Canadian Heritage Committee on April 1st, 2014

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good morning, everyone.

We are going to call this meeting number 16 of the Standing Committee on Canadian Heritage to order. We are currently undertaking a study of the Canadian music industry.

This morning we have, for our first hour, an esteemed panel before us. We have three organizations with us today. First of all, from the Alliance nationale de l'industrie musicale, we have Natalie Bernardin, president, and Benoit Henry, the chief executive officer. From the Songwriters Association of Canada, we have Greg Johnston, vice-president, and Jean-Robert Bisaillon, vice-president. As well, from the Gospel Music Association of Canada, we have Martin Smith, president.

Each group will have, between them, eight minutes.

We will begin with the witnesses from the Alliance nationale de l'industrie musicale. You have eight minutes.

[Benoit Henry, Chief Executive Officer, Alliance nationale de l'industrie musicale]

Good morning. Thank you for inviting us.

We have three tools that we use to evaluate the status of the music industry in the francophone and Acadian communities, that is to say the francophone minority communities. They are two studies that were conducted in 2001 and 2005 and our own knowledge of the field.

We conducted the 2001 study with funding from the Canada Music Fund. The Alliance nationale de l'industrie musicale, ANIM, had just been established. The study showed that music industry artists and artisans in the official language minority communities were getting very little federal government funding. That caused several problems with respect to the circulation and professionalization of artists and reduced our ability to promote them.

The 2005 study, which was commissioned by the Canada Music Fund, was conducted by Nordicity. That study, which was done five years later, was another attempt to establish an economic profile of the Canadian francophone music industry. According to this second study, there had been a distinct improvement in Canadian francophone artists' access to funding, particularly to Musicaction. That better access had obviously had a positive impact and other indicators had improved.

Natalie will round out the picture by outlining what has happened since 2005.

[Natalie Bernardin, President, Alliance nationale de l'industrie musicale]

I will provide a brief report on the current situation, as Benoit said.

The Canada Music Fund, through Musicaction in particular, helps provide direct funding for recording projects and marketing projects. That means the promotion and circulation of our artists.

ANIM monitors the allocation of that funding. We are pleased to note that we have managed to obtain funding roughly commensurate with our demographic weight. We are involved in this monitoring effort with Musicaction, working with that agency to try to maintain this level. Musicaction's budget is unfortunately not rising even though music production in the Canadian francophonie and Canada as a whole is increasing, resulting in greater pressure in this area.

We are very pleased and satisfied that the Music Showcase program is being extended. This is a program that enables artists from the Canadian francophonie to circulate in the same way as those from Quebec. Consequently, it is a real success for us because they are circulating now more than ever.

The picture is less positive with regard to the Canada Council for the Arts. With a budget of $8 million, the francophone communities are not even receiving 1%. That is an approximate statistic for the period from 2007 to 2012.

With respect to industry professionalization, although progress has been made in production in particular, there are still deficiencies, particularly in artist support infrastructure. Artists thus receive little support from professional services. That means management, production and promotion. It also means that limits are being placed on the outreach of artists and their products. This is quite a significant missing link. Associations that provide services to the arts of course play this support role, but in too many cases they lack the resources they need to do it, even though they are meeting industry demand for the moment. This is still a significant missing link in artist support.

With respect to market penetration and development, despite the fact that distribution structures are developing, we are still facing challenges associated with market size, circulation across the country as a whole, which is immense, and the ability to penetrate the Quebec and international markets. This is improving thanks to the Music Showcase program in particular, but the battle is far from won. This is a long-term effort, and we must not give up.

As a result of all this, commercial activities still show poor profitability. This is the new music economy, and it requires new funding sources: sales of products such as CDs, digital and other tracks, fundraising campaigns, the collection of royalties, shows, publishing and so on. All these funding sources help artists live from their music. CD sales or tours alone are no longer enough for artists to live on their music incomes.

