MediaPolicy.ca

December 4, 2023

The week of November 26th was an “everything, everywhere, all at once” moment for Canadian media policy. There’s a lot to catch up on.

Google’s $100 Million 

Heritage Minister Pascale St.-Onge announced the federal government had reached a deal with Google to contribute $100 million cash annually to online news organizations under Bill C-18, the Online News Act. The deal ensures that Google does not follow through on its threat to block Canadians from accessing news through its Search Engine. 

Everyone’s attention was riveted on the bottom line dollar amount, to the exclusion of deeply principled objections to “link taxes,” which is not a thing anymore. It was always about price, as MediaPolicy suggested previously.

The $100 million is approximately 2.5% of Google’s Canadian revenue, short of the four per cent the government was initially looking for. The 4% target reflected what Google paid out in Australia in 2021. St.-Onge negotiated a “me-too” clause which allows the federal government to re-open Google’s cash contribution should it settle for a higher contribution elsewhere (for example, California, the United States federal jurisdiction, the United Kingdom, or in a renewed agreement in Australia). The 2.5% figure is closer to the deal Google made in France (in a legislative framework also proposed in Canada by a Conservative Senator).

Newsmedia Canada and the Canadian Association of Broadcasters warmly applauded the Google agreement. Torstar CEO Jordan Bitove was noticeable in his dissent.

What the Google deal means for pulling the news-throttling Meta back into news distribution and participation in C-18 is unknown. Although Meta’s re-calibrated contribution would now be closer to $50 million, its defiance of regulation has always been more truculent. While news reports suggested that the Minister was approaching Meta again, her recent description of Meta’s behaviour as “deplorable” does not betray optimism. Meta’s three-year agreements with Australian news outlets expire in early 2024.

There are still significant milestones to pass in implementing Bill C-18.

The final federal regulation will be issued in two weeks. Conservative MPs on the Heritage Committee quizzed St.-Onge on which eligible news organizations would participate in dividing up the $100 million Google cash and her reply appeared to be that all news outlets meeting the statutory criteria in section 11 of the Bill will share in the money (which means the CRTC may have a lot of work to do in vetting news outlets).

The follow up question from Conservatives was whether the CBC, employing about a third of Canadian journalists according to the Minister, will get a full pro rata share of the $100M. The Minister gamely stood up for CBC’s equal status as an eligible news organization but, after some gentle prodding from the Bloc’s Martin Champoux, softened her language to the point that we can speculate the CBC will emerge with a reduced or even token share of the money.

The compromise over the cash amount was a signal for the told-you-so critics of C-18 to crow. Many of those critics are opposed to C-18 in principle (for various reasons). Others, such as the Toronto Star’s Althea Raj, are annoyed by what she characterizes as poor execution by the federal government. Still others make the argument that federal intervention to save news journalism is fruitless in the long run, news journalism must respond to the changing media landscape by upping its game in editorial quality and professional standards.

One of the less fair criticisms of C-18 is the claim that if the government had ignored the Australian model (endorsed by the Conservatives in 2021, incidentally) and imposed instead a direct FaceGoogle corporate tax feeding into a single news fund, the government would have arrived exactly where they are today but without Meta having flown the coop.

While back in 2020 many recommended this one-tax-one-fund model, it also would have been opposed by Big Tech and the US government as a “news industry” iteration of Finance Minister Chrystia Freeland’s 3% Digital Services Tax. We were reminded of the US opposition to the Canadian DST —the Americans argue without particulars that it’s a trade violation— only last week when Freeland’s motion to implement the DST its scheduled January 1st deadline passed the House.

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Sorry Canada, no change. 

The CRTC will wind up hearings this week on its first step implementing the Online Streaming Act, Bill C-11.

The Commission has been entertaining industry pitches on its proposal to levy on foreign streamers a temporary cash contribution to Canadian media funds. That “initial basic contribution” will remain in place at least until such time that the Commission can figure out an appropriate streamer investment in their own Canadian programming. 

The proposals have ranged from the ridiculous (Bell and Corus demanding a 20%-of-Canadian-revenue cash contribution) to the very cheap (Rogers suggesting a 2% contribution for fear that it will be imposed on Canadian broadcasters later) to the Motion Picture Association’s defiant “zero.” Several Canadian advocacy groups and small broadcasters are proposing a more plausible figure of five per cent.

The streamers are all saying they can’t afford any cash contribution to a media fund that doesn’t recycle “their” money as a subsidy back into their own programming, streamer by streamer. Currently the existing scheme of media funds (like the Canada Media Fund) recycles dollars back to contributors, but it’s a general fund supporting priority Programs of National Interest (TV drama series, documentaries) and local TV news. The funds are drawn upon by those broadcasters producing that unprofitable programming. As it stands, few Canadian contributors to these media funds reclaim “their” subsidies on a dollar-to-dollar basis and many are ineligible to draw upon them at all.

Spotify had the daring-do to tell the CRTC that it was running a music business on negative margin, contrary to its latest quarterly report. Amazon said the same thing about its music business and then, when pressed by the Commission for a general description of its profit and loss margin on Prime Video, committed to providing confidential revenue numbers (but not profit and loss) to the CRTC.

But the hell-no-we-won’t-pay common front of streamers standing with the Motion Picture Association appears to be cracking. During its presentation the Disney representative on the MPA panel inadvertently undermined the common front for “zero” contributions by citing comparable media fund contributions in the European Union. He described a range of contributions beginning with Portugal at the low end at one per cent, France as an “outlier” at 5.15%, and a mean average among EU nations of 2.7% (in fact Portugal is not that low and Denmark is the high point at six per cent).

