Thank you.
I'll speak in French, but surely you have translation. You also have an English version of our presentation, if you want to refer to it.
Good morning.
Thank you for this invitation to appear before the committee today.
My name is Solange Drouin, and I am the Vice-President of Public Affairs and the General Manager of ADISQ.
I am speaking today on behalf of about 250 independent entrepreneurs, who produce sound recordings, live performances or videos, who act as talent managers, and who are responsible for the production of 95% of French-speaking musical content in the country.
The independent industrial structure that characterizes francophone music production in Canada was created 40 years ago and is unique in the world. In Canada, francophone artists almost always turn to local entrepreneurs, small and medium-sized businesses, to assist them in the production and commercialization of their works.
Everywhere else in the world, music production is dominated by three multinational corporations known as the “majors”: Sony Music, Warner Music Group and Universal Music Group. During the 1980s, those three majors chose to get out of our market, thus allowing French-speaking Canadian artists and entrepreneurs to create together a dynamic ecosystem, a true star system of which the local public has grown fond: a situation that should make the Canadian public proud, as well as our leaders. For 40 years, our artists, supported by these small companies, have been shining here and around the world.
Nevertheless, these majors are still very much present in our market: they are our competitors. Is it really necessary to add that they benefit from enormous resources compared to ours? It's obvious.
Even if the whole musical world has been in turmoil for more than 15 years, independent companies are much more vulnerable to the transformation of the competitive music market. While we were operating in a historically unequal market, we must now deal with a market that has become unbalanced and unfair. This specificity must be taken into account in the current process.
First of all, let me make one important point: we are aware that, since coming into power in 2015, the government has made significant investments in culture. However, independent companies in the music sector, whose very first market is the important domestic market, have been forgotten. Yet there is an urgent need for action. The unfair and unbalanced market to which I have just referred threatens not only their competitiveness, but also their ability to provide the Canadian public with sustainable access to diverse, high-quality and professionally created national contents.
The facts are known and widely acknowledged: revenues stemming from album sales—both physical and digital—have been falling sharply in Quebec since 2005. Those resulting from streaming, paid by a handful of foreign companies that dominate the market, are almost non-existent. Internet service providers do not contribute to the support of the music industry, while their attractiveness is mostly based on the consumption of cultural contents. All this while the investments required to hope to make a sound recording profitable have increased since, going forward, investments must be made in two universes.
Moreover, while our industry was weathering all those storms, in 2012, the government then in power introduced amendments to the Copyright Act that have since taken tens of millions of dollars away from our industry.
Finally, federal public financing for production and commercialization in the music sector has remained stagnant since 2002-2003. Still, its leverage is necessary. Did you know that 84% of the revenues of companies on whose behalf I am speaking today are autonomous revenues?
Music is THE cultural sector that stands out because of the risk-taking of entrepreneurs. But let's be careful: in 2014, the profit margins of these companies averaged 7.4%. Public support is minimal compared to other cultural sectors, but its importance is crucial.
Over the past year, essential processes have finally been launched. We can think about the revision of three important laws in our sector, regarding copyright, broadcasting and telecommunications. This is good news. But we know that such processes will take time, a lot of time: a luxury we no longer can afford.
In order for music companies to remain in business, in the meantime, substantial and urgent funding must be provided.
The Canada Music Fund is being modernized. In order to maximize the impact of this modernization, we ask you to grant an additional annual emergency fund of $10 million, starting in fiscal year 2019-20, and to renew such fund until the many measures necessary for the return to a balanced, fair and viable market for music companies have been completed. This was done in the audiovisual sector last year by the Liberal government. Music faces challenges that are similar in every respect to those in the audiovisual sector, but has been facing them longer.
Cultural diversity is a principle that is dear to Canada. Content creators—artists and producers—are its cornerstones. We thank the Liberal government for maintaining the cultural exemption in the USMCA. We found out on Monday, and we were very happy about it.
When they no longer manage to make a living from their art, cultural diversity is directly threatened. This is the case today. Two years ago, our sector felt it was at a tipping point. We are dangerously approaching a point of no return. You have the power to turn us away.
Thank you.