THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Tuesday, October 4, 2022
The Standing Senate Committee on Transport and Communications met with videoconference this day at 9 a.m. [ET] to study the subject matter of Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
Senator Leo Housakos (Chair) in the chair.
[English]
The Chair: Good morning. My name is Leo Housakos, I am from the province of Quebec, and I am Chair of the Standing Senate Committee on Transport and Communications. I would now like my colleagues to briefly introduce themselves.
Senator Simons: I’m Senator Paula Simons, Alberta, Treaty 6 territory.
[Translation]
Senator Miville-Dechêne: Julie Miville-Dechêne, senator from Quebec.
Senator Cormier: René Cormier, senator from New Brunswick.
[English]
Senator Quinn: Senator Jim Quinn, New Brunswick.
Senator Klyne: Marty Klyne, senator from Saskatchewan, Treaty 4 territory.
Senator Sorensen: Karen Sorensen, senator from Alberta.
Senator Woo: Yuen Pau Woo from British Columbia.
[Translation]
Senator Clement: Bernadette Clement, from Ontario.
[English]
Senator Manning: Fabian Manning, Newfoundland and Labrador.
The Chair: Welcome to all.
We are continuing our study today on Bill C-11, An Act to amend the Broadcasting Act and to make related and consequential amendments to other Acts.
Joining us for the first panel this morning, I’m pleased to welcome from Blue Ant Media, Michael MacMillan, Co-founder and Chief Executive Officer, who is with us by video conference. As an individual, we also have with us Frédéric Bastien Forrest, radio personality and content creator. Welcome to the committee, and thank you for joining us for this important study.
Both of you will have five minutes for opening statements, and then I will turn it over to my colleagues for Q & A.
Mr. MacMillan, you have the floor.
Michael MacMillan, Co-founder and Chief Executive Officer, Blue Ant Media: Thank you. I’m pleased to be able to speak to the committee today.
I urge the committee and the Senate to approve Bill C-11. This is an overdue action from our government, and I enthusiastically support the bill.
My context is that I’ve been in the Canadian film and TV industry since 1978. For 44 years, as a producer, distributor, broadcaster and streamer, I’ve watched the evolution of our industry, I’ve seen technologies come and go, and I’ve seen decision makers come and go. I am convinced that the purpose of this policy, including as drafted, is completely consistent with the general policy direction that our government has pursued since 1982, which is to not attempt to keep out international producers or signals but, rather, to rely on allocating funding in order to support the production of Canadian programming. So this act is consistent with 40 years of successful policy.
We’ve never wanted to keep out international producers, the U.S. majors or the streamers. In fact, our policy is to bring them in. We’re delighted that, in our Canadian production industry today, the majority of production is international projects produced and owned mostly by the U.S. majors and for which we supply hundreds of millions of dollars of funding from our federal treasury for service tax credits, while the producers also enjoy an efficient Canadian dollar and great Canadian crews.
So we’re not asking for Americans to go away. We want the streamers to stay. We encourage the majors to stay. It’s very good for all of us. What we are saying, however, is that we need to support the Canadian part of our industry.
So we urge the passage of this bill.
There have been a lot of conversations, I’ve noticed, in recent weeks about the definition of what an “eligible Canadian program” might be. My firm view is that an “eligible Canadian program” is a program produced by Canadians. Who makes the program and also who owns the program? Is a program created by Canadians — actors, writers, directors, producers, editors, cinematographers — and owned by Canadians, where the copyright and the use right are owned by Canadians? Those should be the main guidelines. Those have been the essence of how we’ve defined a Canadian program successfully over many years.
I would urge the Senate not to be confused by some odd sidebar conversations that seem to be taking place suggesting that the definition of a “Canadian content program” should be based upon the actual specific subject matter. This is not a place for government to make decisions on whether a story has an appropriate redheaded pigtailed girl or a documentary about wheat fields. That’s not at all the purpose of government support in this industry. We would argue strongly that a Canadian program should be one that’s made by Canadians and where the copyright is owned by Canadians.
The CRTC is well positioned to work out the nuances of this. While I don’t agree with everything the CRTC has decided over the past 44 years, by and large, they’ve got the direction right, and they are well able to navigate the nuances of that definition.
I should also say that, in terms of an eligible program, I continue to believe that all Canadians should qualify as being eligible producers. That would include not only what part of the country you come from but if you are, as in the case of Blue Ant Media, a producer that is also affiliated with a broadcaster. Blue Ant is a producer and a distributor, but we also own a handful of small Canadian TV channels. We would argue that enterprises like ours should not be disqualified merely because we also happen to own some broadcasting and streaming outlets.
In summary, I urge the committee and the Senate to join your colleagues in the House in approving Bill C-11.
The Chair: Thank you very much.
[Translation]
The floor is yours, Mr. Bastien Forrest.
Frédéric Bastien Forrest, radio personality and content creator, as an individual: Good morning, senators.
I am honoured and delighted to be here today. Many Canadians would love to have this privilege of being heard by the members of a heritage democratic institution like the Senate.
[English]
Yes, a lot of Canadians would love to say, “I am the Senate.” Today it’s my turn. I’m humbled and honoured to be here. My presence on this stage is pretty unlikely. I’m just a YouTuber. Well, I’m also a board member of the UDA, an artists’ union representing more than 10,000 members. I’m on the radio every week, thanks to Radio Canada, for a panel on tech trends that airs from coast to coast.
Let’s go back in time a bit. I started my career at MusiquePlus about 13 years ago. That was the French-Canadian-Québécois version of MuchMusic. Around the same time, my internet audience grew. I was becoming a digital creator before we even had a word for it.
Since then, I always kept one foot in traditional media and one foot in digital media. I try to build bridges between cultures.
When it comes to culture, 90% of Canadian kids in their twenties are watching YouTube, and a lot of them are watching Canadian creators — Manitoba creators, Ontarian creators, Albertan creators, Quebec creators, francophone Canadian creators.
[Translation]
This week, I watched a video on YouTube by Franco-Saskatchewan rapper Shawn Jobin. Some of his videos have had more than 100,000 views. That’s our francophone culture, which is alive, circulating and being exported. My own YouTube channel is in French and has more than 30,000 followers. The vast majority of views on my channel come from Quebec and French-speaking Canada. Approximately 20% to 30% come from Europe, France and Belgium. At least one European consumes Quebec culture on my YouTube channel every day. For your information, my channel gets between 4,000 and 100,000 views a month. That’s small beer for many people, but it’s enough for us to earn a living in Quebec. Yes, I, a self-produced and self-managed artist, can rap in French on YouTube. I can film experiences, such as running a marathon without training for it, to see if it’s possible, and Canadians watch it. I bet you want to watch it too now.
Many of my videos are part education, part entertainment, and, like many of my digital platform colleagues, I try to contribute and give back to our society; every one of my videos that goes viral is a piece of our Canadian culture that’s being exported. That culture is something I’ve conceived, written, filmed, edited, exported and published myself, but I’m far from the only one doing it.
Every day, thousands of Canadians are inspired by the videos of Cam Grande Brune, Émile Roy, Thomas Gauthier, Jessica Prudencio, Ryan George, Lysandre Nadeau and Nabil Lahrech. All those popular creators and pioneers deserve to be mentioned here today, but there are so many of them we wouldn’t have time.
The web platforms that let users create their own content have enabled us to break free creatively and reach an audience without having to wait for a producer to say yes.
Sometimes it’s healthy to create without gatekeepers. That lets us be 100% ourselves, regardless of our differences. It enables us to reach an audience of people like us. All these victories take nothing away from the conventional media. I treasure all the times I’m fortunate to work with a bigger team like on radio or television. Alone you go quickly; together we go farther.
I’d really like to work with a team on my YouTube channel, but that requires better funding for digital culture, the culture that Canadians really consume on YouTube, TikTok, Instagram, Twitter and Twitch. Let’s tax those platforms and subsidize their creators. We’re already doing that for other industries. Let’s tax those platforms and create new parapublic cultures that let our digital creators across Canada go farther.
It’s absurd that a YouTuber who wants to hire a camerawoman or a researcher should have to pay out of pocket 30% to 50% more for the same service than the television station next door. However, that’s the way it is since those conventional media have access to grants and tax refunds that aren’t available to digital creators.
In other words, our public funding undermines the Canadian economy because we’re subsidizing an aging and decelerating industry instead of training workers who understand how to create on the web.
I’ve heard colleagues in the cultural industry wonder whether it’s a good idea to engage public opinion in the debate on Bill C-11. If that’s what it takes, just watch me.
[English]
Right now, I’m reaching out to all the politicians in Ottawa, Vancouver, Toronto, St. John’s, Winnipeg, Montreal and Quebec. Please help us empower digital creativeness. Because a creator is a small business. Small businesses are the backbone of our economy and internet platforms allow small creator businesses to thrive. If we are to tax the tech giants, let’s make sure we subsidize local internet creators with that money. Let’s not miss this opportunity for stronger creators and a stronger economy. More specifically, on Bill C-11, fix clause 4.2 and keep user-generated content out of any discoverability enforcement.
[Translation]
Thank you for listening.
The Chair: Thank you very much, Mr. Bastien Forrest.
[English]
I’d like to begin, as I usually do, with a question directed to Mr. MacMillan.
