Transcript, Hearing 29 November 2023

Attendees and Location

Held at:

Conference Centre
Portage IV
140 Promenade du Portage
Gatineau, Quebec

Attendees:

• Chairperson: Vicky Eatrides
• Members: Alicia Barin, Vice Chairperson, Broadcasting
  Adam Scott, Vice Chairperson, Telecommunications
  Nirmala Naidoo, Commissioner, Alberta and the Northwest Territories
  Joanne T. Levy, Commissioner, Manitoba and Saskatchewan
• Legal Counsel: Valérie Dionne
  Bianka Lauzon
• Secretary: Jade Roy
• Hearing Managers: Courtney Fitzpatrick
  Marie Lyse Lavallée

Table of Contents

Presentations

5871 Corus Entertainment Inc.

6110 RNC MEDIA INC.

6240 Digital First Canada

6354 Digital Media Association

6455 Shaw Rocket Fund

6543 Accessible Media Inc.

6609 Spotify

Transcript

Gatineau, Quebec
29 November 2023
Opening of Hearing at 8:59 a.m.

Gatineau, Québec

‑‑‑ Upon commencing on Wednesday, November 29, 2023 at 8:59 a.m.

5868 THE SECRETARY: Good morning.

5869 We will start this morning with the presentation of Corus Entertainment.

5870 Please introduce yourself and your colleagues, and you may begin.

Presentation

5871 MR. REEB: Thank you.

5872 Good morning, Madam Chair, good morning, Vice‑Chairs and Commissioners. My name is Troy Reeb. I am the Executive Vice President of Networks and Content at Corus Entertainment.

5873 Joining me today are Jennifer Lee, our Executive Vice President and General Counsel, as well as Vice President and Associate General Counsel, Matt Thompson.

5874 Corus, as you may know, is Canada’s largest independent pure‑play media and content company. We are the operator of 86 licensed broadcasting stations and services. We are a proud and longstanding supporter of Canadian content, we are Canada’s leading provider of children’s content, a significant employer of Canadian creators and one of the country’s largest journalism organizations through Global News.

5875 This is an aspirational proceeding. Everyone the Commission has heard from and will hear from wants to be part of a better system, but we cannot get there without fixing what is broken now. The system we currently have is fundamentally unfair and has jeopardized the future of Canadian‑controlled broadcasting and devastated the economics of local news. You certainly have your work cut out for you, but this is a proceeding that we must get right.

5876 Through Bill C‑11, Parliament affirmed that a Canadian‑controlled broadcasting system is central to Canada’s broadcasting policy because it serves many other objectives in the Act. For the better part of a century the system has depended on successful Canadian broadcasting companies. Now, as ever, you cannot have one without the other.

5877 Over the last decade, in the face of unregulated foreign competitors, our industry has faced escalating costs and declining revenues and profits. These trends have accelerated in recent years. Local television and radio stations are closing, jobs are disappearing, and there may be worse to come. Impartial, fact‑based journalism provided by Canadian broadcasters is in particular peril.

5878 To be sure, Corus has not been spared. In our most recently completed fiscal year, we reported meaningful declines in consolidated revenues, in segment profits, and in free cash flow. We have been forced to reduce our headcount by more than 15 percent to keep pace.

5879 For years, Corus has advocated for less prescriptive, more equitable broadcasting regulations, which would allow us to build a more successful and growing business. We have always been open to different approaches to bring about this outcome.

5880 Bill C‑11 and the Commission’s current proposal represent one such approach, and after years of consultation and debate, we are committed to working with it constructively. As we look to reinvent the regulatory framework for a post‑walled garden era, the stakes could not be higher for our company, for our 3,000 employees, for our audiences, for the many creators that we work with, and for the entire Canadian‑controlled broadcasting system. As Minister Pascale St‑Onge rightly said: "We want to make sure that we still have a system to save."

5881 MS. LEE: Fortunately, we are encouraged by certain aspects of the Commission’s approach. You have moved quickly since Bill C‑11 passed, just as Ministers Champagne and Rodriguez encouraged you to do in their joint letter to Chair Eatrides last February.

5882 Your outcomes‑based approach would promote more adaptable and effective regulatory tools. Your three proposed contribution categories would draw on different players’ strengths to realize shared goals.

5883 We have been open that we would much prefer to have our existing regulatory obligations revisited earlier on, but we do see that you are taking important steps to level the playing field through initial contributions from online players and we do see a path forward for our industry.

5884 While progress has been made, there remains much more work to do. To that end, we do have some recommendations today for your consideration.

5885 First, Corus recommends that large standalone online undertakings who are not affiliated with licensed broadcasters be required to contribute to eligible funds. Only undertakings exceeding $50 million in annual gross revenues should be subject to a base requirement at this initial stage.

5886 Some witnesses have argued that both standalone and affiliated online undertakings should be subject to these base requirements, but we strongly disagree. Licensed broadcasters like Corus already carry heavy, inequitable contribution requirements and we have done so, while awaiting legislative and regulatory reform, for quite some time. No new costs should be imposed upon us now until our existing obligations are revisited and recalibrated.

5887 Our company is currently undergoing an enterprise‑wide cost review, which has prompted some very difficult decisions. We simply cannot sustain additional regulatory burdens at this time.

5888 Canadian broadcasting undertakings, large and small, share our perspective on this, and the government’s recent policy direction reinforces this important point.

5889 To be clear, we accept that our largest online undertakings like STACKTV will attract regulatory obligations under the new framework, but they should not be brought in until the Commission is ready to revisit and recalibrate the requirements on traditional broadcasting undertakings.

5890 The largest online undertakings are owned by multibillion‑, and in some cases multitrillion‑, dollar international media and technology companies. Unlike Corus, these firms enjoy global scale, unparalleled access to capital markets, virtually no regulation in Canada, and a host of other structural competitive advantages. They can and should begin contributing at standards comparable to licensed undertakings as soon as possible.

5891 As for where base contributions should go, we believe a significant proportion of them should support local news production. This proceeding allows the CRTC to shift greater emphasis onto a genre of programming that is newly highlighted in the Act. It's highly valued by Canadians, hugely important to democracy, yet struggling to stay afloat.

5892 You’ve heard a lot about "gaps" in this hearing, and there is no gap more urgent than news funding. Current regulated funding tools like the Independent Local News Fund are failing to cover eligible news providers, including 15 local Global Television stations in eight provinces. There is a news funding crisis in this country and we urge that it should top your agenda for this proceeding.

5893 MR. THOMPSON: More specifically, we recommend that 25 percent of all initial base contributions be allocated to the Independent Local News Fund in its current form. If the Commission decides to expand that program to include vertically integrated local television stations, discretionary services and/or radio stations, then a higher proportion should be allocated.

5894 Funds that support non‑news Canadian content and creators, like the Canada Media Fund, Certified Independent Production Funds, FACTOR, Musicaction and the Radio Starmaker Fund, should receive 64 percent of these contributions or less if the Commission decides to expand the news fund.

5895 Funds that support Indigenous content and creators, like the Indigenous Screen Office, should receive 4 percent of the base contributions.

5896 Funds that support creators and content from members of equity‑seeking and ethnocultural groups, including Black and other racialized communities, should receive 4 percent of the contributions.

5897 And funds that support accessibility, participation and other public interest objectives like broadcasting services deemed of "exceptional importance" should receive 3 percent of the contributions.

5898 In the interest of expediency, Corus believes base contributions should generally flow to established funds, which can disseminate monies quickly.

5899 With that said, we congratulate the Indigenous Screen Office and the Black Screen Office on their successful applications to become Certified Independent Production Funds. We trust they will continue to support storytellers and narrative sovereignty in the years ahead.

5900 Like virtually all other Canadian broadcasting groups in this proceeding, Corus believes obligations should be assigned at an undertaking rather than an ownership group level for reasons of fairness.

5901 Similarly, we believe all undertakings should be organized into one of three classes based on the nature of the broadcasting activity they perform: distribution, video programming and audio programming.

5902 Assigning similar contribution levels to undertakings engaging in similar broadcasting activities will best achieve equity in the system. After all this time, we cannot end up with a two‑tiered framework in which traditional undertakings must meet a higher set of rules than online undertakings.

5903 Finally, the largest standalone online undertakings should not be assigned partial contributions at this stage. Rather, given their many competitive advantages, their full contribution requirements should apply in Step 1. It would be unfair to allow large international media and technology companies to meet partial obligations, while requiring smaller Canadian broadcasters and distributors to continue meeting their full obligations for two or three more years.

5904 More specifically, online video programmers should be required to make 20 percent initial base contributions, online audio programmers should make 4 percent contributions, and online distributors should make 5 percent contributions. These obligations should apply for at least an initial period. It may be appropriate to offset some of an undertaking’s base contribution through flexible and intangible contributions at later stages, depending on the composition of those other categories.

5905 MR. REEB: Commissioners, we believe our proposals are workable and that they can be implemented quickly to meet the Commission’s objectives.

5906 Unfortunately, others have taken less constructive approaches to this proceeding.

5907 Large unregulated international players have rejected the Commission’s proposal and want to avoid making contributions as long as possible. We agree with them that equitable does not necessarily mean the same, but equitable also does not mean that you get to enter the regulated system on your own terms. International streamers enjoy significant structural competitive advantages and they have had the better part of a decade to prepare for Canadian regulations. They should not be allowed to delay any further.

5908 For their part, creative sector guilds, unions and producers’ associations espouse a backward‑facing regulatory approach. They would have the Commission believe that news content does not warrant support and that Canadian broadcasters should be subject to the same rules that they always have been, despite the competitive changes. Both of these approaches would imperil the Canadian‑controlled broadcasting system and the many objectives in the Act it serves. Most notably, they would jeopardize news programming in communities across Canada.

5909 As my colleague said earlier, we are focused on a path forward. Despite our current challenges, our company is confident that we can build a brighter future and continue supporting a thriving, creative and distinctly Canadian media ecosystem.

5910 We are leveraging our long track record for making outstanding news and lifestyle content that people love, bringing that content to audiences wherever they are, including overseas, and forming lasting, mutually beneficial partnerships with global media organizations, all of which will fuel a growing business that can continue to be a part of a Canadian‑controlled broadcasting system and deliver local news to Canadian communities for many years to come.

5911 That is our plan, and we can achieve it, but it cannot happen without a more fair and equitable regulatory framework. There is not a moment to waste.

5912 Corus thanks the Commission for the opportunity to appear before you today and we hope you will consider our recommendations. Of course, we would be very pleased to now answer your questions. Thank you.

5913 THE CHAIRPERSON: Thank you so much for being here with us, kicking off day 8. We are now officially halfway through our three‑week hearing, so thank you very much.

5914 MR. REEB: Congratulations.

5915 THE CHAIRPERSON: I know that my colleagues have long lists of questions. I think Commissioner Naidoo had the longest list, so we said that she could go first. So, over to you, Commissioner Naidoo.

5916 COMMISSIONER NAIDOO: Yes. Thank you so much for being here today, for your presentation and your intervention. We really appreciate it.

5917 I wanted to start off by asking you about the proposal that you just mentioned. You propose that all large video, audio and distribution standalone online undertakings generating greater than $50 million in annual Canadian gross revenues should be required to make base contributions. Video and audio programming services, though, have very different financial dynamics, as we all know.

5918 In light of this, if the applicability threshold is set to $50 million for all online undertakings, do you consider that the resulting contributions flowing to the audio and video funds would be equitable? Is there a possibility that one sector may be favoured over another, and, if so, how do you recommend that the Commission address this?

5919 MR. THOMPSON: Lots there. I think certainly the Commission has its work cut out for it. There are many worthy cultural interests that the Act prioritizes and it is going to be difficult to choose how much each shall receive and who is in the best position to disseminate it.

5920 We've approached the exercise from the perspective of trying to group things together as best we can. We do think a significant share should flow to support creators and creation of non‑news audiovisual content, and there are some established funds that do that work already, and we think that that is a good starting point is working through existing funding structures like the CMF, like certified independent production funds.

5921 I think the Commission's task in this phase is to get dollars out the door as quickly as possible. So we favour an expedient approach like others have expressed to date working through existing funds, evolving those structures to better serve the objectives of diversity and equity and inclusion in the system as well.

5922 So we think beginning with that perspective is the best approach to ensuring dollars flow equitably with an emphasis, of course, on supporting this production because we think that is the area of most acute need at the front end.

5923 MR. REEB: Just to pick up on the question around the $50 million level that we've recommended, that would, you know, involve the undertakings that are the largest, most established in the territory. It's at a level that we think wouldn't stifle the competitiveness of allowing new entrants in and encouraging their growth. But 50 million would certain capture those services that are now clearly in direct competition with the traditional broadcasting sector and, you know, obviously provide an immediate cash flow to help the Commission achieve its goals as it looks to remake the system.

5924 As for the audio, the difference between the video and the audio undertakings, which I think was a clear question you were asking, Commissioner, you know, we recognize there is a difference between kind of the level of revenue that comes with video services and audio services. If the Commission was looking ‑‑ thought it appropriate to have a lower floor for audio streaming services, we would support that.

5925 COMMISSIONER NAIDOO: Thank you for addressing that. I appreciate it.

5926 Are your contribution level proposals for both language markets? And if so, please explain your rationale, given the clear differences between the markets and the differences in Canadian programming expenditure requirements for French language traditional broadcasters.

5927 MR. THOMPSON: Yes, our proposal applies to both languages. We recognize that the CMF, for example, has an existing breakdown and our recommendation is to work through the existing ratio. We understand that is a discussion that is open for debate, and you've heard various perspectives on it to date. But yes, our proposal is intended to address both language groups.

5928 There are existing funds that are directed specifically to supporting French‑language creations, such as Musicaction and Fonds Radiostar. And certainly, we think an equitable portion should flow in that direction.

5929 As for supporting French‑language content directly, we're the proud owner of French specialty services here, French‑language specialty services in Canada that commissions a significant amount of original French‑language programming and looking forward to continuing to do so.

5930 COMMISSIONER NAIDOO: Thank you for that. The pause was in case one of you wanted to jump in there.

5931 You proposed a contribution level at five per cent for virtual broadcasting distribution undertakings and at 20 per cent for online programming services. But many online services serve multiple purposes, and some have a mix of distribution services and programming services. So in light of this, how would you suggest that the Commission differentiate what is considered distribution, what is considered programming in order to require such different activity‑based initial base contribution levels?

5932 MR. REEB: Well, I'll start off by referencing the top of my presentation: you have your work cut out for you.

5933 Look, we'll be the first to acknowledge that there is a mix of services that are provided. What's more clear cut in the linear world becomes blurred in the digital world. But it's not blurred to the point that we think it's impossible for the Commission to differentiate. And we think it's important to differentiate, because as you will know in the world that we are moving out of there are very different contribution levels between distributors, between broadcasters, between audio providers, and very different business models as a result.

5934 Probably the best example that you'd be looking at would be Amazon, where they have Prime Video, which acts very much like a broadcaster. It is a video undertaking. On top of that, there are Prime Video channels. Our StackTV service is distributed as a Prime Video channel bundle on top of that. Those are differentiated revenues inside of Amazon. And I don't think it would be particularly onerous for the Commission to request a breakdown of those revenues. In the same way, Amazon offers Amazon music, a music streaming service which has differentiated revenues. Part of that service is base, included in the Prime Video subscription, part of it is an add‑on incremental. But it is ‑‑ but again, inside of these companies, as inside our own company, where we have separate reporting segments between our audio and our video segments, certainly too do these companies break down the differences between their delivery and their distribution segments.

5935 MS. LEE: I might just add, we know that there are certain comments that have been made about, well, if it's too difficult, we should just apply a broader approach, maybe a less differentiated approach.

5936 I think our view is that we think now is the time to take the time to sort this out. As Troy rightfully said, we know it's not maybe immediately apparent or the way we've been doing things, but it is certainly possible to distinguish.

5937 I think everyone recognizes there won't be a definition that's perfect, and it might need to evolve. But naturally, through regular Commission processes and hearings, you know, all licensed broadcasters, for example, get a chance right now to come back in a substantive way to revisit conditions, to talk about their businesses. We report annually. So I think there's actually a lot of steps and a lot of ways along the way to adjust and have people advocate if their business model changes.

5938 I don't think we should be afraid to ask all players in the system now to think conceptually about how they could contribute and for the Commission to think that way for fear that further down the road it might get a little bit cloudier. Maybe, put simply, we shouldn't let maybe the exceptions be the rule in this case. And this is why we continue to advocate for some differentiation and have proposed certain amounts that of course you may consider more closely, but that's why we continue advocating for that.

5939 COMMISSIONER NAIDOO: Thank you for that.

5940 The initial base contribution levels that you propose are very similar to what traditional broadcasters already contribute in total. So you also state that contribution levels for traditional broadcasters will need to be reduced in the future steps of the process. So in your view, would these initial base contributions for online undertakings also need to be adjusted in steps two and three going forward?

5941 MR. THOMPSON: Potentially. I think it's a useful starting point, because, as the Commission phases in a new framework, I think what we're attempting to do is to try and bring the largest online undertakings, the largest stand‑alone online undertakings who have established a foothold in the market ‑‑ and that's why we've deliberately set a threshold at a relatively high level at 50 million ‑‑ to begin to contribute at levels that are comparable to incumbents in the market.

5942 So I think that is a useful starting point for this phase. But certainly, as the Commission develops the rest of its contribution framework ‑‑ and the modus operandi for step three will be to establish individual contribution arrangements for individual broadcasting groups, so I think that is a discussion that can certainly evolve. But these, we think these are useful starting points for this phase.

5943 MR. REEB: We are talking about interim contributions. As I said off the top, the ship needs to be righted at this moment. There has been a tremendous imbalance between the level of regulatory obligations put on certain players in the sector, including our company, and the complete lack of regulatory obligations put on other players in the sector.

5944 As part of an initial process, that balance needs to be righted. That means that applying somewhat equitable similar standards to the other players in the system. As the system that evolves with new definitions of Canadian content potentially with an understanding of how much money is available in the system versus how much money is available for companies to actually continue to drive their businesses, there can be a rebalancing, as Matt has suggested. But initially, we believe that there has to be equitability and injected quickly.

5945 COMMISSIONER NAIDOO: Thank you very much.

5946 I want to talk a little bit about news. You suggest that 25 per cent of the base contributions derived from online undertakings should be directed to the Independent Local News Fund in its current form. Can you elaborate on the immediate needs of the local news industry and how you think increased funding to ILNF would address these needs? And also, is this the best way to ensure the long‑term viability of news in Canada? Because it seems to me that this has been an issue for quite some time, and I'm wondering what else must change on either a funding basis or a non‑funding basis to support news.

5947 MR. REEB: The economics of news are difficult. This is a topic I've spent much of my career studying relatively in‑depth and have probably made more speeches on than I can count.

5948 The simple reality is that news programming is the most botched and most beloved programming in the traditional broadcast system. Survey after survey, including those done by the Commission itself, showed it is the category of programming that Canadians deem the most important inside of the traditional broadcast system. But the reality is that in broadcasting, much of the audience for news is on free‑to‑air channels that don't get subscription revenues, that much of the audience for news falls outside the advertising demos of 18‑to‑49‑years‑olds or 25‑to‑54‑year‑olds, sometimes 80 per cent or more. And therefore a small proportion of what is the largest audiences for a category of programming actually gets monetized and is monetizable.

5949 It is very much core to the Act that public benefits be provided to Canadians. And the provision of local news telling people what's happening in their communities, supporting the efforts of local charities, uncovering local difficulties, and telling the stories of people from marginalized communities is very much in the vein of public service that the Act is trying to achieve. But the market forces of media fragmentation, which used to work toward news as a gathering place for, you know, many people for the 6:00 show or the 11:00 news every night, those fragmentation forces are now causing the market to work against news, even as the audiences remain incredibly strong both in English and French.

5950 So the ILNF proposal is one that actually we do think is a long‑term solution because it spreads the question of funding not just to the services themselves that have, for market reasons, have difficulty monetizing news content. It spreads it to the entire broadcast system and provides supports across the entire broadcast system for a benefit that should be to the entire broadcast system.

5951 And when we talk about the ILNF in particular, we reference the Independent Local News Fund, which is right now eligible for those not affiliated with large vertically integrated groups. We have heard other intervenors in this proceeding already suggest that there should be a larger fund which the vertically integrated broadcasters could also tap into. That's certainly a worthy idea. But we would note that the vertically integrated broadcasters are eligible to redirect local expression funding from their distribution arms currently and that cross‑subsidization that takes place in those companies would have to be taken into account in any larger fund.

5952 MS. LEE: I'll just add thematically I think, Commissioners, a lot of our suggestions are really based on the notion we're not necessarily trying to preserve legacy things. What we're trying to work with is hopefully with the Commission is to suggest things that if there's well‑trod paths, if there's existing funds, for efficiency and expediency, if we can work with something that is already working and has a proven record, let's keep with it.

5953 In other areas, if it's not, you know, well, some people have talked about adding funds. I think there's ways to increase accountability, increase that sort of rigour around what's existing.

5954 But Corus is very focused on, again, working with the proposals and working and moving things forward quickly and expediently. So something like the ILNF, we have a vast experience understanding how it works. People understand how to get the funds. There's existing definitions. And as Troy said, they largely make sense already. And that's another reason that supports that suggestion and a couple of other recommendations today.

5955 MR. THOMPSON: Maybe if I can ‑‑ it's an area of great interest to us.

5956 So on the issue of an expanded news fund, I think we would just acknowledge that there is broad need in the industry across different classes of broadcasting undertakings for support in the short term. So just we want to acknowledge that. But we also acknowledge that there would be complexity in applying, for example, a locally reflective and a locally reflective news requirement to radio, which currently ‑‑ for which that cost is currently foreign. It doesn't apply in radio. So there is some complexity as well in accounting for some of the equity issues with vertically integrated local television stations as well.

5957 We've also heard funds should be directed to support national news. Also a worthy idea, but not necessarily ‑‑ we currently do in the current framework, so there are some complexities involved with expanding the news fund. If the Commission is prepared to have that conversation now and to do that work in this proceeding, it's certainly worth exploring. But in the short term, we have a very acute funding issue with the ILNF which we wanted to make sure we were very clear about in our appearance today. And it's very top of mind for us and our 15 global stations.

5958 In terms of the long term, Commissioner, it's a good question about how we ‑‑ and it's a big one ‑‑ about how do we safeguard news over the long term. Funding is certainly a piece of a broader puzzle. We think there are ‑‑ it's going to require more than one piece. Regulatory flexibility long term is something that's also going to be needed to support news over the longer term.

5959 But we've tried to approach this exercise in a staged manner, in accordance with the framework that you've laid out. So the question before us today is how do we best direct initial base funding. And that's why we placed a heavy emphasis on the news funding idea.

5960 COMMISSIONER NAIDOO: Thank you very much for that.

5961 Mr. Reeb, you had mentioned vertically integrated players, and I just wanted to ask a question related to that and ILNF. You also mentioned that if the Commission decides to expand the Independent Local News Fund to include vertically integrated local television stations, discretionary services, and/or radio stations, that a higher proportion should be allocated. Can you expand on this and maybe put forward a suggested percentage that the 25 per cent would have to be increased by in order to include vertically integrated local TV stations?

5962 MR. REEB: Well, I'll just jump in. First, I'll echo my colleague's comments. The challenges of local news at Bell, at TVA, at CityTV are no less acute than they are in other places.

5963 We have a particular challenge at Corus in that we are the only broadcaster in the country to not receive local expression funding currently because of some anomalies with the setup of the ILNF and our unique status as being formerly considered vertically integrated and no longer.

5964 And so I just want to reinforce that we believe there is an overall issue in news that needs to be addressed long term, but that short term, for expediency's sake, we should be ‑‑ and you're going to hear this repeated over and over again today ‑‑ we believe working through existing structures to not over‑complicate things so that the Commission can move quickly is a wise path to follow.

5965 In terms of coming up with a specific number, I will pass it to my colleague to see if he wants to venture down that dangerous rabbit hole.

5966 MR. THOMPSON: Well, we know that 30 per cent has been proposed by others for a broad news fund. And so that's an idea that's out there that might have some merit.

5967 I think it depends on how far the Commission is prepared to expand the fund. If it's prepared to expand it to include all radio operators, is it prepared to expand it to only vertically integrated local television operators? Is it prepared to expand it to include national news providers? I think the degree to which you're prepared to expand it will inform how much we're going to need to capitalize that fund, which is why we left it a bit open.

5968 COMMISSIONER NAIDOO: Thanks for that.

5969 You've probably heard ‑‑ we're into a week and a half of the hearings, and you've probably heard already, if you've been following at all, online undertakings say that if they pay into funds, they should be able to draw from those funds.

5970 You acknowledge in your reply that it may be appropriate to permit online undertakings to access production funds in the future as part of a broader reconsideration of Canadian production funding policies. However, you do state in your intervention that it's necessary to do so at this stage. Can you please elaborate on this?

5971 MR. THOMPSON: I think at the core of our submission is our conviction that the largest online undertakings have competitive structural advantages over Canadian incumbents. These include unparalleled access to global capital, global scale, and a lack of regulation.

5972 Another one has to do with the value proposition for them in the acquisition of content. When they acquire or license a Canadian production, they're able to amortize those costs over many markets. They're able to exploit the returns of that investment over many markets. Domestic Canadian broadcasters are generally limited or traditionally have been limited to exploitation in the Canadian market alone, limited to a limited Canadian broadcast rights window. So the value proposition is uneven. It's part of the competitive imbalance that we referred to earlier.

5973 So direct expenditures on Canadian programming, it works a bit more to the advantage of the international players. So working through funds is one solution to that competitive imbalance in the short term. Again, we're working in a phased manner. We do understand that there is an ongoing conversation about funding rules and about the definition of Canadian content longer term. But in advance of those broader considerations, we think the most appropriate and equitable solution is to have those players pay into funds.

5974 COMMISSIONER NAIDOO: Thank you. I just have two more questions and then I'm going to pass it over to my colleagues.

5975 Some intervenors have said not enough focus has been placed on broadcasters specifically when discussing how to change the system going forward. I wanted to give you an opportunity to give us your take on that.

5976 MR. REEB: You won't be surprised that we agree with those intervenors. The role of traditional broadcaster I think sometimes is in a derogatory way reduced to being an intermediary between content creation and audiences. But it is so much more than that. The role of the broadcaster in creating programming services, the broadcasters still have incredible power to create hits, to direct audiences, and I think most significantly to inform and empower local communities through the provision of local news. And it is not simply a role of intermediary. They are the largest providers of direct jobs in the system and operate in not just the big production centres of Montreal, Vancouver, and Toronto or the small production centres like Sudbury, but in communities right across the country.

