Exploring the Future of Canadian Content Regulation for Radio
Author: Kennedy French-Toller
Home university: Department of Communication, Media and Film, University of Calgary
Education level: Master’s Student - Communication and Media Studies
Introduction
In January of 2020, a review of existing Canadian communications legislation was published by an independent panel convened by the Minister of Innovation, Science and Economic Development (now the Minister of Innovation, Science and Industry) and the Minister of Canadian Heritage (ISED 2020). This comprehensive review acknowledged a need for modernized legislation which would continue to guide the communications sector in Canada. This paper aims to discuss the recommendations made by the report which specifically impact the music industries in Canada, using academic research, submissions made to the review panel, and an analysis of the final report itself to gain a comprehensive view of the future Canadians wish to see for the music industries.
Since the popularization of radio, Canadians have faced several hurdles in building a strong domestic music industry which allows Canadians access to Canadian voices. For the popular music realm, it was a government agency enforced regulations which fostered development in the cultural industries and enabled the wide dissemination of Canadian music. These Canadian content (Cancon) requirements, built from the ground up in the 1970s, have responded to industry shifts through various policy alterations, but remain built on a regulatory basis of licensing. What regulators have failed to adopt today, however, are comprehensive Cancon policies towards alternatives to radio, namely newly popularized music streaming services. A path has been set by past and current Canadian content laws for radio, one that must continue to evolve as technology and listenership in music shift, in order to ensure the continued success of Canadians working in the cultural industries.
Literature Review
In order to understand the current state of the music in Canada, developments in regulation and technology must first be explored. This literature review serves as an overview of the forces that contribute to the production and distribution of music. In Canada, these forces exist as a result of the specific regulations which they operate under, but emerging music streaming services which operate outside of these regulations have grown in prominence and must be looked at critically in order to understand the shifting music market.
Cultural Industry Roots
Hirsch (1972) defines cultural products as “nonmaterial goods directed at a public of consumers, for whom they generally serve an aesthetic or expressive, rather than a clearly utilitarian, function” (127). In the Canadian context, early communication technology which had the ability to disseminate cultural products developed quickly but lacked the cultural products to travel along the developed infrastructure (Charland 1986). This “technological nationalism” meant Canada was connected as a state, yet this connection only served to transmit American popular culture, which filled the gap left by a lack of Canadian cultural products (Straw 2002).
In order to exist as a successful cultural product, cultural goods must be consumed. With the wide dissemination of American cultural products in early Canadian broadcasting, this meant Canadian cultural products would “have to attract viewers in a market defined by the American cultural system” (Charland 1986, 215). Further, Canadian cultural products would need to compete against a solidified American cultural industry. Specific to the topic of this paper is the popular music industry, whereby Hirsch’s definition, popular music exists as a cultural good. The development of the popular music industry follows along these lines of American domination, as will be further explored in the following section.
Important to note in this section is the lack of a cohesive definition of Canadian culture. Straw (2002) offers two positions by which cultural and cultural policy can be examined; the essentialist position, where thematic traits exist across Canadian content which can and should be found, and the contemporary position, where Canadian culture has no distinctive essence but instead exists to fill gaps in international cultural products. Scholars engaging in popular music studies fall on either side of this divide. However, the majority of scholars cited here— Straw, Edwardson and Spalding most explicitly, take the contemporary position. To these scholars, there is no distinctive Canadian style of music, though Canadians do share Canadian stories and perspectives in their music, which can create a “sense of place” through “natural incorporation” of the influence of the Canadian industry (Henderson 2008).
Early Industry
Again, from Hirsch (1972) come factors which define the cultural industry system and its organization—demand uncertainty, due to shifts and preferences, and “cheap” technology, which creates surplus in the system. For early popular music this surplus came from mass media exposure, as volume sales of a single item generally covered earlier losses and yielded additional returns. In this system, competitive advantage existed for firms which were best able to link artists with reliable and established distribution channels organized by the firm (Hirsch 1972). In the early days of popular music, the American industry had “economic, technical, and human resources which Canada could not match” (Charland 1986). American record companies overproduced to respond to taste changes, at relatively low investment as production lines were already established (Hirsch 1972).
This effective system resulted in American domination of popular music production, and subsequent domination of radio broadcasting. This domination was built upon an existing dominance in early radio broadcasting, discussed above, prior to the rise of popular music stations. In 1930, “At least 50% of Canadian listening time was devoted to United States programming” (Charland 1986, 208). As radio programming evolved, American production channels strengthened and diversified. By the time popular music production was in full swing, American domination of Canadian airwaves had only grown. In 1968, only 4% to 7% of songs broadcasted over radio were Canadian (Audley 1983).
