Canadian Heritage Committee on April 29th, 2014

[Brian Hetherman]

Yes, but it's important to note too that, in the case of 10 or 15 years ago, you might have had to spend $40,000 or $50,000 on a music video, which of course was a fairly hefty expense; however, you would also sell hundreds of thousands of records, so it was much easier to recoup.

Using the video as an example, in the past you would get a per-play from MuchMusic or CMT or one of the music video channels. At one point, CMT used to pay $150 per play of a country music video, up to a cap of I think $15,000. You, as the rights-holder or as the record company, would be able to recoup your investment in the music video via that payment. I think that the MuchMusic payments still happen, when you get.... They're much less than they used to be. The problem is that you would get at least some incentive; you would get the promotional value and you would get some financial incentive for your video to be played on those channels. Now what we're talking about is making a video for maybe $5,000 or $1,000 and your song being played for minuscule payments on YouTube.

But they're not jiving. You're getting the promotional opportunity and the marketing promotional push, but it's not resulting in sales on the other end the way it used to. It's apples and oranges, in a way; it's not a direct correlation, the way it used to be.

[J. Serge Sasseville]

The main thing is that what is now used to do the promotion is what was, until recently, the main source of revenues for artists. That's where the problem is.

[Steve Jordan]

It's considered promotion now, but it has also replaced paid consumption. I guess that's the main difference.

[Jim Hillyer, Conservative, Lethbridge, AB]

I guess that, as we said, we're in a transition period. In the good old days.... We have a culture of fiddle music. A senator is putting forward a bill to have “Fiddle Day”. Other than Stéphane Grappelli, Natalie MacMaster, and Ashley MacIsaac, we don't know very many people who make a living playing the fiddle; we have a few violinists in every city who will maybe hold the chair in a symphony. I used to play in the Lethbridge one and never was paid to do it. I enjoyed it, but most of the fiddle music that existed and continues to exist is made for the love of it.

I would love to be paid to play the violin. I'd love to be paid to play hockey, but we know that only a small percentage of people are paid to play hockey. While I agree that it's the government's mandate to promote heritage, is it also to make sure that people make a living promoting that heritage, any more than in the case of hockey?

[The Chair, Conservative, Gord Brown]

Mr. Hillyer, I'm going to have to cut you off.

I think many of us would like to be paid to play hockey, but looking around the table, I don't think that's going to happen.

We're going to move to Mr. Nantel for about three minutes.

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

Thank you very much.

My colleague Kennedy Stewart has many questions for you, Mr. Jordan. I'll just take one minute. Please forgive my colleague.

[Some hon. members]

Oh, oh!

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

I have a question for you. You talked about a level playing field. Beyond the fact that services from abroad such as iTunes and Netflix don't have to pay taxes, do you think this level playing field could include other commitments with regard to the visibility of our Canadian products?

[J. Serge Sasseville]

I would not go as far as regulating the sector by imposing on companies that come to Canada a percentage in terms of visibility. This is not a matter of a lack of content, but of visibility on platforms. I would not go as far as issuing regulations.

The idea is not to regulate everything on the web, but rather to ensure that Canadians who embark on a web adventure benefit from the same conditions as foreign players.

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

Thank you.

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

Thank you.

Thank you for coming today. It's been a great conversation.

I have a quick question, seeing only a few minutes left; maybe we can get through it.

Why do some emerging artists make it and some not? Let's assume that it's not the music they're producing and the quality; let's assume that it's good. How, in your experience, have some musicians managed to make a full-time living out of music while others who might be of the same quality do not make it?

Perhaps we could just go across the board and see what the answers are—from your observation.

[Brian Hetherman]

I think as someone who's done A and R, which is artists and repertoire, for pretty much 20 years of my music career—in other words, finding artists—if I knew exactly the answer to that question, I would be a millionaire. But, I get where you're going with this.

I think one of the key factors that I alluded to a few minutes ago is that perfect storm, which is something that can't be created. That is, you take a song to radio. Radio picks it up and starts playing it at the same time that the video gets played, and at the same time as 10,000 or 100,000 kids are on YouTube searching the song out. Maybe you get nominated for the Polaris prize, or maybe you get featured on a number of TV shows at the exact same time, or you're touring at the same time. It's very hard to create those opportunities, especially at the same time. Sometimes it's very hard to create any of those opportunities. When they all come together at a certain point, generally you've created a perfect music storm that allows for the artist to get elevated to the next level.

