https://pixabay.com/en/netflix-remote-control-electronic-2705725/ (CC0 Creative Commons)

https://pixabay.com/en/netflix-remote-control-electronic-2705725/ (CC0 Creative Commons)

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Joly’s Digital Cancon Plan: Netflix May Be The Star, But No New Regulations, Taxes or Bailouts is the Story

Canadian Heritage Minister Mélanie Joly presented her vision for digital Cancon earlier today, delivering a wide ranging plan that included previously leaked information about a commitment from Netflix to spend $500 million over five years on production in Canada. The Netflix commitment is the headline of the day, though earlier reports inaccurately claimed that the funding would be for Canadian content rather than productions in Canada (the two are not the same given the restrictive approach to Cancon definitions).

The agreement represents a major long-term commitment to the Canadian market which should go some way to appeasing critics who feared that the company might abandon Canadian production in the future. However, since Canada was already one of the company’s top three countries for production, it may not result in a significant increase in funding.

While the Netflix commitment will attract attention, the more important story is that the government has rejected pressures to levy new Internet or Netflix taxes, impose regulatory requirements on Internet services, depart from its commitment to net neutrality, or provide a bailout to the newspaper industry. Indeed, Joly’s comments on the importance of affordable Internet access and support for net neutrality effectively slam the door shut on those ill-advised proposals. Joly started the consultation by indicating that everything was on the table, which many cultural lobby groups hoped would lead to new Internet taxes and regulation. The decision to reject those proposals confirms that the government’s digital focus emphasizes competition, a strong domestic market, as well as export and promotion of Canadian content.

The government may have eschewed new regulations or taxes, but it has not abandoned a pro-active policy approach. From new funding for the Canadian Media Fund and export promotion to working with Internet companies to obtain commitments to Canada to fashioning a new role for the CBC, the government clearly sees (and wants to be seen) as active on the cultural file. As I blogged last night, the government has also brought the CRTC into the mix with an order-in-council that will review distribution models and their impact on the maintaining a “vibrant domestic market.” The CRTC study is due by June 1, 2018. While it seemingly replicates much of the Talk TV hearing, it is consistent with the government’s emphasis on a strong domestic market supporting domestic production.

The other longer-term issue involves the legislative reviews of the Copyright Act and the Broadcasting and Telecommunications Act. The CRTC study will form part of the communications legislative review, which seems unlikely to go much further than consulting the public, conducting studies, and putting out some preliminary proposals over the next two years until the 2019 election. Joly provided a creator-focused comments on copyright reform, moving away from the balanced copyright approach of the last reform to adopt a Sheila Copps-like position. That is not unusual for a Heritage Minister and will likely face a counter from the ISED Minister Navdeep Bains that should restore the policy process to a position of relative balance that recognizes the need for copyright to address the interests of all stakeholders. The Copyright Act review will not start until November and is expected to run for about a year, suggesting that the primary immediate copyright reforms will involve the Copyright Board, which is the subject of a consultation that concludes on Friday.

Joly may have initially viewed the decision to launch a digital Cancon review as political winner, but the challenge of satisfying groups who view cultural policy as primarily a vehicle for regulation and mandated contributions would have become quickly apparent. Though she faces immediate criticism for failing to tax or treat Netflix like a conventional broadcaster, she deserves thanks for recognizing that future success will not come from regulating or taxing the Internet.

Creative Canada
does not do the heavy lifting of shaking things up – there is no reform to the definition of Cancon, no modernization of existing funding mechanisms, and some of the tougher legislative questions are deferred for further review – but Joly deserves credit for delivering a policy that rejects new taxes and regulation, keeps net neutrality intact, and still finds some new money for production and investment certainty from Netflix.

6 Comments

  1. This is all well and good, but it felt like she kinda glazed over the part about funding for independent production to replace BravoFACT/MuchFACT (RIP) – singling out examples of broadcast-level series funded by CMF (Orphan Black, Kim’s Convenience, etc…) which are well beyond the production level those two aforementioned funds were subsidizing.

    Hoping we’ll hear more about her plans for CMF to cater to this level of career development soon. So far this all feels like it’s keeping things moving and growing in the establishment at a respectable pace, but not doing much to foster the development of the next batch of creators – and their content – when they may not yet have attained a level in their careers that makes them eligible to compete with these series for the CMF funding.

  2. I’m still waiting for an explanation as to why a company like Netflix should not collect and remit sales tax on its services. When I buy a book by mail order in the United States Canada Customs collects Canadian sales tax on it when the US postal service hands it off to Canada Post at the border. And yet the sale was made in another country. Netflix is different how?

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  4. I have been interested and following this dilemma for some time (albeit without knowing the finer details of either approach so forgive my naiveté) I see Micheal, that you seem to be in favour of “a policy that rejects new taxes and regulation”. No doubt there are merits to keeping things free-market friendly. On the other hand, like George, I wonder why a simple tax on sales seems to be so problematic?Especially considering that, just announced, France will be doing precisely that – levying a “taxe video” to all digital platforms. (see the article here: http://www.cnc.fr/web/fr/actualites/-/liste/18/12851510#.WcT_7X5_xJs.twitter)

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