Canada: What Is The Online Streaming Act And How Will It Affect Canadians?

The Online Streaming Act (OSA) is one of three digital initiatives of Canada's federal government. The other two are the Online News and the Online Safety regulations, set to be passed in the near future.

On April 27, 2023, the OSA came into force in Canada. The Act is a shiny new version of the old, and some would say decrepit, Broadcasting Act. The OSA is intended to address contemporary challenges arising from the growing popularity of internet videos and digital media, as well as prioritize the needs and interests of Canadians.

The OSA empowers the Canadian Radio-television and Telecommunications Commission (the "CRTC") to regulate digital content creators, including online streaming within the framework of broadcasting. The OSA arms the CRTC with the ability to impose conditions on internet broadcasts. Broadcasters may be required by the CRTC to utilize Canadian content and support Canadian content makers. Importantly, the OSA may also be used to improve the discoverability of Canadian content across various platforms. If you see altered results when online streaming or feel your search results contain a surplus of maple syrup and poutine, the OSA and CRTC may be the culprits.

Support and Criticism

Supporters of the OSA argue it promotes a level playing field by applying regulations like those already in place for conventional radio and television broadcasters. However, critics express concerns about the significant authority granted to the CRTC, which operates with limited oversight from Parliament. Content creators are mostly worried the CRTC will use OSA to regulate user-generated content, which forms the bulk of streaming revenue for platforms like TikTok.

While the Government clearly feels regulation is needed, streamers like Netflix, Spotify, and YouTube have opposed the Act. They claim it allows the Government to come between streamers and subscribers, restricting what should and should not be streamed online. Google and YouTube even launched a public campaign against this legislation, claiming it had an adverse affect on user experience.

Moreover, critics fear the Act's broad language gives little insight into limitations on the powers of the CRTC. It does not explain how or if the CRTC would make use of its powers in specific situations. Perhaps as a response to this criticism, a policy directive was published in July 2023 for implementation of the Act, providing direction on how to the CRTC can achieve its objectives. The CRTC has started public consultations and is scheduled to reach policy implementation stage in late 2024.

Regardless of how you feel about the OSA and its objectives, more Canadian content is sure to find its way into your daily streaming.

Penalties for Non-compliance

The CRTC can fine streaming entities for violating orders or regulations. Fines from the CRTC under the new OSA may be up to $25,000 for first offences by individuals, and up to $10 million for first-time offending corporations. Individuals and corporations must be extra diligent to abide by the instructions of the CRTC, or risk heavy penalties.

What the Online Streaming Act means for Canadians

Canadians can expect more Canadian content on their various online streaming feeds. Disney+, Netflix, Prime Video, YouTube, Twitch, or any other online streaming service may be forced to alter their current algorithms to favor Canadian content and content creators. Some Canadians may be happy to see Canadian content makers getting exposure, but there is obviously a risk of just receiving more Justin Bieber, Celine Dion, and Nickelback. For content creators on platforms like YouTube and TikTok, there is disappointment in the Government's refusal to recognize the unique nature of user-generated content in the new Act.

On the brighter side, with a limited amount of Canadian content currently available, the OSA may create opportunities for new Canadian content creators to gain prominence in the digital media landscape. The Canada Media Fund anticipates significant contributions from major streaming services, potentially generating up to $830 million in annual funding by 2023. This influx of money is expected to generate a greater amount of Canadian content being accessible on streaming platforms. For better or worse, this will probably lead to more Canadian programming on your Netflix feed.

In summary, the Online Streaming Act represents a significant regulatory shift in Canada's approach to online streaming, with the goal of promoting Canadian content and talent while addressing contemporary challenges in the digital media landscape. When the "CanCon" rules were introduced for radio and TV more than a half century ago, similar benefits and risks were debated. There are, however, some additional issues in the internet arena. The impact of the OSA on Canadian media and streaming platforms will only become apparent as it is implemented and enforced.

While there is uncertainty surrounding broadcasting legislation, the Intellectual Property & Technology (IPT) Group at Procido LLP is well-positioned to continue advising clients on compliance with this legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.