People get attached to it. Yes, people still buy music, but not anywhere near the way they used to. They buy 10,000 copies instead of the 100,000 they used to buy. At least you've sold 10,000 instead of zero. Maybe they'll pay $20 for a concert ticket, or maybe they'll pay $20 for a T-shirt. Whatever the case may be, people start engaging in the music, and it builds. The word spreads, and it creates this opportunity for the artist to get to the next platform.

In my experience, if I can go quickly back to when I first started in the music business, I think it was one in ten artists was successful. Those were your odds, and that was a number of years ago. Now I think the odds are probably more like one in maybe forty-five is successful.

[The Chair, Conservative, Gord Brown]

All right. That's going to have to be the last word, but, Mr. Stewart, thank you.

And thank you to our panellists. Thank you for your contribution to our study. If you have any further contributions, please send them to us in writing as soon as possible, please.

Thank you very much. We're going to briefly suspend.

[The Chair, Conservative, Gord Brown]

All right. We're going to call this meeting number 19 of the Standing Committee on Canadian Heritage back to order. With us this afternoon, for the next hour, we have from RBC Ottawa Bluesfest, Mark Monahan. From the Canadian Tourism Commission, via video hook-up, we have Greg Klassen, who's the president and chief executive officer. And with us here in Ottawa, from the Tourism Industry Association of Canada, we have David Goldstein, president and chief executive officer.

Each of the three of you will have eight minutes, and we'll start with Mr. Monahan.

You have the floor.

[Mark Monahan, Executive Director, RBC Ottawa Bluesfest]

Thank you so much, and again, thanks for inviting me here today. Honestly, I was surprised to get the call, but I'm happy to give my thoughts on a number of different fronts and I'll try and stay within the eight minutes.

The first thing I want to touch on, which has really been a topic over the last few years, is the demise of the record industry and how that affects live music. The one thing I have noticed is that with the demise of the record industry, live music has actually proliferated more than ever, which is kind of odd because we hear so much about the fact that people can get their music for free. They download the music and people aren't buying records anymore. Well, if there were a typical supply-and-demand relationship, that would have led to less music being created. In fact, the opposite has happened. More music is being created. More music is being watched and listened to, and more people are going out to see live music. That is kind of an odd thing, given all of that. My observation is that the demise of the record industry is really about the demise of the recording executive industry, not really about music, and 95% to 99% of musicians, are still making about the same.

Why is music becoming more popular? One thing I would argue is that there are so many events, and today I'm going to touch on the notion of not-for-profit music events because that's who I represent. The RBC Bluesfest is a not-for-profit and almost every festival across Canada is a not-for-profit event. There's a big distinction between that and a for-profit event. I'll mention that five to 10 years ago, really, the market in Canada shifted from concerts to more what I call “destination music” events. Destination music events are large-scale music events that attract tourism and large numbers of people to different communities.

Those destination music events, I would argue, are events like the Montreal Jazz Festival, the RBC Bluesfest, and the Festival d'été in Quebec City. All these events have been tremendously successful over the last 10 years, for a number of reasons. One reason is that they've been supported in large part by government, but also that there has been a huge interest in music, and the things that these not-for-profit events have been able to do have had a huge impact. We're a member of FAME, Festival and Major Events Canada. There are 15 of us right now and that list is growing, but the economic impact of the 15 FAME members is $1.1 billion to the economy. These organizations are making a huge impact.

One argument and one question maybe is, what is important about a not-for-profit music event, and why do we merit support from different levels of government? One of the main things we do is encourage the proliferation of non-commercial music. For instance, the Montreal Jazz Festival or the Festival d'été in Quebec City spend probably a million dollars on non-gated events. These are events that are free to the public, and many of those events have the biggest impact. The Festival d'été sells a 10-day, 200-act event passport for roughly $70, and for that $70 you can not only go and see Metallica and Bon Jovi, but you can also see phenomenal Canadian artists, ethnic and cultural artists, and street performers. They sell a hundred thousand of those passes, and the only reason they sell them is that the passes can be a huge deal. One of the ways they can do that is by using the public funding they received to do the important things they need to do to generate that impact.