Mr. MacMillan, if I understand correctly, if we are producing a film or a program that has been written by a Canadian that tells a Canadian story, is set and filmed in a Canadian town, using Canadian directors, actors and artists, but that program is owned by a foreigner, it doesn’t fit into our definition of CanCon. Yet, if we have an American writer telling an American story, shot in an American town, using American directors and American actors, but is owned by a Canadian financier out of Toronto, then that qualifies as Canadian content. Don’t you find that to be a bit difficult to comprehend if we’re here to promote Canadian culture?
Mr. MacMillan: I do because that’s not at all what I was saying — not at all. I’m saying that a program created by Americans, with American writers, producers, directors and cinematographers, is not a Canadian project. I did not say that. If I gave that impression, I should restate it.
My comments were intended to say that a Canadian program is one that is both made by Canadians and owned by Canadians. If it’s only made by Canadians but also not owned by Canadians, we run the risk of becoming the hewers of wood and drawers of water that has bedeviled us in other industries over much of the life of our country. I’m arguing that for the industrial development of our country, the economic benefit, more of it needs to stay with those who actually create and take that development risk to make the next show and the next show. For clarity, I was not suggesting that a show shot in America with American talent qualifies as Canadian.
The Chair: You did say, though — and you just said it again — that a product that is made by Canadians and owned by Canadians is Canadian content, which is the definition of CanCon. That is the definition upon which we’ve been working as a country for 40 years.
In the world we live in today, where investment is very important to support our arts and culture, isn’t it imperative to broaden our CanCon definition in order to give our artists an opportunity to get the revenue they need to be able to reach their maximum potential? Shouldn’t this bill also be tackling CanCon and the definition of CanCon to make it a bit more flexible in order for Canadian artists to benefit from their financial investment? I’m not saying you invented this concept. This is a concept that has been in CanCon defined by our governments for years. I get the sense you agree with it. My point is, wouldn’t it be a lot more prudent for us to broaden that concept? It’s not who invests in the project; it’s who runs the project that matters, I think.
Mr. MacMillan: I disagree profoundly with what you are saying. You’re accurately describing the debate we’re having; that’s correct. But I disagree with what you’re saying. I think it’s very important that the economic ownership and control is held in Canadian hands and there should be an advantage to there being a Canadian broadcaster, or distributor, or producer involved in the project and owning it.
There already is enormous subsidy for programs that don’t qualify as Canadian content in Canada. Our service tax credit, which services the non-Canadian productions in this country, is an enormous tax credit. Happily, we funnel hundreds of millions of dollars to those projects, which, you’re right, indirectly or directly provide support for Canadian crews and artists. I’m talking about an advantage given to shows owned by Canadians so that the Canadian broadcasting and international distribution industry stands a better chance of surviving and growing.
The Chair: Wouldn’t you agree with me that our artists and cultural communities would flourish and grow if they had access to more capital?
Mr. MacMillan: That’s probably true of many industries. One of the most logical sources of capital would be Canadian producers and Canadian production companies. One of the ways that those Canadian production companies and Canadian producers will have capital available to invest is if they are able to own the IP of the projects they are creating. That’s probably their most logical source of self-generated capital. So I do agree. I would hope that over time, our children and grandchildren would have more opportunities to work on projects that were developed and produced by a Canadian production company that partly had those resources because it had been able to benefit from their previous work and their previous projects.
[Translation]
Senator Cormier: Thank you for your clear explanation, Mr. MacMillan. My questions will be for Mr. Bastien Forrest. Welcome. I’m glad to be able to speak with a francophone YouTuber. You’ve made quite a strong case for the importance of platforms that let you create.
I’d like to go back to the bill as such. I’d like to hear how you understand the exclusion under the new section 4.2 set forth in the bill. In light of that, how concerned are artists, and do they think they’ll be subject to the act? There’s an understanding that this focuses more on the platforms that would be subject to it. Can you tell us what you think about this and where you stand?
Mr. Bastien Forrest: It’s very interesting. For many users, the platform is us. For example, if you want to regulate the YouTube platform—many other algorithms operate the same way—that’ll have an impact on the way I upload content to the platform and how that content is then recommended. As we speak, I believe that the purpose of my creative work is to make the best video possible. And I feel that YouTube’s job is to reach the people who want to watch it. That’s an incentive that works for YouTube and for me.
If you artificially alter that relationship, it can potentially have a negative effect on my ability to reach the francophones already watching me.
I really enjoyed talking to Mr. Rodriguez with other YouTubers a few months ago. He said that, in the spirit of the act, users’ creations would be excluded. That’s great, in the spirit of the act, but under new section 4.2 of the act, it would apply to everyone who earns revenue directly or indirectly from the Internet, and that means everyone and his dog.
Senator Cormier: Three matters must be considered. It’s not just direct and indirect revenue. It’s also whether your content is elsewhere on platforms that are subject to the act and whether that content is associated with a source code, an official registration. Three matters must be considered, and the undertaking must be able to be subject to the act, but in accordance with the three matters considered. I want to understand how artists are concerned with regard to those three matters.
Mr. Bastien Forrest: I’ll tell you about my fears too because I hope this act becomes permanent and promotes both the so-called traditional industry and the new, digital industry. Our fear as creators stems from the fact that our governments have rarely or infrequently listened to us. We’re trying to get more organized. I’m drawing on the model of the Union des artistes, the UDA, from the 1970s and 1980s and trying to rally YouTubers so we can have greater impact when we speak to politicians and the Canadian Radio-television and Telecommunications Commission, the CRTC. From a historical perspective, even though I acknowledge the CRTC’s importance, I don’t sense it’s an institution that’s in favour of new things or able to understand these new platforms and the positive opportunities they afford.
Yes, there are other provisions, and the idea that, in the spirit of the act, you can exclude users from those provisions… All of us creators would sleep better at night if that were clear in the mandate of the act before matters reach the CRTC. At any event, we know we’ll have to start the process over again when we go before the CRTC because it’s the one that’ll enforce the act.
I hope that gives you a little more insight into our misgivings. Sometimes fears aren’t always rational, but I think it’s worthwhile to consider them.
Senator Cormier: All right, thank you. I’ll come back in the second round, if possible.
Senator Miville-Dechêne: Thanks to both witnesses. I’ll go to Fred Bastien as well. First of all, thank you for your presentation, for your passion and all that. This is the first time we’ve had a francophone YouTuber here; so this is important for me. I don’t doubt your success; you seem to be on the rise with 30,000 people watching you.
Mr. Bastien Forrest: You could say it’s been slowing down in the past few years.
Senator Miville-Dechêne: Do you know where those 30,000 people are watching you from? Second, I’d like you to consider a slightly broader perspective than that of your YouTube channel, and by that I mean Quebec culture, because with your francophone channel, you’re part of the new Quebec culture. How would you characterize your channel’s numbers?
You named a handful of francophone YouTubers. We realize we live in a more anglophone North American world; we’re a minority. You’re managing to get by, but is this idea that we—not you personally—should recommend that viewers watch a little more francophone culture a negative point for you?
I’d like you to adopt a view that’s slightly broader than your own experience and to tell us where your audience comes from.
Mr. Bastien Forrest: With pleasure. Generally speaking, approximately 80% of my views come from French-speaking Canada. I guess much of that is from Quebec, but it’s impossible to know. I know they’re francophone Canadians. That’s great, I’m very happy because people from New Brunswick watch me and people from everywhere comment. I’m very happy about that. Approximately 20% to 30% of my views come from Europe—France and Belgium, as I said—and a few percentage points from elsewhere around the world, probably people who are travelling. That’s the big picture.
Every video is different; some videos that I make appeal to many people outside my own audience. I mentioned the marathon video, which has reached 100,000 views, and more people around the world have seen that one than some of my other, much more local videos, as I might call them.
With respect to francophone culture, I don’t think I can avoid saying a few words about the concept of discoverability on digital platforms. When you ask a radio station to broadcast more francophone content, that’s easy because there are 24 hours in a day and a limited number of songs that can be played. So you can say: 20% more local culture. Here’s how YouTube works. We often automatically think, even as creators, that our role is to make a video and that YouTube will find us pairs of eyes to show it to, that it’s YouTube’s job to show it to us, but the reverse is true. YouTube looks to the consumer first, thinking: what content combo will I present today to have the best chance that people will click on one of the proposed videos?
For the robot that YouTube is, hundreds of thousands of hours of content are uploaded every minute, and other algorithmic platforms operate in a similar way, but YouTube is the one I know best. I’ve had a chance to speak to YouTube engineers in the course of my career and to speak to people who specialize in this field…
Senator Miville-Dechêne: May I interrupt you briefly? You say you’re comfortable letting this robot—this algorithm—make every decision regarding the visibility of francophone culture.
Mr. Bastien Forrest: I’d like to conclude here. I really think we could understand the two operating modes better. If you think of Marshall McLuhan’s The medium is the message, there’s something in technology that has an impact on the way you create for these platforms. The robot that receives thousands of hours of content every minute wants to know what’s interesting in that content and to whom. The only measure of that is the time those people spend viewing the video.
