Canadian Heritage Committee on May 6th, 2010

[John Barrack]

Who are you referring to, sir?

[Voices]

Oh, oh!

[Charlie Angus, NDP, Timmins—James Bay, ON]

Oh, nobody in particular. Let's say, hypothetically, the feudal lords.

[Voices]

Oh, oh!

[Charlie Angus, NDP, Timmins—James Bay, ON]

Are you telling us that as independents there is a business case to be made that we could actually have real cultural competition by allowing you the money to go out and find those markets in the digital realm, as opposed to having to go to a broadcaster?

[John Barrack]

Broadcasters are a very important part of this mix, absolutely. But I do think we could, and I think are.... Look at the Daniel Cook example that we mentioned here earlier. If we can take that culture of entrepreneurialism that exists among independent producers and free them to have that money to be able to create those jobs in Canada--of course, there have to be all those safeguards: it has to be made here, it has to use Canadian inputs--then, yes, I do believe that. I do believe we will be able to sell to the world and attract financing from around the world to really sell Canada internationally.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you very much.

[Marc Séguin]

Could I add to that? I apologize for jumping in here.

I want to share a very quick example of how we've gotten a bit cuckoo in the system. We have a member who has a show and has almost entirely financed his show with international money. The only piece missing to close it all out is an agreement with a Canadian broadcaster, and he's not getting it. That agreement, which opens up doors to the tax credit to finish the financing, would trigger the production, and he can't go forward. These are thousands of jobs that are basically put on hold because we can't trigger in Canada. This is a bit odd, if you ask me.

[John Barrack]

That's not just one example. Particularly in areas like kids' programming, there is a demand for Canadian kids' programming around the world, but we can't sell this to Canadian broadcasters, and therefore those programs die and those jobs disappear.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman.

Thanks for the presentations today.

I just wanted to go back to the Canadian Film and Television Production Association, briefly.

You mentioned a couple of things. You talked about concentration in the broadcast industry and how that's leading to some deals that you think are offside or certainly one-sided. I will say that I'm happy to hear that in the purchase of CanWest, Shaw has committed to the $125 million of Canadian content investment over the next five years that CanWest had originally committed to. I think that's good news.

We had a broadcast study last year, and I do think it's incumbent on us—I agree with other comments at the table as well—that once we come up with our digital strategy, we're going to have to look at other things we've established, like the Broadcast Act, the CRTC, and see how they jive with our strategy to make sure everybody is pulling in the same direction, that we have a common directive. If we're going to invest more in the CBC, I think we need a performance review from the Auditor General to make sure this is all going in the same direction, so we can really be effective with every dollar we're putting in, regardless of how much it is. Then maybe we can make a case for more.

I'm really concerned. I wanted to mention this the other day, that in order for us to step up on Canadian production, and to encourage international markets of it, I think we need to start to value it more here. I'm not aware of any comments you may have made on the recent CRTC decision on value-for-signal or fee-for-carriage, but the decision, to me, is remarkable. The entire trump card on this is the ability to block out U.S. networks if you own the rights to U.S. shows. They also reduce Canadian content requirements.

Once we get beyond this current period where there are commitments for Canadian content, and understanding that over-the-air broadcasters are going to have to spend themselves into oblivion to buy U.S. shows so they've got the bargaining power, are you concerned at all that the new focus is all on foreign content—mostly U.S.—and that regardless of whether there's a fee or not, that fee is going to be determined by how much foreign content you've got? Ultimately, Canadian production is really going to suffer. It seems to me that it runs in a completely opposite direction to the CRTC's mandate.

I'm just wondering what your feelings are on that.

[John Barrack]

Obviously we have a view. What we would say is there are very many elements of the recent CRTC decision that we applaud, in the sense that they turned their minds to content in some ways that they hadn't in the past, for example, moving from an expectation to a condition of licence that 75% of programs of national interest be sourced from independent producers.

However, you're right on. I think that what was not in that decision was anything to put the brake on the foreign spend. That was a little surprising to us, to be honest. I think what we've seen, certainly with the Shaw acquisition and the price paid, is that these assets have incredible value. Particularly on the specialty side, these assets are incredibly robust.

So, yes, we think that television very much still has a place to play in terms of making sure those content obligations are met, and frankly as a platform to help selling to the world.

But I think your concern is a very valid one, and it's one that we would share.

[Dean Del Mastro, Conservative, Peterborough, ON]

It seems to be moving forward, and I think this is the Shaw approach. I don't want to put words in their mouth, but I think you're going to see duplication of this in other countries. We're seeing it in the United States as well. The approach is to own the product in order to monetize it. In order to get a value out of it with the platforms that are emerging, they really want to take the content from creation all the way through to final delivery, and to own all of the final delivery points on that.

