Evidence of meeting #123 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was creators.
A recording is available from Parliament.
11 a.m.
Liberal
The Chair Liberal Julie Dabrusin
Welcome, everyone.
We are beginning the 123rd meeting of the Standing Committee on Canadian Heritage.
Today, we are continuing our study on remuneration models for artists and creative industry.
For our first hour today, we have Jason Kee, from Google Canada.
Before you begin your presentation, I'd just like you to know we do have a bilingual committee, so if you need any help with working the translation system, please let us know.
Please begin your presentation.
11 a.m.
Jason Kee Counsel, Public Policy and Government Relations, YouTube, Google Canada
Thank you, Chair.
My name is Jason Kee. I'm public policy and government relations counsel at Google Canada.
We appreciate the opportunity to participate in your study of remuneration models for artists in creative industries.
As Google, our approach to remuneration and revenue is a partnership model. In this model, creators—such as publishers, artists, producers or app developers—create and supply the content while we provide distribution and monetization, including technical infrastructure, sales teams, transaction and payment systems, and business support, etc. We then share in the resulting revenue, with the majority of the revenue going to the creator every single time. Under this partnership model, we only earn revenue when our partners earn revenue, so it is in our interest to ensure that our partners are successful.
Google offers a wide variety of platforms for different types of creators. We offer publishers advertising platforms that allow them to monetize their content by hosting ads on their sites and apps, and share in that revenue.
Google Play, our online store, provides a massive global audience for developers and other content partners, with developers sharing in 70% or more of the revenue. Google Play Movies & TV offers shows or movies for rental or purchase, while Google Play Music offers unlimited ad-free access to over 40 million songs for a monthly fee, or through a more limited ad-supported tier. These are each fully licensed services that remit royalties to rights holders in accordance with licensing agreements and provide a significant source of revenue to our content partners.
Last is YouTube, Google's global online video platform. YouTube has over 1.9 billion monthly logged-in users, and over a billion hours of video are watched each and every day. At YouTube, our mission is to give everyone a voice and show them the world. This is the true power of YouTube—that with just a camera and an Internet connection, anyone of any age from any walk of life can participate, have a voice and build a global audience.
And they do. Over 400 hours of video content are uploaded to YouTube every single minute, making it one of the largest living collections of human culture ever assembled. These uploads represent virtually every imaginable type of video content, from home videos and user-generated content to high-end film and television content. Through platforms like ours, more people around the world are able to think of themselves as authors, artists and creators.
YouTube is also a “lean-in” interactive experience, where creators interact directly with a community of engaged and passionate fans who share and comment and contribute. This personal, direct connection that YouTube creators share with their fans makes them more authentic and relatable and distinguishes YouTube from other platforms.
Canada has a very large and vibrant YouTube creator community that producers high-quality and engaging content that is being enjoyed in high numbers, both domestically and globally. Canada is one of the top exporters of content on YouTube. Globally, on average, 50% of a creator's watchtime comes from outside their own country, but for Canadian creators, over 90% of watch time comes from outside of Canada. This is higher than any other country on the platform, and demonstrates that we actually produce very exportable content.
In the past year, Canadian channels have seen their watchtime grow 45%, and channels making six figures or more in revenue are up 24% over last year. Canadian success stories are numerous and many of these creators have grown sufficiently large and sophisticated to employ teams of business managers, researchers, camera operators, editors and others, effectively becoming small production studios.
Canada also has a large community of up-and-coming creators—YouTube's creative middle class—including a range of Quebec creators, who predominantly produce French-language content that performs very well in Quebec and French-language markets.
Canadian broadcasters and producers are increasingly partnering with YouTube and leveraging the platform to reach new international audiences. We partnered with the Canada Media Fund on Encore+, a YouTube channel featuring classic Canadian content that is no longer aired, such as The Littlest Hobo and Wayne and Shuster. We've provided live streaming services for major events, including the last Tragically Hip concert, The JUNO Awards,The Canadian Screen Awards, and APTN's Indigenous Day Live, among others, extending the reach of these Canadian moments. We work closely with these partners to help them maximize their opportunities on the platform.
11:10 a.m.
Liberal
The Chair Liberal Julie Dabrusin
Thank you very much.
We will now begin with our question-and-answer period.
We're beginning with Mr. Long for seven minutes, please.
11:10 a.m.
Wayne Long Saint John—Rothesay, Lib.
Thank you, Madam Chair.
Thank you, Mr. Kee, for your presentation this morning. It was very interesting.
I participated in a charity boxing match this past weekend. It's on YouTube, and I have a couple of hundred views now. I'm wondering if I'll be compensated—just joking. I won't retire on that, getting beaten in the ring.
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
I don't think you were the star of that.
11:10 a.m.
Saint John—Rothesay, Lib.
No, I wasn't, but thank you for your presentation.
We want to make sure, obviously, that young artists, up-and-coming artists, are compensated fairly. We want to create an environment in which they can continue to grow and thrive.
