Canadian Heritage Committee on May 24th, 2022

[Kevin Waugh]

Good on you.

I think my six minutes are up.

Thank you very much, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Thank you, Kevin.

We're going to go to the Liberals, Lisa Hepfner, for six minutes.

Ms. Hepfner.

[Lisa Hepfner, Hamilton Mountain, Lib.]

Thank you very much, Madam Chair, and through you I would like to start off my questions with Troy Reeb, who was a colleague of mine many years ago through Global News.

Mr. Reeb, I know you have been through the trenches over many decades in journalism on the front lines, and I know you touched on this a little bit in your opening statement. I'm wondering if you can talk a bit more in detail about the decline we have seen in journalism and the ability to produce local journalism over the past 20 years, not even just since the pandemic but with the rise in technology.

[Troy Reeb]

Thank you.

I will just acknowledge off the bat, in response to MP Waugh's statement, that we have 36 employees at Global Saskatoon who work to produce more than 25 hours of local news every week, and in fact contribute to a 24-7 streaming local news channel, which we have innovated in that marketplace in order to provide news not just on the regulated platform of television but also in the digital space around the clock.

Those have been the kinds of innovative challenges we've had over the last little while as we have tried to reposition this industry for the future. We need to be on new platforms whereby we can reach audiences in all places, but at the same time we have to fulfill the requirements of the outdated broadcasting rules. Our capacity to do that kind of local-service programming, whether in Saskatoon or Regina or Montreal or New Brunswick, is hindered by the fact that we have many other encumbrances put onto the business in the forms of the other kinds of programming we are required to produce and essentially the taxes that are put onto our business. This is at the same time that foreign competitors come into the marketplace and don't operate under any of the same rules.

Mr. Menzies, in his opening statement, referenced the significant growth in the production sector in Canada, and that is true if he cites aggregate economic data from the CMPA. If he looks at what's happened to broadcasting on the other hand, he will see absolutely the opposite story. The CRTC's own aggregate data showed that the vast majority of local over-the-air television stations in Canada now lose money.

Mr. Menzies was a newspaper publisher prior to his tenure as a CRTC commissioner, and we have seen the hollowing out of the newspaper business in this country with the closure of many local papers because of the loss of local advertising dollars that used to support that business. Those dollars have all migrated to Google and Facebook. Now we are seeing the same thing happening in the broadcasting space, as audiences and dollars migrate to platforms like Netflix, Disney+ and Amazon.

While, yes, there is an increase in contract production, with U.S. studios making U.S. content in Canada, we are seeing a decline in Canadian content and especially local content, which is the tip of the spear in terms of this loss. As I said, we've already seen a hollowing out of local journalism at the newspaper level, and that is now starting to have an impact across the broadcast platforms as well.

[Lisa Hepfner]

Thank you, Mr. Reeb.

Following up on that, what do you say to the assertion we heard earlier in this panel that this bill just doesn't understand the online world?

[Troy Reeb]

I think there are a lot of concerns about its impacts on user-generated content. I think those are valid concerns. Mr. Geist has made them. Ms. Fortier has voiced those concerns.

We are not in favour of the regulation of user-generated content. In fact, as a company, we've invested in a user-generated content network called Kin Community, which helps connect Canadian creators who work across social media platforms, YouTube, etc. with advertisers to be able to monetize their work to global audiences.

We're very supportive of that kind of innovation and that kind of business and we don't want to see further regulation of user-generated content.

The challenge, of course, is that there are very blurry lines in terms of when something crosses into the professional network world. We've had 30 years since the last time the Broadcast Act was updated, and legislative change in this country is clearly very hard. I'm not saying that we need to just turn over blanket powers to the CRTC to be able to regulate as it pleases, but the CRTC already does have thresholds in its licensing process. If you have a certain number of subscribers or a certain amount of revenue, then you're subjected to a higher licensing threshold by the CRTC in the traditional space. We would encourage the discussion of those kinds—

[Lisa Hepfner]

Just let me ask you this quickly before we run out of time. Do we still have a need for traditional journalism? Is it outdated? Is there still a demand? Should we be supporting it?

