Without adequate production financing, Canadians will not have the choice of sufficient professionally produced Canadian digital entertainment media. Yes, the costs of content creation have dropped so low that anyone can be a content creator. But it is the production costs that are dropping--cameras and editing equipment and software. The content is still amateur if unskilled amateurs are writing and performing in it.
My 13-year-old daughter has a YouTube channel, as do many of her friends. Jacob Glick from Google has appeared before you and told you that there is plenty of Canadian content on YouTube. He is counting my daughter's videos, and while I think she's very talented, I'll be the first to say that she is not a professional and her audience is somewhat limited. YouTube can be an inexpensive way to distribute content directly to consumers without the broadcaster as a gatekeeper, and our members are increasingly interested in this opportunity. But amateur content is not a substitute for professionally produced Canadian content. Canadians deserve better. Without government support, Canadians will have no choice but to enjoy the vast amount of U.S. professionally produced content that is online.
We welcome the changes to the Canada media fund that require content on more than one platform. However, as a result, the CMF now requires that broadcasters, producers, and content creators do more, by creating content for more than one platform. Under the new CMF, every TV show it finances must be accompanied by content on a digital platform, such as streaming the TV show, building a simple brochure site, or, for at least 50% of a broadcaster's CMF programs, building value-added digital content.
While the first two can be easily financed by the broadcasters themselves, value-added content requires third-party financing in addition to what is being provided by CMF and broadcasters. There simply isn't enough money in the system to cover the shortfall. The answer is not to reallocate more money from broadcast to digital content, either. We cannot compromise the quality of our television content. We must remember that the bulk of viewing is still to TV. According to a recent Nielsen study in the U.S., 99% of screen viewing is still TV, and according to the CRTC's annual communications monitoring report, an increasing proportion of viewing of video online is of traditional TV. Private sector investment is not a viable alternative, as there are not yet any secure business models available to guarantee a return. Yes, there have been a few online successes, such as Club Penguin and Justin Bieber, but they are the exception to the rule.
What do we need to ensure a Canadian presence in the digital world? We need the government to extend the current Canadian film or video production tax credit to linear original web series so that online distribution on a Canadian-owned site also acts as a trigger for the tax credit. We also recommend that the government create an interactive digital media tax credit modelled after several successful provincial digital media tax credits. However, to ensure that such federal funds support Canadian talent as well as producers and crews, there must be a Canadian content certification system for digital media, similar to CAVCO. The WGC has been recommending that the top five highest-paid creative talent must be Canadian, in addition to current funding rules that require that 75% of costs are spent in Canada under Canadian ownership and control of the project. This should not be hard to do.
We also need the ISPs, like Rogers and Shaw, to make an appropriate contribution to Canadian content under the Broadcasting Act. They are not dumb pipes. For one thing, due to graduated fees, ISPs earn more revenue when consumers download more rich media content. With our colleagues in the independent production community, we recommended to the CRTC at their new media hearing last year that ISPs make an appropriate contribution to the creation of content that they carry, through a levy. Even though the CRTC chose to extend the new media exemption order and not impose a levy, we still see the need for ISPs to make a contribution to the creation of the Canadian content they benefit from.
We look forward to the government's public consultation on the national digital economy. We will look to ensure that any national digital strategy includes an updated Copyright Act; terms of trade; expansion of the Canadian film or video production tax credit and creation of an interactive digital media tax credit; maintenance of Canadian ownership and control requirements on telecommunications and broadcasting.
We thank you for your time and look forward to answering any questions you may have.