Canadian Heritage Committee on May 6th, 2014

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good morning everyone.

We're going to call the 21st meeting of the Standing Committee on Canadian Heritage to order.

Right now we are conducting a review of the Canadian music industry. For the first hour we have three organizations represented. First of all, from the Canadian Independent Recording Artists' Association, we have Zachary Leighton and Gregg Terrence; from the National Music Centre, we have Andrew Mosker and Mary Kapusta; and from Lula Lounge, we have Tracy Jenkins.

Some of you may recall that last week Tracy was fogged in in Toronto, so thank you for being able to join us today.

Each of our organizations will have eight minutes, and then we'll have rounds of questions.

We'll start with our folks from the Canadian Independent Recording Artists' Association. You have the floor for eight minutes.

[Gregg Terrence, President, Canadian Independent Recording Artists' Association]

Thank you.

Good morning. My name is Gregg Terrence. I'm the president of the Canadian Independent Recording Artists' Association, also known as CIRAA. I'm also the owner of Indie Pool, a Canadian independent music aggregator with over 100,000 Canadian songs on iTunes, which works with over 15,000 Canadian independent recording artists.

I'm joined by Zachary Leighton, CIRAA's executive director.

[Zachary Leighton, Executive Director, Canadian Independent Recording Artists' Association]

We'd like to thank you for the opportunity to appear in front of you today.

The digital frontier of Canada's music industry has empowered independent artist entrepreneurs by means of a fully integrated business ecosystem. It is now viable for musical acts to establish an intimate and dedicated following through a grassroots approach without record companies. As a result of this digital progress, and due to the contracting of the traditional music industry, the last 25 years has seen the rise of the artist entrepreneur.

CIRAA provides support to these artist entrepreneurs through unique programming, such as an online music business educational series, monthly mentorships with established artists, and a monthly micro grant to reward and encourage live performances.

Our current membership exceeds 9,200 artists across the country; however, CIRAA's statistics confirm that there are approximately 19,000 active, independent recording acts in Canada. Seventy-eight per cent consider themselves professional musicians, with a staggering collective reach of 5.2 million fans, collectively performing 750,000 shows annually, or 2,000 performances every single day.

Each spend, on average, $3,400 annually on their music careers, amounting to tens of millions of dollars and triggering hundreds of millions in economic activity.

[Gregg Terrence]

These artists exist in a precarious and important stage of Canada's talent development system, a system that CIRAA often compares to an apple orchard. The end goal of having an orchard is to pick beautiful, new apples, shine them, and distribute them domestically, and preferably internationally. But before putting apples or bands to market, some very careful and measured steps must take place to assure a healthy crop.

First, one must prepare the land and sow the seeds by ensuring instruments are in our schools and our children are taught the value of music to our culture. We must all support budding musicians in this childhood incubation period prior to their introduction to the Canadian music industry.

Then, we must water and tend to the saplings, or in this case, Canada's artist entrepreneurs, by providing ongoing funding for the creation of demos and master recordings, video content, websites, marketing, touring and showcasing, and so on.

Finally, we must care for mature trees, pick the apples and take them to market, by supporting nearly established artists, music businesses, innovative start-up businesses, and industry events.

All of these stages must be adequately addressed to ensure the long-term sustainability of the Canadian music industry. We are here to testify that the CMF is starving our seeds and saplings, and they are dying off.

[Zachary Leighton]

Over the past seven years, FACTOR has contributed just over $105 million in total offerings. Of that $105 million, $97 million, or 93%, has gone to signed artists and music businesses, with a paltry 6.8% going to all of Canada's artist entrepreneurs. Another way to put it is that 93% of the money has gone to 1.5% of Canada's active artists.

Then you add the fact that this 1.5% of Canadian bands are often also eligible to receive funding from the Radio Starmaker Fund and are often supported by both organizations in the same fiscal year.

Then, you also add the fact that many of the record labels and management companies representing the majority of this 1.5% are also receiving CMF support from the music entrepreneur component of the Canada Music Fund. All told, between MEC funding, Starmaker, and FACTOR, a handful of artists and companies received more support than all of Canada's artist entrepreneurs combined.