5977 You know, I am a former radio news director in Yellowknife, and I know the incredible value that the local radio station in Yellowknife ‑‑ and the I know the Commission has looked into this issue as well ‑‑ plays in providing local news. That is the case right across the country. Our local station in Kelowna during wildfires was the place where community leaders held townhalls in the parking lot because it was the fastest and the easiest way to get messages out to the broader community, a community that watches that newscast in tremendous numbers every night.

5978 So I think to downplay the role of the broadcaster in the system going forward I think is a mistake. It plays an incredibly important role both in terms of economic and cultural benefits for the system.

5979 MR. THOMPSON: If I could add, difficult to follow that, but the journey that we undertook with legislative reform, it was really an informative one insofar as Parliament sort of ‑‑ it made changes with its approach throughout the journey.

5980 In its earliest stages, the predecessor legislation, C‑11, C‑10, did away with the provision that would require effective Canadian owned and controlled broadcasting system.

5981 They overwhelmingly restored that provision to the final version of the law that you have before you today. It sent a really important signal that Canadian owned and controlled broadcasters still matter. You cannot have a Canadian owned and controlled broadcasting system without Canadian controlled private broadcasting organizations.

5982 So I think just we have our marching orders in this process that we should be invested in the future success of our homegrown Canadian broadcasters.

5983 COMMISSIONER NAIDOO: Thank you for that.

5984 My last question before I turn it over to the rest of the Panel is, we have heard throughout this proceeding, throughout this hearing that U.S. content being sold directly to viewers is a new reality of the evolving industry. So I wanted to find out what you ‑‑ how do you think that that’s going to affect Corus or is already affecting Corus and where it will go further down the road?

5985 MR. REEB: The content rights market in Canada certainly has been thrown for a loop by the entry of direct‑to‑consumer streaming services, particularly those that are affiliated directly with the major Hollywood studios who used to serve only as the suppliers to Canadian broadcasters but now serve as both suppliers and competitors.

5986 No longer when we are bidding on television shows that we think will work on our platforms are we just bidding against our fellow Canadian broadcasters or even against upstart streaming services. We’re sometimes bidding against the studios themselves, who will have their own reserve price that if they can’t get it out of a Canadian broadcaster, they will hold the content back or maybe never offer the content for sale in the first place because they have their own direct‑to‑consumer opportunity to put it out there.

5987 It doesn’t mean that the distributors ‑‑ and I think you’ve probably heard from a number of the major U.S. studios who have talked about the value they place on the partnerships that they have with Canadian broadcasters. We agree with them. There is tremendous value in that.

5988 And we continue, at Corus, to partner with all of the major international studios around some of our own channel brands, around content supply agreements. But certainly the margin that used to be available through the provision of foreign programming in Canada, that has become a very compressed business.

5989 It is still the profit driver for private broadcasters. Make no doubt about that. It is still the thing that we rely on to subsidize what is generally money‑losing Canadian content. But those margins are thinner, and that is why, going forward ‑‑ recognizing it’s out of scope for this proceeding, but going forward, we feel that there needs to be an overall readjustment of Canadian broadcasters’ contribution levels to match what has become the new reality of a lower margin business that needs to be more specialized in the kind of Canadian content that it can focus on in order to attract audiences and be able to create a growing business.

5990 MS. LEE: And if I would just add to that, I think that we have accepted the reality, I think if you kind of just say that colloquially. And I think a lot of broadcasters, certainly Corus, feel that that’s actually all that we’ve been doing, but we’ve been going at it essentially isolated from a regime and legislative reform that hasn’t yet caught up.

5991 You know ‑‑ I think streaming came, what, 2010. It’s been years. And there are many, many other industries, markets, goods and services that are offered internationally, including from the U.S., that Canadians have access to and value, but there’s very few industries in Canada where you come in unregulated and dictate your own terms.

5992 So I would argue that, you know, we are no way arguing that. You know, there’s a new reality. We’re not trying to reshape that reality. We’re just trying to do what we do best, which has always been, as Troy said, we partner with U.S. majors, we bring content that Canadians want to see.

5993 I think more than anyone, it’s broadcasters who understand what people want to watch. We don’t want to restrict that access. But as you’ve been hearing from us and you’ll probably hear some more is that we want to be able to do it in a way that preserves all the things that the Act, the Commission and we have said are important things like local news. We’ve talked about French language services.

5994 And I think that that is undeniably something that broadcasters are best positioned to do, and I would say the many years that streaming has been here can show you that. And what we’re really asking for is to help us work with the new reality versus fighting that statement, so I think it gets thrown around a lot, but I really think no one lives that reality more than broadcasters like Corus, and we certainly accept it.

5995 COMMISSIONER NAIDOO: Thank you so much for all your answers, and I will pass it back to Madam Chair. Thank you.

5996 THE CHAIRPERSON: Thank you. Thank you, Commissioner Naidoo.

5997 So just a heads up to Corus, Commissioner Levy’s list of questions is almost just as long. So we’ll go over to Commissioner Levy and then we’ll go to the Vice‑Chairs.

5998 Thank you.

5999 COMMISSIONER LEVY: No. Actually, I just wanted to do a little bit of tidying up given that I talked to Paramount+ yesterday, and that was an indication that Corus has been particularly agile when it comes to partnering with the new reality and the streamer services so you have a vested interest in their success. They’ve been suggesting that an initial rate contribution pretty much of any size, let alone the 20 percent you’re suggesting, would stifle the service production that is, quite frankly ‑‑ you know, contributes far more to the industry than Canadian oriented and initiated production.

6000 So how do you respond to that?

6001 MR. REEB: Well, first off, let me just say that we are ‑‑ we consider Paramount to be a tremendous partner. They’re one of our largest partners. We continue to work with them in, as you say, an agile way.

6002 And we do see a way forward for all players in the system to be able to work together, to make content that works not just for Canadians, but can be exported worldwide.

6003 One of the challenges you talk about when it comes to striking commercial agreements or dealing with a partner like Paramount which has both the ability to license content to us or hold it back and put it on its own Paramount+ streaming service is dealing with questions of scale.

6004 We don’t have an equitable ‑‑ we don’t have a level playing field right now. We have our services which shoulder the vast majority of regulatory burden in this country where we have foreign services which do not. Righting those scales is what allows us to actually be able to establish fairer partnerships going forward.

6005 And sorry, Commissioner, I forgot the second half of your question.

6006 COMMISSIONER LEVY: It had to do with stifling their operations in Canada if the initial contribution is too high.

6007 MR. REEB: You want to try that?

6008 MR. THOMPSON: Yeah, if you’d like it.

6009 MR. REEB: Yeah. Maybe I'll just say, look, as ‑‑ we run a business. We have obligations put on us. When we are ‑‑ when we’re required to spend money on one thing, it means we can’t spend that money on something else.

6010 I think that’s going to be true for any business, but I also think that there are ‑‑ you know, the reality is that whether or not you were considering mandatory contributions to funds for these major international players is not going to determine whether the next blockbuster is shot at a studio in Vancouver or Montreal. Those are much bigger decisions around tax credits, around availability of talent and probably have very little to do with what happens in this room.

6011 MS. LEE: And Commissioner, if I just might add, I think it’s ‑‑ it seems like an obvious argument to make and it sounds good, but you know, we are all very sophisticated businesses. As Troy said, every business, every sector, every industry whenever they enter, certainly, a new market, you should expect that there are, you know, existing rules, existing competition.

6012 I think Corus has contributed close to, what, $2 billion since 2017 under our Canadian programming expenditure, so ‑‑ and I still argue we make great content, we make it in Canada. We produce news, often at a loss, and we make difficult decisions.

6013 And so as Troy said, you know, you layer that on top of multinational large billion, trillion dollar tech companies who have infinitely more levers to pull to spread those costs, to figure that out, I think it’s an easy sort of argument to make. It kind of sounds scary at the beginning, but I think that would undermine their own argument that they are, in fact, large multinational, very sophisticated entities that can, you know, figure out how to play in a fair system.

6014 And I think it would do all of us and Canadians a disservice to be afraid of that and to be afraid of taking the right steps to protect what it is that we like about our system and the content that we’d like to see because in the future some super‑sophisticated company can't figure out how to work, you know, better with their cost base.

6015 Certainly Canadian broadcasters, producers, creators, we've been doing that, you know, since we’ve existed, so I think it’s a bit of a, you know, trite argument to be able to say, you know, you should just be afraid that it’ll stifle creativity or production.

6016 COMMISSIONER LEVY: What ‑‑ how could you ‑‑ I’m sorry.

6017 MR. THOMPSON: If I could just add one thing, Commissioner.

6018 I think these organizations produce in Canada because it makes good business sense for them to do so and we think that it will still make good business sense for them to do so regardless of this proceeding. The factors that made it good business sense before, an attractive tax credit regime, outstanding skilled labour, a favourable exchange rate, these are constants. These will not change irregardless (sic) of this proceeding.

6019 The question of service productions, that’s an interesting one. I know it’s gotten a lot of play in this hearing to date.

6020 Our position is similar to what you’ve heard from other Canadian broadcasters. Service productions do not ‑‑ you do not get the same bang for your cultural buck with a service production that you do on a Canadian program as certified by the CRTC and CAVCo.

6021 The productions that the international studios have referred to, we don’t know whether 75 percent of the production and the post‑production costs have been expended in Canada like CPE does. We don’t know whether the producer is the central decisionmaker on the production like we know that CPE does.

6022 These are the indicia that we would be looking for to make sure there is some comparability between the investment. So even if we were to play out the scenario where some dollars would shift from some of those productions to productions flowing through a fund, you might get a better bang for your cultural buck, if you will, if you were to undertake that decision. But again, we’re dubious about whether that would be the ultimate outcome.

6023 COMMISSIONER LEVY: How did you arrive at the 20 percent?

6024 MR. THOMPSON: Well, 20 percent is roughly half of the amount of contribution that licensed conventional and specialty television broadcasters have made over a long period of time. I think a few broadcasters cited some data points to support that number.

6025 It’s also ‑‑ 20 percent, again, just to clarify, is meant to apply only to online video programming undertakings. We’re proposing lower levels for distributors and audio online providers.

6026 So 20 percent, it’s within range of what traditional video programming undertakings are required to contribute today. It probably represents a more appropriate contribution level for all video programming undertakings going forward. And so that’s how we got to 20 percent.

6027 And mindful that we are continuing to be at 30 percent through this interim period as well.

6028 COMMISSIONER LEVY: Are you concerned at all about the notion that an influx of funds into the system might contribute to inflationary pressures in the cost of production and, indeed, the producers that you license simply having access to crews and resources for Canadian content?

6029 MR. REEB: I think you would hear from the CMPA and others that there have been declines coming from the traditional broadcasters. That’s true. Our revenues have been in decline for quite some time so this, again, would be somewhat of a righting of the ship.

6030 And we ‑‑ please understand that production cycles on scripted programming in particular are long. There is development funding, there’s the production of scripts, there’s writing rooms. You know, oftentimes this takes place over a long period of time and then the costs are amortized over a long period of time.

6031 One of our challenges, of course, has been, as a broadcaster, managing the ups and downs of our own revenues in ironing out CPE and how we spent it inside our own company, but an influx of dollars into the funds, I think, would be a ‑‑ well, first off, it would be a good problem for the funds to have and I don’t think it would be a significant problem for the funds to have.

6032 COMMISSIONER LEVY: Okay. I want to talk a little bit about news.

6033 Currently, some news expenditures are allowable as part of your Canada Programming Expenditure.

6034 MR. REEB: CPE, yeah.

6035 COMMISSIONER LEVY: CPE. Would more flexibility in that area, obviously, ameliorate some of the difficulties that you’ve had in supporting news?

6036 MR. REEB: Well, our full news funding is eligible as Canadian program expenditure, so all funds that are spent on news can be counted towards our required 30 percent prior year revenue’s CPE requirement.

6037 You know, I think looking ‑‑ if I can look backwards for a little bit, the old regime which required ‑‑ well, which continues to require ‑‑ you know, PNI expenditures is one that does not ‑‑ I’ve always held it up as this incredible anomaly that the national news in Canada does not count as a program of national interest, so some more flexibility in those rules would certainly be helpful. But I think what we’re really looking to ‑‑ you know, looking at going forward is one which is looking more at the provision of funding as opposed to, you know, changing the definitions around on how it’s spent.

6038 MR. THOMPSON: If I could just add, we regard this as more of a step 2 question. I think in step 1 we’re focused on funding and it’s a piece of a broader whole, like I referenced before.

6039 To clarify, our local news ‑‑ we have a subset of local news expenditure requirements. Locally reflective news accounts for 11 percent ‑‑ represents an 11 percent prior year revenue obligation on our conventional television stations. That is a subset of our broader Canadian programming expenditure requirement.

6040 But I think I’d like to make a larger point, if I could. News programming is Canadian programming, period. I think we’re ‑‑ kind of hive it off and think of Canadian programming as being a subset of programming, but just I wouldn’t ‑‑ I couldn’t resist the moment to make that point, that Canadian news programming is Canadian programming and engages all of the cycle of creation that I think the Commission is most interested in and that the Act prioritizes.

6041 COMMISSIONER LEVY: Thank you. I thinks that's all.

6042 I had another question, but I think that it is best left to stage ‑‑ Phase 2 where we can more fulsomely explore broader changes. I think we have to start thinking beyond the system that we’ve had and trying to put band‑aids on it. This is an opportunity and I urge you to contribute fulsomely to the next phase where we can talk about really sort of kicking open the doors of trying some new things.

6043 Thank you.

6044 MR. REEB: Thank you, Commissioner.

6045 And I would just say the ‑‑ you know, we are very eager to get to the next phase. We’re hoping for expediency on some decision‑making out of this phase.

6046 And I will say that, as a company, Corus continues to drive innovation in its partnerships with major studios and its innovation in the news space. We continue to be the largest provider of online streaming news in the country, a product we have uniquely innovated and which we partner to distribute with on very non‑traditional methods such as Prime Video.

6047 And you know, the pace of change does not slow down and we’re eager to stay ahead of it and keep the regulatory environment ahead of it as well.

6048 THE CHAIRPERSON: Great. Thank you so much.

6049 Let’s go over to our Vice‑Chair for Broadcasting, Vice‑Chair Barin.

6050 VICE‑CHAIRPERSON BARIN: Thank you.

6051 So I want to ask you some questions about these partnerships that you’ve mentioned.

6052 We have had before us many of the foreign streaming companies and they’re telling us that they already contribute to the Canadian system because they are either producing content or they are partnering with Canadian companies such as yourselves.

6053 Yesterday, we had Paramount Global tell us that they work with you for content on Pluto TV. So can you tell us, obviously without going into any confidential details, but can you expand on how you produce content with Paramount and maybe, you know, talk about that experience but also, when you respond, please consider how they also want us to count this type of content as contributions to the system?

6054 MR. REEB: First off, I will just reinforce the value that we put on our ‑‑ we use the word partnership and I think my colleague, Mr. Smith, from Paramount yesterday reinforced that when we talk about partnership, it’s really about a commercial relationship and that is that most of our partnership with Paramount and the other major studios involves us buying content from them and airing it on our platforms.

6055 It is true that in the case of Pluto TV, we have a different partnership, but Pluto TV is a wholly‑owned Paramount product, one for which we have contracted to sell the portion of the advertising in Canada, and which we also help to create Canadian channels for.

6056 It is a distributor for the innovative Global News channels which we operate directly, and then we also provide Canadian content from our, you know, various Corus studios divisions and libraries so that it can be distributed through Paramount operated Canadian channels on the service.

6057 So it is ‑‑ you know, it’s a necessary space to be in. The vast TV space is very quickly evolving. But that’s kind of the nature of the partnership, as you call it.

6058 And that’s not dissimilar to the kinds of relationships we have with many of the other major studios, whether it be Warner Brothers, Discovery, Disney where we are the operator of the Disney channels in Canada, you know, and that’s largely based on content which is secured by Disney, broadcast ‑‑ secured from Disney, broadcast by us and blended with a great selection of Canadian content which we have either created or acquired through our children’s studio to create a Canadian version of the Disney channels.

6059 And so that’s ‑‑ when we talk about partnerships, that’s generally what we’re talking about.

6060 VICE‑CHAIRPERSON BARIN: Okay. So I understand it falls under the programming supply category or distribution activities.

6061 Now, just a question on your advertising relationship. So you sell advertising for Pluto TV in Canada. Can tell us a little bit about your responsibilities with regards to selling advertising, obviously without getting into any confidential details, and then explain how a Canadian company like Corus benefits from this?

6062 MR. REEB: Well, without getting into too many of the commercial details, it’s not unusual for Canadian companies like ourselves and other broadcasters who have large ad sales organizations to basically have a representational arrangement in the territory. We have tremendous expertise at selling advertising in this country and when, you know, a provider wants to bring their product into the market and they’re certainly competitors to Pluto like Tubi, which works with one of our competitors to sell its advertising in the marketplace, it’s not unusual to contract with a local provider ‑‑ this is the case in Europe as well ‑‑ in order to sell the advertising ‑‑ to sell local advertising into the ‑‑ into what is essentially a foreign service.

6063 VICE‑CHAIRPERSON BARIN: Okay. Thank you.

6064 So it's like an agency relationship, if you will. Okay.

6065 MR. REEB: It’s an ad representation deal.

6066 VICE‑CHAIRPERSON BARIN: One last question, so it's a broader one.

6067 I’ve heard you speak about the important role that Canadian broadcasters and broadcasters in general play, and you also spoke about the challenges in this environment where global companies have structural advantages where they can amortize their programming costs over various markets, et cetera.

6068 Now, it ‑‑ so in this environment, I understand how Corus is adapting and it would, if you look at it, sort of push you to think that maybe Canadian owned broadcasters should be focusing more on local programming and Canadian programming.

6069 In your view, is this a viable business model?

6070 MR. REEB: I think that you may be referencing one of the intervenors suggested that there should be a greater focus on creation of content that is specifically for the Canadian market. I would say this. Canadian consumers don’t think that way. Canadian viewers ‑‑ Commissioner Levy yesterday referenced Yellowstone when she was speaking with one of the other intervenors. Great content travels the world and it can become a cultural phenomenon far outside the territory in which it is created.

6071 And we believe the same can be said for great Canadian content. We at Corus Entertainment have been the proud stewards of such talent as The Property Brothers; the Baeumlers, who have become international superstars in the home renovation space and the lifestyle programming space. Great Canadian content can travel the world. Yes, there is local content, particularly local news that doesn’t travel as far, but I will tell you this ‑‑ a great local story in Calgary can be a very fascinating story in Atlanta as well, depending on how it resonates with an audience. And the last thing I think we should be doing as a system is trying to put limits on how far those stories can travel. The world needs more Canada, and I think as a broadcasting system we should be fully engaged in not only making great Canadian content for Canadian audiences, but great Canadian content that the world can share.

6072 MR. THOMPSON: And if I could add, I think the question, Madam Vice‑Chair, I think went to the viability in the future. And I think it’s an imperative for us corporately to make Canadian shows that can generate ancillary revenues outside of the Canadian market. We really can’t afford to lose more than we absolutely have to on a Canadian programming investment ‑‑ or any investment, for that matter, in this environment. As Troy said, news is going to generally be domestic‑focused, just by virtue of the nature of the content itself. All else that relates to our Canadian programming investment I think we would be looking to sell as much as possible, as far as possible.

6073 VICE‑CHAIRPERSON BARIN: Okay, thank you very much.

6074 THE CHAIRPERSON: Thank you. Thank you, Vice‑Chair Barin.

6075 Let’s go to Vice‑Chair Scott for the last question.

6076 VICE‑CHAIRPERSON SCOTT: Thank you, and it is not unrelated to the discussion we just had, but Mr. Reeb, when you were speaking before about the economics of news, you really pitched it as kind of a classic example of almost a textbook example of market failure in the sense that the public benefits are misaligned with the individual incentives. And I don’t think we’ve had anyone on the record of this hearing dispute that. But I think the record is maybe a bit muddier when it comes to other objectives.

6077 So, could you speak as clearly on other market segments, particularly creation of Canadian stories in English and in French? Is there a market failure there? And within those groups ‑‑ so, when we talk about equity‑deserving voices, is there a market failure there in terms of the incentives don’t exist, or the incentives are misaligned?

6078 Like, we’re hearing some of the streaming platforms say, “Incentives are aligned great and we’re doing an amazing job in getting those stories produced.” We’re hearing some creators suggest that maybe the incentives are not perfectly aligned, or not there yet. I’d be very interested in your views on that issue.

6079 MR. REEB: There is a simple reality when we talk about ‑‑ and in particularly in the Canadian language market ‑‑ we are in a global content ecosystem where a show is made with the ‑‑ you know, one of the international streamers spent almost a billion dollars on getting IP and making a show based on the Lord of the Rings trilogy. These are just massive, massive scale productions and obviously have incredible power ‑‑ marketing power, brand power ‑‑ to attract Canadian audiences. English Canadian audiences in particular have shown a tremendous affinity for global content.

6080 And to be able to compete in that space becomes very, very difficult. Canada is not an isolated market. We are part of ‑‑ we sleep next to the elephant, as a former Prime Minister put it once, and the reality is, even with the injection of CMF, of other funds, it is very difficult for Canadian dramas, for Canadian comedies to get to the budget point, to be able to recruit the kind of star talent and the kind of marketing support that is required to become hits vis‑à‑vis international content. You are simply competing in a very, very different game.

6081 That’s not necessarily the case when it comes to other genres of content. We are obviously in a very unique position to be dominant players in the provision of local and national news in Canada. That’s simply a matter of geography. But in the lifestyle space, where production budgets are fractional compared to what they are in the scripted space, you know, I think there the market dynamics support ‑‑ can support ‑‑ a more robust Canadian ecosystem, and I think our work in that space is proof positive of that.

6082 I think, you know, the scripted space, as I say, is an example of ‑‑ left to its own devices, it would be a prime example of market failure. It is through the intervention of the Commission and the Act and its cultural objectives that have enabled the curation of that content. But I would note that even when we have a show ‑‑ Schitt’s Creek being a great example of a Canadian‑made show that may not have been identifiably Canadian other than to Canadians who watched it, that travelled the world tremendously ‑‑ the production costs of that were largely by the Canadian system. The international distribution profits of that were reaped by others outside the system. There has to be a way to correct that imbalance and ensure that when we can make hits in Canada that the world wants to watch, that it is the Canadian system that can reap the benefits of it.

6083 VICE‑CHAIRPERSON SCOTT: Great. Thank you for that perspective. Thank you, Madam Chair.

6084 THE CHAIRPERSON: Thank you so much. Maybe I can squeeze in one very quick question before we turn things back over to you for any closing remarks.

6085 You have used the words ‘fair and equitable system’; we, the CRTC, used those words in terms of regulatory fairness and equitability in our Notice of Consultation. You have talked a lot about the imbalance and righting the ship. You have talked about the ‑‑ obviously, the financial onus on traditional broadcasters. We have also heard a lot about the other regulatory burdens that you have from a number of broadcasters. Cogeco gave us very granular examples yesterday of how they are being weighed down by CRTC regulation. I was wondering if you could just speak to that before turning things back over to you for closing remarks.

6086 MS. LEE: I’ll just maybe speak a little bit to the system and the ‘fair and equitable’ that we’re all aiming for. So, we certainly use those words very sincerely, Commissioner. We are cognizant that those are your words, but those are ours as well. And so, I think, you know, you’ve heard from us, you know, on Friday of formats already on that, so I won’t belabour it too much, but I think that there’s been a certain theme by certain intervenors of, ‘Why are we rushing? We have to get this right. Why is it all of a sudden urgent?’ I would just say that it’s not ‑‑ we’re not rushing; we’re behind. That’s our view, is that we’re behind reality.

6087 So, we’re not saying that anyone is behind in particular, but we’re behind reality. So, I did really think that Commissioner Naidoo’s question was a great one for us to address head‑on. And we are not asking the Commission or anybody to right every structural advantage. Again, we are trying to accept the reality. We know who we’re working with. We also know what Canadians want to see. And so, we were encouraged by, you know, the Commission’s first steps the Act, the direction, because it seems that, you know, we have a clear focus now on certain aspects, including the importance of broadcasters and Canadian cultural content.

6088 And so, I think what we’re trying to fix is kind of the rules of the road, as quickly as possible. A couple of times we’ve been asked about whether, you know, we’d be eventually open to certain things, for example, would we count eventual, you know, contributions that streamers think they’re making now towards some sort of CPE or equivalent? I think we’ve indicated in our submissions we are of course open to that. We’re open to flexibility, but what we’re really urgently trying to do is to address what’s already been happening, and in a way that makes sense for Canadian broadcasters, content creators, and in Canada ‑‑ not to fix every single other thing that we mentioned and that we talked about. I think I’ll turn it over to Troy to maybe elaborate on the second part of your question ‑‑ or Matt.

6089 MR. THOMPSON: In terms of examples, Madam Chair, of where the burden is hitting us most urgently, I just would emphasize that our company is undergoing an enterprise‑wide cost review, and that’s born out of economic necessity. We have to take costs out of the business. And so, the requirements that relate to expenditures on our company, that come from an era when we participated in what was effectively a closed market ‑‑ those need to be urgently revisited. I think that’s a point you will hear us ‑‑ you’ve heard us make before ‑‑ you’ll continue to hear us make. This is ‑‑ we are in an open market now. We’ve heard an international player argue otherwise, early in this proceeding, that somehow we’re still participating in a closed market with competitive protections against foreigners. That is not the reality. Conventional television profits have fallen in the order of 70 percent in the last ten years. That does not happen in a closed market with competitive protections. It happens in an open market that is inherently unfair, and for us, the most urgent challenge and the task before us is to address some cost issues, and Canadian programming requirements go directly to that issue.

6090 MR. REEB: And I would say I agree with the intervenors from Cogeco who have particular concerns around the regulatory burden in the radio marketplace, which continues to be ‑‑ you know, has some significant discrepancies. SOCAN very helpfully pointed out that while Canadian radio stations play 30 percent, sometimes 40 percent Canadian selections, the average on streaming services is at 11 percent. That is a sharp discrepancy. You have, you know, streaming services that literally create new station playlists as you listen, based on AI and algorithms, while radio stations are limited to owning three different kinds of genres in a single marketplace. You have your choice of three from broadcasters. You have your choice of infinite from streaming. That is not a competitive landscape.

6091 There are some competitive protections around access to the airwaves, but those are continuing to be broken down by technology. So, I think those concerns are particularly acute in radio, and we have them as well around our radio services.

6092 Really, in the television space, do we have more intervention than we would like? Absolutely. But one of the real challenges is that, as I referenced earlier to Commissioner Levy, the production cycles on content are long. Once you have commissioned programming, once you have started development, once you have started amortizing, there's no stopping those clocks, we still have to follow accounting rules.

6093 And so, the flexibility to be able to increase costs, decrease costs quickly for television broadcasters is limited, and more flexibility around the regulations as to how we go into those arrangements in the first place would be very helpful.