In the early era of popular music production, record companies were reliant on radio for exposure and promotion (Hirsch 1972), as radio provided an international distribution system for records (Berland 1990). Production channels created by firms did not simply end with a finished cultural product but extended into the distribution and promotion of an artist’s music. Control over the selection of new releases was held by radio station programmers, who became major gatekeepers in the industry (Hirsch 1972). As evident when exploring this era in popular music, it was powerful American firms who had the most effective production and distribution channels.
Early Regulation in Canada
The questions raised by Straw and others as to what can be considered Canadian are answered by the CRTC through fulfilment of distinct conditions. To qualify as “Canadian” a musical selection must generally fulfil at least two of the following conditions: M (music): the music is composed entirely by a Canadian; A (artist): the music is, or the lyrics are, performed principally by a Canadian; P (production): the musical selection consists of a live performance that is recorded wholly in Canada, or performed wholly in Canada and broadcast live in Canada; L (lyrics): the lyrics are written entirely by a Canadian (Armstrong 2010, 99). A Canadian in this framework is a citizen, permanent resident, or “a person whose ordinary place of residence was Canada for the six months immediately preceding their contribution to a musical composition, performance or concert” (CRTC 2009). It is worth noting here that these conditions sidestep the essentialist position, using bureaucratic classifications which do not make clear the cultural benefit of Canadian content. Further, these classifications avoid addressing the economic side of music production, using definitions which seek to only check cultural boxes—leaving economic lifting to other regulations.
Canadian content mandates set by the then Canadian Radio-Television Commission, now Canadian Radio-television and Telecommunications Commission (CRTC), were introduced in 1971. The content laws at the time required that 25 per cent of radio airplay be Canadian music, as defined above. The introduction of these laws did increase the playtimes of Canadian music overall. However, not all radio stations were on board with legally mandated Canadian content quotas, with stations finding a way to skirt around Canadian music quotas by playing their Canadian content mainly between the “ghetto” hours of midnight to 6 am (Rickwood 2009). While these stations were still technically following the CRTC mandates, these practices undermined the goals of Cancon requirements. As such, updates to policy were made both to restrict unfair practices and further promote Canadian music, as requirements were updated to be met between 6 am and 6 pm (Armstrong 2010). Policy updates in this era also responded to listening trends as a shift appeared from AM to FM listening (Armstrong 2010). This evolution in policy kept stations accountable to give fair and popular airtime to Canadian artists. To further promote Canadian artists, Cancon quotas were raised by the CRTC twice over the decades following their initial introduction. The first percentage bump caused quotas being raised to 30 percent, with another 5% bump to quotas increasing Cancon percentages on radio to their current 35 per cent (Henderson 2008).
These regulations are built upon a framework of licensing, as stations are divided into different categories based on their programming and as such face specific requirements (Armstrong 2010). The above quotas are specific to Popular Music stations, which can be considered the category most in-line with the use of streaming services for music consumption and most effective for comparison in this paper. From Armstrong (2010),
When a licence to operate a broadcast service is granted or renewed, the licensee essentially enters into a form of contractual agreement with the CRTC whereby it agrees to abide by the Commission’s requirements, including its Canadian content requirements, in return for the privilege of holding the licence. If the licensee does not respect its agreement with the CRTC, the Commission may impose certain sanctions, including more onerous conditions of licence and a reduced licence term or, in more extreme cases, may call the licensee to a hearing and suspend or revoke its licence. (96)
The licensing model is a contractual agreement with consequences to licensees, in this case radio stations, for breaking their contract. This model requires direct oversight from the CRTC, and compliance on the part of the broadcaster. As such, a balance has been sought by the CRTC in order to promote non-market cultural objectives while maintaining viable market conditions for commercial radio stations (Berland 1990). This balance means stations are only regulated to an extent which promotes CRTC objectives without total control or harsh market interference.
Recent Evolution of Regulation
Since the introduction of Cancon requirements for traditional radio, alternatives to traditional AM and FM radio have emerged, beginning in the early 2000s. The first of these alternatives which resulted in regulatory response was paid satellite radio, which offers subscribers ad-free radio with channels specific to genres and artists over a listening footprint that covers millions of square kilometres.
