The politics of Netflix
Amid criticism over the lack of details with Ottawa's new creative sector policy, Heritage Minister Mélanie Joly is shedding some light on what's to come from the government's agreement with Netflix.
The government's strategy, announced Thursday, broadly aims to support Canadian culture and includes plans to beef up Ottawa's contribution to the Canadian Media Fund, invest in local news and assist artists, musicians, writers and other content creators in a changing digital landscape.
The strategy also includes an agreement with the streaming giant Netflix to spend at least $500 million over five years on creating Canadian content.
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One question that remained after Thursday's announcement was whether the money pledged by Netflix would go to creating Canadian content, as defined by Cancon rules, or just to producing content in Canada, such as an American crew shooting a film at a Canadian location. The former would require employing Canadians in key artistic and production roles.
While producing content in Canada doesn't appear to be off the table, Joly said the idea is to employ Canadians.
"There's no need for Netflix to open a Canadian production company in Canada just to do service production, which is a term to basically come in Canada and shoot new content," Joly told The House.
Critics of the agreement have voiced concerns that Netflix is gaining an edge over home-grown companies, since the government's strategy doesn't require the company to pay sales tax on its services in Canada.
Putting a tax on digital platforms is a tough question for Finance Minister Bill Morneau to tackle, Joly said.
"That's quite frankly a very complicated question," she added. "All countries in the world are asking themselves how to deal with digital platforms that are mainly American, out of Silicon Valley."
The Netflix operation north of the border is the first production house run by the company outside of the United States.
Globally, Netflix spends $7 billion on production every year.
The $500 million allocated for Canada is just a floor, Joly noted, the company could end up spending more. She also said the company will be providing more details on their plans soon.
Joly added the government is eyeing other big internet companies to make Canadian content production agreements.
"Netflix has much more invested in production than any other platform yet… they're the leaders right now in terms of platforms," she said. "Facebook has said they want to do that. Amazon is right now trying to do that. And so that's why we want to have those discussions."