Canadian Heritage Committee on March 25th, 2014

[Stuart Johnston]

Yes, I can say that we have a number of organizations representing different aspects of the music industry. As I said at the top of my remarks, the industry is not homogenous, so each individual component I think requires its own voice, because there is a uniqueness to each one.

That said, on many issues and on many programs and services, we do band together as an industry. I don't know if you've noticed, but we all know each other. We know the previous speakers and we all know each other. Shauna and Bob are both on my board. We work with ADISQ quite often.

We do band together as an industry. I mentioned CIMA acting in the capacity of an export office, but we couldn't do that without our industry partners at the table as well. In a recent development, we are formalizing a group to coordinate those efforts, share information, share market strategies, and work together. That's a long way to say that we do work as an industry when we need to, and then we are our own voices for the unique aspects of our various constituencies.

[Ray Boughen, Conservative, Palliser, SK]

Okay.

I have a general question, open to all the panel members. How do you see the role of government facilitating the industry and helping it grow and continue on a path that seems to be moving forward at a pretty good rate? The other panel members suggested a couple of things having to do with income tax.

What do you see as a way the government can be involved in facilitating continued growth and movement?

[Solange Drouin]

In this regard, we recommend a very broad approach. We cannot consider the music industry from only one angle. The music must be created, produced, marketed, broadcast and distributed. So all of those components need to be taken into consideration. Today you want to talk about funding. If you ask us if more money is needed, of course we will say yes, but we are aware of the state of public finances.

However, as far as copyright law is concerned, you, as the government, do have some other tools at your disposal. As I was saying, there are international regulations and international taxes, subjects you examined in a recent budget consultation. We need to have a broad view of all of these tools in order to help the industry. We can't consider all of the components separately; we need an overall approach. Of course, this involves education, and that's important, but that requires a long period of time. And we would like the effects to be felt as soon as possible. Given the state of the industry, we can't wait to make progress in terms of education before taking action on other fronts.

[Ray Boughen, Conservative, Palliser, SK]

As a performer, Shauna, how do you view that? What is the role of government to help you continue on your career path?

[Shauna de Cartier]

To clarify, I'm not a performer.

[Ray Boughen, Conservative, Palliser, SK]

Oh, I'm sorry.

[Shauna de Cartier]

I have a record label, and I'm also an artist manager. As an artist manager, I do work very closely with artists and performers who make records and tour nationally and internationally.

I just can't say enough about how important the support of FACTOR is. It makes it possible for a struggling artist to figure out a way to get their record made, to get even just a tour across Canada, to get from Vancouver to Edmonton to Winnipeg to Toronto. That's how we know how to do it. That support, I feel, has created an infrastructure here in Canada of an independent community that is sustainable. Our main point is that we're grateful the funding has been made permanent, so to speak.

We have lots of other ideas. For example, exporting is something that all independent artists need help with. It's something that CIMA is doing. We could use the support to do that better and do more of it, but we don't want to see that at the expense of the core: production and marketing and touring.

[Ray Boughen, Conservative, Palliser, SK]

What is the core? I've heard the core mentioned a couple of times this morning.

[Shauna de Cartier]

It's production, as in making the records, marketing, which is self-explanatory, and touring.

[Ray Boughen, Conservative, Palliser, SK]

Good. Thank you.

How much time, Mr. Chair?

[The Chair, Conservative, Gord Brown]

You have about a minute.

[Robert D'Eith]

Could I jump in here?

[Ray Boughen, Conservative, Palliser, SK]

Yes, by all means, Bob.

[Robert D'Eith]

Wonderful.

I totally agree with what Shauna is saying. I think the existing programs are great. Thank you for continuing to support those.

As I said, I do think there is a gap that has been created because of the industry at a regional level. I think artists need more artist development so that they're more attractive to labels like Shauna's and to the majors and others. I really think we need a strategy to help the artists get from the basement to a place where they're attractive to the industry. There's a gap that's created, and I believe if we had a strategy moving forward, we could fill that gap a bit better.

We're doing a good job; FACTOR does a really great job at part of that, but I do think there's more room at the regional level to try to bridge that gap.

[The Chair, Conservative, Gord Brown]

Mr. Nantel, you have seven minutes.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you very much, Mr. Chair.

I would like to verify something, Mr. D'Eith. Can you hear me in French or in English?

[Robert D'Eith]

I'm hearing you in English right now.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Good, that's wonderful. I didn't know that I was able to be heard in both languages.

First of all, I just want to say that I think it's wonderful to have with us a group of people from all over Canada who have shared artistic and cultural interests. I think that's very exciting. I think that we are all learning a lot.

Clearly, this industry is facing particular challenges that are intimately linked to technology. We have to recognize that the music industry is very happy with the amount that they have been able to secure. It's an amount of $25 million. You said several times that that's all the better for the government.

Furthermore, the program managers are doing good work in terms of production and in terms of the basic activities we've been talking about so far. This money and this expertise from the government, all of that matches. I would like to hear you speak about the fact that we will have to change our way of analyzing and we will have to move more quickly in order to deal with theses changes.

Ms. Drouin, you mentioned figures from the IFPI which indicate to what extent we are moving towards a streaming broadcast model. I will give you an example. Yesterday, while I was preparing for today's meeting, I discovered that there was a new Hall and Oates album. I am betraying my age. Hall and Oates were a duo from the 1970s. I listened to the entire album, I didn't pay anything, and it was not illegal. So there's a problem. It's not the fact that it's free. Indeed, if it's free, so much the better for everyone, but an agreement was signed with these streaming broadcasting services. I would like to know if the terms are favourable for you. How is such an agreement signed? We are always hearing and reading that these agreements only allow for a tiny amount of income. Will you be able to renew these agreements? Do you have the support of government policies to do so?

