Copyright is king in the battle for Canadian content

TORONTO–A battle with significant implications for our creator community is looming between American tech giants, which see Canada as a market rather than a country, and our much smaller film and video production companies, which see Canada as a country and want to make it even more so. Against their will, Hollywood streamers—Netflix, Amazon Prime, Disney and Paramount—are, with the passage of Bill C-11 (the Online Streaming Act), to be treated in the same way as traditional Canadian broadcasters and subject to the same rules. This means they will have to allocate a share of their revenues to producing Canadian content, and the money will have to be spent in such a way that they meet Canadian content rules, including allocating 75 per cent of the funds to productions by Canadian-owned production houses. One of the biggest issues will be who owns the intellectual property—the copyright—on programs that meet the test of Canadian content. For domestic TV networks, this has meant the Canadian production houses. As with the software, artificial intelligence, and bioscience industries, ownership of intellectual property is the key asset. It is through their ownership of intellectual property that Canadians companies can prosper and grow, and take risks while funding new opportunities. For the next step, the Canadian Radio-television and Telecommunications Commission (CRTC) is now tasked with determining the Canadian content rules the streamers must follow. The streamers will be lobbying hard to dilute as much as possible any serious Canadian content rules. The Motion Picture Association, which speaks for the studios and streamers, has already targeted copyright ownership as a top priority. Can CRTC chair Vicky Eatrides resist lobbying pressure and focus on what she says is the CRTC’s pledge to ensure “that online streaming services make meaningful contributions to Canadian and Indigenous content, and Canadians have greater opportunities to create and access a variety and diversity of content”? Among other things, Bill C-11 directs the CRTC to consider “whether Canadian producers, including independent producers, have a right or interest in relation to a program, including copyright, that allows them to control and benefit in a significant and equitable manner from the exploitation of the program.” Bringing the streamers under the same rules as Canadian broadcasters is important, not only because of their growing importance in the broadcasting system and the vast revenues they are generating from our audiences, but also because the streamers' growth has reduced the capacity of traditional Canadian broadcasters—such as CTV, Global and Corus—to fund Canadian content, with the steamers siphoning away significant advertising revenue. Until now, the streamers have had a free ride, with little obligation to put serious money back into Cancon. Sen. Yonah Martin, left, and Paul Sun-Hyung Lee of 'Kim's Convenience,' at the Canadian Media Fund event on Sept. 27, 2017. The Hill Times photograph by Andrew Meade In January 2020, an advisory body of experts appointed by the federal government to review Canadian broadcasting issued its final report, Canada’s Communications Future: Time to Act. The review was urgently needed. By 2018, it says, 61 per cent of Canadians subscribed to an internet video service such as Netflix, rising to 80 per cent in the 18-34 age group. Netflix had an estimated $1.6-billion in revenue in Canada in 2018, while Apple iTunes had revenue of $330-million from audiovisual content, and Amazon Prime an estimated $214-million. These numbers almost certainly would be much higher in 2023. In 2017, advertising revenue for Facebook reached approximately $1.6-billion, or 24 per cent of all online advertising revenues. Google, with a number of platforms which deliver media content, including YouTube, captured $3.4-billion in advertising revenue in Canada that same year. It’s time for the streamers to give back. Canadian content rules and fiscal incentives have worked, leading to English-language productions such as Murdoch Mysteries, Little Mosque on the Prairie, Degrassi: The Next Generation, and Kim’s Convenience, or French-language productions such as La Petite Vie or Les beaux malaises. “These programmes would not have existed without the panoply of CRTC and government policies,” the report said. But a new report commissioned by the streamers complains that Hollywood productions made in Canada are often shortchanged because they do not count as Canadian content. One example the report highlighted was The Handmaid’s Tale, now in its fifth season. While it has been filmed in southern Ontario, there was little Canadian about it. The Handmaid’s Tale is funded and owned by Hulu, an American streamer owned by Disney. Of the top 12 stars, seven are American, including the lead Elisabeth Moss, and only one is Canadian. The series was created by an American screenwriter and producer, the music was composed by an American, and the five production companies involved are all American. The American copyright owner has been able to license exhibition rights all over the world. The value of Canadian ownership of copyright can be seen in the internationally popular TV series, Murdoch Mysteries. Produced as a Canadian content production, Canadian production house Shaftsbury owns the copyright, enabling additional revenue sources from licensing it to foreign broadcasters or for secondary exhibition in Canada. This is why copyright ownership is so important, argues Peter Grant, one of Canada’s top experts on culture policies and for many years chair of the technology, communications and intellectual property group at law firm McCarthy Tétrault. With the opportunity to build their own libraries through copyright ownership, production houses can earn additional revenue from their creative works. This contributes to the stability and growth of Canadian-owned production houses in two ways, Grant says. First, since every film production entails a great deal of uncertainty on its success, the revenue from library sales enables production houses to take on more risk. And second, because of library-generated revenue, a production house can better afford to invest in script and concept development. Both are important for a healthy and competitive Canadian production industry, with quality Cancon for both domestic and foreign audiences. Now it is up to the CRTC to make sure this new world of broadcasting can be a win for Canada. David Crane can be reached at crane@interlog.com. The Hill Times