Regulating music streaming

In November 2020, the federal Liberals proposed changes to the Broadcasting Act through Bill C-10 that would bring music streaming platforms under Canadian regulatory jurisdiction. This would require platforms to support and help produce Canadian content.  

If Bill C-10 passes as is, a number of its features may change Canada’s independent music industry. For one, music streaming services would be obligated to provide funding as well as promote Canadian content. It would achieve the latter through discoverability requirements, which would compel online streaming services to actively promote Canadian content, including work from marginalized and underrepresented groups.

The federal government estimates that this would generate about $800 million per year by 2023. That amount would then be reinvested into Canada’s cultural industries, including music. It remains to be seen as to how much of this funding would be set aside specifically for music, as the total amount would cover film, TV and other creative industries. Currently, online audio streaming services are not under regulatory control in Canada.

Fauteux explained that the proposed legislation can be seen as an outgrowth of the Canadian government’s long-standing attitude toward heritage and culture. “When the broadcasting system in Canada was established, it was very much in the service of thinking about ways to support and protect and sustain Canadian culture, against airwaves from the States coming across, and only having American content.” It is in response to this context that Canadian content regulations were created in 1971 for conventional broadcasters like radio and television stations, with the express purpose of nurturing a domestic record industry.

However, as radio ownership in Canada became more and more concentrated, Fauteux said that this had a trickle-down effect on what kind of Canadian content was broadcast. “As you get more stations owned by fewer companies, and in the increasing market driven pressures as well, you get a very narrow selection of what these Canadian songs are that you’re hearing to kind of make up the Canadian content quotas across the commercial radio sector,” he said. A smaller pool of Canadian songs enjoyed frequent airplay, and were often from artists already experiencing major success. 

In Fauteux’s research on the campus community radio sector, which began getting licensed in the mid 1970s, he found that more attention was paid to the nature of what music fit into Canadian content quotas. Specifically, some stations would attempt to carve out space for local artists, while others would limit the number of songs that are classified as hits. 

Public funding is an important component of Canada’s media economy. Even as it is a significant driver for production in the country, federal spending on culture and broadcasting as a share of the economy is about half what it was a generation ago.

At the same time, the radio industry is pushing for Canadian content regulations to be reduced for their operations, down to 25 per cent from the current 35 per cent. The CRTC is currently reviewing its policy for commercial radio, and solicited feedback from stakeholders and members of the public. The consultation period ended March 2021.

“… The idea of forcing Spotify to play 35 per cent of the music that they play to their subscribers being Canadian, well, it just won’t happen.” – Jeff Vidler

Vidler attributed this action by conventional broadcasters in part to online streaming. “I mean, there’s no regulations on streaming at all. And the idea of forcing Spotify to play 35 per cent of the music that they play to their subscribers being Canadian, well, it just won’t happen. The whole idea behind Spotify is music on demand, right? It’s what I want, when I want. Netflix can spend lots of money on Canadian productions, but it can’t make people watch them.”

Spotify has made a similar critique of the move to add music streaming services to the Broadcasting Act, which was originally conceived to regulate conventional broadcasters.

“It would be virtually impossible for Spotify to meet these types of requirements because streaming is an entirely different model that is ultimately controlled by the user. It is the user, not Spotify, that determines what to hear and when and in what order.”

Vidler said that equilibrium needs to be found between these opposing regulatory directions. “First of all, the Canadian music industry is much healthier now than it was 50 years ago, when Canadian content regulations came in, and to some extent, to the credit of Canadian content regulations that did that.”

Critics of Bill C-10

At the same time, many have criticized Bill C-10 for the undefined and vast powers it would grant to the CRTC, powers that pose a risk to Canadians’ rights to free expression online. The bill currently sits before the House of Commons Heritage Committee, where each clause undergoes a thorough review. On April 23, committee member Julie Dabrusin proposed the removal of section 41, the part of the bill that excludes individual social media users from regulation.

“By removing the user generated content exclusion, Bill C-10 represents an unconscionable attack on the free expression rights of Canadians.” – Michael Geist

Michael Geist, a professor at the University of Ottawa, has called the bill a “dangerous attack” on free speech. Geist, who is an expert on the intersection of law and technology, wrote on his blog, “Without the exclusion, Bill C-10 adopts the position that a regulator sets the rules for free speech online.” He continued, “By removing the user generated content exclusion, Bill C-10 represents an unconscionable attack on the free expression rights of Canadians.”

Peter Menzies, former vice-chair for the CRTC has added his voice to the chorus of criticism. In an Op-Ed in the Financial Post, Menzies suggested that Minister of Heritage Steven Guilbeault could have simply taxed online platforms rather than attempting to modernize the Broadcasting Act, a 20th century relic. “Right from the start, its violation of the principle of a free and open internet was an outrage to those who support openness as the web’s founding principle,” wrote Menzies. “To many, putting the CRTC in charge of the Internet is like putting a logging company in charge of the Great Bear Rainforest.”

Canada is wrestling with how to hold web giants to account alongside other countries, but whether such actions provide governments with the leverage to compel international corporations to bend to their will remains to be seen.

The closest test case for examining how that regulatory dynamic might play out can be found in Australia. Its government passed the first law of its kind that would make web giants like Facebook and Google pay to feature news content on their platforms. In response, Google threatened to pull its search engine completely from Australia, while Facebook blocked news to Australians on its platform in February of this year. The social media giant reversed the ban days later.

As debates are staged on the role online platforms perform in society and whether tighter reins are needed to mitigate potentially harmful consequences, a deeper question about the distribution of music exists below the surface: What might a better way of sharing music look like for artists and listeners?