Consequently, yes, I’m proudly in favour of Quebec francophone culture. I think that YouTubers are the culture, that the people who stop me in the street to talk to about my videos are very much like me, guys and the girls alike: they wear jean jackets and rock T-shirts, they’re fans of superheroes and Star Wars; they’re 18 to 40 years old. If, for some reason, you suggest that YouTube show my content to francophones who aren’t interested in the things I just named, the algorithm will see that you’re suggesting my content, but those people won’t watch it or will watch two seconds of it before leaving the website. YouTube will then conclude that my content isn’t interesting, whereas, if you showed it only to people interested in it, as is currently the case—because that’s an incentive for both creators and the platform—I’d have a much better chance of reaching my audience without my video being negatively affected by people who are thought to be interested in it but who aren’t necessarily.
Senator Miville-Dechêne: I believe I’ve taken up enough time. Thank you for that explanation.
The Chair: I like Star Wars too, and I’m dressed the way I am because I have no choice. It’s the rule. I can assure you, Mr. Bastien Forrest, that I’d rather be dressed like you.
[English]
Senator Manning: Thank you to our witnesses for your presence here this morning.
In a brief that YouTube provided to the Committee for Canadian Heritage in the House of Commons, they argued that Bill C-11 as currently drafted will put the livelihoods of tens of thousands of Canadian creators on YouTube at risk. Other creators who testified before our committee last week noted their concern that Bill C-11 risks putting them out of business.
I would like to ask both our witnesses, do you share these concerns? I know it has a relation to section 4.2, which you touched on earlier. I’m wondering about the concerns of putting thousands of people out of work and risking their livelihoods.
Mr. Bastien Forrest: We can talk about doomsday scenarios all day. I like to focus on solutions and on a potential win-win. My take on this is that it is scary. We have the feeling that the politicians behind this law are well intentioned and they want to promote our culture, which is great, but the side effects of the law could break stuff. That’s what’s scary about the business model we have already, namely, the fact that a lot of people assume that digital media works just like traditional media, a top-down approach, but it’s more of a grassroots thing so we need separate ways to address these two industries.
Senator Manning: Would our other witness like to comment?
Mr. MacMillan: We also participate in the ecosystem of YouTube, Snapchat and other platforms.
My impression is that as drafted, the bill does not intend to capture individual creators on YouTube and similar platforms. I don’t believe that it does and when it comes to the direction the government will issue to the CRTC so that they can ensure that’s the case, I’m not terribly concerned that the bill overreaches, as has been commented by some. I’m content with the way it is drafted.
Senator Manning: In relation to proposed section 4.2, do you think it needs to be clarified to exclude user-generated content?
Mr. MacMillan: It depends on how that content is collaborated together. It could be presented in a so-called professional way. It could be part of a larger offering. I guess it depends. Again, I’m not terribly worried about that drafting.
Mr. Bastien Forrest: To me, it’s different to ask Netflix to produce more Canadian content and to play with the discoverability of YouTubers. For Netflix, it is people with suits who decide what everybody watches. This mimics a traditional model more than user-generated content. To answer your question, absolutely we should specify that user-generated content — in very simple terms — is out of this law.
Senator Manning: Just to let you know, it’s people with suits who will eventually determine this law, too. That could be scary also.
If other jurisdictions such as the United States, or different countries in Europe, decide to bring laws into their countries similar to what we have here under Bill C-11, does that concern either one of you in relation to what the future holds?
Mr. MacMillan: It doesn’t concern me. We are used to this. We are used to many countries in the world having extensive support systems for their own creative industries. We see it in France, in the EU, in the U.K., in Australia, in Brazil and in many other countries. We are used to it and we support it. In fact, Canada is lucky to have coproduction treaties in many countries in major markets including the U.K., Germany, France, Israel, Australia, et cetera, whereby nationals in each country can come together and jointly create a show that qualifies as local yet in each of the originating countries.
I respect and encourage the actions taken by the Europeans, the French and others. It is an act of courage for a country to support its own creators and encourage, in some cases, its own language, culture and the industries that support it. I’m not concerned about pushback from these countries vis-à-vis our creations.
This is related to my earlier answer to a question I received. For Blue Ant Media, our international sales — that is, the licence arrangements we make to rent our programs to users outside of Canada — is more revenue than the revenue we generate by licencing our programs for use in Canada, which gets us back to the point of the importance of actually owning what one produces. The revenue we generate outside of Canada is more than the revenue we generate within Canada. That’s why it’s essential not only for our continued success and growth but also for the industry. Given that, I’m not concerned because I completely respect the need, the right and the logic for other industries, other countries and other areas to similarly support their own creators.
Mr. Bastien Forrest: It could happen that other jurisdictions would imitate us. Also, Canada is very digital and often looked at as an example worldwide, both for the private and the public sector, in technological trends. The whole world is watching.
Senator Simons: Mr. MacMillan, Blue Ant’s corporate slogan is “Nothing connects like a good story.” We have been told over and over again one of the reasons we need Bill C-11 is to encourage the creation of Canadian stories. However, as I look through Blue Ant’s portfolio, I see shows like “9/11 Kids,” which is not Canadian; “Searching for Secrets,” which is not Canadian in its topic matter; an upcoming documentary about Prince Andrew’s sex life; a cartoon show called “DOOMLANDS,” which takes place in what looks like the Southern states after the apocalypse.
I’m trying to understand. You are arguing that a show shouldn’t be deemed Canadian just because it has Canadian content, but you have an entire portfolio of productions which are deemed CanCon because they have Canadian funding and production but do nothing to tell Canadian stories.
I’m confused. Are you asking for a regulatory regime that encourages Canadian business or that supports Canadian culture?
Mr. MacMillan: The programs you are citing, you are incorrectly citing as qualifying as Canadian content. We also produce programs that do not qualify as Canadian content. The Prince Andrew show, for example, had nothing to do with Canada. We made it elsewhere. It did not qualify as Canadian and probably didn’t qualify as any particular country of origin. We make programs, some of which qualify as Canadian, many of which don’t. Only some of them would qualify for that.
We are not remotely suggesting the programs we produce such as “Orangutan Jungle School,” which we shoot in Southeast Asia, would qualify as Canadian no more than that Prince Andrew show you mentioned.
Senator Simons: Even though the IP is Canadian owned?
Mr. MacMillan: That’s correct. It’s Canadian owned but it’s not entirely made by Canadians so it doesn’t qualify as Canadian. We don’t seek it to qualify as Canadian. It doesn’t pass that test. We’re still able to produce it, however. In that case, we shot it in the U.S. and the U.K. “Orangutan Jungle School” we shot in Singapore, in Indonesia. That’s fine. They’re not Canadian shows. They’re not of any particular nationality. They don’t earn those subsidies. Our company does more than only making Canadian content but it only receives the subsidy for the shows that do so qualify.
Senator Simons: What about “Canada’s Drag Race,” which I’ve been enjoying on my flights home of late? Here we have an American production company at its root, the RuPaul company. You have transposed an American cultural artifact and cast Canadians in those roles. Does that count as Canadian content?
Mr. MacMillan: It does. Obviously, it was not invented by us in the first place. It’s a version of a show invented elsewhere. However, it is made by Canadians and we happen to own it. We do it with Crave and it does still qualify. I think the themes, the hopes, the aspirations and the fun of “Canada’s Drag Race” perfectly well suit this country and account for why Crave gets such a high rating audience for it.
Senator Simons: Senator Housakos and I don’t agree on much most of the time, but I think we are in agreement on this point. It seems to me that the definition of Canadian content and the imperative to tell Canadian stories — which, as a writer myself I support — is getting confused here for support for Canadian industrial production. I take your point that we don’t just want to be a service economy where we are making Hallmark and Disney movies. But it also seems to me that when you’re saying that the content of the show should have no relevance to whether it is Canadian or not, that it can’t just be about “Anne of Green Gables,” to be Canadian, it seems to me we are doing nothing to encourage the telling of Canadian stories. I surely don’t want us just to be supporting people who tell American stories with Canadian production dollars.
Mr. MacMillan: I’m also saying that it’s a very slippery slope for a government agency to be involved in the precise prescription of what is Canadian. It would, for example, presumably mean that a point-of-view documentary made by a Canadian filmmaker about climate change outside of Canada would not qualify as a Canadian point of view. Science-fiction shows or most animation projects could also not qualify because they are not set in a particular time and place that can be identified.
There are many kinds of audio-visual expression that are hard to specifically speak to the “Canadian-ness” or the “French-ness” of it. That is especially true because Canada shares a language and a culture, in many ways, with our wonderful neighbour, the U.S. It’s difficult.
I would urge that we not go down that difficult path, because we could end up in places we don’t want.
Senator Simons: Thank you, Mr. Forrest, for one of the best explanations of how the algorithm works.
Senator Klyne: Welcome to our guests, and thank you very much for your remarks here. My question is for Mr. MacMillan but Mr. Bastien Forrest can jump in as well. I would like a second-round question too.
Mr. MacMillan, you have had a very lengthy and successful career in broadcast television, and you seem to be experiencing success in the online space too, which gives you a somewhat unique perspective. As a company that operates in both broadcast television and the world of online streaming, does it make sense to you for the Government of Canada to bring online streaming under the purview of the Broadcasting Act, and will this bill make Canadian content more discoverable or sought after than it is now? Will the resulting revenue add to funding the production of more good Canadian content to realize even higher potential, and will it, at the same time, empower digital creators, or will it hinder them?
Mr. MacMillan: I think it will bring additional funding to the production, the discoverability and the consumption, use or viewing of Canadian programming. It will, therefore, create more creative employment opportunities for Canadian creators. So the answer is “yes.”