The CRTC responded to this new development in the system by adapting their existing licensing model. In 2005, the first satellite subscription radio services were licensed by the CRTC with the condition to include a number of Canadian channels which would maintain their own specific Canadian content quotas, ones which were significantly higher than quotas for traditional radio (Armstrong 2010). These satellite radio providers were required to provide a minimum of eight Canadian-produced channels within the entire program offerings, with a maximum of nine non-Canadian channels per Canadian channel provided (Fauteux 2016). Channels would be considered Canadian under these regulations if the channel was produced in Canada and broadcast no less than 50% Canadian programming (Fauteux 2016). When this licence was renewed in 2012, the language surrounding the licensing stipulations changed to state that no less than 10% of the total number of channels should consist of original Canadian-produced channels (Fauteux 2016).
The action taken by the CRTC in regulating satellite radio shows both an ability as well as willingness on the part of the CRTC to adapt to new players in the music consumption market. However, since the introduction of satellite regulation, further services involved in music listening have grown in popularity. Central to the subject of this paper, regulation from the CRTC regarding Canadian content stopped short of evolving past satellite radio, and into online music streaming services.
Industry Funding and Profitability
As noted by Henderson (2008), the primary objective of the CRTC’s content policies is identified as a cultural one that encourages increased exposure of Canadian musical performers, lyricists, and composers to Canadian audiences. Along with this cultural objective is an “industrial one” with a goal of strengthening the Canadian music industry, in both creative and production aspects (Henderson 2008). Content regulation has not only spread Canadian voices but allowed these voices to be heard in the first place, by incentivizing domestic development in the music industries. Central to having Canadian content quotas is having Canadian content to broadcast in the first place, as noted by Straw (2000). From Spalding (2008, 313), “Not only has content regulation provided networks for these bands, but it has also helped to build a viable infrastructure, including live venues and studio space.”
In order to support the recording industry, both public and private organizations have been established in Canada with the support of the government. The CRTC required, as part of its licensing agreement with broadcasters, that broadcasters provide financial support based on revenues to the recording industry in Canada (Spalding 2008). This support takes the form of requirements that broadcasters make annual contributions towards the development of Canadian music talent (Armstrong 2010). As such, non-profit organizations and specific funds have been established in order to financially aid Canadians involved in the recording industry to varying degrees. The Canada Music Fund and the Foundation Assisting Canadian Talent on Recordings (FACTOR) are two such organizations which provide financial support to the Canadian music industry, notably for recording, producing music videos, and touring (Spalding 2016). The contemporary position of cultural policy specifically supports these initiatives, believing public policy should direct resources to Canadian cultural producers who might succeed commercially (Straw 2002). Further, Terry (2013) offers interviews with several key figures in the Canadian industry, finding funding to be a key aspect of artist success on commercial radio. However, current legislation limits funding requirements to traditional radio broadcasters licensed under the CRTC guidelines. In a globalized industry, with new players emerging in online music streaming, profit diversion from traditional radio to online streamers leaves domestic industry funding venerable.
Success of Cancon Policies
Academic literature points to a success in Cancon policies. There is a Canadian music “scene”, and infrastructure to create popular Canadian music (Henderson 2008). This environment which allowed a domestic industry to blossom was the direct result of effective policy (Muia, 2020). The Canadian music industry exists as a result of the comprehensive policies discussed above, which encompass the development as well as distribution of Canadian content. Though a solid domestic cultural industry has been built to employ Canadians, popular music has evolved in a way which may render old policy ineffective.
Radio is no longer in the previous position it once was, as new music distribution channels have grown in popularity, disrupting traditional distribution lines with new technology (Wikhamn and Knights 2016). As distribution lines shift to unregulated technologies, policies to distribute Canadian content will suffer. Further, radio revenues have fallen as new listening technologies have gained traction, leaving funding streams which allow Canadian content to be produced in jeopardy (Canadian Association of Broadcasters 2019).
Rise of Music Streaming
In 2008 Henderson explored the emergence of digital music, concluding that “Across this new ‘great divide’, a digital divide, nation still exists, even in a place where nation doesn’t really matter” and “A more nuanced examination reveals a successful industry poised to take advantage of a new era in popular music” (314). His exploration of statistics surrounding online listening, via Last.fm (a site which tracks online listening) showed that Canadians still listened to Cancon according to digital charts, but nowhere near the same rate as is played on over-the-air radio. Music streaming has now risen substantially in popularity and has become central to listening habits, as new technology within streaming services has the capacity to respond to the listener’s desires (Hesmondhalgh and Meier 2018).
