Spotify, Apple and Amazon have launched legal challenges against Canada’s new 5% streaming levy through the country’s Federal Court Of Appeal. The Motion Picture Association Canada has also begun legal proceedings on behalf of its streaming service members, including Disney+, Paramount+ and Netflix.
The levy, introduced by the Canadian Radio-Television And Telecommunications Commission, or CRTC, requires digital services to contribute 5% of their revenues to support Canadian music and content creation. The music industry has welcomed the measure, but the streaming services oppose it
Graham Davies, CEO of the Digital Media Association, speaking for the music services as they filed their legal action, criticised the CRTC's approach as “backward-looking” and “unsustainable”. He warned that it “risks raising costs for Canadians” and urged the CRTC and the Canadian government to reconsider the plan which, he says, “fails to acknowledge streaming’s existing contributions to music production”.
None of this is surprising, given we know the streaming platforms are generally against any bespoke levies or taxes. France has already introduced a 1.2% levy on music services and that was widely criticised by the platforms, with Spotify threatening to “disinvest” from the French market in protest. It subsequently just added the 1.2% uplift to a monthly subscription price. Obviously passing on Canada’s 5% levy to consumers would be more noticeable.
The legal framework for the streaming levy comes from Canada’s Online Streaming Act, which left it to the CRTC to sort out the specifics. It announced a plan for how the levy would work last month, including who the beneficiaries would be.
Of the money paid by audio services, half will go to organisations supporting the music community, with the other half supporting local radio news production, community radio and indigenous content. Money from the video services will go to schemes that support productions and people in the TV and film industries, and more local news.
President of MPA Canada, Wendy Noss, took particular aim at the levy being used to support local news production when confirming her organisation’s legal action. “The CRTC’s decision to require global entertainment streaming services to pay for local news is a discriminatory measure that goes far beyond what Parliament intended”, she stated.
“Our members’ streaming services do not produce local news”, she added, “nor are they granted the significant legal privileges and protections enjoyed by Canadian broadcasters in exchange for the responsibility to provide local news”.
Interestingly, on the audio side, while the streaming services oppose the levy, the music industry has welcomed it, with the Canadian Independent Music Association stating that the CRTC's plan was “good news for the Canadian music sector”. That is also unsurprising, given the music industry initiatives getting some of the money, such as FACTOR, have long been important sources of funding for independent artists and labels.
By contrast, however, the big movie and TV studios - including Disney, Paramount and Sony Pictures - oppose the levy because they also run streaming services.