6094 THE CHAIRPERSON: Thank you so much for those answers. We will turn it back over to you for the final word.

6095 MR. REEB: Well, first off, I just want to say thank you to all of you for not only taking the time to hear us out today but for undertaking this very important exercise.

6096 The broadcasting system has served Canadians very, very well for many years, over a century now since XWA ‑‑ depending on whether you believe the Americans or not ‑‑ became the first radio station in the world in Montreal. But in all the time that broadcasting has existed, up until the last generation at least, it was always a place for people to come together. It was a place where people gathered to share stories, to talk about the next morning that incredible show that they watched last night, and that spoke to the market dynamics, that there was some scarcity, and people would gather around a shared experience on radio and later on television.

6097 In the age of media fragmentation, where the Internet has provided infinite choices, tailored down to a very individual basis, and in fact where algorithms serve up content based on very individual tastes, the entire media ecosystem is no longer a place for people to come together. Sometimes it is a place for people to focus on division. Sometimes it is a very divisive place.

6098 But broadcasting at its best is still a place for people to come together. When the Stanley Cup Finals happen, let's hope a Canadian makes it. When a federal election happens, when a debate happens, it is still the place where people gather, people come together, people have a shared experience and people are able to discuss that shared experience the next day.

6099 We have to fix what's broken first. As we move to a new system, a new ecosystem for all of us, we have to fix what's broken first. The ship needs to be righted. There are some significant issues that are in the system right now and none is more acute than the provision of local news, which is in crisis.

6100 So, injecting competitive fairness back into that system in the early going needs to be the priority.

6101 We've suggested focusing on the biggest undertakings first because that is the easiest way to get at fixing what's broken first and using existing structures.

6102 We've talked about the opportunity for new funds, for new ways of creating, new definitions of Canadian content down the line, but right now the Commission has in front of it tools which it can use to fix what's broken first and to find a solution for not just local news but for our democracy and for our communities across the country who rely on the provision of broadcasting and the provision of journalism to ensure that we can correct the divisions that are so inherent in the rest of the online media ecosystem correctly.

6103 Thank you again for the time.

6104 MS. LEE: Thank you.

6105 THE CHAIRPERSON: Thank you very much and thank you for answering all of our questions.

6106 THE SECRETARY: Thank you very much.

6107 J'inviterais maintenant RNC Media à venir à la table.

‑‑‑ Pause

6108 LA SECRÉTAIRE : Lorsque vous êtes prêts, vous pouvez débuter.

6109 Merci.

Presentation

6110 M. RANGER : Madame la Présidente, chers Membres du Conseil, je me présente : Robert Ranger, président et chef de la direction de RNC Media.

6111 À ma gauche, je suis accompagné de Sébastien Côté, directeur général et directeur de l’information pour nos stations de télévision et de radio dans le marché de Gatineau‑Ottawa, et, à ma droite, Francis Beauvais, directeur général pour nos stations de télévision en Abitibi‑Témiscamingue, dans le Nord‑Ouest du Québec.

6112 RNC Media, également connue sous le nom de Radio‑Nord, est un radiodiffuseur québécois indépendant appartenant à M. Pierre Brosseau et M. Jean‑Yves Gourd. Nous exploitons quatre stations de télévision indépendantes affiliées aux réseaux TVA et Noovo dans les marchés de Gatineau‑Ottawa et de l’Abitibi‑Témiscamingue, ainsi que cinq stations de radio dans les marchés de Montréal, Québec et de Gatineau‑Ottawa.

6113 RNC Media célèbre cette année son 75e anniversaire, ce qui en fait le plus ancien radiodiffuseur privé au Québec. RNC Media emploie plus de 200 personnes, dont 25 journalistes à temps complet répartis dans ses salles de nouvelles de télévision et radio, auxquelles s’ajoutent les équipes de production nécessaires pour la création hebdomadaire de plus de 22 heures d’émissions de nouvelles en télévision et plus de 11 heures de nouvelles sur nos propriétés radios, dont le contenu est 100 pour cent local.

6114 Merci de nous donner l’opportunité de s’exprimer devant vous dans le cadre des travaux de cette audience publique. Les populations que nous desservons comptent sur nous, mais pour que nous puissions continuer à le faire, il faut des changements aux règles et conditions actuelles. Il y a urgence d’agir, nous avons besoin d’oxygène.

6115 Déjà, nous avons pris des décisions structurelles et opérationnelles importantes et souvent difficiles pour assurer notre survie et la continuité de nos services dans les communautés que nous desservons. Des postes ont été supprimés, des bureaux régionaux fermés.

6116 En 2018, nous avons fermé une de nos stations de télévision en Abitibi‑Témiscamingue afin d’assurer notre survie dans le marché.

6117 En juillet 2020, nous avons été contraints de remplacer, à nos frais, l’émetteur télévision de la station CHOT à Gatineau dans la foulée de la vente aux enchères du spectre de la bande de 600 MHz.

6118 Malgré des investissements technologiques importants, la renégociation des conventions collectives afin d’améliorer notre productivité et l’intégration de nos différents contenus sur les plateformes numériques, nos médias traversent une crise sans précédent et l’industrie dénombre déjà plusieurs victimes.

6119 Comme si ce n’était pas assez, l’achalandage sur nos plateformes Web est en baisse de 76 pour cent depuis le blocage de notre contenu en août dernier. L’exode des revenus vers les géants du Web se poursuit à vitesse grand « V » et constitue une menace constante pour l’information locale.

6120 Dans cette instance, le Conseil s’attend à ce que nous répondions aux trois questions suivantes :

6121 1. Pourquoi les entreprises numériques devraient faire des contributions de base au système canadien de radiodiffusion?

6122 2. Qui devrait faire une contribution et pour combien?

6123 3. Qui devrait bénéficier de ces nouvelles contributions et comment assurer un impact sur la diversité des contenus?

6124 Le système canadien de radiodiffusion est en crise, et l’absence de réglementation pour les joueurs numériques crée un avantage concurrentiel marqué pour ces derniers. La rentabilité des radiodiffuseurs canadiens est en chute libre et le délai de deux ans évoqué pour en venir à un nouveau cadre réglementaire est beaucoup trop long. Pour RNC Media, cela signifie deux autres années de réductions de revenus, amenant inévitablement des réductions de dépenses et de services aux populations que nous desservons. L’imposition d’une contribution de base aux joueurs numériques est la première étape pour un retour à l’équilibre du marché.

6125 Qui devrait faire une contribution et pour combien?

6126 Dans le présent avis de consultation, le Conseil a mentionné que les contributions des radiodiffuseurs traditionnels demeureraient inchangées au terme de la première étape du processus. Il n’en demeure pas moins que ces mêmes radiodiffuseurs traditionnels doivent toujours se conformer au lourd fardeau réglementaire qui leur est imposé, alors que les entreprises en ligne évolueront encore dans un environnement totalement déréglementé jusqu’à l’issue des consultations en cours.

6127 Considérant ce qui précède, nous demandons que seules les entreprises en ligne non affiliées à un radiodiffuseur traditionnel soient assujetties aux exigences de base de cette première étape du processus.

6128 Pourquoi exclure les radiodiffuseurs actuels qui opèrent déjà sous licence?

6129 Parce que le contenu en ligne des radiodiffuseurs traditionnels indépendants est principalement du contenu diffusé en direct et est déjà soumis aux exigences et obligations de nos licences de radiodiffusion.

6130 Le niveau de revenus devrait être l’unité de mesure pour la détermination du seuil de contributions. À l’étape 1, nous suggérons un seuil de revenus global de 30 millions de dollars pour l’ensemble des services d’une entreprise en ligne, indépendamment de la provenance des revenus afin de les qualifier. Les contributions seraient calculées à partir du premier dollar de revenus.

6131 Nous croyons que le niveau approprié de contributions pour les entreprises en ligne devrait se calculer sur la base d’un pourcentage des revenus annuels, selon le secteur d’activités. Les pourcentages proposés s’appuient sur des taux déjà applicables dans le système de radiodiffusion.

6132 Nous proposons un montant global de contribution de 20 pour cent pour les services audiovisuels (Netflix, Disney, par exemple), de 5 pour cent pour les EDR virtuels (YouTube TV, Amazon Channels) et de 4 pour cent pour les services audio en ligne (Spotify, Apple Music).

6133 Des contributions supérieures pourraient même être envisagées par le Conseil, compte tenu des exigences et obligations moindres auxquelles sont soumises ces entreprises.

6134 Qui devrait bénéficier de ces nouvelles contributions?

6135 RNC Media considère que les recettes des nouvelles contributions doivent être distribuées dans le système de radiodiffusion canadien via les différents fonds et leviers existants.

6136 En télévision, nous croyons que le Fonds pour les nouvelles locales indépendantes, le FNLI, a atteint les objectifs de favoriser la production de nouvelles locales fiables et de qualité dans les marchés hors des grands centres. Il mérite d’être bonifié et doit passer d’une mesure transitoire à une mesure permanente.

6137 Toutefois, les contributions au FNLI diminuent à chaque année et les coûts de production augmentent. Pour vous donner un ordre de grandeur, entre 2018 et 2022, l’augmentation de nos dépenses en information s’élève à 62 pour cent. Afin de continuer à produire de l’information dans ces marchés, l’apport de contributions des entreprises en ligne est essentiel. Pour l’année financière 2021‑2022, le FNLI a perçu un peu plus de 19 millions $ des EDR participantes, soit 2,6 millions de moins que lors de sa première année d’exploitation en 2017‑2018.

6138 De ces sommes, les exploitants francophones ont reçu, pour l’année financière terminée le 31 août 2022, un montant de 5,5 millions, alors qu’ils avaient reçu 7,4 millions lors de la mise sur pied du fonds. Alors que les exploitants de langue française recevaient 33,9 pour cent des fonds du FNLI en 2018, ils en ont reçu que 28,7 pour cent en 2022. En fait, ce sont les télédiffuseurs de langue française qui ont le plus perdu puisqu’ils ont subi près de 60 pour cent de la diminution du FNLI.

6139 Actuellement, les télédiffuseurs de langue française membres du fonds ont accès à moins de fonds que les autres entités culturelles sous la responsabilité du ministère du Patrimoine canadien. Le Conseil des Arts du Canada, Téléfilm Canada et le Fonds des médias du Canada consacrent au minimum 30 pour cent à la vie francophone.

6140 Soyons clairs : Sans l’accès au fonds, les stations de télévision de RNC Media ne seraient plus en opération aujourd’hui. Depuis sa création, le FNLI a permis à RNC MEDIA de doubler sa diffusion de nouvelles, la faisant passer à plus de 22 heures par semaine cette année.

6141 Comment ce cadre réglementaire modernisé permettra aux Canadiens d’avoir accès à plus de contenus diversifiés?

6142 Nous croyons que l’apport de nouvelles contributions par les entreprises en ligne devraient servir à la bonification et pérennité du FNLI de la manière suivante :

6143 ‑ garantir un plancher de contributions minimales pour les bénéficiaires actuels, particulièrement si de nouvelles stations devenaient admissibles ‑‑ je pense ici aux stations de Corus;

6144 ‑ une indexation de ce plancher au coût de la vie; et

6145 ‑ un pourcentage dédié au marché francophone.

6146 Ces nouvelles contributions nous permettraient de maintenir notre niveau de production actuel et même considérer étendre notre couverture, en plus d’investir dans le développement de nouveaux services numériques dédiés à l’information locale.

6147 Pour le volet audio, nous appuyons la proposition de plusieurs groupes qui stipulent que des montants supplémentaires devraient être investis dans Musicaction et RadioStar à condition que les radiodiffuseurs traditionnels puissent y avoir accès afin d’investir dans des opportunités de découvrabilité et de promotion des contenus francophones, autochtones et émergents.

6148 De plus, pour le côté audio, nous souhaitons voir le CRTC remettre en application le fonds de créations orales dédié aux stations indépendantes, tel que Patrimoine Canada avait rapidement mis sur pied sous l’appellation « fonds d’urgence » lors de la pandémie. Ce fonds était géré par l’ACR et tenait compte de la création orale, incluant les nouvelles. La méthode d’allocation était simple et visait principalement la production de contenu oral.

6149 Compte tenu de l’urgence de la situation, nous demandons que de nouvelles contributions soient distribuées dès la fin de l’étape 1 du processus.

6150 En conclusion, dès le début de l’audience, vous avez posé la question à plusieurs Intervenants : Pourquoi agir maintenant et ne pas attendre la révision du cadre réglementaire?

6151 Nos revenus sont en baisse depuis 2018 et l’optimisation de nos processus administratif et technologique sont maximisés. Attendre deux ans pour la fin du processus du Conseil signifie deux autres années de réductions de revenus, amenant inévitablement des réductions de dépenses et de services aux populations que nous desservons.

6152 Le CRTC a toujours reconnu le rôle important des radiodiffuseurs indépendants dans le système canadien de radiodiffusion en adaptant la réglementation à notre réalité. Nous avons, ensemble, le devoir de sauvegarder et de soutenir la poignée de joueurs indépendants qui, comme RNC Media, continuent de jouer un rôle prédominant dans la sauvegarde de la pluralité des voix du système de radiodiffusion partout à travers le Canada, mais spécialement en région où l’information locale est malmenée.

6153 La crédibilité, le savoir‑faire et la réputation de notre entreprise s’est bâtie sur une période de 75 ans, grâce à l’apport d’artisans passionnés et de communautés bien desservies par nos différents services.

6154 Comme le démontre les lettres d’appuis en annexe, l’information locale est au cœur de leur préoccupation et constitue un service essentiel pour les populations de nos marchés.

6155 Dans sa lettre, madame Diane Dallaire, mairesse de Rouyn‑Noranda, mentionne que « Les médias sont au cœur du développement local et régional ».

6156 Le député fédéral de l’Abitibi‑Témiscamingue, M. Sébastien Lemire, mentionne : « C’est pourquoi investir dans les médias régionaux est une nécessité pour s’assurer que nos élus(ues) soient imputables, que les exploits de nos athlètes régionaux soient célébrés, que nos artistes bénéficient de ce tremplin pour présenter leurs créations ».

6157 La mairesse de Gatineau, madame France Bélisle, abonde dans le même sens en mentionnant : « Il est crucial de ne pas sous‑estimer l’importance du service d’information régional pour notre communauté. C’est pourquoi je sollicite votre soutien en faveur de RNC Média afin d’assurer la survie de l’information de qualité et locale ».

6158 Le président de la Chambre de commerce de Gatineau, M. Stéphane Bisson, quant à lui, souligne l’importance des médias locaux afin de permettre aux citoyens de mieux comprendre les enjeux qui les touchent directement et de participer activement à la vie de leur communauté.

6159 Finalement, le président de la Chambre de commerce de Rouyn‑Noranda, M. David Lecours, écrit : « Dans une région comme celle de l’Abitibi‑Témiscamingue, de pouvoir compter sur un service de nouvelles régionales est essentiel à notre développement politique, économique, culturel, communautaire et sportif ».

6160 Nous le répétons : Il y a urgence d’agir. Sans la contribution des joueurs numériques dans l’écosystème de radiodiffusion canadien, la pérennité des joueurs indépendants, dont RNC Media fait partie, est menacée à court terme.

6161 Nous vous remercions de nous avoir donné l’occasion de nous exprimer et d'exprimer nos points de vue, et nous sommes maintenant disponibles pour répondre à vos questions.

6162 LA PRÉSIDENTE : Merci beaucoup pour votre présentation ce matin et aussi pour votre participation dans notre instance.

6163 Alors, on va commencer avec la vice‑présidente de la Radiodiffusion, madame Barin.

6164 VICE‑PRÉSIDENTE BARIN : Merci beaucoup, Madame la Présidente.

6165 Bienvenue, Monsieur Ranger, Monsieur Côté et Monsieur Beauvais. J'ai bien entendu votre message sur la situation actuelle pour les médias locaux et pour RNC Media.

6166 Je vais, alors, poser quelques questions sur les propositions que vous avez faites, en commençant par le seuil. Parce que dans votre intervention initiale, vous avez proposé un seuil global de 50 millions, et dans votre présentation, vous proposez maintenant un seuil global de 30 millions. Alors, qu'est‑ce qui vous a amenés à réviser votre proposition?

6167 M. RANGER : Je pense que suite à certains commentaires que j'ai entendus de d'autres joueurs, le seuil de 50 millions pour certaines industries comme l'ADISQ, par exemple, était un maximum qui était trop élevé et permettait à certaines compagnies d'échapper à la première étape. Alors, nous avons décidé... Comme nous aimons défendre les plus petits, nous avons décidé de réduire le seuil de 50 millions à 30 millions pour essayer d'attraper plus de compagnies numériques et donc de grossir le fonds.

6168 VICE‑PRÉSIDENTE BARIN : O.K. Alors, je comprends que ça l'a rapport peut‑être avec les entreprises en ligne qui ont des activités audio versus audiovisuelles et les structures financières différentes de ces entreprises.

6169 Alors, selon vous, si le seuil était le même pour les entreprises en ligne audio et audiovisuelles, est‑ce que ça serait équitable comme résultat pour les fonds qui bénéficieraient de ces contributions, et sinon, de quelle façon le Conseil pourrait remédier à cette iniquité?

6170 M. RANGER : Je pense que dans la première étape, il faut simplifier les choses. Plus on va avoir de critères, plus l'applicabilité va prendre du temps. Alors, peut‑être qu'à la deuxième étape on pourrait s'attarder à faire des plateaux différents pour l'audio versus le vidéo, mais je pense qu'à la première étape le but du Conseil est vraiment de mettre le système en marche et de pouvoir avoir accès à des fonds et à distribuer ces fonds‑là le plus rapidement possible. Et les intervenants à la Phase 2 pourront faire leurs représentations. Je pense que du côté audio, il pourrait avoir un seuil plus bas que du côté vidéo, mais je pense que la deuxième étape ça serait peut‑être le meilleur moment de faire ce choix‑là.

6171 VICE‑PRÉSIDENTE BARIN : Parfait, merci.

6172 Dans votre présentation vous avez parlé beaucoup du FNLI, le Fonds pour les nouvelles locales, et vous avez mis de l'emphase sur la bonification de ce fonds. Alors, selon vous, quelles seraient les étapes à suivre pour assurer la bonification du Fonds pour les nouvelles locales indépendantes à long terme?

6173 M. RANGER : Je pense que si on regarde l'augmentation des dépenses ‑‑ j'en ai parlé dans notre présentation ‑‑ nos dépenses ont augmenté de 62 pour cent à l'information, et nos revenus ont baissé de 2,6 millions pour le côté francophone. Donc, il y a déjà une déconnexion entre notre niveau de dépenses, donc le pourcentage que le fonds pouvait couvrir à ce moment‑là et le pourcentage que le fonds couvre aujourd'hui.

6174 Ce qu'il faut comprendre, c'est que faire des nouvelles en Abitibi‑Témiscamingue, par exemple, qui est un territoire qui est 16 fois la Belgique, ça coûte très cher, et un journaliste ne coûte pas nécessairement moins cher là‑bas qu'il peut coûter à Montréal. Les revenus qu'on peut tirer des clients locaux ne sont pas du tout les mêmes en Abitibi‑Témiscamingue qu'à Montréal.

6175 Donc, la création du fonds était faite un peu à la base pour amener des fonds supplémentaires pour compenser la baisse de revenus pour que les compagnies indépendantes puissent continuer à faire des nouvelles locales.

6176 Alors, pour bonifier ce fonds‑là, premièrement, ça serait au moins de ramener la couverture de nos dépenses d'information au même niveau qu'elles étaient, et, après ça, d'avoir au moins une augmentation du coût de la vie à chaque année.

6177 Présentement, on a une diminution à chaque année, ce qui nous appelle à faire des choix très, très durs. On a à peu près coupé dans tout ce qu'on pouvait couper à l'extérieur des nouvelles, et maintenant, si la situation continue à se détériorer, si ça prend deux ans, par exemple, pour le CRTC de mettre un cadre en place, je vous dirais qu'on va être obligés de faire des coupures.

6178 Et ce n'est pas l'objectif, parce que les populations qu'on dessert, comme le montrent les lettres d'appui, c'est vraiment un service essentiel pour ces régions‑là. Si on n'était pas là, la plupart des hebdos régionaux ont disparu ou ne sont plus que l'ombre d'eux‑mêmes, de ce qu'ils étaient. Alors, je pense que c'est important de supporter les joueurs indépendants dans les marchés comme ça.

6179 VICE‑PRÉSIDENTE BARIN : O.K.

6180 Maintenant, vous parlez de la bonification du FNLI, mais certains intervenants qui ont comparu devant nous, tels que Bell, Québecor et Rogers, ont proposé la création d'un autre fonds qui soutiendrait les nouvelles locales. Que pensez‑vous de cette proposition, et, selon vous, est‑ce que le Conseil devrait prioriser la création d'un nouveau fonds ou bien se concentrer sur la bonification du fonds existant?

6181 M. RANGER : Je pense que, en première étape, ça devrait être la bonification du fonds existant. Par souci de rapidité, je pense que d'implanter un nouveau fonds, c'est quand même... ça peut être complexe. D'inclure les joueurs intégrés verticalement dans le fonds de la FLNI, c'est impensable, parce que leur niveau de dépenses, qui est un des critères d'allocation du fonds, est 50 fois ce que nous, on peut dépenser en information. Donc, ça n'aurait aucun sens de les inclure dans un fonds comme ça.

6182 Est‑ce que, un jour, de penser avoir un fonds pour la création orale en radio, par exemple, serait une idée? Bien, on a des stations de radio. Je pense que ça pourrait être intéressant, très intéressant même.

6183 On a suggéré de faire revivre le fonds d'urgence qui était pour les joueurs indépendants, qui est un fonds qui existait, qu'on peut sûrement retrouver pas très loin dans les papiers et remettre en place.

6184 Mais je vous dirais que les autres gros joueurs ont d'autres sources de revenus que nous, on n'a pas. Ils peuvent faire de la compensation sur d'autres plateformes que nous, on n'a pas. Alors, si je parle pour les joueurs indépendants, dont nous sommes, je pense que la bonification du fonds existant est la réponse que j'aimerais recevoir du CRTC.

6185 VICE‑PRÉSIDENTE BARIN : Je vais toucher sur cette idée que vous venez d'apporter, sur l'idée du fonds d'urgence ou la ressuscitation de ce fonds.

6186 Alors, pour vous, quelle entité serait chargée d'administrer un fonds de ce type, et qui devrait contribuer à ce fonds?

6187 M. RANGER : Je pense que l'entité pourrait être l'ACR, parce que c'est l'ACR qui administre le FLNI. C'est l'ACR qui a administré aussi la distribution du fonds d'urgence. Alors, je pense que l'ACR a toutes les qualités pour gérer ce fonds‑là. Ce sera au CRTC d'établir les règles, mais l'ACR peut en faire l'administration.

6188 Qui devrait contribuer à ce fonds‑là? Je pense que les joueurs numériques devraient contribuer à ce fonds‑là, parce qu'ils ont créé un débalancement dans l'univers de la radiodiffusion canadienne. On a des conditions qui sont énormes par rapport aux conditions que ces joueurs‑là ont. Donc, finalement, je pense que c'est les joueurs numériques, dans la première étape, qui devraient contribué à cette bonification‑là.

6189 VICE‑PRÉSIDENTE BARIN : Merci.

6190 Alors, Monsieur Ranger, ma prochaine question est peut‑être un peu plus large. Outre les fonds dédiés aux nouvelles locales, qu'est‑ce qui pourrait vous aider à continuer la production de nouvelles locales fiables et de qualité?

6191 M. RANGER : Via le CRTC ou via d'autre instances? C'est sûr qu'un crédit d'impôt pour les journalistes pourrait être un avantage, je pense, pour une production de nouvelles de qualité. Je pense que ça, c'est déjà offert pour certains médias, dont les journaux. Je ne pense pas que RNC Media veut devenir un OSBL demain main, ce n'est pas l'objectif, mais je pense qu'un crédit d'impôt pourrait être intéressant.

6192 Je pense que le système qui est en place pour le FLNI fait la job. La preuve, c'est qu'on a doublé notre production de nouvelles. La preuve, c'est qu'on est devenus incontournables dans nos marchés. Numeris n'existe plus aujourd'hui, mais lors du dernier sondage Numeris, on avait 66 pour cent de part d'écoute pour notre bulletin de nouvelles le soir en Abitibi‑Témiscamingue, puis 25 à 26 pour cent à Gatineau‑Ottawa dans un marché bilingue ou multilingue. Alors, je pense que nos produits sont appréciés par les populations. Les lettres d'appui aussi le disent.

6193 Enfin, crédit d'impôt. Je vous dirais, pour que ça soit réaliste et rapide, crédit d'impôt et une bonification du fonds, sans oublier la création orale. Je pense que la création orale locale de qualité, c'est vraiment ce qui attire les gens vers nos médias. Les gens sont là, mais les publicitaires nous quittent pour aller sur les plateformes numériques. Alors, on doit continuer à produire des produits de qualité pour garder notre auditoire, puis d'un autre côté, les revenus s'en vont sur les plateformes numériques. Alors, pour nous, c'est un peu difficile, et même très difficile.

6194 VICE‑PRÉSIDENTE BARIN : Alors, retournons au FNLI. Vous avez mentionné dans votre présentation que les télédiffuseurs de langue française reçoivent actuellement moins de financement de la part du Fonds pour les nouvelles locales depuis quelques années. Qu'est‑ce qui a créé ce déséquilibre, selon vous?

6195 M. RANGER : C'est sûr que le départ des chaînes de Noovo, qui était télévision TQS à ce moment‑là, qui sont sorties du fonds. C'était trois chaînes francophones qui recevaient un fonds. Quand ça été acheté par Bell, c'est sûr que ces chaînes‑là ont été exclues. Mais c'est sûr aussi que la décision du Conseil de faire passer le pourcentage de 10 pour cent à 12 pour cent pour un joueur indépendant dans un marché nous a affectés aussi du côté francophone.

6196 VICE‑PRÉSIDENTE BARIN : O.K. Alors, selon vous, est‑ce qu'il y a une portion de contributions initiales qui pourrait être dirigée au marché audiovisuel francophone pour remédier la baisse de financement, et, si oui, quel pourcentage?

6197 M. RANGER : Historiquement, le FAPL avait dans un de ses critères 30 pour cent du fonds pour le marché francophone. J'en ai parlé dans ma présentation. Il y a plusieurs organismes, le Fonds mes médias du Canada, et cætera, qui ont 30 pour cent aussi comme barème. Alors, je pense que 30 pour cent pourrait être intéressant.

