Canadian Heritage Committee on May 13th, 2010

[The Chair, Conservative, Gary Schellenberger]

Mr. Simms.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you, Mr. Chair.

Thank you to the guests.

Mr. Levy, first of all I want to say congratulations on acquiring a young gentleman by the name of Paul Brothers. I grew up with the guy. He's from my hometown of Bishops Falls. I just thought I'd throw that in for Paul.

It's a unique situation that you're in. I think it is. And I used to work at the Weather Network, Pelmorex. I would assume that you are like them. You're this small entity among a sea of bigger fish. But it seems to me--I'll make an observation and you can agree or not, or maybe add to it--that it's almost like you've discarded the notion of being a broadcaster as opposed to creating a special relationship with a particular consumer. Maybe you can call it “e-casting”--I don't know what you'd call it--but you've created a relationship with a particular consumer by way of this, television, all platforms that are there. However, 10% of your ad revenue is from new media. It's a bit risky, isn't it?

[John Levy]

Quite the contrary; it's just the beginning. I mean, 18 months ago that 10% was 0%, and 18 months ago I didn't have 1.4 million unique visitors coming to me. I didn't have any exposure. All I had...and I'm not demeaning what we have, because the TV network in Canada is amazing, continuing to grow, and we're going to continue to pump the heck out of it. But this is all happening overnight.

In terms of the growth that we've experienced in the digital world, we're seeing 5% growth, week over week, in terms of the number of downloads, the number of unique visitors. I am absolutely convinced that in the next two to four years we're going to be generating as much revenue offline, off of the television network, than we are from the TV network--

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Because of that special relationship that you create—that's my own analogy—are you striving to get more revenue from that individual? I don't mean that's a nefarious thing; I'm just saying that if you're tailoring advertising to that particular person, the consumer....

[John Levy]

The reality is that two things are happening. First of all, the consumer who we're talking to, the 18- to 34-year-old male or younger, isn't sitting and watching television the way I used to when I was growing up, as a kid, or as most people in this room did. Newsflash: they haven't been watching the 30-second ads for years. How many people in here have had a clicker in their hand for how long, and have been clicking away from commercials? This has been recognized for years, and only now with the new measurements are people actually taking hold of that.

In our particular case, what we wanted to do was make sure that we were moving where that consumer was going. The young audience, especially the sports-passionate crazy guy, that 18- to 34-year-old—and female as well, by the way—is gravitating to the new technology. That was the number one realization for us.

But the number two realization, which is really exciting for us, is that 60% of all our downloads for this are coming from outside of Canada. This is allowing us to take our brand, which was nurtured in Canada, which started here in Canada...and I am fully convinced that we are going to have, maybe like this gentleman's company--which I aspire to, truthfully--a brand that will be an international brand, started right here in Canada.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Is there time for Mr. Jenkins?

[The Chair, Conservative, Gary Schellenberger]

Right now we're at almost nine minutes. I'm sure Mr. Jenkins can get an answer in someplace along the line.

Mr. Pomerleau, please.

[Roger Pomerleau, Bloc, Drummond, QC]

Thank you, Mr. Chairman.

Thanks to our two witnesses.

Mr. Jenkins, you said you had worked in a number of countries around the world. You cited Singapore, where the situation is completely different from that in Canada. Singapore is the size of Montreal Island and the equivalent of three-quarters of Quebec's population lives there. So that's a completely different problem. You also talked about France and other countries.

You're telling us that Canada is perceived—ultimately by you, at least, but by us as well in many respects—as lagging far behind in the digital field. What exactly are the differences between the countries you have visited and Canada? Could you cite a few examples and tell us exactly in what way the situations are different? Is it because of regulations, investment, goals pursued?

[Tom Jenkins]

I apologize if perhaps the way I tried to phrase the last answer I led you to believe that I believe we're trailing. I don't think there's enough evidence yet to determine whether we're trailing or leading or what we're doing. That's what I was trying to refer to earlier, about where we are in terms of, say, measures such as digitization or connectivity.

