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The Unrecognizable Bill C-11: The Online Streaming Act Comes to the Heritage Committee

The Standing Committee on Canadian Heritage yesterday held the first of four planned day-long hearings on Bill C-11, the Online Streaming Act. Over the course of five hours, the committee heard from about a dozen witnesses. I was included on the opening panel and used my opening remarks to focus on two key issues: Bill C-11’s regulation of user content and its overbroad regulatory approach and the need for greater certainty. A full transcript of the opening remarks are posted at the end of this post.

Bill C-11, much like Bill C-10, has been touted by the government as a measure to ensure that large foreign streaming services contribute to the Canadian cultural sector. There is a reasonable debate to had about whether they already do so, since foreign money is now the largest source of funding for English-language film and television production in Canada and according to a Netflix presentation to the government released under Access to Information, it has funded multiple productions that would qualify as Cancon under every metric other than the fact it retains ownership. However, most would accept the general principle that large curated streaming services that appear to function like broadcasters should face some form of domestic regulation.

Yet anyone who tuned into the Heritage hearing yesterday could be forgiven for wondering whether they had wandered into the wrong hearing given that the bill strays so far away from its alleged intent. As the top of the list in this regard is the regulation of user content. The debate over the issue effectively ended last week when CRTC Chair Ian Scott confirmed that the bill as currently drafted allows for the regulation of user content. Yesterday’s hearing moved the discussion to the likely impact with presentations from me, Peter Menzies, Irene Berkowitz, Matt Hatfield of Open Media, and most notably, Morghan Fortier, the CEO of Skyship Entertainment Company, the obvious star of the day.

Skyship Entertainment may not be a household name, but with tens of millions of Youtube subscribers, billions of views, and dozens of employees in Toronto, it should be. Fortier patiently explained how her business owns all of its intellectual property and has a global audience that would be the envy of pretty much any Canadian content company. She came to the hearing to do more than just talk about its success, however, noting “Bill C-11 is not an ill-intentioned piece of legislation, but it is a bad piece of legislation. It has been written by those who don’t understand the industry.” After months of the government inaccurately claiming that the bill doesn’t regulate user content or supporters expressing doubt about the digital first creator community, Fortier succeeded in reshaping the debate by putting a public face on the bill’s negative impact on a successful sector that views the Internet platforms not as a threat, but rather as an opportunity, emphasizing “the platforms work for us.”

While Fortier managed to bring the risks of user content regulation to life – real jobs and Canadian cultural success are at risk – much of the rest of the day featured discussion largely disconnected from how the government has tried to characterize the bill:

  • Corus talked about “leveling the playing field” in an obvious call for de-regulation of Canadian broadcasters, yet no MP called them out on it.
  • OutTV focused on must-carry style rules for Internet streaming distributors, but without naming names it was impossible to determine if this is a serious concern
  • The Quebec music sector seemed to think this is a copyright bill, as it cast doubt on SOCAN data that shows record revenues for Internet music streaming by pinning hopes on a bill that does not address streaming compensation.
  • Unifor wants the bill to fund local news despite the existence of Bill C-18 that specifically focuses on that issue
  • CDCE wants to fund certified Canadian programming but is uninterested in the flaws in Cancon certification that call into question whether the policy will achieve its objectives

There are three more days of hearings scheduled for next week. Given that Bill C-11 is short on details, the early conclusion is that leaving implementation to the CRTC combined with a still-secret policy direction is a virtual guarantee for years of hearings, litigation, and Internet regulation framed as “broadcast regulation.” Indeed, several groups were clearly comfortable with regulating user content or leaving it to the CRTC to figure out. As Unifor perhaps half-jokingly stated, if a cat video generates millions in revenues, it needs some Canadian cats. Sadly, that is the starting premise for many lobbying for Bill C-11, namely that anything or anyone that generates revenue need to give some of it to those that don’t.

Appearance before the House of Common Standing Committee on Canadian Heritage, May 24, 2022
 
Good morning. My name is Michael Geist. I’m a law professor at the University of Ottawa where I hold the Canada Research Chair in Internet and E-commerce Law and I’m a member of the Centre for Law, Technology and Society. I appear in a personal capacity representing only my own views.

As you are surely aware, I have been quite critical of Bill C-11. I would like to emphasize that criticism of the bill is not criticism of public support for culture nor of regulation of technology companies.

I think public support for culture is essential and that one of the core problems in this area is that our current Cancon rules do not achieve their stated objectives. As Peter Grant, a member of the Yale Report panel and longtime advocate for Internet regulation recently noted, certified Cancon “doesn’t have to look Canadian or be about a Canadian story.” I don’t think that’s how Canadians think about Cancon and our rules should change to become better aligned with our policy objectives.

Further, I agree with former Supreme Court Chief Justice Beverly McLachlin, who recently noted with respect to the Internet platforms that there is a need for legislated transparency, accountability, and rules on data governance and privacy.

Given my limited time, I’d like to focus on two main issues this morning: Bill C-11’s regulation of user content and its overbroad regulatory approach and the need for greater certainty.

