Why the CRTC needs an overhaul – Part 2

This is the second part of my post/rant about the CRTC.  You can find part one here.

In part one I briefly talked about the protectionism the CRTC takes with regards to Canadian content.  I want to talk a bit about how the CRTC handles TV, and how it is really limiting how Canadians can get TV shows legally through new media sources, namely the internet.

I am going to start by explaining where the United States stands in online media.  It’s a fairly simple process in the US.  Fox produces the show 24, and they have full rights to that show to distribute it however they want.  24 can be watched on regular TV, it can be purchased on the iTunes store, and it can be legally watched online on various websites, most notably hulu.  Through all of these, Fox collects a royalty.  It collects a percentage of the sales on iTunes, as well as revenue from advertisements on both the broadcast TV and web versions.  The streaming web versions have advertisements just like the broadcast TV does.  in the year since hulu launched, it has exploded in popularity.  The people that visit the site do not care that there are ads in the shows.  they appreciate that they can watch the shows online, and are more than willing to sit through normal ads.  This model is proving very successful, and more and more shows are appearing on the web in either a paid downloadable form, or an ad-supported streaming fashion.

Now, lets move over to the Canadian logistics. In Canada, Global TV has paid for the right to show 24 on it’s network.  This means that Global has full rights to the show in Canada.  Under CRTC rules, Global simulcasts 24 fox in the US, except that the fox channel in Canada is dubbed over the the Global broadcast.  This means that the Fox broadcast is not seen at all in Canada.  This is to ensure that all ads shown on TV are the Canadian ads.  This I have no problem with(except for the super bowl of course.  I want those US ads).  where it gets muddy is the online space.  I will use the iTunes store and 24 as an example. 

Since Global owns the rights to 24 in Canada, it also owns the rights for all online broadcasts of the show as well.  for Apple to offer 24 on the iTunes store in Canada, they have to negotiate a deal with Fox, as it is the owner of the show as a whole.  Then, because Global owns the broadcast rights in Canada, Apple essentially has to negotiate the same deal again with Global.  this means that while Apple only has to negotiate one deal to offer 24 in the US, it has to negotiate 2 deals to offer 24 in Canada.  This means that they will have to pay fees to both Fox and Global, which, if any such deal can even be done, will likely mean that extra cost being passed onto the consumer who buys the show.  Apple has been reluctant to this point to have to pass that cost onto the consumer, so those deals have not been made.  To be fair, Global does offer it’s shows streaming on it’s website.  However, as of this writing, they have chosen not to allow other methods of streaming either through them, or through sub-licensing their rights to the show.

If you look on the iTunes store in Canada, there is a lot of Canadian content, as well as some US content.  Canadian content can be negotiated the same way the US content is in the US. if CBC produces a show, they own all the rights, so Apple only has to negotiate one deal to get the show on iTunes.  there are also several US networks and shows in Canada.  Those are shows that do not have a Canadian rights owner.  Meaning that there are no Canadian networks that broadcast them.  In that case Apple again only has to negotiate one deal for those shows, as there is no one who holds the rights to broadcast the shows in Canada.

What I would like to see the CRTC do is begin removing the online component of the Canadian network’s license to show US shows in Canada.  If they want those rights, they should have to negotiate them separately.  This would allow proper competition in the marketplace, instead of a monopoly of the Canadian networks over US content.  Let’s un-do the shackles, and let people actually innovate with TV delivery on the internet.  It’s the way of the future, and if the CRTC chooses not to allow this to happen, they risk having the country left behind as others innovate.