I think, overwhelmingly, there is a benefit to this bill, and I think it’s overdue. It is not a huge ask to request that companies that participate in our Canadian life contribute to income tax, pay their HST or contribute in this manner receive some kind of funding mechanism to assist the continuing production of Canadian cultural products — films, TV shows and digital products.
I think it will benefit not only the industry but Canadian users and viewers. I think it also had great potential to do the same thing for digital creators and the consumption of digital content.
Senator Klyne: Do you expect that updating the Broadcasting Act to include digital creators and online streamers will be beneficial to Canadian broadcasting, digital creators and online streamers, or will it create challenges and hinder digital creators and online streamers?
Mr. Bastien Forrest: I think it would create a lot of challenges for both industries. The ideal scenario is to focus on financing supply in order to promote their culture. We should tax the platform but use a lot of that money to subsidize small-time creators, small teams and independent artists.
We have a lot of that in Quebec. In Quebec, our theatre industry, movie industry and music industry are subsidized, all for good reasons. The demography of France, of America allows them to scale their operations.
I met with Cyprien, who is a huge YouTuber in France, and he is making funny videos just like me. After talking to him, I realized that he had 80 employees. I have one, which is me. So France has a demography that allows him to scale a lot faster than me, and France is a lot friendlier to YouTubers in their public programs.
The best thing we could do while taxing these platforms is making sure a big piece of the pie goes to the users of these platforms who are creating the content that Canadians are watching.
Mr. MacMillan: I agree with that, and that’s consistent with the notion of channelling funding from various sources — tax credits or other contributions from signal distributors — into the hands of creators. You can define them as individual digital creators or as production companies, but in both cases, it is the same notion. So I agree with that comment.
Senator Klyne: Earlier, you mentioned “fix 4.2.” What does that mean?
Mr. Bastien Forrest: As I mentioned earlier, a lot of creators I know are a bit scared of clause 4.2, because the spirit of the law says that user-generated content is out of it, but clause 4.2 seems to include anything or anyone who gets direct or indirect revenue from the internet. If I sell shirts on the internet, I’m back in. If I have a little payment from YouTube, I could be back in.
It would reassure us if the statement was made clearly in simple terms that user-generated content — YouTubers and TikTokers — is definitely out of any discoverability enforcement.
Senator Klyne: Thank you.
Senator Quinn: Thank you, Mr. MacMillan and Mr. Bastien Forrest, for being here today. Thank you for commenting that you are trying to be a bridge. I very much appreciate that, because I, too, am trying to figure out both sides.
My question comes back to what Senator Manning was getting into; I would like to explore it a little more. We have heard different things from different people with different points of view. For example, we have heard that platforms and content generators are out. The algorithms will not be tampered with by the CRTC but they might be regulated — the platforms might have to do something with their algorithms.
For me, there is a lot of confusion about who’s on first when it comes to all of this.
My question is for both witnesses, because you are experienced with this. In a country like Canada, shouldn’t we be introducing laws that have some clarity so those who make the regulations are better guided so that there is less interpretation of what the law says versus what their powers are? Shouldn’t we be supporting making changes to this piece of legislation to achieve that result? I would like you both to comment.
Mr. Bastien Forrest: I’m always for less legalese, that’s for sure. There’s this law, then there’s the CRTC and then there’s the application. That makes for a lot of layers to go through. If we are talking about simplifying the text and ensuring that digital creators have a say in how this will play out, it is a win for the whole industry and all Canadians.
Mr. MacMillan: I think the current drafting seems clear to me. However, if it is not clear, and apparently it isn’t clear to some, make it clear for sure.
Senator Quinn: Mr. MacMillan, you would support amendments introduced to achieve that clarity?
Mr. MacMillan: Yes, if that’s all they were there to achieve and if such amendments weren’t a red herring or for some other purpose associated with it to undermine the essential purpose of the bill.
One of my concerns is we simply want to clarify, as we’re discussing now, and not trying to capture an individual YouTuber or something like that — an individual digital creator, such as somebody selling T-shirts or whatever you want to give as an example. Great; make that clear.
There is a risk here that there are platforms that currently mostly deliver user-generated content that are also getting into the professional delivery of a whole library of programming with advertising. You could see where that could get into a grey space, but if it is simply to clarify that it is not the T-shirt sellers or the individual creators, sure, make that clear.
[Translation]
Senator Clement: I’d like to thank the two witnesses. My questions are for Mr. Bastien Forrest. I would like to explore your answer to Senator Miville-Dechêne on discoverability. You said in your comments that the people who follow you look like you.
I don’t look like you, but I’m a big fan of Marvel, and I’m a super geek, but I’m from the generation that knows MusiquePlus as the glass-fronted studio on Saint-Catherine Street. I’m not of your generation. But I would like to learn more about your content. I don’t necessarily trust the YouTube algorithms. I’d like to know how to go about changing the habits of Canadians. Do you trust YouTube more than the CRTC? Do you rely on algorithms? I don’t understand them, because I don’t have enough information about how it all works.
Mr. Bastien Forrest: Specifically with respect to the discoverability of user content, then yes, I trust YouTube more than I trust the CRTC.
Senator Clement: Why?
Mr. Bastien Forrest: Because based on my experience and the experience of Quebec creators I’ve known for about 10 years and who work on the internet, if you come up with a unique product and put steady effort into it, you’re going to end up reaching people.
When I say that my audience looks like me, I’m not talking about physical appearance, but rather culture, meaning our favourite films, music and sports, and what we like to talk about. Of course, you’re welcome to check out my channel.
How to get Canadians out of their ruts? I believe it would be by funding and focusing on content in a supply and demand context. It won’t be by adding an act and regulations and making people jump through hoops that more Quebecers will be able to discover me, but rather by giving me the opportunity to compete with people like Cyprien, the YouTuber in France who has 80 employees, or some American YouTubers who have a lot more financial backing than I do.
So if we really want to place an emphasis on culture from here — Quebec, Canadian, Montreal and francophone — I would concentrate on enabling those who are already making use of these platforms to become better and get more YouTube exposure.
It’s difficult to break people out of a rut. I was recently speaking with someone who said that it would be great if anglophone Canada spent more time watching francophone YouTubers.
Senator Clement: Exactly.
Mr. Bastien Forrest: I can dream, but there are Radio-Canada stations everywhere in Canada, with very few anglophones watching them.
The argument goes like this: it’s not by recycling old models that we’re going to deal with this paradox, but rather the creators themselves who are going to build the bridges.
I recently met J.J. McCullough, a YouTuber from western Canada who is very critical of Quebecers and who has strong but fascinating opinions. We had some productive discussions, and I get the impression that he understands francophone Quebecers somewhat better now and that I now have a better understanding of his point of view. It wasn’t legislation or an organization that forced us to get together.
I mentioned Mr. McCullough as an example, but there’s also Thomas Gauthier, an extremely popular Quebec YouTuber who is much more popular than I am, with a huge following in Europe. He managed to attract an audience that is mainly European with a smaller Canadian minority, whereas I did the opposite — I think my Quebec accent is stronger than his, for one thing. He has already invited Mr. McCullough to his channel and vice versa, for a collaboration of “frenemies,” and it happened because they learned about one another on YouTube. They are fans of YouTube, they make videos for YouTube, but they also watch YouTube videos; that’s where they met one another and that’s how come they began to work together.
That’s why I want to preach by example and continue to take an interest in the rest of Canada in the hope that the rest of Canada takes an interest in us. I believe that the best thing that could be done in connection with the act would be to give the power to those who think this way rather than erect more barriers.
Senator Clement: Thank you.
The Chair: Well said, Mr. Forrest. I agree that many people dream about the past, as I dream about those wonderful years when the Montreal Canadiens would always win the Stanley Cup and there was always a Stanley Cup parade in Montreal in May, but things change as time goes by.
Mr. Bastien Forrest: I’m still a believer.
The Chair: Me too. We’ll remain true to them, but we have to dream of the future, not the past.
[English]
I would like to thank our witnesses for being here with us. We appreciate your testimony very much.
For our second panel, we’re pleased to welcome, from Netflix, Stéphane Cardin, Director, Public Policy; Motion Picture Association — Canada, Wendy Noss, President; and from the Canadian Association of Film Distributors and Exporters, Noah Segal, President, who is with us by video conference; and Justin Rebelo, Director as well, who is with us by video conference. Welcome and thank you for joining us. As is the norm with our committee, all three panellists will have five minutes for opening statements, and then we’ll turn it over to Q & A.
[Translation]
Over to you, Mr. Cardin.
Stéphane Cardin, Director, Public Policy, Netflix: Mr. Chair, honourable senators, thank you for this opportunity to speak to you today.
Netflix continues to invest and grow our footprint across Canada. Last fall, we opened our corporate office in Toronto and hired our first local content executives. They have since travelled across the country and engaged with creators in over 400 meetings, to find the next great stories that we’ll share with the world. And we’re happy to say we are in active development on several shows.
[English]
We’ve kept the cameras rolling in studios and on locations across the country and continue to collaborate with Canada’s leading animation studios on several titles every year. Many of Canada’s top VFX companies have worked their magic on our series and films, and last November we acquired Scanline VFX, with over 600 employees in Vancouver and Montreal. That same month, we also launched our first selection of mobile games, including several from Canadian game developers.
