Canada should ditch Canadian content tools that are ill-suited for the digital age, says a new report from the C.D. Howe Institute.

In “Choosing Canada: Canadian Cultural Policy in the Twenty-first Century” author Daniel Schwanen sets out a plan to bring Canadian content policy into step with developments such as the emergence of digital competitors for Canadian viewers, including Netflix, Spotify and YouTube.

Unfair Competition

These digital competitors, notes Schwanen, are unconstrained by Canadian content requirements facing traditional TV or radio distributors. The consequence is a “slow bleed” in audiences for licensed TV broadcasters and radio stations while audiences for non-regulated digital channels (many based outside Canada), are rising sharply.

Trends

These trends negatively impact the revenues of traditional conduits for culture and information as advertising revenues migrate to digital channels. Compounding burden on traditional broadcasters, regulators maintain out-dated quotas of Canadian content in prime time and requirements to help fund Canadian TV and film production, whereas their emerging competitors on digital platforms are not subject to these rules. Furthermore, foreign online services such as Netflix are not required to charge their Canadian customers the Goods and Services Tax, unlike their Canadian competitors.

“As Canadians embrace new technologies and platforms to access their entertainment and information, the ability of quotas to affect Canadians’ viewing or listening habits is rapidly diminishing,” said Schwanen. Indeed, 2013 marked the first year in which the number of Canadian households subscribing to internet services exceeded the number of traditional television subscribers. Although 75 percent of Canadian households still subscribed to cable or satellite television distribution services in 2016 – down markedly from 83 percent only four years before – 87 percent of Canadian households subscribed to internet services. In the economy more generally, the culture, entertainment and information services offered online through digital technologies have boomed relative to other economic activities, and in particular relative to traditional cultural and information businesses.

What Is True Demand?

The report proposes an approach focused on more deliberately linking offerings of Canadian content with the potential demand for them. The report’s recommendations for regulators include:

• Focusing the funding framework for public cultural agencies and cultural subsidies, including that of the CBC, on the production, dissemination, and exhibition of original artistic or literary works for which a commercial market is not yet established or for which there is a clear public rationale (e.g., educational, informational, or community benefits).
• Establishing an arms-length “Canadian Connections Fund” that would replace some existing subsidies with support for initiatives that promote non-commercial Canadian content with Canadian audiences.
• Working with Canadian broadcasters and distributors to facilitate the “discoverability” of Canadian content on digital platforms (through, e.g., search engine optimization, targeted online advertising, mobile applications, and the translation of Canadian works for both foreign and domestic audiences).
• Eliminating mandated funding of Canadian content and Canadian content quotas for broadcasters while ensuring a level playing field for federal taxation applicable to digital media services purchased by Canadians
• Reducing foreign investment restrictions applying to cultural industries, with the aim of attracting investment in Canada.

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