CIRAA is not here to judge the needs of this 1.5%. We are here to report on the neglect of the 98.5% and its effects on our industry.

In 2006, there were 28,000 active artist entrepreneurs in Canada. That number is down nearly 50%, slowly choking off the supply of talented artists, and potentially depriving Canadians of the next Glenn Gould, or Bryan Adams, or Arcade Fire.

Another telling fact is that, of Canada's 19,000 recording artists, only 3,400 have even bothered to register with FACTOR, due to widespread apathy. Canada's remaining artists feel abandoned, frustrated, angry, and are increasingly vocal.

[Gregg Terrence]

CIRAA and others have attempted to modernize FACTOR. However, the bylaws dictating the institutional makeup of the FACTOR board of directors, created before the rise of the artist entrepreneur, assures us that nothing there is likely to change. Roughly half the seats are assigned to traditional commercial music businesses and the other half to radio.

To ensure a sustainable Canadian talent development strategy, CIRAA respectfully offers the following recommendations:

One, the Canada Music Fund should be divided equally across the development supply chain. We recommend that one-third of CMF funding goes to independent artist entrepreneurs, another third to established artists through FACTOR, and the final third to music businesses through the music entrepreneur component and the collective initiatives program.

Two, we recommend that a new funding organization be founded collectively by specialists in the independent artist entrepreneur field; including, but not limited to, CIRAA. This new funding organization would invest its third in artist development and artist entrepreneurs. We believe that no association should ask for this task alone, and that there are many across the country that can provide valuable leadership.

We strongly believe that a new organization allocating funds towards artist development for early career musicians and artist entrepreneurs will see a number of improvements, which this committee is seeking.

One, more funding will flow to communities nationwide, with less concentration in Toronto, where Canada's music companies primarily exist. This also means greater support for homegrown, local culture across Canada.

Two, there will be greater public recognition and appreciation for the Government of Canada's support to music in all communities, due to fewer intermediaries.

Three, there will be more artistic and business innovation by fuelling entrepreneurs using modern technologies and cutting-edge methods beyond simply recording music.

Four, there will be a levelling of the playing field between artists supported by personal investment of family and those without financial support.

Five, music business literacy will be expanded through education and mentorship.

Finally, Canada's music companies will benefit from having more developed and educated artists ready to expand their audiences; in essence, a stronger and more vibrant supply line.

We are asking for a nod, an invitation, or better yet, a clear mandate from this committee to begin the work of assembling associations nationwide to create a new funding body tasked with solving this fundamental imbalance that, without repair, will make all other recommendations heard here akin to rearranging the chairs on the Titanic. We need a strong, educated, literate, and confident artist entrepreneur base that sparks artistry and innovation in communities coast to coast to coast.

We thank you for your time today and for your continued support of Canadian music. We look forward to your questions and comments.

[The Chair, Conservative, Gord Brown]

Thank you very much.

We'll now move to the National Music Centre.

Andrew Mosker and Mary Kapusta, you have the floor for eight minutes.

[Andrew Mosker, President and Chief Executive Officer, National Music Centre]

Good morning, bonjour, and thank you for inviting us to speak to the standing committee today. And thank you for all of the support that the government of Canada has made over the years in fostering, developing, and sharing Canadian music.

I applaud you for wanting to learn more, and for asking the question regarding whether or not the current strategies and investments are working as well as they can, and if they're not, what can be done to adjust, alter, or reinvent them. Regardless, the government of Canada's role at the table is fundamental, as music is a vehicle by which we communicate our values, our identity, and our nationhood.

The facts speak for themselves. Today, we are already an arts nation, a country where ordinary Canadians spend more than twice as much each year attending the arts—of which music is a major component—than all sports in Canada put together. In short, Canada cares about music.

It's no secret that the changes in technology over the past 10 to 15 years have impacted all of us, between the launch of Napster in 2000 and the iPhone in 2007. It is also no secret that these technologies, as well as others, have profoundly affected the music industry, both positively and negatively. Although the impact of these new technologies on the development of music and the music industry is nothing new—it's been happening for centuries, often in transformative ways—its net impact over this period has fundamentally altered the commercial system of the music industry that has been in place for well over 100 years, and much more quickly and adversely than originally anticipated.

