Canada adds 5% Streaming Services tax to fund Local News, Media Diversity

Canada has imposed a 5% tax on streaming services like Spotify and Netflix to fund local news and content creation by new and diverse voices.

Op-ed by Karl Bode of Tech Dirt

Canadian Regulators are leaning on new authority built into the 2023 Online Streaming Act to impose a new 5 percent tax on streaming TV and music services like Netflix and Spotify; funding that the regulator says will then be used to help fund Canadian broadcasting.

According to the Canadian Radio-television and Telecommunications Commission (CRTC) announcement, the plan should drive $200 million in new funding annually to local news and a variety of other public interest content:

“The funding will be directed to areas of immediate need in the Canadian broadcasting system, such as local news on radio and television, French-language content, Indigenous content, and content created by and for equity-deserving communities, official language minority communities, and Canadians of diverse backgrounds.”

The fee systems effectively mirrors the fees already imposed on local broadcasters. Past efforts on this front (in the U.S. and Canada) haven’t been received particularly well by streaming giants, and the same applied here. The Digital Media Association, which represents Amazon Music, Apple Music and Spotify, insisted in a statement that the new tax will only expand what they’re calling an “affordability crisis”:

“As Canada’s affordability crisis remains a significant challenge, the government needs to avoid adding to this burden. This is especially true for younger Canadians who are the predominant users of audio streaming services.”

Huge contracts for the likes of Joe Rogan and Wall Street’s insatiable demand for relentless quarterly growth have more to do with streaming affordability than anything else, though in this case the services are correct in that they’ll simply pass the cost of the new taxes directly on to users. Facing slowing subscriber growth, streaming giants have already been pretty relentlessly raising rates. 

That said, real journalism (especially independent and minority owned) is consistently facing a funding crisis, and much of the conversation (both in the U.S. and Canada) tends to be centered around what isn’t possible, shouldn’t be done (usually framed around the interests of giant corporations), as opposed to actually fixing the problem. 

At the same time, similar efforts are often derailed by corruption, and there’s no guarantee the money guaranteed for useful things actually finds the way it its original destination.

Efforts to tax streaming companies to help fund broadband deployment in the States, for example, risk being hijacked by telecom giants looking to exploit corrupt policymakers simply to pad their wallets. Municipalities in Texas have also tried to tax Netflix with a fairly broad disdain for existing law and no particular public interest initiative in mind.