As regards promotion, production among Canadian francophone artists is becoming more and more varied in an increasingly segmented market. There is something for everyone. However, these artists remain relatively unknown. Initiatives such as the Gala des prix Trille and the Gala des Éloizes give these artists access to a national platform thanks to Radio-Canada in particular. It is here especially that our arts service organizations and our media can play a major role. With more promotional resources, our organizations and media, such as 100 Nons in Manitoba, Musique Nouveau-Brunswick and APCM in Ontario, offer stability and legitimacy for our artists' work and products. They can rally audiences and inform the general public about artists' new offerings and activities. They are genuine hubs of information and support for the music industry and for these artists with whom we work.

As for strengthening our national organization, ANIM fully plays its role with the help of a single employee. I am always amazed to see how actively involved ANIM is. It carries out numerous projects and plays the roles of analyst, mediator, guide, promoter and so on.

I repeat that the health of our organizations is an essential link in the chain of healthy music production, particularly in the Canadian francophonie.

[The Chair, Conservative, Gord Brown]

Okay. Thank you very much.

We'll now move to the Songwriters Association of Canada for eight minutes.

[Greg Johnston, Vice-President, Songwriters Association of Canada]

Good morning. My name is Greg Johnston, and I currently serve as one of two vice-presidents on the board of the Songwriters Association of Canada. On behalf of the S.A.C., I'd like to express our thanks for the invitation and opportunity to speak with you this morning.

The S.A.C. is a registered national arts service organization with approximately 1,500 members dedicated to educating, assisting, and representing Canadian songwriters. An association run by accomplished and active writers, the S.A.C. is committed to the development and recognition of Canadian songwriters by pursuing: their right to benefit from and receive fair compensation for the use of their work; the advancement of the craft and enterprise of songwriting through educational programs, networking opportunities, dissemination of business knowledge, and other services; and the development of activities that allow members to reach out and enjoy the sense of community shared by songwriters.

The board of accomplished songwriter-directors of the S.A.C. is drawn from across Canada. The association works in cooperation with and supports regional associations across the country.

In the context of this committee's work to study the state of the Canadian music industry, I believe it is of great importance to define who we are as songwriters. We are entrepreneurs. We are self-employed. We are artists. Some of us are performers as well, but a great many of us are not. We work mostly behind the scenes utilizing our talent, wisdom, experience, and skill to build the foundation of the music business—the song. Socio-economically we are a diverse community. A great deal of us are, like myself, middle class. We raise families, pay taxes, participate in our communities, and are essential to the music industry.

Canadians are highly successful exporters of music, but it is important to remember that although the record labels and performers are the face of this success, it all starts with a song. Songwriters are in essence the raw material of the industry. I make this point to illustrate the uniqueness of our place within the business. Our challenges, our successes, our needs, and our concerns are better understood when one first recognizes songwriters as a distinct and autonomous sector within the music industry.

We at the S.A.C. also believe it is important to examine the economic influence of the songwriter-publisher, or creator, side of the business as it compares to the record label-performer, or maker, side of the business. In the end, it was probably Mr. Reynolds, former president of Universal Music Canada, who best stated the conundrum when he expressed the view that establishing the relative value of the authors' and performers' contribution in a successful recording was the classic chicken-and-egg situation. He didn't think you could extricate the two to say one was more important than the other.

Recently the S.A.C. has joined the ACCORD group representing almost all Canadian songwriters and publishers through their unions and associations. Research is being carried out on the contribution of the ACCORD community to the Canadian economy, and although the study is incomplete, it is clear that the songwriter contribution is roughly the same as that of the Canadian record labels, both major and independent, according to the CIMA and Music Canada studies.

Considering the current state of the industry, we at the S.A.C. know that the ability of songwriters to earn a living is in jeopardy. Over a decade of escalating unauthorized uses of our works has eroded the royalty stream we rely on almost exclusively as income. The hardest hit will be the songwriting middle class, the group that is undeniably the engine of the sector. Although pundits and experts alike expect new streaming models of music consumption to reach the $40-billion mark globally within five years, creators must be represented fairly in the value chain. When artists like Zoë Keating are reporting 2013 Spotify earnings of $808 from 201,402 streams, it becomes apparent that there is still much work to do on the sustainability of the streaming model.

