Netflix confuses entertainment with culture

The video-streaming giant Netflix recently told a panel reviewing Canada’s Broadcast Act that “market forces” should determine the programs that Canadians watch, not pooled resources like the Canadian Media Fund.

image: Lifewire

In making this claim, Netflix is essentially saying that they will determine how to spend our money –the fees they collect from Canadians- and not be dictated by what Canadians want to see.

Netflix’s arrogance is offensive, not just because it’s paternalistic, not just because it treats programs as entertainment, but because it pretends that it’s not a Canadian broadcaster.

Netflix claim that it’s not a broadcaster is suspect. It’s a disingenuous argument considering that millions of Canadians now watch shows and movies through video-streaming. Surely, that makes them a broadcaster.

OK, maybe Netflix is not a broadcaster in the traditional sense that their broadcasts are not over-the-air. That’s a technicality. But TV stations don’t stop being broadcasters because they transmit over cable. Our Broadcasting Act and Telecommunications Act, currently under review, should be updated to include video-streaming as broadcasting.

The reason Netflix doesn’t want to be defined as a broadcaster is because they would have to pay into the Canadian Media Fund like every other broadcaster. The Canadian Media Fund produces programming that reflects who we are. It’s a modest fund run by a not-for-profit corporation to deliver funding for Canadian TV and digital media.

If your eyes glaze over at the talk of culture, digital media and regulations, it’s because there are so many distractions in the Netflix debate that it’s hard to keep track of them. Last year it was the so-called “Netflix tax” which has nothing to do with Netflix specifically. Rather, it’s a proposed tax on the entire internet. That’s obviously a bad idea because the internet has become essential in accessing education and government, not just video-streaming. The internet has insinuated itself into our lives that’s necessary for a functioning democracy.

Then there is the sales tax that Quebec and Saskatchewan have imposed on subscriptions to Netflix. While Netflix is not technically obliged to collect the tax and pass it on to provinces (they are not a Canadian corporation), they have agreed to do so.

Why is Netflix so agreeable in the matter of collecting sales tax and so disagreeable when it comes to contributing to the Canadian Media Fund?

It’s because they persist in claiming that what they sell is a product. But what they see as entertainment, the rest of the world sees as culture.

It’s a blind spot that all big American media giants have. They see the exportation of American culture as subject to the forces of the marketplace. They studiously ignore the fact that exported American culture is intended to swamp local, more poorly funded, productions.

Don’t get me wrong. Netflix produces some very good programs and is rivaling Hollywood in quality. It also produces some mundane and derivative schlop.

As much as Netflix wishes, programs don’t compete in a marketplace where the most popular ones win. The stories we tell ourselves capture our identity. While those markets are as small, they are as important as a tile in our cultural mosaic.

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No internet tax for Canadian media

I agree with Conservatives who reject an internet tax to support Canadian media but for different reasons.

    Heritage Minister Melanie Joly. Image: Huffington Post

Conservatives reject taxes do so because they reject government intervention in what they see as a commercial enterprise. If media corporations can’t stand on their own without support from taxpayers, then they should fall.

But media are not only an enterprise; they are reflection of who we are and necessary for an informed citizenry. The goal of all legitimate media is to report unfiltered news and if my taxes go towards achieving that end, then it’s money well spent.

Use of an internet tax to support Canadian media is controversial. Politicians who are normally on opposite sides of the issue agree on this one. Two lobby groups that I support are on opposite sides. The Friends of Canadian Broadcasting supports the internet tax. Open Media rejects it.

A parliamentary committee recently recommended the internet tax, which Prime Minster Trudeau promptly rejected. The recommendations weren’t even unanimously supported among committee members. Predictably, Conservatives rejected the tax and some Liberals supported it. Prime Minister Trudeau sided with the Conservatives (again, for different reasons).

Before decided which side you’re on, it’s useful to know what it is. It’s a tax on streaming content over the internet as opposed to a tax on cable or satellite content, or over-the-air broadcasting.

What it’s called is determined by which side you’re on. Opponents call it a Netflix tax. “Applying the 5-per-cent levy to broadband distribution, that’s a Netflix tax,” said Conservative committee member Peter Van Loan. “Efforts to turn back the clock to an earlier era are doomed to failure.”

Prof. Michael Geist agrees with Van Loan but doesn’t find it necessary to call it a Netflix tax. It’s an internet tax because it applies to all internet content and as such, it’s a bad idea. Geist, a law professor and Canada Research Chair in Internet and E-commerce Law, sees the internet as more than a source Canadian content:

“A taxation system such as the one used for cable and satellite companies is highly inappropriate given the Internet’s importance for communication, electronic commerce, Web banking, education and tele-health. Given its integral role in virtually every aspect of modern life, it is wrong to treat network access as little more than an ATM for the cultural sector.”

Geist points also points out that such a tax is inconsistent with the Broadcasting Act because internet providers are not “broadcast undertakings” under the act.

Trudeau took the line that he was protecting the middle class: “We’re not going to be raising taxes on the middle class through an Internet broadband tax. That is not an idea we are taking on.”

Canadian media deserves support. Open Media suggests that the proceeds from the sale of cell phone wireless spectrum could go to Canadian content. Tax revenue should be used to support public and private broadcasters as suggested by Friends of Canadian Broadcasting. Small market broadcasters like CFJC in Kamloops should continue to receive funding from the CRTC.

Canadians pay one of the highest internet rates in the world. The best way to support Canadian media is to ensure that Canadians have an affordable, high speed internet where innovators can create content.