[Troy Reeb]

I think the answer to that is absolutely yes. In a time when we have seen increased division, we have all seen the damaging impacts of social media commentary and fake news, so the importance of traditional, professionally reported journalism that brings people together in a town square to try to hear each other out, to actually listen to opinions that they may not share and to try to understand what other Canadians think could never be more important. It is important to our democracy and it's important to social cohesion, and it's something that only Canadian companies can provide. We do not want companies based in Silicon Valley or in Hollywood dictating our local news in this country.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Reeb.

Your time is up, Ms. Hepfner.

Mr. Reeb, if I may be so bold as to comment, you have a fantastic broadcasting voice. Of course, our colleague Kevin Waugh has as well. I'm just making note of these things. Thank you.

Next up is Martin Champoux for the Bloc Québécois.

Mr. Champoux, you have six minutes, please.

[Martin Champoux, Bloc, Drummond, QC]

Thank you, Madam Chair.

The other members of the committee now feel a need to articulate clearly and to use their best voice.

Thanks to all the witnesses for being with us today.

I will turn immediately to Mr. Payette from APEM.

Mr. Payette, I'm pleased to see you again. You heard the remarks of the other witnesses earlier, particularly those of Ms. Fortier.

What's your reaction to Ms. Fortier's remarks?

[Jérôme Payette]

Thank you, Mr. Champoux. You have a pretty good voice too.

If I may, I'll begin by clarifying what Bill C‑11 says about social media broadcasting activities.

Clause 4 concerns the content uploaded by users, not generated by them. The process of uploading content tells us very little about the nature of that content or the relevance of regulating it. Users may be uploading professional music.

I'd also like to note that undertakings are regulated, not individuals. Those undertakings are regulated for the streaming of commercial content only. Non-commercial content is exempt from Bill C‑11.

Clause 4 isn't the only aspect of the bill that must be examined. We also have to look at the Broadcasting Act as a whole. Many fears have been expressed. Freedom of expression is protected under section 2 of the Broadcasting Act. Sections 5 and 9 provide that the CRTC must take into consideration the impact of creation and production on the Canadian industry and avoid imposing obligations on undertakings that are not conducive to the achievement of the objectives of Canadian broadcasting policy.

There is a risk that amending clause 4 of the act would create a loophole. If the activities of certain undertakings are exempt from the act, the impact will be felt by all undertakings in the sector because they compete with each other. If the act is drafted too specifically, it will limit the flexibility of the CRTC, which needs to adjust to quick changes in the sector.

The act will be in force for years, perhaps decades. If we limit or freeze the CRTC's power, the situation will be rendered obsolete.

To answer your question regarding Ms. Fortier's remarks, I think people occasionally confuse the act with regulations. Today we're talking about the act. If we drain Bill C‑11 of its substance and limit the CRTC's powers, that will allow undertakings to avoid appearing before the CRTC, transmitting information and conducting themselves in a transparent manner. The CRTC must be given the means to do its job. We have far more confidence in our institutions than in the platforms, which operate with a total lack of transparency.

The Broadcasting Act, is an enabling statute. The CRTC must be granted the powers it needs to conduct its study. Then comes the regulatory phase, which must be conducted together with experts based on accurate numbers, not anecdotal evidence. That will all take place in the context of CRTC hearings. In that way, all parties can express their views.

I could say more about that…

[Martin Champoux, Bloc, Drummond, QC]

I'd nevertheless like to give Ms. Fortier a chance to state her point of view on this. It wouldn't be fair if I didn't.

Ms. Fortier, what are your impressions on what Mr. Payette just said?

[Morghan Fortier]

I think part of the issue is that we aren't actually looking at real numbers and real situations. I don't believe there has been a very clear, honest audit of what the digital landscape looks like today. I think there's a lot of conjecture. I think there's a lot of speculation. I will definitely be the first to openly admit that this is not an easy sector of the industry to be working in. Digital distribution, self-distribution, is not for everybody.