Last week Netflix must have read the room and reluctantly proposed a two per cent contribution.

During this final week of presentations, the Commission will hear from Apple, ACTRA, Unifor, Friends of Canadian Broadcasting, the Independent Broadcast Group, the Writers’ Guild, and Channel Zero, the owner of Hamilton’s innovative local broadcaster CHCH-TV.

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‘Close the Loophole‘

During Heritage Committee hearings last week, NDP MP Peter Julian revived the long dormant policy idea of extending the Income Tax rules on deducting expenditures made on advertising buys on television and print to buys made on online platforms.

The long standing incentive in section 19.1 of the Income Tax Act allows Canadian businesses to deduct their advertising expenditures in Canadian media, but not American media. The ‘loophole’ is that these rules were never extended to Internet advertising, now 60% of the Canadian advertising market and dominated by Google and Meta. The policy concern is that Google and Meta have a far greater share of the Canadian advertising market than they would if they were regulated like a television or print medium. And for the government, that’s a lot of foregone tax revenue (estimates are all over the place, in the hundreds of millions that could be spent by the government on Canadian media if it chose).

Julian’s debating point was how could Google be allowed to escape with contributing $100M for news when it was the windfall beneficiary of a nearly billion-dollar tax loophole. When he asked Minister St.-Onge about reviving the idea of closing the tax loophole, she surprised many by acknowledging that her staff were now studying it. 

As a dose of reality however: a Heritage staff study of a policy idea is a long way from it being proposed and, based on past experience, still a challenge to squeeze through the Ministry of Finance’s hobbit-sized door.

Another tidbit emerging from the Minister’s Committee appearance: she said Heritage was also considering extending the federal “QCJO” journalist subsidies for online text journalism to news websites operated by television companies (currently excluded from the program). She also observed that the CRTC was studying the possibility of a local news fund for broadcasters.

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The CBC

Another nugget panned out of the Minister’s appearance at the Heritage Committee concerns the CBC.

Thanks to the Conservatives pounding away on the CBC potentially claiming a third of Google’s $100M, the Minister said in both English and French that a deep policy review of the CBC was in her mandate letter. In fact, it has been in every Heritage Minister’s mandate letter since 2019. More importantly, she said she wanted to act upon it soon, which is a very different thing from what the previous Minister Pablo Rodriguez told the Committee in June. 

Parsing the Minister’s statement optimistically, it may be that the Liberals have finally realized that it cannot cede the field to the Conservatives’ relentless “defund the CBC” campaign and that the fate of the public broadcaster is in fact a two-sided wedge with its own popular support.

It’s a file to watch in the coming months.

Update: Following publication of this post, CBC announced it was laying 600 journalists and other staff in response to “rising production costs, declining television advertising revenue and fierce competition from the digital giants.” As well, the CBC cited upcoming federal spending restraints that will affect the public broadcaster’s annual $1.3 billion Parliamentary grant.

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November 26, 2023

If you will forgive the grandiosity of appropriating Emile Zola’s famous accusation, “j’accuse.”

J’accuse Pierre Poilievre.

Last week the Opposition Leader resorted to his habitual vilification of the news media in response to a reporter’s question about whether he was too hasty in using Question Period to challenge the Prime Minister on national security after a car explosion at the Niagara Falls border crossing.

As Poilievre well knows, aping Donald Trump in his relentless demonization of the media for political gain endangers journalists.

Coincidentally on the same day of Poilievre’s performance, I received my first death threat by e-mail from “DG”:

That was in the subject line of the e-mail. The text field contained only a link to an article that I co-wrote in the summer regarding the funding of Canadian journalism.

I’m not having too much of a moan about this (and I’m not a journalist). Thanks to Trump and Poilievre, real journalists get these threats all of the time now. Neither am I suggesting a linear cause-and-effect relationship between DG and Pierre. But no other Canadian politician has done as much to incite contempt against journalists for the impertinence of asking politicians difficult questions.

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The day before the Niagara Falls incident, the Liberals announced in their Fall Economic Statement that the expiring Qualified Canadian Journalism Organization (QCJO) program for federal aid to journalism would be extended and the per journalist subsidy increased.

The original program was established in 2019 with a $600 million price tag. The budget was spread over five years at $120M annually and divided into separate funding envelopes for subscription tax rebates for readers, per journalist subsidies for news organizations, and charitable status for donations to non-profit news outlets. The budgets for the latter two programs were significantly under-subscribed: the journalists subsidies were drawn down annually at $30M out of the allocated $95M, possibly because of the decline in journalism employment.

Under the revised spending program, the per journalist subsidy is increased from 25% to 35% of a maximum $85,000 salary (up from $55,000). The new subsidy cap rises from $14,000 to $30,000.

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Last week the CRTC completed its first of three weeks of public hearings on “Step One” of implementing the Online Streaming Act, Bill C-11.

This first of three regulatory steps is focussed on cash contributions from Netflix, YouTube and the rest of the online streamers to Canadian media funds that support Canadian content.

The hearings are going according to script. Canadian broadcasters are telling the Commission that the first order of business ought to be emergency regulatory relief for them. American streamers refuse to discuss a cash contribution without the CRTC favourably watering down the definition of Canadian content.

The US streamers commissioned a two-question Canadian survey by former Abacus pollster Bruce Anderson to bootstrap their Commission arguments.