6198 VICE‑PRÉSIDENTE BARIN : Merci.

6199 Alors, j'ai une dernière question pour vous. Dans votre intervention écrite, vous avez parlé de reconnaître le statut particulier des joueurs indépendants, surtout en ce qui concerne l'accès au financement et à l'allocation des fonds. Pouvez‑vous commenter sur les suggestions potentielles de comment reconnaître ce statut particulier?

6200 M. RANGER : Bien, je pense si on regarde dans les régions du Québec, ce sont les joueurs indépendants qui fournissent les services de nouvelles à la majorité de ces populations‑là. Je pense à Télé Inter‑Rives dans le Bas‑du‑Fleuve; je pense à RNC Media; je pense à Arsenal Media, qui est aussi un joueur mais du côté audio.

6201 Les grands joueurs ont délaissé ces marchés‑là pour se concentrer sur les grands marchés, et les joueurs indépendants continuent... À cause de leur modèle économique qui est moins complexe, je dirais, on est mieux capables, je pense, de s'adapter dans des marchés de plus petite grandeur ou de plus petite population.

6202 Alors, c'est important, je pense, de financer ces joueurs‑là, donc les joueurs indépendants dans ces marchés‑là, pour que les marchés puissent continuer à recevoir des informations locales de qualité.

6203 Les hebdos ont déjà disparu, comme je disais. Donc, il est trop tard un peu pour faire quelque chose pour les hebdos. Je pense qu'il n'est pas trop tard pour faire quelque chose pour les radiodiffuseurs indépendants, mais si ça prend deux ou trois ans, ça se peut qu'il soit trop tard.

6204 VICE‑PRÉSIDENTE BARIN : C'est bien. Merci beaucoup, Monsieur Ranger.

6205 Je passe la parole à la présidente.

6206 M. CÔTÉ : Pardon, si je peux me permettre aussi.

6207 Vous parlez d'un statut pour les radiodiffuseurs indépendants. C'est un peu déjà dans cet esprit‑là que le FNLI avait été créé à l'époque.

6208 Vous avez évoqué l'idée d'un nouveau fonds où tout le monde serait intégré. C'est une autre réalité complètement pour nous. On est bien implantés dans nos marchés, on offre un contenu de qualité, c'est reconnu, et je pense que la force des radiodiffuseurs indépendants par rapport aux plus grosses machines, c'est justement cette présence dans nos milieux que les grandes multinationales ne peuvent pas recréer.

6209 On ne peut pas recréer la présence d'une entreprise qui est dans une municipalité depuis 75 ans, les relations que ça crée, le lien de confiance avec la population, avec les diverses organisations. Vous avez entendu de nombreuses lettres d'appui qui appuient ce qu'on dit. C'est une reconnaissance aussi que bien peu de grands joueurs internationaux, ou même sur la scène nationale, pourraient obtenir aussi facilement.

6210 VICE‑PRÉSIDENTE BARIN : Merci, M. Côté, pour la précision.

6211 LA PRÉSIDENTE : Merci beaucoup. On va continuer avec la conseillère Levy. Merci.

6212 CONSEILLÈRE LEVY : Vous avez mentionné dans votre intervention que le souci principal du Conseil devrait être l'équité en matière d'exigences pour les différents joueurs. Comment cela se traduit‑il pour vous en tant que radiodiffuseur indépendant? Vous parlez d'incitatifs, de rétribution. Pouvez‑vous élaborer votre position?

6213 M. RANGER : C'est sûr que quand on regarde, surtout pour un joueur indépendant de notre taille, le fardeau administratif et les exigences, que ce soit au niveau des quotas, que ce soit au niveau du contenu canadien ‑‑ je le sais que les quotas, c'est un sujet très sensible, là ‑‑ mais la réalité, c'est qu'on a des règles du jeu complètement différentes des joueurs numériques. Les populations qu'on dessert ont des goûts... suivent des tendances, et on n'est pas capables d'adapter notre produit à ces tendances‑là, parce qu'on suit des règles qui sont très rigides par rapport à la réalité du marché.

6214 Alors, c'est dur pour nous, même dans un marché local de plus petite taille, par exemple, d'aller dans les hits anglophones que les jeunes veulent écouter, parce qu'on a des contraintes à suivre, parce qu'on a des... Puis je comprends les contraintes, puis je comprends la protection du patrimoine et tout ça, mais je pense qu'il y aurait place à essayer de rééquilibrer un peu les exigences pour qu'on puisse avoir plus de flexibilité pour offrir aux auditeurs ce que les auditeurs veulent écouter.

6215 Dans le marché de Montréal, il y a 300 000 Montréalais francophones de souche qui écoutent la radio anglophone. Ils ne sont pas comptabilisés dans les radios anglophones et sont perdus par les radios francophones.

6216 Alors, c'est une réalité quotidienne que l'on vit, et je pense que le fardeau réglementaire, dont plusieurs joueurs ont parlé au cours des derniers jours, est quelque chose qui doit être adressé, parce qu'on compétitionne dans un environnement où on n'a pas les mêmes règles. Alors, c'est très difficile pour nous d'adapter nos produits à ce que la clientèle veut, parce qu'on est régis et on doit suivre des règles.

6217 Et le fardeau administratif pour des petites compagnies comme nous, on vient de finir le rapport annuel, c'est 90 rapports qu'on a dû déposer au CRTC. On n'est pas une grosse entreprise, mais on a 90 rapports à déposer pour le 30 novembre. C'est énorme comme fardeau administratif.

6218 La présentation aujourd'hui, c'est nous autres qui l'avons préparée, parce qu'on n'a pas une équipe pour préparer la présentation.

6219 Donc, ça c'est notre réalité, qui est bien différente de Corus, par exemple, qui était ici juste avant, ou d'autres gros joueurs comme Cogeco. Donc, c'est sûr que pour nous puis pour les joueurs indépendants, le fardeau administratif a toujours une lourdeur additionnelle par rapport à ces grands joueurs‑là.

6220 J'espère que ça répond à votre question.

6221 CONSEILLÈRE LEVY : Merci.

6222 LA PRÉSIDENTE : Merci beaucoup. Bien entendu.

6223 Alors, les lettres d'appui que vous avez mentionnées qui sont jointes à votre présentation écrite ne sont par sur le dossier public déjà. Alors, est‑ce que vous faites la demande pour qu'elles soient ajoutées au dossier?

6224 M. RANGER : Nous aimerions qu'elles soient ajoutées au dossier public si le CRTC le permet.

6225 LA PRÉSIDENTE : D'accord. Merci. Alors, le Panel considérera votre demande.

6226 Maintenant, on aimerait vous donner le dernier mot.

6227 M. RANGER : Merci beaucoup, premièrement. Merci beaucoup de nous avoir donné l'opportunité de comparaître. Je le sais que vous en avez pour deux ou trois semaines à voir des tonnes de gens défilés devant vous qui veulent tous un morceau de tarte.

6228 Alors, pourquoi ma demande serait plus importante que les autres, je pense que ça vient du fait que le CRTC a toujours considéré les joueurs indépendants comme partie intégrante du système de radiodiffusion canadien. Il y a les joueurs indépendants, il y a les joueurs intégrés verticalement, et maintenant, il y a les joueurs numériques.

6229 Je pense que ça serait très important que le CRTC continue de considérer les joueurs indépendants de façon différente des autres joueurs, continue à supporter les joueurs indépendants de façon différente des autres joueurs, parce que notre réalité au quotidien est qu'on offre un service local de nouvelles locales, de programmation locale, aux populations qui souvent n'ont pas cette exposure‑là ‑‑ vous excuserez le terme anglophone ‑‑ sur les réseaux nationaux ou sur les réseaux des grands centres.

6230 En Abitibi‑Témiscamingue, par exemple, on a de la chicane des fois de certains maires, d'Amos, de Rouyn‑Noranda, parce qu'on a passé trois reportages sur Rouyn, deux sur Val‑D'Or, puis un sur Amos, et on se fait chicaner parce qu'on ne donne pas de l'exposure égale à tout le monde. Ça, c'est notre réalité.

6231 Donc, je pense, si je dois faire une conclusion à la fin, c'est vraiment de dire : un, il y a urgence d'agir; deux, l'information locale est au cœur de la vie des communautés qu'on dessert.

6232 Je ne pense pas que l'espace numérique peut offrir le service que l'on offre présentement en termes de qualité et de quantité, que ce soit en temps de feux de forêt en Abitibi‑Témiscamingue, des inondations à Gatineau. Je sais qu'il y a beaucoup de vos et de vos collègues qui écoutent nos stations de télévision ou de radio dans le marché de Gatineau‑Ottawa.

6233 C'est important de conserver ce service‑là essentiel pour les populations des régions, puis je ne pense pas qu'on demande la lune, je ne pense pas qu'on demande quelque chose de déraisonnable. Je pense qu'on demande juste un soutien pour la programmation locale, donc la création orale, pour nos stations puis pour tous les autres joueurs indépendants au Canada, parce qu'on offre un service que les gros radiodiffuseurs n'offrent pas.

6234 LA PRÉSIDENTE : Merci beaucoup. Merci pour votre participation dans notre instance et aussi dans cette audience. Merci.

6235 M. RANGER : Merci à vous et bonne fin d'audience.

6236 LA SECRÉTAIRE : Merci.

6237 Nous prendrons une pause, et de retour à 11 h 05.

‑‑‑ Upon recessing at 10:52 a.m.

‑‑‑ Upon resuming at 11:06 a.m.

6238 THE SECRETARY: Welcome back.

6239 We will now hear the presentation of Digital First Canada. Please introduce yourself and your colleague, and you may begin.

Presentation

6240 MR. BENZIE: Thank you, Chair and Commissioners, for having us here today. My name is Scott Benzie. I’m the Lead of Digital First Canada, an organization that supports and advocates on behalf of digital creators across the country.

6241 I am joined by my colleague and creator, Fred Bastien, who is here to speak to the specific experience of Francophone digital creators. We are new to this conversation; this is certainly our first time in front of the CRTC. We have no team of lawyers to help us through this, so please bear with us. Ad‑libbing, we got lost coming here today, but we’re here.

6242 I have the honour of sitting in front of you today not to talk about an industry in crisis or one that needs saving, but one that is thriving both domestically and globally. I am here to speak to you today about an opportunity to support something that is working and, in the worst case scenario, talk you out of doing some harm.

6243 Canada’s digital‑first creators are best described as artists of many different practices. They are diverse, they are innovators, they are entrepreneurs, they are Canada’s greatest cultural export, and it is not close. They simply chose a different distribution model. That model has given creators such as Shina Nova, an Inuk throat singer, an audience that she can monetize ‑‑ not a fringe couple thousands of people, but millions and millions of people from around the globe. She just makes great content. Her story is not unique; there are thousands, if not tens of thousands, of those stories across Canada.

6244 We understand that, for the purpose of these hearings, our focus is limited to three key areas: applicability, initial base contribution, and funds. And not discovery. I would like to talk about it, but I won’t.

6245 In terms of the applicability of the framework, we are pleased to see that the policy direction has clearly scoped out social media creators and their content. We are here today to talk about the funding and updating of the models that support Canadian culture, as set out in the policy direction. It does say in the policy direction, under section (k): “that support and promote Canadian creators of audio or audio‑video programs for broadcasting by broadcasting undertakings, including social media creators.”

6246 It is because of the inclusion of social media creators that we are here today. There are a couple misconceptions in some of the comments made by other intervenors when it comes to digital‑first creators that I want to shed a little bit more light on, and hopefully make some corrections.

6247 The truth is, today’s funding bodies are not equipped to support DFCs. Today’s funding bodies are based on funding content, not funding individual businesses. The proper way to allocate resources for digital‑first creators is through business building activities. Each creator, emerging or professional, is a business.

6248 Barriers to entry. DFCs do not have teams of lawyers to work on submissions like traditional media who have done this for years and have people employed with the sole goal of checking boxes. There are too many DFCs in Canada to support. Current funding models are project‑based and unworkable for the diversity of projects, creators, and needs of Canadian digital creators. There are tens of thousands of creators that we would consider professional or emerging, and funding on a project basis for that cohort is just impractical.

6249 Finally, a lot the organizations that have come before you have talked about declining revenues, and a drop in percentages of plays from the good old days. What they don’t tell you is that there is a new type of artist ‑‑ an entrepreneur that does it on their own, receives money direct from the platforms, and enjoys the ability to connect to a global audience. Ten percent of a million is so much better than 50 percent of 1,000.

6250 To be clear, we support having platforms in Canada contribute, and we think they should do more. The fear that DFCs have is we heard from many groups, including the funders, Heritage, and the Commission itself, say that they do not “understand our world” and they are learning. That is not good enough. If fundings from these platforms are to go into the system, we need to ensure that it is not a reallocation of funds and it does not come from the creators themselves through another method.

6251 The platforms do indeed contribute today to the creator economy in Canada. For example, we run a program called ‘Road To Freedom’, which brings digital literacy, mentorship, and gear to Indigenous youth in community. That program today could not be funded by traditional means; we had to turn to our private partners to do it, and they did. We created the first ‘free to use’ studio for creators, loaded with gear, with bookings through to the next year, not with the government’s help but with Henry’s Camera, which is dedicated to the entrepreneurial spirit of creators. They support creators and community through building accelerators, sponsorships, and other activities. I will say again, they can do more. It is critical that that support not go into a fund that digital creators and programs cannot access.

6252 Now, I would like to turn it over to my colleague Fred to share a bit more and speak on the francophone experience.

6253 M. BASTIEN : Bonjour. Hi. Kwe.

6254 Il est très difficile de convaincre quelqu’un de quelque chose lorsque son métier dépend de son incompréhension de la dite chose. C’est une citation philosophique, qui m’a marqué, à MusiquePlus à l'époque où j’ai commencé ma carrière.

6255 Je me souviens précisément d’un moment en 2011, autour d’une table de réunion remplie de cadres et de producteurs à MusiquePlus, je m’exclamais : « Pourquoi les VJs ne sont pas sur YouTube? » Et on me répondait à l’époque que ça nuirait, ça ferait baisser les abonnements au câble. Comme si Rej Laplanche et Chéli Sauvé‑Castonguay pouvaient à eux seuls renverser une tendance mondiale, entamée depuis le début des années 2000 et avant.

6256 Que serait‑il arrivé si MusiquePlus, ou l’industrie traditionnelle au complet, avait vu ces « nouvelles » plateformes Web comme une opportunité et non comme une menace, si on voyait plutôt l’Internet comme une solution et non un problème? C’est triste, mais la suite de l’histoire m’a donné raison. MusiquePlus n’existe plus, et moi, j’existe encore.

6257 Impatient devant l’inaction systémique de l’industrie médiatique et musicale traditionnelle, c’est en parallèle de ma carrière télé que j’ai commencé ma propre chaîne YouTube en 2014. Ça fait aussi 15 ans que j'œuvre auprès des géants de notre industrie comme Bell, Vidéotron, Cogeco, Radio‑Canada, Télé‑Québec. Nouvelle émission en janvier.

6258 Ça peut sembler étonnant, mais je vous le confirme. Les mêmes discussions que nous avions à MusiquePlus en 2011, je les ai encore aujourd'hui avec certains diffuseurs, certains producteurs et certains professionnels de la musique en 2023. C’est surréaliste, sisyphéen. Celle‑là, c'est pour les fans de Camus.

6259 Mais ça en vaut la peine. Pourquoi? Parce qu’il n’y a rien de plus important que notre culture. Il n’y a rien de plus important que nos artistes : ceux qui se mettent en danger tous les jours pour repousser les limites de la créativité; ceux qui se rendent vulnérables pour toucher le cœur et la tête de tous les Canadiens et toutes les Canadiennes; ceux qui exportent notre culture et qui la font rayonner chez nous.

6260 Il y en a trop pour tous les nommer, mais je pense à Gurky, Citron Rose, Alaclair Ensemble, Mike Clay, Jordann, Nabil ‘Aiekillu’ Lahrech, Emile Roy, Cindy Cournoyer, Ryan George, Kaytranada, Marianne Plaisance, Shawn Jobin. Je viens de nommer 12 créateurs francophones, 16 si on inclut le groupe musical numéro 1 de la république du Bas‑Canada; salut, Robert Nelson.

6261 Mais ces 16‑là ne survivent pas de leur art, de leur musique ou de leurs vidéos en ligne. Ils vivent de leur art. Ils vivent bien de leur art. Ils n’ont pas tous choisi le “français” comme langue d’exportation de cette culture, mais la plupart de ceux que je viens de nommer l'ont fait. Et ce florilège de créateurs représente parfaitement le bilinguisme de notre grande nation.

6262 Oui, nos régulations méritent d’être modernisées. Merci. Mais ce n’est pas qu’au gouvernement de s’adapter aux nouvelles réalités culturelles et économiques. L’industrie a une responsabilité à prendre. La stratégie et l’innovation sont essentielles pour toute organisation. La recherche. Le développement.

6263 Notre culture canadienne n’est pas en train de disparaître. Peut‑être que certains jeunes ne connaissent pas Véronique Cloutier, mais c’est bien correct, ils connaissent Lysandre Nadeau. Et peut‑être que certains jeunes n’achètent plus les albums de Pierre Lapointe, mais c’est bien correct, ils vont au spectacle de Jay Scott, et ils chantent chaque syllabe par cœur : « J’ai plus d’acétaminophènes. »

6264 Dans les dernières années, j’ai trop souvent entendu les lobbys industriels tenter de s’approprier cette fameuse culture canadienne, québécoise, locale. J’ai vu trop de lobbys en acronyme qui tente de faire croire aux Québécois et aux Canadiens que c’est cette vieille industrie traditionnelle qui a le monopole de notre culture. Ces lobbys qui laissent entendre que ce qui ne passe pas par nos institutions médiatiques traditionnelles n’est “pas assez bon” ou “pas assez sérieux” pour être considéré comme de la culture.

6265 Il est là le nœud. Je les entends les scénarios de panique : « La culture meurt. » Non, la culture change. Toute industrie est sujette à des cycles d’innovation. Ce n’est pas parce qu’une industrie change qu’elle meurt. Notre culture sera canadienne, notre culture sera québécoise, notre culture sera mondiale. Oui, on écoute moins la télé câblée. On change la boîte, mais les artistes ne meurent pas. Les artistes s’adaptent.

6266 C‑11. Est‑ce que c’est les marchands de blocs de glace qui ont demandé au gouvernement de les aider parce que les réfrigérateurs ont été inventés?

6267 En tout cas, ce qu’il faut garder frais, c’est la culture. Et qui sont les meilleurs défenseurs de la culture? Les artistes, les créateurs, numériques comme ailleurs.

6268 Oui, en tant que fiers Canadiens et Canadiennes, en tant que grande nation bilingue et inclusive, protégeons notre culture. Mais encore mieux, créons notre culture, exportons notre culture, publions notre culture.

6269 Je sais que chaque Canadien, chaque Canadienne, chaque Québécois, chaque Québécoise, et chaque membre des Premières Nations qui m’écoutent présentement ont déjà en eux la créativité nécessaire pour faire rayonner toutes nos cultures partout. Parce qu'on n'est pas nés pour un petit pain pantoute.

6270 Merci.

6271 MR. BENZIE: I am not going to attempt to follow that. In closing, we are not here looking for a handout. If the commission decides not to support digital‑first creators, they will continue to flourish as they always have. But there is a real risk of taking resources they have today and handing them over to a system that admittedly “is just learning” about our industry.

6272 Thank you, and we welcome your questions.

6273 LA PRÉSIDENTE : Merci beaucoup pour votre présentation. Thank you. Thank you for being here with us today. We’re happy that you found the building ‑‑

‑‑‑ Laughter

6274 THE CHAIRPERSON:  ‑‑ and we do hope that your first experience before the CRTC is a good one.

6275 I will turn things over to my colleague Commissioner Levy.

6276 COMMISSIONER LEVY: Hello. Salut. Welcome.

6277 MR. BENZIE: Thank you.

6278 COMMISSIONER LEVY: You’ve talked in your submission about the fact that nobody seems to really understand your industry ‑‑ so, that we don’t really understand how you earn your money and build your careers online. So, this is your opportunity to educate us, (laughs) please. How would you say digital creators are different from other creators? How do their needs differ?

6279 MR. BENZIE: Sure. So, as I discussed ‑‑ I’ll back it up a little bit. Traditional media and funding bodies are content‑based. They are based to fund projects on that base of the project. You know, it’s hard to generalize creators because there’s thousands and thousands, but the actual production of the content isn’t the cost barrier, isn’t the barrier to entry. Everybody with a phone can tell a story.

6280 When we talk about ‑‑ you know, we heard a lot in committee hearings leading up to this about AdSense and making money through algorithms. That’s not how the majority of Canadian creators earn their money today. There are brand deals that go along with that AdSense. There are ‑‑ you know, they write books, they start merch stores, they have their own fashion lines. So, it’s been difficult that going through some of that process, we just weren’t even speaking the same language as some of the other people, and some of the other needs that, you know, we recognize need to be helped here. Not really my bag, but there is a real risk, if we try to apply what we’ve learned in the last 50 years to an industry that doesn’t fit into that box.

6281 I don't know, Fred, if you want to add anything?

6282 MR. BASTIEN: Thank you so much for your question, and I’d love to spend twelve hours talking about it. What’s different is the philosophy of the business model of that creation. TV, radio ‑‑ it’s top‑down culture. It’s a handful of people that decide what the population will watch. Digital creation is a bottom‑up approach. You can’t fake popularity. You have to be a community first; then, you will have more and more popularity, and then, you will be recognized, and then, you will be a phenomenon. But on TV and radio, I can create a phenomenon tomorrow by putting it primetime at 7:00. On the internet, I can’t create a phenomenon unless I am consistent, unless I build an audience that truly resonates with what I’m talking about, and the best part about these platforms is the fact that there are no gatekeepers.

6283 I was at MusiquePlus, and I was pitching some ideas to some of my producers, and sometimes they didn’t think they were great ideas. So, I would turn to YouTube, do it online and have tens of thousands of views. The audience should be the judge. I heard earlier today someone say, “We know what Canadians want to watch.” I have big doubts every time I hear that sentence. Some people have made careers into convincing themselves that they know what Canadians want to watch, but the population knows what it wants to watch, and in Québec, they watch Québécois videos. They watch me, they watch LeGurky, they watch Ryan George.

6284 So, I do a lot of digital strategy for the traditional sector. I get hired by producers and people in Quebec, and I tell them all this all the time. You need to think of digital creation as a free focus group, but it’s not even a focus group; it’s your actual audience. You don’t need to pay a marketer to tell you what to do; you can just do it and see what works, and do it again.

6285 MR. BENZIE: And I think if I could just add on to that, about the traditional industry learning, our friends at the CMF, whom I love dearly, you know, recently launched a program for digital‑first creators, and while it is a welcome program and a welcome sign, it’s very limiting. Like, the scope of creators that are going to apply for that and qualify for that are very specific. And that’s a great thing that they’re doing that, and it’s a great thing to help creators elevate their content, but it’s just not going to help a lot of people, which I know is a wider problem in the industry, but.

6286 COMMISSIONER LEVY: So, in the lead‑up to the legislation and so forth, there were Canadian creators who make a living off YouTube and so forth, who were really concerned that we might, in the legislation and in the following regulations, damage their bs model. So, there was a carve‑out that said that none of this applies to user‑generated content that’s put on platforms. So, are you now saying that the people who wanted to make sure they weren’t covered now want to come back into the system? Let me be clear about that.

6287 MR. BENZIE: Yeah, no, absolutely not.

6288 COMMISSIONER LEVY: Okay.

6289 MR. BENZIE: And with all due respect, the carve‑out in 422 was not a carve‑out ‑‑ but we’ve been down that road. I don’t want to rehash it. Absolutely not. You know, I think there is a ‑‑ I think the policy direction that we saw from the government, that they put forward, recognized the value that Digital First creators are bringing to Canadian culture and to the export of Canadian culture and included them in that policy direction for support and for funding. That's why we're here today.

6290 I think, you know, if you asked ‑‑ I don't want to speak for them. I want to be very careful. But if the choice is binary between, you know, be regulated and you can get a little bit of money here and there or not be regulated at all, I would venture to guess that the answer would be to not be regulated.

6291 MR. BASTIEN: If I can add something, let's take a step back and be more philosophical about this. So these creators, Québécois and Canadian and First Nations, are thriving. So let's not fix it if it ain't broke, first thing, is the main priority for me.

6292 And then, ideally, if digital platforms contribute to Canadian media, which I'm not against, well, I sure know my YouTuber friends in Montreal and Quebec are like, Are they taking resources away from us to give them to the traditional legacy media ‑‑ who I work with and love, but it's not the same for every YouTuber. Some of them got misrepresented by some journalists, and now they are angry at the media. Some of them had, you know, TV interviews that were setups to make them look bad. And every time traditional media talks about YouTubers, it's always, excuse me, dumb influencers making mistakes and not our economies and our actual creators making excellent content that educates and enlightens Canadians.

6293 So my whole thing is I like to build bridges between cultures. And I like to explain the TV sectors to YouTubers, and I like to explain YouTubers to the TV sector. It's what I've been doing for 15 years. And I know that if we want to bridge the gap in that great industry of ours and be side by side ‑‑ TV, radio, digital, all together ‑‑ well, we need to think positively about how to better include people and not maybe force them to be included, but talk to who they really are and see what they are, as we are ‑‑ what we're doing today. So I'm super thankful.

6294 COMMISSIONER LEVY: So you obviously have some needs, and they're different than the traditional. Can you tell us a little bit more about what your needs are and how you see we have a role to help.

6295 MR. BENZIE: Yeah, well, I think, you know, if the CRTC is in a position to build support for Digital First creators, they have to look at creators not in a sense of building a piece of content that's going to be sent out, but as a business and as a small business that has needs.

6296 So each creator is going to have different needs. Some of them are going to be really good with gear. Some of them are going to be really good with audio. Some of them are going to be really good with merch stores. But the idea of building an ecosystem of industries that support Digital First creators and giving them access to services at a reduced or subsidized rate, whether it be accountants, lawyers, merch experts, experts within the platforms themselves, access to better gear, access to studio space.

6297 You know, the only barrier to entry is belief that you can do it. So maybe put those resources in helping emerging or starting‑out creators believe that they can do it and show them the way that they can build a business. And, you know, I can count all day here the number of creators that started off as one person making funny videos online and are now a team of 15 ‑‑

6298 MR. BASTIEN: Yes.

6299 MR. BENZIE:  ‑‑ with studios, with lawyers that are doing big business around the globe. I think if we looked at emerging creators and said, Let's make more of those, we could actually achieve something great here. Not just as a cultural export, but as a culture that's also building economies and building businesses.

