Canadian Heritage Committee on April 10th, 2014

[Luc Fortin]

Yes.

Do you want to discuss the private copying levy for Internet broadcasting?

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

Tell us what exactly you have in mind.

[Luc Fortin]

The Beijing treaty talks about levies and fees for audiovisual recordings. That's an important aspect for which we are currently not getting paid.

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

Where would the money come from? How would that work, in more concrete terms? What kind of mechanisms would help distribute the money?

[Luc Fortin]

As Mr. Tetreault was saying, this treaty is one or two years old. Once all the countries sign the treaty, the copyright collectives that claim royalties will be able to distribute them. Those are very complex international processes. A number of collectives around the world have concluded partnerships in order to distribute that money.

It's important that as many countries as possible sign that treaty. Our country could set the example and even lobby other countries to sign the treaty, as well.

As for royalties on albums sold, a lot of money in the compensation chain is spent before getting to the artist, who end up with ridiculous amounts. We are talking about very small percentages. When a group of four musicians receives 75¢ per album sold....

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

I understand what the problem is. I would now like you to explain to me, in concrete terms, how the solution will work. That's what the committee needs to understand. You say that another source of revenue would come from royalties. How would that work? How would the money go from A to B, from buyers to sellers?

[Luc Fortin]

Mr. Rheault, who specializes in collectives, could tell you more about this than me.

If private copying were to apply to all media, fees would be collected on the sale of those media. The fees would be redistributed to right holders through collectives. That's a well-known mechanism that has been working for a long time.

Today, private copying is practically dead because it applies only to CDs and cassettes. We all agree that cassettes have become completely obsolete. The relevant legislation should be modernized.

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

Mr. Tetreault or Mr. Rheault, you would perhaps like to participate in the discussion. Who would those fees be collected from?

[Pierre-Daniel Rheault]

Let's talk clearly about the beast.

Mr. Harper created some trauma about seven or eight years ago when the study on Bill C-32 began. He said he would never impose a new tax on Canadians. We told him that this was not a tax, but a tariff, which was much smaller than the amounts discussed earlier. It's clear that quadrupling the funding the government gives to the industry will not be possible.

Let's take the example of Internet subscriptions. The Songwriters Association of Canada, which has no representative here today, suggested a way to impose what is called a monthly retainer. You may find this illogical, but I am comparing that retainer to the 411 telephone service. Every month, we receive a bill that includes the 411 and 911 services, or anything else ending in 11. The amount charged is peanuts.

My mother always told me that peanuts add up to a bag of peanuts, and when you have a big bag, you can sell it. That's how copyright works. We never thought outrageous fees over $1 should be imposed. At some point, the conversation was about $5 because the Songwriters Association of Canada wanted to have

a blanket licence for the Internet.

That will be difficult to manage, but I'm convinced that, given the complexity of the processes that have been implemented, there will be some space between A and B to insert an A⁺ or a B^-. We suggesting applying the user-pay principle and a tariff that would not make the user feel trapped.

It's as simple as that. Users could contribute. Studies were carried out two or three years ago on this topic, and the vast majority of the people surveyed were in favour of a tariff, and not a tax, being imposed.

[The Chair, Conservative, Gord Brown]

Thank you.

Mr. Boughen, you have seven minutes.

[Ray Boughen, Conservative, Palliser, SK]

Thank you, Mr. Chair.

Let me welcome our panel. Thank you for appearing before us and sharing your expertise. It's very helpful as we look at the study.

I have a couple of questions that I want to pose to you. I've heard you talk about copyright, and I've heard some discussion around educational programming. In terms of copyright, what are your suggestions as to how that should be introduced so that the person who's the performing artist is adequately rewarded and recognized for his work? What notions do you have on that?

Maybe we could start with Mark.

[Mark Tetreault]

We have in place in Canada, the Musicians' Rights Organization of Canada. This organization collects money from broadcasters that they pay when they broadcast, and their goal is to distribute this money to the performers. There are organizations like this in countries across the world. They are supposed to share the money and share the resources and make sure that the artists are paid. There has been a reluctance, mainly of European countries, to even give the money to Canada. They just hold onto the money, making technical claims that we don't have proper distribution methods. That's been a problem, but our methods are improving.

