Evidence of meeting #22 for Canadian Heritage in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was funding.
A recording is available from Parliament.
11:20 a.m.
As an Individual
That was a FACTOR number, I believe, or that was testimony from one of your other witnesses. Was that the number? Was it 93% of FACTOR funding? We might want to make sure we're on the same page with that number.
11:20 a.m.
Conservative
11:20 a.m.
As an Individual
Yes, and that's where I got the number as well, so we'll go with that.
Established artist—the word “established” speaks for itself. Again, at what point do you cut the umbilical cord? At what point do you have artists just go on and get along with their careers without government support at some level?
Yes, I can support FACTOR and other initiatives helping start-ups in the industry, but at some point you have to get on with it.
12:20 p.m.
As an Individual
Same question, different perspective.
I think it's not the right question, if I could be so bold to say. The right question is how can Canada support an environment in which creators can earn a living? There are two big ways to do that. There is a choice.
One is the way that Canada and most countries in the industrialized world have done it, through legislation and regulation. They create economic conditions that favour or support the creation of content. Absent that, there is giving money away, which Jim is not in favour of and many others are in favour of. I won't speak to it one way or the other.
The fact is that international copyright legislation over the last 15 years has had, by general agreement in all the industrial countries, what we call an anti-creator bias for reasons. You hear the reasons when the folks are asked to pay copyright fees and stuff like that and they come and say it's a break on business.
Whatever the reasons are, it has produced an anti-creator environment in which the laws under which we operate today produce a lot less income than they used to produce, and they certainly exclude all of the new methods of distributing content that are Internet-based. So there are tariffs on broadcasts, there are tariffs on all the old business that's going away, and there are no tariffs on the new stuff.
As you get an environment like that, we can't earn a living. Therefore, since we have not been successful—not just us and not just Canada, but around the world—in doing that, there's been an increasing desire to put in place other programs that can support this generation, the next generation of creators, so that each country, in our case Canada, can hopefully maintain the vibrant reputation and revenue earning that we have had by having a lot of great creators.
12:20 p.m.
Conservative
12:20 p.m.
NDP
Pierre Nantel NDP Longueuil—Pierre-Boucher, QC
Thank you, Mr. Chair.
I thank the witnesses for being with us today.
Very often witnesses impress us, for all kinds of reasons. Obviously, what you wrote is a part of everyone's life here, and we thank you very much for coming to share these secrets.
You knew an era when it was simpler to live from the products of your sector, since copyright was worth something. I think you were the person to whom I said, earlier, that I used Deezer this morning to listen--free of charge--to all of the works on Sarah McLachlan's new album, and I did not pay a cent because I am still in my free subscription period. Everyone knows that in order not to pay all I have to do is then provide another email address. I could keep enjoying new free subscriptions. It is like a “dumping“ of products and the creators are providing raw material.
Luc Fortin from the Guilde des musiciens et musiciennes du Québec raised these problems this morning in La Presse. I'm wondering if there is a link to be made between those problems and the one raised by Mr. Hoffert.
Mr. Hoffert, you pointed to a very interesting angle concerning scoring, music that accompanies images and the people who compose that music. It is true that we have not talked about that very much during this study. Is there a link between the problem you have raised and the one mentioned in La Presse? Do you think we are losing ground regarding the recording of symphonic music and film music in Canada? Is there a link between your situation and that that of orchestras, that are not used enough for recording soundtracks for video games, films, etc.
12:20 p.m.
As an Individual
Yes, there is some linkage. It's part of the same general problem that, because the current situation does not pay people who create and produce music—producers, production companies, the older kind of record companies, the artists, the composers—we must produce the work that we do for less money. So there's less money to hire musicians and all the rest of it.
12:20 p.m.
As an Individual
So it is linked. In particular the situation with audiovisual works, which are normally never spoken of in the same breath because there are whole different areas of copyright and you have two different industries, the Hollywood movie industry looks at copyright differently than the record industry and deals with it differently, which has created some—
12:20 p.m.
As an Individual
Yes, some loopholes that, of course, every good businessman will try to find to maximize their profit.
Anyway, this goes along. It's a big question, I think, larger than what we are discussing today. I'd be happy to speak about it at another time, but that's my answer.
May 8th, 2014 / 12:25 p.m.
NDP
Kennedy Stewart NDP Burnaby—Douglas, BC
Thank you.
Welcome to the witnesses.
I have a quick question regarding your talking about FACTOR. I actually was a performing artist for some time, and once you decide that you don't want to do cover music anymore, and you want to do original music, FACTOR really gives you that first step into doing a demo tape and doing a recording. It starts to launch your career, and helps you decide whether or not you can move forward.
Mr. Vallance, you said that you agreed with the FACTOR funding and you thought that might be a good place for us to continue funding. Do you think we should perhaps ring-fence that to make sure we preserve that funding for future artists?
12:25 p.m.
