ARCHIVÉ -  Transcription

Cette page Web a été archivée dans le Web

L’information dont il est indiqué qu’elle est archivée est fournie à des fins de référence, de recherche ou de tenue de documents. Elle n’est pas assujettie aux normes Web du gouvernement du Canada et elle n’a pas été modifiée ou mise à jour depuis son archivage. Pour obtenir cette information dans un autre format, veuillez communiquer avec nous.

Offrir un contenu dans les deux langues officielles

Prière de noter que la Loi sur les langues officielles exige que toutes publications gouvernementales soient disponibles dans les deux langues officielles.

Afin de rencontrer certaines des exigences de cette loi, les procès-verbaux du Conseil seront dorénavant bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience et la table des matières.

Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience.

 

 

 

 

 

 

 

TRANSCRIPT OF PROCEEDINGS BEFORE

       THE CANADIAN RADIO‑TELEVISION AND

TELECOMMUNICATIONS COMMISSION

 

 

 

 

TRANSCRIPTION DES AUDIENCES DEVANT

LE CONSEIL DE LA RADIODIFFUSION

    ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

 

 

  SUBJECT:

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:               TENUE À:

 

Conference Centre               Centre de conférences

Outaouais Room               Salle Outaouais

140 Promenade du Portage               140, Promenade du Portage

Gatineau, Quebec               Gatineau (Québec)

 

May 15, 2006           Le 15 mai 2006

 


 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.


  Canadian Radio‑television and

Telecommunications Commission

 

Conseil de la radiodiffusion et des

télécommunications canadiennes

 

 

Transcript / Transcription

 

 

 

Review of the Commercial Radio Policy /

Examen de la Politique sur la radio commerciale

 

 

 

 

BEFORE / DEVANT:

 

Charles Dalfen           Chairperson / Président

Michel Arpin           Commissioner / Conseiller

Rita Cugini           Commissioner / Conseillère

Andrée Noël           Commissioner / Conseillère

Joan Pennefather           Commissioner / Conseillère

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet     Secretary / Secrétaire

Peter Foster           Hearing Manager /

Gérant de l'audience

Bernard Montigny           General Counsel,

Broadcasting / Avocat

général, Radiodiffusion

Anne-Marie Murphy           Legal Counsel /

Conseillère juridique

Robert Ramsey           Senior Director, Radio

Policy and Applications /

Directeur principal,

Politiques et demandes

relatives à la radio

 

 

HELD AT:           TENUE À:

 

Conference Centre           Centre de conférences

Outaouais Room           Salle Outaouais

140 Promenade du Portage           140, Promenade du Portage

Gatineau, Quebec           Gatineau (Québec)

 

May 15, 2006           Le 15 mai 2006

 


TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

    PAGE / PARA

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

Canadian Association of Broadcasters 7 /   42

 

CIRPA 261 / 1529

 

Canadian Recording Industry Association    300 / 1707

 

Friends of Canadian Broadcasting   355 / 2063

 

EARRS 369 / 2131

 

 

 

 

 


Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Monday, May 15, 2006

    at 0931 / L'audience débute le lundi

    15 mai 2006 à 0931

1     THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

2     Good morning, ladies and gentlemen.  Welcome to this public hearing in which we will examine Canadian commercial radio.

3     Bonjour, mesdames et messieurs, et bienvenue à cette audience publique, au cours de laquelle nous procéderons à l'examen de la radio commerciale canadienne.

4     My name is Charles Dalfen.  I am the Chairman of the CRTC.  I will be presiding over this hearing.

5     Joining me on the panel are my colleagues Michel Arpin, Vice‑Chairman of Broadcasting; Rita Cugini, Regional Commissioner for Ontario; Andrée Noël, Regional Commissioner for Québec; and Joan Pennefather, National Commissioner.


