8 things you should know about the Online Streaming Act, Netflix Bill C-11

1. What is Bill C-11?

The ‘Online Streaming Act’ C-11 is a federal bill going through Parliament right now, as of March 2023 (at the time of writing).

It’s been called the ‘Netflix Bill,’ but its first formal title was ‘an Act to Modernize the Broadcasting Act.’ The goal of C-11 is to update the regulation of TV and radio content for online streaming.

2. What is meant by ‘broadcasting regulation’?

As the most popular of our many cultural platforms ranging from movie theatres to books, TV and radio broadcasting are at the centre of Canadian mass media and popular culture.

‘Regulating’ them is mostly about money: the Canadian Radio-Television and Telecommunications Commission (CRTC) and the federal government together figure out how to pay for the creation and promotion of ‘Canadian’ programming, especially in the priority genres of news, sports, drama, documentaries, talk shows, and children’s programming.

Of course, the money begins with cable bills and paying advertisers but Canadian broadcasters don’t enjoy the same market scale and deep pockets of the Hollywood studios and U.S. networks to make blockbuster shows and high-cost news coverage.

Left to their own devices, Canadian broadcasters would just import the U.S. shows which Hollywood exports to foreign markets at discounted prices, having already recovered their investment in the U.S. market.

That’s why the CRTC ensures that Canadian media companies like Bell, Rogers and Québecor earmark funds to make Canadian content, by paying into film production funds and making their own Canadian shows.

Regulatory ‘airtime quotas’ for Canadian content on television have mostly been eliminated in the modern world of on-demand consumption. Instead, the CRTC licenses broadcasters on the condition they dedicate 30% of their annual revenues to Canadian shows (including budget lines for local news and programs of national interest).

Apart from these obligations on private broadcasters, another big part of ‘regulation’ is the Parliamentary grant to the CBC/Radio-Canada paired with the CRTC’s requirement that the public broadcaster produce 85% Canadian programming.

The CRTC requires both the CBC and private Canadian broadcasters to buy 75% of their Canadian shows (not including news or sports) from independent Canadian film producers. To be able to make shows for a relatively small domestic audience, those Canadian producers supplement the sale price of their shows with subsidies from the Canada Media Fund and government film production tax credits.

Apart from the money, ‘regulation’ includes the promotion of Canadian shows, renamed ‘discoverability’ in the algorithm-driven online world. That means the CRTC wants broadcasters to make Canadian programs visible to Canadian audiences in a continental online market saturated by American content. That not only makes Canadian audiences aware of the CanCon they have helped to fund through subsidies but also boosts the paid advertising revenues of those shows.

Lastly, ‘regulation’ is only in a very limited way about acceptable broadcast content: there are self-policing content codes that CRTC-licensed broadcasters observe to limit abusive comment or misinformation.

3. What is the social policy behind broadcasting regulation?

‘Broadcasting regulation’ is the antidote to American domination of English Canadian media and English language domination of Québécois media, especially in arts and entertainment.

It has been in place for a long time, going back at least to before World War II when the U.S. established its cross-border domination of film theatres and radio.

Over the years by virtue of their global economic scale, U.S. studios and music labels have dominated all English language countries, even Britain.

In defense of its cultural sovereignty, Canada has used a policy toolbox of Canadian ownership of private broadcasting, public broadcasting, subsidies to artists, and the regulation of private broadcasters, all to carve out a discoverable space on TV and radio where Canadian programming is on offer.

In 2023 as Canadians are becoming more aware of the imperative of reconciliation with Indigenous nations and the voices of racialized communities, those ‘cultural’ goals add to the importance of broadcasting regulation in communicating Canadian experiences to Canadians. That’s reflected in amendments to Bill C-11.

4. Why hasn’t broadcasting over the Internet been regulated like conventional broadcasting until now?

The scope of ‘broadcasting’ in our ‘1991’ Broadcasting Act was always ‘technologically neutral,’ it was not specific to radio-spectrum or cable TV. As we know, online streaming reaches Canadian homes through the same fibre and satellite connections as ‘television.’ A key feature of regulation was that broadcasters had to be Canadian owned.

Nevertheless beginning in 1998 the CRTC decided to ‘forebear’ from regulating broadcasting programs over the Internet for at least five years until it looked a lot more like TV and radio.

That five years turned into 25. By the time download speeds and streaming services turned Internet broadcasting into a major distribution platform, Stephen Harper’s Conservatives were in power (remember his ‘No Netflix Tax’ mantra).

Returned to government in 2015, the Liberals repeated the same mantra in spite of Netflix’s growing share of audience and the shrinking pool of advertising revenue available to Canadian broadcasters thanks to the rise of Google and Facebook.

Finally, in the 2019 election the federal Liberals promised ‘web giants will pay their fair share.’

In C-11 the Liberals decided that instead of giving the green light to the CRTC to begin regulating streaming video and music under the 1991 Act, they would table a new Bill in Parliament.

Of course they were playing catch-up. During the intervening twenty-five years that broadcasting over the Internet had remained unregulated, global streamers like Netflix, hosting platforms like YouTube, and music streamers like Spotify had entered Canada and eaten up market share, free from regulatory obligations to fund or make Canadian shows, and taking profits abroad.

Bill C-11 recognizes the foreign ownership of these online undertakings as a ‘fait accompli’ but now requires them to ‘pay their fair share’ of producing Canadian content.