We in fact spend $200,000 on local artists. Those local artists don't really contribute to the people who are buying tickets to the event, but they contribute tremendously to the community. One thing I would note is that with a for-profit enterprise, the general goal is to maximize shareholder value. Well, not-for-profit companies don't do that. Not-for-profit companies maximize community value and that is the biggest difference between those two organizations. We do things like employ many local artists, non-commercial artists, who appear alongside commercial artists and who therefore gain a broader audience.

At the end of the day the question is, what should Heritage should be doing to support the live music industry in Canada? I think the argument that I would make is that it's time to really take an inventory of where the money is going. I think the not-for-profits make a huge impact but there also has to be accountability.

So it's not just music for music's sake. What is the impact these funds are making and what does each organization use the funds for? At the end of the day, there has to be accountability on the money that we're receiving and what the impact is in the community. That also has a huge impact on the tourism community and industry.

Those really are the several points that I'd like to make today. I'm open to questions and thank you very much for entertaining me.

[The Chair, Conservative, Gord Brown]

All right, thank you very much, Mr. Monahan.

We're now going to Vancouver by video conference.

Mr. Klassen, you have the floor for eight minutes.

[Greg Klassen, President and Chief Executive Officer, Canadian Tourism Commission]

Thank you very much, Mr. Chairman.

It's a pleasure to join you here today. I'm sorry I'm not here in person, but I do appreciate this very much and thank the committee for including the tourism perspective in your important study.

I would like to offer just a quick overview, if I can, of the organization that I represent—the Canadian Tourism Commission— and really give you a bit of a picture in terms of how the CTC incorporates Canadian music, Canadian festivals and events, into our international tourism marketing, and why it's important for us to do that.

First of all, we are Canada's national tourism marketing organization. We're a crown corporation that leads the industry in marketing Canada as a premier four season destination.

We know that travel and tourism is one of the world's fastest-growing sectors. It is an $84-billion industry for Canada's economy, but a very competitive marketplace.

Through our international tourism marketing activities and our trade and sales activities in 12 countries, we really are competing hard for a visitation, supporting over 170,000 mostly small and medium-sized businesses in every nook and cranny and region of our country.

Our model is really partnership-based. We work with the Canadian private sector, from hoteliers to chefs to ski resorts and the cultural industry, to leverage every dollar that we get and double our marketing impact. We work with our international travel trade by connecting international buyers with Canadian sellers. We have a meetings and conventions division called Business Events Canada. Its mission is to create awareness of Canada as a great place to hold international conferences. We know that holding international conferences is great for filling hotel rooms, cultural centres, and restaurants, but we also know that we bring very important people to our country. It's like a big familiarization trip to our country, where, when they get here, they see what they see, and they invest here, they send their kids to school here, and perhaps even buy Canadian products from here. We know that the long-tail effect of that is significant.

We also work, of course, with the public sector, the provincial and territorial tourism marketers, to leverage their investments.

We're always looking about 5, 10, or 20 years out, to see what competitive advantages we can create and develop. One of these opportunities relates to our music industry in Canada and, of course, to some very important people who really appreciate great music—I think we all do—and that would be youth.

We know that young travellers represent a large and lucrative market for Canada. Internationally, it totals to about 187 million travellers, representing about 20% of our annual global arrivals, and it is the fastest-growing segment.

We're focusing domestically on youth because they present a large domestic tourism opportunity as well. There are 5.2 million Canadians up to the age of 29, reflecting about 15% of our population. Canadian youth travelling in Canada spent an average of about $1,400 over 14 nights, and that's pretty much on par with what our international long-haul travellers are spending.

And yes, music festivals and events are significant motivators for youth travellers, and this is a key pillar in developing the youth travel strategy that we have under way at the CTC.

While still in development and only seed-funded by us at this point, our youth strategy focuses on the opportunity of leveraging existing Canadian festivals and events to attract those travellers. We've pulled together a youth council, and we're pleased to have representation of that FAME group—Festivals and Major Events Canada—that was mentioned by Mr. Monahan as an important contributor to help us build the right plans for the travel movement.