We ask the Government of Canada to support the Songwriters Association of Canada in our efforts to research and establish guidelines for fair compensation for songwriters in regard to new digital models. We must do all that we can to ensure that individual Canadian music creators receive a fair share of the new and growing revenue streams that without our work would not exist.

Jean-Robert.

[Jean-Robert Bisaillon, Vice-President, Songwriters Association of Canada]

Good morning.

My name is Jean-Robert Bisaillon and I am an elected member of the board of directors of the Songwriters Association of Canada. I am co-vice-president together with Greg Johnston.

I too would like to thank the Standing Committee on Canadian Heritage for allowing me to speak as part of its consultations on the Canadian music industry.

To begin with, I will cite one of our joint objectives.

“Ultimately, the Canadian Sound Recording Policy will...adopt a more holistic approach to developing this sector.”

For the SAC, this holistic approach is based on the fundamental fact that all links in the industry chain that produces great Canadian music must be valued equally.

We feel that current support measures for singer-songwriters and the royalties we receive from online music providers will ultimately be inadequate to enable us to stay in business. Consequently, for us, a holistic approach means establishing a sustainable industry that can regenerate itself.

New technologies are fabulous. I myself am involved in the software sector. However, they also have very disruptive effects. Our sector has suffered a 40% loss in value since physical music media disappeared. This has disrupted the experience of Canadian consumers without any satisfactory new models being introduced. We are dealing with permanent downloading from iTunes and file-sharing on BitTorrent networks using USB keys and cloud storage. There is also interactive and semi-interactive digital radio and online mobile listening. We are even seeing a return to vinyl. We believe that consumers are completely lost in all this.

One of the objectives of the music industry consultation exercise is to find ways, and I quote:

“To enhance Canadians' access to a diverse range of Canadian music choices through existing and emerging media”.

Our music industry, like consumers, does not have access to Canadian music platforms or digital apps created by Canadian tech start-ups. No one has access to satisfactory new distribution or consumer models.

The Songwriters Association of Canada is constantly looking for ways to study and document this situation. Out of our own resources, we funded a study on Canadian peer-to-peer music-sharing practices, that is to say file-sharing. We are currently conducting a study on fair compensation for creators in accordance with effective royalty rates based on digital use. The following statements are taken from that study.

The songwriting model is no longer sustainable. Despite our role as the primary content provider, our revenue share is largely insufficient relative to those of other industries. In streaming radio, our share of costs incurred by the platforms is less than 1%.

As Greg mentioned, we are saying that digital streaming radio industry revenues should increase. Most subscriptions to those services are currently free of charge and generate royalty levels that are tantamount to piracy. Even an increase in paid subscriptions for these services would not help us. Music creators must invariably receive a larger share of the revenue stream.

Several income sources are currently excluded from the calculation of royalties. Please note that contractual advances paid by some labels from certain music platforms are excluded from the calculation, as are revenues from the sale and mining of user data, some ad revenues and gains generated by the issuance of public shares by certain players.

I'm almost done.

In order to obtain equal remuneration, we must be able to put transparent reporting processes in place. We believe that music industry businesses could gain a competitive advantage in this area by meeting new transparency requirements.

We would like to test these Canadian music service certification models in cooperation with representatives of the entire industry chain, including content aggregators, high tech start-ups and telecommunications businesses. Songwriters must be able to conduct independent studies and compliance tests specific to their needs.

Lastly, these efforts will help restore consumer confidence in legal online offerings and in the Canadian industry in general.

A holistic frame of reference means, above all, a sustainable music industry ecosystem.

Thank you very much.

[The Chair, Conservative, Gord Brown]

Thank you.

We'll now move to Martin Smith from the Gospel Music Association of Canada for eight minutes.

[Martin Smith, President, Gospel Music Association of Canada]

Good morning. Thank you for the opportunity to speak with you today.

My name is Martin Smith, and I'm the president of GMA Canada, also known as the Gospel Music Association of Canada.

