Tap streaming services to fund Canadian productions: CMPA

OTTAWA — Streaming video services like CraveTV and Shomi can and must be regulated as broadcasting entities in order to ensure funding for Canadian programming, the Canadian Media Production Association (CMPA) argued Friday. Jay Thomson, the CMPA’s vice-president of broadcasting policy and regulatory affairs, said in a panel discussion during a law conference called Rebooting Canada’s Communications Legislation that the CRTC has the jurisdiction to regulate Rogers Communications Inc. and Shaw Communications Inc.’s Shomi and BCE Inc.’s CraveTV under the Broadcasting Act. He said the CRTC reaffirmed in a recent Let’s Talk TV decisions that it’s necessary to “stabilize financial contributions to the creation of Canadian programming in a changing broadcasting environment,” which is needed to make sure the financial resources exist to create a “diversity of programming.” “Currently, traditional media and broadcast accounts for two-thirds of all financial support for Canadian programming, according to the commission,” he said. “However, the commission has forecast that, over the next several years, Canadians will continue to migrate from scheduled and packaged programming services to online programming,” while the head of Netflix Inc. has said he believes online television will ultimately replace traditional TV, Thomson said. He added that “Canadian television programming needs financing to have a future” and services like Shomi and CraveTV will ultimately replace the major broadcasters that account for most of that financing. “Who will replace the financing? It has to be broadcasting services like Shomi and Crave. Look around. Unless start contributing, there’s no one else,” Thomson argued. He said the CRTC should begin regulating streaming services, “and for the future of Canadian programming, it must do so sooner rather than later.” University of Ottawa law professor Michael Geist said: “I don’t think it’s fair to say that the kind of activities that we see today is what was envisioned back when the Broadcasting Act was first established” in 1991. He said the focus shouldn’t be on “content-oriented regulation,” but the notion that the laws don’t apply to the Internet “can’t possibly be right either.” “My view would be that the right kind of regulation is one that creates a level playing field. It’s one that acknowledges that we need is not so much new ways to finance, but instead rules that ensure that all, no matter big or small where they come from, can all effectively compete in a global medium,” he said. That includes rules around net neutrality and vertical integration, Geist noted. He said the CMPA’s position is tantamount to viewing “regulation as an ATM.” “Netflix isn’t a bank, and I don’t think we ought to be setting up a system that seeks to ensure that money comes out of Netflix in the same way” as it has from traditional broadcasters, he argued. Geist pointed out that the money earned even by a global player like Netflix is relatively small. In the first quarter of 2015, Netflix reported revenue of $1.4 billion US and a profit of $24 million US. He said focusing on that kind of money “doesn’t make a whole lot of sense.” At the same time, TV providers who charge $50 or $100 for service can’t compete with Netflix’ $8.99 price point, even with the new $25 skinny basic service the CRTC has mandated to start next year. That also means the streaming system can’t “generate quite the same kinds of revenues.” “If you’re putting your bets on a business that charges $9 a month, and right now has about 40 per cent of the English-speaking marketplace, even if it gets everybody, and even if we get a couple more services into the marketplace, we are still talking about relatively small amounts of revenue,” he said. Geist added that the right question isn’t how to continue financing video production, it’s how to find audiences and generate revenue. “I think the Internet creates that. I don’t think regulation does.” Former CRTC commissioner Timothy Denton said the ability to broadcast used to be scarce and was therefore controlled through licensing, but the Internet now allows anyone to upload video. He said it wouldn’t be reasonable to proclaim that “any time you send video over the Internet, you’re broadcasting and you need to seek the permission of the CRTC.” Denton added: “If you want to subsidize television production, let us do so, but tightening a grip on every one of the millions of people who send videos … is not the way to go.” He said the Broadcasting Act is based on technological assumptions that are already obsolete. Returning to the issue later in the discussion, he noted that individuals can now use virtual private networks (VPNs) to access TV content from around the world. “My concern in these conversations is how are we going to subsidize Canadian television production by, as Michael aptly describes it, as the ATM method of using our appetite for foreign programming, channeling that appetite through a restricted number of licensed undertakings, and causing those licensed undertakings to have enough money that they can transfer from the profits made on U.S. television programming into Canadian,” he said. That’s an old business model that’s been broken by changing viewer behaviour, he said. Technology like VPNs has made “import controls and content controls” irrelevant, he said, noting that the only option is the implementation of firewalls to control Internet access, which isn’t compatible with a democratic society. “The architecture of control that used to exist does not exist and having to reinvent your architecture of control in an Internet era is an enterprise fraught with many dangers,” Denton said. Geist added that the government shouldn’t make VPNs illegal because they have multiple purposes, including more important purposes than accessing TV content not available in a person’s geographic region. For example, they allow users to “safeguard … communications and privacy.” He noted that while some in the Canadian TV industry have called for controls on the technology, such measures would also target “those who use technologies to safeguard their privacy in this country, to engage in free speech in many where free speech isn’t otherwise available.” Content creators who don’t like viewers accessing their content from other jurisdictions through VPNs “have the power to stop licensing to Netflix,” he said. “We haven’t seen that today, and I’d suggest that the reason is that the market opportunities in licensing to Netflix are worth far more than the downside of having some people access the content from a different geography.” — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Tap streaming services to fund Canadian productions: CMPA

Broadcast | May 22, 2015

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