Today, following weeks of consideration and consultation with members of the music community, Music Canada CEO Patrick Rogers released the following statement in response to the CRTC’s Phase 1 decision on initial base contributions.
Earlier this summer, Canada’s broadcast regulator, the CRTC, announced that music streaming services will need to pay an unprecedented 5% of their Canadian revenues to support the legacy broadcasting system. And almost half of that money will be used to prop up traditional radio. If that sounds like outdated thinking, it’s because it is.
When the CRTC launched their process to implement the Online Streaming Act (Bill C-11), they promised a “blank sheet of paper” approach that would help them re-imagine the Canadian broadcasting system. Music Canada encouraged them to “turn over every stone”. If our broadcasting regulations were going to be extended to streaming, then we had to treat it as the once-in-a-generation regulatory process that it was. The framework needed to reflect the power and competitiveness of streaming if it was going to create new and meaningful opportunities for Canadian and Indigenous artists in the global streaming environment.
So it was with a mix of surprise, disappointment, and confusion that we read the CRTC’s decision. If the CRTC had truly set out with a blank page, it had the old regulatory rules written on the back. At some point in the process, faced with the immensity of the task at hand, it seems they simply turned the page over.
Bill C-11 was designed to require audio streaming services to pay into the Canadian broadcasting system – but a 5% contribution rate is staggering. For context, it’s roughly 10 times what radio broadcasters are required to pay. And when you look at how that 5% is divided up, you see that 40% of it goes to funding the radio industry. It is truly confounding that such a large sum of money from streaming services like Spotify, Amazon Music and Apple Music will be used to subsidize our radio industry.
Our hope was that the CRTC would leverage this opportunity to modernize our system and find innovative ways to help artists find success in the global streaming market. Canadian and Indigenous artists have catapulted themselves to global stardom through the universality of their music and the reach of licensed streaming – and the CRTC had the chance to build on that success by putting artists, not domestic industrial policy, at the heart of its framework. Instead, the decision focuses on protecting legacy domestic institutions. This is not what artists need to succeed in today’s highly competitive, on-demand, streaming-driven music marketplace.
We asked the CRTC to carefully consider the existing investments made by the music streaming services in Canada and not impose requirements that could jeopardize them. The music platforms’ local teams curate playlists featuring Canadian and Indigenous artists, which introduce Canadians and global audiences to new voices; they educate artists and label teams on the best ways to leverage their platforms; they host industry events and seminars. Simply put, these local teams – these investments – are integral to the growth of the Canadian music industry and the success of its artists.
The decision ignores the role that licensed streaming plays in the growth of the industry and furthering the careers of our artists. Paid subscription streaming services that pay royalties when music is played are what allow all music companies, big and small, to reinvest in the next generation of Canadian and Indigenous talent.
It’s too early to know for sure what the consequences of this decision will be for Canada’s music industry. It’s easy to predict that the new costs will be passed on to consumers, which could threaten Canadians’ participation in the licensed, legal music economy that sees artists paid when their music is played.
But it could also trigger a reduction in streaming services’ investments in our country – or worse, an exodus. If that happens, the CRTC’s decision won’t just be a missed opportunity, it will be a cultural policy disaster.
As we work towards the next phase of CRTC regulations, Music Canada will continue to advocate for the best regulatory system that reflects how music is made and listened to today and creates the greatest opportunities for Canadian and Indigenous artists. We recognize more than ever the need to turn over a new page – and the resistance toward doing so.
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