First, regulation of user content. When Minister Rodriguez introduced this bill, he stated “we listened to concerns around social media and we fixed it.” With respect, many of the concerns remain intact. While the Section 4.1 exception for user content was reinstated, the addition of Section 4.1(2) and 4.2 – which together provide for the prospect of CRTC regulations on user content  – were added. The bottom line is that user content is treated as a “program” and the CRTC is empowered to create regulations applicable to programs that are uploaded to social media services. Non-commercial user generated content may be out, but user content that generates even indirect revenue is subject to potential inclusion within the regulations.

You do not need to take my word for it. As you know, when asked at this committee last week about whether bill included the potential for regulating user content, CRTC Chair Ian Scott acknowledged that “as constructed, there is a provision that would allow us to do it as required.”

You may ask why any of this matters. Bill C-11 permits the creation of regulations on the “presentation of programs to the public” and since it treats all audio-visual content anywhere in the world as a program, the potential regulatory scope is vast. Those regulations identify but are not limited to discoverability. Discoverability has rightly attracted attention since applying it to user content it is both unworkable as we do not have a mechanism to determine what qualifies and potentially harmful to Canadian creators who may find their works downgraded globally.

The solution is obvious. No other country in the world seeks to regulate user content in this way and it should be removed from the bill because it does not belong in the Broadcasting Act. In the alternative, remove all regulatory powers associated with user content, but leave in the potential for contributions by the user content platforms.

Second, a few comments on the overbreadth and uncertainty with this bill, which as currently structured covers any audio-visual content anywhere in the world. As a Canadian Heritage department memo on the issue noted with then Bill C-10, that includes video games, news sites, niche streaming services, and workout videos. I recognize that may not be the government’s intent and there is an expectation that there will be a policy direction that creates some limits and the CRTC may decide to establish some others.

However, I believe there is a clear need for thresholds and limitations in the legislation itself. Without it, services may regard the regulatory uncertainty – which you heard last week could take years to sort out – to block Canada, leading to less choice and higher consumer costs. If the goal is to target the large streaming services or to exempt video games or niche streamers, say so in the legislation. And while we’re doing that, borrow from the European Union approach of distinguishing between curated and non-curated services and use that as a way of establishing more targeted regulatory requirements or exemptions.

There is certainly more to discuss including the myriad of concerns about the CRTC, such as the current lack of transparency, the cloud of bias, and the potential for government to overstep on CRTC decisions into program regulation. There are also the outdated Cancon rules and the actual data on investment in film and television production.

But I’ll stop there. I look forward to your questions.

5 Comments

  1. Pingback: News Around The Web – May 26 – YYZtech

  2. Fortinbras says:

    This is more of the same from Michael Geist except that, for the first time to my knowledge, he apparently admits that “large curated streaming services that appear to function like broadcasters should face some form of domestic regulation.”

    In this blog, Michael Geist again fails to recognize the differences among three distinct phenomena – Canadian television broadcasting; certified Canadian television production for broadcast in Canada; and runaway Hollywood theatrical feature film and television location shooting in Canada. The Broadcasting Act targets the first two of these phenomena, but not foreign location shooting which in large measure does not contribute to Canadian cultural objectives (though it may contribute to economic objectives).

    As I said in my comments on Michael Geist’s May 4 blog on Canada’s Cancon rules, total revenues for Canadian conventional, discretionary and on-demand television services declined every year between 2016 and 2020, from $6.1 billion to $5.3 billion. Total profits (PBIT) fell from $815,2 million to $709,2 million over the same period. The trend is clear, and it’s the result of the shift to the viewing of unregulated online broadcast services operated by the web giants.

    The total value of certified Canadian television production also declined over the last five years for which data is available: from $3.0 billion in 2016-17 to $2.5 billion in 2020-21 (years ending March 31). Even in the year prior to the COVID epidemic, 2019-20, the value of Canadian television production was down to $2.8 billion.

    Over the same five-year period, the value of foreign location and service production in Canada increased from $3.8 billion to $5.3 billion. In 2020-21, the value of theatrical feature films shot in Canada, such as the Hollywood movies The Unforgivable, Jurassic World 3 and Ghostbusters: Afterlife, constituted 26% of the total in feature film and television runaway production. (Theatrical feature films, foreign or domestic, are not regulated by the Broadcasting Act.) Runaway US television series also reached an all-time high of 277 in 2020-21 thanks to generous federal and provincial tax credits and additional services. This is great news for technicians, such as visual effects specialists, but does little for the creative elements in the Canadian production industry.

    Up to now, the web giants have not provided any data on their contribution to the creative aspects of Canadian production. Bill C-11 clarifies the CRTC’s authority to collect such data, but as things now stand, the Canadian content certification system works reasonably well, If and when the web giants, such as Netflix and Amazon, are required to invest in Canadian programs, they will presumably want to retain the proprietary rights to their own productions, and the certification system may have to be jigged. Updating the Cancon rules for television will only become an issue after Bill C-11 has been adopted.

  3. Looking forward to our dystopian future where we can’t say what we believe and are forced to participate in others’ beliefs to our detriment… I never thought I’d see this in real life, in Canada.

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