The responses to the first question suggested —no poll methodology was published— a significant level of public support for injecting a “Canadian themes” factor into the definition of a Canadian program. Currently the definition of a Canadian program —required in order to allocate subsidies or recognize CanCon efforts made by broadcasters– is based on Canadian ownership of the programming and a headcount of Canadian creative talent employed in making it. Those criteria also earned top scores in the Anderson survey.

Unfortunately the second Anderson question was misleading, asking respondents if it was better for the Commission to require streamers to make cash contributions to Canadian media funds or broadcast licensed Canadian programs on their platforms.

Putting aside the editorialized phrasing of the question, the Commission is proposing the streamers do both and not either as part of an overall contribution to Canadian content. The final split of in cash and in kind contributions may well be in the neighbourhood of 21/79.

This week the Commission will hear from Netflix, Amazon, Corus, Rogers and others.

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Speaking of the CRTC, last week MediaPolicy digressed far beyond our core expertise to comment on the Commission’s decision to force Bell and Telus to open up their top-end fibre networks to the wholesale broadband market of ISP retailers.

The Commission’s decade long effort to drive down retail Internet bills has been chaotic at times. This recent move seems to have backfired.

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November 22, 2023

If the CRTC’s regulation of Internet broadband pricing was a television series, it would be in something like its 17^th season now as one of Canada’s great reality shows.

The most recent episode of Bell’s capital strike in response to a new CRTC ruling on its Fibe network infrastructure is a worthy follow-up to ‘BeerGate,’ that unmissable season two years ago where CRTC Chair Ian Scott and Bell’s Mirko Bibic were accused of cooking up the Commission’s cancellation of a major cut to the broadband wholesale rates the large telcos charge independent ISPs to rent carriage on their networks (the ISPs in turn compete against the major telcos and cable companies). 

To recap the most recent episode, Bell announced on November 6^th its indefinite deferral of a billion dollars in capital spending to push out its industry-leading fibre telecommunication network to the five million homes it hasn’t reached yet in suburbs, small towns and rural areas.  Its refurbished network will replace its legacy copper with fibre-enabled bandwidth download speeds of up to 8 Gbps (compared to cable co-axial speeds topping out at 1.5 Gbps, offered by its major competitors Rogers and Québecor). 

The dramatic cancellation of investment, delivered in an angry press release from Bell’s CEO Bibic, was sparked by the CRTC ordering Telus and Bell to rent ‘wholesale access’ to their fibre networks in Ontario and Québec to ISP competitors, especially the independent ISPs TekSavvy and an array of smaller broadband “re-sellers.” Until then, the CRTC had never ordered the telcos to share their top-end fibre networks with the independents, only copper or co-axial. 

The CRTC’s regulation of telecommunications is as relentlessly politicized as broadcasting, even more so because of the regulator’s preoccupation with bottom-line numbers on monthly cellphone and Internet bills. 

For the last two decades, the Commission has pursued the holy grail of lower retail prices for Internet services with a strategy of adding more competitors into the market through wholesale access to major telco networks, as ordered by the Commission.

The Commission strategy is founded on its unwavering conviction that affordable Internet services are “essential” to Canadians; that the capital-intensive ISP industry is plagued by high levels of corporate concentration that inflate retail prices; and that adding re-seller competitors is the solution. It has two tools at its disposal: the authority to force the major ‘incumbents’ like Bell and Rogers to open up all or part of their networks to these up-and-coming competitors and fixing the “just and reasonable” wholesale price for that access.

The “just and reasonable” wholesale rate is what the Commission has been trying to get right for over a decade. It’s not an easy task given the constantly evolving network technology and, more visibly, the bitter regulatory feud between the incumbents and the independents over identifying the sweet spot between a fair rate of investment return for the networks and a profit margin for the independents that allows them to compete and grow.

The CRTC’s effort to mediate the fight and find the sweet spot always seems to be in chaos. Nevertheless retail prices have declined —even garnering a gold star from the Competition Bureau— but on the other hand many of the leading independents have thrown in the towel, selling their assets and customers to the major networks (E-Box and Distributel to Bell, VMedia to Québecor, and Comwave to Rogers). Critics and the surviving independent ISPs (like TekSavvy and the ISP trade association CNOC) blame the CRTC for setting wholesale rates too high.

It’s fair to say the CRTC is spooked by these market exits which reflect badly on its long-term strategy. It’s in the midst of yet another review of wholesale rates. Its public hearings lumber on with painstaking evidence and analysis of what it costs to build and amortize multi-billion-dollar investments in networks sprawling across the Canadian land mass.

Perhaps this is why the Commission felt the need to do something short-term and dramatic by ordering Bell and Telus to open up their upgraded networks in central Canada that cater to customers with an appetite for up to 8 Gbps bandwidth. 

Unfortunately, there is no publicly available map of ultra-speed fibre-network consumption. It seems unlikely that a significant number of customers want to pay for speeds greater than the 1.5 Gbps they can get from the co-axial networks owned by the cable companies that have to share access with the competing independent ISPs. 

The median Canadian Internet customer utilizes less than 200 Mbps bandwidth. That’s less than 20% of available co-axial speed. The ultra-bandwidth speeds offered by Telus and Bell’s next-generation fibre networks may be the wave of the future —otherwise why would they spend so much building them— but in 2023 the top fibre bandwidth capacities aren’t what the average or even above-average household needs unless you’ve got multiple 4K televisions or teenage gamers online at the same time. I pay for 500 Mbps bandwidth. What’s in your wallet?