I'll describe some of these changes. While digital revenues for music have increased, they have not replaced what has been lost due to the disappearance of physical sales. Revenues paid to creators for the intellectual property created has decreased significantly, forcing musicians to find other ways to earn a livelihood. The public has devalued the economic value of an artistic work. The traditional role of a major record label has been redirected from marketer and incubator mainly to distributor. The presentation of live music is becoming more important for artists to generate revenue than ever in the past.

Despite these changes, we have not seen an erosion of music, but rather quite the contrary, in fact. Music is more ubiquitous and varied than ever, offering more choice for the listener and, I would argue, more opportunities for the musician and the creator to draw upon to expand the creative process. There is an opportunity that we must recognize and celebrate with these changes in technology.

As the seventh largest music market in the world, Canadians have demonstrated their support for music, and we need to continue to build on those successes, but be more innovative in how we continue to nurture our uniquely Canadian voice for the future. It is in this context that I will be making the following recommendations to this committee.

Number one, invest in awareness that celebrates and educates. We believe there needs to be more focus on recognizing and celebrating the contributions that Canadians have made in music, and celebrate it not only nationally within Canada but globally as well. In short, invest a portion of the existing allocation to a national awareness program that educates and celebrates the stories of performers, songwriters, producers, and composers of our country through a myriad of media platforms. The stories of these individuals are often inspirational tales of unique talent, drive, hard work, and competitiveness.

The contribution that Canada has made to music is staggering when you consider our relatively small population and the size of our economy, the 14th largest in the world. For example, since the 1950s we have given the world such artists as Glenn Gould, Oscar Peterson, The Band, Neil Young, Joni Mitchell, Leonard Cohen, The Guess Who, Offenbach, Harmonium, Céline Dion, Arcade Fire, and untold others. These stories are untapped treasures, and my own experience at the National Music Centre has elevated my own awareness that many people don't realize that these artists are, in fact, Canadian.

Number two, brand Canada as a music country, and launch this national awareness strategy to further communicate the impact that the creative industries, and music in particular, have on strengthening Canada's economic position in the world as a place that attracts the brightest and most creative talent to live here and work here. It's taking the success of music tourism and expanding it further as an economic pillar. In the process, this is one way we can continue to develop and celebrate our uniquely Canadian diversity and voice.

Number three, expand hall of fame celebrations in Canada beyond a segment of an annual awards show to an outreach opportunity that tells a broader narrative relating to the inductees' success and what impact they are having on younger artists emerging today. Think of it as successful artists giving back to their community. Celebrating recognition will amplify existing support for production, marketing, and touring opportunities to completely new levels.

Number four, celebrate diversity and broaden support to include the unique multicultural tapestry of Canadian identity. By this, I mean be inclusive. In addition to our aboriginal peoples and our founding peoples from Europe, consider the broader ethnic voices that are a significant part of Canada's population.

Number five, as part of the National Music Centre's offering, our intention is to represent our geographical regions by amplifying their unique stories, not only through the assembling of collections but also by supporting and incubating the unique voices that come from each of these regions.

In the area of incubation and professional development, we offer the following recommendations: Canada's musicians need a hub that is available 365 days a year. Musicians today need to have a holistic understanding of the environment they're working in, from the creative process to the marketing process, and everything in-between.

We need to ask where our professional knowledge is and if we are creating an environment that fosters meaningful collaboration and mentorship. The National Music Centre can potentially help with this. It would not surprise me if many of you had never heard of the National Music Centre prior to this presentation, what our purpose is and why we matter to Canadians, regardless of where they live in Canada.

We're headquartered in Calgary, Alberta. We're a non-profit charitable organization. Our vision is to harness the power of music and use it as a way to catalyze innovation, discovery, and renewal of things that matter to Canadians.

