The Online Streaming Act: Canada Passes New Legislation to Regulate Online Streaming Services

On April 27, 2023, Bill C-11, titled the Online Streaming Act (the “Act”), was passed by the Canadian Senate and received Royal Assent, officially becoming law in Canada. The Act is designed to modernize and amend the Broadcasting Act by bringing online streaming services, such as Netflix, Amazon Prime Video, Disney+ and Spotify, under domestic broadcasting regulation, registering them, and requiring them to, among other things, make expenditures to support and promote Canadian audio or audio-visual programs. This could potentially include funding for programs created and produced by Canadian minority groups and serving minority populations such as Indigenous peoples, racialized communities, cultural and linguistic minorities, LGBTQ2+ communities, and persons with disabilities.

Key Aspects and Policy Direction

The Act gives the Canadian Radio-television and Telecommunications Commission (CRTC) the power to: (i) decide which streaming services to regulate, (ii) require and determine any financial contributions to be made by these streaming services, and (iii) regulate the discoverability of Canadian programs on streaming platforms. Failure to comply with the CRTC’s orders could lead to monetary penalties.

Canadian Heritage Minister Pablo Rodriguez is expected to issue a Policy Direction to the CRTC setting out the government’s priorities within the next month. The Policy Direction will be designed to guide the CRTC in interpreting and implementing the Act, including an expected instruction to modernize and update the official definition of a “Canadian program” as well as an indication of what types of social media content should be included in, or excluded from, the Act. Regarding the latter, the Minister indicated that “..social-media content will not be captured by the act”¹, although many digital content creators have expressed continued concerns that their activities may be caught by the Act. According to Canadian Heritage, a draft of the Policy Direction will be first published in the Canada Gazette and subject to public consultation, with a final Policy Direction published once the consultation process concludes.

As for the CRTC, it is apparently moving forward with the Act even before it receives the Policy Direction. The new CRTC CEO and Chair Vicky Eatrides issued a statement on April 27 that the CRTC will “…share [its] detailed plan and launch the first public consultations shortly” in order to “...establish a modernized regulatory framework where all players contribute equitably”. She added that “[t]he views of all Canadians will be important at every step. We encourage everyone to participate, including traditional players and streaming services who will be regulated, as well as Canadians who will benefit from the modernized system.”²

Act is Culmination of Long Process

The Act is the culmination of several years of failed efforts to modernize Canadian broadcasting legislation for the digital age. Several provisions in the Act are based on recommendations originally made by the Broadcasting and Telecommunications Legislative Review Panel (the “Panel”), which reviewed Canada’s broadcasting laws and published 97 recommendations in its final report released in January 2020.³ The Panel rejected a so-called “Netflix tax” (i.e., charging consumers an extra levy on subscriptions to streaming services such as Netflix) and instead recommended that streaming services with access to the Canadian market contribute a percentage of their Canadian-derived revenues to fund Canadian programs.⁴ Aligned with the Panel’s recommendations, the Act classifies internet streaming services as “online undertakings”, a category of “broadcasting undertaking” under the Broadcasting Act. This classification will bring them into the regulatory system that currently only imposes “Canadian content” financial contribution requirements on traditional (i.e., linear) Canadian broadcasting undertakings.

The Panel’s recommendations initially led to Bill C-10, the first effort to amend the Broadcasting Act, which was introduced by the Liberal government in 2021 and which failed to pass in the Senate before Parliament dissolved ahead of the last federal election. In February of 2022, Canadian Heritage Minister Pablo Rodriguez introduced Bill C-11, a new version of Bill C-10, which became the subject of many tense exchanges in Parliament and was one of the most extensively studied bills in Senate history, with over 130 witnesses appearing before a Senate committee in 31 public hearings, before it finally was passed into law.⁵

Mixed Reaction to the Act

To date, reaction to the Act by leading industry players has been mixed. Canadian producers and talent guilds are generally supportive, however some critics remain concerned that the legislation is too onerous and may alienate international streaming services. Others have noted that the existing CRTC definition of a “Canadian program”, which is based on the minimum participation of Canadians in key creative and technical “point” positions (e.g., writer, director, actor, etc.), is too rigid and needs to be updated for the goals of the Act to be effectively implemented, and digital content creators are worried their activities may become regulated by the CRTC.

Reynolds Mastin, the President and CEO of the Canadian Media Producers Association (CMPA), which represents independent production companies, welcomed the new Act and said: “We are grateful to Heritage Minister Pablo Rodriguez for his heroic efforts in securing the passage of Bill C-11. We congratulate him and the Liberal government for getting the job done.”⁶

Valerie Creighton, president and CEO of the Canadian TV funding body, the Canada Media Fund, said: “The passage of Bill C-11 opens up a wealth of new possibilities to strengthen the future of Canadian storytelling on screens at home and around the world.”⁷

Scott Benzie, executive director of Digital First, which represents digital content creators who post their content on online platforms such as YouTube stated that they are “genuinely worried” that they are going to be regulated and that the bill “…has consumed the last two years of my life”⁸

Canadian Association of Broadcasters president Kevin Desjardins stated that there is an urgent need for a “...new regulatory framework that reflects the realities of the modern media landscape and creates a fair and equitable marketplace for Canada’s broadcasters.”⁹

Online platform TikTok said it is “committed to working collaboratively” with the government on the policy direction as they “fight for the interests of Canadian TikTok creators,” in a statement to Playback Daily. “Without the legislative clarity they asked for, digital-first creators are now left to simply hope that the government keeps its promise not to regulate user-generated content.”¹⁰

Looking Forward

The next expected step is for the CRTC to release its “detailed plan”, followed shortly thereafter by publication of the government’s draft Policy Direction, both of which are expected in the near future. After that, and once the Policy Direction is finalized, it will fall to the CRTC to propose, and ultimately to create, a detailed set of new policies and rules to implement the Act. To facilitate that, the CRTC, led by its Chair Vicky Eatrides, will preside over industry-wide consultations with interested stakeholders and the public, likely including public CRTC hearings. Once this public consultation process concludes, the CRTC will then formulate and implement the new rules, including those governing how foreign–controlled streamers will operate in Canada going forward. This consultation process is expected to take at least a year from beginning to end, if not longer. We will be assisting and advising our clients throughout the entire process.

For further information concerning the Act, please contact any member of our Entertainment and Communications & Media Groups.

³  Broadcasting and Telecommunications Legislative Review, Canada’s Communications Future: Time to Act, Final Report (January 2020).

⁴  Ibid at 13.

⁵  Marie Woolf, “Senate passes online streaming bill that targets foreign platforms”, The Globe and Mail (April 28, 2023).

⁶  Jordan Pinto, “Landmark legislation passes Canadian parliament, paving way for SVoD regulation”, C21 Media, (April 28, 2023).

⁸  Marie Woolf, “Senate passes online streaming bill that targets foreign platforms”, The Globe and Mail, (April 28, 2023).

⁹  Kelly Townsend, “Online Streaming Act clears final hurdle as it becomes law”, Playback (April 28, 2023).

¹⁰  Ibid.