Canadian Heritage Committee on May 24th, 2022

[The Chair, Liberal, Hedy Fry]

I call this meeting to order.

Welcome, everyone, to meeting number 23 of the House of Commons Standing Committee on Canadian Heritage.

I want to acknowledge that this meeting is taking place on the unceded traditional territory of the Algonquin Anishinabe people.

Pursuant to the order of reference of Thursday, May 12, 2022, the committee is meeting on the study of Bill C-11, an act to amend the Broadcasting Act and to make related and consequential amendments to other acts.

Today's meeting is taking place in a hybrid format. I want to make a few comments for the benefit of the witnesses and members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon at the bottom of your screen, or wherever it may be on your screen, and you can actually get English or French. I will remind you that all comments should be addressed through the chair.

I have a comment for the clerk. I am unable to see all the members of the committee and the witnesses on this format that we now have. I see a big empty room and then just six people in one corner of my screen. It would be difficult for me to see people's hands going up if I don't get to see everyone on the screen. I just wanted to point that out.

[The Clerk of the Committee, Ms. Aimée Belmore]

Dr. Fry, would you want to suspend the meeting for a moment and an IT person will call you for gallery view?

[The Chair, Liberal, Hedy Fry]

I think I have gallery view. I always go on gallery view. I will try again.

Thank you very much. I can see everyone now, including Kevin Waugh looking very studious at the bottom of the screen there.

Good morning, everyone. We're ready to begin.

As witnesses, your organization has five minutes. I will time you and I will give you a one-minute warning so that we can begin and you can know when you can cut off. If you don't get to make all your statements, you will be able to do so in the Q and A section later on. I just want you to try to stick to the times.

Here we go. The first witness is Peter Menzies, as an individual.

Peter, go ahead for five minutes.

[Peter Menzies, As an Individual]

Thank you.

I'd like to thank the committee for the opportunity to appear from here in Treaty 4 territory.

I'd like to state for the record that I am not employed by nor am I on contract to any company or person asking me to advance the perspective I will share with you today.

I spent almost 10 years as a CRTC commissioner, initially as a part-timer, then as regional commissioner for Alberta and the Northwest Territories and finally, for four years, as vice-chair of telecommunications. I served on dozens of public panels and was involved in thousands of decisions. I met with and heard the views of people involved in Canada's creative sector and became familiar with their structures, their needs and the world that the CRTC created for them.

The Canadian film and television industry has just enjoyed a decade of remarkable prosperity. According to the Canadian Media Producers Association, it was a $5.8-billion industry in 2012. That was a year in which many groups within the industry were lobbying for the CRTC to take action for fear of the negative impact that they were convinced Netflix would have. This was similar to the arguments made in previous years: essentially, that the development of streaming on the Internet would devastate Canada's creative sector and that change was bad.

However, that is not what happened. By the last pre-COVID year, 2019, also according to the CMPA, the industry grew to become a $9.5-billion industry. That's 80% growth, and it didn't happen because of something the CRTC did. It happened because the CRTC paid attention to the evidence, and the evidence indicated that the creative film and television industry was prospering like it never had before. More people than ever were finding work in that sector.

There was little evidence to suggest that the industry would be better off if the CRTC tried to imprison the 21st century within a 20th century structure called the Broadcasting Act. In fact, some of us felt it was important that we make it clear that unless there was evidence of economic decline, we had no intention of intervening. The objectives of the Broadcasting Act were being met, and it was clear that at a time of dynamic and significant disruption innovation would be required. Any hint of initiating a lengthy regulatory process with uncertain outcomes was only going to create uncertainty, and uncertainty suppresses investment. When investment is suppressed, innovation stops, and Canada's creative sector suffers.

These are the likely unintended consequences of Bill C-11, which has left far too many definitions and determinations up to a CRTC that is not designed to make them. It is unfortunate that the government hasn't taken the opportunity suggested by the Broadcasting and Telecommunications Legislative Review Panel to create an entirely new Canadian communications act.

If that had been done and the CRTC had been replaced with a new governing body built around the Internet and the issues of primary interest to Canadians—access, affordability and the freedom to watch what they want, when they want it, and how they want it—Canada would have been much better prepared to flourish creatively in the 21st century, but there's nothing to be done about that now, so I'm here today to focus on one suggestion, made recently in a Globe and Mail op-ed co-authored by me and former CRTC chair Konrad von Finckenstein.

