Canada demands 5% of revenue from Netflix, Spotify, and other streamers | Hacker News Reader

Canada demands 5% of revenue from Netflix, Spotify, and other streamers

arstechnica.com

43 pointsPlasmoid24 comments

France did something like that last month. To support the "Centre national de la musique", a new 1.2% tax was added on digital music streaming services. But rather than absorbing the cost, Spotify just raised its subscription cost. In the end, the government just taxes its citizens more instead of getting a bigger share of revenue from these companies.

https://newsroom.spotify.com/2024-03-07/spotify-to-adjust-it...

That’s not necessarily always true. Spotify may very well pass costs on _right now_, but it may choose to lower its rates if it sees that enough people start unsubscribing.

Companies are constantly adjusting subscriber count vs revenue per subscriber and will charge the absolute maximum they can get away with. Doesn’t make sense not to as a profit-driven company.

That will be a first, a company lowering its subscription prices.

I mean, Microsoft raised their prices last year substantually. And they had a "record year 2023".

We're decades in on Netflix specifically ratcheting their prices like clockwork. One may say inflation, doubt - they adjust more often than anyone.

It overwhelmingly goes in one direction. A new sucker is born every day

The network effect of this is "the money machine must grow/demands more". They don't have to do this - everyone knows how well-paid their people are. It's a system of systems.

There's an academic understanding and then the practical one. Everyone stands to benefit from a Boogeyman

> They don't have to do this

What is the economist term for (not) leaving money on the table? Revenue maximization?

Netflix has it both ways:

- Raises prices on its current customers - Sells ad space on its streams, devaluing the experience

I won't pretend to be educated on this, but I'd say 'Revenue maximization' works. Businesses are there to make money, I get it.

I'm really getting at this: we as people have a tendency to optimize things beyond their optimal point. We can't leave well enough alone.

In the time it's taken me to post twice about how I've quit Netflix, I made enough to pay for the subscription. The cost isn't the point - I stopped because of the action, not the result.

I'm not really complaining, though. My job - SRE - basically depends on this tendency in others.

To your point, the experience has been devalued.

The content isn't as good as it once was IMO. The price continuously raised, the terms kept changing, and the proposition stopped making sense for me.

A lot of the productions themselves have to borrow money to get made. Higher interest rates means shows and movies cost more to produce.

Not sure why you are getting downvotes, you are absolutely right.

It's a positive outcome of economic science that procuders can't fully pass taxes to consumers. There's always some sort of division of the overall dead weight loss, and it's always proportional to that market's conditions (competition, market share, elasticity, etc). If a producer decides to try to fully pass the price, it's because they believe their costumers are inelastic or that competition will not be able to undercut them.

To put it another way: if companies were fully passing tax hikes onto the customer... then companies wouldn't be complaining about taxes!

Companies will make less money as a result of the tax, but the consumer will also be paying for it through higher prices. Just because companies end paying a part of the tax, it doesn't mean that the consumer isn't paying.

Additionally, fewer people will enjoy the service which is bad for everyone. Arguably people will get to enjoy whatever the tax is funding, but will they want to?

As I said:

> There's always some sort of division of the overall dead weight loss

My point is, a lot of people seem to think that the costumer _exclusively_ bears the cost of a tax hike. It is simply not true, positively so.

> Just because companies end paying a part of the tax, it doesn't mean that the consumer isn't paying.

That's tautological, unless there is a third entity that could be paying the remaining part of the tax.

> Additionally, fewer people will enjoy the service which is bad for everyone. Arguably people will get to enjoy whatever the tax is funding, but will they want to?

That's normative. I will not discuss preferences.

Right, it generally settles into a new optimum where customers are paying a little more, the company is earning a little less, and the state gets its so-well-deserved cut.

Not very often companies will absorb the costs IME. Sometimes though it’s delayed or through some other side effect.

Huge oligopolistic algorithms tend to homogenize consumer behavior, so I think it's not wrong to support local and small artists. Additionally, giants can even influence the algorithms to favor their new hits [0]. I am also not sure how much tax avoidance is happening in Canada.

[0]: https://www.theverge.com/2020/11/2/21545958/spotify-artist-t...

Well today the Supply side (of content) has outstripped Demand for content by a huge factor.

Demand for content from people with disposable income and interested in creative output, has dropped below demand for content from corporates to play attention/market capture games.

Cuz available global attention is finite and corporates will outspend everyone to capture it to peddle whatever. So creatives are basically front line troops in the wars for finite global Attention.

Until we see global consensus on better attention allocation systems than the current garbage there are no easy paths ahead.

Just a bunch of mafias that want their cut, and governments are the biggest.

I'm Canadian and I don't think this makes sense at all. Netflix (etc) isn't a TV station or a radio station broadcasting cultural programming on the airwaves, it's a self-serve library of digital content you pay to access for as long as you want to have access to whatever you choose to access. What makes that so different from a bookstore or membership-based physical library?

[dupe]

More discussion: https://news.ycombinator.com/item?id=40576696

Sorry, but Canada demanding "internet money".. you got to be kidding me.

https://southpark.fandom.com/wiki/Department_of_Internet_Mon...

"In order to give the Canadians more money because, according to Stephen Abootman, Canada doesn't have enough money [...] They receive 10 million 'theoretical dollars', which ends up being useless for the Canadians."

Anyway, I'm dumb and I'm not getting it even after reading it. What does Disney+ or Netflix have to do with "local news"?

> Anyway, I'm dumb and I'm not getting it even after reading it.

Per the article, they are proposing to tax streaming services in order to support local news, as they already do with licensed broadcasters.

Yes, but I don't understand why. Is Netflix damaging them ("local news")?

I don't see the relation and I'm assuming there is one.

This feels like taxing McDonalds to support struggling local artists.

Its to level the playing field. Licensed national broadcasters already have to pay a fee which ends up supporting local news / content. International streamers charging money to Canadians for their attention do not currently pay this fee. It seems only fair that all broadcasters / streamers should have to pay the same fee to access the same market.

Ah. I can understand the argument the streamers should be handled like all broadcasters currently are.

Still think it's an.. awkward way to handle things, but that's up to Cadana. Ok, thank you.

Why shouldn't it (be treated the same as broadcasting)? Streaming is eating broadcasting alive.

Streaming surpassed cable TV for the first time in July 2022 (in the US).

(As to Canada levying a charge on them to fund local news, that's a whole other discussion.)

“The regulations exclude revenue from audiobooks, podcasts, video game services, and user-generated content. The exclusion of revenue from user-generated content is a win for Google's YouTube.”

Yeah it also makes sure Montreal’s thriving video game industry isn’t negatively impacted either. And Google have branches in Canada employing Canada maybe Netflix doesn’t have as many I wonder about that.

This is another reason why I hate it when countries do stuff like this because they always implement it very hypocritically too. They didn’t innovate the wildly popular product that has come into their country or “being dumped” into their country which is usually their word choice driven by envy and their local competition can’t compete so they pull nonsense like this to get at some of that revenue.

India and China have done variations of this for years but now Europe and it looks like Canada are doing it or planning to and I’m sure soon other countries.

Even here in America this has started with Biden’s recent moves on China and Trump wants to double those if elected. So both parties are moving into this mindset.

Most American multinational companies generally thrive in a global marketplace, same with Japanese, Chinese, South Korean, and German companies. I know Spotify was Scandinavian but they moved to the US some time back right?

I guess rest of the world got fed up with this small set of countries dominating the Consumer Tech and Entertainment marketplace and wants to grab at some of their revenue when it’s coming from people living within their borders using the international product.

Companies will probably just pass these costs on to the consumers and try to minimize absorption.

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