Spotify emerged as, and remains, the global leader in music streaming services, though other service providers such as Apple Music, Amazon Music Unlimited, Google Play Music and YouTube Music have made progress in the market (MarketLine 2020). Spotify now has a higher market share than was held by retailers or radio stations in the digital era, clearly emerging as a front-runner in music streaming services, with a reported 37% share of the subscription streaming market in 2017 (Aguiar and Waldfoge 2018). The market for popular music has shifted away from physical and digital consumption, towards streaming as a dominant consumption medium (Hesmondhalgh and Meier 2018).
Understanding Music Streaming
While it is outside the scope of this paper to fully explore academic literature surrounding the inner workings of music streaming services, this paper must prove that music streaming services are powerful enough to warrant regulation. The above section notes the rise in popularity of streaming services, but it is the practises of these streaming services which should be of interest to regulators. As Spotify is at the centre of the bulk of academic research into music streaming services, this section will explore literature surrounding Spotify specifically, though this paper does not suggest that Spotify is the only music streaming service which should be subject to regulation. It is important to note that Spotify has been labelled a “black box”, with researchers unable to access data to fully study the service (Eriksson et al. 2019). The literature explored here has been informed by interviews, users reported or collected data, and some app collected data.
Playlists owned by Spotify are driven by human curators employed by Spotify, algorithms, or a combination of the two (Bonini and Gandini 2018). These playlist are heavily promoted by Spotify directly through their social media, as well as through their prominence on the user interface (Prey 2020). The interface of the app also limits what users can do on Spotify, limiting music discovery to a search bar, Spotify-generated recommendations, or playlist browsing (Besseny 2019). Presence on playlists have become increasingly important to artists, as placement on highly followed Spotify-owned playlists directly correlates to higher streaming numbers for artists (Aguiar and Waldfoge 2018). Overall, literature points to a growing power of playlists in music discovery; where radio stations previously exposed publics to new music, playlists now do.
What is most notable in Spotify literature for this paper is their under-promotion of domestic content, with Aguiar and Waldfoge (2018) noting the promotion of major label and US origin music over domestic content on both algorithmically generated and human curated playlists. While a gap in literature exists in the intersection between Canadian content and Spotify, the lack of promotion of domestic content from Spotify indicates that the streaming service will not effectively promote Canadian artists in Canada. Gatekeeping in the industry has clearly shifted away from traditional broadcasting professionals towards teams of editors influenced by company direction, and backed by algorithms (Bonini and Gandini 2018).
While the distribution side of music streaming services are explored in literature, the production side is less prominent in literature. Prey (2020) has noted that Spotify has paid producers to create tracks under fake names to be featured on Spotify owned instrumental or “mood” playlists. This shows that Spotify has an interest in funding content which suits their own interests, however further research is needed to fully understand the capacity at which Spotify is funding production, and their goals surrounding funding.
The literature surrounding Spotify explored in this paper has shown that Spotify is now being in the position of power previously held by radio. Spotify is effectively promoting music through house-made playlists, and has the capacity to fund music production with their revenue. This paper is of the position that while Cancon policies have been successful, they will need to be adapted to better suit the current environment. With this position in mind, this paper will explore how those involved in the industry have acknowledged the issue of modernizing music regulation, and their suggestions regarding policy moving forward.
Method
This paper will use critical discourse analysis (CDA), combined with policy analysis, in order to take a critical look at both written submissions to the legislative review panel, as well as the final report produced by the panel. This method is specifically informed by Fisher’s exploration of CDA as a tool for policy analysis. Fischer (2003) offers a thorough exploration of discourse analysis, using Fairclough’s foundational Discourse and Social Change (1992). Fischer’s exploration is based on Fairclough’s (1992) text, Discourse and Social Change. As defined by Fischer (2003, 1), “policy analysis can be formally defined as an applied social science discipline which uses multiple methods of inquiry and arguments to produce and transform policy-relevant information that may be utilized in political settings to resolve policy problems.” In this research, policy-relevant information is both submissions to the Broadcasting and Telecommunications Legislative Review Panel as well as the panel’s final report, Canada’s Communications Future: Time to Act.
Fischer’s exploration of CDA method applied to public policy provides methodological backing useful for this case of policy-related review. As noted by Fischer, most public policy research and methodology has “an emphasis on rigorous quantitative analysis, the objective separation of facts and values, and the search for generalizable findings whose validity would be independent of the particular social context from which they were drawn” (2003, 4). It is in this separation of social context where CDA will be particularly useful for this area of research, where policy studies and cultural studies intertwine. With CDA principles applied to political analysis practice, this analysis of texts surrounding policy critique will be more encompassing, taking power and social relations into consideration together. CDA will inform method here, specifically surrounding power relations and inequity, but will not extend to specific linguistic analysis.
