Spotify to CRTC: Streaming Act Will Hike Prices in Canada

Following the Online Streaming Act’s given Royal Ascent last April, the Canadian Radio-television and Telecommunications Commission (CRTC) has been gathering responses for its consultation on a new regulatory framework, which were published earlier this week.

The framework aims to define the contributions required from broadcasting and online undertakings, including audio and video services, to support Canadian and Indigenous content.

In its submission to the CRTC, Spotify pointed out potential operational changes in response to the proposed regulations. The company stated the idea of new fees in Canada might force it to reduce expenses, which currently support Canadian and Indigenous artists. Alternatively, Spotify could be forced to increase prices for Canadians, it said.

Spotify’s submission, seen by iPhone in Canada, highlights several key points:

• Payments to Rightsholders: Spotify directs about two-thirds of its global music revenue to royalty payments, benefiting Canadian and Indigenous artists and the broader Canadian music ecosystem. In 2022, streaming services contributed nearly 80% of recorded music revenue to Canadian record labels, spurring an industry growth of over 8%.
• Record High Collections: In the same year, SOCAN’s collections reached a record $484 million CAD, growing by 16%. This growth underscores the significant revenue generated by streaming services like Spotify in the music industry.
• Canadian Artist Growth: Royalties from Spotify for Canadian artists more than doubled from 2017 to 2022. The number of Canadian artists earning over $100,000 CAD in royalties on Spotify also saw a similar increase. Notably, 28% of artists earning over $10,000 CAD in royalties self-released their music on Spotify in 2022, retaining a majority of their generated revenue.
• International Reach: Canadian artists earn more from international streams than domestic ones, with 91% of royalties paid to Canadian artists’ rightsholders on Spotify generated by listeners outside Canada. This global reach contrasts with traditional broadcast radio, which primarily targets Canadian listeners.

The music streamer says it employed 150 people in Canada, with 20 based in Quebec. Every month, 8 billion streams of Canadian music or podcasts are exported to its global audience of 573 million. Spotify also says that in a given week, Canadians listen to over 600,000 distinct Canadian tracks here, which is over 83 times the rate at which unique Canadians songs are played on traditional radio in the country.

Spotify also said that it is helping Canadian creators reach Canadian fans, giving the example of Calgary’s Tate MacRate hitting the number one spot on their global daily charts, back in November 2023, thanks to its playlists and recommendations.

The company pointed out it previously altered its operations in other markets with similar regulatory changes, such as France and Uruguay, to sustain its business model. Of course, any rule changes in Canada would likely cause it to also trigger a response here in the name of running a sustainable business model, says Spotify.