6300 COMMISSIONER LEVY: The list that you enumerated is not really that different from the kind of resources that emerging filmmakers and producers and so forth want as well. So in that sense, I don't see the same differences other than the fact that you are in the digital realm. You tend of think of the business first and expansion into other things later. But essentially, emerging is emerging, whether ‑‑

6301 MR. BASTIEN: It's ‑‑

6302 MR. BENZIE: Sorry Fred, just one second, if I can quickly intervene.

6303 You know, the difference is the way the funding ‑‑ sure, a lot of the needs are the same. But the way the funding models are built, like if the CMF is going to give somebody 75 per cent of their production budget to go out and get an accountant or a lawyer, get whatever help they need, that that's again going to help a very, very, very small group of digital creators who are making content for nothing. You know, 75 per cent of zero is zero. So it's really about helping those creators and helping creators that are doing it on their own, giving them access to, as you correctly pointed out, a lot of the same resources, but in a different way, I think is the way ‑‑

6304 MR. BASTIEN: You know, and my instinct is it's very different, because I have friends that are aspiring filmmakers and that work in, you know, the cinema industry in Quebec and Montreal. And they certainly don't think like creators in Digital First creators. They chose a path that is top‑down. They chose to pitch movies to say they can get financed, and then get ‑‑ they're aspiring filmmakers. And YouTubers will just make their movie with their cellphones, and then next year they'll buy a camera, and then the year after they buy two cameras. This is usually the way it ‑‑

6305 MR. BENZIE: We just want to accelerate that process that Fred is describing.

6306 COMMISSIONER LEVY: Other than the creation of a new fund, how else could digital content creators be supported as we go forward in the future?

6307 MR. BENZIE: I think the imperative thing for the CRTC is not necessarily ‑‑ if we take it out of ‑‑ sorry, I know the ‑‑ if we take it out of the scope of this hearing, there are a lot of ways that digital creators can be supported. You know, reluctant to talk about an algorithm and algorithmic transparency. I don't believe that there's a person that you could bring in front of you to explain the algorithm. It's very complicated. But I think working with the platforms to get heads‑up, following changes are being made, having somebody to call if your channel gets banned, like there's a lot of ways outside of the scope of this hearing that creators could be helped.

6308 Within the scope of these hearings, it's important that we just don't harm something that's already thriving. There's a real risk that some of the actions that could be taken here will harm the ecosystem that is built today.

6309 COMMISSIONER LEVY: But I mean, you're coming to us asking for a fund. So I'm trying to ensure that we fully understand your position. If most of your needs can be dealt with outside of this system, why would you be pressing for a fund?

6310 MR. BASTIEN: If it's a binary choice ‑‑ I don't think it's a binary choice ‑‑ but if it's a binary choice, we addressed it earlier.

6311 You know, in 2016, I got invited at a career event called Buffer Festival. And no single thing in my career has made me a better creator than spending a lot of time with digital creators ‑‑ some people from LA, some people from Vancouver, some people from St. John's, Newfoundland, some people from London. And it is a craft, you know.

6312 I'm on the board of l'UDA, which is a 10,000‑artist union in Montreal, Quebec. And I also bring them these reflections all the time. And artists are different. That's why l'UDA exists. And digital creators are also different. That's where we're trying to help them is because they are not represented by traditional structures. So by simply allowing them to exist as a collective, you make it a lot easier for us to be here and collaborate with the political instances all over Canada.

6313 MR. BENZIE: I think if I can ‑‑ thank you, Fred ‑‑ you know, from watching these hearings, and I have, all we've heard is about stuff that needs fixing and stuff that's not working. And if it's the Commission's position that, you know, you're here to fix things that aren't working and fix things that need fixing, I don't know that we need a lot of help. But if you are in the business of supporting and accelerating Canadian culture, there are things that we could do that we could do that with digital creators.

6314 COMMISSIONER LEVY: Thank you. I think some of my colleagues have questions, so I will leave it there. Thank you so much.

6315 THE CHAIRPERSON: Thank you so much. Let's go over to Commissioner Naidoo.

6316 COMMISSIONER NAIDOO: Hi there. Thanks for your presentation, for being here today.

6317 You argue that if 80 per cent of a platform's content is user‑generated, it should be considered a social media service. So I'm wondering how you arrived at the figure of 80 per cent, and are there other criteria in your view that could define a platform as a social media service other than a user‑generated content service?

6318 MR. BENZIE: Yeah, so there's no magic math that went on behind the scenes that made me come up with the number. I just ‑‑ you know, we looked at it pragmatically with a lot of the platforms, saying you know, for the sake of legislation and the Commission, when should a service be considered a social media service? Eighty per cent seemed like a fair number, because there are some platforms where users can upload their own stuff.

6319 You know, I think the better description is around curation. I think I would have preferred to be asked that question, where some platforms curate their own content, and it's allowed on their platform because somebody has made a decision to allow it on their platform.

6320 I think the best definition of a social media service is when a user by themselves has the ability to upload without anybody getting in the way. And I think if that happens 80 per cent of the time on a platform, then it's probably a social media service.

6321 COMMISSIONER NAIDOO: Thank you for that. Did you want to add something?

6322 MR. BASTIEN: I agree.

6323 COMMISSIONER NAIDOO: Okay, sorry. Your mic was on, so I ‑‑ sorry to put you on the spot. Thank you very much.

6324 LA PRÉSIDENTE : Merci beaucoup.

6325 Alors, on va continuer avec la vice‑présidente Barin.

6326 VICE‑PRÉSIDENTE BARIN : Merci beaucoup.

6327 Alors, Monsieur Bastien, oui, je connais Véronique Cloutier, mais je suis certaine que mes enfants connaissent Lysandre Nadeau.

6328 Si on ne voit pas ça comme une question binaire et le Conseil était pour dire qu'il y a un besoin pour un fonds pour financer le contenu numérique, est‑ce qu'il existe une organisation qui pourrait prendre en charge le financement des créateurs de contenu numérique, sachant que vous êtes en dehors des organisations traditionnelles?

6329 M. BASTIEN : Réponse très simple. Il n'y a aucune institution déjà existante qui peut bien nous servir.

6330 VICE‑PRÉSIDENTE BARIN : Merci.

6331 THE CHAIRPERSON: Thank you. Let's go over to Vice‑Chair Scott.

6332 VICE‑CHAIRPERSON SCOTT: Thanks very much. I was going to pass, but then your last answer prompted a question.

6333 Because you spoke about curation and your notion of kind of permissionless uploading really reminded me of kind of the Bell‑head versus the Net‑head debate. So across the platforms, is there unanimity or homogeneity in terms of the level of curation versus truly user‑driven content? Are there some platforms that have more barriers than others? And should they be treated differently?

6334 MR. BENZIE: I'm just, you know, there's so many. That's a difficult question to answer. I'm going over like the big four or five in my head, and I would say they're generally the same. They're generally the same for your ability to upload without a gatekeeper.

6335 VICE‑CHAIRPERSON SCOTT: Okay, yeah, maybe to ask it in an easier way, then, is there ‑‑ are there key features or key thresholds that have to be met in terms of ease of uploading to count?

6336 MR. BASTIEN: Can I just say something? It's something that I explained to my colleagues at UDA, and they find it quite insightful.

6337 In the traditional model, it's artist versus platform, right? It's like either the producer makes a lot of money or the artist gets a lot of money, and it's like a confrontation. But in digital creation, we're the same person. I'm the artist and the producer, so I have two hats, don't wear them at the same time.

6338 But say I'm not satisfied with one of the digital services I'm using. Say one of my platforms, I say, Hey, they're too cheap, or I don't like where they're going with their content, or the algorithm is messing me up. I can just stop using them and start publishing on another platform. And if I'm not satisfied with that platform, I can start my own platform. I can start a newsletter, charge people 10 bucks a month.

6339 So the point is, there's no winners and losers when you choose a social media service to distribute. You're choosing the best distributor possible.

6340 And last thing that is very interesting also that a lot of people don't take into consideration ‑‑ and I know most of them, but I know YouTube the most ‑‑ and YouTube, you know, the revenue share for creators, when there's an ad on YouTube and it's my video under it, YouTube will give me 55 per cent of the revenue from that ad and will keep 45 per cent of the revenue for that ad. So literally, Google is giving Canadian creators more money than they keep from their Canadian videos. This is interesting too, when you look at the economics of it.

6341 VICE‑CHAIRPERSON SCOTT: Great, thanks very much. I think you broadened my question, and then gave a very robust answer. I appreciate it.

6342 THE CHAIRPERSON: Thank you very much.

6343 So those are our questions. We'd like to turn things back over to you for any concluding remarks.

6344 MR. BENZIE: Yeah, so I kind of changed my concluding remark, which might make it a little less polished than you're used to.

6345 You know, we didn't ask to be here. I'm sure a lot of you followed C‑11. You know, digital creators are not broadcasters. It really comes down to is this an exercise of supporting Canadian culture, and how that culture can be best supported. And I think digital creators provide the greatest opportunity at the least amount of cost to grow Canadian culture through equity‑deserving groups, through economically challenged groups. There's a real opportunity here to build what is working.

6346 We are world leaders in digital creation. That's not trite. That's not something that I say lightly. Canadians punch above their weight. And it's something that we should be celebrating, and something that we should be trying to harness, and something that we should be trying to give to some of our legacy partners. You know, try to teach them a little bit what we do. They can teach us a little bit about how to elevate our content, and hopefully work with a spirit of cooperation.

6347 But there's a real opportunity here to make positive change. And I think that's what I would like to leave on.

6348 MR. BASTIEN: Thank you, and I just want to say thank you to the Commission. It really means something for a Montreal guy, you know, eastern Montreal guy to be here in Ottawa and feel that you listen. Thank you.

6349 MR. BENZIE: Thank you very much.

6350 LA PRÉSIDENTE : Merci beaucoup. Thank you for being here with us this morning.

6351 THE SECRETARY: Thank you. We'll now go to the next participant, Digital Media Association, appearing virtually. Can you hear me well? Oh, I think you're on mute, maybe.

6352 MS. DONALDSON: Oh?

6353 THE SECRETARY: Oh yeah, we can hear you. So may introduce yourself and you may begin.

Presentation

6354 MS. DONALDSON: Great, thank you.

6355 Well, good morning, Madam Chair, Commissioners, and Commission staff. Thank you so much for the opportunity to participate in this important hearing.

6356 My name is Kirsten Donaldson, and I am the vice‑president of Legal at the Digital Media Association or DiMA.

6357 We appreciate the Commission's efforts to modernize and create a new, flexible broadcasting system. In our view, flexibility will mean recognizing and building on existing successes. We believe we have a great story to tell.

6358 DiMA represents the world's leading audio‑streaming services: Amazon, Apple Music, Spotify, YouTube, Pandora, and Feed.fm. Founded in 1998, DiMA is the leading organization advocating for the digital music innovations that have revolutionized the way music fans and artists connect. Our members work tirelessly to drive innovation that benefits creators, rights holders, and fans. Today, DiMA's members are the economic engine that has revitalized the music industry, bringing it forward from the depths of the harm caused by piracy into a brighter future.

6359 That brighter future is clear in Canada. As our written submission highlights, Canadian music‑streaming subscriptions are rapidly increasing, year over year. Canada ranks eighth in the list of top countries in recorded music revenues, and streaming revenues in Canada ‑‑ where currently, approximately 70% of audio streaming service revenues are paid to rights holders in the form of royalties ‑‑ are continuing a trend of annual double‑digit growth. This is nothing short of a success story.

6360 Only a decade ago, the music industry faced declining revenues and challenges to get listeners to pay for music. Working alongside creators and rights holders, music‑streaming services invested time and resources to provide legal access to music in a compelling manner that benefits music fans, creators, and rights holders alike, in Canada and around the world.

6361 Streaming services are the number one source of music discovery. They provide unlimited shelf space, curated experiences, endless opportunities for personalization and discovery as well as rediscovery, information about music, and recommendations ‑‑ all of this accessible anywhere, anytime.

6362 DiMA members have also broken down geographic boundaries, allowing Canadian artists and others, particularly emerging artists, to access new audiences and build new engaged and supportive fanbases in ways they could not have dreamed of in years past. And we expect that streaming will continue to grow to reach new audiences across the globe, particularly in untapped markets such as francophone nations, which is particularly relevant for French Canadian artists.

6363 Today, streaming is the number one source of music discovery, and fans overwhelmingly embrace its features. Eighty‑eight per cent of fans support services providing recommendations based on their listening habits, and 87 per cent rank their favourite services as good or excellent on the ability to create their own playlists.

6364 As revenues grow, the percentage of revenue licensing model allows rights holders to be the biggest beneficiaries of streaming's success. As noted a moment ago, audio‑streaming services currently pay rights holders around 70 per cent of every dollar of streaming revenue in the form of royalties. This 70 per cent contribution is eight and a half times more of a revenue share than commercial radio stations pay: commercial radio stations pay just 8.2 per cent of revenues. In short, streaming services provide more, while operating on the lowest margins of any other distribution model.

6365 With the remaining 30 per cent of each dollar received, streaming services not only operate their services at a global scale with a catalogue of virtually all the world's music, but they also invest in a range of financial and non‑financial initiatives to support creators, including Canadian creators; innovate in new technology; provide new tools and data to the industry; and build compelling fan experiences.

6366 We've explained these investments in our written submissions. They include large catalogues of Canadian playlists, dedicated pages and stations for Canadian listeners with a great selection of local content, bilingual programming and user interfaces, marketing teams on the ground in Canada driving the promotion of local artists and music, and partnerships with Canadian music organizations. In short, our members are deeply engaged in the financial support, promotion, and discoverability of Canadian artists and Canadian content.

6367 Like other participants in this proceeding, we have called on the Commission to evaluate the contributions streaming services already make to the Canadian system, before deciding whether it's appropriate to impose an initial base contribution. Whether or not the Commission conducts a further assessment of these existing contributions, we firmly believe that our members' existing contributions already fulfill the kind of support and the amount of support required by the Broadcasting Act and sought by the Commission.

6368 You've asked whether and how any new financial contributions should flow to existing or newly created Canadian funds. Given that audio‑streaming services already pay around 70 per cent of all revenues they receive for music streaming to music rights holders and make significant financial and non‑financial contributions to artists and Canadian content beyond that, a new category of regulated financial contributions would be inappropriate and against the Commission's intent. In fact, they could actually harm existing investments, which have contributed to the success of Canadian artists both at home and abroad. Drawing revenues into a regulated fund without mind to existing investments would only draw such revenues away from successful ongoing initiatives that our members have undertaken to support Canadian artists in Canada and around the world.

6369 Thank you, Madam Chair, Commissioners and staff. I look forward to answering your questions.

6370 THE CHAIRPERSON: Thank you so much for joining us today and for your presentation.

6371 I will turn things over to Vice‑Chair Scott to lead the questioning for the Commission. Thank you.

6372 VICE‑CHAIRPERSON SCOTT: Good morning. I think you’ve ‑‑

6373 MS. DONALDSON: Good morning.

6374 VICE‑CHAIRPERSON SCOTT: I think you’ve won the award for sticking most closely to your allotted time, so thank you for that.

6375 MS. DONALDSON: Excellent.

6376 VICE‑CHAIRPERSON SCOTT: So kicking off the questions, your submission, obviously, focused on a lot of the benefits that your membership brings to Canadian artists. You mentioned specific stations featuring Canadian artists, partnership with Canadian music orgs, promotion of Canadian artists, local teams in Canada.

6377 Just on ‑‑ what do the local teams in Canada do? That’s featured in a number of submissions, and if you could just speak to some of the benefits or what ‑‑ who are they and what are they doing here?

6378 MS. DONALDSON: That's a great question.

6379 And actually, this is one of the times where I will direct you to our member companies who can best answer that question, but I do know that this is part of the investment that our member companies are making in Canada and so important to all of the other services that they are providing for local artists, particularly the incubation of artists that receive a lot of time on streaming services that would have never received that time on traditional broadcasting services.

6380 So I would direct you ‑‑ and I wish I could answer more of your question, but I’d direct you to our member companies on that.

6381 VICE‑CHAIRPERSON SCOTT: Okay. I think most of them are coming up, so we’ll get that opportunity.

6382 In your perspective, would ‑‑ these types of initiatives that your members are undertaking, they’re done because they make economic sense, these are good business investments?

6383 MS. DONALDSON: Is the question just for ‑‑

6384 VICE‑CHAIRPERSON SCOTT: Would you agree with that? Like are they promoting Canadian artists because it’s good for their business? Do they make money out of promoting Canadian artists? Is there a strong presence in Canada that have gotten benefits for your membership?

6385 MS. DONALDSON: I would say it's a symbiotic relationship that the streaming services have with the artists. They need each other to thrive and I think what I would say to that is that streaming has been a success story for both parties, particularly, though, for Canadian artists who have the global reach that streaming services can provide.

6386 It has turned what household names ‑‑ we all know, you know, Drake and Justin Bieber, but it has made a plethora of other local Canadian artists household names because of this global reach.

6387 So I think it is a symbiotic relationship, but one that definitely benefits Canadian artists and rightsholders, for sure.

6388 VICE‑CHAIRPERSON SCOTT: Okay, thank you.

6389 And then in your ‑‑ you hinted at it this morning and your submission includes a fairly ominous line. You say that a base contribution could disrupt the tremendous benefits that audio streaming has for Canadian rightsholders, artists and music fans.

6390 Could you just walk us through a scenario? Like what could we do that would disrupt it and how would that play out?

6391 Kind of the more concrete you can be, the more helpful, I think.

6392 MS. DONALDSON: Sure, sure. That's a great question. Thank you for that question.

6393 So you're right, DMA does not believe that initial contributions as an interim solution should be made before consideration and thorough consideration is taken of the financial and non‑financial contributions that services already made. And like I say in our submission, those contributions include music streaming services already paying for 70 percent of revenues received from music streaming as royalties and then, beyond that, the services make additional significant financial and non‑financial contributions to Canadian artists, so contributions to a fund, whether initial or otherwise, would only go toward duplicating the same or similar promotional services in which DMA members are already engaging but which DMA members are engaging in at a global scale.

6394 So that’s why it’s incredibly important that regulations and contributions not hamper the business models that are already working exceptionally well for Canadian artists and rightsholders on this global scale, but instead, what we urge the Commission to do is to forego initial base contributions and take its time ‑‑ and I think the Commission has articulated this very well, recognizing that this is a new era.

6395 And so with that in mind, take your time, please, in careful deliberation of music streaming services. And music streaming services are different from visual services or other online platforms and then within music streaming services, what we kindly ask of the Commission is to evaluate each service on a service‑by‑service basis because, again, it’s ‑‑ music streaming is not just an iteration of those past eras. It’s a completely new structure.

6396 And the other thing that I would note, too, and I know the Commission is hard at work on this as well, we also believe that it’s premature to assess contributions in advance of determining which content is even considered Canadian, so we’d be glad to come back and discuss that with you when the time is right.

6397 VICE‑CHAIRPERSON SCOTT: Okay. So you mentioned the word “duplicative”, so is it your view that it would be duplicative or that it would actually be worse than that, that it would be harmful? So would a base contribution result in a net negative investment in Canadian talent or would it just be unnecessary because the function’s already being fulfilled?

6398 MS. DONALDSON: Well, I think it's both. Music streaming services operate at very low margins and I think when you're talking about those low margins, it’s difficult to contribute in all ways.

6399 So I think it’s ‑‑ when you look at the benefit that streaming services provide, which is global in nature, that’s where the Canadian artists our member services work with receive the most benefit.

6400 So that’s ‑‑ that is where the duplication comes, but also, the global reach that streaming services are already able to provide is not the same reach that funds would be able to provide.

6401 VICE‑CHAIRPERSON SCOTT: Great. Thanks for that.

6402 Turning to royalties, which have certainly been a hot topic through the hearing so far, how would you respond to parties that have argued that paying royalties is really just the cost of doing business and that you’re in the music streaming business so, of course, you’re paying royalties, but that doesn’t translate into some kind of regulatory credit, that that’s just an ongoing business expense.

6403 MS. DONALDSON: Well, thank you for that question. That is a great question.

6404 I would return, first and foremost, to the fact that streaming is a success story in Canada and it’s one whose benefits will continue to grow in the coming years. We know this from the statistics.

6405 We look a decade ago and the music industry was faced with declining revenues, struggling to get people to pay for music, and music streaming launched in Canada less than a decade ago and now comprises almost 78 percent of the company’s recorded music market as measured by revenue generated, which comprises the overwhelming majority of the roughly $800 million of annual recorded music revenues, which shows that benefit to Canadian creators and copyright owners.

6406 Also, according to IFPI,, in 2022 streaming revenue in Canada increased by 10.1 percent year over year, which follows on the 18 percent year over year growth from 2021.

6407 So this trend of annual double digit growth is continuing, so what music streaming services are providing to fans is the legal access to the history of recorded music and providing to Canadian artists an audience of over half a billion worldwide users, so ‑‑ in addition to the several artist services and huge marketing opportunities, whether it’s showcasing playlisting or merchandise sales or related ticketing sales or other opportunities for artists to grow their global presence.

6408 So I would say that first and foremost.

6409 On the economics point, 70 percent of the revenues that music streaming services take in each month is paid as royalties to music rights owners. That is paid out to record companies, to music publishers, to performing rights organizations, and then those intermediaries have a direct contractual relationship with recording artists, songwriters, composters and producers. So I just wanted to make that clear, that DMA members do not pay artists directly so we can’t speak to the royalty breakdown in Canada or other countries. But what we are trying to point out is that this delta between the royalties that music streaming services are paying, so that upwards of 70 percent of their revenue, versus the royalties that are being paid by commercial ‑‑ the commercial broadcasting sector at 8.2 percent actually should factor into this question of whether a contribution is being made into the Canadian music industry and the creation of Canadian art because nothing is more directly relevant to whether more art is created than the amount that is received in compensation for the use of that art.

6410 And then on top of that, as I said, each music streaming service makes additional contributions to maximize the benefit for Canadian artists in this market that is rapidly changing and ever evolving, so yes, we do believe that that should be part of this evaluation by the Commission because of this game change.

6411 VICE‑CHAIRPERSON SCOTT: I'm going to change gears completely from my last question.

6412 So again, in your submission you spoke ‑‑ so speaking now about the funds, your submission articulated a view that the Commission shouldn’t be relying on existing funds in order to move forward and that we should be looking for new innovative models.

6413 What are some of the features ‑‑ what are some of the innovations that you’re hoping could be supported through a new fund that can’t be achieved through the existing ones?

6414 MS. DONALDSON: So actually, in our submission ‑‑ and thank you for this question.

6415 We ‑‑ because music streaming is not simply an iteration of that traditional model, we believe that in total when the Commission looks at music streaming as its own category and then, within that, each service on a service‑by‑service basis, we believe that you will find that the contributions already made by streaming services are sufficient so that additional contributions are not necessary.

6416 I know that doesn’t answer your specific question, but I just wanted to clarify that that’s ‑‑ that is where we are in our submission.

6417 VICE‑CHAIRPERSON SCOTT: Great, thanks. Those are my questions. I’ll pass you back to the Chair.

6418 THE CHAIRPERSON: Thank you so much.

6419 Let’s go to Vice‑Chair Barin.

6420 VICE‑CHAIRPERSON BARIN: Thank you.

6421 So I think I'm going to take another clarification question on the royalties.

6422 I understand your point that there’s a lot being paid in royalties by the online audio streamers, but having been in the business a while, programming costs are generally the major part of the expenses of either audio or audio‑visual undertakings. And to the extent that some of your members may be focused more on music, traditional audio players have other programming expenses that include local programming and news.

6423 So I’m just not sure that I understand what ‑‑ you know, what the argument is for counting royalties as a contribution. Maybe you can take another cut at that.

6424 MS. DONALDSON: Sure. So our members try to make music as affordable as possible for the maximum number of consumers around the world and provide the most benefit possible for the maximum amount of artists, and they do that with global reach that broadcasters, local broadcasters, traditional broadcasters simply cannot match.

6425 And again I will return to the statistics. What our members pay is that ‑‑ is upwards of 70 percent of their revenue compared to the 8.2 percent of revenue that broadcasters pay. And this is indicative of the revolutionized system of music streaming that we are in today because of DMA’s members and it’s that ‑‑ it can’t be compared apples to apples because it’s ‑‑ our members have completely changed the game. And that is precisely why the revenues should be included. They’re 8.5 times that of what traditional broadcasters paid.

6426 And in addition, streaming services have this global reach that is also something that traditional broadcasters cannot provide.

6427 In terms of a bit of a comparison, if I might go down this road, broadcasting and streaming could not be more different. Broadcasting is finite, streaming is endless. There’s unlimited shelf space. There is unlimited opportunity for all levels of artists to create fan bases all over the world and the streaming services help with that.

6428 And so all of the contributions, whether it’s royalties that are amassed from this half a billion fan base all over the globe as well as the contributions that are financial and non‑financial to help market, help discover ‑‑ help Canadian artists be discovered in a global realm, all of those in this new system should be considered.

6429 And I think the comparison just is not at all a comparison because our services have completely revolutionized the industry.

6430 VICE‑CHAIRPERSON BARIN: Okay. Thank you very much, Ms. Donaldson.

6431 I have one more question, and you are talking about the role of audio online streamers in discoverability and promotion of Canadian artists and Canadian music. One of the themes that we’re exploring in this hearing is support for Indigenous artists and Indigenous music, and I’m wondering if you can speak to the activities of your members in that area.

6432 And I know we’ve had some Indigenous intervenors before us and I think one of the comments was that they can’t get their music classified under their Indigenous languages, and so it isn’t discoverable as Indigenous music. So I’m wondering if you can speak to whether your members have any activities to support Indigenous music.

6433 MS. DONALDSON: Absolutely. That's a terrific question.

6434 Our members have a plethora of opportunities to support Indigenous artists. And I’ve talked to some of them and I guess I would also direct you to speak directly to our members to get into some more specifics. But truly, there are a whole host ‑‑ and it’s service by service, but a whole host of opportunities for Indigenous artists to be discovered.

6435 And we see this, too ‑‑ it’s so important to note that streaming is growing. It’s growing globally. And so for Indigenous and francophone artists, there is a whole world out there that has yet to be discovered, and so that presents a lot of opportunity for these artists.

6436 But in addition, I know several of our members, if not all of our members, showcase Indigenous artists regularly, whether it’s through playlisting or whether it’s through other marketing and promotional opportunities. And they do this with quite a bit of regularity, and so that speaks to what I was mentioning before about allowing these names to become household names across the globe.

6437 It’s not just the Drakes any more, and that is a great testament to these services that our members are providing for these Indigenous artists.

6438 VICE‑CHAIRPERSON BARIN: Great. Thank you very much.

6439 Back to the Chair.

6440 THE CHAIRPERSON: Thank you so much.

6441 So at this point, we would just like to turn it back over to you for any concluding comments.

6442 MS. DONALDSON: Great.

6443 Well, thank you so much again for your time today and for your careful consideration of the manner that is appropriate and reflective of the unique role that audio streaming services have in the music ecosystem.

