Music Industry

Published on June 1st, 2018 | by Alan Cross

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Get ready to having your streaming service taxed. But this is actually a good thing. Here’s why.

When we pay for Netflix, Spotify, Apple Music, Britbox or any other streaming service for audio or video, we pay ZERO tax. We also don’t pay any tax when we buy/rent anything from iTunes. Cool, right?

Well, maybe from the viewpoint of your wallet. But it also means a steady flow of cash out of Canada to foreign entities. This gives them an advantage over domestic companies who do have to pay tax.

There’s another problem, too. Domestic broadcasters and other cultural gatekeepers are required by law to invest in the creation and support of Canadian talent. Radio stations, TV networks and so on are obligated to plough a ton of pre-tax dollars into creating new Canadian culture products, ranging from funding indie musicians through programs like FACTOR to various television and movie production funds.

The foreign streamers? Nope. They have no such obligations. They just siphon away money without putting anything back into Canadian culture.

Canadian broadcast types have been pushing the CRTC on this unlevel playing field, which has resulted in a new Commission report that recommends music and video streaming companies be federally regulated.

The proposal says that Spotify and Netflix and all the rest of them should also be required to fund local/domestic content lest our own companies be completely decimated by foreign interests.

Yes, regulators will regulate. It’s what they do. But in this case, you can see why this could be important. This new money would go to things like the Canadian Music Fund and the Canadian Media Fund. With contributions from domestic producers in decline because of changing technologies and consumer habits, this would top things up.

Another part of the report urges that we do more to promote Canadian content on the Internet (podcasts, webisodes, music, etc.) more vigorously internationally.

Great, right? Tough to fight that logic, especially since we live right next door to the largest exporter of popular culture in the known universe. If we don’t do something to protect out own, we risked being swamped by American broadcasting/streaming interests and losing our Canadian identity.

The bad news? Higher prices for us. You know that Netflix and Spotify would just pass on these costs. But isn’t it worth the sacrifice?

Read the whole report here.

 

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About the Author

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 30+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.


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2 Responses to Get ready to having your streaming service taxed. But this is actually a good thing. Here’s why.

  1. Daryl Knee says:

    Radio and TV get to use something they don’t own – their broadcast frequency. The number of frequencies out there are much more finite than the number of services possible on the internet. It makes sense to me that they have to pay something for this privilege, support domestic voices, invest in original programming and not just relay content they can acquire elsewhere.

    Tax is a different matter – I believe anyone doing business in Canada, even online, should be required to remit the same fees or taxes a domestic operation has to charge but it’s important to remember that sales taxes are consumer taxes. The supplier collects and remits these to government. Not exactly the same as a business tax or license to operate. It’s going to take some international agreements on how to deal with things that cross the border in a non-physical method.

    Then there’s that tricky bit on how you can regulate something like the internet. How do you know how many Canadians are buying ‘out-of-country’ services? Probably either by looking at said company’s billing records or by regulating ISP surveillance of their customers. Since it may be difficult to get access to billing records of companies that operate outside the country, it’s easy to see what will be proposed. When it comes to net neutrality, website blocking, ISP surveillance, etc, I am firmly in the ‘no freaking way’ camp.

    There’s not an easy answer here but ultimately it’s up to the individual. If the domestic content is good enough, it will be happily consumed and paid for. A regulatory balance may be needed but it’s hard to achieve.

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