Thank you, Mr. Chair.
Good morning, everyone.
I take it that you've all received a copy of the deck that we have prepared.
The document is written in both French and English.
The Department of Canadian Heritage is thankful for this opportunity to appear before the committee in the context of its study of the Canadian music industry.
My name is Jean-François Bernier and I am responsible for the cultural industries policies and programs at the Department of Canadian Heritage. I am accompanied by Sophie Couture, who is in charge of one of the cultural industries, specifically music.
Our objective today is to present committee members with an overview of the music industry and the federal policy framework for Canadian music, more specifically the support provided by the Canada music fund. We will be pleased to answer any questions you may have following this presentation.
I'll go right to page 3.
I would like to start by presenting a brief overview of the ecosystem in which the main players you will meet during your study operate.
From the time a musical work is created, a multitude of industry professionals and activities are needed to help this piece find an audience through ever-growing and diversified means of consumption. While there may have been times when interactions between industry players were fairly linear, today's reality is quite different.
In fact, the roles and activities of the players are now much more fluid and diversified.
Over the years, successive governments have supported Canadian music in recognition of its important cultural and economic contribution. Altogether, the music sector adds nearly $3 billion each year to Canada's economy. With over 10,000 Canadians employed in the sound recording and concert sectors alone, and 30,000 professional songwriters, music feeds into other important economic sectors, including tourism, entertainment, and advertising.
The music industry in Canada comprises three major entertainment multinationals, Universal, Sony, and Warner, and hundreds of small to modest-size Canadian-owned entrepreneurs.
Multinationals operating in Canada are an important part of the domestic music scene and have contributed to the careers of many Canadian artists. However, Canadian-owned companies play a critical role in developing and nurturing Canadian talent. Overall, Canadian companies release 87% of the new Canadian artists' recordings and account for 79% of Canadian artists' recording sales.
Music is a high-risk business where each project is a prototype. Canadian market conditions present additional challenges.
First, our domestic market is relatively small, which means that reaching the international market is key. Second, Canada is split in two linguistic markets that feature distinct characteristics that impact differently on the Canadian industry's competitiveness.
I am on page 6.
Canada has developed a series of response mechanisms to ensure the creation of and access to a wide range of Canadian musical choices. The Canadian music policy framework is made up of legislative, regulatory, financial and institutional measures that work together to achieve this objective of creation and access. In fact, Canada is world renowned for its forward thinking in the public policies for its music industry.
In terms of legislation, the Copyright Act protects the creators' rights while balancing consumer needs. The Investment Canada Act ensures that foreign investments in the Canadian music sector are of net benefit to Canada. The Broadcasting Act establishes a Canadian broadcasting system that must contribute to the creation and presentation of Canadian content, while recognizing the different needs of English-language and French-language markets. It gives regulatory powers to the CRTC in particular.
Actually, the CRTC requires that commercial radio stations broadcast every week a minimum threshold of Canadian and French-language content and that they make financial contributions in support of Canadian content development. In 2011-2012, those contributions amounted to $55 million. Almost half of that amount goes to funding bodies, including FACTOR, MUSICACTION, the Fonds RadioStar and Radio Starmaker Fund. The rest is for discretionary initiatives, mainly local and regional initiatives.
FACTOR and MUSICACTION are foundations that were created in the early 1980s to collectively manage the financial contributions of broadcasters. For over 25 years, they have also administered the public funds that support Canadian music.
The federal government also provides financial support to the Canadian music sector, primarily through the Canada music fund.
With an annual envelope of close to $25 million, the fund supports a wide-ranging diversity of Canadian music through support to new, emerging, and established Canadian music artists and entrepreneurs. The fund's sunsetting resources of close to $9 million were renewed on a permanent basis in recent budget 2014. This will take effect in 2015-16.
Music programs of the Canada Council mainly support Canadian orchestras, opera, or artists in non-mainstream music genres, and are complementary to the Canada music fund. The road map for Canada's official languages supports the showcasing of artists from official language minority communities.
Other PCH programs indirectly support Canadian music, for example, through festivals or endowment grants for orchestras.
More specifically—I'm on page 10 of the presentation—the Canada music fund provides the Canadian music sector with some upfront support needed to take risks, innovate, and remain competitive at home and abroad. Over the years it has adapted to industry challenges and opportunities. For example, in its 2009 renewal, the Canada music fund increased its support for digital and international market development initiatives.
The total funding supports Canadian sound recording production and marketing, national and international touring for artists, music editing, commercial and professional development, collective marketing activities such as music showcases, award shows, digital applications and marketing.
Currently, over half of CMF resources are administered by FACTOR,for the English-language market, and Musicaction, for the French-language market. This joint administration of both public and private broadcaster funds is a key strength of Canada's music policy tool kit.
In addition to the funding administered by FACTOR and MUSICACTION, Canadian Heritage administers $9.5 million, and $360,000 goes to Library and Archives Canada for the preservation of Canadian sound recordings.
Those funding streams support complementary activities and clients. For instance, the two most significant components of the Canada music fund, the New Musical Works and Music Entrepreneurs, both support the production and promotion of Canadian music artists, but they do so separately.
With Music Entrepreneurs, the support is provided through an annual envelope intended for the activities of established entrepreneurs. The funding is calculated based on their success in reaching audiences. So it depends on success.
The New Musical Works supports production and promotion projects through funding provided to artists and small and medium-sized entrepreneurs. For instance, an artist with no contract with a label can request assistance for a demo or even the production of an album.
What is funded over an average year with the Canada music fund? I'm on page 12.
The CMF has allowed many Canadian artists to have prolific careers in Canada with some also reaching significant success abroad. Overall, the Canada music fund helps fund the production of more than 400 albums by Canadian artists in an average year and supports the marketing, touring, and showcasing projects of over 1,100 artists. That's without mentioning the support provided for collective initiatives that work to expand the reach of Canadian music.
The Government of Canada's music policy framework has contributed to making Canada the third largest exporter of musical talent. As Canadian artists succeed on the world stage, they continue to carve out a bigger piece of the Canadian market as well. Between 2001 and 2012, Canadian artists' share of domestic album sales increased from 16% to 26%, peaking at 28% in 2011.
Today, more Canadian creators receive royalties for the public use of their works. Royalties from foreign markets are on the rise, which is proof that Canadian music has an increased presence.
The showcasing offered to Canadian artists with televised events such as the ADISQ Gala and the Juno Awards, continue to be popular with the public.
These have a tremendous impact on enhancing the awareness of audiences towards Canadian music and artists.
The rapidly changing technologies and consumer habits will continue to be catalysts in the music sector for years to come, and our programs must consider this reality.
The CMF's continued support towards the creation of and access to Canadian musical content is key. At the same time, the fund must remain highly responsive to rapidly changing market conditions. The program's ability to adapt will ensure Canadian music continues to thrive at home and abroad.
We look forward to the committee's report and are available to answer any questions you may have.
I have also included three annexes to my presentation. Although I may have referred to them, I do not intend to talk about them.
Annex 1 shows the breakdown of Canadian content development contributions by commercial radio. In 2009, digital and international market development initiatives were taken. Annex 2 and Annex 3 include examples of some of the projects that were funded to meet those priorities.
Mr. Chair, I am ready to answer any questions the members of the committee may have.
