Thank you very much, Mr. Chair and members of the committee, for having me here today. It's a pleasure to come to talk to you about the state of the media landscape here in Canada, with some focus on the issue of media concentration.
I have four ideas that I want to share with you.
The first is that the overall media economy has grown enormously and become structurally much more diverse with the development of fundamentally new sectors over the last 20 to 30 years. This comes with both a great deal of promise, but also with significant perils.
Second, media concentration remains astonishingly high around the world, and Canada is no exception.
Third, emergent media do not replace traditional media, but they are important and they interact with them in complex ways that we'll talk about.
Fourth, I will finish with a half a dozen proposals about what might be done.
First of all, I do research at the Canadian Media Concentration Research project, which that I direct, and I'd invite you all to take a look at the reports we put out on an annual basis for a full explanation of some of the things I'm going to discuss today. My primary interest is in doing two things. One is mapping the growth and development of the media economy in Canada over a 30-year period, and the second is mapping the developments in concentration over the same period and asking a simple question: are media becoming more or less concentrated?
I do so because, sharing with Monica and Mr. MacKay, I know the problem with data is severe in this country. We also have a lot of people with a lot of opinions and little data to act upon. I think it's important that we do good research and have a solid base of evidence on which to draw.
I think it's important to talk about how I define the media, because I do not define the media in a narrow way, in a separate, silo-segmented way; I define the media expansively to include all of its component parts. I deal with each of the component parts separately, and then I combine them in what I call the scaffolding approach so I can get a view of the whole.
When I talk about the media, I'm talking about everything from cellphones to plain old telephone service to Internet access to cable television to broadcast TV, as well as pay television, newspapers, radio, magazines, search engines, social media sites, Internet news sources, browsers, and operating systems. We need to look at the entire universe, because increasingly all these components interact with one another, and we cannot deal with them adequately separately.
What do we know? We know a couple of things. We know that media have expanded greatly over the last 30 years from about $19 billion in total value in 1984 to over $75 billion in 2014, the last year for which a full set of data is available.
Some media are growing fast; others are stagnating, others are in decline, and yet others are being remade and are recovering. The music industry is the poster child of the last type.
We've seen the rise of fundamentally new media, especially cellphone service, Internet access, Internet news, and search engines. The rapid expansion of the pay television universe is another thing to remark upon.
Revenues are up greatly for the cellphone industries, Internet access, Internet Protocol TV, Internet advertising, pay and specialty TV, and television overall.
Some areas have stayed flat. Radio and cable television, in the last couple of years, are those types. Some are in significant decline. Newspapers, magazines, and broadcast TV are those types. Music, as I said, is in recovery mode.
The growth of the network media economy since 2008 has been slow and sluggish, reflecting the overall economic conditions of our time.
I think one of the things we can take away from the general description I've just given you is that in the new media environment it's not content that is king, but connectivity that made be emperor. This is significant for policy discussions.
We live in an age of information abundance, not scarcity. There are 695 TV channels in Canada, 1,100 radio stations, and 92 paid daily newspapers. Expert blogs abound. Most Canadians have a smart phone. One hundred hours of video are uploaded to YouTube every minute. About three million Netflix subscribers were in Canada in 2014, and some estimate the number is about four million today. About 18 million are subscribers or users of Facebook.
What do people do with the media they have at their disposal?
Well, Canadians have long used a wide variety of media very extensively by international standards. That's been the case since plain old telephone service in the early 20th century, and it remains the case today with smart phones and the Internet.
As I said earlier, most growth in the media has been in connectivity, not in content. Consuming old media still occurs. People are still watching TV. People are still watching movies. People are still reading the newspapers a great deal. People are still listening to music. However, they are doing it on their smart phones, on their laptops, on their desktops, in their bedrooms with the big screen TV. They're doing it in the movie theatres and so on and so forth. What we have is the same media, but they've been detached from the traditional delivery vehicles and now are being circulated across an expanding array of delivery devices.
When we look at what people are doing, we see that youth are not so much disconnected from the news as they are connected with it in different ways, and the types of news are perhaps not the kind that senior folks like ourselves would like to see. It's more lifestyle news and personal news that they can use. There are issues there. They are also getting their news via Facebook, Twitter, Reddit, and Google. These sources bring people to the news in droves, but engagement is fleeting, shallow, and not easy to monetize.
What could possibly be wrong in this scenario? There are several things that stand out.
One, access to the Internet, to mobile phones, and to other media is far from being universal. One in five Canadians does not have a cellphone or an Internet connection from home. The connection between income and access is strong. For people in the bottom income quintile, around one-third do not have access to a cellphone, and just over half, about 56%, have access to Internet at home. If you look at the top income quintile, everybody has both. It's income inequality.
Advertising-dependent media are in big trouble right now, and this is due to a number of factors that we'll talk about. We see the closure of nine daily newspapers since 2008, and 13 free daily newspapers, and 16 newspapers have scaled back their publishing schedule. Four TV stations have closed. This is not a good-news story for the real engines of the news environment.
Third, Facebook's average revenue per user in 2014 was $28 for the entire year. A Globe and Mail subscription is a little over $500. We can see the difference here in the scale of resources. They're not bringing a very big scale.
Now, the big point that I want to make today is that concentration in Canada is very high in most media sectors, although this is not uniformly the case, and I'll point to some of those later. In many media sectors, concentration levels are very high. Across the media as a whole, concentration levels are very high, and this is high by Canadian historical standards, high by international standards, high by empirical measures that are commonly used to assess the state of competition and concentration.
Vertical integration in Canada is enormously high and unusual by world standards, and it has doubled between 2008 and 2013 and remains at that level today. The top four media conglomerates in this country combine telecommunications, a wide variety of television assets, and in some cases newspaper assets and Internet access. They are Bell, Shaw, Rogers, and Quebecor. Between these four companies they own about 60% of the overall media universe. The trend has strongly been up. We have a bigger media pie but a smaller number of players controlling a bigger stake of that media pie. By controlling both the access pipes and the content, they're fundamentally shaping the way in which the overall media universe is unfolding today.
If we look at the evidence, what we find is that we have, as I said, some areas where things are okay. What are those areas? Radio is not very concentrated at all. Magazines are not very concentrated at all. Internet news is the bright light on the horizon. The sources that Canadians go to are a wide plurality of domestic, traditional, and new and foreign websites, and the trend is towards greater diversity, not less.
Where is concentration a problem? Moderate levels of concentration exist in newspapers, and concentration has taken a very significant jump upward with the recent acquisition of the Sun papers by Postmedia. This was a very significant transaction. It bumped up levels of concentration a great deal. Television concentration levels are very high overall. Cable and satellite television concentration levels are moderately high.
In the highly concentrated area we have broadcast TV, pay TV, and to show you that the Internet is not immune from concentration issues, let me point to the following that have the highest levels of concentration across the entire media environment.