The above literature review will also inform the analysis of the written submissions, as well as the concluding discussion section. So far, this paper has sought to highlight the success of past policy, and introduce a picture of the current industry. With this past and present in mind, this paper will explore the potential future the Canadian music industries will face.
Submission Findings
The findings here come from submissions by the Canadian Association of Broadcasters (CAB), Canadian Music Policy Coalition (CMPC), and the CRTC. The CAB (2019) report was put out by a committee comprised of representatives from more than 500 AM and FM radio stations across Canada which comprise in aggregate over 95% of total radio industry revenues. This submission reflects the views of the private commercial radio industry. The CMPC (2019) is made up of Canadian music professional organizations and music rights organizations and represents a cross-section of the Canadian industry. This submission reflects the combined views of record labels, music publishers, managers and distributors, as well as artists at the grassroots level. The CRTC (2019) presents its report from the view of the independent administrative tribunal which supervises the regulation of the music industry in Canada. Overall, these selections seek to represent the views of players in radio, the recording industry, and the regulator which enforces Cancon policy. The following sections will explore core issues which were explored in these submissions.
Important to note in this section is the lack of submissions from Spotify, Apple (Apple Music), Amazon (Amazon Music Unlimited), or other music streaming services. However, submissions were received by other major technology companies—Facebook, Netflix, and Google (without specific reference to Google Play Music). Netflix specifically wrote to the panel to clarify their existing investment in Canadian production and content, asserting that their position as an online service provider should not mean they are regulated as broadcasters, and state that market forces will be sufficient in achieving cultural policy goals (Netflix 2019, 1-2). Spotify and other music streaming services could have written in to echo any of these sentiments from a music streaming perspective, or even suggest regulatory framework they feel they could operate under. However, their lack of submissions could suggest a lack of interest in participation in policy, or a lack of belief that policy will impact them. Alternatively, Spotify and others may be intentionally avoiding any interaction with communication regulators until they are specifically targeted for regulation, as acknowledging regulators will lend legitimacy to the idea that they should be regulated.
Profitability
Concerns regarding profitability for artists in the modern streaming world are clear from the CMPC submission. “While an independent label, generally speaking, can make a profit on 15,000 sales of a physical album, it takes 30 million streams of all the songs of an album combined to achieve a profit in the case of online music services, a threshold that is seldom reached by an independent Canadian artist and even more rarely for French Canadian artists.” (CMPC, 2019, p. 8). The CAB committee also sees the impact of streaming on profits, citing a four-year radio audience decline from 2012 to 2016 of 7.6%, with a potential ten-year decline of 15%, and as listenership declines for private radio, profits decline (CAB 2019).
These reductions in profitability have been driven by a new digital landscape in differing ways. For artists and labels, a new model of digital distribution brought on by technological developments requires diversification on the part of content producers, while yielding “just a fraction of the total revenues that were previously generated two decades ago” (CMPC 2019). For radio stations, an “exodus of advertising revenue to digital platforms … advertisers are opting to spread their marketing budgets across the vast array of digital advertising platforms available to them” (CAB 2019). Both CMPC and CAB submissions make it clear that the landscape they exist in is changing, and they cannot keep up.
Discoverability
The CMPC submission explores the challenges faced by independent and emerging Canadian artists “if the discovery of their music is limited by the parameters used by recommendation algorithms of online music services” (CMPC 2018). This sentiment echoes the research explored by this paper surrounding the limitations in music discoverability on Spotify. Both the CAB and the CMPC note in their submissions the lack of incentive by streaming platforms to fund or promote Canadian content.
The CRTC submission explores consumption of content under the current market. Canadian content faces competition from an abundance of compelling and well supported non-Canadian content. Canadians’ priorities for the content they consume and the ways they choose to obtain it have fundamentally shifted. Canadians are spending more time with non-Canadian sources for content than ever before. (2018, 9)
However, this CRTC submission does not address how Canadian content should be promoted in order to combat the above issues specifically. Instead, the report simply states that “Government should contribute to this effort as well through funding and tax-based supports of promotion and discoverability” (CRTC 2019).
Who Should be Regulated and How?
The specific 2019 CRTC report submitted to the legislative review panel and explored here does not offer specific regulatory suggestions but does note the necessity of new regulation.