If that's the model we're moving toward and if we're going to try to encourage the Canadian industry, don't these Canadian content restrictions become much more important?

[John Barrack]

I think what becomes important, to go back to the terms of trade discussion, is that no one in the independent production world is saying, we don't want you to have the content; they're saying, we just don't want you to abuse your dominant position. Effectively, it's no longer really independent, right? If you're able to put the thumb on someone to acquire digital rights for a dollar, for example, or a thousand dollars, you're not reflecting true value.

I think it's important for companies and broadcasters to be able to acquire rights because I think it's important to work with those broadcasters in partnership to best exploit that Canadian content across a multiplicity of platforms. That's what we want. We want to do those deals, but they have to be balanced and fair, and they must lead to the maintenance of what is a truly independent production sector.

I don't think Canadians want to see all decisions about what they view coming from what really is now less than a handful of broadcasters. If we really want to have that independent voice, no one is saying, don't sell those cultural products to those various broadcasters, but there has to be a balancing in there somewhere. That's really what we're seeking.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

We don't have time for another full round at this particular time, so if anyone has any further questions for our presenters here this morning, you can either talk to the presenters directly or send the questions through me, the chair.

We will recess for five minutes and change witnesses.

Again, thank you very much for your presentations this morning.

[The Chair, Conservative, Gary Schellenberger]

Welcome back to the second part of our meeting here this morning.

We welcome as our next witnesses, from the National Campus and Community Radio Association, Shelley Robinson, executive director; and from Telefilm Canada, Carolle Brabant, executive director, and Dave Forget, director of contracts and certification.

Welcome. If you could keep your comments to about 10 minutes, then we can have time for two rounds of questions.

Go ahead, please, Ms. Robinson.

[Shelley Robinson, Executive Director, National Campus and Community Radio Association]

Good afternoon. I appreciate the opportunity to appear before you today.

The National Campus and Community Radio Association, l'Association nationale des radios etudiantes et communautaires, NCRA/Anrec, is a not-for-profit group of organizations and individuals committed to volunteer-driven, non-profit community-oriented radio across Canada. Many of you probably have these stations in your own communities. Our goals are to ensure stability and support for individual local stations and to promote the long-term growth and effectiveness of the sector.

Our particular organization represents 77 not-for-profit radio stations in nine provinces, not including P.E.I., and three territories. We are here today to ground community radio in the discussion of digital and emerging media. We also have some recommendations for how the federal government can help support this vital cultural industry as we continue to provide meaningful access to community media for Canadians in whatever ways they find most useful.

We have members who have been broadcasting for more than 35 years, including CKCU here in Ottawa, and some who have just been licensed this past year. Collectively, we have more than 6,000 volunteers; our signals reach at least 22 million Canadians; our content stretches everywhere else; and we broadcast in more than 63 languages.

Our stations are already serving as local multimedia hubs, albeit to different degrees. Almost all have a website that provides a live audio web stream, and many also have a downloadable on-demand version of their program archives or podcasts of some of their shows. A few are also streaming video from their broadcast studios. Facebook, Twitter, and live chats, especially for taking requests, abound. People add community events and local recipes to station blogs. One station is even working on an iPhone application.

Many members tweet about station and community activities, but CJSF-FM in Burnaby, B.C., also asked listeners to tweet updates live from events around the Olympics so they could then broadcast that information back to listeners. That station also maintains two web streams, one that duplicates their FM broadcast and another for longer-form special programming.

CJAS-FM in St. Augustine, Quebec, and CKDU-FM in Halifax, Nova Scotia, are examples of stations that also serve as CAP sites, an Industry Canada initiative to provide free local Internet access for community members to get online.

CJSR-FM in Edmonton has produced video countdowns of that station's most popular songs, including interviews with local musicians on that week's chart, and then posted them on YouTube.

CFRU-FM in Guelph has a program that links with stations in Los Angeles, Winnipeg, and Peterborough, using phone lines and a web stream interface to produce live, improvisational radio art.

Because of spectrum scarcity, meaning the lack of available FM frequencies, particularly in urban areas like Toronto, the Waterloo cluster, and around Vancouver, some of our stations can't obtain an FM broadcasting licence at all, and instead broadcast entirely online. For instance, Radio Laurier is the official campus station of Wilfrid Laurier University in Waterloo. It has a staff of 11 students and a roster of 25 live web streaming shows, all with accompanying blogs. They cover music, sports, campus activities, and current affairs. They even have a live concert series.