I certainly don't have issue with regulation. If I were presented with a piece of legislation that had a clear and concise goal of what it wanted to accomplish, how it would go about it and how it would impact digital content creators, in this example, I would be more than happy to look at it.

The problem is that Bill C-11 is so broad and so contradictory within itself, with no clear definitions and no clear terms, especially when it comes to, as an example, what's commercial and what's non-commercial.

Right now, UGC is lumped together as one big solid whole. It would include small businesses like mine, and it would include my mom, who is uploading videos of our family vacations to the platform. It does not clearly indicate what “commercial” would be. It often doesn't indicate that there's an understanding of the sheer volume of small businesses that run in the sector and the success of content, and it forgets, or misunderstands potentially, that these platforms really only exist based on the success of content creators on these platforms. If people weren't finding success and weren't finding an audience, they would leave those platforms.

As I mentioned before—not to sound like a broken record—the platforms work for us, not the other way around. If people aren't finding an audience or that community to reach out to and to build, it doesn't win for anybody on a global perspective, even on a regional perspective.

[Martin Champoux, Bloc, Drummond, QC]

Mr. Payette, do you think the proposed amendments concerning the YouTube and TikTok platforms, for example, are ways to evade the act?

[Jérôme Payette]

I definitely think so.

From a legal standpoint, that will enable undertakings to avoid appearing before the CRTC in any way or gathering information…

[The Chair, Liberal, Hedy Fry]

You have three seconds.

I'm sorry, Mr. Payette. Perhaps in the next round you can elaborate on your statement. Thank you very much.

We're going to the New Democratic Party and Peter Julian.

Peter, you have six minutes.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much, Madam Chair.

Thanks to all the witnesses for being with us today. Their testimony is extremely important. As the COVID‑19 pandemic is still under way, I hope all the members of their families are healthy and safe.

Mr. Payette, you said your industry is losing revenue. If the bill isn't passed and we do absolutely nothing, what impact will that have on the revenue losses of the people in the industry?

[Jérôme Payette]

Thank you for that question.

Our sector would become virtually non-existent in the public's view. It would become a kind of museum exhibit. Without public funding, it could lose the ability to generate revenue.

The main challenge is really to reach the audience. To do that, you must not deregulate the traditional sector but have it contribute to online undertakings. In the online sector, the challenge is to stand out. There are several tens of millions of songs on online music services.

Currently, it's the platforms that choose winners and losers by recommending music to Canadians every day. They do so in many ways. There are editorial playlists, algorithmic playlists and "algotorial" playlists, a portmanteau word formed from the words "algorithmic" and "editorial".

Recommendation tools have a major impact on what people listen to. According to YouTube, the leading online music service in Canada, 70% to 90% of listening time is determined by these recommendation tools. That's enormous. The problem is that the recommendation tools are neutral and deeply biased.

I will now quote the authors of the article “Music Streaming: Is It a Level Playing Field?”, published in Competition Policy International: “Music that doesn’t fit easily within an established genre, or which is not in the English language, is also likely to be competitively disadvantaged.”

I'll quote the University of Toronto's Schwartz Reisman Institute for Technology and Society, in the article “Artificial Intelligence, Music Recommendation, and the Curation of Culture”.

...the effect of the extreme centralization of the global platforms is that it may become harder for local musicians to have their music heard even in their own communities. Recommendation systems therefore have the potential to act as a neocolonialist force in music, trained on data in which dominant user demographics are over-represented, and using the tastes and preferences embedded in this data to guide the music consumption of other musical cultures.

What we're witnessing is cultural standardization, the unregulated wild west. The platforms choose winners based solely on their interests without any consideration for the local culture, be it anglophone, francophone or whatever.

To answer your question more directly, if no regulatory action is taken, people will virtually stop listening to us. Our sector will be unable to generate revenue because cultural standardization has an impact on the entire chain.