A lot of risk to investment and innovation can be mitigated and a lot of uncertainty can be avoided if you were to just make it clear in the legislation that it applies only to streaming companies with annual Canadian revenues of $150 million or more. The CRTC could then debate with them whether they are reinvesting in Canada and its cultural and industrial goals in an appropriate fashion. In other words, if the government's goal is to, as was initially described, “get money from web giants”, then go get the money from web giants and make it clear that everything else will be left alone to continue the innovation and investment that have defined Canada's creative sector in the past decade.

Thank you very much.

[The Chair, Liberal, Hedy Fry]

Thank you.

My goodness, that was excellent timing, Mr. Menzies. Thank you very much.

Now we're going to go to the second group, and that's Corus Entertainment Inc., with Troy Reeb, executive vice-president of broadcast networks.

Mr. Reeb, you have five minutes.

[Troy Reeb, Executive Vice-President, Broadcast Networks, Corus Entertainment Inc.]

Thank you, Dr. Fry, and good morning, committee members.

My name is Troy Reeb, and I am with Corus Entertainment. On behalf of our more than 3,000 employees across Canada, I want to thank you for inviting us to discuss Bill C-11, which we urge Parliament to pass without delay.

Corus is proud to be Canada's leading independent media and content company. We have subsidiaries such as the renowned animation studio Nelvana, our children's book publisher Kids Can Press, and Corus Studios, which is a leading producer of lifestyle and documentary programs.

Toon Boom, our Montreal division, creates software for international studios.

All told, our Canadian content is exported to 160 countries worldwide, but our bread and butter remains broadcasting in Canada. We operate 15 local Global Television stations, 39 radio stations and 33 speciality channels, such as Treehouse, Séries Plus and Food Network Canada. We're the proud home of Global News, one of Canada's largest journalism organizations, which supports communities across Canada. To emphasize, Corus is a pure-play media business. We have no cable and no telecom assets to subsidize us.

Canadian broadcasting policy is primarily cultural policy. It uses regulations and licences to promote cultural objectives such as representation, creative expression, national identity and connectedness. Canadians care a lot about these issues and hold a wide range of views on them, but I hope there's one thing we can all agree on: Successful Canadian broadcasting policy depends on successful Canadian broadcasters. One simply cannot exist without the other.

Corus and other Canadian broadcasters continue to embrace our responsibilities in the system, but we can no longer support the onerous regulatory framework of the past entirely on our own, with no similar obligations on foreign players that don't just operate in our marketplace but now threaten to dominate it. The status quo is unsustainable.

For example, Corus is extremely proud to be a local news provider. We're uniquely able to provide this vital cultural contribution through local stations that foreign streamers cannot and will never replicate. However, local news is a challenging business. Traditionally, we've offset our losses in local news through more profitable entertainment programming, but our ability to do this is fading fast. To be clear, news is Canadian content and journalists are Canadian creators who actually live in Canadian communities; they don't just visit for the duration of a production cycle.

Corus has received international awards for innovation for developing new models to sustain local journalism long into the future, but even the best people and ideas cannot overcome badly outdated regulation. Today, broadcasting regulations dictate how much we must spend on certain kinds of shows, when our shows can air, the types of songs we have to play on our radio stations and the number of commercials we can broadcast per hour. Our mandatory spending levels on Canadian content have hardly changed, despite decades passing since the World Wide Web first became a thing.

Most of the rules we operate under were designed for an industry that simply no longer exists, one where radio and TV stations enjoyed privileged access to Canadian audiences. Today, among the largest TV networks in Canada are foreign digital companies with no cultural policy obligations, and the largest sellers of local advertising in Canada are, again, foreign digital players that have no requirements for local programming.

I repeat: the status quo is unsustainable.

We support Bill C-11 because it gets the biggest thing right: It would finally bring the foreign digital broadcasters that operate in Canada into the regulatory framework. We can achieve no other meaningful broadcasting policy reforms until this gets done. After more than a decade of unregulated foreign competition and six years of rolling consultations, it is long past time to update this 30-year-old law.

