Music streaming services are criticizing a new regulation in Canada that requires major streaming services to pay 5% of their revenue to various groups supporting the creation of Canadian content.
“We are deeply concerned with today’s decision to impose a discriminatory tax on music streaming services that are already making significant contributions to Canadian artists and culture,” Graham Davies, President and CEO of the Digital Media Association (DiMA), said in a statement issued on Tuesday (June 4).
“Streaming is the main source of revenue and engine of growth for music in Canada, benefiting the industry, creators, fans and consumers. And this is effectively a protectionist subsidy for radio.”
Among others, DiMA represents announced on Tuesday that, starting on September 1 of this year, any digital service providers (DSPs) not affiliated with a Canadian broadcaster that have revenues of at least CAD $25 million (USD $18.3 million) in Canada annually will have to contribute 5% of that revenue to a number of programs designed to aid Canadian content creators.
The rules echo similar requirements that have been enforced on Canadian broadcasters for decades.
“Streaming is the main source of revenue and engine of growth for music in Canada, benefiting the industry, creators, fans and consumers. And this is effectively a protectionist subsidy for radio.”
Graham Davies, DiMA
Among the affected platforms are
“In a devastating blow to artists, the Canadian government chose the past over the future by demanding that streaming services pay a protectionist subsidy to radio.” Spotify Spotify said the regulations, with their focus on funding radio, would be bad news for musical artists. “Yesterday, in a devastating blow to artists, the Canadian government chose the past over the future by demanding that streaming services pay a protectionist subsidy to radio,” a Spotify spokesperson stated in an email to MBW. “Streamers already pay 8.5x more in royalties than radio and are the engines of growth for Canadian music. Spotify alone, which contributes two-thirds of revenue to rights holders, has generated billions of dollars for the Canadian music industry.” The Online Streaming Act was supported by many broadcasters and content creators, as well as unions representing workers at Canada’s major media companies. It was opposed by operators of global platforms like Google and Spotify, as well as by consumer advocacy groups concerned that new levies on streaming services will be passed on to subscribers. Unifor, a union that represents employees at vertically-integrated Canadian broadcast and print media companies such as Bell Media and Rogers, praised the CRTC’s new rules. “Foreign streamers have been competing directly with Canadian broadcasters, and they should have the same responsibilities and obligations to support local news and Canadian storytelling,” Unifor National President Lana Payne said in a statement. “Canadian artists earn more from streams outside of Canada than they do domestically… Canada has been the third most successful country globally in exporting its artists through Spotify.” Spotify However, the rules received mixed reviews from consumer advocacy group OpenMedia. “Price increases seem likely for Canadian consumers” in the wake of the CRTC decision, tweeted Matt Hatfield, the group’s Executive Director. “For low margin businesses like Spotify, they may pass most of this 5% levy on to us.” Hatfield also criticized the new regulations for focusing the lion’s share of the money towards traditional broadcasting, and not towards digital creators. “That MUST change,” he wrote. In a submission to the CRTC earlier this year, Spotify said it already contributes significantly to the creation of Canadian and Indigenous music, and a new levy on its revenue would force it to cut back on those supports, or raise prices on consumers. “Spotify’s sustained investment in local music teams supports the Canadian music ecosystem. Our music teams…carry out Spotify’s mission to be the best home to creators by partnering with Canadian artists and industry and promoting Canadian and Indigenous artists at home and around the world,” the company said. “While traditional broadcast radio is only capable of playing Canadian artists to Canadians, Spotify allows listeners all around the world to discover and hear Canadian artists. In fact, Canadian artists earn more from streams outside of Canada than they do domestically… Canada has been the third most successful country globally in exporting its artists through Spotify.” Spotify also noted that the company “has not previously been regulated by the Commission or any other regulators elsewhere in the world in this manner.” In its statement issued Tuesday, DiMA said it will be reviewing the CRTC’s decision with its members “in order to plan next steps accordingly.”Music Business Worldwide
Higher prices for streaming subscribers?