The numbers I cited are disastrous, and the CRTC urgently needs to be given the means it requires to do its job.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

You were just talking about algorithms. They're definitely one way the Web giants use to choose what's offered and what people can discover.

How is this a problem if these major undertakings are the ones that decide what people can see and listen to based on non-transparent algorithms? Is that a valid criticism? It's often the undertakings that decide, not individuals.

[Jérôme Payette]

The problem isn't the algorithms as such, because technology is good. It's the way they're being used because undertakings are allowed to operate based solely on financial considerations. We aren't interested in the details about algorithms.

The fact is that the francophone music sector, which represents 8 million persons, isn't a profitable enough market for the undertakings to cater to it. Consequently, we need acts and regulations. This isn't new; it's always been this way. Our sector has always been a small market, hence the importance of statutes that give the CRTC the power to regulate undertakings.

We need to add the cultural aspect to the factors that should be considered, and I think that's what Bill C‑11 will do.

[Peter Julian, NDP, New Westminster—Burnaby, BC]

Thank you very much.

Mr. Reeb, I'd like to come back to you. You've talked about a level playing field and the importance of passing Bill C-11 without delay. Can you tell us more about how Bill C-11, in your opinion, would set and put in place a level playing field?

[Troy Reeb]

I'll bring it back to the comment earlier from Mr. Waugh about employment levels in Saskatoon at Global Saskatoon or CTV Saskatoon. I will be the first to acknowledge, because Mr. Waugh and I actually worked across the street from each other in Saskatoon many years ago, that employment levels have declined in almost all Canadian local television stations. If you pick the Saskatoon example, there was a time when CTV and Global in Saskatoon had most of the market to themselves. They would have been able to make profits on their entertainment programming through prime time, which would have been used to cross-subsidize the losses they had to take in local news. To be really clear, every single medium- to small-market television station in this country loses money in local news.

Nowadays, the largest television network in Saskatoon in prime time is Netflix. We may only have 36 employees in Saskatoon, but Netflix has zero, Apple has zero and Google has zero. That is the question we need to be asking, not trying to continue to hold Canadian companies and broadcasters to one standard while applying none of the same standards, none of the same regulations and none of the same obligations to foreign competitors.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Reeb.

Your time is up, Peter.

We're now going to the second round, which is a five-minute round.

I will begin with Mrs. Wagantall for five minutes.

[Cathay Wagantall, Yorkton—Melville, CPC]

Thank you so much, Madam Chair.

Thank you to the witnesses for the testimony you've brought this morning.

I have a question for you, Dr. Geist. You have criticized the Liberal government's defence of Bill C-11 for being “misleading”. Could you expand on that, please?

[Dr. Michael Geist]

Thank you for the question.

I guess I would start by noting that we've had the government claim, as I mentioned in my opening remarks, that user-generated content, user content, was out of the bill, and we've had the CRTC chair say otherwise. Even now, on this panel, we've had Mr. Reeb and others say that's not their intent or what they would like to see included in the legislation. I must admit that I struggle to quite understand why it remains there when it seems that so many are against it.

As part of the discussions we've had today, I'm struggling to even identify the bill a little bit here. I'm not sure if we're in a Bill C-18 hearing on local media, because this bill doesn't really address core local media issues. It's more about film production and music.

I'm not sure if we're talking about the Copyright Act, because we're hearing claims that there's not enough there on the music side, even though SOCAN has seen record amounts of revenue being generated from Internet-based streaming services. In fact, they attributed all their growth this past year to Internet-based streaming services.

If we're talking about specifically this bill, then we have these dual conversations on the one hand, where there seems to be a general consensus that it's not appropriate to be regulating user content and we ought to be fixing that and have a discussion—a more appropriate discussion, it seems to me—around the impact of streaming services, and how we ensure the legislation is sufficiently targeted to ensure there is an appropriate contribution as part of that system. Some of that gets lost because of the details, and if we're not going to update legislation for decades at a time, we have to get those details right.