To be sure, Bill C-11 is not perfect, and we will recommend a few amendments in our written brief. For example, there's no reason Canadian media companies should have to pay millions in part II licence fees when foreign competitors will not, and there's no reason that Canadian media companies should be left with higher obligations than our foreign competitors. All we ask for is a level playing field with modern regulations for all.

Some will argue here today that this bill is unnecessary. They claim that all is well with Canadian broadcasting, that foreign digital media companies operate in a different market because they live online. Believe me, I wish that were true, but it simply is not. Here is our reality: Facebook and Google compete with us for advertising; Netflix and Amazon compete with us for audiences; and the same U.S. studios that used to license us content for Canadian televisions now take it directly to Canadians themselves, causing programming costs to skyrocket.

[The Chair, Liberal, Hedy Fry]

You have 30 seconds, Mr. Reeb.

[Troy Reeb]

Thank you, Dr. Fry.

This bill is not about Internet freedom and it's not about cat videos. It is about modernizing broadcasting policy for the 21st century. It's about preserving a Canadian broadcasting sector that can support cultural policy as it always has.

The status quo is unsustainable. Let's get this done.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

Now I'll go to OUTtv.

Brad Danks, go ahead for five minutes, please.

[Brad Danks, Chief Executive Officer, OUTtv Network Inc.]

Good morning, Madam Chair and members of the committee. Thank you for letting me appear today.

My name is Brad Danks. I'm CEO of OUTtv Network, which is both a regulated linear TV channel in Canada and an online streaming platform in Canada and around the world. By way of background, I worked in the entertainment industry in Canada for more than 25 years, first as an entertainment lawyer and later as a broadcasting executive. As an executive, I've negotiated many online streaming deals in Canada and around the world, including with Amazon, Apple and Roku.

To begin, let's be clear about what's happening in the television industry. Over the past decade, the industry has been steadily moving from delivery by Canadian-owned cable and satellite to delivery by foreign-owned online streaming platforms. The movement has accelerated over the past two and a half years, with the launch of studio platforms such as Disney+ and channel aggregators such as Amazon and Apple TV+.

It appears inevitable that over the next decade, or sooner, the foreign online streaming platforms will deliver 100% of Canadian media services. This is both a threat and an opportunity for the Canadian industry. The threat is obvious. For the first time in our history, our media services will be distributed in Canada by foreign-owned companies, which may not always have our national interests at heart. These online distributors also create an opportunity for Canadian media services to compete directly in international online markets. Global content markets are huge and can support a wide variety of media offerings of different scale and type. OUTtv and many Canadian services are taking up this challenge.

However, to meet these challenges, it is critical that Canadian services gain access to the online streaming platforms in Canada. This is why we need Bill C-11. We need to ensure that the Broadcasting Act requires online platforms to grant access to Canadian media services. Once given access, Canadian services must be able to compete for audience share on these platforms on an equitable basis and receive fair compensation.

The core concept is that Canadian services must always be able to access our domestic market. The CRTC must have the authority to make sure that this happens. Experience has taught us that distribution platforms—and this includes our own large Canadian distribution platforms—cannot be counted on to deliver and support a wide range of Canadian-owned services and diverse programming without effective regulatory oversight and rules. Over the past decade, we've learned the hard way in Canadian broadcasting about the difficulties and inequities that can happen when distributors show preference to their own content on their platforms. The CRTC is aware and well equipped to regulate these platforms, but only if it has the tools and the power it needs.

We have suggested critical amendments to ensure that Bill C-11 gives the CRTC the authority it will need in the years ahead in dealing with online distributors. First, the CRTC must have the ability to set terms and conditions for the distribution of Canadian services on online distribution platforms. This is a critical backstop power that any domestic regulator must retain to ensure that dominant global platforms serve domestic markets. Second, the CRTC must be able to create rules that will govern distribution so that it can regulate in a flexible way that adapts to how distribution platforms develop in the future. Third, the CRTC must have the ability to resolve disputes and issue orders regarding online distribution of media services. Otherwise, its authority as a regulator will be illusory. The CRTC is developing increasingly effective tools to resolve disputes and will be able to apply these tools to the online world.

Regarding the form of these amendments, OUTtv supports the IBG submission to the committee.

