Major music companies send letter to Canada’s CRTC, urging it not to regulate streaming as if it were radio

Industry groups representing major record companies and streaming platforms have a message for Canada’s telecom regulator: streaming is not radio, and shouldn’t be regulated as if it were.

“We write to you today to reinforce an important message shared throughout the consultations: radio and audio streaming are not the same,” stated a letter from Music Canada and DiMA (the Digital Media Association) to Canada’s telecom regulator, the CRTC.

Music Canada represents the country’s three major recording companies: Sony Music Entertainment Canada, Universal Music Canada, and Warner Music Canada. DiMA represents various digital media companies, including Amazon Music, Apple Music, and Spotify.

The groups were responding to the CRTC’s recent series of workshops on implementing new rules governing streaming services.

Under those rules, streaming services that are not Canadian-owned and have more than CAD $25 million (approx. USD $18.5 million)  in revenue in Canada annually are required to pay 5% of that revenue into funds that subsidize Canadian content and creators.

Under that plan, 1.5% of music streamers’ revenue would go towards subsidies for local radio stations.

The regulations, which stem from a new law – the Online Streaming Act, passed in 2023 – echo earlier regulations from the broadcast era, which require Canadian broadcasters to pay towards funds that support the creation of Canadian radio, TV and film content.

Both music and video streaming companies have vocally opposed the plan, with some music streamers saying it’s fundamentally unfair to require streaming services to subsidize radio stations, which are effectively their competition.

In July, Amazon, Apple, and Spotify filed a legal challenge against the rule with Canada’s Federal Court, while the Motion Picture Association–Canada, which represents Netflix and several major Hollywood studios, including Disney, Paramount, Sony, NBCUniversal, and Warner Bros. Discovery, filed a similar lawsuit.

At the CRTC’s workshops, “there was a clear attempt to place the continuation of radio regulations on audio streaming services as an obvious next step,” Music Canada and DiMA said in their letter. “We do not agree.”

The letter argued that Canada’s radio regulations were designed to address the problems created by its vast geography, its “linguistic duality” (English and French), and the fact that space on analog radio is limited, making decisions about what gets broadcast necessary.

Streaming has “none” of these problems, the Music Canada and DiMA letter stated.

“Being driven in terms of each consumer’s individual interest and activity, it represents nearly infinite hours of listening, a vast catalog of recordings, a plethora of languages, and has broken down not just physical geography but international borders as well.”

“Not only has streaming allowed Canadians to reach the world in ways previously unimaginable, streaming has allowed Canadian artists with no home in the traditional radio system to be found by their Canadian and international fans.”

Music Canada and DiMA

Echoing an argument made earlier by companies like Netflix and Spotify, the letter argued, in effect, that Canadian content doesn’t need subsidization in the digital era.

“Three of the top 10 songs streamed in India in 2022 were by Canadian artists – a fact that would be inconceivable to the founders of our terrestrial broadcasting system,” the letter stated.

“Not only has streaming allowed Canadians to reach the world in ways previously unimaginable, streaming has allowed Canadian artists with no home in the traditional radio system to be found by their Canadian and international fans. This has led to higher levels of play on streaming for women and racially diverse artists compared to Canadian radio.”

Earlier this year, Spotify said that Canadian artists “earn more from streams outside of Canada than they do domestically… Canada has been the third most successful country globally in exporting its artists through Spotify.”

“We will be unable to continue funding many of the programs that have come to rely on our backing, as we are now required to allocate resources to meet the CRTC’s new investment mandate.”

Netflix

For its part, Netflix has long argued that it’s already funding Canadian content, voluntarily, through the production of TV shows in Canada, and through grants to various organizations that support Canadian content creators. Netflix said it has spent some $25 million on these programs, supporting over 1,200 Canadian directors, producers, writers, and performers.

However, in light of the CRTC’s new streaming fee, this appears to have come to an end. Various cultural groups found out last week that Netflix would be cutting their financial support, in order to cover the cost of the new streaming fee.

“Despite our long-standing commitment, the government has chosen not to acknowledge our substantial support for the Canadian film and TV sector,” Netflix said, as quoted by The Globe and Mail.

“Consequently, we will be unable to continue funding many of the programs that have come to rely on our backing, as we are now required to allocate resources to meet the CRTC’s new investment mandate.”

The Globe and Mail reported that a number of professional development programs and cultural institutions are “in jeopardy” due to Netflix’s withdrawal, including the Pacific Screenwriters Program, and Hot Docs, North America’s largest documentary film festival, held in Toronto every year.Music Business Worldwide