The CRTC needs an updated regulatory toolkit to enable it to approach new players operating in Canada, regardless of their national affiliation, to maintain a strong and diverse Canadian broadcasting system that best serves all Canadians, as citizens, consumers and creators. Such an approach must be inclusive of all entities that operate in and derive revenue from audio and video content in the Canadian market, regardless of platform or national affiliation. (CRTC 2019, 10)
The CAB and CMPC submissions make this same assertion. Foreign-based entities need to be regulated in order to keep the market competitive. The CAB submission states that the existing Broadcasting Act has jurisdiction over these foreign-based digital audio and media services and has the capacity to impose requirements on these services (2019). The CMPC submission differs on this issue, stating that foreign entities are “sidestepping” the rules that Canadians in the system play by, and are exempt from most government regulation (CMPC 2019). While these submissions differ with their positions that the regulatory framework must be updated to include new players, they both point to the importance of regulation to level the playing field. To further level the field, the CAB submission included a suggestion that regulations for radio might need to be relaxed, specifically current regulation preventing ownership of more than two FM stations in a single market (CAB 2019).
Each of the submissions discussed here offer solutions, though vague at times, to the panel. The CAB (2019) submission accepts that transplantation of radio policy on foreign audio services would be impractical. They point to the adaptation of traditional radio policy for satellite radio as an example of effective action by the CRTC, stating that it is again up to the regulator to determine effective policy for additional new players in the system. The CMPC (2019) submission is far clearer with their suggestions. They suggest percentage quotas for Canadian content recommendations to Canadian users who choose to rely on recommendation features offered by streaming services, pointing to the sophistication of algorithms to suggest Canadian content relevant to a listener’s taste. They offer data measurement and monitoring as a solution to track compliance with quotas and use of metadata in order to identify Canadian content. The CAB (2019) submission suggests this type of approach more vaguely, discussing promotion through “displays and algorithms” as possible but hard to regulate.
Review Panel Findings
The review offers specific and numbered recommendations in its report, of which a handful are relevant to this research, and future Canadian music regulation. Analyzed here are recommendations from Section 3: Creation, Production, and Discoverability of Canadian Content. First, the specific recommendations will be explored, followed by further findings from Chapter 3, which explains the recommendations more in-depth.
The first relevant recommendation is an update to policy objectives of the Broadcasting Act, Recommendation 53, part of which surrounds investment in the development, creation, and distribution of high-quality Canadian content and promoting the development of a strong Canadian production sector. These goals would serve to guide the Act, keeping Cancon a part of policy objectives.
Recommendation 54 is also useful to this research, suggesting the use of the term “media content undertaking” to replace “broadcasting undertaking” in the Act, including the term “media curation undertakings” which would describe streaming services like Spotify. Following Recommendations, 55 and 56, suggest that “the Broadcasting Act be amended to establish that the legislation applies to undertakings carried on in part within Canada, whether or not they have a place of business in Canada” and “the existing licensing regime in the Broadcasting Act be accompanied by a registration regime.’ These combined recommendations would make music streaming services subject to Canadian regulation, under a new registration framework. Recommendation 56 explores this further, with the establishment of “classes of registrants” and “impose requirements” for these registrants including the payment of registration fees and potential to impose penalties “for any failure to comply with the terms and conditions of registration.’ However, Recommendation 58 removes the certainty of these regulations:
58. We recommend that the CRTC have the power to exempt any media content undertaking or classes of media content undertakings from registration in instances in which — by virtue of its specialized content or format, revenues, or otherwise — regulation is neither necessary nor appropriate to achieve media content policy objectives. (ISED 2020, 32)
Recommendations 60-63 surround spending and discoverability requirements which would be applied to all media content undertakings. Recommendation 64 surrounds collection of information and consumption data from media content undertakings and their publishing by the CRTC. Together, these recommendations would support the current Canadian music industry through new channels, under the new framework.
The 2020 ISED report offers further insights into their recommendations in Chapter 3. This section, as mentioned, centres around the creation, production, and discoverability of Canadian content. In introducing this section, the report makes clear that the broadcasting landscape has changed, specifically noting the shift towards subscription services operated by foreign providers. The recommendations in this chapter seek to redefine “activities and actors subject to regulation that is technically neutral and forward-looking” with objectives that include “a sustainable model for the creation, production and discoverability of Canadian content with all actors contributing in an appropriate manner” (116). The introduction to this chapter refrains from using specific language, as it addresses Canadian content broadly, including news, video, and other media content.