You should at least be paid when people listen to a song. It would be nice if you could also be seen. We would like the artists to be seen. That's why I will let you speak. It's important to hear the perspective of independent companies and not just large companies.

We know that Avril Lavigne comes from Napanee, but promotional tools are definitely developed in the United States, and that is a huge machine. The artists who represent our cultural reality are the artists that the Standing Committee on Canadian Heritage should consider.

I would like to hear your opinion on this, Ms. Drouin, Mr. Johnston, Ms. de Cartier and Mr. D'Eith.

[Solange Drouin]

Mr. Nantel, it is important to put that $25 million into context. It was implemented around 1998. At the time, funding for the industry was increased. At the time, the return on investment was still appealing. It was possible to sell albums and to invest in the production of an album. Ms. de Cartier talked about tours. There was significant income at the time and a sum of $25 million played an important role.

Today, incomes are collapsing. Some people have said—incorrectly, in my opinion—that income from the sale of recorded music was collapsing, but that we could recoup the money through live shows. That is not the case for local and Canadian artists who do not have an international career. People like Madonna or Rihanna can decide to give a show in Toronto, Montreal, Washington or Boston. However, a Quebec artist cannot stay in the Gaspé more than four days if there is not a sufficient audience. You can't claim that local artists can recoup significant sums of money through shows. The income lost in disk sales really constitutes a significant loss.

However, I would encourage you to look at the lost income. I was reading this morning that in 2014, Google and Facebook will have $21 billion in revenue from mobile phone advertising, while these companies do not give back any money to the content industry, which nonetheless produces a large part of their services. Perhaps not all of their services, because people conduct searches with Google and do other things with Facebook, but it is clear that a large part of these two services is based on entertainment and music. How is it that this $21 billion in advertising revenue is being completely lost to those who are providing a product for resale, and how is it that there is no return on investment? We need regulation. You have power as far as copyright law is concerned. That could be used to rebalance the situation.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Ms. Drouin, since I only have a minute and a half left, I will give the floor to Mr. Johnston.

A few years ago, agreements were signed by various parties. Commercial radio stations played music, and because the financial situation was good, it was possible to contribute more. I can make a parallel, Mr. Johnston, between the enormous revenues Ms. Drouin was talking about, and which come from Internet companies, and your situation as a provider of raw content. And I could ask the same question to people working in the video industry, isn't that right?

[Stuart Johnston]

Well, I guess the bottom line is that those who create need to be compensated. That's the fundamental. Our industry has splintered so much in terms of the types of revenues we need to draw from. The old cliché is that it used to be a dollars business. Now it's a pennies business, and you have to find those pennies from a multitude of sources.

Broadly speaking, it's great that the government is at the table, because it really is a true public-private partnership of the music industry and government. There's private sector money. There's public sector money. There is broadcaster money. There's a multitude of revenues coming in to provide seed money.

Our entrepreneurs, who are small businesses, just need two things. They need time and money. If they don't have the time, they need the money. With them being small businesses and sole proprietors, that capital from a multitude of sources, not the least of which is the public sector, helps them to make the investments they need in their artists and to invest in the strategies they need to do in terms of marketing, touring, promotion, and whatnot.

That doesn't directly answer your question. We could spend an hour and a half on that particular topic, but it's extremely important that we tease out dollars as much as possible where people are exploiting the content that is created by others.

[The Chair, Conservative, Gord Brown]

Thank you.

Mr. Dion, you have the floor for seven minutes.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Thank you very much, Mr. Chair.

I would like to thank Ms. Drouin, Mr. Johnston, Ms. de Cartier and Mr. D'Eith for being with us today.

I think that we will agree on the challenge, which is the drop in revenues that followed the arrival of new technologies. Now, we need to find solutions.

Mr. Johnston and Madam de Cartier, you've come here with some very specific propositions. I don't know if there is one that you would like to expand on.

I am intrigued by the one you proposed about giving the CRTC regulatory powers to enforce rules for broadcasters to pay into the Canadian content development funds. Would you like to develop this proposition more for the benefit of the committee?

[Stuart Johnston]

Yes, for sure. There's an area where it just takes a regulatory change, we believe.

The CRTC right now is undergoing a radio review to determine future policies relating to the broadcasters, the Broadcasting Act, and whatnot.

One of the challenges the CRTC has is enforcing compliance for the broadcasters to pay their required Canadian content development funds. They have to pay half a per cent of their revenues every year into the CCD fund, which goes to the support of the music industry, and up to 6% of the value of a licence whenever they sell that licence, like the Bell-Astral deal.

Compliance is a very big problem. Last year a million dollars was left on the table because in 266 instances last year, CCD money was not paid by the broadcasters in a timely manner.

How does the CRTC enforce this? Our solution, in part, would be to give the CRTC the regulatory authority, if they don't already have it, and there's some question as to whether or not they do, and the ability to impose a late fee. It's not unheard of. The phone companies all charge us late fees. Well, when the phone companies forget to pay their CCD, perhaps a 2% surcharge should be added to what they owe. There's a simple way to change the regulatory authority to provide the incentive for the broadcasters to comply with their obligations.

That's one of the things we'd like to put on the table for consideration.

[Stéphane Dion, Liberal, Saint-Laurent—Cartierville, QC]

Ms. Drouin, you concluded your presentation by saying that we needed to develop tools.

Is this one of the tools that you would recommend?