Canadian Heritage Minister Melanie Joly heads to UNESCO this week where, according to the Globe and Mail, she will be focused on making the case for a common approach on mandatory cultural contributions from companies such as Netflix. Joly states:
I’ve always said we are ready to have conversations with those companies and those platforms. We are already engaged with them, and will continue to do so. But on a general level, it is obvious that the more we are able to have a concerted approach among countries on this issue, the better we will be able to make sure it is a priority.
Joly’s goal would appear to be to develop a universal position at UNESCO that countries could then leverage to force companies such as Netflix to comply with local content regulations. I’m quoted in the article to the effect that efforts to harmonize sales taxes on digital services makes sense at a global level, but targeting companies like Netflix with new regulations or tinkering with the Internet in violation of fundamental net neutrality principles does not.
I think Joly’s seeming interest in creating a global cultural regulatory framework for digital services is unnecessary at best and harmful at worst. First, the emergence of global digital giants has largely been fuelled by the absence of content regulation. Platforms such as Netflix and Google have grown by providing consumers more choice and flexibility than the regulated system. By responding to market demands, the companies have developed enormously popular, well-priced services that offer great potential for creators to find new markets and call into question the relevance of many legacy regulations.
Second, even if there is a role for domestic regulation, UNESCO, a United Nations agency, is surely not the right venue to address these issues (the U.S. is not even a signatory to the 2005 convention referenced by Joly). There may be value in discussing cross-border issues such as harmonized sales taxes or ensuring that countries do not block access to online video services at a global level (which already takes places in venues such as the OECD), but a U.N. policy on domestic cultural regulation is a poor fit for the issues raised by online video services.
Third, the Netflix response to the government’s consultation on Canadian content provides a compelling argument against the need for domestic regulation in order to attract investment. Despite the absence of regulatory requirements, Netflix has emerged as one of the leading backers of Canadian content, reporting that it commissioned hundreds of millions of dollars in original programming in Canada in 2016 (a Netflix tax comparable to that paid by cable and satellite companies would generate a fraction of that amount). In fact, Netflix says that Canada now ranks as one of its top three locations worldwide for original productions. Given that the company spends billions each year on content, the activity in Canada is likely larger than all but a handful of regulated sources. The Netflix submission provides a full sense of the scope of its support for Canadian content. It includes:
Original Cancon co-productions with Canadian producers and broadcasters in 2016 (Netflix obtains rights outside Canada )
- Anne (with CBC)
- Alias Grace (with CBC)
- Between (with Rogers’ City TV)
- Travelers (with Corus Entertainment’s Showcase)
- Frontier (with Bell Media’s Discovery Channel)
- Degrassi: Next Class (with DHX Media’s Family Channel)
- Orphan Black (with Bell Media)
- Some Assembly Required (with Corus Entertainment YTV)
Original CanCon that may not qualify as such due to Netflix financing and global distribution
- Trailer Park Boys
Netflix originals produced in Canada for global distribution making use of Canadian creative and other resources
- Special Correspondents
- Van Helsing
- I Am the Pretty Thing That Lives In the House
- Lost in Space
- A Series of Unfortunate Events
- Altered Carbon
- Death Note
- Dirk Gently
- Hemlock Grove
- Haters Back Off
Netflix original kids titles produced in Canada for global distribution making use of Canadian creative and other resources
- Little Prince
- Beat Bugs
- Lost and Found Music Studios
- Inspector Gadget
- Hilda, Luna Petunia
- True and the Rainbow Kingdom
- Project MC2
- Justin Time Go!
- Magic School Bus 360
Rather than looking for new forms of global Internet regulation, perhaps Joly should be asking why there are still Canadian groups calling for regulation of an entrant that would appear to be one of the leading investors in Canadian content and working on ways to ensure that Canadian content can be exported worldwide.
The rather impressive list you posted is the best argument yet that CanCon rules are an archaic remnant of a bygone era, pointless in today’s digital world.
Write your MP, make sure they stop Melanie’s un-holy crusade for a Netflix tax.
Because at best, this is a waste of our tax payer money!!! And that’s not good.
I think it’s time Canadian content focused on quality vs. quantity. For a young Minister, she’s entirely off-base and out of touch with the reality of today. She needs to be put on a shelf and let someone more experienced in to run the ship.
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I agree that UNESCO is the wrong place to promote the wrong approach to funding Canadian content. However we should be clear that Netflix original content being shot in Canada is not Canadian Content – it is American Corporate content designed to appeal to the lowest common denominator in the international market place. Netflix shoots in Canada not to make use of our creative talent – but because of our generous provincial tax credits and the low Canadian dollar. (At least a 40% saving over many unsubsidized US production centres)
The strategic importance of Netflix “original” content is that Netflix owns the international distribution rights to these shows. Currently over 60% of the 80 odd million Netflix subscribers pay $10 a month in order to access this “original” content. So at the same time Netflix is emptying its coffers making episodic TV it reduced the size of its non Netfilix library by 30% in the US – last year alone.
So the end game for Neflix is probably to distribute exclusively netflix content globally and to do away with library’s of regionally owned content all together. This would mean that national subsidiaries like Netflix Canada would become obsolete as customers subscribe to “Netflix Global” accessing only content owned and produced by Netflix. Accessing Netflix in US dollars without paying GST or HST and without a penny of profit being returned to Canada.
So as Netflix becomes a global HBO – Crave TV will likely go the way of Shomi. The point being that taxing subscription based video on demand platforms will be both impossible and irrelevant. Canada needs to abandon protectionism in a digital world and start concentrating on ways enter the distribution market and make Canadian content economically viable. Attempting to turn UNESCO into the CRTC is just plain goofy.
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