6     The Commission team assisting us includes Hearing Manager Peter Foster; Robert Ramsey, Senior Director, Radio Policy and Applications; Bernard Montigny, General Counsel, Broadcasting; and Anne‑Marie Murphy, Legal Counsel.

7     Chantal Boulet is the Hearing Secretary.  Please speak with her if you have any questions with regard to hearing procedures.

8     The Commission is undertaking a review of its commercial radio policy in view of the major transformations which are taking place in this sector.

9     The commercial radio environment has changed a great deal since the current policy was adopted in 1998 largely due to industry consolidation, technological developments and new economic factors that have rapidly come into play.

10     The Commission therefore wishes to ensure that its regulatory policies and processes keep pace with these changes.

11     Many people are using new technologies for accessing music and listening to it.  The Commission will review the potential impact of these new technologies as it would appear that this trend will continue in the years to come.


12     The hearing will focus on the elements that will help create new commercial radio policies that are appropriate for the current environment, policies that will support a strong and flourishing radio industry in both official languages while pursuing the objectives set out in the Broadcasting Act.

13     Par exemple, le rôle que la radio joue dans la promotion des artistes canadiens et leurs oeuvres, incluant les pièces musicales de langue française, est crucial, et nous devons trouver des moyens pour qu'il se poursuive et qu'il progresse.

14     De plus, nos politiques doivent favoriser une radio commerciale qui offre une plus large gamme de genres musicaux et qui diffuse suffisamment d'émissions régulières d'information produites localement.

15     Nous aurons également l'opportunité de faire le point sur la transmission numérique et sur les nouvelles plate‑formes de distribution.

16     The make‑up of Canadian society is also changing.  Broadcasters are operating in a society that is increasingly multicultural, multilingual and multiracial.  They therefore have to ensure that their offerings reflect this new reality as well as the special place of Aboriginal peoples.


17     As stated in Broadcasting Notice of Public Hearing CRTC 2006‑1, our process will also include a review of the effectiveness of the measures implemented in the Commercial Radio Policy 1998.

18     Au cours de la semaine qui vient, nous écouterons avec soin les points de vue de nombreux intervenants qui comparaîtront devant nous selon l'horaire préétabli.

19     Je tiens, d'ores et déjà, à remercier tous ceux et celles qui prennent le temps de nous faire part de leurs commentaires.  Les enjeux sont importants pour le secteur canadien de la radio, et vos observations nous seront précieuses pour mieux les cerner.

20     If the Commission requests additional documents during the course of this hearing, intervenors will have until May 29th to file them.

21     Furthermore, as mentioned in the Notice of Public Hearing, interested parties will have the opportunity to file brief final written comments following the oral public hearing.  These submissions must be no longer than 20 pages in a 12 point font or larger.

‑‑‑ Laughter / Rires

22     THE CHAIRPERSON:  This is not just for those with presbyopia ‑‑

‑‑‑ Laughter / Rires


23     THE CHAIRPERSON:  ‑‑ and they must be filed no later than June the 12th.

24     I will now invite the Hearing Secretary Chantal Boulet to explain the procedures we will be following.

25     Madame Boulet.

26     LA SECRÉTAIRE : Merci, Monsieur le Président.

27     Nous aimerions souligner quelques points d'ordre pratique qui contribueront au bon déroulement de cette audience.

28     First, simultaneous interpretation services are available during the hearing and you can obtain a receiver from the technician at the back of the room.  The English translation is on channel 1 and l'interprétation française se trouve au canal 2.

29     When you are in the hearing room we would ask you to please turn off your cell phone, beepers, BlackBerries or other text messaging devices as they are unwelcome distractions for participants and commissioners and they cause interference on the internal communication system used by our translators.  We would appreciate your cooperation in this regard throughout the hearing.


30     We expect the hearing to take approximately one week.  We will being each morning at 9:30 and adjourn each afternoon around 6:30 p.m.  We will take one hour for lunch and a 15‑minute break in the morning and afternoon.