It is important that this legislation happen now. Global markets are in a period of transition, and the rules are being written now across the world. Competition is currently fuelling opportunity, but the market is maturing quickly. There is a real fear that much of our industry will miss the transition window. It is therefore critical that Bill C-11 be passed as soon as possible.

Thank you for letting me appear today. I'm always available for questions.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Danks. You have a full minute that you did not use up. I appreciate that. Thank you very much.

I now go to the next witness, and that is Jérôme Payette, executive director of the Professional Music Publishers' Association.

Monsieur Payette, you have five minutes, please.

[Jérôme Payette, Executive Director, Professional Music Publishers' Association]

Good morning, everyone.

Madam Chair, thank you for inviting me to appear before the committee.

I am very pleased to represent the francophone music sector, which at times is overlooked in discussions concerning the Broadcasting Act.

The Association des professionnels de l'édition musicale, or APEM, represents the Quebec and francophone music publishers of Canada. Music publishers, partnering with author-composers, support the creation of musical works and promote and administer them. Music is published wherever there are music, online and concert music services and audiovisual productions.

The music sector needs the continuity that the Canadian broadcasting system affords.

There is much talk of the potential negative effects of the bill and the potentially twisted way in which the Canadian Radio-television and Telecommunications Commission, the CRTC, may interpret it. The CRTC currently has more power than what it would be granted under Bill C‑11, and the work it has done over the past 50 years hasn't troubled a single citizen. CRTC regulations are of critical importance to the francophone music sector.

I will therefore begin by discussing the very real effects of the lack of a regulatory framework that applies to online undertakings. It's quite simple: the further the online transition progresses, the more the Canadian music sector shrinks and strains to reach its audience.

The revenues that the Society of Composers, Authors and Music Publishers of Canada, or SOCAN, has paid to Quebec music publishers have fallen by 24% since 2016. Revenues from conventional sources such as radio and television are declining, and we have been unable to obtain a substantial share of revenues from online undertaking, which are growing.

According to SOCAN, the royalties distributed to Canadian authors and composers from digital distributors are 69% lower than those from traditional broadcasters. Only 10% of royalties from digital media are distributed to SOCAN members compared to 34% for conventional media.

Growth in the online music sector mainly benefits the platforms and a very limited number of international artists. It has not helped local music or niche music artists, minority artists or those who speak languages other than English.

Quebec music struggles to reach its audience online. According to statistics obtained by the Association québécoise de l'industrie du disque, du spectacle et de la vidéo, or ADISQ, our market share in Quebec is only 8% for online music services compared to 50% for record sales. Our francophone music is in even greater trouble as it represents only 6% of total streams. The situation is dire.

In the music business, if no one listens, you don't get paid. If your music doesn't reach an audience, that has a spillover effect that affects concert ticket sales, the uptake of songs by performers, the incorporation of music in audiovisual productions and the entire value chain. Apart from financial aspects, this concerns our culture. Our cultural sovereignty is in question.

Online undertaking have no financial interest in promoting, recommending or supporting a diversity of cultural expression. For them, cultural standardization is less complex and more profitable.

This is nothing new. We have been protecting our diversity of cultural expression with statutes and regulations for decades, and we must continue to do the same. The CRTC's regulation operates in the traditional environment, and it is high time it was adapted to the digital environment.

Bill C‑11 is a good piece of legislation and should be promptly adopted.

The web giants and opponents of the Broadcasting Act are exercising enormous pressure to create flaws in the bill. We must not yield to the platforms' lobbyists, who use misinformation and try to mislead.

The portions of Bill C‑11 concerning social media broadcasting activities should not be amended further. As you know, the text of Bill C‑10 was adopted by the House of Commons, but contained no social media exception in clause 4. The criticisms were heard and Bill C‑11 featured the return of that exception, but in a way that remains acceptable to us.

Any further change to the text of clause 4 could create a loophole for social media that will be felt by all broadcasting undertakings. It must be understood that TikTok competes with YouTube, which competes with Spotify, which competes with radio. The act must apply fairly to all undertakings or else it may be obsolete as soon as it is passed.

Some say the text lacks clarity, but the bill's opponents are focusing their attention on a single pixel to distract us from the big picture. The text of the bill is not limited to clause 4. The Broadcasting Act sets forth clear objectives and provides many guardrails. Any attempt to revise too many elements in the bill would stiffen the Canadian broadcasting system and rob it of the flexibility it needs to adapt to the rapid changes in our sector. The CRTC must be given the means to exercise adequate regulation over the web giants' broadcasting activities.