Before making up your mind on anything to do with Canadian telco regulation, I commend you to the blog Telecom Trends published by independent consultant Mark Goldberg.

Goldberg is clearly of the view that CRTC’s regulatory strategy on wholesale broadband regulation is not working because it doesn’t fully appreciate the investment climate for network building by the incumbents.

According to Goldberg, Bell and Telus have already built their fibre networks in the most lucrative, densely populated markets, the “low hanging fruit.” They are now building out to markets where the business case for rate of return on investment is more precarious and requires a disciplined market-by-market business case.

Business considerations are driven by rising capital costs in these less densely populated markets and  Goldberg questions why the Commission based its most recent wholesale rate on only the last five years of capital cost, omitting the next five years, which a Scotiabank analyst projects will increase by 33%.

The CRTC wholesale rate does not include cost recovery of the incumbents’ lost opportunity to sell other core services, especially television, to the customers that the retailer is taking away from them. But the opportunity to sell multiple telco services to customers is a big part of the business case for investing the capital to build the fibre network in the first place.

“Look at a business case [for Bell or Telus] to lay fibre in the suburbs,” Goldberg told me in an e-mail correspondence. “Rogers is already offering up to [1.5] gig speeds over their cable plant. The wholesale-based ISPs have access to Rogers and are reselling that service already. Bell puts together a business case that says ‘we should be able to capture, say 50%, of the market if we make the investment, based on some assumed ARPU’ [average revenue per customer for bundled services]. They look at the cash flows and determine if the forecasted revenues are sufficient to undertake the risk. They set up a capital plan based on all the areas where the business case is positive.

“But now, CRTC says they have to allow TekSavvy to resell Bell Fibre there. So they can’t forecast the same retail share… The wholesale revenue from the resellers will be less than the retail revenues that Bell may have otherwise obtained. So the point is that there will be some areas that the business case for fibre will no longer be supportable.”

That perspective leads one to re-evaluate whether Bell’s investment cancellation is a capital strike, intended to arm-twist the Commission into reconsidering its fibre access order, or just a ruthless calculation of the best way to spend a dollar of gross profit.

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From TMU News Poverty Report 2023

November 19, 2023

Last week MediaPolicy published two posts in anticipation of tomorrow’s commencement of CRTC proceedings to implement the Online Streaming Act Bill C-11.

The first post reviewed Heritage Minister Pascale St.-Onge’s final tweaks to the federal government’s broadly worded policy preferences it wants the Commission to follow. There was a surprise addition and perhaps a not so surprising omission.

The second post was a primer for the policy-curious who intend to follow this first of three rounds of CRTC hearings on C-11.

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The Parliamentary hearings for Bill C-11 in 2022-23 were dominated by the debate over regulating YouTuber videos.

The YouTuber advocacy group Digital First Canada opposed regulation of their user-uploaded videos and at least partly won that battle when both the CRTC and the Heritage Minister announced that for now the CRTC won’t regulate YouTuber videos to meet “discoverability” outcomes for Canadian content.

But it seems the Canada Media Fund thinks Canadian YouTubers are deserving of state support anyway and announced a pilot project (initially at a modest $500,000) to subsidize Canadian YouTubers. The Canada Media Fund typically funds Canadian content that winds up on regulated broadcast platforms so there is a bit of a YouTuber “have my cake and eat it too” going on here. The upside is that deserving Canadian artists and content will get support in the burgeoning “creator economy” platform.

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My neighbour, the late metallurgist, political thinker and peace activist Ursula Franklin, used to discourage what she called “awfulizing” about bad news.

Mea culpa, that happens regularly in this space when the latest metrics are published on the declining capacity in Canadian news journalism.

The Toronto Metropolitan University’s annual update to its news poverty survey produced these numbers of local news outlets, of all medias, that closed or opened since 2008:

Cutting the data to include increases or decreases in coverage by the newspaper outlets that didn’t close, TMU reported thus:

Chicago’s Medill School of Journalism (at Northwestern University) also released a report analyzing the socio-economic impact of the lost news coverage at the county level across the United States. The creeping news poverty skewed to a rural, older, lower income, and less educated demographic:

Research released by the American Pew Research Institute noted another important metric, this one concerning the regular consumption of news on social media.

The eye-catching statistic was the meteoric rise of news consumption on TikTok:

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Graphic illustration from cultural advocacy group Friends

November 17, 2023

On Monday the CRTC begins three weeks of public hearings on the key points of supporting Canadian content as Bill C-11 brings online platforms into the regulatory circle for the first time.

As typically happens, Parliament paints broadcasting legislation with the broad brushes of principle and ambiguity and then hands off the half-finished canvas to the CRTC. Having also received the Heritage Minister’s somewhat inscrutable policy preferences through last week’s Policy Direction, the CRTC is now tasked with completing the regulatory portrait.

It’s the first of three rounds of Commission hearings over the next year. The popular interest in C-11 normally creates its own cold fusion of energetic news reporting, so for those who will be following the proceeding here’s a basic primer of what is at stake in this first go around at the Commission.

The main task of the Commission’s “Step 1” hearings is to establish a “initial basic contribution” (IBC) to Canadian content to be levied on all broadcasting entities, especially the online streamers, but also licensed Canadian broadcasters, cable companies, and even social media platforms such as YouTube.

The Commission’s proposed IBC —“proposed” as in it’s not decided yet but it’s going to happen anyway— is a cash-only contribution to Canada’s various media funds that subsidize “Canadian” programs.

