Music Canada Files to Join Court Battle Over 'Streaming Tax'​

Music Canada has applied to intervene in a key Canadian music policy battle.

The organization, which advocates for the major labels in Canada, is seeking leave to intervene in the legal challenge of the CRTC's 2024 decision that major streaming services must pay into Canadian content funds as part of the implementation of the Online Streaming Act.

The mandate specifies that foreign-owned services with over $25 million in annual revenue contribute 5% of that revenue to funding bodies like FACTOR and Musicaction, as well as an in-development Indigenous Music Fund.

That decision has become a major battle in the Canadian music industry, with organizations like the Canadian Independent Music Association (CIMA) and the Indigenous Music Office welcoming it, while others like the Digital Media Association (DIMA), which represents the major streamers, have been fiercely critical of what they call the "Streaming Tax."

The Federal Court of Appeal paused the mandated payments until an appeal of the decision is heard this year.

Now, Music Canada is wading into the legal challenge, aiming to speak to what it calls the potential harms the regulation may cause to existing investments made by streaming companies in the country.

"Specifically, we are asking the court to consider music streaming services’ direct investments in Canada among qualifying contributions," says a statement from Music Canada. "We are concerned that the CRTC’s base contributions decision risks harming ongoing and direct investments in the Canadian music streaming market and Canadian and Indigenous artists."

Music Canada points out that streaming services have dedicated teams in Canada, investing in programs and initiatives that support Canadian and Indigenous musicians.

"In setting the 5% levy, the CRTC did not take into account or recognize any of the investments made by music streaming services in Canada," they write.

CIMA President Andrew Cash, in a previous interview with Billboard Canada, argued that the investments streamers currently make aren't comparable to the career development enabled by Canadian organizations like FACTOR and Musicaction.

"Over the last five years, FACTOR has supported over 6,500 artists across the country,” he said, pointing to artists like Charlotte Cardin and The Weeknd as just two musicians who received key early investment from FACTOR.

Music Canada also takes issue that a portion of the base contributions will be used for a news fund, which isn't specifically related to music. (Specifically, 1.5 of the 5% contributions are mandated for "a new temporary fund supporting local news production by commercial radio stations outside of the designated markets.")

"While support for news is a laudable goal, it should not come at the expense of artists who are already trying to compete in a highly competitive, global music marketplace," the statement reads.

Read Music Canada's full statement here, and a deep dive into the battle over the base contributions here.