Our mission is to build a home for music in Canada that champions our stories, as a country, through a wide range of programs, including exhibitions that celebrate our history in music, our contributions, our voice, and our identity; education programs for elementary schools that extend beyond traditional music education, that connects core curriculum subjects, including math, science, language arts, social studies, to examples from music. This very successful practice is particularly important for those who might never be exposed to traditional music education; supporting performances of touring Canadian artists across the musical spectrum through live shows that foster, at various stages of an artist's development, their own professional abilities. Finally, inviting an artist...in resident incubation programs that nurture the development of new Canadian music for recording artists, composers, as well as performers.

In essence, the National Music Centre is a hybrid organization and has derived its influence from a variety of influences--music, technology, and museums. On an annual basis, today we serve about 75,000 people, mostly in Calgary, and we're now in the process of building a new National Music Centre building, that is currently under construction in Calgary, for which we have already raised $103 million. We're scheduled to open in the first quarter of 2016.

As a nationally focused organization, we have several partnerships, with the Canadian Music Hall of Fame, Junos, CARAS, the Canadian Country Music Association, CKUA radio network, Library and Archives Canada, as well as several others.

I've worked and volunteered in many aspects of the music industry over the past 25 years—as a musician, an academic, a promoter, and a broadcaster. I was the first employee at the National Music Centre 16 years ago. I've been fortunate enough to be in a position to shape an entirely new organization for Canada that supports and celebrates our country's national music story through education, as well as serving as a hub for creating, supporting, and celebrating Canadian music.

I think we've been fortunate enough to be in a position to fill a void in Canada at a time when the music industry, as well as museums in general, have undergone a radical shift as a result of the rapidly changing technologies—

[The Chair, Conservative, Gord Brown]

Mr. Mosker, I'm going to have to cut you off there. You're well past the allotted time.

[Andrew Mosker]

Thank you.

[The Chair, Conservative, Gord Brown]

You'll have an opportunity to expand during questions.

We'll now move to Tracy Jenkins, from Lula Lounge, for eight minutes.

[Tracy Jenkins, Executive and Co-Artistic Director, Lula Music and Arts Centre, Lula Lounge]

Thank you for the opportunity to appear in front of the committee today.

I represent Lula Lounge, a mid-size venue in Toronto that specializes in presenting world music, often through partnerships with other presenting and community organizations. In tandem with the venue we run a not-for-profit organization, Lula Music and Arts Centre, which receives some support from arts councils for its multicultural presenting and educational activities. This private-public partnership model was inspired by organizations such as Harbourfront Centre in Toronto and the Public Theater in New York City, both of which derive some income from a separate for-profit corporation.

While best known for our weekend salsa nights featuring 10-piece to 12-piece live salsa ensembles, we also present many other forms of Latin music as well as jazz, opera, classical, flamenco, Brazilian, African, Eastern European, and South Asian music.

I'm sure you're all aware that Canada is home to some of the world's very best musicians working in these genres. Many of these receive support directly or indirectly from Heritage Canada programs.

With a capacity of 250, Lula tends to host emerging rather than established artists. While more mainstream musicians such as Feist, Metric, and Norah Jones have performed at Lula, most of our programming focuses on artists from diverse cultural backgrounds whose work lies outside of the commercial mainstream. Although we serve audiences with quite particular musical interests, our presenting activity has significant economic, artistic, and social impact. More than 30 people are employed year-round by the venue and each year hundreds of musicians, mostly Canadian, derive income from playing at the club. Performing at Lula, they build their fan bases, sell CDs, and develop artistically.

Our venue and other places like it are spots where projects funded by municipal and provincial arts councils, FACTOR, and Canada Council come before an audience, creating connections between communities and art. Lula and other world music presenters provide opportunities for immigrant communities to engage with their musical traditions and for audience members to learn about and enjoy a diversity of artistic cultures.

We hope that the results of this study will recognize the importance of small, mid-size, and non-traditional presenters and venues. Small presenters in bars, churches, and libraries in and outside of major city centres make tours across Canada possible. It is through such tours that artists can build an audience and launch their careers. Collectively the social, artistic, and economic impact of these small presenters is very important and needs to be taken into account.

To support such presenters we suggest Heritage Canada continue to foster the presenting infrastructure by encouraging networks across the country. The Canadian world music presenting community has formed such a network. We hope that our efforts will be supported as we have seen firsthand how such a network can increase touring opportunities for artists and allow presenters to do more with the resources that they have at their disposal.