At the moment, only Canadian cable (and satellite) companies make such cash contributions, pegged since the 1990s at a robust five per cent of their annual revenues (the cable industry’s gross profit margin was 11.2% in 2021-22). 

The lion’s share of the $390M in annual cable cash goes to the Canada Media Fund and a short list of bespoke Certified Production Funds (CIPF). After the CMF money is matched by the federal government, the CMF and CIPF cash becomes ten per cent of the financing for Canadian television shows, especially high-cost dramas and documentaries.

As for Canadian broadcasters —major networks as well as “indie” programmers like APTN, Wildbrain or OutTV— they don’t pay into media funds. Instead, they make their contributions to Canadian content in kind, not in cash, by programming Canadian shows, profitable or not. The usual in-kind programming contribution requires these broadcasters to spend about 30% of their revenues on Canadian shows that they either make in-house or commission from Canadian video producers. The Commission calls it Canadian Programming Expenditures (CPE).

(Radio operators also contribute cash, on a much smaller scale, to musician development media funds FACTOR and MusicAction).

As yet, the foreign streamers don’t contribute to Canadian content, neither in cash to media funds nor in kind within their own programming offerings. That’s about to change with Bill C-11.

The Commission wants to move quickly to get streamer cash into the broadcasting system to make up for the cable companies’ declining contributions to media funds, essentially reinflating the tires on the funding of Canadian programming. 

So the question is not if the Commission will establish an IBC, but what the tariff will be and whether any broadcasting entities will be exempted. 

Some of the regulatory filings submitted to the Commission in advance of the hearings don’t signal a harmonious atmosphere over the next three weeks. The large Canadian media companies are cranky and they have proposed that the US streamers pay in cash at a tariff set at twenty per cent of their annual revenues. That’s a non-starter, and they know it.

The streamers are not cranky, but they are arrogant. In an act of collaborative defiance, the Californian cartel of the Motion Pictures Association of America, Netflix, Apple, Amazon, and Disney —also Spotify on the music side of the streaming ledger— oppose any cash contributions to Canadian media funds and have refused to name a price they would pay. In other words, a tariff set at zero. That’s also a non-starter, and they know it.

The IBC will be the number one focus of these upcoming “Step 1” hearings. 

But it won’t be the Commission’s exclusive focus. Later this year in Step 2, the Commission will look at Canadian programming obligations beyond the IBC. Those will be the Canadian Programming Expenditures, the “in kind” programming of Canadian content. Also in Step 2, the Commission will set expectations of “discoverability,” meaning the priority and promotion given to Canadian programming. Finally, the Commission will review the definition of a Canadian program, a perennially contentious set of criteria determining what Canadian programming is eligible for subsidies from the CMF and government tax credits and also what programming expenditures count towards fulfilling CPE obligations.

All of these Step 1 and Step 2 issues weave together into an overall broadcasting policy for Canadian content. So the Commission is expecting Step 2 considerations of Canadian Programming Expenditures, discoverability and Canadian programs to bleed into the Step 1 debate over the IBC over the next three weeks.

Beyond the tariff-setting for the IBC, expect to hear a lot about to whom the media fund cash ultimately flows.

The CMF and CIPFs currently subsidize Canadian television producers to make shows that they license for broadcasting to Canadian networks and indie channels. As well, there is a tiny $19M Independent Local News Fund that bankrolls local news, but only at 18 independent stations not owned by the CBC or the Canadian news networks.

The list of worthy recipients is going to proliferate, the only question is how far.

The Indigenous Screen Office is staking out its claim as a new media fund, making the pitch to be its own CMF for funding Indigenous video content. A similar request for music development has been submitted by a little known group, the Indigenous Music Office. 

The Heritage Minister has asked the Commission to consider a more comprehensive local news fund, available to some or all of the 70 local stations operated by the CBC and private TV networks.

Another candidate for a possible media fund is what you might call “the public service channels,” or what the Minister has called programming “of exceptional importance.” That might include programming that is licensed by the Aboriginal Peoples Television Network, Accessible Media, the Weather Network, the gay and lesbian-focussed OutTV or the multi-ethnic channel OMNI. The Black Screen Office has just been recognized by the Commission as a CIPF, so that will also be part of the funding discussion too.

Despite their refusal to name a price for the IBC tariff, the American streamers are talking up the creation of bespoke media funds owned and operated by each streamer as a way of sending cash to, for example, Indigenous producers who would sell their programs directly back to their Hollywood patron: a Netflix Production Fund or a Disney Production Fund is what they have in mind. 

That’s enough of a primer to get you started. The Commission’s official notice of consultation will take you a layer deeper. More to come over the next three weeks. 

***

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Heritage Canada Facebook Page

November 15, 2023

This week Heritage Minister Pascale St.-Onge finalized the federal government’s policy direction to the CRTC on key points of cultural regulation flowing from Bill C-11, the Online Streaming Act.

The Minister’s amendments to the Policy Direction, first issued in draft by her predecessor Pablo Rodriguez in June, were few and subtle.

The two most meaningful changes were made to paragraph 8 of the Direction, listing the ways in which the Commission ought to impose regulatory obligations upon Canadian and foreign broadcasters, in a “flexible and adaptable framework.” That’s regulatory semaphore for “don’t overdo it.”

St.-Onge’s first tweak was to add the simple words “where appropriate” to the existing requirement to “minimize the regulatory burden on the Canadian broadcasting system” in paragraph 8(a).

