TikTok, YouTube and Digital-First Creators are the focus of House debate on the Online Streaming Act C-11

April 5, 2022

The Parliamentary sparring match over the Liberals’ Online Streaming Act has led Heritage Minister Pablo Rodriguez to guarantee no regulatory impact on videos uploaded by “digital first creators” to hosting platforms such as YouTube and TikTok.

On March 30th Liberal MP Francesco Sorbara announced in the Commons during second reading of Bill C-11 that a cabinet policy directive to the CRTC will exclude videos posted by “digital first creators” from being considered “programs” and therefore exempt from the hosting platforms’ obligations to host, fund, or promote Canadian video programming:

“For instance, a policy direction to the CRTC will make it clear that the content of digital first creators who create content only for social media platforms should be excluded.

“A policy direction will clarify that the content of digital first creators will not be part of the commercial content that can trigger obligations for platforms. This means that the content of digital first creators will not be included in the calculation of the social media platform’s revenues for the purposes of financial contributions. Content from digital first creators will not face any obligations related to showcasing and discoverability. Canada’s digital first creators have told us that they do not want to be part of this new regime, and we have listened.“

The surprise announcement raised unanswered questions.

For example, who is an exempted “digital first creator”? Does the exemption include all broadcasters operating in Canada other than licensed broadcasters?

Will the cabinet’s policy direction be circulated to the Heritage Committee prior to third reading?

Who did the government believe was speaking on behalf of digital creators in the first place? No organization represents them (the spokesperson for the newly created anti-C-11 website Digital First Canada acknowledged to Heritage Committee MPs that he doesn’t represent creators).

As a result of the announcement, C-11’s applicability to hosting platforms is in a muddle, awaiting a fulsome explanation of the government’s intentions.

The purpose of C-11 is to bring Internet platforms that distribute videos into our system of funding and promoting Canadian content.

For streaming platforms like Netflix, Disney Plus or Amazon Prime, the Bill is straightforward: streamers will make and broadcast their own Canadian shows or else support independent Canadian film makers through cash contributions to the Canada Media Fund. Or a mix of both.

In addition, the streamers will promote —make “discoverable”— an as yet unspecified number of Canadian films on viewers’ home pages

It’s less clear how the funding and promotion obligations of hosting platforms YouTube and TikTok would work. Prior to the Minister’s announcement last week, the government had not sketched this out in any detail. This invited C-11 critics to fill the void with a worst case scenario.

C-11 obliges hosting platforms to finance and promote Canadian content. But the uploaders —-whether independent artists or licensed broadcasting companies— have no obligations. Prior to the March 30th statement in the House, the only regulatory link between hosting platforms and their uploaders was that the hosting platforms would be counting uploaded Canadian videos for the purpose of meeting their own obligations to air Canadian “programs.”

What was not addressed by the government was the possibility (however remote or real) that the hosting platforms might meet their regulatory obligations to fund and promote Canadian content in a way that backfires on artist uploaders. Internet activist Michael Geist stated the backfire theory as a fact in blog and twitter posts.

This cued Conservative MPs to invite Canadian TikTok and YouTube artists to appear before the Heritage Committee to air their fears of being side swiped by C-11.

The Committee heard from Orbee Roy whose “Aunty Skates” show on TikTok combines skateboarding and personal empowerment and then from stand-up comic Darcy Michael. The latter has an impressive 2.7 million followers on TikTok, which appears from his testimony to supplement his appearances on conventional television platforms.

It was the questioning from Conservative MP Rachael Thomas —- twice publicly rebuked for spreading Covid vaccine misinformation— that revealed false assumptions about C-11’s impact on digital first creators:

“For those individuals with us today who are virtual creators, I pose this question. C-11 will have an impact on your ability to make an income. Bill C-11 will force you to pay 30% of your revenue off the top to go into the arts fund, which you will pay into but not have the opportunity to apply for funding from.“

Rachael Thomas is wrong.

First, C-11 will not force creators uploading to hosting platforms to pay anything to anybody. Any payment obligations under C-11 belong to the hosting platforms. Digital first creators pay nothing.

Second, digital first creators already apply to the “arts fund” (i.e. the Canada Media Fund) and in fact the CMF encourages digital first projects.

Ms. Thomas knows this. Nonetheless to offer her a little help, she could have argued that hosting platforms might try to recoup their financial contributions to the Canada Media Fund by clawing back revenue share from creators.

The flaw in that unmade argument is that videos posted by digital first creators like Orbee Roy and Darcy Michael qualify as Canadian content under CRTC and CAVCO rules because they are made by Canadians. That means the hosting platforms would not make additional Canadian content financial contributions for those videos, so there would be no question of clawing back revenue for them.

In spite of the weakness of these criticisms of C-11, the Liberals still beat a hasty retreat by exempting digital-first videos from regulation of hosting platforms. The ease of that concession suggests the government hopes for an easier ride through the Heritage Committee hearings than they got last year on C-10.