All of these investments add up to Canada remaining one of our top production countries globally. In fact, since 2017, we’ve invested more than $3.5 billion in Canada for films and series that have launched on Netflix. This includes our own titles; numerous licensing agreements with Canadian independent producers and broadcasters; and many acquisitions of both classic and new series and films, in English and in French. Each of these models contribute to the system.
We’ve also actively promoted Canada, its breathtaking locations and over 30 of our made-in-Canada titles through our Netflix in Your Neighbourhood website, which just marked its one-year anniversary, attracting foreign visitors to our cities and towns. We also promote our Canadian titles through launch events and panels at industry conferences, as well as on service through thematic rows and collections, like our National Canadian Film Day collection.
In addition, we’ve provided substantial support and opportunities to Canadian creators. We’ve enabled emerging and diverse Canadian talent like Maitreyi Ramakrishnan, star of the hit series “Never Have I Ever,” to achieve global recognition. And we’ve partnered with over 20 organizations across Canada, including the Indigenous Screen Office, the Fabienne Colas Foundation and Inside Out, to advance the careers of over 1,000 creators from every province and territory, with a focus on creators from under-represented communities.
[Translation]
Netflix has therefore invested in Canada. To the extent that Bill C-11 aims to create a flexible framework that will enable the CRTC to recognize the different ways that individual online services contribute; to tailor conditions of service applied to online undertakings; and to modernize the definition of Canadian content, we believe that is the right approach.
[English]
We, however, remain concerned about any proposals that would result in a more rigid approach, including transposing the current regulatory requirements of Canadian broadcasting groups onto online streaming services or maintaining the decades-old definition of what qualifies as a Canadian program. Under this definition, titles that are produced or solely financed by Netflix do not qualify, even when the majority or totality of key creative roles are held by Canadians.
We believe a new legislative framework should recognize that streaming services provide an unparalleled opportunity to promote Canadian stories to global audiences. The phenomenal success of titles like “Lupin” and Canada’s own “Schitt’s Creek” and “Jusqu’au Déclin” demonstrates that quality stories no longer have borders.
As members of the Motion Picture Association — Canada, we support the recommendations, including proposed amendments to the bill, made by the MPA—Canada, outlined in our respective written submissions.
[Translation]
When the government initially set out to modernize the Broadcasting Act, it clearly stated that its ambition was to create a world-class communications sector and highlighted three key objectives: enabling and promoting Canadian culture, contributing to economic growth, and safeguarding the interests of Canadian consumers, including affordability and choice.
To achieve this, Canada must build a balanced and forward-looking model that acknowledges the unique contributions of each participant in the system.
[English]
Thank you, Mr. Chair. I would be happy to answer your questions.
Wendy Noss, President, Motion Picture Association — Canada: I appreciate the opportunity to offer the shared perspective the global studios and streamers represented by the Motion Picture Association in Canada. They include Disney, NBCUniversal, Netflix, Paramount, Sony and Warner Bros. Discovery.
We hire, train and provide opportunities for 200,000 of Canada’s most talented creative workers.
Global studios spent more than $5 billion across Canada in 2021, now accounting for more than half of all production in Canada and 90% of the growth over the last decade.
At the same time, global studios have increased their investment in Canadian-owned productions, now exceeding all other players in Canada, including the CBC, Telefilm and the Canada Media Fund.
We help finance new infrastructure, animation and VFX houses, supporting over 47,000 Canadian businesses last year alone. We are proud partners of Canada’s cultural organizations, advancing equity and diversity, representation in front of and behind the camera, and amplifying under-represented voices and untold stories.
We offer a wide range of subscriber and free-to-consumer streaming services across Canada: the global originals on Netflix, the much-loved brands on Disney+ and Paramount+, Paramount’s Pluto TV, NBCUniversal’s all-reality show format on Hayu, the best in Japanese anime on Sony’s Crunchyroll, and the most popular Bollywood content on SonyLIV.
We support the thinking at the heart of Bill C-11 — modernizing broadcast policy to create a flexible framework that will allow global streaming services to play to their strengths. As Bill C-11 has reached the Senate, we are here to continue working as constructive partners with this committee playing a critical role in ensuring that Bill C-11 can realize on this central ambition.
Our written submission has recommendations in three parts: ensuring a modern, flexible broadcast policy; supporting amendments made in the House that fixed drafting language and prevented unintended consequences, including for provincial governance over labour relations in production; and clarifying the policy imperatives on discoverability.
In the limited time we have, I will focus only on the initial section regarding sections 10, 3 and 5.
First, the CRTC must create a modern, flexible definition of Canadian programs in order to expand opportunities for Canadian creatives; promote content made by, with or about Canadians; and bring Canadian stories to the world. We therefore propose an amendment to section 10 to ensure that “no one factor is determinative” as the regulator considers the full range of policy objectives in establishing a new approach to defining the scope of Canadian programs.
Second, the broadcasting policy objectives in section 3 must be flexible enough to allow each unique streaming service to best contribute. To achieve this outcome, we urge the committee to adopt an amendment that recognizes global undertakings are now being included in the Canadian regulatory system and maintain the language in 3(1)(f.1) that is necessary to foster equitable requirements for global online undertakings.
This approach recognizes the fundamental differences in content strategies between streaming services with unique business models competing around the world, and Canadian broadcasters who operate only in a closed domestic market with access to legislative and regulatory benefits and protections.
In this rapidly evolving sector, Canadians will be best served if this committee rejects calls to look backward by imposing like-for-like obligations on global streamers in Canadian broadcasting groups or by enshrining rigid, decades-old approaches to defining Canadian content in legislation.
Finally, we propose amendments to the regulatory policy in section 5 to ensure that the CRTC will encourage competition, innovation and promote choice and affordability for Canadian consumers. Legacy policies that were designed to prescribe what was available to viewers were plausible as a means of achieving cultural or economic goals in the past when distribution platforms and choices were limited. Achieving those same goals today requires a new approach that recognizes the different ways that each player can best contribute.
We ask this committee to support policy that leans into a modern definition of creativity, offers global players flexibility and a wider lens to create more opportunities for Canadian creatives and more choice for consumers.
Talented Canadians who want to stay in Canada, develop their skills and help create stories that resonate with audiences around the world need this policy to be flexible and adaptive. Viewers who want the best stories from Canada and around the world need this policy to be forward-looking and consumer-friendly.
Thank you, and I look forward to your questions.
The Chair: Thank you, Ms. Noss.
Now the floor is turned over to Noah Segal.
Noah Segal, President, Canadian Association of Film Distributors and Exporters: Ladies and gentlemen, thank you for the invitation. As was said, I’m Noah Segal, co-president of Elevation Pictures, the largest feature film distributor in the country. I am also the president of CAFDE, the Canadian feature film distributors association. I am here with my colleague Justin Rebelo, CEO of Vortex Media.
We are truly here to give you an industry look at why Bill C-11 is so timely and essential for the Canadian film and television industry. Our fundamental point is that Bill C-11 is to be put through without delay. The Canadian-based film industry is in crisis. The combination of the evolution of the industry and the globalization of the business, primarily brought on by the advent of streaming or over-the-top broadcasting, has hyperbolized. With the advent of the COVID-19 pandemic, we are in trouble.
The good news is that, with any major change, the consumers face great new choices. The bad news is what the consumer can’t see around the corner is this market correction that is occurring is already precipitating media concentration and, particularly, centralization of the curation of Canadian viewing choices outside of our borders, and particularly the United States.
Essentially, Canadians will have their choices controlled and owned by companies headquartered outside of Canada’s jurisdiction. This is not good for the social fabric of the country and, moreover, the entire Canadian motion picture industry, both English and French.
Moreover, this bill has to happen now to assist in throwing a lifeline to not only distributors but producers, filmmakers and Canadian talent coast to coast, in all languages and from all walks of diverse life. We cannot afford to dither over specifics that can be managed after the passing of the bill and through the CRTC and other policy directives.
In terms of facilitation, there is good news. The foreign-owned streaming companies most affected by this bill is market-driven, decent curators who truly want to make a meaningful profit from servicing the Canadian market. That said, left to their own devices, as with many businesses without rules and regulations, the thin edge of the wedge will drive them away from supporting a healthy, vibrant culture and homegrown entertainment industry in Canada.
The Canadian cultural future and a major growing future-centric business of export for Canada relies on this bill and its speedy assent. If we do not push the international streaming community into being true partners in our content right now, we run the very real risk of either them ignoring our interests in negotiations or Canadian producers and distributors missing this crucial moment in the rise of streaming, arguably the largest known production bump in global history.
There’s always room for improvement in the bill, such as the CanCon designation and the copyright ownership, but most of these can be included in the policy directives. This legislation cannot be delayed further.
We are sure the House and Senate committee meetings, with so many stakeholders, have given the minister’s offices a lot to think about which can be incorporated in those policy directives. CAFDE encourages the quick passage of this bill through the Senate and believe our recommendations can be incorporated into the policy directives provided by the government to the CRTC.
Justin Rebelo, Director, Canadian Association of Film Distributors and Exporters: Thank you to the Senate.
As Noah said, CAFDE encourages the quick passage of this bill through the Senate and believe our recommendations can be incorporated in the policy directives provided by the government to the CRTC.