31     Given the number of participants and the scope of the issues to be discussed it may be necessary to continue the hearing beyond 6:30 in the evening.  We will let you know of any schedule changes that may occur.

32     Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public pour cette audience dans la salle d'examen qui se trouve à la Salle Papineau, située à l'extérieur de la salle d'audience, à votre droite.

33     Tel qu'indiqué dans l'ordre du jour, le numéro de téléphone de la salle d'examen est le 819‑953‑3168.

34     Une transcription des comparutions quotidiennes sera affichée sur le site internet du Conseil peu après la fin de l'audience.

35     Les personnes qui désirent acheter des transcriptions peuvent s'adresser au sténographe qui se trouve à la table en face de moi durant la pause ou directement auprès de la compagnie Media Copy.


36     We will now proceed with the presentations in the order of appearance set out in the agenda.  Each participant will be granted a given time to make its presentation.  Questions from the Commission will follow each presentation.

37     Pour les fins du dossier, veuillez noter que le Conseil a publié, le 4 mai dernier, les relevés statistiques et financiers relatifs à la radio privée commerciale pour la période 2001 à 2005.

38     Vous trouverez, au Secrétariat de l'audience, une copie de ces relevés financiers, ainsi qu'un cahier supplémentaire concernant les données financières et statistiques sur l'industrie de la radio privée commerciale pour la province de Québec.

39     I would now invite the first participant, the Canadian Association of Broadcasters, CAB, l'Association canadienne des radiodiffuseurs, l'ACR, to make their presentation.

40     Appearing for the CAB is Mr. Glenn O'Farrell who will introduce his colleagues.  You will then have 20 minutes for your presentation.

41     Mr. O'Farrell.

PRESENTATION / PRÉSENTATION


42     M. O'FARRELL : Merci, Madame la Secrétaire.  Good morning, Mr. Chairman, members of the Commission.  My name is Glenn O'Farrell.  I am the President and CEO of the Canadian Association of Broadcasters.

43     The CAB is pleased to appear before you today to talk about the future of radio broadcasting and the regulatory conditions to ensure its continued vitality and significant role in local communities across Canada.

44     I have the privilege of appearing before you today with a group consisting of some of the most talented and capable radio executives and programmers in Canada.

45     This group of radio broadcasters is representative of the women and men who work in the 600 or more private radio stations across the country operating in small, mid‑size and large markets, all of whom are dedicated and passionate about the work they do every day and the future of local private radio in Canada.

46     On behalf of Canada's private radio broadcasters, we appreciate the opportunity to be the first to appear before you today as you commence the important work of this proceeding.

47     Allow me to introduce the panel.

48     On my right, Rob Braide, Chair CAB Board of Directors, Vice President and General Manager, CJAD, MIX‑96, CHOM‑FM, Standard Radio.


49     Next to Rob is Rael Merson.  Rael is Chair of the CAB Radio Board and President and CEO of Rogers Broadcasting Limited.

50     Next to Rael is Elmer Hildebrand.  Elmer is a member of the Radio Strategy Committee and President and CEO of Golden West Broadcasting and on my far right is Jacques Parisien, Président du Comité de stratégie radio marché francophone de l'ACR et président Astral Média Radio.

51     To my left is Sarah Crawford who is the Chair of the CAB Diversity and Radio working group and Vice President Public Affairs CHUM Limited.  To Sarah's left is Marc Maheu, member of the CAB Radio Board and Executive Vice President and COO of Newcap Radio.

52     To Mark's left is Lilianne Randall.

53     Elle est membre du Comité des questions musicales de l'ACR et directrice musicale réseau RYTHME‑FM Cogeco.

54     To the left of Lilianne is Pierre‑Louis Smith, Vice President Radio CAB and finally, on my far left is Suzanne Wheeler, senior director Policy and Regulatory Affairs CAB.