However, we are in favour of moderate amendments to Bill C‑11. We support the amendments proposed by the Coalition for the Diversity of Cultural Expressions, particularly so that the use of Canadian talent is equivalent for Canadian and foreign undertakings solely under paragraph 3(1)(f) and so that the CRTC's orders are subject to appeal to the Governor in Council.

We are also in favour of a public hearings process for the making of orders so that the CRTC is required to demonstrate that Canadian broadcasting policy objectives have been achieved. The maximum amount of potential penalties must be increased in the administration of administrative monetary sanctions in the event the act is contravened. It would also be desirable that the CRTC demonstrate transparency as a general rule.

Bill C‑11 should be quickly passed. The process has been dragging a very long time.

I will be pleased to answer your questions.

Thank you.

[The Chair, Liberal, Hedy Fry]

I now go to Skyship Entertainment Company, with Morghan Fortier, chief executive officer, for five minutes.

Mr. Fortier, go ahead.

[Morghan Fortier, Chief Executive Officer, Skyship Entertainment Company]

Good morning.

[The Chair, Liberal, Hedy Fry]

Ms. Fortier, I'm so very sorry.

[Morghan Fortier]

No, it's okay. That's what happens. It's rare that there is a woman on a panel like this.

Good morning. I would like to thank the committee for the opportunity to speak today.

My name is Morghan Fortier. I am the co-owner and CEO of Skyship Entertainment, creator of Canada's most-watched YouTube channel, Super Simple Songs, with over 1.3 billion lifetime views in Canada alone.

Since founding our company in 2015, we've grown into a studio that employs 35 artists, writers, puppeteers and musicians. During that time, we've built a global audience, and today we share our Canadian-owned and Canadian-created content with more than 30 million families, classrooms, and day cares all around the world every single day, including hundreds of thousands of Canadians.

We accomplished this because of three main factors: the desire to create great content for children, parents and caregivers; our willingness to take risks for the sake of owning and controlling our own IP outright; and the tremendous skill, dedication and creativity of our hard-working Canadian artists. We accomplished it without broadcasters or government intervention.

We are but a single success story among a robust and rapidly growing industry of like-minded entrepreneurs who have started small businesses as digital content creators right here in Canada. We are also an example of the amazing things that can happen when the government takes a soft-touch approach and allows a new industry to flourish.

Bill C-11 is not an ill-intentioned piece of legislation, but it is a bad piece of legislation. It's been written by those who don't understand the industry they're attempting to regulate, and because of that, they've made it incredibly broad. It mistakes platforms like YouTube, TikTok and Facebook for broadcasters like the CBC, Netflix and Amazon Prime. It doesn't understand how those platforms operate, and it ignores the fundamental importance of global discoverability. Worst of all, proposed section 4.2 hands sweeping power to the CRTC to regulate the Internet use of everyday Canadians and small businesses like mine that are not even associated with broadcasters.

I absolutely appreciate the necessity of updating the Broadcasting Act to include the new band of broadcasters—companies that take pitches, green-light shows and movies, and pay for productions—but regulating user-generated content on platforms like Facebook, TikTok and YouTube is far too overreaching. In the Venn diagram of the entertainment industry, the needs of legacy broadcasters and the enterprise of digital content creators are not interconnected. There is no demonstrable reason that user-generated content needs to be included in this bill.

Minister Rodriguez has insisted that UGC will not be included in Bill C-11, but this is untrue. Last week, the chair of the CRTC, Mr. Scott, confirmed that UGC is in the current draft of the bill. If it truly isn't intended to be in the bill, then it simply needs to be removed; proposed section 4.2 just needs to be taken out. If you don't remove that section, you're asking Canadians to just trust that you won't misuse this far-reaching law and that future governments won't misuse it either. Thousands of Canadian small businesses and digital content creators deserve far more consideration than that.

Thank you for your time. I look forward to taking your questions.

[The Chair, Liberal, Hedy Fry]

Thank you very much, Ms. Fortier.

I'll go to the final witness in this particular two-hour session, who is Dr. Michael Geist, Canada research chair of Internet and e-commerce law.