Many traditional FM stations in rural communities, such as CHES-FM in Erin, Ontario, use digital media to complement their programming. They stream programs but also have programmers from nearby Orangeville who produce daily shows from their homes, which they submit to the station using an FTP process. CHES also has some programmers who were going to produce an online-only version, but then they saw the value of using the station's studio space and aligning themselves with a recognized community broadcaster. The station also draws content from other community stations and our own online program exchange to round out their schedule.

Similarly, CJMQ-FM in Sherbrooke, Quebec, is trying to cover all of the Eastern Townships using a blend of technologies, including SHOUTcast and cellular Internet—which you just plug into your computer—to broadcast live from people's homes and local community events.

New media are also important for recruiting and retaining younger volunteers and listeners and for expanding listening audiences to other parts of Canada and other countries. This is especially the case for third language and specialty programming, a backbone of many of our stations.

Most campus and community radio stations operate on whatever funds they can raise from their communities. Canadian Heritage has funding available for every kind of community media—print, television, film, and new media—except community radio. This means there isn't a lot of money to adopt these new media technologies, to buy and maintain the necessary equipment, and to train the staff and volunteers to use it, even though it would expand audience access and the potential pool of volunteers. For instance, CKUW-FM in Winnipeg would love to be on iTunes' automatic list of campus stations, but their current web stream can only accept 12 listeners at a time, due to bandwidth limitations. They have insufficient funds to increase their station's bandwidth, and iTunes demands a bandwidth of at least 300.

Station staff--some stations don't have any--juggle a lot of responsibilities and often rely on volunteers for technical initiatives, which makes these projects inconsistent and vulnerable to disappearing when volunteers leave.

Further, there is great uncertainty about the copyright tariffs our stations might incur through their new media activities. Copyright collectives have been proposing new tariffs that may apply to our sector's activities, including digital storage of music, audio and video web streaming, and podcasting. Proposed tariffs can also apply retroactively, creating fear of an even larger future bill. For some stations this means it may not be worth taking the risk of using these new technologies, no matter how well they serve their communities.

It is also worth noting that our stations see new media as complementary to what they already do, not a replacement, so they don't want to cut back on current operations to fund new ones. Some listeners do not yet have reliable access to online media. These barriers may include poverty, lack of familiarity with technology, and remote locations without affordable access to high-speed Internet. These are some of the communities best served by our stations, and we wouldn't want to lose them.

The fact that our stations are in accessible physical locations in their communities is another important part of our service. To be entirely virtual is not the dream. Right now you can drop into the studio, receive training, and meet other community members at the station, regardless of how you access the content.

Based on everything I have just talked about, we have three main recommendations. The first one is inclusion. We recommend that community radio be recognized as part of the new media landscape and included in all discussions about its future, including funding initiatives like a potential ISP levy, and consultations on industry standards.

The second is copyright. We respect the right of producers to protect their material from unfair distribution or services that profit at their expense, but we feel that community radio and other non-profit community access media should be exempt from paying copyright tariffs. This is based on the fact that no profit is earned from the use of that copyrighted material, and significant exposure is gained by emerging Canadian artists on our stations.

This can be addressed by inserting provisions into the Copyright Act to exempt not-for-profit broadcasters from copyright tariffs, or fix a low annual flat rate for such tariffs. For example, paragraph 68.1(b) of the Copyright Act limits the neighbouring rights collective of Canada copyright tariff for community radio stations to $100 a year. We feel that's fair.

Third is financial support. Funding for community radio translates into support for community-based new media initiatives. In partnership with our colleagues at the francophone community radio associations, ARC du Canada and ARC du Quebec, we founded the Community Radio Fund of Canada, an independent organization that aims to support local community radio. We have strongly encouraged the CRTC to direct some mandatory Canadian content development contributions by commercial broadcasters to that fund. We further asked the CRTC--and today I ask you--to recommend to the Treasury Board that 1.5% of the part II licensing fees commercial broadcasters pay to the federal government also be directed to the Community Radio Fund. That works out to about $1.5 million annually. So the return on investment is huge.

Finally, we ask for the Department of Canadian Heritage to create a program that would direct roughly $4.2 million a year to the Community Radio Fund of Canada to help support our sector. We came up with that figure because there are roughly 140 stations across Canada, and $30,000 per station is roughly a full-time equivalent. We don't necessarily make a lot of money. This commitment would fit with the department's current efforts to help other types of community media. It would also mean that every station could increase their new media capacity, whether by training, hiring a dedicated staff person, or purchasing new equipment and software.

