The trade body for the three major record companies in Canada has spoken out against the new 5% streaming levy that is being introduced in the country, the size of which, says Music Canada CEO Patrick Rogers, is “unprecedented” and “staggering”. Rogers is particularly scathing about the decision to direct 40% of the money raised by the levy to the Canadian radio sector. “If that sounds like outdated thinking”, he declares, “it’s because it is”.
This contrasts with the position taken by the trade body for indie labels in Canada, which previously said that plans devised by the Canadian Radio-Television And Telecommunications Commission for how the streaming levy would work were “good news for the Canadian music sector”. However, the majors are allied with the streaming services, which have dubbed the levy a “protectionist subsidy for radio” and are already fighting the CRTC’s plans through the Canadian courts.
Rogers published his statement on the levy earlier this week after, he says, “weeks of consideration and consultation with members of the music community”. The levy for streaming services - extending a principle that already applies to broadcasters in the country - was introduced by Canada’s Online Streaming Act. The act left the specifics of how the levy would work and who would benefit to the CRTC.
“When the CRTC launched their process to implement the Online Streaming Act, they promised a ‘blank sheet of paper’ approach that would help them re-imagine the Canadian broadcasting system”, Rogers explains. Which meant that the plan the regulator published in May prompted “a mix of surprise, disappointment and confusion”.
“If the CRTC had truly set out with a blank page, it had the old regulatory rules written on the back”, Rogers says. “At some point in the process, faced with the immensity of the task at hand, it seems they simply turned the page over”.
Under the CRTC’s plan, all audio and video streaming services will be required to hand over 5% of their revenues. Of the money that comes from audio services, half will go to various existing organisations that support independent artists and labels, including FACTOR. Which is presumably why the independent label sector is happy with the plan, given it will provide a considerable boost to those existing funding schemes.
The other half will be split between the Community Radio Fund Of Canada, funds supporting Indigenous music and audio content, and a new fund supporting local news production by commercial radio stations. It’s the funding for traditional commercial radio that Rodgers is most critical of. The CRTC’s plan, he says, “focuses on protecting legacy domestic institutions”, which is not what artists need “to succeed in today’s highly competitive, on-demand, streaming-driven music marketplace”.
Echoing concerns expressed by the Digital Media Association, the trade body for the streaming services in North America, Rodgers says the CRTC has failed to consider the ways the digital platforms are already supporting the Canadian music community, nor the impact the 5% levy could have on the streaming market if the services are forced to pass the extra cost onto subscribers.
“It’s easy to predict that the new costs will be passed on to consumers, which could threaten Canadians’ participation in the licensed, legal music economy that sees artists paid when their music is played”, Rogers writes. “It could also trigger a reduction in streaming services’ investments in our country - or worse, an exodus. If that happens, the CRTC’s decision won’t just be a missed opportunity, it will be a cultural policy disaster”.
The streaming services hope to force a rethink of the levy plan through the courts. Meanwhile Music Canada says it “will continue to advocate for the best regulatory system that reflects how music is made and listened to today and creates the greatest opportunities for Canadian and Indigenous artists”.