The original text from last June had been seized upon by both foreign streamers and Canadian broadcasters as the Minister telling the Commission to reduce the costs of Canadian content obligations. A chorus of cultural groups responded that Rodriguez’s Policy Direction said no such thing —and there were no amendments to Bill C-11 suggesting that the reduction of costs is part of the Commission’s mandate— and the Minister’s Direction was only referring to administrative burdens, i.e. paperwork.

St.-Onge’s “where appropriate” doesn’t necessarily resolve that argument, but it does appear to soften whatever section 8(a) means.

Her second tweak was to add a new paragraph 8(g) stating the CRTC should “where appropriate, foster collaboration between Canadian and foreign broadcasting undertakings.”

This new text in the Policy Direction appears to come out of left field but is in fact directly responsive to Bell’s previously unsuccessful efforts to amend the legislation in a way that would empower the Commission to incentivize Netflix (and other streamers) to retail premium content through co-production or joint venture with Canadian broadcasters like Bell. MediaPolicy wrote about that proposal last year here and here.

The most notable omission among the St.-Onge’s amendments to the Policy Direction was a revised guideline on the discoverability of Canadian content in Paragraph 6. As discussed previously in this space, Rodriguez’s Policy Direction ignored the clear mandate in section 3(1)(r) of Bill C-11 for the CRTC to instruct streamers to “make recommendations” of Canadian content on their platforms to subscribers. This is of special importance to the availability of French language music, significantly under represented in the consumption of audio content distributed by Spotify and other major streamers.

St.-Onge has left Paragraph 6 untouched. On the other hand —and it’s difficult to discern whether this is connected to the Direction’s silence on content recommendations— St.-Onge added a new subparagraph 12(f) telling the Commission to “ensure that expenditure requirements [for broadcasters and streamers] support the creation and availability of programming in French, in recognition of the minority context of French in Canada and North America and the specific challenges involved with creating and making available original French language programming.”

One last notable change in the Policy Direction is that any reference to strengthening programming for Black and racialized Canadians has been broadened to include all “equity-seeking and ethnocultural groups.”

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ISED Minister François-Philippe Champagne is overseeing a public consultation on copyright

November 12, 2023

Yesterday MediaPolicy posted an update on the political trouble brewing in Québec for federal Heritage Minister Pascale St.-Onge over regulatory support for French-language music streaming on Spotify and the other global platforms.

In my view, French language music is a test case for whether the mandate given to the CRTC under the Online Streaming Act is going to be taken seriously where the discoverability of Canadian content is at a severe disadvantage in the Internet media environment. 

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The 118-day Hollywood actors’ strike is over. SAG-AFTRA is claiming victory and Netflix’s Ted Sarandos doesn’t disagree, publicly commenting “we didn’t just come toward you, we came all the way to you.” 

Major issues were compensation, health benefits and the studios’ use of AI. The settlement follows resolution of the 146-day Writers’ strike in September.

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The federal Department of Innovation, Science and Economic Development’s December 4th deadline is approaching for public submissions on the copyright issues raised by AI large language model products that scrape the Internet to ingest media content.

Here is a brief summary of the issues from a Bay Street law firm. Here is the ISED consultation document:

The US is in the midst of a similar public consultation and The Verge published a handy summary of the arguments made by Big Tech and the AI industry. Those arguments could be boiled down to this: our AI products ought to be protected by copyright and the content we scrape to make them should not. 

There is of course more nuance than that. Meta says it’s ingesting so much content, from so many creators, that individual payments for content would be trivial, so why bother (tell that to Getty Images, which is suing for unlicensed copying of its enormous photo library).

Google says that unlicensed ingesting of text and images is like “reading” or “studying” the scraped content but not “copying.” Other less risible submissions from Anthropic and Adobe get to the heart of copyright theory: where is the line between imitating an idea and copying the corporeal expression of an idea? 

Still other submissions put the issue even more starkly: do society’s interest in the productivity gains from AI outweigh the property rights of creators? However these tech companies then want to claim copyright for their AI products, once the copyright holiday on content scraping is over. 

On the other side of the coin, the US Newsmedia Alliance of news publishers offered its policy recommendations:

• The Copyright Office should clarify publicly that use of publishers’ expressive content for commercial generative AI training and development is likely to compete with and harm publisher businesses, which is disfavored as a fair use.
• Substantial transparency measures should develop around the ingestion of copyrighted materials for uses in generative AI technologies.
• Further development of relevant licensing models should be encouraged, including by acknowledging the potential feasibility of voluntary collective licensing to facilitate licensing for ingestion of news and media materials for generative AI purposes.
• The Copyright Office should swiftly promulgate an updated registration option to enable online news publishers to register groups of news articles published online.
• Considering the large bargaining power disparity between media publishers and very large online platforms, measures to correct this negotiating disparity, such as the Journalism Competition and Preservation Act, should be supported.
• Measures to address the scraping of protected content from third-party pirate websites should be adopted.

In both the US and Canada, the ingesting of these policy recommendations (to indulge in a little copyright humour) may lead to legislative action or, possibly, remain a public discussion while lawsuits make their way through the courts under current copyright legislation. 

The copyright issues raised by AI are just one piece of a much larger political-technological phenomenon. The issues of public safety, national security, spreading deep fakes and disinformation, job loss, and harm to children are already obvious. On these, Columbia University professor Tim Wu has a thoughtful piece in the New York Times.

