Innovation, experimentation and transition
Netflix’s deal centrepiece of Ottawa’s new strategy to promote Canadian culture
Heritage Melanie Joly revealed the government’s new funding regime for Canada’s cultural sector as consumption of video, music and news shifts online, a digital disruption that has seen traditional funding sources dry up for local creators.
The showpiece of the plan, developed after more than a year of extensive consultations, is a commitment from Netflix Inc. to spend at least $500 million on original Canadian productions over the next five years.
New government funding includes $125 million over five years to develop a creative export strategy and an unspecified amount to maintain funding levels at the Canada Media Fund.
Traditionally, the fund got its cash from broadcasters, which are required to contribute a percentage of TV subscription revenue to fund Canadian programming.
But that source has been dwindling as Canadians cut the TV cord and increasingly get content online from streaming giants including Netflix and Amazon Prime Video.
Some creators and Liberal MPs called for a tax on internet services as a way to make up for the shortfall.
Prime Minister Justin Trudeau shut down the idea, which consumers vehemently opposed.
Still, the creative sector and broadcasters alike have called for a “level playing field” given Netflix doesn’t follow any of the stringent broadcasting rules despite having approximately 5 million Canadian subscribers.
Under the new plan, however, Netflix still won’t be treated like a broadcaster. Rather, the half-billion cash influx will go towards a production house launched under the Investment Canada Act. If Netflix doesn’t contribute the funds as promised, it could be fined up to $10,000 per day under the legally binding agreement with the federal government — the first such deal Netflix has inked anywhere in the world.
The government also opened the door for creative industries to access its previously announced $1.26-billion Strategic Innovation Fund and set aside part of its $300-million Cultural Spaces Fund for creative hubs to incubate talent.
It reiterated plans to review the broadcasting, telecommunications and copyright acts. It asked the Canadian Radio-television and Telecommunications Commission to report back to the government on how it sees the broadcasting system evolving — and the wording indicates an eventual tax on internet providers isn’t permanently off the table.
“We are asking them to look at how new models will support the creation and distribution of Canadian entertainment and information programming, in both official languages,” according to a copy of Joly’s speech.
When it comes to the news business, the government reiterated its support for local news and announced a partnership with Ryerson’s Digital Media Zone and the Ryerson School of Journalism to create a digital news incubator.
It said it expects internet companies such as Facebook to “do more” to support the news industry, but it stopped short of announcing funding for print publications.
“Our approach will not be to bail out industry models that are no longer viable,” Joly said. “Rather, we will focus our efforts on supporting innovation, experimentation and transition to digital.”