ABC boss proposes forcing Netflix to contribute to creation of Australian content with new fund
ABC boss Mark Scott has floated a proposal of forcing online giants like Netflix to contribute to a digital content fund which would help pay for original Australian TV and video content.
ABC boss Mark Scott
During a speech at Macquarie University this evening Scott also predicted plans to reform media reform would remain stalled, but warned that may also harm Australian storytelling.
Scott called for debate on the idea of a digital content fund which would include companies like Netflix, Apple and Google contributing a “percentage of revenue” to support the creation of local content.
“Netflix was until recently exempt from GST. Costings done by the Parliamentary Budget Office showed that GST on Netflix, which is supposed to come into force in two years, would raise $3.2 billion in GST revenue over a decade.”
During the annual Brian Johns AO lecture – named after the former managing director of the ABC – Scott called for a policy response from government to ensure the likes of Netflix, which only formally launched in Australia in March, contributed to creating Australian content.
“The Netflix effect is rapidly changing the way Australians feel about paying for video content, not just on their smart TVs but mobile devices,” he said. “And because the Netflix business model is based on content with international appeal, amortising the cost of producing that content across hundreds of markets, Australian content will struggle to remain just that, uniquely Australian.”
Scott acknowledged taxing the likes of Netflix and Google would be challenging and argued that he personally was in favour of a producer rebate which Scott argues would encourage the creation of more Australian content.
“Some will argue that Netflix and others should simply be required to spend a certain amount of local revenue on local content,” said Scott.
“But ‘Force Netflix’ might be a bit like ‘Tax Google’: a simple two-word policy statement that sounds good in theory but is far harder to implement in practice,” he said.
“Some may call for most standardised local content requirements across all providers: pay, free-to-air or SVOD. That will redistribute the current burden, but most likely see less quality Australian content on free-to-air TV.
“As I said, levelling the playing field on the producer rebate would make it easier for networks to afford more Australian content, on a platform that really engages audiences at scale.”
Scott cited the success of ABC TV shows like The Slap, Utopia, Rake and The Code to argue that rebates and Screen Australia funding should be geared to television and online viewing.
“To encourage film and TV production, we currently have a system of tax offsets in place for producers. But under the current rules, Australian film attracts twice the level of offset as TV, even though Australian film attracts a fraction of the audience,” he said.
Scott, who announced this week he will step down in 2016, added that the ABC should not be the only place where Australian content is made.
He also cited the example of the pay-TV operator Foxtel saying: “We can’t ask or expect Foxtel to deliver the same cultural impact on this investment—or the best return on Screen Australia’s investment… local drama does not press its way on to Foxtel’s most watched list.
“It is washed away by all that is offered, on all the other channels. And while Australian identity is shaped through the involvement of every Australian, productions on Foxtel are not available to every Australian; only those willing and able to pay for subscriptions.”
Scott concluded by noting it is likely hoped-for media reform would continue to be stalled as Canberra waits for the media to achieve “consensus”.
“I have heard politicians say they are ready to legislate once media executives have agreed on a course of action. Giving the animosity and competitive egos that linger in this sector, this is an unlikely prospect, this millennium at least,” said Scott.
“When policy reform can be stymied by lunches in New York and dinners in Broome then you know that the cycle of inaction will most likely continue,” he added, referencing recent dinners between Coalition politicians with News Corp’s Rupert Murdoch in New York and Seven’s Kerry Stokes in Broome.
“You cannot stop the technological revolution. You should not stop companies acting rationally in the interest of their shareholders.
“What is needed is a collective will to work through all the options and to answer the one critical question: who will tell the Australian stories?
“The stories that matter most to the Australian people: the way we understand ourselves, each other, our history and our place in the world.”
Nic Christensen
So Mark Scott wants to add another tax to overseas content companies, Australia is only a small market and if these companies think they’re being exploited or there’s no money to be made they’ll soon pack up and leave resulting in a return to piracy.
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@David Meanwhile the local television and production market shrinks and sheds jobs. We need a healthy local content industry and Netflix should play a part in that.
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Maybe a more powerful scheme for Aussie content creators is a commitment by powerful global distribution platforms such as Netflix, Google Apple etc to promote and distribute Aussie content to other markets rather than just a “local content tax”
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@Burt i don’t think the local industry is shrinking just changing and yes some may loose their jobs but so is every other industry feeling the effects from digital disruption and global forces. But I think a content fund which is just another form of tax is not the answer it will just drive companies away from coming to Australia and lets face it every man and his dog was begging for Netflix to come here.
But I do agree with Mark Scott on a more equitable Producer Rebate which I think makes more sense and is easier to implement which will encourage the production of Australian content.
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So we need a force-funded TV show before we can “understand ourselves… and our place in the world?” Typical socialist nonsense from a man who doesn’t operate in a commercial environment.
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I think this is a great idea… hitting Netflix with a blanket tax just because they’re global would be a bit meh (although I get why they would)… but if the government ensured Netflix’s participation in local content then that would fuel industry, and Netflix could then profit off the content. Seems like a win win?
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“Netflix, … would raise $3.2 billion in GST revenue over a decade.” Is it just me or does that seem big? Let’s average it at $320m a year over the 10 years, the Government better hope Netflix has a quick growth plan above the 885,000 homes that are currently subscribing (according to Roy Morgan).
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I suspect most of the respondents here are too young to remember the fight for local content on free to air television. The owners all swore it would send them broke while having cosy little closed shops. Same with Foxtel’s emergence. The fact is in a small English speaking market expensive local content such as adult and children’s drama and documentary will not be made unless there is regulation to force media companies to make it. These new digital companies are US multinationals with no interest in Australian drama and content because they have a large core North American market big enough for them to commission from. They too will have to be dragged kicking and screaming to invest in it. They don’t want to pay GST or Australian corporate tax so making a legislated contribution to local content is another thing they will not want to contribute to.
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David, I can assure you that the local TV production industry is shrinking as many friends and associates lose their jobs.
The children’s TV production industry could be wiped out with the stroke of a pen, as the FTAs are not keen on the 20 hours per annum as part of their licence agreement. That would leave just the ABC to produce and commission and we know the incumbent govrenment’s feelings about that.
It all comes down to whether you think that (a) Australian kids are worth investing in and (b) Australian stories are worth telling. I am a yes on both fronts.
While I don’t like the idea of ‘being forced’ I see the sense is some form of small local production levy.
Then again, you may be totally comfortable for future generations to dine exclusively on overseas content or rely on YouTube for consumer content.
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He doesn’t understand Netflix’s business model, which is to deliver expensive glitzy Hollywood content at a such a low price that piracy is no longer worth the bother. So on the one hand, you have lots of money going out, but on the other, small amounts coming in. How to make this work? Two ways: ramp up subscriptions globally so that small subscriptions multiplied across a huge population will add up; and focus development money on just the content that will appeal to that huge cross-section of the global audience.
Can Australian productions help appeal to that vast global audience any moreso than what Hollywood produces? Nah. Hollywood has decades of experience churning out stuff for a global audience. The average big budget movie now makes more money overseas than domestically, in some cases much more, 70-80%. Making shows for a small market like Australia does not fit Netflix’s business model.
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