We urge Heritage Canada to work with Immigration Canada to eradicate the new LMO application fees for foreign artists. A healthy music industry cannot be insular. Canadian audiences clearly have an appetite for hearing great music from around the world and are interested in emerging artists from elsewhere.

While our foremost goal is to support Canadian artists, we've seen that working with international musicians can benefit those from Canada. For many years at Lula we've programmed concerts that bring together local and international artists. We do this with an eye to creating unique experiences for audiences, as well as professional and artistic opportunities for Canadian musicians. Often the invited guests are further along in their career path and a mentoring relationship develops. These international collaborations have been very successful in terms of the calibre of art created, economic impact, and the career development of the artists involved.

The new LMO application fees make such international collaboration significantly more expensive and difficult. While we've been able to obtain exemptions for some of our activities, each exemption is done on a case-by-case basis and is not guaranteed. The process to apply for an exemption is cumbersome and acts as a barrier to taking on such projects. We know that colleagues who present some of their jazz and world music festivals and series in bars face similar uncertainty.

We hope that the Canadian government will see that, unlike other industries, our goal in bringing in foreign workers is not to save money or to cut out Canadians, but to enrich the artistic lives of creators and music fans.

On the flip side, Canadian artists need to tour in the U.S. as well as Canada. Given the importance of access to U.S. markets to Canadian artists, we wonder if an agreement of sorts between Canada and the U.S. for touring musicians might be possible.

We'll also briefly mention that the unwieldy process for applying for tax waivers for foreign artists puts additional stress on many festivals and serious presenters funded by Heritage Canada programs. Perhaps this is another issue on which branches of government could work together to strengthen our industry.

Many presenters to this committee have stressed the importance of music education. We would like to reinforce this point and add that we need to simultaneously foster a culture of professional music journalism. With changes to the publishing industry and cutbacks to the CBC, many of the writers and broadcasters who used to celebrate and critique Canadian musical arts are no longer active. Perhaps this could be achieved by working with university journalism programs or perhaps through the Canada Media Fund.

Finally, going back to the importance of supporting a diversity of musical cultures, we would like to point out that CBC Radio has been crucial in helping us to develop audiences for our programming and the artists we present. We have really felt the impact of the loss of the initiative to do live recording for a future broadcast as this was an effective vehicle for reaching new listeners across the country and affirming the importance of artistic contributions being made by culturally diverse Canadian artists.

Thank you.

[The Chair, Conservative, Gord Brown]

All right, thank you very much.

We'll now move to the questions, and we'll start with Mr. Hillyer for seven minutes.

[Jim Hillyer, Conservative, Lethbridge, AB]

Thank you very much.

I want to talk more about your thoughts about changing how the Canada Music Fund is divided. It's divided into four components: the new musical works component, collective initiatives component, music entrepreneur component, and Canadian music memories component.

FACTOR and Musicaction are responsible for administering the new musical works component and the collective initiatives component.

Because they are closely involved with industry, do you believe that artists and artists' organizations would be better served if they administered the entire fund and not just those parts?

[Gregg Terrence]

Not entirely. We believe that FACTOR does a wonderful job at funding established artists, at picking fruit from the tree, shining them, bringing them to market. They know how to do that very well. The board is radio people looking for hits and the board is large music companies, and we believe in what they do and that it is a fundamentally important element of what they do.

However, the artist entrepreneur, which is something that is new since the creation of FACTOR, with the tools that are at his or her disposal, is severely neglected because there's not really a long-term strategy. As to how those four components are divided, we see collective initiatives and the music entrepreneur program as the final third. That's basically taking care of the entire orchard. It's about making sure that the ecosystem is there for export and so on.

We believe that one-third of it should be FACTOR. So I guess you would say new musical works would be divided into the other two bodies equally, for young arts entrepreneurs and for established artists and companies. Perhaps we don't see it as the same division of four. We believe a new structure would divide new musical works.

Am I right, Zack?