Section 3.3.1 (ISED 2020) defines actors and activities, with the report noting the global nature of today's market and new alternatives to over-the-air broadcasting, specifically acknowledging how this landscape continues to evolve rapidly (129). The section does not shy away from noting that the internet has had an impact on the audio sector in Canada, and redefinitions are needed in order to regulate effectively. In this section, the report suggests a definition of “curation” from Recommendation 54 and specifically lists Spotify as an example (130). While Spotify is the sole music streaming service listed, this inclusion shows a clear acknowledgement of music streaming services as a provider of media content with specific editorial control. Addressing the foreign nature of these undertakings, the report asserts that CRTC jurisdiction extends to foreign internet services “that receive significant revenues from Canadian subscribers” (134). While the current Broadcasting Act could, in fact, regulate foreign actors, the report suggests clarification in legislation in order to further solidify this position.
Section 3.3.2 (ISED 2020) moves on to review regulatory mechanisms, explaining current licensing models and their goals. The report notes that this mechanism is not appropriate for new media undertakings, offering a registration model as a suggestion to regulate these entities, while keeping the established licensing model for traditional services. Like the current licensing model, registrants would be categorized into classes based on the activity they perform, meaning streaming services like Spotify would be regulated as media curation undertakings. What this section does not expand upon is the suggestion of registration fees, or penalties for failure to comply. While it is not within the scope of this report to suggest exact dollar values, the lack of explanation here defers decision-making surrounding a potential registration process. Expanding on Recommendation 58, the report simply states the potential for overreaching with new registration models, making CRTC power to exempt “certain media content undertakings or classes of media content undertakings” from regulation (135-136). This power to abstain from regulating is for cases where regulation would be unnecessary or inappropriate to “achieve cultural policy objectives”, pointing to undertakings which generate low revenues, or “have specialized content or format” (136). This recommendation removes the accountability for the CRTC to regulate every new media undertaking they encounter. Language remains vague both in the recommendation, and further explanation, reflecting current regulatory forbearance in the Act. This addition is not surprising, as total regulation over media undertakings would prove impossible in a digital world.
Section 3.4.1 (ISED 2020) discusses the financial concerns in the industry regarding declining revenue shares held by traditional media, instability in the industry, and risk to content funding regimes (142). The following section, 3.4.2, addresses these concerns with recommendations. Recommendation 60 regards the call from stakeholders to level the playing field, asserting that contributions in funding should be equitable. Here, the report found “a growing number of jurisdictions have affirmed their cultural sovereignty by imposing obligations on media services that provide content to audiences in their countries” (143). While again, exact funding and monitoring measures are not explained, the recommendation serves to introduce goals for policy to be made down the line. Exploration of Recommendation 61 explains that funds should be established in order to support Canadian content production and distribution, without offering specifics. In regards to the second point in this recommendation highlighted in this analysis, the report notes difficulties finding or recognizing Canadian content and “algorithms and AI-based processes have a major influence on program recommendations with a consequent influence on the discoverability of content” (144). On this basis, the report recommends discoverability requirements for media content companies, but do not suggest what those requirements could look like. For Recommendation 62, regarding financial contributions for media curation undertakings, proves more specific in its expansion. The section suggests spending requirements for other media curation undertakings, but levies in the case of online audio streaming services, due to their differing business model. Here, the report asserts that the CRTC should remain flexible, offering choices between expenditures and levies. Though exact numbers are again not discussed, the report offers several solutions here. Recommendation 63 regarding discoverability notes that “alongside measures to support content creation, it is important to ensure that Canadians are able to discover Canadian content provided by undertakings in both the private and public sectors” (147). This section again notes algorithms, recommending requirements for media content undertakings to be more transparent regarding factors which contribute to recommendations, which would in turn make these providers more accountable to making Canadian choices available. The report recommends flexibility in discoverability requirements, and in monitoring the consumption of Canadian content online, suggests collaboration between the CRTC and industry.
Discussion
Overall, the elements of the submissions above reflect sentiments within the organizations who submitted them. The CAB report offers a perspective from an industry placed in a vulnerable position. The report focuses on the concerns of public radio which have emerged as streaming and digital media has gained popularity over traditional media. The submission is concerned for the future profitability of commercial radio first and foremost. The CAB pushes for deregulation in areas where they are constrained in order to remain competitive, and regulation for players who threaten their profitability.
The submission from the CMPC shows concern for all players in the industry. The submission concerns itself with the future of the Canadian music sector at large. The CMPC addresses the struggles faced by artists and labels in a changing music climate. They offer specific suggestions to the panel surrounding new regulatory framework which would protect a strong Canadian music industry which remains important in the digital age.