We are pleased for the opportunity to work with the government to ensure that Canadian cultural industries like community radio continue to thrive in the new media environment and that all Canadians have access to these emerging technologies.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much.

We will now move to Telefilm Canada and Ms. Brabant.

[Carolle Brabant, Executive Director, Telefilm Canada]

Good morning, Mr. Schellenberger and honourable members of the committee. I am pleased to be here. Joining me today is Dave Forget.

Our cultural industries are undergoing one of the most important transformations since the invention of the printing press. The study you are conducting is critical to understanding our future as creators, producers, and cultural administrators in Canada and on the world stage. We are happy to be participating in this process and contributing to your work.

Telefilm Canada's mandate is to foster and promote the growth of the audiovisual industries. For over 40 years, Telefilm has helped develop the growth of a robust and sophisticated independent production sector in Canada. Led by passionate, highly skilled entrepreneurs, our industry is highly valued and appreciated around the world. Today this industry is part of a bigger engine. As Minister Moore often says, Canada's creative economy contributes $46 billion to our GDP.

Two of the most powerful drivers of growth in the cultural sector are digital technologies and expanding Internet use.

Today Telefilm manages programs worth approximately $450 million, of which $350 million is on behalf of the Canada Media Fund, and the rest is through the Canada Feature Film Fund and international activities.

This is my first appearance before this committee and I would like to leave you with three observations.

First of all, I am privileged to be the head of this agency at a pivotal time in the industry's evolution—a time of great upheaval, but which I prefer to think of as a time for inspired innovation.

In the words of British writer and former film and television executive John Newbigin, “with every passed cultural shift we may feel that we are in a state of anarchy and uncertainty about where all this is going. But we ought to draw some comfort from the fact that actually in the course of human history we have been in this situation many times before”.

And the constant has been our appetite for a good story. What changes is the form in which we want them to be told. In each of the cultural industries, established business models have unravelled at lighting speed—and just as the music industry was transformed by MP3 delivery so now the audiovisual industry is facing extraordinary challenges. Surprisingly, some of the largest players have seen their revenues tumble and entirely new companies have sprung up to redefine the playing field. YouTube, Netflix, iTunes and Hulu—are some of the new players in this space. Will they still be around five years from now?

Data's infinite mobility and the Internet's capacity for perfect and instantaneous reproduction without marginal costs have provoked cultural industries around the world to think differently about what they are selling. Is it the song, the book or the movie? Or is it the community experience, the live performance or access on demand? Companies must now consider what consumers want in a “people-driven economy” and learn to create new business opportunities out of disruption. Mobile Internet will only accelerate these trends.

In one month last year, 25% of Americans reported viewing a short video on their phone. Mobile reading has also taken off, with Kindle books making up 35% of sales at Amazon. Apple recently announced that it sold one million iPads in 28 days. It took 74 days to sell the same number of iPhones.

An feature film is not immune to these changes. Fifteen per cent of the world's modern cinema screens are now digitized, and 55% of those digital screens are also equipped with digital 3D.

Perhaps even more profound is the recent proliferation of downloadable movie sales. Today iTunes is the single largest seller of digital movie downloads in the world and Canadian films are among them. One Week, for example, made iTunes Canada's top ten. Will iPads be to movies what iPods were to music?

My second observation is that now more than ever we—the government, funding agencies, broadcasters and the industry—have to work together to ensure that Canadian culture thrives in the multiplatform reality.

Telefilm Canada has always worked closely with the industry anticipating change and helping the industry adapt. Twelve years ago, Telefilm had the foresight to launch a pilot program for interactive media, a precursor to the Canada New Media Fund. Just like we did then, we are pleased today to be administering the Canada Media Fund, a forward-looking initiative which will drive further innovation for the benefit of Canadian audiences. Telefilm's role is to ensure that Canadian producers are able to innovate and experiment in every way possible in order to reach and build audiences for their products—wherever those audiences may be.

It took radio broadcasters 38 years to reach an audience of 50 million, television 13 years, and the Internet just 4. And in less than 8 months last year, 100 million people joined Facebook. Ironically, it is easier than ever to access a large audience, but harder than ever to connect.

That's why we at Telefilm are focused on supporting Canadian companies to innovate in digital marketing and distribution. Earlier this year, Telefilm launched Web-Ciné 360 in Quebec, a pilot initiative that supports innovative web-based promotion of Canadian feature films in advance of their theatrical release. We want to help distributors develop Twitter, Facebook and other social media tools to build as much buzz around a film while it is still in production and right up to its release date.

