Canadian Con(tent) Artists: "Just Give Us the Money"

After two days of hearings last week, the Canadian Radio-television and Telecommunications Commission (CRTC) resumed its hearings yesterday on whether to apply traditional broadcasting-style regulation to the Internet. As described in my post of Feb. 16, Canadian cultural groups want the CRTC to mandate new taxes on the customers of Internet Service Providers (ISPs) and wireless carriers, with the proceeds being given to these groups to produce Canadian content.

Of the 15 parties that have appeared so far, almost all have been Canadian cultural groups. Later in the proceeding, ISPs and wireless carriers will have the opportunity to present their views on why their customers (most Canadians) should not be taxed to pay for Canadian content.

Two small and fleeting moments of clarity emerged during last week's sessions where the cultural groups pressed their case for new taxes. In response to questions from the CRTC, a spokesperson for the actors' union cut through the thin veneer of the Canadian content mantra and confessed that their position essentially amounts to saying "just give us the money".

The second highlight was a representative of the Canadian Conference of the Arts stating that "consumers are not my concern".

Boil it all down and that is the main issue in this proceeding: Canadian cultural groups want money from consumers, but have no interest in what consumers think. And in Canada, it can happen if the CRTC says so.

A little bit of background will explain why the cultural groups appearing before the CRTC want broadcasting-style regulation applied to the Internet: they are major beneficiaries of the current broadcasting regulations that govern Canadian television and radio.

In the regulated broadcasting system, the two central pillars are the programming entities and the distributors (e.g., cable and satellite TV companies). A comprehensive set of intertwined regulations devised by the CRTC governs these entities and directs money to the cultural groups currently appearing before the CRTC.

Companies providing television and radio programming are required to produce significant amounts of Canadian programming. Canadian programming is produced by individuals who are virtually all members of cultural unions (e.g., actors, writers, directors) or trade associations (e.g., film and TV producers). These groups receive a significant percentage of every dollar spent in the regulated broadcasting system, where the dollars come from advertisers and from consumers who subscribe to programming services such as TSN offered by cable and satellite companies.

Broadcasting regulations also require that cable and satellite TV companies carry a majority of Canadian TV services as well as pay 5% of their revenues to produce Canadian programming. The bulk of the money collected from consumers by cable and satellite TV companies is passed on to Canadian programming entities.

Currently, no broadcasting-style regulation is applied to the Internet. (The CRTC previously considered the idea, but rejected it in 1999.) As a result, the Canadian cultural groups appearing before the CRTC do not receive any government-mandated advantages or privileges in producing content for the Internet. Nevertheless, they have the same freedom as all other Canadians to produce content for the Internet.

Many Canadians are using the Internet as a medium to distribute a wide range of content to Canadian and international audiences. The large majority of this content is not broadcasting. Increasingly, however, Canadians are broadcasting over the Internet.

This should be cause for celebration. When Canadians broadcast over the Internet they do so without having to ask a government agency's permission (when you have to seek permission, government bureaucrats restrict what you can say and how you say it based on the politically correct dictates of the time). Moreover, broadcasting over the Internet is typically being done without taxpayer funding. And it is no less Canadian because it is being done by any Canadian that wants to do it rather than the Canadians anointed by government bureaucrats.

Any form of broadcasting-style regulation of the Internet would be detrimental to virtually all Canadians except the small group of cultural insiders that benefit from the regulations that govern traditional forms of broadcasting. The CRTC is the central player in the traditional broadcasting world and is facing intense pressure from the core cultural groups in this world to apply broadcasting-style regulation to the Internet. The CRTC had the courage to say no to the idea in 1999. They should do so again.