[Jim Hillyer, Conservative, Lethbridge, AB]

You talked about having more funding for music businesses. Can you give me some examples of what kinds of businesses those would be?

[Zachary Leighton]

The way we look at it is that there are music businesses as we currently see them. These are record labels, publishers, distributors, organizations, and award shows. Then there are artist entrepreneurs who have created businesses and in many cases are operating small businesses as the artist, so they are playing hundreds of dates a year. They're selling thousands of units of product a year. They are actual businesses. So there are really two ways of defining that, but there are entrepreneurs and music businesses.

[Gregg Terrence]

So it's a small business or a large business. Currently the large businesses and large artists are very well funded. However, there is no small business strategy. Zack is a former arts entrepreneur. I'm a former arts entrepreneur. We end up becoming entrepreneurs in the music business, and these artists are managing fan clubs and securing grants and booking shows.

These are businesses in every way possible. They're spending a lot of money. They're active in their communities, and they are in small communities coast to coast. They're in Moose Jaw, in Lethbridge, and in London. They're everywhere, yet they are at this point growing weary of the funding process to a point where we mentioned that over 80% have not even bothered to try anymore with FACTOR, and they haven't registered with FACTOR. Only 3,400 have registered with FACTOR, out of 19,000.

[Zachary Leighton]

That 3,400 includes everyone in FACTOR?

[Gregg Terrence]

It's everyone including the signed artists and so on and so forth.

[Jim Hillyer, Conservative, Lethbridge, AB]

Andrew, when you talked about your organization, you said something about us needing to do more than using one or two award shows a year. As far as music education and music recognition go, would you say there's the same disproportionate emphasis on the handful of famous, established people getting all the attention just as they are getting 90% of the funding, and that we need to shift not just the funding but the education and the recognition of that tier of people who haven't quite become that famous yet?

[Andrew Mosker]

I would in part. I think there's a certain element of attraction to celebrity that our society is drawn to, which gets people in the door. Once they're in the door, you can start telling them about second-, third-, and fourth-tier artists and the kind of work that is evolving with them and the creative processes they are going through.

I think independent music is a really good example of how there was at one time in the late 1990s—or in the early 1990s—a bit of a rejection of celebrity in favour of second- and third-tier innovative music, which came from the independent field.

So I think it's a combination. I think it's a balance. You definitely need some celebrity on the educational side. It's no different from a Wayne Gretzky in hockey. It's what gets people's attention, and then as they delve deeper into it, they find other success stories further down the line.

[Jim Hillyer, Conservative, Lethbridge, AB]

I liked your metaphor or your allegory about the orchard. When it comes to the heritage department of government, should their emphasis be on making sure artists make a living, or should we be making sure the average Canadian feels connected to Canadian arts? Maybe to do that, you need to help artists make a living, but should the emphasis be on the average Canadian being connected to the arts by the saplings getting the education? Should that be the emphasis, or should it be making sure that the trees are getting the average Canadian supporting them?

[Gregg Terrence]

If we run a good orchard, it's all of these pieces. You cannot ignore the fact that we need to polish apples and prepare them for the international marketplace, but there's no doubt there are many seeds created by educators and by schools and young people, and these seeds need to be watered, and these saplings need to be taken care of.

So I do not believe that Heritage needs to have a focus on any one part. We truly believe in the entirety of the ecosystem and the supply line, and we know this supply line is being choked off. It's being choked off by the needs that are being created by the changes in the marketplace. It's been a tough decade. Therefore there are needs there. However, Heritage needs to be aware of the neglect of this marketplace.

This marketplace will take care of connecting with Canadians. They're on Twitter. We're talking about how many millions of Twitter followers? There are multi-millions of Twitter followers of these Canadian artists. The average is 860 per each one of these enterprises, multiplied by 19,000. They will take care of reaching the communities. They will take care of singing the right songs, of going to the right shows, of connecting with Canadians. Heritage doesn't really necessarily have to focus on how we should connect. They will connect. They will find their way on YouTube. They will find their way.

[The Chair, Conservative, Gord Brown]

Thank you very much.

We're going to have to move over to Mr. Nantel and Ms. Mathyssen

for seven minutes.