Good morning, everyone.
I am the President of the Professional Music Publishers' Association, the PMPA. The professionals we bring together—music publishers—work on the development of songwriters' careers, the exploitation of their musical works and the management of the revenue earned through that exploitation. In this digital era where the number of sources for exploiting musical works has increased, publishers' commercial role has grown. Their economic importance has never been as high.
It is a fact that digital content has increased the modes of music consumption. In our industry, music could once be consumed only through a limited number of media—disc, radio, television—but the modes of music consumption have experienced a real explosion. As a result, we are seeing an increase in the number and types of stakeholders involved in music broadcasting. Music consumption has never been so high.
This diversification of music broadcasting and consumption modes led us to believe, in the early 2000s, that the public would have better access to a larger variety of cultural products. We thought the Internet would help dilute the effect of the superstar economy. We were even talking about the democratization of music.
However, what actually happened was the exact opposite. According to the website Musically, the Internet has not killed the hit parade; it has rather fuelled the economy of superstar artists. Musically refers to a recent study by a Midia Consulting analyst. According to that study, 1% of the most popular artists on the market collected almost 77% of all the revenue generated by recorded music. These telling figures show a profound lack of cultural diversity in the digital environment. In that context, the dominant culture inevitably supplants the other cultures.
That brings me to the first challenge our industry is facing that could be addressed by our government. I am talking about the lack of regulations on the Internet.
In the broadcasting system—radio and television—the CRTC imposes different quotas on music aired in order to support cultural diversity. Quotas for francophone music, local music and emerging music need to be met. We know that, when a greater variety of works is broadcast, the generated revenue is shared more equitably among all creators. This implies maintaining a diversified culture instead of polarizing earnings and restricting the creation of musical works to a limited number of creators.
However, there are currently no such quotas for content on the Internet. The broadcasting, accessibility and positioning of music are in no way regulated on the Internet. Since consumers are no longer exposed to Canadian content in the same way, their consumption habits are being directly affected. The application of Canadian and/or francophone broadcast quotas in traditional media such as radio and television has significantly supported the broadcasting and consumption of Canadian products. However, since people are increasingly consuming content through non-regulated platforms, Canadian content is reduced across the board and is being played and consumed less. Ultimately, our culture is being eroded, both nationally and internationally.
Until the new modes of music consumption appeared, the delicate balance between Canada's musical and even audiovisual products, on the one hand, and foreign products, on the other hand, was maintained through regulations the CRTC imposed on traditional media. We think that the diluted consumption of Canadian, and especially francophone, cultural products is directly related to the lack of regulations that would guarantee a minimum of Canadian content in new media. This is a major paradox. On the one hand, culture is receiving significant and necessary financial support, but on the other hand, the new modes of consumption are not being regulated. In other words, we are investing, but we are not doing what needs to be done to recoup our investment and foster the development of our culture in the digital environment.
The second challenge our industry is facing is the fact that our copyright legislation is inadequate. The premise of copyright is that content creators have the right to control their work and be compensated for its use, regardless of how that work is accessed. We maintain that the Copyright Act must support music rights holders' entitlement to compensation on the Internet. That should mainly be done by improving the accountability of Internet service providers—which have so far mostly benefited from content provided by creators without ensuring compensation—and, of course, by expanding the private copying regime to include all existing and future digital audio platforms.
It is easy to see that household spending on culture and entertainment has shifted, over the last 10 years, from cultural products to ways to access those products—in other words, from content to media. The portion of cultural spending in general household consumption is still relatively stable, but the portion of cultural products in household spending is in constant decline. However, the portion of spending on Internet services, cellular telephone services and video equipment, among others, is skyrocketing.
So the money that was once used to buy music albums and went to music creators' and publishers' pockets is now being used to purchase equipment for music consumption such as Internet connections with large bandwidth, smart phones and digital audio players. So music consumption revenue is no longer going to the pockets of music rights holders, but mainly to the pockets of Internet service providers, and smart phone and digital audio player makers. We think it is imperative for those two groups—which have been playing a key role in the music industry since the rise of digital content and are undoubtedly benefiting from it—to contribute to the industry. We also think the legislation should take that into account.
There is also a third challenge. Sufficient support should be given to professional associations. Music publishers need help from an association that would defend their rights and interests, identify their needs and meet them using the appropriate services, especially in this time of major challenges, which I have discussed.
The PMPA has been doing this work for 12 years. The Government of Canada's recent abolition of the Creators' Assistance component of the Canada Music Fund has led to the loss of a significant portion of the PMPA's operating budget. It has become difficult for us to sustain our activities and to keep our budget in line. We are doing the impossible, but this situation is not sustainable over the medium term.
Through various components, the Canada Music Fund is supporting record labels and publishers, as Jodie Ferneyhough mentioned. Associations that represent record labels receive support through the component Aid to Canadian Music Industry National Service Organizations. However, publishers' associations are not supported through that component. Why not? The two publishing associations meet all the criteria, except when it comes to an association's minimum operating budget. A simple technical amendment would help remedy the dire situation stemming from the abolition of the Creators' Assistance component.
I would be happy to answer your questions.
Thank you.