55     Behind us, we have a panel of experts; that's what they call themselves anyway.  Beginning with Ken Goldstein, President of Communications Management Inc.  He is our CAB Economic Trend Expert.

56     Next to Ken is Pat Grierson who is the President of Canadian Broadast Sales and an expert on advertising trends, and last is Wayne Stacey, President Wayne Stacey and Associates Limited, the CAB's Technical Adviser and the leading expert on digital radio.

57     Mr. Chairman, Commissioners, we will keep our opening remarks brief and focused on three areas of discussion this morning.

58     Number one is the need to adopt the closed market regulatory model to an open market model.

59     The second topic we would like to address is the CAB's Transitional Regulatory Proposals regarding music exhibition and Canadian talent development focused on emerging Canadian artists.

60     And Finally, our third point is the CAB's recommendation to measure the impact of its proposals and monitor what we call "the first phase of the transition".

61     So, starting with the first point that we are calling "Closed to Open".


62     I think we must preface our comments by suggesting that to move forward we need to share a common assumption and that is the radio market is now an open system.

63     The written brief we submitted on March 15th is entitled, as you know: "Then ‑ Now".

The title was inspired by a very clear sense of the starting point of the discussion we're having here today.

64     As is demonstrated in the slide before you, digital technology has changed everything  for content creators, for distributors, for consumers and we also believe it has changed everything for regulators.

65     There is no turning back and as a result, we no longer have a single and regulated system of radio services delivered over the public airways and free of charge to Canadians.

66     Instead, we have both a regulated system developed over the past 80 years and a largely unregulated parallel system of new delivery options for audio content.


67     The key point in all of this is that the CRTC licensing and regulation no longer serve as the single and exclusive point of control of market entry for content providers seeking to offer service to Canadians in the audio space once occupied only by licensed radio services.  That was then and this is now.

68     So, where do we go from here?  We submit the way forward is one that will require managing a transition, a transition to be largely defined by even more change than we have already seen.

69     As a case in point, two years ago, how many of us here today were users or better yet, had heard or even heard about the Ipod.  Yet, within approximately 24 months, the Ipod has become the dominant force in the consumer's electronics audio space.

70     Who among us here today can predict who or what will dominate that same consumer audio space 24 months from today?  How will all the new digital technologies impact Canadian private radio?

71     These are not easy questions.  Yet, radio broadcasters represented by the CAB, while concerned on the one hand by the transition challenges that lie ahead are, on the other hand, equally passionate about the future of private radio in Canada and have demonstrated they are committed to making the necessary investments in technology, marketing and talent to keep reinventing their businesses.


72     Rael.

73     MR. MERSON:  Thank you, Glen.

74     The commercial private radio data recently released by the CRTC covering 2001 to 2005 present an overall positive financial picture of private radio in Canada.

75     In 2005, the private radio industry in Canada cheated healthy financial returns purporting aggregate increased profitability for the sector.

76     These are significant results that clearly strengthen the industry's financial position to absorb the economic impact of the unregulated content providers who are entering the market in growing numbers.

77     However, if you take a closer look and drill down into radio revenue numbers, you will find that the industry as a whole is as the boxing expression goes, punching well above its waist.

78     While the industry has seen year revenue increases since 1998, audience numbers reveal a very disturbing and steady year over year decrease in tuning to radio across all demographic segments.  The decrease in tuning is the greatest in the youth market.


79     More recent tuning statistics indicate that the decline in radio usage is both entrenched and accelerating, as the slide demonstrates.

80     The word of caution on the point is that overall radio revenue and profitability appear untouched by tuning declines.  Revenues the profitability on a per‑station basis are now showing signs of a decline.

81     When taken in isolation the situation in the French radio market may serve as an advance warning of what might happen across the radio sector as technologies multiply new unregulated audio content choices for the Canadian consumer.