Dr. Geist, you have five minutes, please.

[Dr. Michael Geist, Canada Research Chair of Internet and E-commerce Law, Professor of Law, University of Ottawa, As an Individual]

Thank you very much, Chair.

Good morning, everyone. My name is Michael Geist. I'm a law professor at the University of Ottawa, where I hold the Canada research chair in Internet and e-commerce law. I'm a member of the Centre for Law, Technology and Society. I'm appearing in a personal capacity, representing only my own views.

As you're surely aware, I've been quite critical of Bill C-11. I'd like to start by emphasizing that criticism of the bill is not criticism of public support for culture nor of regulation of technology companies. I think that public support for culture is essential and that one of the core problems in this area is that our current CanCon rules don't achieve their stated objectives.

As Peter Grant, a member of the Yale report panel and a long-time advocate for Internet regulation, recently noted, certified CanCon “doesn't have to look Canadian or be about a Canadian story.” I don't think that's how Canadians think about CanCon, and our rules should be changed to become better aligned with our policy objectives. Further, I agree with former Supreme Court Chief Justice Beverley McLachlin, who recently noted with respect to Internet platforms that there's a need for legislated transparency, accountability and rules on data governance and privacy.

Given my limited time, I'd like to focus on two main issues this morning. These are Bill C-11's regulation of user content and its overbroad regulatory approach, and the need for greater certainty.

First, I'll discuss the regulation of user content. When Minister Rodriguez introduced this bill, he stated, “we listened to the concerns around social media and we fixed it.” With respect, many of the concerns remain intact. While the proposed section 4.1 exception for user content was reinstated, proposed subsection 4.1(2) and proposed section 4.2, which together provide for the prospect of CRTC regulations on user content, were added.

The bottom line is that user content is treated as a program, and the CRTC is empowered to create regulations applicable to programs that are uploaded to social media services. Non-commercial, user-generated content may be out, but user content that generates even indirect revenue is subject to potential inclusion within the regulations. As you just heard, you don't need to take my word for it. As you know, when asked at this committee last week about whether the bill included the potential for regulating user content, the CRTC chair Ian Scott acknowledged, “As constructed, there is a provision that would allow us to do it as required”.

You may ask why any of this matters. Bill C-11 permits the creation of regulations on the presentation of programs to the public, and since it treats all audiovisual content anywhere in the world as a program, the potential regulatory scope is vast. Those regulations identify but aren't limited to discoverability. Discoverability has rightly attracted attention, since applying it to user content is both unworkable, as we don't have a mechanism to determine what qualifies, and potentially harmful to Canadian creators who may find their works downgraded globally.

The solution is obvious. No other country in the world seeks to regulate user content in this way, and it should be removed from the bill because it doesn't belong in the Broadcasting Act. In the alternative, remove all of the regulatory powers associated with user content, but leave in the potential for contributions by user content platforms.

Second, I have a few comments about the overbreadth and uncertainty with this bill, which, as currently structured, covers any audiovisual content anywhere in the world. As a Canadian Heritage department memo on the issue noted with Bill C-10, that includes video games, news sites, niche streaming services and workout videos. I recognize that this may not be the government's intent, and there is an expectation of a policy direction that creates some limits and the CRTC itself may decide to establish some others. However, I believe there is a clear need for thresholds and limitations in the legislation itself. Without it, services may regard the regulatory uncertainty—which you heard last week could take years to sort out—and block Canada, leading to less choice and higher consumer costs.

If the goal is to target the large streaming services or to exempt video games or niche streamers, say so in the legislation. While we're doing that, borrow from the European Union's approach of distinguishing between curated and non-curated services, and use that as a way of establishing more targeted regulatory requirements or exemptions.

There's certainly more to discuss, including the myriad of concerns about the CRTC: the current lack of transparency, the cloud of bias and the potential for government to overstep on CRTC decisions into program regulation. There are also the outdated CanCon rules that I noted earlier and the actual data on investment in film and television production.

I'll stop there. I look forward to your questions.

[The Chair, Liberal, Hedy Fry]

Thank you, Dr. Geist.

We will move into the question and answer component of this meeting. During the first round, you will be asked questions by members of Parliament from all parties, and it's a six-minute round, so remember that the six minutes include the question and the answer.

