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Canada Imposes 5% ‘Contribution’ on Netflix, Other Online Streamers to Pay for Local Broadcasting

The Canadian Radio-television and Telecommunications Commission (CRTC) announced on Tuesday that it will require online streaming services such as Netflix, Hulu and Amazon Prime to “donate” five percent of their Canadian revenue to fund local broadcasting.

The CRTC estimated that the payments would generate about $146 million in annual revenue for Canadian broadcasters.

“Today’s decision will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content.” Said Vicki Eatrise, CEO of the CRTC.

The CRTC said the new rules, which take effect in September, will inject funding into broadcast content such as local news, radio broadcasting, French-language content and Indigenous content. The rules are also being touted as a way to create Canadian jobs and ensure Canadian culture thrives in an online streaming world.

The CRTC rules include several exemptions from the 5% tax, including for streamers that make less than $25 million in annual revenue in Canada and those that partner with Canadian broadcasters.

“This decision demonstrates a strong commitment to the sustainability and growth of the film and television production sector and places Canada on an equal footing with other jurisdictions that have taken steps to level the playing field, protect cultural sovereignty and adapt their broadcasting systems for the digital age.” Applause Warren P. Sonoda, President of the Directors Guild of Canada.

Dave Forget, Executive Director of the Directors Guild of Canada Said The rules will increase the “great international offering” available to Canadians and promote “shows that are made here in Canada and that reflect a little more of the Canadian experience.”

Forget did not elaborate on whether withholding five per cent of revenue would encourage streaming services to offer even more great international content to Canadians.

“If we had to take 5% of our revenue and put it into this fund, [streamers] “If they’re not getting any benefit out of this, they’re likely going to have to raise their prices if they want to stay in the market to remain competitive,” said Michael Geist, a law professor at the University of Ottawa.

Geist also said the CRTC has yet to decide on some key elements of the proposed system, such as how it will define “Canadian content” or what steps it will take to ensure that only bona fide creators of such content receive funding from the new revenue stream.

“We are disappointed in today’s decision, which reinforces a decades-old regulatory approach designed for cable companies. Today’s discriminatory decision makes it harder for global streamers to work directly with Canadian creators and invest in world-class storytelling made in Canada for audiences around the world,” said Wendy Noth, president of the Motion Picture Association of Canada.

Amazon Prime separately said it was concerned about the “negative impact” the restrictions would have on Canadian consumers.

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