82     Jacques.

83     M. PARISIEN:  Dans ce contexte, l'expérience du secteur de la radio privée de langue française pourrait très bien s'avérer un signe avant‑coureur des défis auxquels l'ensemble de l'industrie radiophonique sera confronté en raison de la révolution technologique.

84     Le BAII des stations de langue française s'explique en partie du fait que les stations de langue française exploitées dans les marchés bilingues de Montréal et d'Ottawa‑Gatineau doivent partager avec les stations de langue anglaise l'attention des auditeurs francophones.


85     Dans ce marché dit bilingue, mais considéré comme distinct aux yeux de la réglementation des contenus musicaux, le consommateur peut librement écouter la radio de son choix, peu importe la langue de diffusion de celle‑ci.

86     Or, les marchés de Montréal et de Gatineau représentent à eux seuls 50 pour cent de la population du Québec.

87     Par comparaison, c'est comme si les stations de radio des dix plus grandes agglomérations du Canada anglais comme Toronto, Vancouver, Calgary, Edmonton ou Winnipeg se retrouvaient du jour au lendemain dans les situations de Windsor où le consommateur peut choisir à son gré d'écouter les stations locales ou les stations de Détroit.

88     Confrontée à cette réalité, la radio privée de langue française a choisi d'adopter de plus en plus des stratégies axées sur le développement de contenu radiophonique exclusif.

89     Pour assurer le succès de cette approche de différenciation entreprise au cours des dernières années, la radio privée de langue française a dû et doit encore dépenser une part nettement plus élevée de ses revenus en coûts de programmation que ne le fait la radio de langue anglaise.


90     Le rendement financier nettement moins reluisant du secteur de la radio francophone se résume donc en bonne partie par la perte de revenu potentiel découlant du transfert de l'écoute non monnayable d'une partie importante de l'auditoire francophone vers les stations musicales anglophones et la nécessité d'investir davantage dans les émissions de contenus exclusifs à prédominance verbale pour se démarquer les unes des autres et mieux résister à l'attrait que représentent pour le public francophone les stations musicales de langue anglaise.

91     Pour le moment, ce phénomène est dans une large mesure limité au secteur francophone de l'industrie  Toutefois, il ne faudra pas se surprendre si à mesure que la révolution technologique prendra assise auprès des consommateurs, modifiant en profondeur leurs habitudes d'écoute, que le rendement financier observé dans le secteur francophone s'étende à l'ensemble de la radio privée canadienne.

92     MR. BRAIDE:  The bottom line on all this is that the going forward model for an over market system needs to be focused on a multiple phase transition.

93     In what we consider to be the first phase, we propose to maintain the fundamental principle of regulation with only modest amendments.


94     Our second point for this morning's comments relates to complementary transition or regulatory proposals for music exhibition and Canadian talent development.

95     In short, these proposals are designed to increase the exposure of emerging Canadian artists to a combination of incentive for airplay and directing radios Canadian development contributions to marketing and promotional assistance.

96     Canadian private radio has a unique relationship with Canadian music in that it has the highest music exhibition quotas in the world and is required by regulation, unlike any other jurisdiction, to directly subsidize the domestic music industry.

97     As you see, since 1998, private radio has committed over 168 million dollars to Canadian talent development initiatives, of which 60 per cent is directed towards national funding agencies in the French and English markets.

98     Specifically private radios contribution to national funding agencies went from 1.4 million in 1998 to 16.1 million in 2005.  This represents a staggering increase of 1,170 per cent.


99     Put another way, if you combine the copyright payments and Canadian talent development funding, private radios contribution to the music industry went from 24 million in 1995 to more than 85 million in 2005.

100     It's clear that the Commission's 1998 policy yielded many positive results for both the radio and music industries, including historic contributions to Canadian talent development.

101     The Commission's 1998 policy also called for the creation of a Canadian music marketing and promotion fund to support cooperative activities by broadcasters and the music industry in marketing and promoting Canadian music, which by all accounts has produced tremendous successes.

