Graphic from the Hollywood Reporter
June 29, 2024
The CRTC’s June 4th ruling that levied a five per cent Canadian content tithe on audio and video streamers was played in the media, somewhat speculatively, from the consumer angle: would the mandatory contributions be passed along as subscription price increases?
But as MediaPolicy posted , Netflix and the video streamers won’t be paying the full five per cent. The Commission gave them the option to keep 1.5% of the 2% earmarked for the Canada Media Fund and instead spend it directly on Canadian shows for their own platforms. The 1.5% is worth $45 million out of the $150 million annual contributions.
Canadian industry groups have now pointed out the phrasing of the Commission’s ruling is such that perhaps the $45 million doesn’t have to be invested in new shows but can be spent on re-runs of old Canadian shows. MediaPolicy looks into that here.
The general state of streamer financial health is always difficult to capture in freeze frames from quarterly reports. For example on the video side, it’s well known that Netflix is sailing along with record profits. The others are still struggling to get into the black. The prescription seems familiar: more scale, more corporate consolidation, and more hedging of losses by conglomerate owners. On that, there’s a very readable feature in the New York Times that I recommend.
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On Thursday the CRTC launched its public consultation to consider the anticipated request from Google to be exempted from the Online News Act Bill C-18 in exchange for $100 million in annual funding to Canadian news outlets.
Last week MediaPolicy noted that Google’s pick for the consortium representing all eligible Canadian news outlets — yes, Google gets to choose— is highly controversial. Google selected the Canadian Journalism Collective (CJC), newly created by a handful of independent news publishers. Passed over was the mainstream consortium Online News Media Collective (ONMC) that represents about 99% of Canadian online news outlets. The gnashing of teeth was audible.
In considering Google’s application for exemption, the CRTC has some power and responsibility to vet the agreement between Google and the upstart CJC. But it’s not clear that the Commission will deal with the most sensitive issues that divide the one per cent CJC and the jilted mainstream news outlets.
The first issue is that the same government regulation that concedes Google the right to pick its own bargaining adversary also downloaded to Google the responsibility to invite applications from news outlets for funding, accompanied by “attestations” from the news outlets that they are in fact “eligible news businesses” under section 27 of the Online News Act. The most important test of eligibility under section 27 is that the news outlet produces original, core news on current affairs.
As it turns out, Google did not vet the attestations. It accepted all comers. Given that the pie of $100 million is fixed, that affects the size of the slices for all news outlets.
The Commission said only this:
All news businesses that submit an attestation in the open call can receive compensation through a group or collective and no mechanism is provided under the Act or Regulations for the attestations to be disputed as part of that process. As a result, the Commission will not consider the validity of attestations as part of this proceeding.
The second issue is whether the news outlets, especially the 99% signed up with the ONMC, will be able to monitor whether the Google cash is being divided up pro-rata on the basis of a headcount of employed journalists, as required in the government regulation. The headcount must consist of employed journalists (i.e signed up for payroll taxes), adjust for part-time employees, and requires a minimum of two editorial employees (including working publishers).
The Google-CJC deal, which the CRTC must ultimately approve as part of the Google application for exemption, grants the responsibility to police itself to the CJC consortium. As written, the deal gives news outlets access to an undefined dispute resolution mechanism but does not provide for disclosure of the crucial journalist headcounts (except in very broad “industry segments,” for example all broadcasting companies as a group). But it’s clear from the Google-CJC agreement that the dispute resolution will not stand in the way of distributing first payments from the $100 million: the CJC will have to try to claw back any ineligible payments.
Not surprisingly, there’s been a flurry of news articles appearing in the mainstream press venting anxieties over the potential problems with the Google-CJC agreement.
There’s also a good article published in The Tyee about the dispute that gives voice to the CJC consortium’s views.
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