Before I drove up here today, I was thinking about the heritage and place of gospel music in our country. It could easily be argued that the heritage of gospel music in Canada predates the formation of our country.

The Christmas hymn The Huron Carol was written in 1642 at a mission in Sainte-Marie among the Hurons near present-day Midland, Ontario. The music was based on a traditional French folk song, with the current English lyrics added in 1926. Over the years, the song has been recorded by Bruce Cockburn, Tom Jackson, the Crash Test Dummies, the Canadian Tenors, and non-Canadian artists as diverse as Burl Ives and the Vienna Boys Choir.

The Huron Carol may be the first signpost in the journey of gospel music in Canada, but it is just the tip of the iceberg and now represents music that can be heard in every province and territory, and in every conceivable genre: folk, pop, rock, country, jazz, classical, heavy metal, choir, urban rap, quartet, dance, francophone, aboriginal, gospel Caribbean, blues, roots, hymns, and yes, Christmas music. All of these things fall under gospel music.

The sound of gospel music is as diverse as our country. Whether the songs are being played in churches or stadiums, or on the radio or at home, the Canadian gospel music industry is thriving and is part of our country's legacy.

In 1974 the Canadian Gospel Music Association, now known as GMA Canada, was formed. At first the organization was primarily Ontario based and specifically linked to what we call light inspirational and southern gospel music. If you're not familiar with southern gospel music, think four-part harmony quartets with four men wearing the same suit.

Over the decades, GMA Canada has changed to reflect the changes in both the musical styles and the needs of the artists who are our members. Today, GMA Canada exists to serve and celebrate the artists from coast to coast to coast. This is done through our annual artists retreat, the annual Covenant Awards and banquet, various events, workshops and showcases, and the broadcast of the awards program on national TV each fall.

GMA Canada's work is to raise the profile and interaction of gospel music artists, songwriters, producers, promoters, radio stations, distribution, retailers, and churches. The organization is run by a volunteer board of eight women and men who work closely with the greater community to foster the impact and success of Canadian gospel music. As part of that growth and communication with artists across the country, we have introduced many new elements, such as training workshops with industry leaders, the artist songwriting retreat, and a more impactful awards program.

We introduced, for example, the lifetime achievement award that has honoured Canadians such as Tommy Hunter, the Toronto Mass Choir, and also George Beverly Shea, who sang in front of more people in the world than any other artist in history due to his travels with Billy Graham. He was born just down the road in Winchester, Ontario.

We have honoured industry builders, retail giants, groundbreaking artists, and influencers. We added several new categories to recognize music from every community, whether French, English, or aboriginal. We included awards for graphic design for albums, for songwriters, for music videos, and for a whole array of other categories. We created the Canadian Gospel Music Song Hall of Fame to pay tribute to earlier works such as The Huron Carol. If you were to look back at the original lyrics of The Maple Leaf Forever, or even of our national anthem, you would see that the lyrics are about faith and the aspirations of a nation, and they go hand in hand.

The greater gospel music industry includes 30 full-time radio stations, with twice as many repeaters, in communities as far stretched as Grande Prairie in Alberta, and Mount Pearl in Newfoundland. The country is host to major events such as YC, which is a youth event held in Edmonton, Winnipeg, Langley, and St. John's. The annual event in Edmonton has seen 17,000 young people pack the same stadium that Wayne Gretzky used to call home. There are festivals, conferences, weekend church services, and coffee shops that see the playing of gospel music each week.

Sales of gospel music in Canada exceed over $10 million annually, including both physical goods and downloads on iTunes and other Internet sources. David C Cook Distribution in Paris, Ontario, distributes the bulk of the music to religious retail stores, but most of the major mainstream record labels also have a roster of gospel artists, including Sony, Universal, and the Warner Music Group.

This income does not count the CCLI report, which collects fees for songs sung in churches each week, the fees for live performances, or other income from radio or television.