MROC collects data from broadcasters so they know all the music that has been broadcast. Unfortunately, it's up to the musicians to actually ask for the payment. There isn't an automatic mechanism that says, “When we play this music, the money goes to these particular musicians.” It's up to the musicians to actually go to MROC and make the claim. They have to list every single recording, every single track they were on, as well as all the musicians who were on all those other tracks. That's a daunting experience for many musicians. If you have a small, compact band, it's easy to do, but that's very rarely the case.

So we have those challenges of getting the money that's owed to us from other countries. That's where the WIPO Beijing treaty would play a big role. It would put a lot of pressure on those countries that are holding money to release our money to us.

[Ray Boughen, Conservative, Palliser, SK]

Pierre, how do you view that? What can you see happening to increase the probability that musicians are recognized by copyright payment?

[Pierre-Daniel Rheault]

Copyright goes along with education. Copyright is a very abstract concept to somebody who was never involved in the art or in the show business environment. I am the only one to do that in my family and after 35 years with the same woman, none of my brothers-in-law understand my business. So it's not a miracle that we ended up where we are right now. It's so abstract. In fact, that's one of the arguments we have to face: the music is there so why do we have to pay?

I'm old enough to remember when we had 33 rpms in our hands. On the label, there was a line printed, “Reproduction, utilization”, etc. “forbidden unless you have the proper licence”. No one in the real world ever understood the meaning of that line. When I was talking to my brothers-in-law, they said, “Yes, but I paid for the CD”. I said, “You paid for the medium, you did not buy the tune. The tune belongs to the creator.” They need some kind of medication to understand.

I know it's a big problem. At one time, kings were paying for it and it was not a problem, but they all went into bankruptcy anyway.

I think we have to have confidence in the public that they would agree to pay a few cents per use, because this is what we're talking about.

[Ray Boughen, Conservative, Palliser, SK]

Right.

Luc, what do you say? Mr. Fortin?

[Luc Fortin]

I completely agree with you, Mr. Rheault. It's true that this is a matter of education, which could even start as early as elementary school and high school. People have to understand that music works do not fall from a tree. They are the product of labour that involves many people, such as the composer, songwriter and the musicians who perform the song. There is a complex production chain, and that means something. Music is not free.

I know that production is less expensive today than it was years ago, when people had to record in studios with 24 or 48-track devices that had to be rented for $250 or $300 an hour. That time has passed, as people have access to much simpler and less expensive technologies. However, this doesn't mean lower production costs take away music's value as such. A musical work has value, both for its creators and its performers. I think that people are prepared to pay at least something for that.

As I was saying earlier, in Quebec, we have noticed that consumers were much more reluctant to copy without permission a work of a Quebec musician they are familiar with, appreciate and hear on the radio, than the works from other countries or from another era, as they feel a connection with their reality. I think music should be introduced into people's daily reality, and they should be made to understand that, when they copy something, they affect someone else and take something away from them. I am talking about copying a work without permission.

When people pay for their subscription to an Internet service provider, why wouldn't a very small monthly amount go to a fund to support artist creation and compensation? As I was saying, private copying should apply to all media used to copy those works, and not only CDs and cassettes, which no longer exist today.

[Ray Boughen, Conservative, Palliser, SK]

Thank you for that.

[The Chair, Conservative, Gord Brown]

We're all done. Thank you very much. You're out of time.

I'd like to thank our witnesses for joining us today. Thank you for your contribution to our study. If you have any further contributions, you can send those to us in writing.

We will briefly suspend.

[The Chair, Conservative, Gord Brown]

We will call this 18th meeting of the Standing Committee on Canadian Heritage back to order.

For the second hour, our panellists are: from North by Northeast, Mike Tanner, who is the director of operations; from Live Nation Canada, Riley O'Connor, chairman, and Ken Craig, promoter; and from Dallas, Texas, through video conference, from Ticketmaster Canada, Patti-Anne Tarlton.

