Like, will broadcaster rules now apply to the streamer?
REPORTS LATE MONDAY said that the centrepiece of Heritage Minister Mélanie Joly’s 17-months-in-the-making strategy to energize, or backstop, the production of Canadian content in our always-on-and-everywhere digital age is that she has secured a commitment from Netflix to spend $500 million over five years “on the production and distribution” of Canadian content.
On the face of it, this is welcome news. Who in the creative industries wouldn’t like to see another $100 million spent annually on Cancon?
However, I hope this plan, which Minister Joly will officially announce in Ottawa today, has a whole bunch of hard details to it, beyond what is stated in the story leaked to the Globe and Mail.
For example: How will Netflix define “Canadian content”? During its appearance in front of the CRTC’s landmark “Let’s Talk TV” hearing in 2014, the huge American streamer said it could not account for its Cancon the way the CRTC would demand. The Canadian TV industry defines levels of Canadian content based on the Canadian Audio-Visual Certification Office (CAVCO) points system. Netflix’s director of global public policy Corie Wright told the Commission at the time: “We don't track Canadian content on our site within the definition of the CRTC's criteria.”
"What will Minister Joly allow Netflix to call Canadian content?"
So, we wonder, what will Minister Joly allow Netflix to call Canadian content? Will they force it to apply the points system, or will it let Netflix decide what qualifies? Our broadcasters aren't allowed to do that.
This also makes us wonder whether or not Netflix now changed its mind about submitting to governmental rules when it comes to its content. “I think that any time there is a government prescription when it comes to creative works, there's always the danger that you supplant more market-driven forces. We think that those have been really effective to date in promoting content that our members want to see and they like. Frankly, this includes Canadian content.
“As we said, we have proactively licensed Canadian content not because anybody told us to, but because we thought our members would enjoy it, and when we see our members enjoying it that reinforces our decision,” said Wright during the 2014 hearing.
"Will Netflix now submit to a Canadian government prescription?"
So will Netflix now submit to a Canadian government prescription? I hope Minister Joly’s report answers that question.
(Ed note: It’s worth noting that Wright said all this during her appearance which was later stricken from the official record after an on-camera and much publicized quarrel between her and then CRTC chair Jean-Pierre Blais over confidentiality of information. We saved the official transcript before it was deleted from the record. We’ll send along a copy, if you like.)
We wondered also how this spending compares to what the existing Canadian companies have to gather and spend on Cancon.
According to Toronto research firm Solution Research Group, Netflix has about 5.9 million customers in Canada. Using their new $10.99/month retail price, that’s $778 million in annual revenue going forward. Our Canadian broadcasters must spend 30% of their revenues on Cancon (including news and sports) and 5% (pending a CRTC review of that number) of it must be spent on programs of national interest – with a stipulation that 75% of PNI monies be spent with Canadian independent producers.
Are anything like these rules being applied to Netflix, because 30% of its annual revenues earned in Canada look to 
be a little over $233 million, quite a bit more than the $100 million on offer here.
We wonder if there is a stipulation saying the spending on Canadian content must be on new programming? Or, would stuff like “Helicopter Canada” – a government-made flick to celebrate our centennial in 1967 and now streaming on Netflix – count?
Yet another question we have is: Why just Netflix? What about Google/YouTube? Amazon? Facebook? Apple? Will they be coming forward with Cancon dollars, too? Did Netflix just agree to this in order to avoid a tax such as the 2% tax on foreign streamers which French government is enacting? Will the other giant, global over-the-top players be enticed to pay up as well by our federal government?
Will Netflix and others like it finally be asked to gather sales tax to level the competitive playing field? We asked them. They said they would, if the federal government told them to. We’ll find out today if Minister Joly has made that change and if not, why not.
So. Many. Questions.
Cartt.ca will have two reporters in Ottawa Thursday to ask these and many other questions of the politicians and industry players. If you have some you want to send to us, confidentially, let us know at editorial@cartt.ca.
Illustration by Paul Lachine, Chatham, Ont.
