Home > crtc, Google, netflix > A Canada without YouTube? It could happen

A Canada without YouTube? It could happen

July 12, 2011

Here’s an interesting if somewhat disturbing thought: can you picture a world without YouTube? Or more specifically, a country without YouTube?

It seems improbable, almost impossible, but it’s entirely conceivable if the CRTC loses its collective mind and decides to regulate such “over-the-top” internet services in Canada.

The regulator, answering to cajoling from traditional broadcasters, has now concluded its “fact-finding mission” on whether YouTube, Netflix and other OTT services should have Canadian content rules foisted on to them. At some point, it will decide on whether to proceed with a new, full hearing, or whether it will just drop the issue, at least for now.

The CanCon rules applied to traditional media generally require broadcasters to air a certain percentage of Canadian programming per day, plus pay a percentage of their revenues into funds that help create said programs.

Now imagine if those same rules were applied to the likes of Netflix and YouTube. They’d be easier for Netflix to adopt - it would probably be simple and cheap for the streaming video provider to stock up on old episodes of Beachcombers and The Friendly Giant, thereby meeting the percentage requirements. Paying into development funds would also drive up Netflix’s cost of doing business, which would mean the company would either have less money to spend on new content or it would have to raise prices, but it would be doable.

For YouTube, however, it’s a different story. Measuring and controlling the service for Canadian content would probably be next to impossible, but it’s actually the money issue that’s the bigger problem for YouTube’s owner, Google. The company has been promising for years that the video service is nearing profitability, but barring any official announcement, it hasn’t happened yet. That’s because it’s not an easy business to monetize - the tremendous popularity of the free service means rather big infrastructure costs, which advertisements haven’t seemed to counter just yet.

So what are a few extra million dollars in regulatory costs to a company the size of Google? Not much, but Canada would likely be just the first of many countries to dip their hands into Google’s pockets. Any other country that failed to enact similar regulatory requirements and costs - in the name of national cultural development, of course - would be missing out on an easy pay day. When that inevitable global bonanza gets added up, YouTube’s already questionable climb to profitability would slow down considerably.

Google is not likely to ever come out and say it would block Canadians’ access to YouTube in the event of regulation (I asked and they didn’t comment), but it would make sense if it happened and no could really blame the company. After all, sometimes it’s best to cut off a limb to spare the rest of the body from a hostile infection.

But boy would it be fun if the unlikely did happen. For one thing, given that Canadians are among the world’s biggest users of YouTube, we might not have to worry about usage-based billing anymore since our internet traffic would plunge off a cliff. The country would go back to the good old days that big internet providers seem to love so much, where all people did on the internet was send email.

More realistically, though, usage of BitTorrent file-sharing and virtual private networks would skyrocket, making Canada a veritable piracy wonderland. Yo ho ho and a bottle of rum!

Categories: crtc, Google, netflix
  1. Marc Venot
    July 12, 2011 at 3:20 am | #1

    There are challengers to YouTube like Dailymotion, Vimeo, etc, …
    The technical bottlenecks will ease so how do you control if people just open a window in the background or just buy the cheapest screen to plug it to their router to purge the percentage forced upon them?

  2. Torontoworker
    July 12, 2011 at 9:16 am | #2

    Wow, welcome to North Korea!

    We trash countries that ‘regulate’ (typical term used by societies that are not open) the internet for political, religious and social reasons yet Canadians seem totally unaware that the urge to ‘regulate’ us is as strong in Canada as is the force is within Obi Wan Kenobi. The CRTC sees nothing wrong with reducing freedom of choice in order to protect the monopolists.

    What ever the social contract was with Canadians concerning allowing of Government restrictions on what we view for ‘culture reasons’ - is long been broken by the CRTC. They have allowed the Cable and Telecom monopolists to buy up every media outlet until there is NO competition. It’s now our way - or the very dark highway.

    Business interests now co-opt Canadians rights to watch what they want on any format or technology they wish to use.

    Until or unless some new form of technology is invented – such as a device that I can buy over the net that allows me to bypass Canadian ISP’s or Canadian based TV networks to watch or download what I want unhindered by the Mommy State or the monopolists – Canadians will always be held hostage Rogersvison and Bellvision. We are no better off then Cuba. Well at least they have better weather.