We will start with Mr. Tanner, who has the floor for eight minutes.

[Mike Tanner, Director of Operations, North by Northeast (NXNE)]

Thank you very much.

I'm very gratified to see that there's interest and engagement from the committee here. I've been quite active in speaking to other elements in the industry at the provincial and municipal levels. It's very nice to see that at the highest level of government you're interested in hearing from and working with the industry.

I am the director of operations at North by Northeast, NXNE. We're a large annual music festival in Toronto. I have been with NXNE since 2007. I've seen its metamorphosis from a local festival with local bands and local audiences into one of the premier music festivals in North America. I've also seen how, partly with the support of the Ontario provincial government through the Ministry of Tourism, we've grown our impact on the city and on the province and had a great impact on the tourism industry overall, with economic impact in a number of different areas.

I'd like to tell you a little bit about that, about festivals in general and about how live music, supported in the right ways, and left alone in the right ways as well, can generate tremendous growth in tourism across the country.

What do we talk about when we talk about tourism? In Canada we often focus the discussion on the natural environment. That's understandable. I'm a former professional musician, and I've driven back and forth across the country. As I'm sure you have seen as well on the Trans-Canada Highway, our national identity is reflected even in the licence plates that we see on vehicles: Beautiful British Columbia; Wild Rose Country in Alberta; Land of Living Skies in Saskatchewan; and Canada's Ocean Playground in the Maritimes. We have the ocean, we have the sky, we have wild roses, and in B.C. the whole province is beautiful, of course.

I came to Ontario from B.C. 25 years ago, but my migration had nothing to do with nature. Remember, it's Toronto I went to. It was all about the music scene. It was about the tremendous cluster of artists and venues, and the buzz that existed in districts like Queen Street West, College Street, the Annex, Kensington Market. I believe that same music cluster, that same scene, can be used to drive tourism internationally.

We all love the outdoors, but I would urge the committee to recognize that in Canada I think we've underplayed our unique strengths in the cultural industries, especially in live music. We're still talking about wheat fields and whales. We haven't kept up with the rest of the world in selling the urban experience. I understand we've dropped from seventh to eighteenth in the list of the world's most visited destinations in the last 10 years. The statistics tell us that tourism employs 600,000 people, which is more than the oil patch employs. The stats show us that tourism generates $85 billion in economic activity, which is more than agriculture, fisheries, and forestry combined.

I can tell you from first-hand experience that live music is already a great driver and the reason that thousands and thousands of people cross the border and fly over to our country. We have world-famous festivals across the country. We have folk festivals in Vancouver, in Edmonton, in Regina, and in Winnipeg. We have Ottawa Bluesfest right here. In Quebec there's the Montreal Jazz Festival, there's POP Montreal, there's M for Montreal, there's Osheaga. In the Maritimes they have Halifax Pop Explosion. I have only eight minutes, so I can't tell you about all the events we have in Toronto.

What I would like to state is that each one of these events has built its business largely on its own. Each festival markets to a far-ranging consumer base, mostly using social media. Each one is sustainable. Each one is growing in impact. But this avenue is ripe for expansion with just a little bit of support at the national level.

Imagine a marketing campaign, a public-private partnership by which the federal government joined forces with key festivals across the country to reach out to music tourists in the United States, for example, to bring them here to Canada and keep them here for longer than just a couple of nights by helping them put together a plan that gets them going from Osheaga in Montreal to the Regina Folk Festival and on to Edmonton, travelling by train, perhaps, in less than 10 days. This would be a wonderful thing.

It's possible, and we can help you do it.

The music industry isn't looking for old-school handouts, for the blank cheques written because we all know how noble it is to support the arts.

