Canadian Heritage Committee on April 8th, 2014

[Sébastien Nasra]

How do artists access the funding within the existing programs?

[Ray Boughen, Conservative, Palliser, SK]

Right.

[Sébastien Nasra]

It is partially through.... There seems to be a big structure of funding for the entrepreneurs and the companies. That said, through the arts council in Quebec, the Conseil des arts et des lettres du Québec, or the Canadian Council for the Arts, there is money available that is directly for artists. Only artists can access that money. I don't have the numbers with me, but I think these systems work well. They certainly need more funds to be able to allocate directly to artists, especially as Mr. Petit mentioned, for the creation process, and recording and all that. It is true that sometimes it takes a year or two to get to the right quality of material. It's very difficult for an artist to do that and also have a side job or a day job.

That said, I know there are certainly situations where artists are volunteering to do their own recordings and all that. It hasn't been the case, certainly not for my company. Over the years we've worked with fewer artists but we've supported them, I like to think, more. It's also the notion of quantity versus quality. Personally, we've always tried to go for quality and a little less quantity so that we could use the funds that are available to us and our own money to actually support the artists throughout the process and also throughout the process of promoting and touring. The best I've ever done, it took about three years to recover the whole investment in an artist's project, but the artist was making a living. It was a different case and a different situation, I guess.

[Ray Boughen, Conservative, Palliser, SK]

Richard and Annie, how does it work in Quebec? Is there any difference for artists who are performing there or developing artists to have access to funds to help them with their albums, touring, and all the rest of it?

[Richard Petit]

Is the question for us?

[Annie Morin]

Fine.

[Richard Petit]

There is some funding for performers in Quebec, but it is very little and it is in no way enough to live on and to dedicate oneself completely to creating and recording. Very small amounts are provided for a project.

A project lasts approximately two years. The funding in question covers the cost of living for three or four months at the most. If you consider the actual length of time for a project, this is more like volunteer work. Given that the overall funding is provided to the producers, payment rarely reaches the performers. Whether an album is successful or not the artist does not make any money.

[Annie Morin]

We had the opportunity to hear Mr. David Faber, who testified before you. As he himself said, he has to hold another job. People he works with have full-time jobs even though they are very successful performers.

[Ray Boughen, Conservative, Palliser, SK]

Yes, it's very difficult. We heard from one of our panel members earlier today that a very successful tour doesn't necessarily make you any money. At the end of the day, you've pretty well paid out the money for expenses and there's not much money left for the artist and artist's group. Is that common in your world?

[Richard Petit]

That is the standard.

This industry has been built over the years and for all intents and purposes volunteer work is the standard. Careers have become shorter and shorter. Artists dream of having a career. They start one and then they get to the point where they understand that they will never make any money. So they give up. We are seeing careers become shorter and shorter rather than longer. Over the course of their first production cycle, performers realize that they will never reach their goals, perfectly normal ones like owning property and starting a family. It won't happen under the current circumstances because of the system that is making careers shorter and shorter.

[The Chair, Conservative, Gord Brown]

Thank you, Mr. Boughen.

[Annie Morin]

There are very few performers who can make a living from their work.

[The Chair, Conservative, Gord Brown]

I'm sorry, Madam Morin.

Mr. Natel, you have seven minutes.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you very much, Mr. Chair.

In fact I was telling Montreal people that there is sometimes a lag and the screen freezes. There is a two or three-second lag, just like during the broadcast of the Olympic Games.

I would like to thank everyone for being with us this morning. You are obviously very busy people. Everyone is overwhelmed.

The music industry is a world of travel and performances abroad. I am thinking in particular of Sébastien Nasra. I would just like to tell everyone that we have already met. At the time, all three of us were with Sony Music. It was a glorious time when digital music had just made its first appearance. Music was flourishing and everything was getting much faster. Video clips were taking over the world. Everywhere, and at the same time, master tapes were being used to make CDs that were selling very quickly. It was fantastic.

At the time we also heard René Angelil say, with the appearance of Napster, that it was time to do shows in Las Vegas because record sales were a thing of the past and they would continue to decrease. That is exactly what happened.

I would like to congratulate you all for being here. I would like to congratulate Mr. Petit in particular who was appointed president of Artisti today, if I read the newswire correctly. Congratulations.

[Richard Petit]

Thank you very much.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

My first question is for you, actually.

I believe I have heard you speak about the Paramore situation in the United States. They complained that they were receiving very few royalties or very little payment from streaming services. Could you tell us more about what they had to say? Can you explain to us why that group is so important and why its success or visibility did not translate into revenue?