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November 11, 2023

Pressure is mounting on Heritage Minister Pascale St.-Onge to amend the federal government’s Policy Direction to the CRTC to require music streamers to push French-language songs on their platforms. It’s expected that the Minister will finalize the Policy Direction prior to the CRTC’s public consultation on the implementation of Bill C-11, commencing November 20th.

This past week Québec’s National Assembly passed an unanimous motion asking the major music platforms to “adapt their algorithms in order to promote the discoverability of Quebec music.” 

The motion was in response to the dramatic underconsumption and lack of promotion of French language music on Spotify and other global streaming platforms in Québec, especially by younger Québécois. The statistic frequently cited is that French language songs constitute only eight per cent of streamed music in Québec. This is attributed to a lack of promotion, algorithmic or otherwise, by the streamers.

The problem was raised in the Parliamentary process for the Online Streaming Act, as early as March 2021 when it was debated as Bill C-10, by the leading advocates for the French language music community, ASDIQ and APEM (although it ought to be noted that their English Canadian counterpart, CIMA, opposes regulatory intervention into algorithm recommendations).

In response, Bloc Québécois MP Martin Champoux won support of the NDP and the Conservatives to amend C-10 to provide that streamers “must clearly promote and recommend Canadian programming, in both official languages as well as Indigenous languages, and ensure that any means of control of the programming generates results allowing its discovery.” 

The emphasized legal text leaves no doubt that the streamers “must” push French language music by “any means of control” —an allusion to algorithmic-driven “recommendations”— to attain “results.” As Champoux told his fellow MPs at the time, “c’est l’intention derrière cet amendement. Je veux que Spotify et Apple Music envoient des recommandations de contenu de nos artistes canadiens et québécois.”

But two years later when then-Heritage Minister Pablo Rodriguez unveiled his C-11 Policy Direction to the CRTC in June 2023, the mandate spelled out in Champoux’s amendment was conspicuous by its absence. The word “recommendation” did not appear and, to the contrary, the CRTC was directed to minimize interventions with streamer algorithms. Rodriguez’s view was already anticipated by the Commission in its Notice of Public Consultation which signalled its deference to the streamers’ well known opposition to algorithmic changes.

Not every “must” in the Broadcasting Act gets implemented by the CRTC, but Rodriguez’s Policy Direction and the Commission’s Notice of Consultation look very much like flouting Parliament’s specific instructions.

All of this fits into the broader context of Québec’s cultural politics in response to Bill C-11. After the legislation passed the Senate in February 2023, Québec’s CAQ government suddenly demanded a special right of consultation in federal broadcasting matters affecting Québec.

The substance of the demand was not a surprise. Québec has never relinquished its constitutional claim to jurisdiction over broadcasting (despite a Supreme Court ruling against it) and a special ‘right of consultation’ for official language minority communities (OLMCs) had been inserted into Bill C-10 by the Liberals.

What was surprising was the timing of the CAQ demand: eighteen months had elapsed since the Liberals’ amendment favouring OLMCs and the Bill was almost in the Governor General’s hands for Royal Assent.

CAQ is now saying it’s ready to make a political fight of it. Citing the lack of a special consultation right or federal action on music streaming recommendations, the Legault government is promising a yet to be defined provincial foray into broadcasting in 2024. Perhaps cognizant of the constitutional hurdle of federal jurisdiction over broadcasting, Québec’s language Minister Jean-Francois Roberge said the province “will go as far as the areas of jurisdiction, laws and taxation allow it to do.”

For good measure, the federal Bloc Québécois has introduced a one paragraph private-member’s Bill in the House of Commons that would deal with the consultation issue.

This puts the Minister in a prickly situation. St.-Onge became an MP in the 2021 election, winning her Brome-Missisquoi riding by a margin of 196 votes over the Bloc.

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November 5, 2023

This week The Logic broke the story that the Liberals’ long promised and studied Online Safety Bill has been handed over for Parliamentary sponsorship from Heritage to Justice. The legislation would be the third in the federal government’s Internet trilogy, following the Online Streaming Act Bill C-11 and the Online News Act Bill C-18.

The story suggested that responsibility had been transferred, but not the actual file, citing terse statements from Heritage and Justice communications officials. The take-away may be that the Liberals have bumped the legislation to the back of the Parliamentary queue.

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English-reading Canadians may not be aware that it was a disastrous week for mainstream media in Québec.

The Québecor-owned television network TVA laid off 547 employees, one-third of its staff. Of those, 98 jobs are being cut from its regional stations in Trois Rivières, Lac St.Jean/Saguenay, Rimouski/South Shore and Sherbrooke. Announcements suggest those stations will move to a central casting model with one news broadcasting studio in Québec City servicing the regional bureaus. Also, TVA is eliminating its in-house produced entertainment programming and will acquire independent productions instead. The Montréal studio will be sold and rehoused in Québecor’s Journal de Montréal building. The real estate housing the regional studios may also go on the market. Broadcast Dialogue has a thorough report.

In print journalism, Transcontinental has terminated home delivery of its Publisac product —-flyer packs in plastic bags that piggyback free community newspapers— in response to Montréal’s ban on unsolicited mail and Canada Post’s competing Admail service (which is carrying on despite the municipal ban). News outlets may move to drop boxes.

The double-whammy has gripped political debate in Québec. Premier François Legault has promised unspecified provincial support for media in the Spring budget.

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The dwindling 2023 calendar means deadlines on a couple of big media files, the first being the threat of Google’s throttle of Canadian news in response to Bill C-18.