6444 Our members, as I said, make music accessible ‑‑ as accessible as possible for consumers around the world. They create new abilities for artists and fans to connect. They allow for discovery and personalization and strive to provide the most benefit possible for the maximum amount of artists and Canadian artists of all kinds.

6445 Streaming has changed this game, which is why it is so important for the Commission to recognize the distinct nature of music streaming, not to compare it against traditional broadcasters or others, to fully examine music streaming on a service‑by‑service basis, to account for the significant benefits Canadian artists and licence holders receive for streaming’s global reach and to consider and weigh the plethora of financial and non‑financial benefits that individual audio streaming services already provide before assessing whether additional requirements may be appropriate.

6446 Audio streaming services are innovative and they are fiercely competitive. They are constantly differentiating themselves in ways that are creative and good for consumers and good for the market, and change in this industry is going to be constant.

6447 So we urge the Commission to be aware and to beware of the unintended consequences of regulations that could stifle competition, stifle that creativity or innovation or otherwise hinder the user experience and the ability of artists to connect with their fans because doing so, doing that would harm Canadian artists, Canada rightsholders and fans by deterring rather than attracting users.

6448 Lastly, I would just say that these are first of their kind regulations, which is why it is so important that the Commission take its time to develop timeless regulations that continue to foster that creativity and competition and assess audio streaming services within their own category and then on a service‑by‑service basis.

6449 So with that, I thank you again for your time today and we would be glad to answer any additional questions that the Commission has after this hearing as well. Thank you.

6450 THE CHAIRPERSON: Thank you so much, and we really do appreciate the Digital Media Association’s participation in these proceedings. Thank you.

6451 MS. DONALDSON: Thank you.

6452 THE SECRETARY: Thank you.

6453 I will now ask Shaw Rocket Fund to come to the presentation table.

6454 Welcome, and when you are ready, please introduce yourself and you may begin.

Presentation

6455 MS. AUGUSTIN: Good afternoon, Chairperson, Vice‑Chairs and Commissioners and staff. I am Agnes Augustin, President and CEO of the Shaw Rocket Fund, and I’m here with Christine Shipton, Chair of our Board of Directors.

6456 Thank you for inviting us to speak to you today about the Shaw Rocket Fund and our important role in the media industry. We acknowledge the great responsibility that the Commission has to modernize the entire Canadian broadcasting system and ensure a sustainable and systemic change.

6457 Children and youth are not a programming genre, they are a vital audience. Twenty‑one (21) percent of Canada’s diverse and growing population are under 18, yet at the Rocket Fund, we continually ask ourselves “who is looking out for the kids?”.

6458 The CRTC has an opportunity now to establish children and youth as a priority within the Canadian broadcasting system.

6459 There has been discussion throughout these proceedings about the relevance of legacy production funds. The Rocket Fund is not a production fund, we are an industry fund. The Rocket Fund, for over 25 years, has served the needs of the entire Canadian and Indigenous media sector and have been a key partner in offering children robust, world‑leading content on all platforms. As a private fund, we are nimble and able to alter our course to meet the needs of the industry and respond to the rapidly changing media landscape.

6460 MS. SHIPTON: The state of the children’s industry is in crisis. It needs attention.

6461 Canadian broadcasters have reduced or abandoned commissioning original Canadian and Indigenous children’s and youth programming.

6462 The international financing through licencing and presales that producers have relied on for many years has collapsed.

6463 The Rocket Fund, the one dedicated fund that supports children’s content, has seen a 38 percent decrease in BDU revenue from 2016.

6464 This crisis would have come to our sector earlier. Fortunately, in 2016, the CRTC made a very positive shift in policy, allowing CIPF to support productions without a broadcast licence and support development and discoverability. This timely change allowed the Rocket Fund to support producers with content on any platform, giving continued life to the industry. This shift also brought us new and emerging creators with diverse voices.

6465 MS. AUGUSTIN: Rocket Fund’s support in the industry has always been outcome‑based. We support all types of content and experiences for Canadian kids and youth, zero to 17. This includes live action and animated, scripted drama and comedy, factual, variety, educational, through series, feature films, one‑offs and shorts, all destined for many platforms, both linear and online. We support development as well as complementary digital content that kids expect today, including online games, video games, AR, VR, and Roblox experiences.

6466 We contribute to important discoverability initiatives for producers, such as attending international markets and festivals like TIFF, and we have supported remote community tours to enable creators and producers to reach Indigenous communities and audiences. We support programs in both official languages, Indigenous, and various minority languages. At the Rocket Fund, diversity is a top priority, and in 2017, we integrated diversity statements into our application process and decision‑making, and we continue to evolve and respond to the needs of equity‑seeking communities.

6467 MS. SHIPTON: We rely on and value partnerships. Partnerships for the Rocket Fund are not just about co‑financing. Partnerships are outcome‑based. We have partnered with the CMF to support digital‑first animation. We partnered with the BSO to support ‘Being Seen: Children’s Media Report’. With Content Canada, we created the Rocket Forum to allow for in‑depth conversation about the state of the Canadian children’s media sector. We partnered with the Bell Fund and Telus Fund on the ScreenMiner audience development program. We partnered with the kidSAFE Seal Program six years ago to create the Rocket online safety program. We partnered with the Canadian Academy for the Kids’ Viewers’ Choice Award.

6468 We believe that the independent fund structure best serves the industry. We welcome the newly‑established CIPFs ‑‑ the ISO, the CISF, and the BSO. We fully support them, and we look forward to working with them on great diverse Canadian and Indigenous kids’ content. As the Commission establishes initial or base contributions, we ask that the Rocket Fund, an established CIPF that is dedicated to Canadian and Indigenous children’s and youth programming, is a beneficiary of any initial or base contribution. In addition, we ask that there is a dedicated, ongoing, and meaningful allocation assigned to Canadian and Indigenous children’s and youth content from every recipient, when appropriate. These requests should carry through into the phase two contribution framework discussion.

6469 MS. AUGUSTIN: In closing, we ask again, who is looking out for the kids? Rocket Fund willingly has taken on this responsibility, but we can’t do this alone. All children in Canada ‑‑ children who are Indigenous, Black, come from racialized communities and diverse ethnocultural backgrounds, disabilities, sexual orientations, gender identities and expressions ‑‑ need to see themselves and their families and their communities reflected in the content they consume. The CRTC must ensure kids in Canada are well served by our broadcasting system. We are all responsible. We would like to make this happen. Let’s make this happen.

6470 Thank you, and we look forward to answering your questions.

6471 THE CHAIRPERSON: Thank you so much. Thank you for your submissions in the proceeding. Thank you for being here with us this afternoon.

6472 I will turn things over to Vice‑Chair Scott to start with the questioning.

6473 VICE‑CHAIRPERSON SCOTT: Good afternoon. So, I’d like to start by clarifying misunderstandings of my own, because I had always been under the impression that children’s programming in particular translates really well internationally, ports really easily onto digital platform, and therefore it seems to me like it ought to be pretty economically viable in the digital age. But you used the word ‘crisis’. Could you explain a little bit more the nature of the crisis, and what’s underlying it?

6474 MS. AUGUSTIN: Well, to your point, absolutely there is, when you take a look at children’s content globally ‑‑ I mean, in Canada, we were ‑‑ and we put this in our submission ‑‑ up until about 1999, Canada has been a leader in ‑‑ well, we always are, but it really was a leader in children’s content. And it was at that point considered not a priority program. So, when you take a look at the content, it was produced in Canada, the financing was in Canada, we were actually ‑‑ it was self‑sustainable in Canada. And after that, producers and the Rocket Fund ‑‑ we partnered with international streamers early on, international broadcasters, in order to finance our content. And yes, it did well in Canada, and then went global.

6475 But at this point, not only has the international marketplace collapsed, but the financing of new and emerging talent that can actually access the funding, we’ve seen has been very challenging. So, the international market continues, but within Canada, to create the content within our country and be able to tell the stories that we want to tell, there is definitely a crisis and a challenge for accessing funding.

6476 VICE‑CHAIRPERSON SCOTT: Okay, so I don’t want to put words in your mouth, but just to clarify then, so there is still a failure ‑‑ the international market won’t support the production of Canadian children’s television?

6477 MS. AUGUSTIN: At the moment, we are having a lot of challenges. So, yes, it is a market failure.

6478 VICE‑CHAIRPERSON SCOTT: Thank you. A quick question. We had heard, I think it was last week, someone expressing concerns about the company‑branded CIPFs. Given the history of the Rocket Fund, I would be interested in your views on whether or not company‑branded CIPFs present an additional barrier for anyone not affiliated with the company in question.

6479 MS. SHIPTON: I think, first and foremost, we need to remember that we are an independent fund, and the funding that we received from our contributors was discretionary. At the moment, we are a fund that has two years of certainty ahead of us from Rogers, and that is much needed for producer support. That is a mandatory contribution for our fund. But really, what you should know is that this has given us time to look for new partners. And because we believe in this content, we believe the children’s sector has to be supported, and we believe we can demonstrate that value to new contributors. First and foremost, we’re the Rocket Fund, and we look after kids, and don’t see ourselves as branded as anything other than that.

6480 MS. AUGUSTIN: I'd like to also add, if I may, that even earlier in our Shaw Rocket Fund days, we received contributions from Delta Cable, from Eastlink Cable Systems. So, at that point, those organizations that believed in children’s content contributed to us in the past, as well. So, we are definitely hopeful that we can continue on that.

6481 VICE‑CHAIRPERSON SCOTT: Great. I think it’s useful to get that on the record, thank you.

6482 So, given your mission to protect the interests of children in the audiovisual space, is there an equivalent need on the audio side? Is that a gap? Have you turned your mind to that at all?

6483 MS. AUGUSTIN: Specifically as in podcasts and that type of audio content?

6484 VICE‑CHAIRPERSON SCOTT: Maybe lets avoid podcasts, and maybe ‑‑

6485 MS. AUGUSTIN: Okay.

6486 VICE‑CHAIRPERSON SCOTT:  ‑‑ put on the ‑‑ I mean, kids listen to music. Is there a need for support for children’s music on streaming services? Or is it strictly audiovisual that you see a need?

6487 MS. AUGUSTIN: Oh, I'm going to say that when it comes to children’s content, we believe that, well, kids experience their content in different ways, and so, our experience has been that it’s not just ‑‑ you know, audiovisual content is a driver, absolutely, but in different forms ‑‑ and they experience their content in different ways, through music, through games. So, we would definitely say that when it comes to looking at children’s needs, it is, by far.

6488 MS. SHIPTON: It’s not a stream that we devote our attention to at all, but music being a part of all kids’ programming, producers are cleverly, you know, marketing those music extensions of their content, for sure.

6489 VICE‑CHAIRPERSON SCOTT: Thanks.

6490 MS. SHIPTON: If you can get a kid singing your song in a show, ‑‑

‑‑‑ Laughter

6491 MS. SHIPTON:  ‑‑ that song will go on every of those streaming platforms, for sure.

6492 VICE‑CHAIRPERSON SCOTT: I’ve got a few of those songs stuck in my head still, and it’s been ‑‑ it’s been several years now.

6493 So, my last question involves a bad analogy, but we’re heading into holiday session and all the related potluck events. So, my question is about the need for centralized planning of where funding goes to ensure that the diversity of the objectives in the Act are met. Because we’ve all been to the potluck where everyone is free to bring what they want, and you end up with everybody bringing a seven‑layer bean dip. So, you’re oversubscribed in one area and you’ve got other needs that are not being met. How much flexibility should companies have in where their contributions go? And how much is there a need for somebody to present a coordinated view to ensure that the breadth of needs gets covered adequately?

6494 MS. SHIPTON: I’ll just start and then pass it over to the expert here, quite frankly. You know, I think we want to consider measurable targets for what you’re talking about. I mean, there’s such an ebb and flow in the creative community. Like, the projects we see one year may go this way; the next year, they may go this way. It would be very difficult to say, “I can’t consider that,” or, “We can’t consider that,” because the targets have not been met, or have been met. So, I think measurable targets is what we’re looking at.

6495 Agnes, do you want to go ahead?

6496 MS. AUGUSTIN: So, a measurable is definitely ‑‑ so that we have some flexibility. We do believe that flexibility is important in a world that’s shifting, and especially when we work with children’s content, I mean, that, as you know, evolves every day, and technology, and ensuring that there is an ability to move with that. As far as your question ‑‑ as far as centralized, you know, there is some need for centralization for some things, absolutely, because we believe that there needs to be some order and, you know, we’re hoping that we’re not bringing a dip; we’re bringing something more interesting when it comes to kids. (laughs) But we do believe that when it comes to children’s content, particularly, that there was to be ‑‑ so, in the bigger picture, there needs to be a responsibility and an allocation dedicated to children’s within that system.

6497 As far as who administers and how that does, we believe we’ve been doing this for 25 years with children, we’ve grown with children, we feel we live and breathe what they do today, and so, we’d like to be part of that. We believe that we are important and an important part of continuing that work, but as far as the responsibility to children overall in the broadcasting system, there needs to be a bigger ‑‑ a bigger responsibility.

6498 MS. SHIPTON: But are you talking about the self I.D. ‑‑ identification system, as well? Is that what you’re leaning towards?

6499 VICE‑CHAIRPERSON SCOTT: No, it really ‑‑

6500 MS. SHIPTON: No?

6501 VICE‑CHAIRPERSON SCOTT: I was really speaking to the need to flow funds in a coordinated way, and the ‑‑

6502 MS. SHIPTON: Absolutely.

6503 VICE‑CHAIRPERSON SCOTT:  ‑‑ discretion that contributors have. Or don’t have.

6504 MS. SHIPTON: Right.

6505 VICE‑CHAIRPERSON: I am going to sneak in a last question, because I know in your opening remarks, you spoke about how, despite your focus on children, you’ve actually got ‑‑ that’s a very broad category and does include audiences of Black Canadians, other people of colour, Indigenous groups ‑‑ so, what’s the right taxonomy? So, if children’s programming has diversity within it, the other funds also have envelopes. So, do we have a children’s envelope within every equity‑deserving portfolio, and do we have equity‑deserving portfolios within all the children’s funding? Does that get duplicative and complicated?

6506 MS. AUGUSTIN: Well, it depends on how ‑‑ we don’t think so, because we believe that it’s important for us to work with the CISF, with the ISO, with the BSO, with the stories that they do, and ensure that they ‑‑ I mean, we do our work at the Rocket Fund ‑‑ all of our creative analysis is very robust and done with third parties. We bring authentic voices in from Indigenous to Black to people of colour, to make sure that we are ‑‑ and disability, LGBTQ+ ‑‑ we ensure that we cover. All of our analysts come with really ‑‑ with great voices, but our goal is then to be able to work with the organizations that represent the voices with our expertise in children’s, and so, we actually think when it comes to kids in particular, that we would not be duplicating.

6507 MS. SHIPTON: I mean, our goal is to increase the activity in creating children’s content. And if these other funds can apportion a percentage of their monies to going to the children’s programming community, that’s fantastic. Whether, you know, we can partner with them and administer it ‑‑ doesn’t matter. We just want to make sure there’s more children’s content being made.

6508 VICE‑CHAIRPERSON SCOTT: I’m glad to hear it. Thank you very much.

6509 Thanks, Madam Chair.

6510 THE CHAIRPERSON: Great. Thank you so much.

6511 We will go over to Commissioner Levy.

6512 COMMISSIONER LEVY: Hello, welcome. Just to frame up what your issues are, because what you have talked about, you know, the real issue for you is demand. How many mainstream Canadian broadcasters ‑‑ the ones that would show up on Skinny Basic ‑‑ how many of them regularly program children’s programming?

6513 MS. AUGUSTIN: The CBC does ‑‑ I mean, if we’re talking about skinny, we’re looking at private ‑‑ well, we’re looking at private broadcasters and public broadcasters across the country, I can tell you the public broadcasters have supported children’s content with their limited ‑‑ their resources are very limited. TVO has been a great supporter, but again, they have very limited resources, so the amount of content is limited. In French Canada, we also have on the public side CBC. And the private broadcasters we have seen very little over the last five years. In fact, I think I mentioned in my submission that in 2016, we saw 15 in one year from the private broadcasters of licences, and in the last five years, we’ve seen 15 over five years.

6514 MS. SHIPTON: And we still see activity at TVO and TFO and Québecois private broadcasters as well.

6515 MS. AUGUSTIN: And Télé‑Québec.

6516 MS. SHIPTON: Yeah.

6517 MS. AUGUSTIN: Yes.

6518 COMMISSIONER LEVY: So, and in terms of genres within the children’s field ‑‑ movies, things like that that can transfer to virtually anywhere ‑‑ what’s the market been for those?

6519 MS. AUGUSTIN: If you could please repeat?

6520 COMMISSIONER LEVY: Feature films or television movies that are oriented to young adults and children that might be funded by your fund ‑‑ what have you seen as the trend in those?

6521 MS. AUGUSTIN: Well, we ‑‑ as far as ‑‑ well, feature films has very limited financing for children. So, when we do support it, it tends to be generally more in the youth types of content. We see more animated feature films out of Quebec, which is fantastic. We don’t see ‑‑ I think the very odd ‑‑ very few times in ca ‑‑ or English Canada. We ‑‑ as far as the feature films are concerned, there is a demand. We’ve seen quite a few of our films at TIFF, when again the audience demographic is a bit on the older end. And then, there is a market for them, especially the animated films that go outside the country. So, again, looking at children, I just want to say that we talk about a film and kids today; we don’t just talk about a film, because a film goes and it’s released, and perhaps it’s released on film or maybe it’s on an SVOD service or ‑‑ usually theatres or a service ‑‑ but then, from there, our producers are very, very innovative and we’ve been able to support them. For example, we have our ‑‑ a producer in Quebec who produced Snow Cats, and it’s a fantastic film, but the VR experience that went into museums, for example. So, when you ask about the ‑‑ you know, where the kids are and the content is, we’re trying to support content with ‑‑ whether it’s an audiovisual piece or ‑‑ and then all the additional pieces that go along with it that make sense for kids to enjoy it and find the brand and find Canadian ‑‑ Canadian content. I hope I answered that.

6522 MS. SHIPTON: But I will add, because you've talked about trends ‑‑ the trend we see is our applications are just growing and growing and growing. Producers are there. They want to be creating. They want to be creating for all these digital platforms. A lot more feature films. Like, they are realizing there’s so many different ways to create content for kids. So, it’s overwhelming sometimes ‑‑ the demand for the ‑‑ through the applications.

6523 COMMISSIONER LEVY: So, you’ve got demand from the producers to create the programming, but there’s been a huge fall‑off in the demand for actually buying it? Is that ‑‑

6524 MS. SHIPTON: Well there’s a fall‑off from the traditional commissioning from our regular and traditional broadcasters. You know, the online platforms are endless, so they can ‑‑ they can go to those different YouTube channels and all ‑‑ all there. It’s just that there isn’t anyone else for them to go to for financial support. We do ask our producers always to bring a financial plan. There’s no question. And they’re interesting plans in terms of how creative they’re trying to get, to amass the funding to make their content. And some of them have gotten very creative with ‑‑ well, they used to, with the presales from around the world, but it’s just harder and harder. It’s just harder and harder to find those pockets of money to put it together.

6525 MS. AUGUSTIN: So, to add to that, we went from a time where our content made for Canadian kids in Canada was fully financed by our system, and then we went to the market, and our producers have been very innovative and they always ‑‑ you know, we always say they ‑‑ we used to always joke that you would get as much money as how tall kids are, and ‑‑ and being able to go out into the make and ‑‑ and we’re very successful. I think we saw one of the first Netflix deals. We saw one of the first Amazon deals. But that’s how producers have to pay for their content.

6526 And so, what’s happening today is, to your point about the international marketplace, I’m sure you saw we included it in our submission; you’ve seen what’s happening with Disney and HBO Max and Hulu ‑‑ and those ‑‑ those were our producers ‑‑ basically their presales and their way to finance. So, what we are seeing is more coproductions international, but those, as you know, are challenging as well, and producers are trying to find a way, but right now, we do know that the international market has ‑‑ in the kids’ space globally, has collapsed, and it’s ‑‑ it’s put a ‑‑ it’s been tremendous for our producers.

6527 COMMISSIONER LEVY: Thank you.

6528 THE CHAIRPERSON: Thank you so much. Let’s go to Vice‑Chair Barin for the last question.

6529 VICE‑CHAIRPERSON BARIN: Thank you. So, I am going to follow up on this because I’m really trying to understand then in terms of funding for children’s programming. I heard you say that in terms of Canadian demand, you’ve got CBC, TVO, Télé‑Québec maybe. So, these are public broadcasters to the extent that they’re either provincially or federally supported. And are these broadcasters part of the financial structure of children’s programming still? Or is it completely private?

6530 MS. AUGUSTIN: No, they ‑‑ they are part ‑‑ well, I mean ‑‑ so, they are part of the financing. As you know, we are able to finance digital first as well as linear content. So, we ‑‑ we do both. And when a Canadian broadcaster is involved, we do see the financing, but not at the levels that we’ve seen before, and we do know ‑‑ and we have seen that very few of our kids productions qualify for Canada Media Fund financing because of the licence fee threshold or very innovative ways that we’ve seen, and I know it’s public where they have to split their series into two types of financing to get part of it ‑‑ to get CMF money, and then the other part is through the international piece. So, what’s happened is, again, innovation when it comes to financing, figuring out ways to make it work. And it’s ‑‑ so, yes, we are seeing support from our broadcasters when they do commission, but the commissioning is by far less, and especially on the public side, which we rarely see any original Canadian ‑‑ as we are independent, you know, we support independent producers ‑‑ so, independently produced content.

6531 VICE‑CHAIRPERSON BARIN: We had Corus here this morning and Corus I think traditionally was one of the private broadcasters that had a lot of children’s channels. And they made a comment, and they said that they are seeing that in terms of Canadian programs, we have a lot of programming that is financed in Canada but then kind of exploited by non‑Canadian parties. Would you say that that’s what’s happening with children’s programming ‑‑ that we’re still to a large extent financing it, but it’s going on to streaming platforms?

6532 MS. AUGUSTIN: I would say that ‑‑ I think there is ‑‑ there is also a difference between inhouse production and then independent production, and I would say ‑‑ and I don’t ‑‑ we don’t work ‑‑ deal with inhouse production, so I’m not clear on ‑‑ on the financing there. But what I do know, and what we do know from the Rocket Fund, is that from an independent production side, that the financing of children’s content is challenging. The budgets have gone down. We see every ‑‑ we finance a production, and the producer has to come back with half the episodes because the money is not there. So, I would say that what we have seen from the Rocket Fund is that the content is very challenging to finance in Canada today.

6533 VICE‑CHAIRPERSON BARIN: Thank you very much.

6534 THE CHAIRPERSON: Thank you very much. Perhaps we could now turn it back over to you, if there is anything we haven’t covered this afternoon or a key message you would like to leave us with? Thank you.

6535 MS. AUGUSTIN: Well, we already addressed the market failure, but we would like to address it one more time, thank you. And thank you again for having us here today.

6536 So, earlier, you know, as we said in our intervention, you know, we believe that at one point Canadian children’s content was thriving and it was able to be financed within Canada, and that’s no longer the case. It was ‑‑ I think, when you look at market failure, when it comes to children’s content, we believe at the Rocket Fund that you can’t consider market failure and whether children’s programming is a priority program or not without safeguards when it comes to children ‑‑ and not rely on the international marketplace to say whether or not, you know, our kids are worthy of Canadian content. Since we also believe that part of this challenge has been that children’s content has been categorized as a genre throughout the broadcasting system and then falls under ‑‑ for example, when genre protection was removed ‑‑ so, we do believe that it has been overlooked in policy to the detriment of kids, and we do believe that we ask you to take that into consideration when you’re looking at the new framework.

6537 MS. SHIPTON: I think we’ve covered the demise of the statistics of the community that the CMPA has talked about, but just what I want to say before I pass it back to Agnes is, I just think we ‑‑ what do we want our kids and grandkids to be watching? Don’t we want them to see Canada? Don’t we want them to see themselves, their communities? I mean, we need to have ‑‑ allow them to have access to stories that are meaningful to them, and producers need to have the ability to create that content for them. It will be seen in Canada, enjoyed around the world because they’re such fantastic stories, and we just need to be able to support them doing that, which means we need resources to do that.

6538 MS. AUGUSTIN: So, in respect to allocations, we understand that there is great demand for the pie, and we’ve heard lots of that. And we believe the Commission needs to take into account the population that children represent today in our country, and their future media habits, and include that in the framework.

6539 So, we are an established private fund and we are expert in children’s content, and we are here for the producers that we work with that create amazing shows for children. We can administer and regulate the contributions on behalf of any contributor who believes in the importance of supporting children’s content. And we understand that many decisions have to be made. We are happy and willing to work with you to determine the best path forward when it comes to Canadian Indigenous children’s and youth content, and it is vital and important that children’s content does not get lost in this huge, huge regulatory framework and the huge considerations before you. And really, our kids are the future, and so, we ask you that you please don’t forget them.

6540 THE CHAIRPERSON: Thank you so much. Thank you to the Rocket Fund for your participation and for being here this afternoon.

6541 THE SECRETARY: Thank you. We will now take a lunch break and be back at 1:30. Thank you.

‑‑‑ Upon recessing at 12:38 p.m.

‑‑‑ Upon resuming at 1:31 p.m.

6542 THE SECRETARY: Welcome back. We will now hear the presentation of Accessible Media Inc. Please introduce yourself and your colleagues, and you may begin.

Presentation

6543 MR. ERRINGTON: Thank you.

6544 Madam Chair, Vice‑Chairs, Members of the Commission, Commission staff, my name is David Errington, and I am the president and CEO of Accessible Media Inc. With me today are, to my left, François Beauregard, who is the chair of AMI's Board, and to François' left is Isabella Federigi, our vice‑president, Content Development and Programming. And to my right is Kevin Goldstein, our outside regulatory counsel. We will now begin our presentation.

6545 AMI is a not‑for‑profit media company dedicated to establishing and supporting a voice for the 6.2 million Canadians with a disability, representing their interests, concerns, and values through accessible media, reflection, and portrayal.

6546 We operate three broadcasting undertakings: AMI‑TV in English and AMI‑télé in French, which offer a wide range of original programming for, about, and produced by Canada's disability community. AMI also offers AMI‑audio, which offers a variety of compelling stories and engaging original content to Canadians who are blind, partially sighted, or otherwise print‑restricted. Each of these services benefits from a mandatory distribution order issued pursuant to section 9(1)(h) of the Broadcasting Act. As a result, AMI's services are available in 9.7 million Canadian homes. All of AMI's programs are accessible through the newly launched streaming app AMI+.

