U.S. Republicans pushing back against Canadian rules for foreign streamers

Canada’s recently established Online Streaming Act is being targeted by 18 right-wing lawmakers in the U.S. who want to dismantle it as part of a new negotiation in the ongoing trade war.

The Online Streaming Act has been a hotly debated law that would have major foreign streaming companies like Spotify, Netflix, and Disney give back five per cent of their Canadian streaming revenues to help support the Canadian arts scene. That said, it’s still unclear how much revenue these services make in Canada.

A Canadian judge estimated that each prominent streamer would need to pay around $1.25 million per year. However, the original CRTC report suggested that this Act would bring in $200 million every year, meaning each big streamer would need to pay significantly more than $1.25 million.

To get an idea of how much money we’re talking about, let’s look at Netflix. It’s estimated that between five and 11 million Canadians subscribe to Netflix. For the sake of some ballpark math, let’s say Netflix has seven million Canadian subscribers and makes an average of $13 per user. This is all speculation based on the information Netflix has shared, but it would mean Netflix is making over $100 million in revenue from Canadians. Which would mean the streamer would need to contribute around $5 million back to help support Canadian arts and news. While Netflix is likely the largest streamer of the bunch, Disney+, Paramount, and others would still need to pay, and even a few hundred million would provide a lot to the Canadian industries.

This money goes to help local news production and the creation of Canadian media content. The funds will be explicitly split from each streamer’s initial five per cent. Two per cent to the Canadian Media Fund (CMF) or direct expenditures on certified Canadian content, 1.5 per cent to the Independent Local News Fund, 0.5 per cent to the Indigenous Screen Office, 0.5 per cent to the Black Screen Office, the Canadian Independent Screen Fund for BPOC creators, and/or the Broadcasting Accessibility Fund and 0.5 per cent to the remaining Canadian-certified independent production funds.

The CRTC’s website provides a different breakdown for music streamers and where the money goes to help Canadian musicians.

In a report on Billboard.com, the U.S. lawmakers claim that in 2023, on-demand video services contributed $70 billion to the U.S. economy. That’s on top of the $14 billion the music streaming industry made. So, from the Canadian perspective, it seems likely that most streamers have more than enough to oblige the Online Streaming Act’s rules.

There are also arguments against the Online Streaming Act from Canadians who rightly worry that the streamers will raise their prices to pass the cost on to Canadians. Lawrence Zang notes in his blog post that “in response to France’s 1.2 percent music streaming tax last year, Spotify increased its prices for all subscription plans by the equivalent 1.2 percent.” Notably, Spotify raised prices in Canada last year and suggested the increase was in response to the Online Streaming Act.

Canada also recently cancelled its digital service tax on giant U.S. media corporations like Meta and Google, so there’s a precedent for rolling back the arts and news-related bill as well.

A U.S. letter called the Act a “digital trade irritant,” according to CBC News. This letter seemed to imply that since Canada gave up on the digital service tax, it can likely get this pushed back as well, since Canada now needs to negotiate with the U.S. over the tariffs. Prime Minister Carney has also mentioned evaluating the Online News Act, which regulates American tech companies like Google and Meta.

Source: CBC News, Billboard, CRTC