Canada backs off making Spotify pay for Canadian music, and the money has stopped

Canada has stopped trying to make Spotify and other foreign streamers pay for Canadian music, at least in the form it spent three years building. On 17 July 2026 the Attorney General's counsel wrote to the Federal Court of Appeal that "the Government's intention is to eliminate the base contribution requirement on streaming services and to provide government funding to replace those contributions". Six weeks later, the annual 31 August payment date passed with, according to The Wire Report, funding agencies told that no new transfers were coming.

What was the 5% rule, and who did it pay?

In June 2024 the CRTC required online streaming services with $25 million or more in annual Canadian revenue, and no tie to a Canadian broadcaster, to put 5% of that revenue into set funds, according to Canadian Heritage's Question Period note on the Online Streaming Act. For audio services the split, as summarised by the Canadian Independent Music Association and Billboard Canada, was:

• 2% to FACTOR and Musicaction, split 60/40.
• 1.5% to a temporary fund for local radio news outside the big markets.
• 0.5% to the Canadian Starmaker Fund and Fonds RadioStar, split 60/40.
• 0.5% to the Community Radio Fund of Canada.
• 0.35% to direct spending on Canadian and Indigenous content or selected funds.
• 0.15% to the Indigenous Music Office and a new Indigenous music fund.

So 3.15 of the 5 points from a music streamer were earmarked for music and community-radio funds, and two of them for the two bodies that write grants to Canadian recording artists. FACTOR describes its role as the "career development of Canadian artists", supporting recording artists and songwriters "at every stage of their careers". Billboard Canada reported at the time that the contributions across music, news and film would generate "an estimated $200 million in increased funding".

How did it fall apart?

In three steps. First, the money never reliably arrived. Amazon, Apple, Spotify and the Motion Picture Association-Canada challenged the 2024 decision; all four are listed as applicants in the Justice letter, and FACTOR is listed among the respondents. Payments have been stayed since December 2024, according to Michael Geist. The court heard the case in June 2025 and still hasn't ruled.

Second, the government changed its mind about the whole framework. In May 2026 the CRTC raised the ask: 15% of revenue for non-Canadian streamers over $25 million, per the Heritage note. On 3 June, Heritage announced it would direct the CRTC to review that decision, warning that the cost "could ultimately fall on Canadian consumers through higher prices", and pledged "$600 million per year" for the audio and audiovisual sectors. The July letter then went further than the 15% figure. In CRTC 2026-96, the regulator had kept the original 5% base contribution. The government now says it wants that gone too, through a direction under section 7 of the Broadcasting Act that it expected to publish for consultation in the Canada Gazette "in the coming weeks".

Third, the payments stopped. The Wire Report says Spotify was among the challengers that won the stay and so weren't bound by the 31 August deadline, and that several companies had paid the first instalment last year anyway. This year the firm administering the payments told agencies nothing new would arrive. Kevin Desjardins of the Canadian Association of Broadcasters told the outlet that streamers outside the stay that chose not to pay "would be offside". Neither source names which companies paid last year and which, if any, are now holding back.

Is the replacement money the same money?

The government says it is replacing the contributions. The details say otherwise, or at least not yet. The June release says the $600 million "will be adjusted as appropriate" once the CRTC's rules are final, and that "additional details on these investments will be announced after consultation with the sector". The Heritage note gives no split by sector or recipient. Billboard Canada reported that $200 million of the package covers what the base contributions would have raised, benefiting FACTOR, Musicaction, Starmaker, RadioStar, the Community Radio Fund and the Indigenous Music Office, and that "audio services will no longer have to pay into funds". We have not found that split in a government document.

Stakeholders were caught off guard. Raj Shoan of Friends of Canadian Media told Broadcast Dialogue that moving the cost "to Canadian taxpayers is neither fair nor sustainable". Lawyers at Cassels, writing in Legal 500, link the reversal to "rising trade tensions with the United States" and expect the court may ask whether the case is now moot. Geist reports that Culture Minister Marc Miller has said streamer contributions "won't be zero", and Geist expects any new rates to sit closer to international norms, which he says typically run around 4%, than to the CRTC's 15%.

What we think

This is a bad trade for Canadian artists, and especially for the ones without a team behind them.

A levy grows with the problem; a grant doesn't. The 5% was tied to streamers' Canadian revenue. As listening moved to streaming and away from the radio that has long funded Canadian music, the money would have moved with it. A fixed appropriation that the government itself says "will be adjusted" doesn't do that, and it can be renegotiated in any budget.

Two years of nothing is already a loss. The stay has been in place since December 2024. Whatever the replacement looks like, the music funds have been planning around money that, for the biggest challengers, was never due while the case ran. Billboard's reading is that government money fills the gap. Until Heritage publishes a music line, that is a hope, not a number.

The cut lands at the bottom of the ladder. Established acts have labels, publishers and touring income. Artists making a first record are the ones most likely to depend on a FACTOR or Musicaction grant, so a thinner or less predictable pool hits them first. That is our reading of who uses these funds, not a figure either body has published.

Streamers got the outcome without winning the case. Spotify and the others argued in court that the rule was unlawful. The court never had to decide, because Ottawa withdrew it under trade and price pressure. Other countries weighing streaming levies will notice which route worked.

If you are a Canadian artist, two things are worth doing now. Apply for whatever FACTOR and Musicaction rounds are open rather than waiting for the policy to settle. And when the section 7 direction appears in the Canada Gazette, Geist notes it must carry a comment period of at least 30 days. Use it, and ask Heritage the plain question: how much of the $600 million is for music, and for how long?