I would encourage the committee to recognize that support of events like this and support of the industry is an investment with very high ROI. My own event, North by Northeast, taps into a program called Celebrate Ontario delivered through the Ministry of Tourism. They give us between $300,000 and $400,000 annually which we leverage to partner with corporate partners. We put together free public shows at Yonge-Dundas Square. We close the street and we bring in a lot of people. We can turn that into a multi-million dollar return on investment at Yonge-Dundas Square alone with massive benefits for the local economy. Supporting live music helps the economy, it helps the country, and it certainly helps the musicians by giving them larger audiences to play for, more shows, and more exposure to vital industry that they look for and value so much.

Therefore, I recommend that the Government of Canada first identify and then support festivals and events, venues, promoters, and other industry directly involved with putting musicians on stages across the country. If you stage it, if you book it, the audiences will come. It's all about the programming. We see that with my festival. If we put a big free outdoor concert together with the right kind of headliner, we'll get 50,000 people in a day. We know about the audience. We know that probably 30% of them will come from outside the Toronto area and 20% will be from outside the country. We know that most of them are probably age 19 to 34 because we're dealing with that kind of audience and that kind of music. Many of them won't have full-time jobs yet. Lots won't own cars or houses yet. Some of them will probably be couch-surfing when they're at the festival but all of them will be spending money in bars, in restaurants, in taxis, in retail. They will all leave the festival with a T-shirt and with a fantastic memory of our country. And they'll be back.

I believe the traditional tourist marketing campaigns are not engaging these young music tourists, who are engaging with our kind of entertainment, who are travelling for commercial music versus the high culture represented by the symphony, the opera, the ballet. I see wheat fields and whales, wineries, and water parks, but I don't see Queen Street on a Saturday night.

I've visited Austin many times and I've seen first-hand how its brand, the Live Music Capital of the World, has animated not just the city but the State of Texas itself. I've seen 57,000 hotel room nights booked during South by Southwest alone. I've seen how the city has used its music sector to drive tremendous investment in tourism and other benefits as well. There's a lot more information on Austin in this wonderful report put together by Music Canada called “The Next Big Bang”. Suffice to say for now that we don't need to sit back here in Canada and look with awe and envy on what Austin has done, because in Canada we already have one of the world's most diverse, dynamic, and unique live music scenes with tremendously talented artists, iconic venues, historic club districts, and passionate, articulate fans. We even have the support of the media.

With all that, what we need is for the federal government to encourage further growth of this already vibrant sector. We, the industry ourselves, are finally starting to talk with a more cohesive voice. There's talk of a national association in the works. The live music industry can help the government undertake studies to shape priorities, to create programs to help service those priorities, and to ensure that the support reaches those who can do the most with it to generate tourism, jobs, and economic productivity, while helping the musicians and the music we all care so deeply about.

I'd ask the committee to recommend that live music is a key facet of the music industry and to engage the industry to learn more about it as it exists in 2014, to work with us to create a strategic plan to develop and leverage existing assets and to tap into this largely untapped cultural juggernaut.

Thanks for listening. I look forward to telling you more.

[The Chair, Conservative, Gord Brown]

Thank you very much, Mr. Tanner.

I apologize. I know you wanted to go second.

We'll now go to Mr. O'Connor and Mr. Craig from Live Nation Canada.

You have eight minutes between you.

[Riley O'Connor, Chairman, Live Nation Canada]

Thank you.

I'm chairman of Live Nation Canada. I've been in the business in Canada as a promoter since 1977. I started in Vancouver, worked my way up from being a stagehand at the Montreal Forum, and I'm an electrician by trade.

What I really want to emphasize today.... I had short notice about coming to this committee, but, to echo what Mike has been talking about, I j want to give a broader aspect of what the larger impact is of the commercial music sector and what it really means to the economy of Canada.

So thank you, Mr. Chairman and fellow committee members. I welcome this opportunity today to provide an overview of the live music sector.

Artists who create music are a gift to the well-being of our society. They nourish our sense of community and provide a gateway to inspire us all—tradespeople, professionals, entrepreneurs, and even our politicians. The live music that artists create is also a resource and an economic driver across the economy, from labour, to goods and services, to tourism.