102     There is no doubt that in a very short period of time, both Radio Star‑maker Fund and Fonds de Radio Star have had a significant impact on the careers of Canadian artists.

103     These commercial funds have cemented a place in the larger funding environment by providing touring and marketing assistance of critical importance at key stages in artist development.


104     However, the Commission's decision in 1998 to increase Canadian content levels from 30 to 35 per cent and require 55 per cent of French vocal music in day parts may have not produced some of the desired outcomes.

105     For instance, we didn't see any marked increase in Canadian music sales which have remained stable at 16 per cent since 1998 and that's unfortunate.

106     Radios ability to respond to listener demands has never been more important, given its new reality of unprecedented competition from a variety of audio content platforms.

107     The CAB's bonus system has ended increasing the exposure of emerging Canadian artists who according to the Commission's analysis do not materially benefit under a traditional quota system.

108     We proposed to do this by providing programmers with an incentive to play new and unfamiliar acts attracts by emerging artists both in day and evening parts which we believe will significantly increase, the exposure of these artists to a greater number of listeners.

109     Unlike the quota system, programmers will be engaged in actively seeking out and fostering new talent in a manner that responds to the demands of their listeners and is conductive to their market and the supply of Canadian music available in their format.


110     Mme RANDALL:  Dans la période de transition que nous traversons, ce qu'il faut pour atteindre les objectifs politiques du Conseil, c'est réglementer plus efficacement.

111     Notre proposition à l'égard du contenu canadien et de la musique vocale de langue française reflète avant tout notre engagement à respecter les quotas actuels de diffusion sans oublier toutefois que la radio est en concurrence directe avec d'autres modèles de distribution de contenu musical qui ne sont assujettis à aucun.

112     Dans ce contexte, il nous faut tenir compte davantage de la plus grande liberté de choix du consommateur.  Au fil des ans, la radio privée francophone a accru de façon remarquable la présence de la chanson québécoise et canadienne à l'antenne, à tel point qu'aujourd'hui la chanson d'ici occupe en moyenne plus de 80 pour cent de la musique francophone diffusée par la radio privée de langue française et presque la totalité, 95 pour cent de toutes les nouveautés francophones présentées sur nos ondes.

113     Par contre, le consommateur québécois nous dit également que lorsqu'il a le choix entre écouter de la musique francophone ou anglophone, il a une préférence nettement plus marquée pour les chansons de langue anglaise que pour celles de langue française.


114     Les résultats d'un sondage réalisé en juillet 2005 par la firme DÉCIMA pour le compte du Ministère du Patrimoine canadien le confirment.

115     Les Québécois sondés par DÉCIMA ont indiqué consacrer 36 pour cent de leur temps d'écoute à la musique de langue française, 45 pour cent à l'écoute de la musique anglaise, 13 pour cent à la musique instrumentale et seulement sept pour cent à la musique en langues étrangères.

116     C'est donc dire que le quota de musique vocale de langue française imposé à la radio privée de langue française est, à toutes fins pratiques, deux fois plus élevé que le niveau d'intérêt du consommateur québécois à l'égard de la chanson d'expression française.

117     Dans ce contexte, pour accroître la diversité musicale à l'antenne, l'ACR propose un système de prime dont le but est de favoriser la diffusion des artistes canadiens de la relève en offrant aux programmateurs des incitatifs pour compenser les risques associés à la diffusion des chansons d'artistes peu ou pas connus du public.


118     Dans le marché francophone, le système de prime aura pour résultat de faire plus de place aux nouvelles pièces musicales et aux artistes de la relève, donner la chance aux stations de radios de langue française de se démarquer les unes des autres par leur contenu musical et permettre à la radio de langue française de mieux résister à la concurrence des stations de langue anglaise et des nouveaux modes de distribution du contenu musical, tout en continuant d'assumer un rôle majeur dans l'enrichissement de l'expression culturelle francophone.

