Speech by Tom Pentefountas, Vice-Chairman, Broadcasting, Canadian Radio-television and Telecommunications Commission

To the annual meeting of the Association des radiodiffuseurs communautaires du Québec

Montreal, Quebec
November 9, 2013

Check against delivery

 

Ladies and gentlemen,

I am very pleased to be participating in the ARCQ conference. This is our first meeting; it is an opportunity to meet, and especially to discuss issues that concern us all.

I would like to take this opportunity to share my views on the current state of the radio sector, and on our goals as a regulatory organization.

Community radio is very popular in Quebec. The number of listeners that you have proves that. This shows the contribution by people like you, who take it upon themselves to support and increase the quality of life in their community.

I would like to begin by discussing the CRTC’s perspective on the identity and mission of community radio.

The Commission sees you as unique because of your place in your communities. More than any other media, you are a reflection of the needs and values of your communities. You also stand out by your willingness to involve volunteers in the creation and programming process.

These factors help ensure that the programming is different from that of commercial and public radio. You fill a void that commercial stations and the Canadian Broadcasting Corporation do not.

Among other things, your activities are centred on community involvement, including the provision of unique training opportunities, which often lead to careers in the sector.

You also create programming based on the needs and interests of your communities. In addition to broadcasting local and regional news and information, you are committed to promoting emerging talent with an emphasis on local musical and spoken word talent.

I know that a number of you are what I call “cultural incubators” in several ways. In addition to bringing people into the world of radio, you often act as springboards for technical and artistic talents, which would have a hard time getting anywhere without your presence and goodwill. For those reasons, the CRTC is unwavering in its support of your sector.

From the past to the future

Overall, radio has gone through a difficult period in recent years, but it has emerged stronger than ever. I’m talking about the overall sector because you face many of the same realities as commercial radio.

The rapid evolution of technology has brought about considerable changes in the communication sector, including the environment in which you operate.

It started with the arrival of Napster and the other file-sharing services. Soon after, the iPod, YouTube and personalized Internet radio services were launched.

Then, in rapid succession, came smartphones, tablets and other mobile devices that enable users to find music and information from around the globe – anywhere, anytime.

And if that wasn’t enough, the whole world suffered through the 2008 economic crisis. But despite these setbacks, the industry survived and is once again flourishing.

The good news is that the revenue numbers show that last year was a profitable one for the Canadian radio industry. The bad news is that those same numbers suggest that it is essentially stagnant. These data are important for you because they are indicative of audience measurement trends.

I would like to comment on your current place in the Quebec radio market. We estimate your audience at 500,000. This is a significant number. Keep in mind that your direct competition is made up over 100 private radio stations, as well as CBC stations that broadcast in each of your territories. To say that this is fierce competition is not an exaggeration.

This indicates two things: the content you broadcast is well suited to your public and your connection to your communities is a unique force that wins the loyalty of your audiences.

But I think that, like private stations, your future depends on your ability to attract new listeners and maintain your position in these markets.

Even if you are not motivated by the same goals—particularly financial goals—as private stations, I think you need to look at the competition realistically and act accordingly, with your own principles and the means available to you.

The changing radio landscape

Thanks to the multitude of online services available, music and information have become commodities that can be packaged and delivered in countless ways.

In 2012, 49% of Canadians owned a portable digital music player, 51% owned a smartphone, and 26% owned a tablet.

Since everyone has access to the same products on the platform of their choice, traditional radio no longer rules the roost. Consumers now create their own playlists, with the added bonus that they can avoid ads.

Young people are craving something different from the golden oldies their parents have been listening to for decades.

They want less talk, more edge. They want something fresh, something new.

For young people, conventional radio all sounds the same–no matter the time of day or city you are in.

In contrast, there’s Internet radio. It’s opening the world to all kinds of music and formats—in all sorts of locations, including the car.

We’re soon expecting the “Connected Car,” which is a new generation of vehicles under development with software-driven dashboards and Web-based entertainment systems. For example, Pandora is planning to make its Web service available in a third of new vehicles sold in the United States by the end of the year.

Dramatic developments like these are changing the rules of the game for traditional broadcasters.

Figures published by the U.S. company Edison Research show that weekly use of Internet radio, which includes both online streams by traditional terrestrial broadcasters and Internet-only services such as Pandora, increased from 22% in 2011 to 29% in 2012 in the United States. That’s more than a 30% jump. It’s the largest year-over-year increase since tracking began in 1998.

Canadian broadcasters have largely been spared from personalized radio services such as Spotify, Slacker and Pandora. Canada has fewer services of this type, and they attract a smaller audience.

The CRTC’s Communications Monitoring Report shows that, in diary markets, the average weekly hours tuned per capita for all Canadians are basically unchanged:

17.7 hours in 2011 versus 17.5 hours in 2012.

But compare that with only a few years ago.

Listenership declined by nearly one full hour per week between 2007 and 2011—from 18.3 to 17.5 hours.

Maybe of greater concern, there’s evidence of erosion in time spent listening to radio among younger audiences. There were marked declines among the 18–24 age group as well 25–34 year olds.

Is there a link between these trends and the fact that streaming audio on a cellphone has nearly doubled since the fall of 2011? Or that 13% of Canadians use a personalized online radio service?

The Communications Monitoring Report also showed that just over 20% of Canadians listen to AM or FM radio online.

