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How to build an effective digital Cancon strategy on the cheap

Michael Geist holds the Canada Research Chair in Internet and e-commerce law at the University of Ottawa, Faculty of Law. He can be reached at mgeist@uottawa.ca or online at michaelgeist.ca.

After months of public consultation and debate, Canadian Heritage Minister Mélanie Joly will unveil the government's plan for Canadian content in a digital world this week. Ms. Joly launched the digital Cancon consultation in the spring of 2016 by emphasizing that all policy options were on the table, but the choices have narrowed considerably in recent months.

A potential Netflix tax was a non-starter due to a 2015 election-campaign commitment, Prime Minister Justin Trudeau eliminated the possibility of an Internet tax in June and the government has steadfastly (and rightly) defended Net neutrality, meaning there will be no mandated prioritization of Canadian content on the Internet.

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With few new sources of funding, Ms. Joly's strategy will likely rely on updated policy measures rather than more taxpayer dollars. Given the frequent calls from lobby groups for new regulations and mandated contributions for Internet companies, that approach is likely to leave those who equate cultural policy with more government-backed funding disappointed.

Ms. Joly has an opportunity to craft a new vision for Cancon that eschews more regulation and instead emphasizes competing on the global stage with policies that better equip Canadian creators for digital challenges. What might a forward-looking Cancon strategy without significant new spending look like? There are at least five factors at play.

First, Ms. Joly is a big believer in making Canada a global cultural player with increased exports abroad and bigger foreign investment at home. Industry data is encouraging, with foreign financing now one of the leading sources of funding for English-language television programming. In fact, Canada stands as one of top three production markets for Netflix, confirming that online video services are attracted to the Canadian production market without the need for further regulation.

Even as foreign services play a greater role in Canadian production, the government has signalled that it also expects Canadian broadcasters to contribute to domestic success with its recent decision to send a CRTC ruling on minimum spending back for reconsideration.

If that represents a nod to the traditional approach to Canadian productions, new policies could include a re-examination of what qualifies as Cancon. Canada maintains one of the least flexible approaches in the world and expanding the types of productions that qualify as Cancon would both enhance investment and ensure that cultural policy shifts away from a predominantly employment-based, box-ticking exercise.

Second, Ms. Joly needs to deliver participation from Internet giants such as Netflix, Google, Apple and Amazon to satisfy critics. Rather than pursuing regulation of those services through mandated contributions or Cancon requirements (which would run counter to Net-neutrality rules and discourage the potential establishment of an Amazon head office in Canada), the better approach would be seek assistance with the "discoverability" of Canadian content online. The Internet companies are already moving in this direction – Alphabet Inc.'s YouTube and Apple now have prominent sections devoted to Canadian content – and Ms. Joly should work to bring everyone into the fold.

Third, Ms. Joly's digital Cancon strategy must recognize the link between culture and trade policy. With some U.S. lobby groups raising the possibility of eliminating the long-standing cultural-policy exemption in NAFTA, the government should make it clear that cultural policies will not be bargained away in trade talks with the United States and Mexico and that made-in-Canada intellectual-property policies will be preserved.

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Fourth, the government should continue its work on legislative reforms that touch on cultural policies. The current joint consultation with Innovation, Science and Economic Development Minister Navdeep Bains on modernizing the Copyright Board of Canada promises to address frustrations with delayed rulings that make it harder for businesses to innovate and creators to be paid. In the longer term, reviews of the Copyright Act and Canada's broadcast and telecommunications laws will provide further opportunities to modify the cultural legal frameworks.

Fifth, Ms. Joly should work with Finance Minister Bill Morneau on sales-tax reform to apply GST/HST to digital services. The current rules create an uneven playing field, with Canadian services collecting and remitting sales taxes, while foreign providers such as Netflix, Spotify and new sports entrant DAZN exempt from doing so. No one wants to pay more taxes, but competitive fairness dictates that foreign services with substantial Canadian subscriber bases collect and remit sales tax.

Some may have viewed the digital Cancon exercise as the chance for more government-mandated funding, but the past 18 months has instead provided Ms. Joly with the opportunity to leave the outdated, regulation-first approach behind. In its place, there is the chance for a more confident strategy that emphasizes competition, flexible legal frameworks and the export and promotion of Canadian content to a global audience.

Historical drama Hochelaga, Land of Souls to represent Canada at Oscars (The Canadian Press)
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