119     MR. BRAIDE:  In the English market, the Canadian Association of Broadcasters believes this incentive system will encourage music programmers to take risks by playing more emerging artists, to move off gold or recurrent track sooner, thereby reducing artists burn and increase the effectiveness of exhibition quotas by focusing on quality, who is getting played over quantity.

120     Preliminary testing done by select stations of various formats in different markets indicate that a modest application of the bonus system adding one single every other hour between 6 a. and 6 p. would result in approximately six more spins a day for emerging artists or an additional 30 spins per week.


121     We believe radio can maximize the impact of its exhibition quotas and CTD requirements by providing increased exposure to emerging artists on air while at the same time focusing funding on marketing and touring initiatives that assist artists in promoting their first or second albums.

122     For these reasons, we propose consolidating radios Canadian talent development funding into commercial funds and exclusively at marketing, touring and promotion activities which have proven to be of direct benefit to Canadian artists in establishing and furthering their careers.

123     It's our hope that when harmonized radios commitment to Canadian content French vocal music and CTD will foster more music that responds to listener demands and allows radio to leverage its promotional strength and support of Canadian artists.

124     That leads us to the third point of our presentation, a recommendation to measure the impact of our proposals and monitor the transition to an open market.

125     MR. MERSON:  Given the rapid pace of change in the audio landscape, the CAB believes it makes more sense to review policies of this significance in cycles that are shorter than seven years.


126     We also believe it no longer makes sense for this responsibility to fall exclusively on the regulator.

127     As a first step, the CAB commits to finally report three years from today, May 15th 2009, that measures the impact of its proposals on, firstly, increasing the amount of air play dedicated to emerging artists and, secondly, the effectiveness of its funding in supporting Canadian talent development.

128     Why three years?  We believe that at that time programs will have had enough experience for the bonus system to consider and evaluate its application in the French and English markets and suggest changes that might be required to increase its effectiveness and impact on emerging Canadian artists.

129     We believe a report of this nature will also provide an opportunity for all interested stakeholders, the CRTC, Canadian Heritage, SODEC and the music industry to engage in an open dialogue on the level and effectiveness of radio CTD commitments.

130     This discussion will be of critical importance since radio and other interested parties will have the benefit of certain facts that at this time can only be left to conjecture.


131     These include the total level of CTD funding from additional sources, including contributions from subscription radio services, new licences, transactional benefits and federal and provincial funding, the health of the commercial radio sector and the impact of changes to funding structures, resulting from the introduction of new programs like the MEC.

132     Armed with this information, private radio will be in a better position to consider its future commitments to Canadian Talent Development based on its evaluation of the effectiveness of funding to date, the demonstrable demand for music initiatives and ensuring its competitive equity with the unregulated sector.

133     We also note that in order for radio to properly evaluate the effectiveness of its CTD funding, it is absolutely imperative that all funding mechanisms provide publicly available, detailed and accurate information on a per‑project basis that ensures maximum transparency and accountability.


134     We strongly believe that our proposed reporting exercise would be a positive step to ensuring regulation keeps pace with the changing market realities and is consistent with the Commission's intention to regularly monitor and review its policies as provided for in its three‑year work plan under "compliance, research and monitoring".

135     MR. O'FARRELL:  There is no doubt that private radio has a good story.  However, over the course of its 80‑year history radio has faced many challenges, through both boom and bust economic cycles.  In fact, at various times radio has been written off as an obvious casualty of changing circumstances in the medial landscape.  Meanwhile, the regulated environment of radio has prospered at certain times and not at others.  That was then.

136     We respectfully suggest the fundamental difference we now must recognize is that the cornerstone assumption of the environment that brought us this far, controlled market entry, will no longer regulate the audio services space as it has for all these years, and that changes everything.

137     However, we cannot state with unassailable certainty how quickly the landscape will change in reflecting the reality of an open market as opposed to a controlled market.