This is a difficult topic, because this is moving so quickly. We could come up with, say, a new connectivity investment strategy that would put us at the very top of the OECD rankings. That would be a very capital-intensive effort, but we would never repeat that effort for another decade, like CANARIE, etc.

By the end of that cycle, we would then appear once again to be trailing, to then leapfrog again to be leading. So this is a difficult discussion about whether we're trailing or leading.

[Roger Pomerleau, Bloc, Drummond, QC]

But for the moment?

[Tom Jenkins]

For the moment, I don't think it's clear enough. Certainly one can read OECD statistics, but I've spent some time reading OECD statistics and other commissions in work that I've done, and they can be misleading. So I don't think we can take one report of an OECD and then conclude that we're trailing or ahead, or take comfort or take solace.

One thing is true in all of this: we must keep pace. If there is one thing that is true whether we're behind or ahead, we must keep pace, because this is evolving so quickly.

We should understand that, as most reports are saying, digital content is doubling every 30 days—that's digital content in the entire world. So everything since the beginning of civilization to today will be doubled again by this summer.

That pace is maybe the thing to focus on most. How we rank with other countries does matter, but ultimately it's the pace at which we keep up that really is the thing that matters the most.

[Roger Pomerleau, Bloc, Drummond, QC]

You also talked about the possibility that every health-related issue in Canada can be considerably improved through the use of networks, digitization and so on. Exactly what do you mean?

[Tom Jenkins]

We have a very good workforce of people, we have an excellent university system, and we have some excellent knowledge workers, but they do need tools that are beyond any institution or any organization to create. We do need leadership. We need leadership to set standards.

For example, if we were to digitize our entire country's content or some meaningful amount, what would be the standards of it and how would we do that? The act of Parliament, 50 years ago, was microfiche, because that was the technology of the day. It was a clear standard, so that became the standard for the country. We now have a rich archive that was created by a previous generation. It's that kind of thing that we need. We need to have leadership.

This is not necessarily about large amounts of money. I think it's leadership that sets standards and goals. I'm not talking about...and I think in fact we would do a great disservice. I'm a free market guy, so I don't like to see a lot of constraint outside of market expenditure.

But there does need to be leadership. That's what I was trying to say. We need to set standards. We need to set goals.

[Roger Pomerleau, Bloc, Drummond, QC]

Mr. Levy, as in many other discussions held here, I would say that opinion is divided half and half. You're on the side that says we must not touch the Internet, that we mustn't set too many rules, that we mustn't slow down progress and that we have to let the situation evolve on its own. However, we realize that there are some major losers, and they are the real creators. I'm not talking about the ordinary individual who creates as a hobby; I'm talking about the people who have chosen creation as their occupation. The work of these people will often be copied, whether it be books, music or other objects of creation. Their works are put on the Internet and they never receive copyright royalties. That's a fundamental problem. I find it hard to see how we can resolve that without imposing regulations.

That's a somewhat philosophical point of view, but the idea of leaving this market completely free of all regulation makes me think of what Montesquieu said in talking about the weak and the strong, about total liberty that enslaves the weak and about law that makes them free. Law is important; it is in certain cases. If we let individuals do business with Google, even with millions of dollars, they will be cheated. We need rules that enable these people to receive compensation for their copyright. What do you think?

[John Levy]

There are really two levels here. When we're talking about open access, we're really talking about access that, first of all, has to be transparent and open. It has to be broadly distributed throughout the country and accessible and not controlled in a way where a select few can choose what content comes through or doesn't come through. That's really the thesis we're proposing.

I think you're referring to a completely different issue, which is the issue of copyright and ownership of the content. I wish I could have a response to you that would make some sense. There isn't one currently, because the whole matrix is changing. Who the content creators are is changing overnight.

Historically, it has been very few and we could identify exactly who it was creating the content, and then we could channel it through and protect it. But now it's coming from all over. It's a different ball game, and the same guy who's creating music in his basement now, who has access to the world and didn't have it before, doesn't really care whether he's copied or not. A lot of this relationship has to be talking to the new people who are creating this content, because I think the notion that we have to protect him the same way we protected the major labels may not be true.

I don't know what the answer is. All I know is that the matrix is completely upside down.

Let me give just one example.