I have worked in the broadcast, production and distribution sector of feature film and television for over 20 years, spending time employed in all three areas. I’m currently CEO of Vortex Media, a boutique studio producing, distributing and selling feature films and TV movies in Canada and globally. We develop, produce, sell and own our own productions. I’m here on behalf of CAFDE to say we have a system that, for the most part, works.
CAFDE is recommending the regulations stay largely consistent as is reflected in the CAVCO and telephone rules and guidelines for Canadian content productions and the official treaty coproductions. These rules and guidelines ensure that key cast, producer and production personnel positions are filled by Canadians and that Canadian companies own and control their productions.
I, as an example — as many Canadians did — enjoyed Disney’s Turning Red with my family, a local Canadian story told and owned by one of the world’s most successful companies and brands with origins in the United States. This film was not CanCon, as it did not meet the requirements of ownership or labour hired whether on-screen or behind the scenes within Canada.
If it were made as CanCon, the underlying copyright would reside in Canada, ensuring that earnings would ultimately have legal ties to an owner within our country. It would have ensured that a significant number of jobs within the Canadian borders were employed to make a universally enjoyed and high-revenue generating feature film telling a local Canadian story. In fact, this copyright is owned outside of our borders and jobs were created elsewhere.
It is important that Canada does not become a solely service production industry and our system protects ownership, job creation and cultural representation.
To support the production of film and television content that promotes diverse and uniquely Canadian stories in both official languages, as well as Indigenous languages, CAFDE recommends that all OTT’s and all licensed broadcast services offered in Canada be mandated to contribute 30% of gross revenues generated from subscription and advertising in Canada towards funding the prebuy, acquisition and production of Canadian content from independent Canadian producers. This is consistent with historical precedents within the Broadcasting Act. From this spend requirement, we recommend that no less than 5% of gross revenues generated from subscription and advertising in Canada be required specifically for theatrical feature films.
We also recommend an incentive be implemented to commit to feature film production prior to the start of principal photography at the pre-buy stage, whereas 125% to 150% credit is applied to every dollar invested. This incentive is to help producers get support, prior to production, when they really need it to get their films made, but also helps the OTT and licensed broadcasters reduce their requirement of investment overall into Canadian content, which helps their bottom line economically.
The Chair: If you can wrap up, Mr. Rebelo, you are well over your five minutes.
Mr. Rebelo: In addition to incentivizing the production of Canadian content, it is imperative to have cultural policies that ensure such content could be seen and is discoverable on these platforms. We recommend 30% on-air of discoverability whether in carousels and via recommendation engines.
To incentivize licensees to invest in the Canadian film —
The Chair: Mr. Rebelo, thank you. I will have to cut you off. You are well over the five minutes that have been allocated to you and Mr. Segal. Perhaps you’ll be able to weave in your comments into your answers.
Mr. Rebelo: Thank you.
The Chair: It seems to me, listening to the testimony today, I’m trying to get my head around a number of things; first, I keep hearing our need to protect our Canadian culture.
I don’t believe we’re back in the 1980s when we were just a small nation and worried about being overtaken by American culture, and others that are more powerful and stronger than we are. I believe that Canada is strong. Our artists are strong. All our sectors are strong.
The sectors that compete with the world — and we live in a global environment — are those that partner up with the global world. It doesn’t matter if it’s investment or joint partnerships. Canada is a G7 country, and we’ve succeeded in a wide range of areas because of partnering up. We’ve embraced the global markets. Years ago, we used to talk about free trade as being anathema because it would take away our Canadianism; we would be bought up and swallowed up by the Americans. You know what? We did pretty well with free trade. We’ve been dominant around the world as trading partners with our neighbours and other countries around the world.
From I’ve seen because of streaming and digital, we have a whole new world opening up to our artists and cultural communities.
You touched upon choice and competition in your testimony. If other countries start to embrace something similar to Bill C-11 in their pursuit of supposedly closing off competition — and this is what I believe Bill C-11 does — what would be the repercussions on the Canadian cultural industry vis-à-vis investment, job opportunities and creating revenue, which we have today? Anyone is free to answer that question.
Mr. Segal: First of all, I think you’re confusing — you had on the discussion with Mr. MacMillan and the gang — investment and profitability. Let’s be really crystal clear: Global streaming is a new technology that is sweeping the entire entertainment business, and it’s very successful. The challenge is not the investment in the content; it’s the sharing and the profitability. They’re saying, “We’ll finance the making of the show. We’ll own all rights forever and ever in perpetuity.”
If a Canadian creator makes a show, they can get financed and get a paycheque this month, but they have no ancillary value back in the country. That’s the equivalent of our lumber being sent across the world, being changed and developed, with Canadians buying it at twice the price later on. Let’s be clear: Nobody is trying to put up borders for the streamers. We think they’re wonderful. If the Canadians, under any restrictions, got it right and we have this Canadian content we’ve successfully survived in, we would perhaps be pushing our volume in Canada from 5% of viewership of Canadian content to 9%. We’re 8% or 9% of the North American market.
I think what you’re saying is that we’re going to be a pariah, and we’re not. Most other countries in the world are actually doing what we’re suggesting; they’re all doing it. Canadians are the most polite. France, Australia, the U.K., the EU and other territories are absolutely providing these kinds of criteria and are succeeding within it.
The bottom line is that when you talk about how it’s opening doors for Canadian content, “Schitt’s Creek,” one of the most successful Canadian content shows in recent history — who paid for that show? Canadians. Who retained the profitability in that show? Netflix, an American company.
So let me ask you this: If it were so open, why aren’t those guys sharing the profitability with Canadians? They’re not because they like the profitability. We don’t want the profitability of their shows; we want the profitability of Canadian shows to be retained by Canadians. That’s it. I don’t think that’s too much to ask.
And when you’re dealing in a market — you talk about the free market and globalization — it’s not a fair playing field. If you look at the amount of those companies in the States and their bottom lines, they’re massive. Canadian producers have no choice. It is completely a David-and-Goliath situation. You have sell your soul.
The Chair: Thank you, Mr. Segal.
By the way, just to correct the record, the U.K. has explicitly chosen not to impose any investment obligations on global streamers.
Mr. Segal: No, but they’re building a tax on those streamers.
The Chair: But that’s what we’re doing here.
Second, I don’t want to get into a debate, but I do agree with you that what you brought up is precisely the point of the discussion. It’s a question of how we can take profits away from one group to give it to another group that’s not profitable.
I will give a few seconds to others to weigh in before we continue on.
Mr. Cardin: To address the example of “Schitt’s Creek,” the rights on that show are owned by an independent production company. It did extremely well on the CBC in its initial seasons, but when it was then broadcast in the U.S. and later streamed on Netflix, and we took that show to the rest of the world, even executives of the CBC itself have recognized that doing so helped with the success of that show in subsequent seasons, not just globally but in Canada as well. The market being extremely competitive, we have seen the loss of the rights to “Schitt’s Creek” in the U.S., and it’s now with another service.
I think that’s an excellent example of how things can actually be a win-win between independent Canadian producers, Canadian broadcasters and foreign streaming services. Thanks, Noah, for bringing up the example.
On a larger perspective, I would say that for us, independent producers and Canadian broadcasters remain important partners. There is no world in which Netflix is going to be able to own every show that we make in Canada. In fact, the majority of the shows on our service are licensed, not owned. We are complementary to the role of Canadian broadcasters and Canadian funders.
Again, our mandate is to find Canadian stories that we will bring to the rest of the world.
In that respect, we’re not looking to supplant but to augment the current system. In certain cases, the film and television business is a complex one in terms of its rules of how shows are developed and financed. We feel it is legitimate, in those cases where we have fully supported the development and production of a show, and have therefore borne all the financial risk, to own the rights to that show.
To go back to the discussion you had with Mr. MacMillan on the previous panel, if I may, that is why it is our view that it is absolutely legitimate that if we are telling a Canadian story and employing Canadian creators but that we happen to own the copyright, that show should qualify as Canadian content, just as if it were owned by a Canadian broadcaster, a Canadian broadcaster-affiliated production company or an independent producer. There are several examples I could relate to this committee. I’ll give one, and it is our feature film Jusqu’au déclin that we shot in the Laurentians in Quebec. It was written and directed by Quebecers, and had an all-Quebec cast. Not a single cent of that budget was spent outside of the province. It is not a Canadian content project and is not considered Québécois because we own the rights.
[Translation]
Senator Miville-Dechêne: My questions will be for Mr. Cardin.
I did some math before the committee meeting while checking out your platform, and found approximately a dozen works that could be called French-Canadian, and about 40 that are Canadian. I found these by typing on your little keyboard, which took a lot of time.
Beyond discoverability, which struck me as just so-so, I’d like to know how many Quebecers and Canadians watch these works, compared to total audience numbers on Netflix in Canada. Do you have these figures?
To tell the truth, it looks fairly low from my standpoint, because we now know that platforms like yours are what Quebecers, among others, are watching. For the first time, you found more Quebecers subscribed to your English-language, or multilingual platforms, though dominated by English, than television subscribers. So the paradigm is changing, but it struck me as I was perusing Netflix, that I didn’t see this discoverability; there is no particular heading that I could see anywhere that could help me find Canadian content.
So I would like to have some numbers to learn who and how many are watching this small amount of content and what percentage it represents in your entire lineup.
Mr. Cardin: There are several aspects covered in your question, so I’ll try to address them one at a time.