The other deadline is that Canada’s Digital Services Tax comes into effect at the new year. The DST is the $900 million corporate tax on Big Tech multinationals that are strategically evading nation-by-nation tax liabilities.

MediaPolicy.ca has been following this file off and on: the US has broken its agreement to adopt the comprehensive OECD agreement on minimum corporate taxes owing to implacable opposition from House Republicans. Most countries have agreed to suspend their plans for the national Digital Services taxes pending replacement by an OECD deal. Canada has not (and Britain and France refuse to repeal their own).

The US Ambassador to Canada David Cohen has been dutifully shaking his fist at Canada, promising trade retaliation and a “big fight” in spite of the US failing to ratify the original OECD agreement. Recently, he more temperately conceded that Canada’s tax was “not crazy.”

Finance Minister Chrystia Freeland is being temperate as well, quoted by Reuters as saying she is “cautiously optimistic” that a deal can be reached.

According to news reports there have been attempts to re-negotiate the OECD deal —-presumably to give US President Biden another chance to win Republican support—- described by The Logic as “grinding along slowly.” In any event, it’s difficult to image House Republicans agreeing to accommodate Biden on anything over the next twelve months running up to the November 2024 elections, so hold on to your hat.

The Digital Services Tax has been endorsed by the Conservative Party and was a central plank in its cultural platform in the 2021 federal election, “to make web giants pay their fair share.”

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If you are looking for new reading material on media, MediaPolicy just reviewed Hugh Stephens’ “In Defence of Copyright” here, which was unexpectedly fun reading.

Another compelling read is former WarnerMedia and Hulu CEO Jason Kilar’s speculation on what a successful streaming video business model might look like if US studios are to emerge from the disruption of the cable TV model.

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November 3, 2023

If ‘The Copyright Channel’ was a television show, no one would watch it. Too cerebral by half.

Yet the rights of media creators and sellers —contested by the public’s eager and unlicensed consumption of content— keep popping up in any number of the pressing media policy issues of the day. High-budget movies are pirated. Studio music is illicitly streamed or downloaded. Google can re-publish a portion of a book without the author’s consent. Universities provide free course materials to students after eluding the Copyright Act’s licensing framework to compensate individual authors. Even the Online News Act Bill C-18 involves copyright issues.

University of Calgary academic Hugh Stephens thinks this state of affairs is kind of nuts. “It is a sad commentary on today’s state of affairs,” he begins his new book In Defence of Copyright, “that there is a need for a book defending copyright.”

Stephens might not have written this book 15 years ago. But a lot has changed in the world of intellectual property. One thing is the technological capacity of content sharing software and the Internet trade in pirated digital goods. Another thing is the 2012 amendment to Canada’s Copyright Act that boosted the public’s opportunity to possess copyrighted works they don’t pay for, so long as it is claimed the works are being consumed for “private research and study.”

The origin of “intellectual property”—at least in the English-speaking world— goes back centuries in British common law and is thought to begin with John Locke’s concept of property, that humans mix their labour in nature and produce an inalienable invention (clear a forest, invent the telephone, write the great Canadian novel). But the “property” metaphor has never completely taken hold: perhaps it’s easier to prove a thief stole a goat rather than the expression of an idea.

At its roots, Stephens reminds us, copyright fosters the economic incentive of creators to come up with a good idea, express it in recognizable form, and spend the commercial winnings on the next invention. Unlike the goat, absolute ownership of intellectual property doesn’t exist: copyright expires after a century and even before that it can be lawfully purloined for “private research and study.” Free goat’s milk, as it were.

The fun thing about Stephens’ book is he’s a good writer and a better storyteller. You won’t be bored and your eyes won’t glaze over on the technical descriptions of copyright (he doesn’t dive too deep into the legal stuff, for that you might check out Lesley Harris’ Canadian Copyright Law.)

One story he tells with evident frustration is the successful dismantlement of the tariffed royalties that Canadian universities used to pay to authors for the licensed distribution of their educational materials to students. The Supreme Court of Canada allowed universities to withdraw from this collective licensing regime administered under the federal government’s copyright board, leaving hundreds of individual authors the option to hire lawyers to sue for copyright infringement. The universities, Stephens notes, now pay as much in administrative costs to manage their infringement liabilities as they did in royalties.

The university’s victory was celebrated by advocates of “users’ rights,” most volubly by the University of Ottawa’s Michael Geist. Stephens is miffed by academics who lean hard against copyright while drawing public salaries to support their own writing:

Many copyright holders are determined to protect their economic interests. After all, for many, it is their sole or primary livelihood…But for some authors, economic return is not their primary consideration. Many are academics who are paid to undertake and publish research. You might say that it is part of their day job. Many of these academics are also in the forefront of opposition to strong copyright laws from a philosophical perspective, arguing that copyright law gets in the way of the free sharing of knowledge. It is easy to argue for free information if your work is subsidized in some other way.

Stephens footnotes that paragraph to the Creative Commons project whose sponsors advocate for authors to pre-emptively license their work for free public distribution. That includes an endorsement from famed Canadian author Cory Doctorow:

As a writer, my problem is not piracy, it’s obscurity, and [Creative Commons] licenses turn my books into dandelion seeds, able to blow in the wind and find every crack in every sidewalk, sprouting up in unexpected places.

I would just note here that I paid full price for my copy of Mr. Doctorow’s last book.

Where next? The importance of copyright, and campaigns to limit it, is likely to intensify again with the surge of content-scraping Artificial Intelligence products made available on Tech platforms. Stephens’ book is a good preparation for that debate.

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