In the future, we're planning on hosting two influencer programs this summer focused on youth and music. These will focus on the Osheaga Music and Arts Festival, in Montreal, and Pemberton Music Festival, here in British Columbia.

We're also market-testing new concepts around youth initiatives connected to music festivals and events, and we will have this analysis completed later this spring. We're doing a little bit of research on that.

We look to the Canadian music industry for inspiration when we do our marketing in general. Last summer we asked Canadians to help us create an anthem for Canada. We created this program called 35 Million Directors, one of the most viewed tourism videos around the world of all time. The video connected us to a soundtrack that was Yukon Blonde, which is also a Canadian band, and we were able to highlight them to Canada and the rest of the world.

We focus on the Canadian signature experiences collection, which includes major cultural events in those experiences, including the Calgary Stampede, the Montreal Jazz Festival, the Harvest Jazz and Blues Festival in New Brunswick, and Celtic music in Cape Breton.

The long and short of it is that the tourism industry really relies on the culture and the music industry to help us round out that experience for Canada. We're known broadly and widely for our great outdoors, our beautiful cities. What we need and what we need to support is more the culture, and music plays a huge role in that culture to help us round out the experiences that Canada has to sell and offer.

We're highly supportive of this industry. We really like to partner with it, work closely with it, to help us collectively inspire the world to find a destination in Canada.

Thank you.

[The Chair, Conservative, Gord Brown]

Thank you very much.

We'll now move to Mr. Goldstein from the Tourism Industry Association of Canada.

You have the floor for eight minutes.

[David Goldstein, President and Chief Executive Officer, Tourism Industry Association of Canada]

Thank you, Mr. Chair.

Mr. Vice-Chair, members of the committee, it's a pleasure to join you today and be part of this important study. This was a suggestion the president made when he appeared before the parliamentary tourism caucus. We appreciate the opportunity we are given to discuss with you the impact of music and music festivals on the tourism industry.

Again for the record, my name is David Goldstein. I'm the President and CEO of the Tourism Industry Association of Canada. TIAC represents the full cross-section of Canada's travel and tourism sector, including major music festivals such as the Festival International de Jazz de Montréal, Ottawa Bluesfest, the Winnipeg Folk Festival, and Osheaga as well as other clubs and restaurants and venues of all sizes that host music events.

Our sector generates annual revenues of $84 billion. We employ over 600,000 people and are in every riding of the country, and we've left you information today on the impact in your riding. And most notably, over 204,000 of those employed are under 25 years old, making us the sector that is the largest employer of young Canadians. Canada's most important services sector, export, is where we generate $17.4 billion worth of international revenue.

Our mission at TIAC is to grow Canada's competitiveness as a global destination. Specifically we are working to boost Canada's international visitation growth rate from 1.5% in 2012 to meeting the global average of 5%. A recent Deloitte report states that every one percent increase in international visitation generates $817 million more in general exports. So our 5% objective would mean an additional $1.4 billion in general exports.

How do we get to 5%? TIAC is working within the federal tourism strategy to address the policy barriers, such as marketing investment, access investment, and tourism product like music events. And we are working to encourage more U.S. visitation, in particular, who are key consumers of Canadian music festivals. In fact, a recent study of Ontario statistics show that almost half of U.S. visitors to that province came for arts and cultural events.

Cultural events, including concerts and music festivals, are major draws for Canadian visitors. In 2012, 3.5 million international visitors attended cultural events. On average these visitors spend $768 per trip, meaning these events contribute at least $2.6 million to the economy every year. That is on top of the immense domestic spending and spin-off impacts.

Members of this committee can easily envision the economic benefits from a major festival like the Montreal Jazz Fest, or Mark's excellent product here in town. The Montreal Jazz Festival brought in $72 million in tourism alone. But even smaller-scale festivals in smaller markets can have a major impact. Furthermore, as festivals grow and expand, so does the capacity to showcase and fund Canadian music.

Music Canada, who has already appeared at this committee, says that the limited size of Canada's domestic market means that some of the greatest opportunities for growth and development lie abroad. The same is true for the travel and tourism sector in Canada. However, small gains in quarter-to-quarter growth are masking a very disturbing over-reliance of our Canadian domestic market on tourism. Currently 80% of travel revenue is derived from Canadians travelling within Canada, up 65% from only a decade ago.