6547 François?

6548 MR. BEAUREGARD: Thank you David.

6549 AMI investit de manière significative dans le contenu canadien et dépasse largement ses obligations réglementaires à cet égard. Alors que les chaînes de télévision d'AMI proposaient initialement des grilles formées de contenus déjà offerts par d'autres diffuseurs, qu'AMI rendait par la suite accessibles par la vidéodescription en clair, les grilles d'AMI‑télé et d'AMI‑tv sont désormais majoritairement composées d'émissions originales produites par et pour la communauté du handicap. Cela inclut des émissions comme Ça me regarde, Des familles comme les autres, Pas de panique, on cuisine!, NOW with Dave Brown, Breaking Character, Fashion Dis, et les séries primées Employable Me et Ça ne se demande pas.

6550 Compte tenu de l'importance que nous accordons à l'accessibilité, les chaînes d'AMI proposent toute la programmation avec la vidéodescription en clair et le sous‑titrage codé pour malentendants. De plus, toutes les émissions originales sont produites avec la vidéodescription intégrée. La vidéodescription intégrée, pensée lors de la scénarisation, raconte l'histoire en mettant l'accent sur les sons d'ambiance et une description intégrée aux textes des protagonistes lors du tournage, éliminant ainsi le besoin d'une piste audio secondaire ajoutée en postproduction. Ce type de description révolutionnaire, qui crée une expérience plus fluide et moins lourde pour le téléspectateur, a été mis au point par AMI. Merci.

6551 MR. ERRINGTON: AMI welcomes the opportunity to appear before you today as you consider how to implement a modernized regulatory framework relating to contributions to support Canadian and Indigenous content. 9(1)(h) services, by definition, make an extraordinary contribution to the achievement of the objectives of the Broadcasting Act, including exceptional commitments relating to Canadian expression. However, the changes to the broadcasting landscape that have occurred over the last decade and, more specifically, cord‑cutting driven by the emergence of online streaming services are dramatically impacting the long‑term viability of Canada's public interest services.

6552 9(1)(h) services like those AMI operates rely almost exclusively on wholesale fees from BDUs to operate. Those rates are set by the Commission and are fixed. Therefore, as subscribers decline, so do our revenues. AMI's services now generate $2.8 million less than they did in 2016 or 9 per cent of our total revenues, not adjusted for inflation, which would make the numbers even higher. This trend is likely to continue, especially if, as expected, Canadian BDUs move toward Internet‑based delivery.

6553 Faced with this financial reality, AMI completed a strategic review of all of our operations with a goal of finding efficiencies and cost savings in our original content creation process. A decision was made to move away from an in‑house production to a hybrid model consisting of daily live shows and outsourced independent productions. Ultimately, we were forced to make the difficult decision to eliminate 30 per cent of AMI's workforce and close our regional production bureaus in Halifax, Ottawa, Edmonton, and Vancouver, and replace them with contracted contributors exclusively from the disability community across Canada.

6554 These decisions have stabilized our operations for the short term, but what AMI and other 9(1)(h) services really need going forward is additional funding to offset revenue that is lost when Canadians cancel their BDU subscription. Unfortunately, the amendments to the Act do not provide the Commission with the authority to impose a 9(1)(h) type order on online undertakings or virtual BDUs. What the Act does allow is for the expenditure obligations to be imposed on online undertakings for the purpose of supporting services that are of exceptional importance to the achievement of the objectives of Canadian broadcasting policy, services like AMI, APTN, TV5, CPAC and others. In fact, the policy direction recently issued to the Commission by the government specifically mandates that broadcasting undertakings of this type should be supported.

6555 In the Notice of Consultation, the Commission outlined three specific questions it wanted intervenors to address at this hearing: who the regulatory framework should apply to, the appropriateness of the proposed initial base contribution for online undertakings and at what level, and, assuming such a contribution is appropriate, which funds should receive the monies.

6556 On the first question, AMI does not have a view, given that as an operator of 9(1)(h) services, it will always have commitments that are more substantial than most players.

6557 With respect to the second question, we support the concept of an initial base contribution for online undertakings. In terms of the level of contribution, we note that various players have suggested a contribution level of no less five per cent of annual revenues, with some suggesting requirements in the 20 per cent range for those undertakings more comparable to programming services. Recognizing that BDUs contribute five per cent, but also make other commitments, such as carrying various Canadian programming services, while programming services often have expenditure requirements of 30 per cent or much higher, a number within the range being proposed would seem appropriate.

6558 In terms of the third question, there are various competing proposals relating to where funds should go. There seems to be a broad consensus that the majority of funds should support established, traditional production funds like the Canada Media Fund, Telefilm, and Canadian independent production funds like the Bell Fund or Rogers Fund. There has also been significant support for funding local news, an area in dire need of support. And finally, organizations supporting equity‑deserving groups such as the Indigenous Screen Office, Black Screen Office, and, we would add, Disability Screen Office merit funds as well.

6559 We believe that all these initiatives can be supported by a properly constructed framework for base contributions and still have funding for 9(1)(h) services and other initiatives such as the Broadcasting Participation Fund and the Broadcasting Accessibility Fund. For example, if the base contribution is set at five per cent and online undertakings generate approximately $5 billion in revenue, the initial amount available to distribute would be $250 million. Five per cent of this amount would be $12.5 million, which could be directed to public interest services, the BPF, the BAF, and the DSO. We would recommend that at least 80 per cent of these funds be directed to the not‑for‑profit 9(1)(h) services. We believe that this funding, which will grow over time as online services increase in importance, would make a material difference to the sustainability of public interest services.

6560 All additional funding collected by AMI through this initiative will be directed towards the continued creation of exceptional, award‑winning Canadian content produced for and by the disability community, providing a voice for Canadians with disabilities through authentic storytelling, representation, and positive portrayal. AMI will continue to build on our successful programs to create employment opportunities in the production process for members of the community. As of today, 20 per cent of our current workforce identifies as disabled, and we have over 200 contracted contributors from the disability community from across the country.

6561 Currently, the majority of our programs consist of unscripted lifestyle or magazine formats. We would like to take the next step in our story telling and move into scripted content including dramas. We hope that this funding, as well as support from the other production funds that may receive additional resources as part of this process, will allow us to do that.

6562 In closing, we'd like to highlight that ‑‑ it's actually 9.1(1)(h) services ‑‑ it's easier to say the other way ‑‑ play a crucial role and critical role in furthering the objectives of the Act. It is critical that the necessary protections are put in place to ensure their long‑term viability.

6563 We'd like to thank the Commission for allowing us to appear before you today, and we'd be pleased to answer any questions you may have. Thank you.

6564 THE CHAIRPERSON: Thank you so much. We really appreciate AMI's participation in the proceedings.

6565 I will turn things over to Commissioner Levy to start with the questions for the Commission.

6566 COMMISSIONER LEVY: Good afternoon. Welcome.

6567 MR. ERRINGTON: Thank you.

6568 COMMISSIONER LEVY: Now, your proposal clearly states that there needs to be funding exclusively for not‑for‑profit public interest services benefiting from mandatory distribution such as AMI. Do you believe that it's the appropriate time for this type of funding? Or should the Commission look at distribution and supports for independents more holistically?

6569 MR. ERRINGTON: Well you know, I think it's critically important that we're a huge success story for the Commission and for the Canadian broadcasting system. We just need to have sustained long‑term funding.

6570 So I think that the proposal that we put forth, five per cent dedicated to services like ours that are not for profit ‑‑ so therefore, you know that all the funding that we receive goes directly to the creation of content, nothing goes to a bottom line. So I think our proposal would work. And we just want to continue to do the great things that we've already done. It's a great success story. We just want to continue it.

6571 Do you want to add to that ‑‑

6572 COMMISSIONER LEVY: Does your ‑‑ I'm sorry.

6573 MR. GOLDSTEIN: Yes, if I could just add to that, I think in terms of ‑‑ you know, I think a lot of services within the Canadian broadcasting system are struggling right now. I think there's different mechanisms that can be used to support different services.

6574 You highlighted independent services. I think the limitations in terms of under the Act relating to how expenditure obligations can be used to support broadcasting services directly are limited to the 9(1)(h) services. I think independent services writ large are in need of ‑‑ arguably in need of support as well. And I think, you know, even beyond that, others as well. But there might be different mechanisms or different approaches that might be needed to help those given the regulatory and legislative structure.

6575 COMMISSIONER LEVY: Does your proposal involve modifying or even removing the wholesale rate to which broadcasting distribution undertakings are current subject?

6576 MR. ERRINGTON: No, our proposal does not suggest that. What our proposal does is we would use the regulated rate that 9(1)(h) services already have in place that the Commission identifies and sets that rate based on need. And we would use that as a prorated calculation in order to allocate the funding that's going to be received from the undertakings. So I would assume we would keep the rates in place. We could use those as holders to help allocate the funding that comes from other services.

6577 Do you want to add to that?

6578 MR. GOLDSTEIN: Yeah. I think one of the interesting things about the proposal ‑‑ so I know APTN advanced a relatively similar proposal earlier or late last week ‑‑ is that the ‑‑ you know, there's a variety of groups who are coming forward and asking for different things out of this process. And as we noted in our opening statement, you know, all of them have merit.

6579 The interesting thing about the 9(1)(h) services is the online undertakings we're talking about are the ones having the direct causal link to the reduction in revenue that the 9(1)(h) services are experiencing. Because the rise of online services is tied to cord‑cutting. As people cancel their BDU subscriptions, there's a direct line reduction in the revenues that 9(1)(h) services get.

6580 So I think the proposal that we're advancing and other 9(1)(h) services and groups are advancing is designed to essentially shift some of that support ‑‑ or it's not shift, but make up the support that has been lost to try to ‑‑ I'm not sure that they would make us whole, but I think help create a more sustainable environment for 9(1)(h) services.

6581 COMMISSIONER LEVY: You also mentioned the Canada Media Fund and the certified independent production funds do excellent work; however, you believe funding should not be directed in totality to them. Can you identify other types of funding administrations currently in place that would be better suited for public interest services such as AMI?

6582 MR. GOLDSTEIN: I'm not sure there is any funding body right now, if you're asking who could be kind of the administrator of these funds. I don't think there is necessarily a funding body right now. But we do know, for example, that the Canadian Association of Broadcasters administers the ILNF right now. And we've chatted with the CAB, and I think ‑‑ I know they're going to be here next week ‑‑ but I think they're willing to take on that responsibility if necessary.

6583 I think as Dave alluded to, what we were thinking is, is that there would be a pool of money and it would be distributed amongst the 9(1)(h) services on a pro rata basis, based on what their wholesale fees are set at, you know, because that has been identified as reflective of the need of the channels. That's not an overly involved calculation. I think some of the other funding proposals before the Commission are going to require quite a bit more development in terms of the various programs that are going to receive. This is more ‑‑ I think that the advantage of having an organization like the CAB who's doing this who may, depending on the result, be recipient of other funds, we don't know, you know, under this is that they'll collect the money from those who are required to pay, and there will be a very simple methodology in terms of distribution, and the money will go out. I don't think it would require significant administrative oversight.

6584 COMMISSIONER LEVY: And finally, I'd like to ask a question about trends. We have an ageing population, a growing population, and you're talking about the success story that AMI is in its various services. So what do you see as the long‑term trend for this? Because, you know, when do we hit bottom, and how do we approach filling in the gaps?

6585 MR. ERRINGTON: If I understand your question correctly, where do you see us heading beyond this? We're a content company, and we create content for the disability community, and we try to create content by the disability community. We want to continue to do that.

6586 And what being in the content creation game allows us to do, it allows us to program our linear services; it allows us to participate in new platforms, be it our new streaming app AMI+, be it our mobile app, or it may be eventually maybe with online undertakings with our content.

6587 So in the long term for us, we still want to create great content that's produced for and by the disability community. We want to take it to the next step and do some more scripted and drama, because right now we're doing mostly magazine‑ and lifestyle‑type content. But we're a content company.

6588 And we're a content company that doesn't exist anywhere else in the world. So that's a benefit for the Canadian broadcasting system. So we're the only network like this in the world that's creating content specifically for the disability community. And we just want to continue to grow that and expand upon that and create great content and tell great stories and give a platform for people with disabilities to participate and to share their stories and be part of the Canadian broadcasting system and that beyond.

6589 COMMISSIONER LEVY: Thank you. Oh, sorry, go ahead.

6590 MR. BEAUREGARD: If I may, I don't know, because in your question, you mentioned the demographic and the growing ageing population.

6591 People who are disabled are not all born disabled. A lot of people grow disabled as they grow older. They lose hearing; they lose eyesight; they lose mobility. So actually, if right now you got 6.2 million Canadians who are I would say defined as disabled, that number will grow. There will not be less disabled Canadians as a percentage of population in the future. There will be more. So services such as ours will be even more required. Thank you.

6592 COMMISSIONER LEVY: Thank you very much.

6593 THE CHAIRPERSON: Thank you so much. We will go over to Commissioner Naidoo.

6594 COMMISSIONER NAIDOO: Hi there. Thanks for being here today.

6595 Other than allocating a specific percentage of the initial base contributions to not‑for‑profit organizations, in your view, what other kinds of means or metrics for success could the CRTC consider for ensuring that this framework review that we're doing supports the needs of 9.1(1)(h) services such as AMI?

6596 MR. GOLDSTEIN: I think our perspective is that, more so than any other participant or licensee within the broadcasting system, 9(1)(h) services, you know, are looked to, to meet a much higher standard. So the contribution to achieving not just the old requirements in the Act but the new requirements in the Act have kind of already been identified for the 9(1)(h) services and their obligations have been set to do that. Because it's really the singular objective of these services is to do what they've been tasked of doing and meeting the specific objectives of the Act.

6597 And so to us, the outcome is not really in doubt as to whether or not these services will deliver what the Commission and the government is hoping from this new framework. The really question is, is how, and how do you finance it. And so for us, that's why we've identified a potential fund, because we're all seeing ‑‑ all these services are seeing a straight‑line decline in their revenues because they really only have one revenue source. And they're not ‑‑ the other revenue sources aren't going to materialize.

6598 So in terms of, you know, it's hard to identify another element of the framework that is going to help 9(1)(h) services achieve the outcomes that the Commission sets for this process because they're already achieving them and have been to date. The question is whether or not that's sustainable going forward.

6599 COMMISSIONER NAIDOO: Thank you very much.

6600 THE CHAIRPERSON: Thank you so much. So we will turn things back over to you. If you have any concluding remarks or anything you'd like to add that we didn't cover in our discussion this afternoon, that would be great. Thank you.

6601 MR. ERRINGTON: Sure. I was hoping you'd ask that question.

6602 I just kind of want to state why we think AMI is a great success story, one that, as Canadians, we should all be very, very proud of and I think what makes the Canadian broadcasting system unique from other broadcasting systems around the world. There's no other network like us in the world, despite the fact that between 15 and 20 per cent of the population identify as being disabled. They should be included in the system.

6603 AMI services make extraordinary contributions to the achievement of the objectives of the newly updated Broadcasting Act. That's clear. We've made that evident as of today. AMI provides a voice for Canadians with disabilities for authentic storytelling, representation, and positive portrayal. We do that through our content creation and our daily shows. And in our partnership with Canadian producers, we have created award‑winning shows that are created for and, more importantly, by members of the disability community, award‑winning shows, such as Rockie Awards and MIPCOM Diversify awards. We've achieved two FCC Chairman's accessibility awards. So it's known throughout North America and worldwide.

6604 Twenty per cent of our full‑time workforce consists of members from the disability community. We have strategies in place to continue to grow this number. We walk the walk. AMI has also created employment opportunities for over 200 Canadians from the disability community to participate in the creation of content and be represented within the Canadian broadcasting industry with both onscreen and offscreen. François is not only our chair, he's also a contributor to one of our shows. He's bashful.

6605 In order to continue our joint success, we need a long‑term consistent funding model. Online undertakings should pay a minimum basic contribution of five per cent gross revenues to fund, and arguably higher. Eighty per cent of these funds should be distributed to 9(1)(h) services that operate as not‑for‑profit entities such as AMI represents. And of the monies collected, we believe a hundred per cent will be allocated to the production of Canadian content that is made for and by the disability community.

6606 The long‑term sustainability will allow AMI to continue to be a proud success story for the Canadian broadcasting system today and well into the future. And thank you for your time.

6607 THE CHAIRPERSON: Thank you so much, and thank you for being here with us this afternoon.

6608 THE SECRETARY: Thank you. I will now ask Spotify to come to the presentation table. When you are ready, please introduce yourself, and you may begin.

Presentation

6609 MR. WISZNIAK: Good afternoon. My name is Nathan Wiszniak, and I am the head of Artist & Label Partnerships at Spotify Canada. And on my left is Logan Finucan, the manager of Government Affairs.

6610 MME. REGNIER : Bonjour, je suis Olivia Regnier, Directrice des affaires réglementaires chez Spotify.

6611 MR. WISZNIAK: Spotify's mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it. This mission directly supports the government's goals in the updated Broadcasting Act. We work every day to increase the discoverability of Canadian and Indigenous content, both at home and abroad.

6612 With our remarks we want to touch on three critical issues in this proceeding. First, we believe imposing initial base contributions on platforms before defining critical elements of the broadcast policy is premature and risks overlooking the many ways that Spotify already contributes to and supports Canadian and Indigenous artists. Further, it is incumbent on the Commission to consider the significant portion of revenues streaming services immediately distribute back to the music ecosystem as royalty payments. And finally, the Commission should take into consideration the delicate economics of the music streaming business model and not impose blunt financial obligations.

6613 A regulatory framework that does not adequately consider these factors could jeopardize our nine years of tailored investments and impact Spotify's ability to continue to support artists and discoverability in ways that makes sense for the modern streaming age.

6614 I'd like to start with a short introduction of Spotify, because it underscores our commitment to the music industry. Spotify was launched in Sweden at a time when the music industry was in deep decline due to piracy. The view of Spotify's founder was that if you are going to get people to start paying for music again, you have to make it a better experience. Seventeen years later, streaming is driving record revenues into the music industry and more artists are sharing in that success than ever before.

6615 Spotify launched in Canada in 2014 with this same commitment. Today, Spotify's 150‑strong Canadian team's mission remains to grow the stage for Canadian and Indigenous content through playlisting, marketing campaigns, partnerships, and training that empowers artists, writers, and podcasters to organically grow their audience.

6616 We are proud of the success of the Canadian music ecosystem we have helped build. Thanks to the payments of streaming services, the record labels and artists of the Canadian recorded music industry earned nearly 80 per cent of their revenue from streaming last year, driving robust growth of 8 per cent. Unlike traditional radio, interactive streaming has made space for new talent. Every week, 83 times the number of unique Canadian tracks are listened to on Spotify in Canada compared to radio, creating more opportunities for diverse voices to be heard.

6617 Spotify puts significant effort into showcasing and supporting Canada's diverse, multilingual, and multicultural society. Our editorial team curates playlists with deep experience in and passion for different cultures and musical genres. Spotify Canada programs over 100 playlists editorially, with our popular local flagship playlists programming 100 percent Canadian and Indigenous artists.

6618 Moreover, Spotify empowers creators and their teams with tools for success, including data analytics, educational resources, expression formats, and promotional tools to make the most impact on and off platform.

6619 Combined with special partnerships and tailored campaigns, Spotify is helping Canadian and Indigenous artists from diverse genres and backgrounds to reach listeners at home and around the globe. To highlight a few key examples mentioned in our written submissions.

6620 We elevate voices from marginalized communities including Canadian women, Black, 2SLGBTQI+ creators through specialized programs combining editorial, spotlighting and advertising. EQUAL, for example, is Spotify’s program fostering equity for women in music. It’s an always‑on commitment to support, elevate and celebrate women through editorial, partnerships and community events. We collaborate with organizations such as Women In Music Canada, Honey Jam and the Canadian Country Music Association’s EQUAL mixer community event.

6621 Spotify’s Indigenous playlist, curated on a monthly basis by Indigenous artists, offers a unique platform to showcase Canada’s rich diversity of Indigenous talent and storytelling. Our relationship and ongoing dialogue with the Indigenous Music Alliance and Indigenous Music Office has played a key role in helping us identify artists to support, educate and promote.

6622 Through promotion of Spotify Canada’s Rap québ and Les Nouveaux Classiques playlists, French‑Canadian artists have grown audiences and careers at home and abroad without the aid of any radio play. Today on Spotify, seven out of the top 10 most streamed French‑Canadian artists are independent French‑Canadian rappers. Only two of those artists appear on French‑Canadian radio charts.

6623 Additionally, 2023 marked the second year of Spotify’s partnership with les Francos de Montréal, the festival's first ever partnership with a streaming service.

6624 These unique and tailored investments are paying off for artists.

6625 We invest in Canada’s cultural sector and ensure the discoverability of diverse voices because it is our core mission. However, we are concerned that the introduction of initial base contributions could damage the progressive work that we have been doing for almost a decade.

6626 We believe that the Commission is moving too quickly without key pieces of the puzzle, including foundational elements like how Canadian and Indigenous content is defined and the best tools to support Canadian music and audio content.

6627 Without a more holistic picture, it is impossible to properly quantify the unique and innovative contributions already made by online undertakings today.

6628 I’ll now hand it to my colleague Olivia to explain some of the unique features of the music streaming business model that we believe are important to this larger picture.

6629 MME REGNIER : Merci. Je vais continuer en français, et je suis à votre disposition pour répondre aux questions en français ou en anglais.

6630 Je voudrais approfondir trois points en particulier : ce que représente la contribution financière des services de streaming pour le secteur musical; les marges très réduites, voire négatives, des services de streaming; et l'impact de contributions financières supplémentaires sur les investissements ou la promotion de la musique canadienne.

6631 Nathan a souligné la contribution importante de Spotify à la mise en valeur de la musique canadienne. Nous jouons également un rôle fondamental pour le financement du secteur musical au Canada, grâce aux 70 pour cent de nos revenus que nous payons sous forme de redevances. Il est essentiel que votre Conseil prenne ce point en compte.

6632 Ces 70 pour cent sont versés à de nombreux ayants droit, notamment les labels qui rémunèrent des artistes et les sociétés de gestion qui rémunèrent les compositeurs. Grâce à ces redevances, le secteur musical fournit actuellement presque 80 pour cent des revenus de la musique enregistrée au Canada.

6633 Cette contribution n’est pas un simple coût de fonctionnement, comme certains l'ont suggéré. C'est un des fondements actuellement du secteur musical au Canada.

6634 Pour mémoire, les 70 pour cent sont hérités de la distribution physique. C'était la répartition entre les détaillants et les ayants droit à l'époque. Avec l'avènement du streaming, cette distribution a été appliquée aux services de streaming, donc aux plateformes, par rapport aux ayants droit. Les services de streaming font beaucoup plus que de la seule distribution, avec tous les investissements et la promotion que nous faisons pour la musique.

6635 Ces redevances doivent être mises en contraste avec la contribution des autres services de radiodiffusion, dont les redevances, elles, bénéficient de taux fixés par le gouvernement aux environs de 8 pour cent. Donc, les taux de la contribution du streaming sont plus de 8 fois supérieurs à ceux des services de radiodiffusion.

6636 Deux conséquences des redevances que nous payons. D'une part, les revenus de l’industrie musicale ont augmenté fortement et régulièrement. On peut dire que le streaming a sauvé le secteur musical, qui a maintenant une croissance ces dernières années aux alentours de 8 à 10 pour cent de manière continue. Il en est de même pour les sociétés de collection des droits, les sociétés de gestion, dont les revenus augmentent également.

6637 En constituant 80 pour cent des revenus de l'industrie au Canada, ces redevances sont donc la base du fonctionnement du secteur de la musique, et en particulier pour les labels qui investissent dans la production au Canada et dans la musique canadienne.

6638 Ce qu'on oublie parfois, c'est qu'à cause de ces paiements élevés, Spotify et les autres services de streaming fonctionnent avec des marges extrêmement réduites, voire négatives. C'est une réalité confirmée par les chiffres publiés par nos services et par le rapport de l’autorité de la concurrence du Royaume‑Uni, qui l'année dernière a souligné, après une étude approfondie, que les services de streaming avaient des marges basses, voire négatives. C'est un autre élément qui est très important pour votre appréciation.

6639 Avec les 30 pour cent qui restent à nos services, nous couvrons des coûts, nous faisons des investissements importants, y compris dans la promotion du répertoire local et des minorités, des soutiens pour les festivals et d’autres initiatives en faveur de la musique, avec une attention particulière pour le répertoire local, comme Nathan l'a souligné.

6640 Je reviens sur la Loi sur la radiodiffusion et les orientations politiques du gouvernement à votre Conseil, qui soulignent qu’il faut prendre en compte les différences entre différents services de radiodiffusion. Dans cette optique, les contributions des parties ne doivent pas nécessairement être égales, elles doivent avant tout être équitables.

6641 Dans ce contexte, appliquer une contribution financière générale, sans tenir compte du niveau des contributions déjà effectuées par les services de streaming, de leurs investissements en faveur de la musique canadienne et de leur situation économique, ne tient pas compte de la réalité de la différence structurelle de nos services avec les services de radiodiffusion et aurait un impact financier négatif.

6642 Avec des marges basses, voire négatives, des charges supplémentaires nous obligeront à faire des choix inévitables pour maintenir notre viabilité financière. Elles pourraient nous obliger à couper dans les coûts, à diminuer nos investissements éditoriaux, nos investissements de promotion, voire à augmenter nos prix pour les consommateurs canadiens.

6643 Toutes ces conséquences seraient négatives pour nos services, pour les créateurs, pour les consommateurs canadiens, et nous ne pensons pas qu'elles servent les objectifs de la politique de radiodiffusion.

6644 C'est pour ça que nous vous encourageons à examiner des modèles alternatifs, tenant compte par exemple des profits des entreprises pour le calcul d’une contribution ou une contribution basse qui soit économiquement viable pour les services de streaming. De même, nous vous encourageons à examiner toutes mesures par lesquelles nous pouvons continuer à aider les créateurs canadiens.

6645 Si votre Conseil estime qu’une contribution supplémentaire est nécessaire, ou supérieure, nous vous demandons de prendre d’abord en compte toutes les contributions, financières et non financières, effectuées par nos services de streaming en faveur du secteur.

6646 En conclusion, nous demandons à votre Conseil de saisir l’opportunité de reconnaître que, à tous points de vue, le streaming est une dynamique différente de la radiodiffusion pour laquelle le régime réglementaire a été créé. Le cadre que vous mettrez sur pied doit reconnaître et encourager la poursuite des investissements des services de streaming au Canada et en faveur de la musique canadienne.

6647 Je vous remercie, et nous sommes à votre disposition pour les questions.

6648 LA PRÉSIDENTE : Merci beaucoup pour votre présentation. Je sais qu'on a beaucoup de questions. Alors, moi, je vais commencer.