Artists, producers, record labels, and distribution are all active in producing significant income, whether it is royalties for a recording or staying in those hotels while they tour the country. The biggest challenge for our community is being able to tap into government funding. Many artists have not been able to receive support from FACTOR, as an example, because our industry is made up mostly of independent artists whose CDs do not sell in HMV or Walmart. Our organization has struggled to gain recognition for our members and receive support for our annual GMA Canada week, which includes those key elements of training, showcasing, and the annual awards program.

Many of our artists have looked southward to record labels based in Nashville or Colorado Springs to find the kind of support they need, but as you can imagine, very few artists are signed to those kinds of deals. GMA Canada, as an umbrella organization representing a significant art form and community, continues to seek both recognition and financial support to allow our artists to grow, learn, train, and mentor the next generation. Whether the song is The Huron Carol or something from Tim Neufeld's new album “Trees”, which won a Juno Award on the weekend, the gospel music community is a Canadian heritage gem waiting, like most of the country, for spring to arrive and its bud to blossom.

Thank you for your time this morning.

[The Chair, Conservative, Gord Brown]

Great. Thank you very much.

We will now move to the questions.

Mr. Boughen, you have seven minutes.

[Ray Boughen, Conservative, Palliser, SK]

Thank you, Chair.

Let me add my voice of welcome to the panel. Thank you for taking time out of your busy schedules, I'm sure, to spend part of the morning with us. We appreciate that.

I'll ask a general question and maybe earmark one of the panel to respond, but other members can feel free to jump in and share their thoughts with us. The questions are pretty generic and pretty wide open.

Greg, you were talking about revenue shortfalls and what can happen or what should happen. Can you expand on that a little bit? What recommendations do you have that would increase the probability of more dollars going to the performers to help them with their careers?

[Greg Johnston]

That's a great question, and a very complicated one. I don't actually pretend to have all the answers, but I'll give you a couple of examples that you might find interesting.

If you have a million plays of one of your songs on Rhapsody, for instance, that will get you $11,000. That's a million plays—an extraordinary amount, a bona fide hit. Then we go down to YouTube, where a million plays gets you a whopping $1,750. This is assuming you wrote the song yourself. If you co-wrote it, then you actually get half that amount.

The problem we're seeing is that these massive, massive global companies are coming in, and basically they're start-ups. They talk to the labels, and the labels licence their entire catalogue, because that's how the service works. If you can't get all the songs, no one will want to use the service. So they licence the entire catalogue, and then there are the provisions where a company like that, if they licence the entire catalogue, doesn't actually have to share the revenue stream, because it's licensed for them as a whole, so a lot of artists don't participate in that at all.

We also have a problem with how they divide up the amount the record labels get and the amount the publisher or the creator side of it gets. We find that we're not participating in this conversation at all when these companies are starting up and they're being allowed to do business.

It's increasingly looking like it's really just not possible for us to function in this environment. There have been a lot of questions on whether there needs to be more regulation on this business or more cooperation with the government. Essentially they're a tech company, and arguably a telecommunications company.

There are a lot of challenges. Right now we just want to bring light to the issue. It's time to have some serious discussions about this, because this type of activity could be the collapse of the creator side of the business. It's very dire.

[Ray Boughen, Conservative, Palliser, SK]

Thanks, Greg.

Martin, how does gospel music fit into that in terms of financial involvement? Is it solid, not so solid, or is there room for improvement?

[Martin Smith]

It's not solid. That's for sure. The same problems Greg was talking about we would echo, because of course our community represents people who are creating songs and writing them. Not all of them are performers, but their income streams are drying up. They're not selling physical CDs as they used to. At least for our community, they're not getting a whole lot of radio airplay, so there are not as many chances to tap into income.

Record labels are signing fewer and fewer artists. The roster is shrinking down, and of course, from their perspective, that makes sense. They're looking for money too, so for an artist to write songs or for an artist to get out and perform before people, they need support. I would echo what Greg was saying that on the songwriters' side, people are not going to be able to make money from writing songs with this kind of system in place.

[Ray Boughen, Conservative, Palliser, SK]

In your world, Natalie, how does this factor into increasing performance by artists and giving them a chance to excel?