Many questions remain with respect to how to construct deals so that creative projects have the greatest opportunities to connect with audiences at multiple points. There is no magic bullet but one thing is certain: Telefilm plays a critical role in helping producers navigate an increasingly complex environment.

We are also helping the industry leverage the power and reach of Canadian broadcast platforms. Canadian broadcasters continue to play a key role in aggregating audiences for Canadian feature films despite audience fragmentation. To this end, Telefilm has embarked on a series of partnerships with Canadian broadcasters including the CBC, Rogers, CTV and APTN. We are also committed to ensure that Canadian feature films are available on all exhibition platforms, including the broadcasting platforms regulated by the CRTC.

We cannot lose sight of the eventuality that gradually all content will probably be available online and on demand. We are encouraged by initiatives such as Quebecor's Éléphant: mémoire du cinéma québécois, Radio-Canada's TOU.TV and of course the NFB's online screening room. These initiatives make a treasure-trove of Canadian programs and films accessible to Canadians.

My third and final observation is that while digital technology has made the world smaller, more than ever, international relationships are critical for the financing and distribution of audiovisual products and the survival of our companies.

Telefilm Canada has a long and impressive track record assisting Canadian companies to exploit film and television markets internationally. Even in the online environment, Canadian companies must have access to foreign partners to leverage opportunities afforded by convergent markets abroad. There are many additional factors that need to be taken into account, and these include the basic economic costs of producing, pre-sales, film rights, and distribution.

Telefilm, along with our departmental and industry colleagues, is working to align the existing international co-production certification guidelines with current global realities. Furthermore, we are also undertaking a strategic review of our international programs and initiatives to ensure that we maximize the opportunities for Canadian companies to attract foreign partners, to penetrate new markets, and to exploit opportunities in an increasingly convergent digital marketplace.

In conclusion, we recognize that we are no longer in a world that is simply about the power of narratives at the cinema or on television; we are in a world of powerful interactive environments accessible on every conceivable and convenient device possible. In this dynamic environment, the variables are constantly changing. What we know for sure is that the power of great storytelling will not be enough by itself to sustain a vibrant, productive audiovisual sector. Hopefully, we have learned from the experience of the music industry and are ready to capitalize on the many digital media opportunities to connect with Canadians.

Thank you.

[The Chair, Conservative, Gary Schellenberger]

Thank you very much for that presentation.

We will move now to the first question, from Ms. Dhalla, please.

[Ruby Dhalla, Liberal, Brampton—Springdale, ON]

Thank you.

Thank you, to all of you, for coming before the committee today. Your presentations were extremely insightful and helpful to us.

I have a couple of questions, first of all, for Telefilm.

From the time you were created in 1967 until now, I know there have been a number of changes in terms of demographics and also your mandate, role, and vision.

When we take a look at StatsCan, some of the results that have come out are that two-thirds of Canada's population are going to be visible minorities in the next 20 years. What types of initiatives are you undertaking right now to prepare to reach out to the multicultural demographic of our country, and also to engage people from different ethnic communities to get involved in the process?

I know, having worked with Deepa Mehta, that she has had great support from Telefilm, from the Indian community in particular, to ensure that her films have a national and international platform. What other initiatives are under way to build those partnerships and bridges?

[Carolle Brabant]

Telefilm Canada has always been very present. This is one of its key features, in fact. Its mandate is to promote and develop the audiovisual cinematographic sector in Canada. Telefilm Canada has always had a very strong presence in the regions and in all of Canada's communities. We have always wanted to give a great deal of importance to the stories and reflections of Canadian society, in all of their aspects.

You gave the example of Ms. Mehta, a director and producer we have always encouraged. We have also launched some initiatives for Canada's aboriginal communities and we are funding products in Canada's official languages. Since we are really very well represented in the regions, I think that we can project the reflections of Canadian society with the products we fund.

[Ruby Dhalla, Liberal, Brampton—Springdale, ON]

In terms of the younger generation and the younger population within some of the ethnic communities, they feel that there are a number of barriers and challenges in getting to where they need to go to become the Deepa Mehtas of the world. Does Telefilm have any programs under way right now to help encourage them?

When we talk about the study this committee is taking a look at, we need to know from you what tools and resources we need to bridge that gap so that we can give these young kids hope that there is an opportunity for them to go out there to become the producers and directors that create the content we need.

[Carolle Brabant]

Even though we have programs that are designed for experienced producers, we also have programs for newcomers. It's very important, because with the tough decisions we're making in picking the projects we're going to be financing, we consider it important to encourage incoming talent. We also have programs designed to train them and help them, particularly in dealing with this industry. We have training programs. We have programs that are particularly designed for newcomers,as well.