6649 So maybe just starting with, you know, this ‑‑ you’ve talked about the 70 percent, the 80 percent. We’ve seen that throughout your submissions.

6650 We’ve seen on the record where artists are saying that they are not seeing the money. So can you help explain how it works, help us sort of follow the money?

6651 MS. REGNIER: So I will just re‑explain. Well, re‑explain. I will give more details.

6652 So we pay the labels who have contracts with artists. The contracts are individually negotiated, vary a lot depending whether it’s session musicians, featured artists, depending on, you know, the type of where they are in their career, and so the labels pay the performers, pay the artists based on those contracts.

6653 We don’t have a direct relationship with the performers from a payment perspective. On the other hand, we pay the collecting societies who represent songwriters and the collecting societies, same thing, pay the songwriters.

6654 Now, what we see is that streaming has actually democratized the access to the relation between creators and their audience. They enable more and more artists to have contact, have creative contacts and links with their audience by having their music on services like Spotify. This is a huge opportunity.

6655 It also means that you have more and more artists on the platforms. Not all of them can make a living out of streaming or out of music in general, but what we observe with our figures is that first, as we mentioned, there is more and more money flowing to the musical sector. That’s provided, in large majority, by streaming.

6656 We see the revenues of the producers increasing, we see the revenues of the collecting societies increasing.

6657 What we see as well with our data is that more and more artists are sharing those revenues. So we’ve seen an increase of ‑‑ by four times in five years in the number of artists who generate $10,000 out just of Spotify on top of their services, on top of all the revenues, so that number of artists who generate this has been multiplied by four over five years.

6658 We also see that the number of streams that constitute the top streams is actually also shared between more and more artists in comparison to the physical time in comparison to other streaming services, so the top streams are shared between twice as many artists as five years ago.

6659 So what we see from our perspective is that there’s more revenue around and it’s being shared between more and more artists.

6660 THE CHAIRPERSON: Thank you.

6661 And maybe just continuing along those lines, is it that the 80 percent is 80 percent of a number that’s not big enough?

6662 MS. REGNIER: I think 80 percent is actually ‑‑ the number is 70 percent from our revenue, so from our perspective, that leaves minimum we have to continue to invest in the business and to grow. We are sharing a large amount of our revenues.

6663 We also see that, thanks to our investment and our continued, you know, involvement into the development of music, our revenues are increasing, which means that more and more is going back to creators. So there is definitely an increasing flow of money going back to the industry to the sector ‑‑ music sector in general, and that’s why we see, you know, that the music sector is doing ‑‑ I mean, really has recovering over the last years and is doing much, much better than a few years ago.

6664 THE CHAIRPERSON: And so ‑‑ and maybe I'll use a term that Vice‑Chair Scott often uses about trying to square a circle.

6665 Because we have seen the concerns on the record, I’m just trying to understand, it’s ‑‑ you know, and you compared radio revenues which, quite frankly, is more transparent. We can see that it goes through the Copyright Board and there’s more transparency there. Trying to unpack kind of the music streaming side of things, I guess I’m trying to understand, is this an issue of negotiation between Spotify and the record labels, is it the record labels and the artists?

6666 MS. REGNIER: That's a very good point.

6667 We negotiate with the record labels. Now, in terms of negotiation, this is very, very tough negotiations. Our margin for negotiation is quite narrow because of this kind of system we inherited from the physical environment. So we negotiate with them.

6668 Now, they, after that, define contracts with the artists and it is the artists who negotiate with labels. We hear ‑‑ and there, the industry would be in a much better place to explain this, but we hear that actually the possibility to negotiate for artists have vastly increased in comparison to earlier. There’s more and more competition between record labels.

6669 And another thing to mention is that more and more artists has the possibility to self‑produce and upload themselves the music on the platform via aggregators.

6670 So we see, again, the figures from the industry, you have more and more creators who upload directly the music and, you know, get directly the benefits from the platforms.

6671 THE CHAIRPERSON: Thank you for that. That's helpful.

6672 So on the issue of ‑‑ you know, we’re here to talk about the initial base contribution and, on the issue of that, you’ve said throughout your submissions and you talked about it this afternoon. You know, you used words like, you know, “jeopardizing our nine years of tailored investment”. You have said, you know, damaging ‑‑ we would risk damaging the progressive work that you have been doing.

6673 You’ve talked about, you know, serious unintended consequences. You’ve touched on some of those. You’ve talked about, you know, kind of lower investment, higher prices.

6674 Can you unpack that a little bit more?

6675 MS. REGNIER: Yeah, I will start and maybe Nathan can continue.

6676 So when we say that we have, you know, low to negative margin, this is confirmed by figures. It’s not just for Spotify. For all the services.

6677 For us, what we do is a long‑term investment. We believe in streaming. We see what it is bringing back, you know, to the sector, so we really believe in this model and its virtue.

6678 Now, the fact is that, currently, the margins are what they are and we have to be very careful in, you know, any additional burden that happens. So whenever we have additional burdens that do not always take into account first the investments we make and the economic situations, these mean these are costs and we have to look at our costs. And it means that you have to cut somewhere. You need to maintain financial viability.

6679 So without being specific, I think every company will look at what are the investments we are making, which of them have been more profitable, less profitable, what are the costs where we can diminish. And that’s where you look at the investment you make in promotion, in support, in other things. That’s where you look also at your pricing structure, do you need to change that.

6680 So all those elements would be reviewed to try to reach or to maintain financial viability.

6681 Maybe you can say more, Nathan, about the programs we do for ‑‑

6682 MR. WISZNIAK: Sure, absolutely.

6683 Well, when we launched in 2014, the music industry in Canada was at a very low point. And it was our mission when we came into the market was to really help raise the Canadian music industry and, as you can see through a lot of the programs that we showed to you on the slides today, we’ve really helped try to represent very diverse groups of Canadian artists and we really helped build those programs.

6684 Spotify nine years ago was a different app. It wasn’t as what it looks like today.

6685 We continue to invest into the app. We are creating tools for artists and we are creating a platform for specifically Canadian artists and the diversity of the Canadian music industry through the campaigns that we’re doing.

6686 We’ve become a bit of an industry standard where the industry has been reliant on us and the programs that we’re creating for women in music, for black artists, for Indigenous artists. And a lot of those investments are going right back into the promotion of Canadian content.

6687 So we want to be able to continue to do that work, and those are the investments that we’re making directly into the Canadian music industry.

6688 THE CHAIRPERSON: Okay. Thank you. I'll leave it there. My colleagues might have additional questions on that.

6689 So you’ve made comments about us not moving too quickly, that we shouldn’t move too quickly. We’ve heard those comments on the record from other intervenors, but we’ve also heard, and you’ve heard this as well if you’ve been able to follow along, it’s not that we are rushing ‑‑ and we heard this this morning from Corus. You know, we’re not rushing, we’re behind. We have a lot of catching up to do.

6690 Could you respond to that?

6691 MS. REGNIER: I think for us, there's a question of timing. There’s also the question of looking at things holistically.

6692 Now, we understand that this discussion is about, you know, financial basis, financial contribution. What we are asking is to not do that in total isolation. If you start with financial contribution, you actually lose, in a way, for us, flexibility to discuss all the ways we can help creators, and that’s where we think that ‑‑ that’s where we suggested to look at alternative models or to start with a very low contribution that leaves financial viability so that we also retain the flexibility we need to continue to add value to the system, to continue to provide our tools to help creators in Canada.

6693 MR. WISZNIAK: In addition, I think we also need to also look at the current definitions and modernize the definitions of Cancon in the streaming age, Indigenous content, Canadian francophone content and what those definitions actually are on the platforms now versus what they look like on broadcast radio. And we should probably look at doing that before we start getting into the financial contributions to really understand what Canadian Indigenous and Canadian francophone content is actually defined on our platforms.

6694 THE CHAIRPERSON: Okay. Thank you for that.

6695 And I just have a couple more questions. Maybe I could just build on what you were talking about in terms of alternative approaches because you have mentioned the low fee approach.

6696 Can you talk to us about that? Are there other alternative approaches?

6697 I’m just ‑‑ I’m going to throw in the third question, too, but ‑‑ and maybe you could just answer these together if we haven’t lost track.

6698 Are there key differences ‑‑ if you do have different models, are there key differences in those models that would be helpful to highlight for us as we make decisions in this space?

6699 MR. WISZNIAK: Thank you for the question.

6700 I think it goes back to the current investments that we are bringing into the Canadian music industry. And we showed you a lot of the campaigns, but it also doesn’t talk about, and we heard from a lot of intervenors, the relationships that they have with our teams and the value that we are bringing to the industry through education.

6701 We work with a lot of the provincial music organizations when they are hosting events to have educational seminars around the platform.

6702 Perhaps there are, you know, ways of looking at what exists under the current structure where Spotify can add value in some of those funding programs. We know that the data that we provide to artists through our platform is being used by funding institutions to determine and cross‑function ‑‑ sorry, cross‑reference eligibility for the programs. So it’s more about how can Spotify add value into its currently existing in that framework to really modernize that structure and modernize that framework.

6703 THE CHAIRPERSON: And just on that, what is the low fee approach? Could you talk to us about that?

6704 MS. REGNIER: No, we don't have a specific figure in mind, but I think we just want to put this on the table to encourage you to think of this ‑‑ to think of a system which is viable from an economic perspective and enables to build and enables us to continue to invest in tools where we think are really effectively helping artists, reaching them and helping the creation and the exposure, also, of Canadian content.

6705 That’s one question about production. That’s another big question, they need to reach the audience and we can help that.

6706 THE CHAIRPERSON: Okay. Thank you for that.

6707 So maybe I'll just end on my last question, which again is a little cute because it’s a couple of questions rolled up into one. But you do talk about incentivizing, you know, thoughtful investments.

6708 What do the incentives look like? Like what form would those incentives take and then how do we measure that?

6709 MS. REGNIER: So I think Nathan has explained how much we have already been doing for the Canadian culture, and that’s something ‑‑ that’s because Spotify is committed to Canadian culture, committed, you know, to linking creators with their audience. So that's why we have developed all those programs.

6710 We have invested, actually, with teams, with people on the ground, with master classes for artists. So we can do ‑‑ it’s always possible to do more. That requires, of course, further investments, further activity, but we are prepared to collaborate and to discuss always in which we can even better help creators.

6711 So that’s what we suggest opening this dialogue so that we have ‑‑ we are sitting at the table and we can work with others to see how we can even improve that system.

6712 MR. WISZNIAK: Yeah. And additionally, a lot of the programs that we are investing into are at the very core of the updated policy. And we are creating these programs at home to really build a Canadian music ecosystem, but with that, we are actually looking at how these artists are reaching Canadian audiences and global audiences. So we’re building these ‑‑ building audiences for Canadian artists but then actually using that data and fan engagement to actually work with our counterparts in other territories.

6713 We’re seeing Canadian artists break in territories like Australia, Europe, India and the U.S. We work very closely with our counterparts to ensure the export of Canadian artists. That’s the very heart of what our teams do, is to ensure the success of Canadian artists not only at home, but on a global stage.

6714 THE CHAIRPERSON: Okay. Thank you for that.

6715 There probably is a follow‑up question there on gaps and exploring measurement a bit more, but I know my colleagues have questions as well, so I will turn things over to Vice‑Chair Scott.

6716 Thank you for answering my questions.

6717 VICE‑CHAIRPERSON SCOTT: Thank you.

6718 So I promise I'm only staying on this topic because it is so important and I do want to make sure we’ve got a good clear record. So it’s getting back to the theme of the investments you’re making and the degree to which they’re at risk by contribution requirements.

6719 So would you say that it’s ‑‑ is it a one‑to‑one ratio, that every dollar that you’re required to commit to a contribution fund results in one less dollar ‑‑ or a dollar pulled from investments that you’re making elsewhere or is it kind of all or nothing and if we cross any threshold, then that triggers a larger response or, at the other end of the spectrum, is there a contribution number that’s low enough that we can impose something and it’s still economically rational for you to continue to make the investments that you make? If that’s kind of the full spectrum, where do you sit on that spectrum?

6720 MS. REGNIER: Thank you. Well, in a situation when you have zero profit margin or negative profit margin, any cost is a burden. Any cost is a financial burden. So, you have to ‑‑ we have to deal with that reality. So, it means that a financial burden will oblige us to look at costs elsewhere and see how we can absorb that, how we can deal with that. So, we can’t produce exact math on this, but it’s just a financial reality: when you’re not profitable, when you don’t have a margin, any cost basically hampers your path to profitability and hampers your path to further development.

6721 VICE‑CHAIRPERSON SCOTT: Okay, thank you, and that is clear. So, you spoke about both sides of the equation ‑‑ both a potential increase in the rates that you would charge consumers, and a reduction in the costs. Are there competitive forces ‑‑ because you’re not the only streaming service, are there competitive forces that would push you to look at one of those options before the other?

6722 MS. REGNIER: No, we compete with a number of those services. As you may know, a number of services ‑‑ we are a pure player, so in that sense, we are actually more vulnerable, like all the pure players, to any cost increases because we don’t have the possibility to offset or compensate by selling devices or by selling advertising, et cetera. So, we are exposed. I think it’s an opportunity because that means we are focusing a lot on the quality of our service ‑‑ on the relation with our customers, and providing the best experience possible for users and for artists. But in that sense, we are competing with others. So, we also operate in the market where we are still fighting piracy in certain ways, where, you know, the market is very sort of receptive to changes in cost and pricing structures. So, we really need to look at all of that in our appreciation.

6723 VICE‑CHAIRPERSON SCOTT: Okay, and my last question. So, this morning, I asked the Digital Media Association about the local teams ‑‑ so, we’ve heard from a number of people that local teams are one of the benefits to Canadians. I’m just curious, who are the local teams and what do they do, and how does that benefit Canadians?

6724 MR. WISZNIAK: That would be myself and my team of music experts, based in Toronto and Montreal. At the core, we are music fans. We have backgrounds in music, some have backgrounds in journalism, some are musicians, and some of us have worked at record labels. So, we have very broad knowledge of the music industry and a passion for Canadian music. We work with labels, distributors, songwriters, publishers, artists, managers, and organizations across the Canadian music industry, and that’s at the core of what we do.

6725 Additionally, we have a team of editors who are curating playlists, as I mentioned ‑‑ over a hundred playlists that are dedicated to highlighting Canadian artists through genres, moods, and moments. We have team members dedicated to working with the Quebec music industry. Again, we are working with industry associations like Indigenous Music Alliance. So, we are really working a very cross‑functional group of partners across the music industry to ensure that we know the content that is coming towards us.

6726 We have an incredible system and tool called Spotify for artists that has been developed that helps us educate Canadian users. It helps users submit their music to us for playlist consideration. As Olivia mentioned, we’ve democratized that process. But really, at the core, our teams are really meant to build relationships and to, you know, hear from our partners in the industry cultural trends, what is happening, and we take a lot of that information and we build the campaigns that we showed you earlier today.

6727 VICE‑CHAIRPERSON SCOTT: Thank you for satisfying my curiosity.

6728 Madam Chair.

6729 THE CHAIRPERSON: Thank you, Vice‑Chair.

6730 Let’s go over to Commissioner Levy.

6731 COMMISSIONER LEVY: Thank you very much for being here. Obviously, Canadians love Spotify. You’ve got lots of subscribers and lots of people who live their lives by your ‑‑ by their playlists, I guess ‑‑ on your platform. But we have a mandate ‑‑ a job ‑‑ to do to fulfill expectations from underserved groups, people who feel that they haven’t had a chance to access the full possibilities of Canada’s cultural ecosystem, if you like. So, can you understand that simply saying whatever you are doing now is sufficient, and without ‑‑ you know, we don’t have those measurements, we don’t have those numbers; we have to put them together from you, from all of the other online streamers. To do that without having an initial base rate that gives us a starting point so that we can begin to address needs in an organized fashion ‑‑ you know, to simply say, everyone do their own thing; you’re all doing fabulous work ‑‑ and you are ‑‑ but to say that’s enough doesn’t lead to the kind of organized fashion that we are being asked to create a framework for. So, I just want to put that out there.

6732 But we can’t be the only jurisdiction in the world that is asking you for contributions. So, I’d like to know a little bit more about what’s happening in other jurisdictions.

6733 MS. REGNIER: Well, actually you are the only country in the world that is looking at those contributions ‑‑ at least at this stage. And we actually hope that this is not going to spread to other countries, because we would be in real difficulty. Now, we understand the situation, we understand the rationale. We are just explaining on our side, you know, the best of what we are doing, how committed we are to the market, to the creators; how we are trying to bring to market. But it’s ‑‑ yeah, it is a bit of an exceptional situation.

6734 COMMISSIONER LEVY: Well, we like being trailblazers too, so that’s all right. I guess I would end by saying that I see lots of good will and an ability to work collaboratively, and I look forward to that in the future. Thank you.

6735 THE CHAIRPERSON: Thanks so much, Commissioner Levy.

6736 Let’s go to Vice‑Chair Barin.

6737 VICE‑CHAIRPERSON BARIN: Thank you very much. I note your presentation had a lot of numbers and I like numbers, so I’m going to ask you some questions. And you mentioned, you know, you’re good at data collecting. So, I have to admit I’m still struggling with the 70 percent on your rights collectives. So, Spotify has its Canadian offering, and in that Canadian offering, it consists of Canadian musical selections and foreign musical selections. So, the 70 percent that you are paying to rights collectives and to labels in Canada is for Canadian music and foreign music. Am I correct?

6738 MS. REGNIER: (Nods)

6739 VICE‑CHAIRPERSON BARIN: Okay. So then, we’ve heard from other intervenors in this process that the music ‑‑ Canadian musical selection on online audio streamers is minimal. So, would you have a percentage of what percentage of the Canadian Spotify offer consists of Canadian musical selections relative to the whole offer?

6740 MR. WISZNIAK: Well, we carry a vast catalogue of Canadian music. I’d say we have the majority of the Canadian music available on our platform, and as I mentioned earlier, our teams are curating playlists to ensure that Canadian music is reaching a Canadian audience. And we do that through on‑platform merchandising and through the programs that we had mentioned earlier. In a given week, we know that Canadian users are streaming 83 times more Canadian content than on the radio. So, there is more Canadian content being consumed. A lot of that is through the work that we’re actually doing. A lot of that is coming through, again, our partnerships that we have in the industry and artists that are driving their fans to our platform. So, we do have a full Canadian catalogue. We are not short of that. That all exists on the platform, and we are seeing that that content is being consumed a lot more on our platform than it is on traditional broadcast.

6741 VICE‑CHAIRPERSON BARIN: Okay, well I think other intervenors have kind of analyzed the library, and we’ve had, I think ‑‑ I think it was somewhere in the range of 11 percent ‑‑ or maybe there are other numbers. I was just hoping that you had a more exact figure, but if we assume that the Canadian selections on Spotify are in that range, then that 70 percent that you are saying is your contribution to the investment in Canadian music ‑‑ really it would be 11 percent or X percent of the 70 percent. Am I correct? Assuming same plays and same popularity of foreign and Canadian music.

6742 MS. REGNIER: So, we pay 70 percent, which is sort of, kind of shared between the labels on one hand and the collective societies ‑‑ roughly ‑‑ and that’s not a figure just for Spotify, but for the sort of streaming environment in general. It is between 50 and 55 percent that go to the label who have contracts with the artist, and around 10 to 15 percent to the collective societies. Now, that means that SOCAN gets ‑‑ you know, that amount for Canadian artists that they distribute to Canadian ‑‑ they represent Canadian artists, so that is distributed to them. And what we see is that the revenues of SOCAN have been increasing, you know, year on year, very consistently, thanks to streaming. So, we are distributing, you know, more and more to SOCAN ‑‑ and to the Canadian industry that invests in Canadian creators.

6743 Now, overall, in all our library, all our catalogue ‑‑ we have the world catalogue, so that’s, you know, everything. And I think the one point that we are making is that Canadian content in that library ‑‑ we are helping Canadian content to have exposure, to have visibility, and that’s all the programs we are doing to promote, you know, and to highlight, and to create specific playlists for Québec or for other Canadian types of repertoire so that we highlight the repertoire for streaming.

6744 VICE‑CHAIRPERSON BARIN: Okay. Thank you.

6745 I really was trying to just understand what is actually going to Canadian musical artists from the 70 percent, and I understand that it’s through intermediaries, but it would be great if you had any information to get a better handle on that number. And certainly, I think maybe if you have an opportunity to file anything as an RFI, that would be great.

6746 MS. REGNIER: We can come back to that in more detail. What I can tell you is that this sharing is pretty ‑‑ it’s similar in Canada to other countries. So the 70 percent that goes to Canada is similar to the 70 percent that goes in other countries, and it goes to the ‑‑ to SOCAN. So, what we pay to rightsholders, collective societies in Canada, is to SOCAN, and that represents Canadian artists. And we can come back to you and be more precisely to understand your question and how we can answer with more specific figures.

6747 VICE‑CHAIRPERSON BARIN: Great. Thank you, that would be helpful.

6748 Okay, so now, I’m going to go on to the 30 percent. So, the 30 percent I understand is all of your operating costs, including what you are calling investments, and those investments would be in the shape of promotion of Canadian artists, festivals ‑‑ I mean, there’s a whole panoply. So, could you give us a sense of what ‑‑ I don't want to say percent of that 30 percent, because we’re going to get all mixed up, but ‑‑ you have your hundred percent pie. What percent of that hundred percent are you investing, over and above the royalties, into Canadian artists or promotion, festivals, et cetera?

6749 MS. REGNIER: Yeah, I don’t think we have an exact figure where we say, ‘Okay, X percent is going to be actually devoted to that,’ because all involvement into Canadian music and the local, you know, ecosystem is just part of our activities in Canada. So, that’s why we have teams ‑‑ we have a number of people that Nathan has explained; we have initiatives. But it is not set as a kind of specific percentage of the budget devoted to the country. It’s inherently part of our activity in Canada. So, it’s hard to financially quantify it with a ballpark figure, but it is ‑‑ I mean, we can give a range of activities or show, as Nathan had explained, all the initiatives that we are taking to support Canadian artists and Canadian repertoires.

6750 VICE‑CHAIRPERSON BARIN: Okay. I understand that, and I think it ties back to Commissioner Levy’s question on ‑‑ you know, we understand that you are contributing and making investments, but it’s really difficult to get a handle on exactly the quantum of those investments.

6751 So, let’s park that, and assume that the Commission decides that royalties are not part of the contribution. Do you have a position on what the percent should be for an initial contribution on online streamers?

6752 MS. REGNIER: I mean, we have expressed ‑‑ and that has also been expressed by DMA ‑‑ baselining that we basically contribute massively to the music, you know, sector in Canada. We contribute in a different way from traditional broadcasters, and that’s why the idea of an additional basis contribution is, let’s say, a bit at odds with what we feel we are already doing. And that’s why we sort of push for alternative measures of very low basic fees that would be viable economically and that would enable us to continue, you know, developing of service in Canada.

6753 VICE‑CHAIRPERSON BARIN: Thank you. So, I do understand that you are contributing in different ways, and it would be very helpful if we could actually quantify or understand better what those contributions were, and maybe as part of this process you can file some of that information. Thank you.

6754 Back to the Chair.

6755 THE CHAIRPERSON: Thanks very much. Thank you. Thank you, Vice‑Chair.

6756 Let’s go over to Commissioner Naidoo.

6757 COMMISSIONER NAIDOO: Hi there. Thanks for being here today. In your presentation, you explain how you support Indigenous music and, quote, “work every day to increase the discoverability of Indigenous content.” For example, you mentioned that you have an Indigenous playlist to promote Indigenous music. But over the last week, we have heard one intervenor mentioned that when adding musical content on Spotify, they cannot select their own Indigenous languages. So, the question is basically, wouldn’t that create issues of discoverability for Indigenous music in Indigenous languages? And if so, is that something that you would look to, to try to resolve?

6758 MR. WISZNIAK: Thank you for that question, and we actually heard that statement and did a little bit of research on what that statement actually was. So, ‘Spotify for Artists’, as I mentioned, is a tool that we have built for artists that allows them to pitch their songs for consideration, and through that tool, there are different fields of metadata that really help us understand cultures, language, and we actually have an opportunity for artists to choose ‘Indigenous’ as a culture. And currently, we support three official Indigenous languages: Cree, Inuktitut, and Ojibwa.

6759 We do have the opportunity, and after, you know, listening to the intervenors, we do have that opportunity to now work on ‑‑ and again, I think this will help us strengthen our relationships with the Indigenous Music Alliance and the Indigenous Music Office to further understand the languages that we will need to have specifically on our platform when our artists are classifying their language. So, we would love to work and to continue that work.

6760 Again, we’re always innovating, and these are one of the sort of functions that we would again want to continue to build. We’re getting there, and we have a baseline of that, and we want to continue to work with the Indigenous communities on furthering that.

6761 COMMISSIONER NAIDOO: So, is that ‘hot off the presses’, that you’re saying after what you heard this week, that you’re going to consider making a tangible change towards that?

6762 MR. WISZNIAK: No, we have. So, we have ‑‑ we had already currently identified, you know, ‘Indigenous’ as a culture, and that we have Indigenous languages. We are now going to work even closer and deeper, to continue to build that on our platform.

6763 COMMISSIONER NAIDOO: All right. Thank you very much for that. Appreciate it.

6764 THE CHAIRPERSON: Great. Thank you very much. Thank you for answering our questions. We would like to turn things back over to you for any concluding thoughts.

6765 MR. WISZNIAK: Thank you very much for this. Spotify is very proud of the role that we’ve played in reviving the music industry and ensuring that artists here in Canada have the ability to be heard both in Canada and around the world. As a business that takes our role in supporting local artists and culture seriously, we want to ensure that we can continue to build Canada’s music story in a way that makes sense for Canada and the contemporary music industry, and not to be forced to cut back supports that are today yielding benefits for Canadian and Indigenous artists.

6766 Incentives in the music business today are aligned to support not just the health and growth of Canada’s music industry, but also the range of voluntary contributions by Spotify to artists’ discoverability. This model should be celebrated and facilitated with flexible interventions. An ill‑fitted system designed for older forms of broadcasting is not fit for purpose.

6767 And lastly, today also happens to be the most wonderful time of the year. Spotify’s Wrapped has launched, and we wish you a Happy Wrapped and thank you very much for this time, and thank you for your consideration.

6768 THE CHAIRPERSON: Thank you very much for being here.

6769 THE SECRETARY: Thank you. This concludes today’s hearing, and we will be back tomorrow at 9:00 a.m.

‑‑‑ Whereupon the hearing adjourned at 2:44 p.m., to resume on Thursday, November 30, 2023 at 9:00 a.m.

Reporters
Benjamin Lafrance
Monique Mahoney
Lynda Johansson
Tania Mahoney
Brian Denton