[Natalie Bernardin]

I also echo what Greg was saying. In our reality, because we're predominantly independent artists—there's co-writing, but we don't have a lot of labels and revenue streams that we have to share—we're probably going to feel it further down the line. You guys will feel it first, because there's that relationship and split of the revenue. But the fact is, if we're not getting our fair share, if the songwriters aren't getting their fair share, there will be a collapse of that creative sector.

[Ray Boughen, Conservative, Palliser, SK]

I guess one of the questions is what tools songwriters and composers need to break into the music industry. If we go back to square one, is there some way that young people can get into the industry? Are there some tools they need to get in? How does that work?

[Benoit Henry]

I would like to clarify one point.

In our language, when we say "the Canadian francophonie", that is shorthand for the official language minority communities. The Canadian francophonie is a shorter expression that we use to avoid referring to francophones outside Quebec. It is not very pleasant for us to define ourselves in those terms.

That being said, the music industry crisis that Mr. Bisaillon described earlier—we are not talking about the new music economy here—has not hurt just the artists. When the Alliance nationale de l'industrie musicale was established in 2001, there were enormous numbers of complaints in the francophone and Acadian communities. Access to funding was virtually impossible. You can state the figures in absolute terms or as percentages, but artists in the Canadian francophone communities barely received $200,000 in 2001. Ten years later, however, the figure was more like $1.3 million at Musicaction, for example.

So this means that there has been some catching up. For a long time, we said we had a lot of catching up to do, but we have stopped saying that because we do not want to catch up to a model that is exploding or collapsing.

On the other hand, we have clearly experienced both growth and consolidation in our communities as a result of available funding. For example, under Musicaction's Music Showcases program, which is funded under the roadmap for official languages, we are now able to obtain 15% of available funding. Francophones outside Quebec, who represent 15% of francophones in Canada, are receiving an appropriate percentage.

Many agencies and organizations in our network are funded through official language support programs, which foster the emergence of new artists. Those programs play an important role in that they help artists become professional, promote themselves and develop markets. Natalie talked about the 100 Nons agency in Manitoba. There is also APCM in Ontario and Musique NB in New Brunswick.

[The Chair, Conservative, Gord Brown]

Thank you.

We'll move now to Mr. Kennedy and then Ms. Mathyssen for seven minutes.

[Kennedy Stewart, NDP, Burnaby—Douglas, BC]

Thank you, Mr. Chair.

Good morning and thanks very much for coming. I'm enjoying these stories although they're a bit hard. I think the industry is in a period of transition.

I was a musician for about 10 years, and my brother is currently in a band touring around Europe, so we often discuss how artists who have decided to make this a profession make a living at this now.

When I was playing music, the thing was to get a deal with a big record company, and CDs were just coming onto the market. That was the old model. Now with my brother playing, when he puts a CD out, within 10 seconds it's up on the torrents, the streams, and he has no way of capturing revenue. So they get it from selling other products.

I'm just wondering if you can answer perhaps two questions, and maybe think about mid-career artists or artists who are just emerging as full-time musicians and how they make their money. How do you think the government might support the development of products other than recordings?

Thanks, Mr. Chair.

[Jean-Robert Bisaillon]

To answer your question on how the government might support the development of other products besides music itself, I would say that Musicaction, for example, has made a significant shift by supporting performance activities associated with sound recordings. It has become clear that live activities generate a lot of revenue, which is an excellent thing.

We also mentioned that FACTOR and Musicaction are doing a very good job of helping launch careers, and I do not think that can be questioned. However, we are seeing well-established, very prominent industry players slowing down and declining in size. This is where things are becoming worrisome.

I do not think we can really support other types of products derived from music to offset losses resulting from the disappearance of actual CDs. We have lost a major product and will not get it back. The only thing we can do is rebalance revenue streams so that the entire chain can benefit from the wealth because the wealth is there.

Equipment suppliers, tech businesses and Internet service providers are currently capturing a large part of the wealth generated by digital music. In accordance with the concept of fair trade music, those businesses should be told that, if they still want to benefit downstream from this Canadian content that they like so much and that enables them to make profits, they will have to support the chain upstream or else the system will collapse.

