Canada Hikes Streaming Tax to 15% for Spotify, Netflix, and Others

The CRTC headquarters in Gatineau, Quebec. Photo Credit: SimonP

Forget about a 5% “streaming tax”: Now, the Canadian Radio-television and Telecommunications Commission (CRTC) has moved to require Netflix, Amazon Prime Video, and other video streaming platforms to cough up 15% of their domestic revenue annually. Is a fee hike in the cards for on-demand music services as well?

The CRTC announced as much in a formal release, following more than a few twists and turns in the Online Streaming Act implementation process. We’ve been covering that law, which was passed in 2023 after ample debate, for years now.

But the short version is that the convoluted measure, in keeping with its title, would require foreign DSPs to pay a piece of their revenue to bankroll “Canadian and Indigenous content.” Unsurprisingly, this isn’t sitting right with the impacted platforms, which have opposed the requirement (including via legal action) from the outset.

And as said platforms rather vocally criticized the attempt to take 5% of their revenue, one needn’t stretch the imagination to guess how they feel about the proposed hike to 15%.

Explaining the drastic increase, the CRTC in more words indicated that the new arrangement would coincide with reduced fees for traditional broadcasters.

“Contributions will be recalibrated so that traditional broadcasters will contribute 25% of their annual revenues to support Canadian and Indigenous content and benefit from greater flexibility in how they meet this requirement,” the CRTC wrote in its press release.

“For major broadcasters, this will provide relief as their current requirements range from 30% to 45%. Online broadcasters will contribute 15%, which includes their existing 5% base contribution,” the entity continued.

Regarding the “broadcaster” distinction, the 15% fee would specifically apply to on-demand video services like Netflix.

But to state the obvious, the development doesn’t bode well for their music streaming counterparts. Moreover, with Spotify now hosting music videos, video podcasts, and other audiovisual content yet, at what point does a music platform double as a video platform?

“The Digital Media Association (DIMA) is reviewing the impact the CRTC’s discoverability framework may have on our members, the music creators they support, and the millions of Canadians who enjoy music streaming services every day,” DIMA president and CEO Graham Davies said in a statement shared with DMN.

“The CRTC has again put the cart before the horse by outlining a discovery framework before concluding the audio policy process. As we have said many times before, the CRTC’s implementation of the Online Streaming Act risks undermining innovation, consumer choice, and investment in Canada’s digital music landscape,” he proceeded.

Returning to the initially mentioned marathon implementation process, the streaming tax itself remains tied up in court; a related “decision is expected soon, with the payments paused in the meantime,” according to the National Post.

Meanwhile, there’s also a trade-battle component to the situation; almost 20 U.S. lawmakers last year pushed back against the streaming tax. And one of these lawmakers, Representative Lloyd Smucker (R-PA), in March introduced a bill “to launch a Section 301 trade investigation” into the Online Streaming Act.

Furthermore, in Canada, some have called out the types of media that would be eligible for funding under the framework. Even “a Netflix production entirely made and developed in Canada may not be included” in the law’s definition of Canadian content, per the CBC.

And the Post elaborated that nearly 30% of the streaming tax “must go towards French content.” The multifaceted CRTC breakdown of fees and how the money will be spent is available here.

Closing on the music streaming side, it didn’t come as a shock when Spotify earlier this week unveiled double-digit price bumps in Canada. Previously, the on-demand giant upped its monthly charges in France – and, among other things, ceased sponsoring domestic festivals – after the European nation rolled out a streaming tax of its own.