Thank you.
My name is Charlie Millar. I work as a director of digital development as well.
I've been asked to present to you today the following: what I do, and how what I do is linked to digital media and emerging technology. Specifically, I will address my background, my reasons for entering the content business, my role, and the reason for my attendance today. Last, I'll provide a summary of how government can support my role from a digital business development perspective.
Prior to joining Warner Music Canada, I worked as an economic consultant for KPMG. My focus was technology and pharmaceutical brands. After KPMG, I worked for a marketing company that specialized in selling and designing consumer brand marketing programs. One of our clients was Telus. I actually launched the Internet with Telus, out west, about six years ago now.
What were my reasons for entering the content business? Well, playing music in a number of small bands over the years, it was evident...of the vital role that music, or content, played in the development of new technology and the next generation of music monetization models. Therefore, with a background in economics and with a love of music, it was logical that I would join a record label and work in digital music.
My role at Warner Music Canada is to integrate into the company digital commerce opportunities. I also work with Canadian businesses to educate them and to license content to these businesses. I collaborate with them to ensure a profitable and sustainable business model for the distribution of our artists' content. Specifically, I work with a tremendous number of software companies to ensure that they're involved in licensing content and are developing business models that are sustainable for the artists' content in the long run and are sustainable for their own profitability. This is very important.
Finally, I develop relationships with Internet service providers--Telus, Rogers, and Bell--original equipment manufacturers--RIM, HTC, and LG--and software developers. These are key future business partners for us. These partners will support our acts internationally and domestically in Canada and cannot be denied. Specifically, these companies are the future account base, and together we are going to create new ways for our labels to monetize their content. It's very exciting. These services will be essential in the digital generation of the music business.
I'll now outline my reason for attending this committee meeting.
Warner Music is a significant player in the industry. It has committed national commercial interests and has consistently outpaced the recorded music industry in digital revenue. We have three basic priorities, and I want to explain these to you so that you get a sense of where we see the priorities in the digital music space.
We are extending our leadership in the core download business. You may see this as the iTunes business, but primarily this is the four Ps of marketing we focus on: product, price, promotion, and placement.
We are recalibrating the balance between promotional and commercial within social media. This is very interesting. We have relationships with YouTube. We have relationships with ad-supported networks. What we're doing is removing startup misconceptions around “free” and engaging businesses in sustainable business models. Ad-supported network models right now are at an emerging business level, not sustainable.
We are developing and cultivating new business models by targeting opportunities around scale. What I mean by this is that we're engaging networks and OEMs around bundling content services with device sales and connectivity.
To back up a little bit, the digital market has three main consumer segments. We have done a lot of U.S. research to support these, which I'll use as a proxy for the Canadian consumer. However, we are actually working with CRIA to develop our own consumer research.
The first consumer segment is the traditional listener. You would see this as a radio or CD listener. They “lean back”: they're passive, they listen to the radio, they put the CD in. This segment requires targeted product offerings. The CD-centrics require digital conversion vehicles, such as gift cards.
The second segment is the digital collector. They are very “lean forward”: they're on their computers, they're multi-screen, they're mobile, they're iTunes users. For this segment we're looking at product management--again, the four Ps of marketing help in this area, and that's where we're driving our attention--but also at service and product innovation, specifically in subscription services. You hear the words “digital cloud” these days.
The third and last segment are the pirates. They are “lean forward”: they represent a cross-section of all behaviours. This requires implementation of ubiquitous deterrent measures from government and network-based controls.
In summary, how can government help?
From a sales perspective, from a digital business development perspective, government can help by assistance with deterring pirate lean forward behaviour; two, implementing ubiquitous government deterrent measures so that Canada and all its provinces can become an environment for digital entrepreneurship and service; and specifically, creating a location for foreign direct investment and/or domestic next-generation technology, to be done in a way that is, I hope, export ready.
From a free market perspective, industry is willing and able to sell Canada to the world, but it is essential for government to set up appropriate ground rules for the digital music business to be successful.
Thank you very much for your time.