Music Streaming Services Warns of Increased Cost from Bill C-11

It’s been speculated for months that bills are rising thanks to Bill C-11. Now, streamers are directly warning of this.

Last week, we reported on a statement released by DiMA (Digital Media Association) suggesting that the Online Streaming Act (formerly Bill C-11) would result in the increase of rates on consumers. The suggestion came as the CRTC announced that it would be imposing a 5% tax on them in their bid to prop up legacy media companies as consumers increasingly choose not to consume their content.

Today, we are learning that the streamers are now being more direct about their warnings. In a letter sent to Heritage Minister, Pascale St-Onge, DiMA reiterated their concerns of the costs being passed onto consumers, exacerbating the affordability crisis in Canada. They specifically mention how streamers would have no choice but to pass the new 5% tax onto consumers. From the Globe and Mail:

Graham Davies, president and chief executive officer of the Digital Media Association, warned in the letter that the decision could lead to higher prices.

“Canadian consumers clearly seek access to millions of songs at an affordable price. We are concerned that this new tax will exacerbate the current affordability crisis in Canada, in particular for younger Canadians who are the predominant users of audio streaming services,” the letter says.

Earlier this month Mr. Davies warned MPs on the House of Commons international trade committee about the implications of the CRTC decision for consumers.

“In general, rising costs can lead to rising prices, and we have identified nothing in the new regulations to soften the impact of this economic rule,” he told MPs.

He warned in his letter that “forcing U.S. and international companies to pay into funds they cannot access” also risks becoming a trade issue with the United States.

He urged the minister to “work collaboratively with us to ensure the continued growth and success of the Canadian music industry” and said he wants to continue an open dialogue with her office, while foreign music streamers mull the effects of the CRTC ruling.

The Minister, however, appears to not give a rats arse about consumers. For her office, the lobbyists got what they want, screw everyone else:

Ariane Joazard-Bélizaire, spokesperson for Ms. St-Onge, said in a statement that the act “is now being independently implemented by the CRTC.”

“All along, this was squarely focused on foreign streamers contributing more to Canada and creating a level playing field,” she said. “These companies profit massively here in Canada and Canadians expect them to participate in promoting Canadian content creation. This is about fairness.”

Spotify apparently wasn’t happy about the situation and called the situation out for what it was:

Scott Reid, a spokesperson for Spotify, said “the Canadian government chose the past over the future by demanding that streaming services pay a protectionist subsidy to radio.”

“Streamers already pay 8.5 times more in royalties than radio and are the engines of growth for Canadian music,” he said in a statement.

The response from the Heritage minister’s office is not really all that surprising. Successive heritage ministers have repeatedly signalled that they don’t care what consumers want. If anything, through the Online Streaming Act, they have repeatedly signalled that consumers are wrong about their own free choices and the Online Streaming Act is designed forcefully correct those choices. This by ramming godawful “Cancon” down the throats of Canadian consumers (and possibly international consumers if they can get away with it) and ordering them to like it. Obviously, that is incompatible to how the internet operates, but the legislative choices pleases legacy media companies and that’s all that matters to the Canadian government.

As for streamers, well, can’t blame them for trying one more time on this one. Streamers have repeatedly explained that Canadian content creators have been able to flourish through their platforms and build up people’s careers through the online space. Canadian creators, likewise, confirmed that online platforms have been able to offer them opportunities that traditional media companies in Canada have flatly rejected otherwise. What’s more, they explained how the internet works from their platforms perspective. They even got Canadian record labels on board to explain how the Online Streaming Act could harm their businesses by making it harder to promote their artists.

Unfortunately, throughout the Bill C-11 study in the Canadian senate, those calls to reason largely fell on deaf ears as misleading slogans like “pay their fair share” and lies that Canadian culture is disappearing ruled the day. The Online Streaming Act is one of many instances where politics triumphed over evidence based lawmaking and common sense.

Thanks to this being at the CRTC and the cold reception given by the Heritage Minister received to this call to reason, it seems that little is stopping this effort to jack up the bills for Canadian consumers (and deprive Canadian’s of choice in the process).

In all likelihood, this debate is destined to head in two different directions: more litigation and trade wars. There’s already been one lawsuit filed against the CRTC by Google and more will invariable head the CRTCs way. There have also already been repeated warnings and letters from the United States warning that they are very interested in slapping Canada with trade tariffs over legislative efforts like the Online Streaming Act. At this point, it’s seemingly only a matter of time before a trade war is triggered and further litigation ensues.

All of this was entirely preventable, but the Canadian government seems to insist on sticking its head in the sand. While the political fight against evidence and truth was likely the easiest fight for them to win as they dragged the bill across the finish line, the next few battles aren’t likely going to be so easy. Sadly, it’s looking very likely at this point that the only way the Canadian government is going to learn is by learning the hard way.

(Via @MGeist)

Drew Wilson on Mastodon, Twitter and Facebook.

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