In addition, Nielsen’s research showed that 27% of Canadians discover new songs on YouTube and other websites that offer music videos.

Is it just a coincidence that, as people consume other forms of media, they are tuning into radio less?

I don’t think so.

There’s no holding back time—or technology.

In the past, radio delivered content and advertising from the producer to the consumer. But in the Internet age, it’s all about two-way processes.

Anyone with a high-speed Internet connection can produce content or reach audiences. And the consumer who has something to say about the content he or she hears—no matter who produces it—is now the sender, not the receiver.

Doing things differently

The reality is that despite the challenges they pose, these trends represent unprecedented opportunities.

We are living through a transformational time that calls for new ways of doing business. There are a lot of exciting things happening both on the music scene and in the radio business elsewhere in the world. But I’m not sure I see people in this country moving as quickly in these new directions.

Have we grown too comfortable with the old business models here?

Are we too risk averse to try things that will excite the marketplace and attract new listenership?

For example, I read recently about a Tampa Bay radio station that expanded its entire operation to a smartphone and Web-based format. It recognizes that people are no longer passive consumers. They want to take control of what they hear.

I’m not suggesting everybody should copy this format. But it points to the importance of interactivity and innovation.

Branding

I’d like to discuss the importance of your brand. I think that the issue applies to you as well as commercial stations.

An article in Ad Age Digital recently said that, “Brands are built by being first in a category. Not just first in the marketplace, but first in the mind.”

Try it.

Think search engine. What’s the first name that comes to mind? Google, right?

Think software—Microsoft.

Social media—Facebook.

Mobile devices—Apple—the mother of all brands.

You get my point.

We know that people listen to radio stations, not radio programs.

Listeners can get music, weather, traffic or sports from anywhere. But how do you get them to want to hear it from you?

You have the advantage that your stations—your brands—are trusted curators of local content. What belongs to you is the “brand” you’ve created in your marketplace and the connection you’ve made with your audience. It’s the attachment listeners feel toward your stations.

With all due respect to Marshall McLuhan, it’s all about the messenger. The message is simply a commodity.

Once you have listeners’ loyalty, I’m convinced they will follow you anywhere, using any platform or app.

So, if you want to hedge your bets against encroaching technologies, I’d suggest you focus your energy on building your brand.

When we think of branding, big money also comes to mind. But the two are not necessarily linked. You have everything you need to build an identity for your stations, including close proximity to your audience, your relationships with local talent and your presence in the community.

Canadian content

Something else we all know is that Canadian music is a highly successful brand. Indeed, I see Canadian content as a prime opportunity to carve out a distinctive brand. Radio stations in particular have a vital role to play in defining Canadian culture and identity by supporting Canadian content.

Every time you help to launch the careers of new Canadian artists, you help to create a feeling of pride in being Canadian. And pride in Canadians’ ability to compete and win on the world stage.

Another fact of import to your business model is that Canadians place a high value on music produced by their fellow Canadians.

Polling by the Department of Canadian Heritage revealed that 92% of Canadians strongly or somewhat agree it’s important that Canadians have access to music by Canadian artists.

More than just making us feel good, Canadian music makes money. So Canadian music is something you ought to cultivate and champion.

We need to pursue all opportunities to distribute and commercialize Canadian music in all its forms.

CRTC as enabler

At the CRTC, we recognize that creative content creates economic opportunity.

That’s why we have a long-standing policy of encouraging Canadian broadcasters to support and promote Canadian talent.

In 2011, commercial radio stations proudly contributed $54 million to organizations and initiatives that help develop Canadian artists, such as MUSICACTION and the Radio Starmaker Fund.

We also understand that our job at the CRTC is to enable you to create—so you can introduce pioneering programs and business models that ensure your continued individual success and that of the industry.

That said, we recognize that community radio is in a unique situation compared to the commercial sector. In 2010, the CRTC amended its community radio policy to ensure that these stations have stable funding for the future. The policy requires the commercial radio sector to devote part of its contribution for Canadian content development to the Community Radio Fund of Canada (CRFC).

In 2012, commercial radio stations contributed $1.5 million to the CRFC, enabling the Fund to provide community and campus radio stations with the resources to create original local programming and to give their volunteers the training, learning and mentoring opportunities they need to flourish.

The CRFC manages two annual programs: the Radio Talent Development Program and the Youth Internship Program. Total funding of $200,000 is offered—or $100,000 for each program—with a maximum of $10,000 per applicant.

Our goal is to allow you to become one of the motors that drive Canadian musical success.

Conclusion

So, now, over to you.

How can you optimize your presence with your listeners?

How will you capitalize on the extraordinary opportunities presented by emerging technologies?

What will you do with the fact that you have commercially popular musical content in your own backyard?

I know that, more and more, you are recognizing the need for interactivity in today’s digital world. I am confident that you will make a successful transition to the radio world of tomorrow. I’m sure you will find a way to adapt and carry on your tradition of impressive success.

In closing, I’d like to remind you about an initiative we recently launched called Let’s Talk TV: A Conversation with Canadians. It deals with television, not radio, but the process involves the entire community sector, with whom you share principles and, no doubt, issues relating to your organizations.

Given these similarities, there will be a number of questions that will be of interest to you. I invite you to visit our website, participate in the discussions and talk about it on the air—at an appropriate time, of course.

I wish you every success along the way.

Thank you.

 

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