[The Chair, Conservative, Gary Schellenberger]

A short example, please.

[John Levy]

Okay.

In terms of protection of branding, our whole mantra at our company is that we give up our brand. Unless everybody accepts who The Score is in the community.... I'm not out there protecting this thing. I'm not out there slamming people for using our brand. I want people to engage in our brand and use our brand.

Maybe that's a bit of an example as to how we can start to deal with copyright laws: reverse the thinking and let the people control that on their own. I don't know how we're going to control it anyway.

[The Chair, Conservative, Gary Schellenberger]

Thank you.

We'll now move on to Mr. Rafferty, please.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you very much, both of you, for being here.

I have a question first for Mr. Jenkins. Almost 20 years ago I was at the first digital radio conference in Toronto, back in my radio days. It was interesting listening to you and hearing what you had to say about comparisons with the rest of the world, because back then, almost 20 years ago, technology was the issue and it's not so much the issue anymore. It's literacy and all sorts of other things.

I'd like to ask you...even though it's pretty clear that you can't really tell us whether or not we're behind or ahead, or even whether we're even with the rest of the world, nevertheless it's pretty clear there are dangers to falling behind. When you look at the technologies and the stable of products and so on in the rest of the world, what do you see Canada using that would benefit in particular our artists and our viewing public?

[Tom Jenkins]

Thanks for those comments.

I'm an entrepreneur, so I'm generally an optimist, and I take the optimistic view of this. But there are those who take the dire straits view and the digital colony and what have you.

We are a country that has only 2.5% of world GDP. We are a country that has an even smaller percentage of world population. So I believe we have to take that perspective, first and foremost, to realize our throw weight, our capacity, our critical mass.

Having said that, we have some tremendous attributes as a country. One, we have a multiculturalism.... I travel the world, and we have a wonderfully well-working country. Although, when I come back to Canada, I know we all talk about how terribly it works, we have a wonderfully well-working country. We really do. Many of you who are familiar with other parts of the world know what I mean.

That gives us an opportunity. When you consider some of the comments you've already heard, and the comment about the importance of relationships, we have an opportunity to capitalize on the reverse diaspora of this country in a tremendous way. We have capacity that countries of our size wouldn't normally have.

Think of it: we have Open Text; we have Research in Motion; we have Cirque du Soleil. And I could go on. For a country of our size to have so many world players at different things...? We're a small country, and yet we have an ability to leverage a lot of the infrastructure assets, along with the academic community, and our cultural community. But when you add in that reverse diaspora, then you have an ability for us to punch way above our weight in this regard.

That's where leadership comes in, where we create something--a set of goals, or a methodology--that creates an environment for us to capitalize on those advantages that we have. We have some tremendous advantages.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Thank you.

Mr. Levy, I appreciate your comments on net neutrality. My question is to ask you to maybe expand your thoughts on that. The same things you said to the CRTC, and you mentioned again here, I happen to think are important. But particularly in the case of ISP providers like Shaw, for example, that is not in the business of delivering content that...they have it with CanWest or whoever the case may be.

I wonder if you could expand upon net neutrality, because I think it's a very important issue.

[John Levy]

Well, to try to reduce it to its simplest form, you simply have to make sure that those in control, those who are the gatekeepers, are not manipulating the technology to their own advantage and to the disadvantage of those who do not have the same controls. It's really a simple concept.

Now, that's not to say they can't maintain and manage their own business. It's a difficult business to run. There are pipe issues, there are costing issues, and they have to make money on it. The whole issue is that they should not be able to do it at the expense of those who would otherwise be able to access the community and the public.

The whole idea is that you manage your business appropriately, but don't shut out the ability of now hundreds and hundreds of thousands of content providers--it's not just a few, it's everybody--and allow them the same access to the same environment, the same community, the same world, that you have.

It really goes to basics: treat others like you treat yourself; don't treat yourself better.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

So speaking as a relatively small company--

[John Levy]

Very.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

--which you've indicated you are...although I don't think you're that small at all. It doesn't sound like you're that small.

But from your point of view, are your thoughts about net neutrality just more self-interest than anything else? Or is that a belief that you have in general?