  3. July 12, 2011 at 10:27 am | #3

    I would be very surprised if the CRTC decided to regulate a service like YouTube given the measurement challenges you describe, but even if it did, would Google be prepared to shut down the service? Google’s entire model for its services depends on scale. Their search revenues wouldn’t be the powerhouse that they are if they were the number three search engine. If they ever expect YouTube to become profitable, they’ll need all the scale they can generate. Given, as you rightly point out, Canada is one of their biggest markets, how could they walk away, even if regulatory requirements do increase their costs.
    On the argument that Canada would simply be the first of many countries to jump on the bandwagon, I suspect Google would make the decision to stay or go on a country by country basis, presumably applying a very googly formula to that process.
    Now, all that said, have there ever been businesses that have closed up shop in Canada due to overly burdensome regulatory fees? I’m not aware of any. But that’s not saying much :)

    • July 12, 2011 at 1:14 pm | #4

      Good points Simon. I agree, it is unlikely but still within the realm of possibility. In regards to companies closing up shop because of regulations, it’s not quite the same but some telecom companies (AT&T, T-Mobile) did sell off their stakes in Canadian operations because they were tired of waiting for foreign ownership rules to be lifted. YouTube is, of course, a very unique case because its service is free. I’m not sure there’s ever been an example of a company offering services free, then getting regulated for it. It would be a really interesting precedent.

  4. July 13, 2011 at 7:22 am | #5

    My thought is that as long as the CRTC can find some way to regulate it quickly and efficiently, they’ll do it because it’s always been their mandate to promote Canadian content, even when that actually hurts Canadian markets.

    However, Quebec certainly relies on a lot of Canadian content and creates a lot of film/video, so perhaps therein lies the answer, since french-canadian content should count as ‘Canadian’ enough to prop up at least part of the cultural requirements. Here’s to ‘VousTube?’ ;)

  5. Randy
    July 14, 2011 at 1:17 am | #6

    A couple of points:

    1.) Youtube is kinda like the local cable access channels, users are free to put what they want on it (within certain limits) Unlike the so called traditional media, there is no need to fight for airplay. It’s just a case of creating something that folks want to see.

    2.) Youtube is in fact NOT comparable to a traditional media distribution point such as TV or Radio. It more closely resembles a video store. And from what I have seen, the CRTC does not force Blockbuster to stock 30% CanCon. Nor does it force A&M to keep 30% MPLA CanCon CD’s

    You can stock Blockbuster with all the copies of Ann of Green Gables, Les Boys and Porkeys that you want, but if no one rents them, or for that matter takes home the free promo version, it doesn’t matter.

    3.) I would have to imagine that it would not take too long before Canadian indy artists stood up and made the CRTC take note that they were no longer acting in the best interests of Canadian artists. Youtube is an incredible distribution platform, and the best thing about it is that ANYONE can publish on it. You don’t have to pay for hosting, or Web server software, or anything else. You just have to produce your video, and publish to Youtube. If a CRTC action caused Google to restrict or remove its services from Canada, it could very well hurt the exact people it was intent on helping.

    Remember that unlike HULU (that has now started charging for some of the content) or Netflix etc, as long as the video is within moral standards, and does not infringe on copyrights, it will be published on youtube, and it is available to the public for free.

    Lastly, Youtube could simply kill off youtube.ca and tell Canada if they don’t want their citizens to access their site, they can block it themselves. The site and servers, which would at that point be hosted entirely outside of Canada, and Canadian lawmakers reach, might be very difficult for the CRTC to do much about (lets face it, they can’t seem to block nigerian 411 email, and 50,000 other easily identifiable content!) And if history is any indication, even a court order from a Canadian court would be considered invalid in the US. (Remember the government of France vs EBay case with regard to Nazi memorabilia a few years back??)

    Not to mention if Google wanted to play Hardball, they could cut off access to google itself to Canadians. Within 1 week, the loss of business revenue, not to mention a thousand other issues, would cause all kinds of issues.

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