I shall begin with Mr. Kevin Waugh from the Conservatives for six minutes, please.

[Kevin Waugh, Saskatoon—Grasswood, CPC]

Thank you, Madam Chair.

Good day, everyone, all six of you coming to committee.

I think we all agree that the Broadcasting Act needs to be amended. That goes without saying. It's over 30 years old.

Morghan Fortier, user-generated content has been a hot button, and it's been a hot button for a number of reasons. One is that the minister says they're not in that game, but then, as you pointed out, last week, Ian Scott, the chair of the CRTC, said in our committee that they have it under their jurisdiction.

You're very successful on YouTube. What would that do if the CRTC puts their thumb down on their sweeping powers to deal with user-generated content?

[Morghan Fortier]

I think it's a complicated question to answer, mainly because it mandates looking for a problem. Part of the issue is trying to figure out why UGC is being swept into this bill and what the outcomes of regulation on it would imply.

I think, unfortunately, that a lot of consideration when applying this bill is looking at the pre-existing Broadcasting Act, which is very broadcaster focused as opposed to production company focused, whereas on the digital side of entertainment, which is not broadcast-driven, platforms are very different in that they don't pay for content and they don't green-light content. It's a service that, as an example, my company uses to self-distribute our own content and allows us to retain our IP.

Without a full understanding of how that industry runs and operates.... As an example, it's an export and tourism industry to a great degree. The bulk of revenue...and put a pin in that. The bulk of opportunity, as far as global discoverability is concerned, is really external. As an example, we're the highest-viewed channel in Canada, but Canada is 3% of our overall revenue. That's not because of anything other than sheer population size. Canada is less than half a per cent of the world's population.

In order for these platforms to operate successfully, global discoverability is the key for a lot of these content creators. I think a lot of that understanding is lost when you look at a geographically niche broadcast enterprise, which the Canadian industry has been for a very long time.

I know that it can get complicated when we talk about discoverability and restrictions of discoverability, but really, a lot of the regulation that's being proposed in the current bill doesn't apply to the platforms; it applies to the content. It's either discoverability mandates on the content, or it's discoverability restrictions on the content, or possible advertising regulations against the content. It doesn't tackle platform-specific.... Applying broadcast mandates as they currently exist to platforms just doesn't apply. The two run parallel to each other as opposed to running similarly.

I think that's the larger key here, a lack of education. Part of the frustration has been that digital content creators have not really been allowed access to the table to talk, and current discussions have gone largely dismissed. There's a lot of sentiment that we work for these platforms, and that can't be any further from the truth. It's more accurate to say that the platforms work for us. We are not employees of platforms. We utilize the free services that these platforms offer for us to figure out our business plans and self-distribute.

That might have wandered a little bit, but that's the scope of it there.

[Kevin Waugh]

Your company is only seven years old, but one of the most successful in the country, as you said. Do you own your own IP and the content you create?

[Morghan Fortier]

Absolutely. We own 100% of our IP and the ownership of that IP, and the work we have done on YouTube and the community we built on YouTube has allowed us to create a subscription app called Super Simple, which is available on iOS and Android around the world.

We're a music company, so we work with Warner Chappell to distribute our music catalogue globally. We are into consumer products now and we've just signed a deal with Scholastic books, which will be our exclusive book publisher.

The fact that we own our IP makes that difference. It allows us to build out our larger business plan. Keep in mind, it's a studio of 35 people. This isn't a massive conglomerate. It's pretty mom and pop. It allows us to control and exercise the use of our content however our community needs it, and that's really the biggest thing.

It is definitely a hustle every day. There is no handout in this industry, so it is a ton of work that we constantly do, day in and day out, to ensure that our content is resonating with that community and it gives us this global opportunity to expand our company, not just from a straight YouTube content creator like we would have been in 2015-16 but into a modern-day entertainment company where we are into all sorts of levels.

[Kevin Waugh]

“The platforms works for us”—that was a pretty good perspective.

If I can say, Morghan, when you said 35 employees, I doubt today there are 35 employees at Global/Corus Saskatoon and I doubt there are 35 employees at my former television station, CTV Saskatoon, so don't sell yourself short. You've done very well with 35 employees.

[Morghan Fortier]

Thank you very much.