Canadian Heritage Committee on Nov. 15th, 2016

[Pierre Martineau]

Yes, it certainly is.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

That is a concern. Clearly, that must be the bottom line. If there is no money to be made, there is no journalistic content, no local coverage and no reporters are paid.

That’s all I have for you, Mr. Martineau.

Mr. Gruzuk, what is your business model? How do you manage to pay your reporters at VICE?

[Michael Gruzuk]

We're fortunate that we have a series of different revenue streams, including joint ventures, several different partnerships, and currently we have tremendous investment as we grow. Revenues coming from advertising streams are just one of the ways that we move forward.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Are you beneficial now or are you still pumping money in?

[Michael Gruzuk]

I can follow up with a detailed answer on where we're at with that—

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

That would be much appreciated.

[Michael Gruzuk]

—but we are in growth mode and remain a privately held company.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

We keep talking about the players who are changing the game, but very often they actually are pumping money into the machine for themselves and potentially making profit. Perhaps you could provide us with numbers on how it is possible for you to operate, because you're very often referred to as one of the great references, the new model. It's true that you are everywhere. On the other hand...and I'll refer back to your speech when I speak to Mr. Dumas.

Mr. Crawley, I have one question. I don't want to sound too chauvinistic about it, but the model of La Presse+ on the iPad seems to be working. They seem to make money. It seems to be viable. Is it something you may consider?

[Phillip Crawley]

We looked at that model very closely. There are some big differences between our model and their model. They don't charge for content. Their sole source of revenue, effectively, is advertising, and I don't like that. If you look around the world, the newspapers that are doing well, such as the Financial Times, The New York Times, and The Wall Street Journal, have a strong subscription base. For me, it was not an option to go to a model of giving away content, whether it's on a tablet or wherever.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Okay. That's interesting. I'll just make the comment that these are big brand names. The New York Times sells worldwide. That may be one of the differences.

[Phillip Crawley]

Sure. Yes.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Referring back to Mr. Gruzuk's words, he was saying that he was bringing VICE teams to small regions, bringing their stories to the world.

It is just as you said, Mr. Dumas. Actually, that is how the national media treat the region. They will cover a regional event if it is of interest for the major regions. In this sense, that's fine. For example, when I am listening to Salut Bonjour in the morning and I find out that such and such an event happened in Chicoutimi or Gaspé, it's fine.

However, the question is about local news for local people. When VICE does it, it is fine. It gives exposure to the regional reality. That is very important, but there is no local news, communication no longer takes place on the steps of the church. Have you noticed that?

[Jean-François Dumas]

The representation and the uniqueness of the regions are being weakened. If you exist to a decreasing extent in the media landscape, you sink into indifference. Unfortunately, that is what we see a lot: a number of regions are suffering from media indifference. No one talks about them, as if nothing major, nothing important, nothing of concern is happening in the regions.

That is also reflected in social media. People using them do not discuss regional issues. They are not discussed in the media either. We have even noticed that the political class can take it or leave it, since the media take no interest in regional uniqueness.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Exactly.

You mentioned a number of really revealing statistics. Could you give them to us again and, if possible, send them to us in writing?

Along somewhat the same lines, if we were talking about Canadian cultural content in our media, we would be pleased if the Observatoire de la culture et des communications du Québec, for example, could provide us with a simple statement to explain that average customers do not want to buy culture today, but they do want to have access to culture, with nothing more to pay after buying a huge TV with lots of wires at the back.

Could you repeat those figures of yours?

[The Chair, Liberal, Hedy Fry]

You have one minute.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Already? Okay.

Could you send us all those figures?

[Jean-François Dumas]

Certainly.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Let me ask you another question.

We have been talking about all this for several weeks, and there is an idea floating around in the room that the market may be overvalued. It seems that those who buy advertising for agencies and for customers are overvaluing the market, the social network, the content aggregators, and the Internet. Are you able to help us see that clearly?

I can well believe that there is less advertising, as Mr. Crawley said. However, if a full-page ad for a new Lexus appeared in The Globe and Mail, it could well influence me.

Could this be an area that is not measured as much? Could it be that we are paying too much attention to the novelty?

[Jean-François Dumas]

Unfortunately, my answer to that question is going to disappoint you. We do not analyze data about the advertising market. We focus solely on media content.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Okay.

Thank you.

[The Chair, Liberal, Hedy Fry]

Mr. Erskine-Smith, please begin, and then I'll go go Mr. Breton. You are sharing your seven minutes, so please allow the other person to have some time.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

I'll time it. Thanks very much.

Mr. Crawley, you mentioned the decline in print ad revenue. Perhaps you could speak to the increase in digital ad revenue, what the percentages look like between subscription fees, print revenue, and digital revenue, and the growth of digital revenue. Could you then speak to where your profits come from and support from digital revenue?

[Phillip Crawley]

In terms of the global trends, wherever you look in major markets, the forecasts for 2017 are for continued very rapid growth in digital ad spend, driven by mobile. Consumption on desktop is declining, and the preference to read on smaller devices is growing fast, which is a challenge for monetization. The media has found that it's harder to monetize mobile than it is to monetize the bigger screen.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Mr. Gruzuk, do you find the same thing? Would that be an accurate statement for VICE as well?

[Michael Gruzuk]

Yes, I would echo that. It's a challenge for everybody right now. We're seeing tremendous growth. We've mentioned YouTube, Facebook, Twitter. Migrating the audiences out of those spaces so that we can derive the advertising revenue on our native sites is certainly a challenge that I think we all share.