5. Why is C-11 controversial?

The opponents and critics of C-11 come from various places but they are united with the Conservative Opposition in the belief that the Internet is ‘special,’ too different from TV and radio to justify regulation.

Yet the Conservatives campaigned in the 2021 election in favour of regulating the streamers (i.e. ‘yes, a Netflix Tax’).

Now in Opposition, the CPC has run out in front of a parade of anti-regulation activists, U.S. studios and Big Tech companies.

The rallying point has been opposition to the provision in C-11 that ‘regulates’ social media platforms (e.g. YouTube and TikTok).

On that point, citizens uploading videos and playlists are not considered ‘broadcasters,’ just as Canadian film producers selling their movies to CTV or Global are not regulated either.

Rather, the Bill requires the host platform (i.e. YouTube) to do two things: first, write a cheque for the funding of Canadian programming and, second, ensure that Canadian videos and playlists are ‘discoverable’ (promoted) through any method of the platform’s choosing.

On ‘discoverability,’ this probably means the platforms will have to tweak their algorithm-driven lists of personal recommendations to include some Canadian suggestions in priority programming genres. The CRTC will require YouTube meets some kind of target.

But in this vacuum of uncertainty about what this ‘discoverability’ will look like in practice, opponents of C-11 claim that content will be directly censored by an over eager CRTC, or else indirectly by the CRTC ordering platforms to favour ‘Canadian’ content, thus downranking content that YouTube would have given more prominence.

6. Are concerns about censorship founded on fact?

The noise about C-11 is 90% manufactured hysteria and 10% valid concerns.

The Conservative campaign continually describes C-11 as a ‘censorship bill’ with slick videos aimed at accumulating e-mail addresses for potential fundraising and its voter database.

But when it comes to regulating social media uploads, Bill C-11 actually prohibits the CRTC from exercising content control (e.g. abusive content and disinformation) that it currently regulates for conventional programming through mandatory codes for broadcasters.

In fact under C-11 a video uploaded to YouTube spouting hate or bigoted ‘dog-whistling’ will neither be banned nor even downranked unless YouTube does it voluntarily. (Although this kind of expression could be regulated in an Online Safety Bill that the Liberals have promised but not tabled.)

As for the CRTC requiring ‘discoverability’ of Canadian programming on YouTube or Spotify, opposition to that part of C-11 is based on the inflated fear that the CRTC will become unreasonable or extreme in demanding promotion of Canadian shows.

But more reasonable concerns about YouTube posts focus on other nations reciprocating with their own discoverability measures, reasonable or not, in favour of their own creators, particularly in the U.S. where many Canadian YouTuber uploaders are finding their main audiences.

For many YouTubers, this is their livelihood or at the very least their soul-nourishing side-hustle.

Heritage Minister Pablo Rodriguez has signaled that uploads by smaller YouTube players will be exempted from CRTC regulation once the Bill receives Royal Assent but he has declined to publish a draft exemption.

7. Will C-11 mean a new definition of Canadian content?

There exists an unkillable urban myth about passing a government culture test to earn the stamp of ‘Canadian content.’

Ironically no such ‘Maple Leaf’ test exists.

A ‘Canadian content’ show that is made for theatres or TV —making it eligible for film production subsidies— is based solely on a flexible headcount of Canadians playing key creative roles like producer, writer, director, and leading actors. In other words it’s a passport test, not a content test.

Yet one school of thought is that we need a ‘Maple Leaf’ test to ensure that regulation results in iconic Canadian themes and stories, otherwise regulation is too industrial and not sufficiently cultural.

The other school of thought —representing the current rules— is that a Maple Leaf test would interfere with creative freedom and cultivate an unofficial state culture. It’s considered better to rely on the instincts of Canadian artists to create shows with Canadian authenticity and nuance.

The Heritage Minister has said he will direct the CRTC to take a second look at the historical approach to defining Canadian content, but there are no amendments to C-11 that signal the outcome.

Another important issue within the current definition of Canadian content is the requirement that the Producer is always a Canadian, owns the show, and retains the intellectual property in exports, re-runs, sequels, spin-offs, and trademark opportunities to exploit a winning movie.

Canadian ownership of “IP” in movie projects is seen as indispensable to Canadian filmmakers retaining profits in Canada for reinvestment in their next project and not becoming contractors to American studios.

Bill C-11 did not change this rule which is set jointly by the CRTC and the federal government. However there is concern that Netflix and Disney will demand the U.S. government declare trade war on Canada if the CRTC obliges them to make Canadian movies without giving them the IP rights of exploitation.

8. An unintended consequence of C-11: harm to public service channels

There are other consequences of Bill C-11 recognizing the foreign ownership of online platforms operating in Canada.

A big one concerns our privately-owned ‘public service’ broadcasters such as OMNI multilingual TV, the LGBTQ+ channel OutTV, and the Indigenous APTN, all of which the CRTC has designated as ‘must carry’ on Canadian cable TV.

But to survive in the new world of online broadcasting, those Canadian broadcasters must negotiate carriage on global online platforms like RokuTV and Amazon Prime that reach so many Canadians now.

Unfortunately Bill C-11 withholds from the CRTC the powers to issue these mandatory carriage orders to foreign owned platforms. The Heritage Minister has said he fears a trade complaint from the U.S.

The Minister has said publicly that the federal government might cover the losses our public service channels sustain if they are shut out or undercompensated by the big American platforms, but there has been no binding commitment yet.