First, according to our calculations for Canadian production, according to the current definitions…
Senator Miville-Dechêne: Well, that’s not what you’re presenting. You counted Jusqu’au déclin as one of your Quebec productions, so tell me about that.
Mr. Cardin: What I’m saying is that among our certified Canadian productions, there are already over 300 in English and French. I believe that the figure you mentioned about francophone productions is somewhat of an underestimate because we recently acquired over 25 Quebec feature films from the Les Films Séville company, which are still available. Also, a few weeks ago, we added about a dozen new francophone series.
Senator Miville-Dechêne: I typed in “French Canadian movie” and used your algorithm to find these productions.
Mr. Cardin: In terms of options available to find these films and series, there is of course the search tool. Then we have several thematic collections. If you go to our drop-down menu, under “series” or “films” you’ll see a collection called Canada.
You were talking about audience ratings. As I mentioned, our role is to take stories from here to the rest of the world. Of course, it’s also about taking stories from elsewhere and bringing them to Canadians.
There are of course wildly successful series like Squid Game and La Casa de Papel , which means that these days, people are getting used to watching series in a language other than English, which I believe is good the other way around as well, for Quebec content that we can export.
Senator Miville-Dechêne: Okay, but what are the Quebec and Canadian audience numbers for Quebec and Canadian works?
Mr. Cardin: Generally speaking, 90% of audiences for our Canadian productions are abroad, and demographically, that has been steady. Once again, we believe that it contributes to the exportability and visibility of our own content.
Getting back to the specific example of Jusqu’au déclin, during the first 28 days that the film was on our platform, it was seen by 21 million people around the world. That, in my opinion, is unparalleled.
Senator Miville-Dechêne: That’s terrific, but the question I’m asking is how many people in Canada and Quebec watch the Canadian and Quebec productions that you have in your lineup?
Mr. Cardin: I don’t have an exact number, but I can tell you that it represents approximately 10% of all streaming from the platform around the world.
Senator Cormier: I have a question for Mr. Cardin and another for Ms. Noss, which I’m going to ask in French.
I would like to hear what you have to say about intellectual property. By intellectual property we mean industrial property, copyright, and neighbouring rights for software, literary works and entertainment.
We were talking earlier about revenue sharing. Who owns the intellectual property for the project you produce and which are made in Canada by Canadian creators?
Mr. Cardin: There is no single model. As I was explaining earlier, most of our productions are coproductions with independent producers, and they own the intellectual property. Of course I’m speaking generally.
There are also productions to which we own the rights. It’s all related to the financial model that determines who takes the risks for financing the various development and production phases. In certain instances where we financed everything, we ourselves hold the rights.
In other instances, where the financing might be shared with other partners, public funds or private funds, it remains the property of the independent producer.
Senator Cormier: Do you mean that in instances where you have financed everything, the author, who created the raw material for the work you are you using, loses the intellectual property?
Mr. Cardin: I was talking about copyright in the production. Of course, for the payment of the artists hired to work on these productions, collective agreements are applicable, and in all of our productions, of course, we comply with the collective agreements in force in Canada.
Senator Cormier: Thank you. I still find it worrisome that you keep the intellectual property on Canadian productions, but I understand your business model.
Ms. Noss, I’m not sure I fully understand your argument about keeping the wording of 3.1(f.1), when you say that the approach acknowledges the difference between competitive global streamers and distribution by Canadian broadcasters working in a closed domestic market. We know that several Canadian broadcasters also operate as online companies.
Also, what do you mean when you say that Canadian broadcasters have access to a set of exclusive legislative advantages and regulatory protections? Are you talking about tax credits? If so, then it seems to me that foreign production companies would also be eligible for tax credits.
Could you give me further details on this?
[English]
Ms. Noss: There are two different sections although they are interrelated. The first is the twofold standard in proposed section 3.1(f) which consists of (f) and (f.1) The current standard in (f.1) relates to global streamers. They have a different business model. They are making content for the world. They are not just making content in Canada. By incorporating these streaming services, there is — to reference what Senator Housakos was saying — so much more opportunity for Canadian creatives. However, they are different than Canadian broadcasters who are only creating content in Canada for a Canadian market. Their investment obligations, for example, are augmented by what they spend on news and sports. Global streamers don’t do that. In terms of making the content here, it consists of those two elements that I spoke of in my opening statement and that you referenced. There is over $5 billion in production every year on what you have said, namely, where we own the copyright. The studio is making the investment here. Those productions are typically made where over 98% of the people working on it are Canadian. It is so much more than just Canadian producers.
In addition to that, there are currently Canadian-owned productions for which our members are the largest single source of investment. About 15% of the investment in Canadian-owned productions is made by global streamers. To give you some context, the CBC is 13%; Telefilm is 1%.; the CMF, Canada Media Fund, is 9%.
Contrary to what you may have heard earlier, absent any regulation, Canadian producers are critical partners for global streamers. They are important ways for us to appeal to local audiences, partnering with them on a range of business models. It is not just about taking the rights. There are so many great examples, “SkyMed” and “The Porter,” a great CBC show that I highly recommend. But that was financed with the infusion from Paramount, which owns BET and that allowed “The Porter” to get not just a Canadian audience telling a Canadian story, but to get an audience in the United States —
The Chair: Thank you, Ms. Noss. Sorry to cut in but I’m trying to distribute the time for senators.
Senator Simons: My question is for Ms. Noss. I wanted to look at your amendments proposed to section 10(1.1). I’m just trying to understand what difference you think that phrase “with no one factor being determinative” means. I would read that clause as redundant. Is that not already understood when you enumerate a list of factors such as that?
Ms. Noss: Thank you, Senator Simons, for the question. We are really trying to ensure that there is no ability for the CRTC to set a different policy than what we believe the minister and this legislation intends. The minister has been very clear that there should be a modern definition of “Canadian content” that includes the full scope of the creative talent we have here in Canada and that benefits them, not simply Canadian producers.
Having said that, as you know, there are various parties who have come before this committee to suggest it has to be the Canadian producers who own the copyright. For that reason, we think it is advisable that the legislation sets clear standards for the CRTC that no one single factor is determinitive.
Senator Simons: But surely when you provide a list that does look at these factors, is that not already understood?
Ms. Noss: Again, the clearer the legislation can be, the better off this policy will be in terms of providing opportunities for the full range of Canadian creators.
Senator Simons: Similarly, I wanted to turn to your proposed amendments to subsections 5(2)(g), (i), (j) and (k). One of the things that frustrated me when the bill came out of the House is that a lot of different stakeholders from all across the spectrum added what I would call “motherhood language” — layers of explanatory rhetoric that I think will actually end up making the bill harder to interpret instead of easier.
That is how I feel about your proposed amendments here. It seems to be a lot of verbiage that doesn’t add clarity. Could you explain to me all these words about effective technology and market forces? What are they actually doing?
Ms. Noss: Sure. Thank you for the opportunity.
To put this into context, the ideas around consumer interest being taking into account by the CRTC are already in place in respect of telecom by virtue of a policy direction. As you know, updating the Broadcasting Act or the Telecommunications Act doesn’t take place very often, so in order to ensure that the CRTC takes into account consumer perspectives in making telecom policy, there is a policy direction that requires the CRTC to take into account — and that is where a lot of this consumer choice, market forces and competition language comes from — directing the CRTC to take those things when it is making policy on the telecom side. We think the CRTC should equally take those factors into account when making policy on the broadcasting side.
This legislation is so important and can provide so many benefits to Canadian consumers and the Canadian creative community, but there is nowhere else in the legislation that speaks to the interest of market forces, competition and consumer choice. I heard your speech in the Senate early on when you talked about the impact and the importance of having smaller niche thematic services available in third languages — or the idea that competition is good for the system. That is what this amendment is designed to address.
Senator Simons: As I have said, I would like a clearer bill. I worry about adding — from a variety of places; it certainly hasn’t all come from your members. But I think you take my point that, of the 130 some amendments that were made on the House side, a lot seems rhetorical rather than substantive.
Ms. Noss: I would absolutely agree, senator. But there is nowhere in the bill that speaks to consumer interest — consumer choice, market forces, competition — all being required for the CRTC to take into account when it is making this really important step forward in broadcasting policy.
So, the wording aside, the principle that there should be, in the broadcasting policy and regulatory policy section, the legislature telling the CRTC that they must take into account consumers in Canada — we think it is a positive step forward.
The Chair: Thank you, Ms. Noss. I don’t like cutting people off, but I have that unfortunate job.
Senator Manning: Thank you to our witnesses.
Ms. Noss, would you elaborate on CanCon and give some examples of productions that don’t count as CanCon simply because of who holds the IP?
Ms. Noss: Thank you for the question.
I have been listening to a lot of the debate here, and it’s almost as if people think the definition of “Canadian content” was established on some tablets in the desert long ago and cannot ever be changed. That is far from the truth. There are already various definitions that apply in Canada for different reasons. Canadian producers already have the benefit of a definition that only recognizes when a Canadian producer owns copyright for access to public funds, like Telefilm and the Canada Media Fund, and for higher levels of tax credits.
We are dealing with a definition of Canadian programs for broadcasting policy, and for that, when you are bringing global companies and streamers that make content for the world, there needs to be an expansive 2022 approach, rather than being mired in a 1970s approach.