The CRTC submission shows a commitment to regulatory shift, without specifically outlining new frameworks. Instead, the report focuses on adaptability of policy for changing communication environments, and new tools which fit the digital age. They note emerging models and choices made by Canadians in a shifting system, while promoting existing values surrounding the necessity of Canadian content.
These recommendations, if undertaken, would create a completely new framework for regulating the streaming services explored in this paper. Recommendation 58 is in line with current CRTC regulatory forbearance, leaving open the possibility of a regulator that chooses not to regulate in the first place. These other recommendations discussed here, however, offer hope for the Canadian music recording and broadcasting industry. The review shows a concern for the future of Canadians working in the cultural industries, addressing funding and support for Canadian content. At the same time, the report addresses the fear felt by industry regarding the prospect of music streaming services left to operate in Canada without contributing to the ultimate goals of the nation’s cultural policy.
Actors in the industry voiced concerns surrounding profitability, discoverability, and lack of a fair regulatory playing field. For profitability, the report addressed the challenges faces by traditional media, but do not directly address the issues brought forward by the CMPC and made clear through MarketLine statistics which show decreased revenue that artist's face when distributing their work on streaming services. While equitable funding is addressed, the report suggests no mandates for equitable access to these funds. If funding provided by music streaming platforms is controlled privately, these funds may be specifically allocated to artists operating under firms which have relationships with the streaming service. Specifics surrounding funding will be left up to the CRTC, who will ultimately be tasked with creating a funding landscape which takes into account complex relationships between platforms and labels. As noted in the literature review for this paper, Spotify has a massive share of a very profitable market. In order to continue to have adequate funding for Canadian content production, it is critical to have streaming giants contribute to Canadian music funds. This funding is especially important in an environment where artists may not see the same profits from streaming services as they do from traditional radio.
In regards to discoverability, the report addresses a need for discoverability requirements, and importantly notes the role algorithms play in music selection on streaming platforms as brought forward by submissions. The report, however, does not note the complexities in algorithmically or editorially led discoverability. Again, specific discoverability requirements will be in the hands of the CRTC. The specific mention of algorithms provides a starting point for discoverability, but human involvement in playlist curation will need to be noted when requirements are set. The discoverability also needs to specifically target Spotify created playlists in order to be effective. Literature has shown the intense importance of positioning on playlists for artist discoverability, and should be a central focus in discoverability regulation.
Finally, the issue of who will be regulated and how is addressed on many fronts in the report. The jurisdiction of the CRTC is noted, with a recommendation to further clarify this position. The report addresses the need to level the playing field with new policy, again addressed in submissions. This new policy framework outlined by the report does not satisfy the CMPC suggestion of quotas but does address monitoring and reporting of Canadian content consumption. The new framework of registration is in line with the CAB suggestion that policy will need to be novel. Overall specifics of regulation are not presented by the report, but a commitment to creating a fair arena for both over-the-air and online music is clear.
While language and specifics remain vague, regulation of Spotify and other “media curation undertakings” should be included in communication legislation according to the review panel. The panel did not ignore concerns of those in the music industry, though these concerns can be seen as relatively small in the scope of nearly 100 total recommendations. The report leaves specifics up to the regulatory body but offers a fair framework that takes into account specific industry concerns. While the report may not acknowledge all of the new technologies and trends in listening habits that are explored by the literature surrounding music streaming, it marks a starting point for new legislation.
Conclusion
The growing popularity of music streaming is evident in Canada, with over 50 per cent of Canadians aged 18–34 and 25 per cent of all Canadians reporting subscribing to a music streaming service (ISED 2020, 120). Today, these services remain unregulated by the CRTC, while traditional and satellite radio remain subject to Cancon requirements that mandate broadcast of, and contributions of funding towards, Canadian voices. In a changing system, however, the major streaming platforms wield control over music consumption, with streaming platforms like Spotify having the power to directly influence consumption decisions (Aguiar and Waldfoge 2018). As such, policy which requires these platforms to promote Canadian artists and support domestic industry has been called for by industry professionals. Academic research supports this call, showing that Spotify and other streaming services employ new technologies that have altered music consumption habits in a way which renders current legislation ineffective in sustaining the current Canadian music industries. This call has been answered by the ISED’s 2020 policy review report, Canada’s Communications Future: Time to Act, which recommends new registration-based policy poised to hold music streaming platforms accountable to a commitment to Canadian content. How effective a new legislative framework will become in handling modern communications regulation, however, will ultimately be up to the CRTC, as they move forward in deciding specifics surrounding enforcement of a revised or new Broadcasting Act.
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