American visitors are particularly enthusiastic participants in Canada's cultural scene, with almost 2.5 million attending events in 2012, up 13% from the previous year. When compared to the overall visitation rate of only 2.5%, it becomes clear that music and culture are leading drivers for American visitation.

Since 2002, Canada has lost almost 3.5 million overnight visits from the U.S. Fortunately, many of the structural barriers facing the U.S. market have lifted, making this an ideal time to re-engage. Our currency is stabilizing below par, U.S. passport ownership has doubled and now sits at over 120 million Americans, the border is thinning, the American economy is rebounding, and the U.S. outbound travel to overseas destinations is up.

This brings me back to the question of how music events will play a part in increasing visitation by 5%. TIAC has a whole-of-government approach to increasing tourism's competitiveness which includes advocating for government support for marketing, access and product. Music festivals are among the most compelling tourism products that spark economic growth in all regions of the country. Therefore, TIAC recommends that the committee support festival funding in partnership with the industry and other levels of government, including a broader approach in getting back into the U.S. market leading up to 2017, and we would add that any such initiative be done on a partnership basis with the private sector. Part of the metric should be delivering incremental international visitation to Canada.

I thank you very much, again, for the opportunity to be here. The Chair and Mr. Dykstra will remember my previous life in the broadcasting business where I spent a lot of time at the heritage committee. It's been a while since I've been here and I'm happy to be back especially with regard to a subject that is of great interest not only on a local level but on an national level as well.

[The Chair, Conservative, Gord Brown]

Thank you very much, Mr. Goldstein.

We're now going to move to the questions and we're going to start with Mr. Weston, for seven minutes. I'd like to remind members that we have Mr. Klassen by video conference, so please don't forget him.

Mr. Weston.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Mr. Klassen, as the MP for West Vancouver--Sunshine Coast--Sea to Sky Country, I can assure that I won't forget you on Vancouver.

Thank you, David. I know from the numbers you've provided that the riding I represent has the second number of employees in Canada in this industry right after Niagara Falls. Certainly, we see parallel things in sports, having hosted the Olympic and Paralympic games in 2010. Whistler is very keen about tourism. It's great to have good news actually after a parade of some discussions that made it a little bit hard to see where the hope was for musicians.

Mr. Monahan, I just want to tell you that our birthday gift to my son last week was a wrist band for the Ottawa Bluesfest, and so for people in the room, it's a great product. Young people love it. He's 17 and that's what he really wanted. So some good news.

Mr. Goldstein mentioned the distinction between domestic and foreign revenues. This is something that's driving a study that people in my riding are doing right now. In fact, people whom you know, Barrett Fisher, the head of Whistler Tourism, and Stuart McLaughlin and I are working on this together.

I'm really interested to hear your comments on where we should be putting the emphasis as government. Should it be bringing in the foreign dollars or taking what you said is 80%, David, domestic.

Maybe we can start with you, Greg. Just try and keep your answer to a minute or so, so we can go around the table.

[Greg Klassen]

We're very keen on the international market, of course, to Canada. It's significant because it helps us diversify our over-reliance on the Canadian market. We also know that the Canadian market is under significant threat. We're huge travellers and the rest of the world has figured that out and they're marketing with a vengeance here, especially starting with brand U.S.A. into Canada.

We really need to counter that attack by marketing more aggressively, I think, outside of Canada, in the U.S. and around the world, to draw international travellers here to Canada. They spend a lot of money, they see a lot of things, they contribute to every corner of our country's economy. So that's significant for us.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Yes, more emphasis on foreign. David, do you want to comment on that?

[David Goldstein]

We love all our customers. But Canadian customers are really just moving Canadian dollars around the Canadian economy.

In 2002 we were 7th in the world when it came to international arrivals. We're now 16th. That is the biggest challenge that faces our industry, and that is the biggest gulf not just from a number of visitations but the amount that they spend. They spend at a higher rate than domestic travellers. It's like any portfolio, sir. We want to make sure our portfolio is as balanced as possible and we're just far too over-reliant on the Canadian customer right now.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Can I ask you, how big a factor is open skies in terms of getting more foreigners to Canada to spend their tourism dollars in the music industry?

Greg?