Thank you, Mr. Chair, for inviting me to meet with your committee.
First off, my name is Shawn Cooper, and I'm the president and co-founder of a company called Volu.me. We work with artists, and Canadian artists specifically, such as Hedley, Tegan and Sara, The Sheepdogs, and Sloan. We power their mobile applications, so we build native iPhone, Android, and BlackBerry apps that pull in all of their content from their various sources online and make sure that everything is live in the artist's app all the time.
I welcome this opportunity to help explain some of the ways in which technology is playing a pivotal role in the creation, distribution, and consumption of Canadian music content, while equally offering two suggestions on how the federal government could better aid in the funding of a music technology platform such as Volu.me.
The typical consumer of Canadian music content in 2014 carries an always-connected smartphone with them from the moment they wake up in the morning until the moment they go to bed at night. As a people, we've never been more connected or up to date in history.
With this new always-connected mindset have come greater expectations for intimacy with the musicians we listen to. It's no longer enough for an artist to simply write and release music for a fan to listen to. A fan wants a much deeper connection with an artist, expecting a window into their day-to-day lives and engagement on a level that is unprecedented.
Being a successful and bill-paying musician today requires fan development—the concept that you have to work to acquire your fans initially, followed by keeping the relationship with them alive and strong between album releases. An artist who fails to engage in fan development between album release cycles has little chance of being successful in the next album release cycle, because everyone who cared is no longer listening.
Without technology platforms, which enable these talented musicians to connect direct to fans on a scalable level, they would have little hope of successfully developing or monetizing their fan bases today. Building the technology platforms that help enable these musicians can often be much more complicated and expensive to develop and support than one might imagine. Today's platforms such as Volu.me are dynamic and ever-changing due to the way that they interconnect with other platforms, operating systems, or content distribution channels.
Unfortunately, this means that you can't just build, launch, and forget them, expecting them to just keep functioning. Even after initial development and launch, their operations often remain resource intensive, with developers required in an ongoing manner to keep up with changes in the other ecosystems the platform is connected to.
Easily the most expensive cost in creating and operating a music platform is that of development staff payroll. Your development team is going to make or break your ability to successfully solve and execute on a market problem. Unfortunately, with developers in high demand, often at very high salaries, it can be difficult for the Canadian music technology start-ups to attract or keep skilled developers, especially when competing against U.S.-based companies for Canadian talent.
Being able to get a platform like Volu.me to market can often include upfront costs in the hundreds of thousands to millions of dollars. Further to this, in the case of music platforms specifically, a projected break-even point on operating revenues is typically not possible or probable until you scale your users to a pretty massive level.
This makes music platforms, while very much required and leveraged by the Canadian music industry, a rather risky and often initially money-losing venture to create. Because of this, building out a music platform typically requires raising investment capital. This usually leaves entrepreneurs with two options: raise money in Canada or raise money in the U.S. Raising money in Canada typically means a smaller overall deal evaluation, as well as a reduced possible investor pool due to the limited number of venture capital institutions in Canada versus the U.S. Unfortunately, this often sees Canadian music platforms move south of the border just as they start to get momentum, due to a lack—again—of institutional funding in Canada as it relates to music technology ventures.
In leveraging programs made possible by Canadian Heritage, such as the collective initiatives program administered by FACTOR, along with having raised private investment capital from Canadian angel investors and music industry veterans, we've been fortunate enough to be able to fund the ongoing development of Volu.me based out of Toronto.
It is our recommendation that the collective initiatives program administered by FACTOR and Musicaction see their project timelines and budgets for technology-based projects increased to better reflect the actual budgets and timelines required to build music technology platforms that matter. Seeing an increase in project funding levels that could support several full-time developers on a project for a 12-month project timeline would enable Canadians to build the music platforms that our musicians need and could leverage worldwide.
Further to this, it is our recommendation that a grant program be set up to investment-match in Canadian music technology companies who manage to raise institutional funding. By this, what I mean is that if a Canadian tech start-up can go out and convince an institutional investor, such as a venture capital firm, to invest their own funds into a music platform, the federal government should use this vote of confidence on the investor's part as a barometer to the calibre of the project team and idea. Such investment-matching on the part of the federal government would make keeping music platforms and the jobs they create in Canada a much more viable long-term option, while equally ensuring that Canadian musicians are at the forefront of leveraging technology to further their musical careers.
I thank the committee for its time and look forward to answering any questions.