Recently there was a business breakfast sponsored by the Edmonton Chamber of Commerce, to which an Icelandic trade mission group was invited as guests. I was struck by a quote from the director of culture and tourism for the City of Reykjavik, Ms. Konradsdottir. When she was asked what the most important thing is that her city does as a business centre, she responded that they promote their artists and they promote their culture. She said it is what they are and everything they do. It is also something we do every day at Live Nation. It is something the Canadian government should be actively promoting.

Live music is an economic success story in Canada. We punch well above our weight globally on the international stage. We entertain the world with our musicians, entrepreneurs, and technicians. Additionally, Canada is a mecca as a country for touring national and international artists. The live music sector is the economic lifeblood for our musicians.

Our company, Live Nation, manages and produces more than 1,200 concerts a year from coast to coast. We are active in more than 40 communities annually. In 2013, 3.6 million people attended our concerts. We generated over $285 million in sales. We produced seven major festivals in Canada, attended by more than 200,000 people. We spent over $14 million in Canadian media alone. Last year we produced 360 arena concerts, employing more than 145,000 people.

The numbers do not represent the entire Canadian live music market. What is clear is that musicians and their unique talent are a major economic benefit that provides real jobs in many fields to many Canadians.

Music touches everyone. Music is a motivation for people to gather together. We could do much more in celebrating our live musical heritage in music tourism. Music is an educational tool that enhances cognitive skills and encourages students to develop broader learning skills. Music and our musicians should be considered a national resource, not some sidebar group pigeonholed as a special interest group. Artists who create music should be given every opportunity to become successful, like any other economic platform that enhances economic growth.

We have a vast network of performing arts centres and community arenas in Canada that are all overlooked as they become aged and lacking by not having state-of-the-art services. We have an opportunity to be on the global stage in attracting artists to work in facilities that complement their work in similar ways to those we have developed in the film industry. All these services are a benefit to our own artists' community, through work, collaborative projects, and honing of their own skills. Facilities that are modern also attract patrons domestically as well as in international tourism. There should be a national touring strategy for Canadian artists beyond the developmental stage. The greater success a Canadian artist achieves, the greater the net benefit will be to business sectors in supporting our touring artists.

I came here today to offer my help in creating a national touring strategy in the live sector.

Thank you.

[The Chair, Conservative, Gord Brown]

All right. Thank you very much.

We'll now move to Dallas, Texas, and hear from Patti-Anne Tarlton, the chief operating officer of Ticketmaster Canada.

Welcome.

[Patti-Anne Tarlton, Chief Operating Officer, Ticketmaster Canada]

Thank you, Mr. Chairman and committee members, for inviting a dialogue with the live music industry.

I'm honoured to represent this wildly diverse and vibrant industry and to have participated nationally in the industry throughout my career. I was born in Montreal, grew up in Vancouver, and have lived, worked, and toured from coast to coast. I've revelled in the risks and rewards of concert production. I've witnessed first-hand the infrastructure investment, and how it was a catalyst for new economic growth, in my years at Air Canada Centre. I now oversee Canada for Ticketmaster, servicing attractions large and small across the country.

I understand the purpose of this committee is to review and analyze the way music is viewed and supported by government. In industry we must continually do the same. For example, the role of the ticketing company in the live music business today is to connect artists with their fans. At Ticketmaster we've been investing upwards of $100 million annually in product development to keep pace with the speed of change, technological advancements, and the expectations of fans and their brands and the artists alike.

Music discovery, engagement at live events, and the stories that continue to be shared via the digital media sources we have today to relive those experiences are at the palm of people's hands today. In an environment where fans want always available tickets, despite the variance of supply and demand, our goal is to make that link between the artist and the fan, who has an emotional connection to that artist, as frictionless as possible.

With the unprecedented speed of change in the methods of distribution of music, government strategy with the live music sector needs to shift to be current with our 21st century reality. Historically, governments focused largely on financial assistance to the independent music creators, their marketing, and guaranteeing their coverage on radio, for example. Government also focused on cultural infrastructure investments, such as performing arts centres for the symphony, the ballet, and the opera, but it hasn't followed the growth of the commercial music industry.