As an Individual
I think vetting is a big part of any funding program. You have to know that your funds are going to the right place and being used in the appropriate manner. I think FACTOR has a long, positive history. They have always had good juries, a good board, and good administration. My criticism of FACTOR, if any, is: when do you stop funding?
I'm perfectly fine with startup initial funding for demos and that sort of thing. Again, my bias comes from my own history in the 1960s and 1970s when there was no funding. Someone mentioned it was easier back then. Well, it wasn't easier. It wasn't easy then; and it's not easy now.
The music business is not for the timid. If you can handle rejection, disappointment, humiliation, and years of minimal income with the hopes that hard work will eventually pay off, then you're cut out for the music business.
Startup funding, great, as you said, to see if you have the goods, but I would recommend that FACTOR.... And the information I had regarding Nickelback, Sarah McLachlan, and those people who are accessing FACTOR funding was taken from the FACTOR website, so I'm assuming it's correct. I don't know to what extent they were being funded or for what programs, but if you're an established artist by FACTOR's definition, then I think that is the time to go off and either make it or break it and leave the funding for those who are just getting started.
12:25 p.m.
Conservative
12:25 p.m.
Liberal
Stéphane Dion Liberal Saint-Laurent—Cartierville, QC
Thank you very much, Mr. Chair.
I thank our two guests for their presence here with us.
Mr. Hoffert, you use very strong words that show how much you are concerned. You're saying that, with the conjunction of the new technologies and the current legal framework, we need to find a better way to follow the money in order to stop this situation that is, as you describe, against creators of music.
What kind of legal framework would you like to see? Can you be very specific about the new rules you would like us to implement or us to recommend to the Government of Canada to implement?
12:25 p.m.
As an Individual
I'll try to give you a big-picture answer that will be very incomplete because, in the time allotted to you and to all of us, this complex issue won't be solved.
The big picture is pretty simple. There's general agreement that the major economic frictional loss in the chain of payment for content is that ISPs charge from $40 to $60 to $100 a month for essentially the majority of what people pay for as subscribers: music, television programs, and movies. My own experience at Harvard University, where I was a Fellow at the Berkman Center, included many studies to show this, and they have been validated by other studies done all over the world.
So you have a situation where you have one particular player who is essentially getting paid for and monetizing stuff that they are not paying for, and because the copyright system does not recognize that kind of Internet pass-through as touching the content, two things happen. Number one, nobody who made the content gets paid. They don't have licences. Number two, the ISPs are prevented from entering into a legal business that would be notionally much more profitable than the business they're in.
That's my opinion. It was buried in one line of my brief testimony.
12:30 p.m.
Liberal
Stéphane Dion Liberal Saint-Laurent—Cartierville, QC
I understand your opinion, but now what's the solution?
12:30 p.m.
As an Individual
Well the solution would be.... Again, this is not simply my opinion, but I've met over the years with many people in the broadcast and ISP industry. As you know, I'm the chairman of The Bell Broadcast and New Media Fund and I know many of those people on a personal level. The sense I have is that, just as the cable industry when it started refused to pay any royalties for broadcast television for about 25 years and were sued continually and said “No we don't touch the content, we're just selling bandwidth”, that's the same argument the ISPs use today. Once the thing was getting to the Supreme Court and it looked like there would be some government legislation that could compel them to do it, they basically said they were in the wrong business, they wanted to be in the content business. They wanted to pay a dollar and charge two dollars. Since then we all get all of our television content, not from broadcasters, not from television producers, but only from cable and satellite companies who make a lot of money.
Those same companies own many of the ISPs, and they are not blind to the fact that if they agreed in an industrial sense to pay for this content, they could eat the lunch of the Apples and the other folks who are positioning themselves to be the content suppliers. And they have a great line with subscribers who already pay them a monthly fee. So the issue has been—not only in my view but in the view of many—that the political situation has been very unfavourable in the United States, Canada, and many other countries for imposing what a consumer might see as some sort of tax, a content tax or something, on the ISP level. So governments are loath to weigh in. Absent that, I believe that a long time ago there would have been some sort of copyright legislation that would have made the ISPs liable. Everybody would pay five bucks a month more for the fee and the whole thing would be different.
Where is it going? I believe the time is right, or almost right, for those ISPs to make a deal, either through government compelling them or simply because it's good business sense for them. At some point what might be the way—this is one way to do it—is for government to simply say that it believes that content should be paid for and that it will give the ISPs a period of time to come up with a non-governmental solution. Let the private sector work it out, and if they don't do it within a certain period of time, the government would look at potential legislation or something like that.
That's even a longer answer than, perhaps, I was allowed, but that was as short as I could make it.
12:30 p.m.
Conservative
The Chair Conservative Gord Brown
Thank you very much. That's going to have to be it.
I want to thank our two witnesses for coming today. We've had to shift gears a little bit. I apologize on behalf of the committee for the shortened time. If there's anything else you want to add to our study, we would very much appreciate it. If you could do that in writing it would be appreciated as well.