Organizations such as Music Canada and the Internet Creators Guild have criticized revenues returned to rights holders by YouTube for being too low. We've heard that.
What is the remuneration system for creators who share their work on your organization's platform? How are they remunerated? Can you give us a feel for that?
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
Certainly.
It is always a revenue-sharing model. Basically there is a share in revenue from a variety of sources that flows to the creator, whether it's ad-based or subscription-based. In the case of ad-supported—the usual platform is primarily ad-supported—what will happen is that an advertiser will basically advertise on the platform and the resulting revenue will be split.
11:10 a.m.
Saint John—Rothesay, Lib.
Okay.
I have a question. YouTube's returns seem much lower than other streaming services such as Spotify. Can you elaborate on that, or tell me why?
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
I don't think that is necessarily the case. One of the challenges we have is that much of this is a bit of an apples-and-oranges comparison. YouTube is primarily an online video platform, so we have a very wide range of creators on that platform who are all participating in the advertising.
When advertisers are investing in the platform, they are looking to reach different audiences in different kinds of ways, so the specifics of an individual artist's audience will actually vary the level of return they may receive. For instance, if you are creating musical content or otherwise that appeals to a very attractive audience demographic, advertisers are typically willing to invest more money in that class of advertising. If it's in a little more obscure area or you're advertising in a geographical region where the advertising rates tend to be lower—for example, in India compared to, say, the United States—that can also impact advertising revenue.
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
There's that aspect. Second, having such a diverse range of creators will impact the range of advertising that you see. Third, because the nature of the platform is different from Spotify in terms of being a “lean-in experience”, it is not intended—
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
Yes. Essentially it is a platform, the true power of which is its ability to engage directly with the audience, to actually participate with them, to build a fan base that wants to see you succeed. A “lean-back” platform would be more of a conventional broadcasting platform: you're just sitting back and listening to it.
That's why it rewards creators who invest the time and energy in the platform to cultivate that fan base and essentially build the fan base over time, not just through advertising revenue but through monetization opportunities outside the platform. This is when I talked about sponsorship deals, brand deals, etc. This is also where the features that were introduced around things like channel memberships make a big difference, because when you introduce channel memberships, you can actually monetize those super-fans and have them contribute directly to your income.
11:10 a.m.
Saint John—Rothesay, Lib.
We've heard that many YouTube creators have turned to third party fundraising sites in order to keep themselves afloat. Is that indicative? Is that a result of market failure?
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
It is more a result of a diversification of revenue streams. The online advertising market can be variable. Some creators have been extremely successful in building their entire business based on the advertising. This often happens with what we call brand-appropriate or brand-safe content. If you're creating very family-friendly content, that can be very attractive to advertising. It can be lucrative. If your primary market is one that advertisers want to reach, that can be very lucrative.
In other instances, they will want to diversify their revenue streams to supplement that advertising revenue with brand deals, sponsorship deals, crowdfunding and so on.
Again, you'll often see a fairly different revenue mix depending on the nature of the creator and how they do things. To be honest, musicians would be no strangers to this, because they are used to diversifying revenue with live events, performances, merchandise and so forth. The same basic rules apply across all classes of creators.
11:10 a.m.
Saint John—Rothesay, Lib.
How can we as a government help correct this gap—I call it a market failure— through changes to the remuneration models that exist under the Copyright Act? What can we do as a federal government?
11:10 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
Our primary approach is a partnership approach. We've been working very closely with our partners in the music industry and with the creative industries to help them unlock the value of the online platforms to increase ranges of remuneration. From a government perspective, the challenge you're going to have in that respect is to understand what policies would be most appropriate to help facilitate the partnership.
Number one, if you're asking for specific recommendations, there is actually unanimity among all players, including ourselves, with respect to reform of the Copyright Board.
As YouTube is a licensed service, as is Google Play Music—
11:15 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
—we actually rely on the Copyright Board to help set the rates when we have negotiated deals. We have a very inefficient process that can be very challenging for us. Finding ways to make that process more efficient would be very helpful.
The other challenge is actually a lack of transparency. Part of the challenge that we have is that, as I've said, YouTube pays literally billions of dollars into the music industry, but once that occurs, it vanishes into a fairly opaque web of licensing agreements that is not visible to us, and all the artists know is that they're only receiving a fraction of what was paid in.
11:15 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
Finding ways to increase transparency across the entire supply chain, I think, would also be very helpful to artists.
11:15 a.m.
Saint John—Rothesay, Lib.
Really quickly, we heard earlier last week the from the Screen Composers Guild of Canada. They proposed a levy on data usage of 15 gigabytes per month as a way to compensate artists, as a model. Can you give me your thoughts on that?
11:15 a.m.
Counsel, Public Policy and Government Relations, YouTube, Google Canada
It's not dissimilar to the private copying levy that was originally proposed. It's a manifestation of that. I think it would probably present a challenge, primarily because it would increase the cost to consumers with respect to their monthly subscriptions. That probably would not be well received.
11:15 a.m.
Liberal