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Canada's Netflix Problem

Canada's Netflix Problem

Updated on November 9th, 2018

Canada exempts internet broadcasters like Netflix from rules that Canadian broadcasters have to follow. These exemptions increase Netflix's profits by hundreds of millions, at the direct expense of Canadian programming and culture.

Issue Breakdown
An Unfair System That Puts Canada Second

Canada exempts internet broadcasters like Netflix from regulation. For example, licensed Canadian Broadcasters must spend 30% of their revenue on Canadian programming, but internet broadcasters like Netflix don't have to invest a single red cent in service of Canada's culture. If the regulatory system were fair, Netflix would have had to contribute almost $250 million to Canadian culture by 2020. Their actual obligation is $0.

In September of 2017, former Minister of Canadian Heritage, Mélanie Joly, announced a secret deal that would see Netflix spend $100 million in Canada for five years, but the definition of "Canadian" was purely industrial: a show by American creators, starring American actors, and set in the United States would count as long as it was filmed in Canada. There is no requirement to produce content in French and no requirement to make shows about Canada's Indigenous peoples.

  • In 1998, the CRTC created a rule now known as the Digital Media Exemption Order that lets anybody broadcasting online sidestep regulation
  • This exemption was renewed as recently as 2015
  • As of 2018, Netflix serves more than 50% of Canadian households with an internet connection
  • As unlicensed broadcasters take over more of the Canadian market, investments in Canadian programming will continue to decline
  • Both the Liberals and the Conservatives have promised not to impose a so-called "Netflix Tax". No such thing is proposed, but this seems to indicate that they aren't willing to take action
Jargon

Broadcasting

Digital Media Exemption Order

"Netflix Tax"

Canadian Content

Key People

Ian Scott

Chair, CRTC

Ian Scott is Chair of the Canadian Radio-television and Telecommunications Commission (CRTC), Canada's broadcasting regulator. His Commission is responsible for the Digital Media Exemption Order that lets Netflix off the hook for Canadian content obligations worth hundreds of millions per year.

Mélanie Joly

Former Minister of Canadian Heritage

Mélanie Joly was Minister of Canadian Heritage in Justin Trudeau's Liberal government between November 2015 and July 2018. In September 2017, she released the Creative Canada policy, centred around a secret deal with Netflix that appeared to exempt the streaming giant from regulation on condition that Netflix spend $100 million in Canada for five years. Joly was widely criticized for making what many believed was a terrible deal full of loopholes that would save Netflix hundreds of millions per year.

Pablo Rodriguez

Minister of Canadian Heritage

Pablo Rodriguez succeeded Mélanie Joly as Minister of Canadian Heritage in 2018. Like Joly, he has opposed a so-called "Netflix Tax", indicating that Prime Minister Trudeau's change of Heritage Ministers does not foretell a change in the policy of exempting streaming companies like Netflix from obligations to finance Canadian programs. (Linked article is in French)

Minister Rodriguez's mandate includes the CBC and other critical cultural institutions.