[Natalie Bernardin]

I entirely agree with what Jean-Robert said. Revenue sources must be diversified in the new music economy.

Where the government has a greater role to play is with respect to allocation rights. The right players must be brought to the table so that Canada can establish a viable model.

[Greg Johnston]

Maybe I can jump in here. I think there are a couple of things we need to talk about here. I think the Musicaction and FACTOR have been very successful programs and they're an excellent way for someone to get into the industry. They're also a very good way for small businesses to get into the industry. They really add a lot to the economy and specifically the music economy. So first of all, I'd like to say that those are all very successful programs.

We would like to see the balance maybe shift a little so that the creator side could participate in those moneys a little bit more than the maker side, because we feel as though the labels and the indies and the performers have greater access. There's more funding available to them.

The thing is that no one is paying me to be a songwriter. They don't buy my songs. If a band or an artist wants to use my song, my publishing company allows them to do do. There's a licence in effect. I get paid only if it's played on the radio or if someone sells a physical unit of it. So someone has to buy it on iTunes or they have to buy a disc. That's the only way I get paid. I don't go on tour with them. I'm way too old. I don't sell any T-shirts. All of those other tertiary parts of the music business, I'm not allowed to participate in them. There are a lot of guys and girls like me out there who just do the writing part, so this is really difficult especially for just the creator side. Any way we can help the creator side of the business keeps the business a little more in balance. Right now, it's a lot out of balance.

I just wanted to make it clear how we actually do make our money. Every disc not bought, every album downloaded off the Internet for nothing is just some pennies that I don't get anymore. That's how the situation works.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Thank you very much, Mr. Chair.

Thank you for being here. This has been quite an education for me, because I'm not terribly familiar with the music industry.

I keep hearing some repeated themes. Some of them disturb me very much.

Mr. Johnston, you've said twice, in a couple of different ways, that the ability of songwriters to earn a living is in jeopardy and that there could be a collapse in terms of the creator side of music. From my perspective, that's pretty much the end. If people can no longer do the creative part because they're starving, because they can't possibly do it and make a living, it seems to me that we're in real jeopardy.

What I keep hearing—and I think this may be a concrete recommendation that should be part of our report—is that there needs to be a collaborative effort. Government needs to take the lead, and we need to bring all the parties to the table: the creators, the producers, the marketers, and the providers, the Internet providers and streamers. We need to bring the parties to the table and work out a system whereby everyone benefits, where the creative process can continue, because it would seem to me that these Internet providers, the streamers, are not going to fare very well if those creators aren't there to provide that incredible product.

I'm wondering if you could comment on that and if that makes sense in terms of the kind of recommendation that I think is emerging from the discussion we've been having.

[Greg Johnston]

I'd like to say first off that over the last 10 years I think there has always been a lot of finger pointing: you're to blame, you're to blame, and you're to blame. I think that the more collaborative an approach we can have, the better. I would look at the ISPs as our friends, as providing one of the most incredible distribution systems the world has ever seen.

I think a collaborative approach with the ISPs...and yes, a lot of people use the ISPs to get our content. Maybe there are some more regulatory things that can be discussed about access to certain sites through your ISP provider, but I don't want to have a finger-pointing game. I think it's really important to look at this on a systemic level.

That's why, for the S.A.C., I think we feel that one of the most important things we're doing right now is researching this. We want to do studies. We want to figure out how much money this stuff is worth so that we can talk to an ISP and say, “We think this is what this is worth.” We can go to a streamer like Spotify or Pandora and simply say to them, “You know what? This is an unacceptable royalty rate, and really we think you're just starting a business that you're going to take to an IPO as fast as you can, and you're going to cash out all your stocks.” There really isn't—

[The Chair, Conservative, Gord Brown]

I hate to cut you off, but we're well past the time.

I want to thank Ms. Mathyssen and Mr. Stewart.

Now we will hear from Mr. Dion. You have seven minutes.