My name is Darlene Gilliland. I am the director of digital business development for Universal Music Canada. I am very grateful to the committee for the opportunity to speak to you today.
I plan to cover three topics: who Universal is and how we engage with the opportunities that new media presents to grow our business in Canada; how the challenges presented by the lack of a predictable, rules-based climate for investment in new media limit the growth of that business; and how government can help.
To start, Universal Music is Canada's largest music company. We sign artists to recorded music deals. We also provide distribution for independent labels in both English Canada and in Quebec. We discover artists, we create records with them, we market, distribute, and promote them and their recordings. In short, we create music and we build careers.
Our Canadian artists include Bryan Adams, Diana Krall, Shania Twain, Tragically Hip, and new artists like Hedley and Stereos. We also market and distribute international stars like U2, Elton John, and the Black Eyed Peas here in Canada. We are music people, absolutely, but we are also business people and investors in Canadian talent and technology.
My role at the company in digital business development and the team I work with exist because Universal sees the power in new media to create revenue streams for our artists. In my role I am tasked with strategically implementing new business models that are capable of generating sustainable long-term revenue and delivering a legal music experience that fans can enjoy.
This is not the old days. We are not sitting back and wishing for the days before the Internet. It's quite the opposite; we are heavily engaged in reorienting our business against incredible challenges in the conditions in Canada.
I'll mention a couple of the things we do. First, we license our music and our videos in legal ways to technology companies, big and small broadcasters, mobile carriers, and websites here in Canada and outside of Canada as well. When I talk about licensing deals, what I mean by that is a deal that makes music legally available. You can listen to music in your iPhone application through deals that we do. You can buy an MP3 download over your cellphone after you hear a great song on the radio. You can watch a video on your home computer. That's what we do. All of these can be legally licensed uses that compensate the creator and bring the music to the fan, where they want to hear it.
The companies we work with to build those models understand a couple of things. They know that music is valuable to their consumers, they know that creators must be paid for their work, and they know that working with us directly helps them build value for their business.
I also want to point out that we do use social media in technology constantly as part of our marketing and promotion efforts to reach our fans. Twitter, Facebook, SMS, iPhone applications--all the new technologies are key elements of our marketing strategies. They may not be our revenue-driving strategies at the moment, but they're key in marketing.
As one interesting example, if anyone is an active Twitter user, we actually worked with our Canadian artist, K'naan, to create new lyrics for one of his songs using Twitter “tweets” from fans. K'naan then recorded a song made up entirely of those lyrics, and we were recognized for that by Wired magazine. So we're there.
We're also diversifying. We create and run artist websites and online fan clubs. We design added-value music products, VIP merchandise, and concert tickets.
In short, we are not just sitting around on our hands. People like me did not even work in the music industry in the good old days. We are not running from this new reality, we are doing our very best to embrace it, to work hard on creating business models, and to provide value for everyone in the new media community. That's creators, that's technology companies, and that's consumers. We don't believe these things are mutually exclusive.
Despite our efforts, despite managing to grow our digital business slightly every year, our digital marketplace in Canada is on track to cap out well below our market potential and well below the level that other developed markets will reach. A few numbers are helpful here. On an industry-wide basis, as reported by the IFPI, in the world of physical CDs, Canada represented 10% of U.S. sales. In the digital world we're 4%. This is a substantial difference. I think it helps illustrate this point very well.
We attribute it in large part to the lack of a robust copyright regime and protection for creators' works in our country, especially when we stack Canada up beside our international peers. Our peers have had these protections for a long time.
When technology companies see the piracy that flourishes here in Canada and the uncertainty in our laws, they are apt to invest elsewhere, and they do. The result is that Canadian creators and consumers miss out on innovative music services that are launching elsewhere, including the U.K., France, Sweden, and the United States. We miss out on the jobs, revenue, taxes, and consumer choice that come with them.
Government can help us in two key ways: first, we need government support in new media, as in any industry, to create a rules-based and predictable environment in which business can invest, and in which investments made today by the music industry can continue into the future; second, we need government support for and belief in the fact that compensation for artists and the shifting terrain of new media are not fundamentally incompatible. We believe we can build that market, a market in which technology thrives and creators can earn a living, with the appropriate protections in place.
Universal invests in music and in Canadian talent and culture, and our government invests in music and in Canadian talent and culture, but our laws create a climate in which the product of our investment competes with “free”.
Perhaps over the years this issue has seemed complicated; it doesn't need to be. We can't compete without government assistance in making sure creators' work product receives the same level of protection through copyright as a technology company receives through the patent on the touch screen on their phone.
All intellectual property industries depend on mechanisms put in place by government to foster innovation, encourage investment, and protect creators. We are no different.
We are not asking government to take us back to the old days. We're not giving up here on our efforts to build a market--we're up for the challenge--but we're here asking for your help with that.
Thank you very much.