Thank you.
We will briefly suspend and bring in our next panel.
12:30 p.m.
Conservative
The Chair Conservative Gord Brown
Good afternoon everyone. We are calling meeting number 22 of the Standing Committee on Canadian Heritage back to order.
Unfortunately, today we have a shortened meeting because of votes but we do have some witnesses before us, first here at the committee room. As well, we have a witness by telephone, and another by video conference. Unfortunately, we'll not have the full eight minutes for all of our witnesses to present. I'm going to try to fit it in at about five minutes at the most, so if you could keep your presentations to that time, we would appreciate it. If you can't get it all in, you could send it to us in writing, which we would appreciate.
We'll start for five minutes with Mo'fat Management. We have Stéphanie Moffatt and Mylène Fortier, and you have the floor.
12:30 p.m.
Stéphanie Moffatt President, Mo'fat Management
Thank you, Mr. Chair.
Ladies and gentlemen members of the committee, good afternoon.
My name is Stéphanie Moffatt and I am a lawyer and artists' manager. I manage the careers of Ariane Moffatt, David Giguère, Philémon Cimon and Marie-Louise Arsenault, and I am the delegated producer for other artists including Valérie Carpentier, the winner of the La Voix program in Quebec, as well as Isabelle Boulay.
I am accompanied by Mylène Fortier, who is the director of marketing for our organization.
First of all, I want to thank you for this invitation to appear before you, and I would also like to thank the government for the support it has provided up till now to the music industry.
If I understand correctly, the objective of the Canadian government is to ensure that the public has access to quality Canadian music content, while supporting the industries and artists.
I am sure that all of the Quebec producers made appropriate representations about their needs. As an artists' manager, I am going to concentrate on the “artist” aspect.
I would like to direct your attention to two solutions which I believe would make it possible to improve artists' revenues in this new industry and take into account the arrival of these new technologies.
The first solution is in my opinion the most urgent and the most obvious, but it may be politically difficult for you. It means involving the new players who arrive in the industry with the new technologies in sharing the income. By new players I mean Internet access providers, and those who manufacture devices that allow people to listen to music and the worldwide streaming services.
The second solution is to make amendments to the Copyright Act to adapt the provisions that govern copy for private use to these new technologies and new ways of listening to music.
With regard to the new players in the industry, it now seems quite obvious that the future of our sector rests on the consumption of music via streaming. Here we are talking about Deezer, Spotify, Rdio, Google, ZIK or YouTube. This new reality has completely perturbed our sector. In the past, the sale of a CD used to generate revenue both for the producer and the artist. Today, online music services generate a lot of profit but they go to third parties that are outside our industry. There are only minimal sums left for the producer and artists.
To substantiate what I am saying, I would like to provide you with some real, concrete figures. Recently, I did an exercise with Ariane Moffatt, one of the artists I represent. We put a single up for sale; its theme was springtime. We launched it on the first day of spring and afterwards we compiled data over a 30-day period. Ariane is privileged. She is a well-known artist and people are interested in her music. We are not talking about a new artist.
So for a single song by a known artist over a 30-day period, we observed that 23% of consumption came from sales and 77% was through streaming. We drew up a pie chart—I will try to give you access to it later—and we transferred that data, translated it into money. We observed that streaming only represented 3% of the revenue and that online sales represented 97%. This means that in the future, even for the best-known artists and producers—for this project Ariane was the producer as well as the author-composer-singer—the music industry revenues are in steep decline.
Who is making money with this type of sale or consumption? The Internet providers are making the money. I think that you have all of the legal means at your disposal to cause them to act in this file, thanks to your power over copyright and telecommunications and broadcasting. If you are to continue financing the sector as you have always done in the past, why not go and get the money from those who are collecting it from consumers?
You can be sure that the telecommunications companies are going to claim that they will transfer these costs to consumers, but in light of the profit margins they see every month, they are quite able to assume that small monthly stipend. It is up to us to not believe that argument and not let them use it.
Moreover, I think that calling this a tax is a mistake, because it is not a tax. It is a royalty. The point is to pay for the use that is made of the product. The same goes for the rights that telephone companies pay for each little piece within a device. The company should pay a royalty or a specific amount to be able to make the content available.
The best example I can give you in this file is that of milk containers in school. When our society decided that we wanted children to have access to milk and that we would give them containers of milk in the morning when they arrived at school, we did not refuse to pay dairy producers in order to reach that objective.
This is something similar. Since the Government of Canada's position -- a very commendable one -- is that it wants to provide access to quality Canadian musical content, it must do so. However, it has to find ways to pay the producers and the artists who are the source of that music.
I will speak faster.
12:45 p.m.
Conservative
The Chair Conservative Gord Brown
Thank you.
We'll have a chance a little bit later. I'm sorry.
We now are going to go to Music New Brunswick. We have with us here Jean Surette, and by telephone Richard Hornsby, and between the two, you have five minutes.
