Streaming Giants Challenge Canada’s 5% Levy in Court
Streaming behemoths Spotify, Apple, and Amazon, along with the Motion Picture Association Canada representing Disney+, Paramount+, and Netflix, have initiated legal battles against Canada’s recent 5% streaming levy. Enacted by the Canadian Radio-Television And Telecommunications Commission (CRTC), the levy mandates digital platforms to contribute 5% of their earnings to bolster Canadian music and content creation. While the music sector applauds the move, streaming services are at odds with it.
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CEO of the Digital Media Association, Graham Davies, lambasted the CRTC’s approach in filing their legal objections, deeming it as “backward-looking” and “unsustainable.” Davies cautioned that the levy could spike costs for Canadians and called on the CRTC and Canadian authorities to reconsider the plan, asserting that it fails to recognize streaming’s current contributions to music production.
Resistance Amidst the Global Digital Landscape
Opposition from streaming platforms towards tailored levies or taxes is not novel. France’s introduction of a 1.2% levy on music services faced vehement criticism, with Spotify even threatening to withdraw investments from the French market. Ultimately, Spotify opted to incorporate the 1.2% hike into its monthly subscription fee. Adapting to Canada’s 5% levy might pose a more noticeable impact on consumers.
Enacted under Canada’s Online Streaming Act, the regulatory specifics of the levy were designated to the CRTC. The commission disclosed a blueprint for levy implementation last month, outlining the beneficiaries of the funds.
Half of the funds collected from audio services will support organizations aiding the music community, while the remaining half will bolster local radio news production, community radio, and indigenous content. Video services’ contributions will channel towards initiatives supporting productions and individuals in the TV and film industries, as well as local news endeavors.
Legal Wrangles Over Allocation of Funds
MPA Canada’s President, Wendy Noss, raised objections to utilizing the levy for supporting local news production, emphasizing that it disproportionately extends beyond the legislative intent of Parliament. Noss pointed out that their streaming services do not generate local news content nor are they awarded the extensive legal privileges and safeguards that Canadian broadcasters enjoy in exchange for delivering local news.
While the music industry embraces the levy, lauding it as beneficial for the Canadian music domain, big players in the movie and TV sectors such as Disney, Paramount, and Sony Pictures contest the levy due to their operation of streaming services.
Industry Responses and Impacts
Notably, the Canadian Independent Music Association expressed approval for the plan, citing its positive implications for the local music scene. The infusion of funds into music industry initiatives like FACTOR holds significance as they have historically served as crucial financing sources for independent artists and labels.
The tug-of-war between streaming platforms and regulatory bodies underscores the complexities of balancing financial obligations with industry needs. As legal battles unfold, the ramifications of the levy on digital services and content creation in Canada remain a focal point of industry discourse.