[Richard Petit]

Currently, in Europe, the highest royalty rate for music streaming is 0.00084%, whereas the lowest rate can be as low as 0.00048%. In order to make minimum wages in Canada, your song would have to be streamed from 25 to 30 million times. At such rates, it is impossible to make any money. In the case of Paramore, for 1.3 million songs streamed, they got the meagre sum of $36. That gives you an idea of the current situation. At this time, performers cannot make any money with this new technology. However, someone somewhere must be making some.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Mr. Petit.

Like Ms. Morin, you have explained the issues around royalties redistribution. I hope we will have time to discuss that further today.

However, I would to go straightaway to Mr. MacKay, because we are talking about royalties for streaming services.

Mr. MacKay, in a limited market like the Canadian one, royalties for a product—the word “product” may likely seem offensive to some, but we are talking about the music “industry”, not the “art” of music—are probably quite low because they are established according to levels of international access, which may result in a bit more than fractions of a cent if the volume of consumption is significant.

Who other than the government could potentially make up for these losses? Streaming is the current pattern of use. According to various studies, such as the one conducted recently by the International Federation of the Phonographic Industry, or IFPI, 80% of music is streamed. What can be done to ensure that our creators get a fair shake, given this new way of listening to music?

[Ian MacKay]

There's definitely a challenge as the music industry changes and music consumption changes, to make sure that the way music is being consumed is monetized, and monetized in a way that allows artists to continue to make a living in the music industry and people to continue to invest.

I think that goes to the point that I made earlier in terms of the regulatory process. The problem now is that a lot of the ways that music is consumed by music consumers doesn't result in any money going back to the artists and the people who produce the music.

Even in the situations with streaming services that are legal streaming services, even if the royalty rates are low so that it requires many plays to get to a level of revenue, at least there is revenue going to the artist. When I made the point earlier about the regulatory process in Canada, I think in Canada we see that only 7% of revenues are coming from streaming, versus 20-something per cent in the U.S., and that's because we just don't have as many legal streaming services here in Canada.

We certainly want to encourage as many of those as possible. Part of the process for having as many of those services in Canada as possible is to have a regulatory process that gives them and rights holders certainty as to what the rates are.

Something I would strongly recommend that Parliament and the government look at is making sure that the Copyright Board, the regulatory body that sets those rates, is well enough resourced and the process is efficient enough that these things can be turned around, and as these business models develop, that can take the place of the illegal distribution of music, or the distribution of music that isn't resulting in money getting back to creators, and it's making sure we are doing everything we can from a regulatory point of view to facilitate this.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Mr. MacKay.

Witnesses have repeatedly told us that the government's support system for the recording and composing industry was completely appropriate. People are content. The problem has to do with product distribution and its international visibility.

Mr. Nasra, I believe you can confirm that there is a high level of interest in sound,

the Canadian sound, the Canadian music.

Do you think there is anything that can be done to support visibility on new platforms? In the past, we used to fight for Canadian music to be prominently displayed on record store shelves. Nowadays, are there any initiatives that warrant greater support?

[Sébastien Nasra]

There are certainly things that can be done collectively, hence the usefulness of industry associations' involvement. I am not an expert on these issues, but I fully support these efforts. However, you have to band together in order to square off against the big players, like iTunes, Google and streaming sites. It is not easy.

The route we have chosen is to show off our performers in flesh and blood on international markets. However, we need viral tools, Internet tools and so on in order to do this. That is why I always come back to talking about labour. If a product is good, it will succeed in the end. It is just that it is increasingly difficult to sell a good product because there are so many of them. The competition we face is global.

My work is a bit more in the area of events, and that is what I am seeing out there in the field, be it in the United States or in England, where there are huge conference shows. Countries are branding themselves. Japan has its own brand, just like Nike. It's incredible.

[The Chair, Conservative, Gord Brown]

Thank you.

Mr. Dion, you have the floor for seven minutes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you, Mr. Chair.

Ms. Morin, Mr. Petit, Mr. MacKay and Mr. Nasra, I want to thank you for having presented specific recommendations.

I would like to take the seven minutes that we have together to go over the recommendations and see if there is a consensus on them among you.

Mr. MacKay, you came with two recommendations. The first one I think Madame Morin and Monsieur Petit supported, which was to get rid of the $1.25 million exemption.

Mr. Nasra, do you agree on this?

[Sébastien Nasra]

Yes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

The second recommendation is about regulation, but it's first to make sure that the regulatory board will have the resources needed. It's also to change the regulation as such. Right?