If we look at the different kinds of stories, you can have stories set in Canada, like Washington Black, written by Esi Edugyan. It is a fantastic novel Giller Prize-winning novel about a Black slave travelling to Nova Scotia. The investment in that Canadian novel, Canadian writer and Canadian story is being made by Disney, and it is being shot in Nova Scotia. It is not qualified as Canadian content.
You have heard a lot about Turning Red, which resonates with any child of immigrants growing up in Canada, particularly in Toronto. That, too, is a Canadian story.
There are a host of Canadian creative positions that are not currently recognized in the definition. So you can have a Mexican director like Guillermo del Toro, who makes all of his fantastic content in Toronto, with Oscar-winning and -nominated creative teams — production designers, art directors, costume designers and a Canadian producer — but for which Fox owns the copyright. That also would not qualify.
Again, I want to applaud the minister for recognizing the importance of this. He has said he will include in the policy direction the idea that the scope of “Canadian content” needs to be modernized to adapt to the world in which we live in 2022, where Canadian talent succeeds around the world. We should operate from a position of recognizing the importance of that.
I will close, so Senator Housakos doesn’t have to cut me off again, with John Lewis, Director of Canadian Affairs at IATSE, the union that represents the vast majority of entertainer workers. He said the following, referring to Canadian programs and broadcasting:
. . . Cultural policy should support investment in all Canadian creative workers and not exclusively benefit Canadian production companies.
Senator Manning: The policy directive is from the minister, but the CRTC will make the final decision. So if you were given the opportunity, either witness, to create the number one priority for an amendment to this piece of legislation as it stands today, what would it be?
Ms. Noss: Do we have to choose just one?
Senator Manning: No. I’m just wondering what your main priority is. I realize we are time-sensitive here.
Ms. Noss: It is not necessarily an amendment but I would suggest retaining subsection 3(1)(f) that recognizes there are different business models and content strategies for global streamers and broadcasters is critical, and ensuring that there is a modern definition of “Canadian content” that expands the scope so that more Canadian stories can be brought to the world and Canada.
And the amendments in section 5 will really bring the consumer perspective into the CRTC’s decision making.
Mr. Cardin: If I had to choose just one, it would be the issue of copyright ownership. When Netflix makes a show here in Canada, based on Canadian stories, employing Canadian creators, that should be recognized as a Canadian story. For us, it is avoiding additional amendments are made on that.
Senator Sorensen: My question is for Mr. Segal, and since I do have another question, please do not provide too long of an answer.
We have been told several times that there is no other country doing anything like this. Can you elaborate on what other countries, like the U.K., are doing that you believe are similar to Bill C-11 and how those regulations effect you in Canada?
Mr. Segal: I’ll be brief and I’ll keep it very level. With regard to France specifically, they have, obviously, injected this notion that — for example, Netflix like to have their films day and date with the theatrical, and France has a long tradition of having the films go theatrical and have a distance between that and it going on a streaming or broadcast platform. They have put pressure on everybody, saying you have to honour this. So if you invest in a film, it has to play a certain window before it goes to the streaming service. They are putting in that you have to have a certain amount of catalogue purchases that are French or European content, and a certain amount of films that are new that are French content or French-owned content. That is not impacting in any negative way.
Again, all the important American content that our associates are saying are at risk, they are not at risk. Everybody is getting that content. They are just saying that a certain portion has to be dedicated towards these things. The U.K., as I was trying to allude to earlier, is putting in a certain percentage has to be brought back into the economy, so that means it supports the local content creators. That links up with what was said earlier by the YouTuber on the previous panel, which is — and I understand what our friends here are saying representing the U.S. companies — let’s not put them into too much of a hole; let’s let them do mostly what they want to do. Just make sure they inject enough capital that supports the content creation.
Senator Sorensen: Thank you very much. My next question is for Mr. Cardin and, Ms. Noss, you may wish to jump in too. I’m going to try to combine all this. Netflix has endorsed the MPA proposal. Ms. Noss, please correct me if I’m wrong, but I believe it opposes allowing the CRTC to interfere with the user interface of online undertakings. So Mr. Cardin, are you saying you would oppose requiring, for instance, a Canadian content tab on the Netflix home page?
Also, ACTRA is concerned that exempting online undertakings from the Status of the Artist Act would threaten the rights of artists. But the MPA supports the current language in the bill. Do you agree with that? I’m looking for you to respond but, Ms. Noss, if you want to clarify anything, feel free to jump in if we have time.
Mr. Cardin: I’ll try to keep it brief. I do think it is important when we are discussing the objectives of this bill to support the production and promotion of Canadian stories to look at the issue of promotion in a holistic way. I understand the concerns around discoverability, but one needs to take into consideration the immense efforts that we make off service to promote Canadian stories as well.
I’ll give you a few examples and I’ll try to be brief. I mentioned our Netflix in Your Neighbourhood website, something that we did at our own initiative. It is over a year old. It has over 30 projects on it. We update it quarterly. We present the locations and cultural places of interest in the locations that have been used in films and series that are made in Canada, which our own research demonstrates actually has economic benefits because it draws tourists to this country who are interested in seeing these places.
Senator Sorensen: Thanks for the tourism plug. I think that was directed right at me.
Mr. Cardin: That was entirely serendipitous. In addition to that, obviously, our PR colleagues who work very hard with respect to premieres of made-in-Canada shows that we do in Montreal, Toronto and Vancouver, regularly appear on talk shows and do media interviews. We do panels and industry conferences. So in our view, it would be a mistake to only look in a very narrow way at discoverability on service.
Now, again in terms of discoverability on service, I think Mr. Bastien Forrest, who appeared before us, explained it very well. We think that Netflix succeeds largely with its members because we make it easier for them to find the content that they want to see, and we respect their choices, and people invest a lot of time in their viewer profiles. Mine is terrible because my three kids are on it, but for most people it is useful.
If you, with a noble objective, actually create a situation where you will force a certain content option on to a viewer, and it is something that they are not interested in — it is a Canadian horror film and someone is only interested in Canadian romantic comedies — that results in that show being viewed less favourably, and that has an impact.
Senator Sorensen: Sorry to interrupt, but something like a content tab that says “Canadian content” I don’t think would do that. I understand discoverability with the algorithm. In my brain, I’m asking “Okay, well, then what else can we do?”
Mr. Cardin: I don’t want to take up all the time, but I mentioned things that we have like collections, rows and drop-down menus; under film series, you will find Canadian. But I want to leave Ms. Noss some time.
Senator Sorensen: How am I doing?
The Chair: We are well over time.
Senator Sorensen: Thank you. That was very helpful.
The Chair: Ms. Noss, I really apologize.
Senator Klyne: I would like to get some questions in to all three on this panel. And welcome to them. So maybe the answers could be provided to the clerk if I can roll through them. First of all, I want to go back to section 10(1.1) of Bill C-11 where Senator Simons was. You have suggested an amendment to that section, which is the section that deals with the definition of what constitutes CanCon. It is my understanding you believe the definition should be broadened and more flexible. It is important for me to understand why this is important. I would like the answer to why it is important to have it more broadened and flexible.
In that regard, what is the suggested amendment that, if passed, would allow the CRTC to more broadly define what Canadian content is? That is one question maybe you can provide a written answer to.
Also, the Motion Picture Association — Canada believes that the CRTC should be given clear instruction not to intrude on the platform’s use of algorithms. I don’t understand why they would need to do that, because you need to demonstrate measurable results as evidence it is in alignment with the aims and objectives of the bill.
So if you find yourselves tracking a little offside, you will want to meet those aims and objectives, so you may want to influence your own algorithms to make those achievements. My real question is: Which section or clauses afford the CRTC the latitude to micromanage the algorithms used by online companies on their platforms? You could answer that in writing.
I have a quick question for Mr. Segal and Mr. Rebelo. Kind of chock full with a few points you made there, but I believe that CAFDE has concerns with some of the public criticisms that have been levelled against the bill. I would like to know what your response or counter to some of those criticisms are. Unfortunately, we don’t have time to hear that, so you could provide that in writing.
Also, you had mentioned something about some pre-buy Canadian content, and I didn’t quite get the intent of that or how that would serve. I didn’t understand that, and I want to know what the intent was there and what the objectives were.
Finally, for Netflix, I have a quick question. Actually, I have two or three, but I’m going to try to focus on one point here. There is a reference that:
. . . Netflix cannot benefit from the current flexibility in the CRTC’s regulatory rules which allows Canada’s large private sector broadcasters to dedicate a majority of their Canadian content spending through the categories of news and sports programming.
I would like a further comment to another point that was made:
Nor would the current definitions of Canadian content recognize titles that are produced or solely financed by Netflix, even when the majority of key creative roles are held by Canadians.
The fact that key creative roles are held by Canadians, does that constitute Canadian content as defined in the bill? And perhaps offering some more flexibility, as the Motion Picture Association — Canada is presenting, would allow? You could perhaps comment in writing, please.
The Chair: Thank you to our witnesses for coming before us. As you can see, witnesses, there are a lot of questions. As I can see from my list of senators who still have questions, we didn’t have enough time to get to everything. I apologize for, on a couple of occasions, cutting off our witnesses. Again, hopefully steering will be in agreement with the Chair that you are worthy of maybe bringing back in the next few weeks for another round because there are still a number of unanswered questions that need to be resolved.
We are past our time this morning. I thank you for being before us. Thank you, colleagues.
(The committee adjourned.)