Is Canada about to lose streaming from Apple, Amazon, and Spotify?
Image credit: Hermes Rivera
Canada’s new streaming tax is seeing music streaming services and the industry rise up against the government, potentially damaging streaming’s place in the country?
Canada have announced a new streaming tax that demands streaming services to contribute 5% of their revenues in Canada. Streaming services are rallying against it and have gained support of much of the industry at large, including Music Canada.
The tax requires that any music streaming services who aren’t affiliated with a Canadian broadcaster earning more than $25 million in revenue must pay 5%. This money will then go to the Canadian broadcasting system to fund local creators and broadcasters.
It has sparked concerns over what the backlash might mean for streaming services in Canada. Earlier this year, after a similar tax was introduced in France, Spotify raised their prices to pass the cost on to consumers. Whilst Spotify haven’t made a similar threat in Canada yet, the consequences are yet unknown.
Music Canada’s CEO, Patrick Rogers said: “Canada’s broadcast regulator, the CRTC, announced that music streaming services will need to pay an unprecedented 5% of their Canadian revenues to support the legacy broadcasting system. Almost half of that money will be used to prop up traditional radio. If that sounds like outdated thinking, it’s because it is.”
Rogers describes how Music Canada worked with the CRTC on the Online Streaming Act, saying the news of the tax was “a mix of surprise, disappointment, and confusion”. He adds that their decision “is not what artists need to succeed in today’s highly competitive, on-demand, streaming-driven music marketplace” and “ignores the role that licensed streaming plays in the growth of the industry and furthering the careers of our artists”.
Apple, Amazon, and Spotify are filing a legal challenge against Canada’s streaming tax. Rogers fears that if the protest is not successful that it could “trigger a reduction in streaming services’ investments in our country – or worse, an exodus.”
A similar issue in Uruguay saw Spotify threaten to leave the country before it was clarified that they wouldn’t need to pay more.
However, a major market like Canada will probably see a similar response to France’s tax increase. Rogers says: “It’s easy to predict that the new costs will be passed on to consumers, which could threaten Canadians’ participation in the licensed music economy that sees artists paid when their music is played.”