Canadians want media companies treated equally but don't want to pay, Joly says

Canadians want all media service providers treated equally, and content producers want a stable tax credit regime, Heritage Minister Melanie Joly said Thursday as she spelled out the themes she latched onto from recent cross-country consultations on Canada's media and cultural landscape.

However, Canadians don't want to see any new costs borne by media companies passed on to them through their utility bills, she told a cultural industry symposium.

"We have to bear in mind that Canadians are anxious about their cost of living," Joly told the Canadian Media Producers Association panel.

Canadians appear to accept the notion that services such as Netflix are put on a level playing field with traditional TV service providers, she said.

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"The fact of having a platform-agnostic approach, that was something I heard, strongly," said Joly.

Having a predictable tax credit regime for content producers was also a key message, the minister said.

The minister launched a review of Canadian content in a digital world in April, saying everything was on the table for discussion, including broadcast regulations, copyright law, funding mechanisms that support the creation of Canadian content, the role of the CBC and the mandate of the country's broadcast and telecom regulator.

Focus on revenues

Much of the focus of the review has been on how the Internet has affected revenues for producers of local news and Canadian cultural content.

The dramatic shift in the television landscape, brought on by the growth of Internet-based services such as Netflix, led the Canadian Radio-television and Telecommunications Commission to encourage content producers to market Canadian content more globally. The CRTC also adopted new rules aimed at making traditional TV service providers more consumer friendly, including requirements to offer cheaper basic television packages and "a la carte" channel selection.

Some taking part in the consultations suggested the government adopt measures that would force Internet-based companies to help prop up Canada's cultural sector, such as a so-called Netflix tax and Canadian content requirements for digital services.

While she vows there will be "no Netflix tax," Joly is looking to other countries particularly around Europe in trying to determine how to ensure digital streaming and so-called "over-the-top" services contribute to Canada's cultural industries.

In its recent submission to the consultations, the CMPA pointed to reforms adopted in Europe that it suggested could level the playing field and preserve cultural diversity.

Early last year the European Commission proposed reforms that would require online, on-demand platforms to devote at least 20 per cent of their digital libraries to European content. The proposal would also allow EU states to demand investments by production companies in European-made films and TV shows, either directly or through levies.

The CMPA said an updated "contribution model" similar to the European proposal is needed for "made-in-Canada" content.

Defining Canadian content

It also called on the government to expand the definition of Canadian content and explore new tax incentives to foster more Canadian creative talent.

Joly said she has been studying what's been taking place in Europe, but wouldn't elaborate on which EU policies would benefit Canada's cultural industries.

"We're studying what France is doing, we're studying what Germany is doing," she said. "But countries need to discuss these issues together."

Joly spoke at the Prime Time Ottawa event just hours after another panel heard Google describe the potential implications of taxing online platforms as "complicated."

A Public Policy Forum report released a week ago, which was partly funded by Joly's department, offered a grim assessment for the future of Canada's media industry and warned the crisis that news companies are facing is harming democracy.

To help alleviate massive job cuts in the industry, it recommended, among a dozen suggestions, that federal tax laws be changed so foreign-owned websites including Google and Facebook be charged a 10 per cent levy on advertising revenues.

The report also called on the government to charge GST and HST on digital news subscriptions and advertising on digital media that failed to meet Canadian content rules.

The tax revenues, estimated to add up to $400 million per year, could then be transferred to a new, arms-length fund that would support local, civic and indigenous news reporting.

Taxing online revenues?

Joly said she was studying the report and would respond in the coming months.

While charging tax on online revenues may sound like a simple remedy to some, it's much more complicated than that, said Jason Kee, public policy and government relations counsel at Google.

"About 70 per cent of the revenue that we bring in through our display networks actually goes back out to our partners," Kee told a panel called Bleeding Red Ink: The Future of Canadian Media.

"It's an important component to realize that it's actually our content partners generating the content, and they actually get the majority of the (advertising) revenue."