Music Canada's document, which Mike mentioned as well, “The Next Big Bang”, very successfully outlines how the world of music has changed in this country. I would argue that government's views should also keep pace with the shift of this tide we're all sailing through, and we can do it together. Policy-makers need to follow the industry with this present-day understanding, and I believe this committee is a great step in this direction. Imagine how we could grow exponentially if we collaborated at all levels of government and within this industry to make this sector a priority. Witness what the film industry did decades ago.

Research will also demonstrate that benefits from music education and a vibrant urban music sector deliver a very important competitive advantage worldwide. We know we have a large, diverse music scene here in Canada, but this asset is really not fully harnessed. It is crucial for us as Canadians that we seek to maintain our global position, and our music industry can be a catalyst for this.

All levels of government must be encouraged to make this investment. Policy measures that encourage and support both music education and the sustainable music scene across the country are a critical component to Canada's digital advantage.

From a technology perspective, technology professionals who have been trained in music when they are young become more creative. We find they are better problem-solvers, are more collaborative, and possess the soft skills that are crucial in today's digital economy. Government and organizations like ours which support rich cultural environments are better positioned to attract employers and employees. The high-tech sector provides high-paying skilled jobs for citizens of Canada.

Early education begins a life of engagement in live music. Students continue their participation in music as adults, and this encourages them in their professional careers, not only in a music career. You teach musicians how to be better businessmen and businessmen how to enjoy and to perform music, and we all win. Cities that have vibrant music scenes, both for the listener and the performer, will encourage and retain great employees and great community-minded people.

Recommendations large and small should all be centred around breaking down the roadblocks impacting economic growth of the live music industry in Canada, I believe. The film industry is proving simply that making it a priority decades ago initiated a frictionless environment at that very first industry meets government conversation.

With the guiding principles of making Canada an easier place to play live music, the goal is to consistently make Canada friendlier for the fan, for the musician, and for business alike.

From a musician's perspective, the environment should be friendly to learn, to play, and to grow. Policies that promote music education and access to facilities would go a long way in this regard.

For fans, the access for both residents and tourists alike also goes a long way.

The policies around work visas or tourist visas and, from our perspective, ticket resale laws, for example, would also help encourage a more vibrant live entertainment scene.

From a business perspective, both resident and non-resident, we could look at policies around job creation. Infrastructure has been funded largely by private enterprise, so now how do we prevent barriers to its growth, such as taxes and permits? Cultural tourism and the marketing thereof, which Mike mentioned earlier, play a big part in this as well.

As an industry, we are starting to collaborate. We've already begun this, and we're thinking big. From education all the way to the live event touring business, musicians rely on the live event more today than they ever have in the past.

We are talking about the full life cycle of music, starting with the importance of music education. We also see that there is a federal connection there, too. We had a round table with Minister Glover regarding the Junos just a few weeks ago.

There was a reference made at that point to a music ParticipAction program. That was something we saw years ago in terms of a fitness program. We could think in that regard as well for music.

Music, let's all understand, has a transformative power. It opens minds. It enhances our collaborative skills and changes lives, not only of the musician but of those who listen and engage in the music itself. Music education is not just about producing new Juno award winners. The skills that are learned can be absolutely transferrable to other sectors.

We can grow music fans who will consume. Those consumers buy tickets. They fill the venues that employ people throughout the country. Rabid music fans make for multiple shows. A more vibrant music market would make people say that instead of just doing one show, they'd risk bringing in two shows. When we bring in two shows, it saves a little bit of money, which is more helpful for the concert promoters that Riley spoke about earlier.

Really, it's us building sustainable audiences with some tweaking of policy and through collaborating on a strategy.

In closing, I would like to applaud the government for commissioning the study. Success will come with the collaboration, I believe, in all levels of government, and industry leaders such as ourselves are really willing to partner in this journey.

[The Chair, Conservative, Gord Brown]

Thank you very much. We will now move to the questions.

Mr. Dykstra, you have seven minutes.