138     What is certain is that it will change profoundly and the evidence of impact is mounting rapidly.


139     Our position before you today can perhaps be summarized as follows:  A financially healthy radio industry, supported by good public policy since the last radio review, is positioned to face these new challenges and continue to serve the cultural and social policy objectives this Commission is entrusted to uphold.

140     We have not proposed wholesale change to radio regulation.  We have instead submitted proposals to maintain the principles of Canadian music exhibition requirements and Canadian talent development contributions, in addition to reconfirming the radio sector's commitment to the broad regulatory contract with government, notwithstanding the technological undoing of its cornerstone assumption, controlled market entry.

141     Given the changing circumstances in the environment, we propose to assess and monitor the impact of our proposals in three years from today against the backdrop of hopefully a clearer understanding of the appropriate regulatory directions for private radio.

142     Mr. Chairman and Members of the Commission, this completes our presentation and we welcome your questions.


143     THE CHAIRPERSON:  Thank you very much.  Merci beaucoup, Mr. O'Farrell, ladies and gentlemen.

144     I will begin the questioning and a number of my colleagues will also have questions for you, I'm sure.

145     I want to begin by discussing an issue that was raised in our Public Notice but that you didn't fully address, either in your written or your oral presentation today, and that is really one of the forces driving our proceeding today, which is the impact of new technologies, and in particular the internet.

146     I notice that in a filing attached to your submission by Mr. Osborne he says that:

"Radio broadcasters have a favourable view of the internet as a complementary way to connect with their listeners and a cost‑effective programming research tool.  However, it does not appear that anyone has found the formula for substantially recouping internet costs from advertisers."  (As read)


147     I noticed in a speech you gave, Mr. O'Farrell, I think a number of weeks ago, you also mentioned that broadcasters are on the internet, are making use of it or experimenting with it.

148     What I would like to do with this panel, if I could, and with the individual broadcasters who come forward, is ask them questions regarding their uses of the internet and their ability to occupy that space.

149     I think that in the longer run one of the best defences we have under the Broadcasting Act and for our broadcasting system is an effective occupying of that field by people who, like yourselves, are committed to Canadian content and the development of Canadian artists.

150     So I think we would be interested in whatever information you could provide us with on the uses and experimentation that your members are making of that space and what conclusions, as preliminary as they may be, that you could share with us to assist us in this hearing.

151     So it is at this stage rather open‑ended.  I have gone to the websites of a number of broadcasters, Mr. Braide, iceberg.com is one of them, extremely interesting.


152     Frankly, I would love to have you or the individual broadcasters elaborate now or during the course of the proceeding on the lessons you are learning, the kinds of signals that you are ‑‑ you have your streaming, the kinds of demand you are seeing, the advertising success you may or may not have.

153     I know I have talked with a number of you about this individually, but it would be useful to have it at this hearing at this moment in time, a snapshot for the record of that.

154     So I don't know how you want to begin, but it would be helpful to me ‑‑

155     MR. O'FARRELL:  Well, I think it is a good starting point.

156     And thank you for allowing the question to be framed that way, because I think that is the right place where we should take this discussion, and that is to the internet and to these alternative technologies that are competing with radio.

157     I think that the preface ‑‑ and each group here that is represented in their own way are involved in some kind of activity that is internet‑based or otherwise seeking to extend their business lines into new business areas that are all about serving consumers and serving audiences.


158     I will invite each of the individuals here that would like to share with you their own corporate group stories for the record.

159     If I may, I would take two steps back and say that's exactly what we are talking about, which is a closed market where we are coming from emerging into an open market where we are and where we are going to.  Clearly, Canadian radio broadcasters are engaging very actively in every possible area of development that leads them to continue in that service orientation of taking content to Canadian consumers in their local marketplaces or beyond.

160     The same is true of broadcasters across the world.  Regulated broadcasters in other jurisdictions as well are looking to these new activities as places to go to extent their businesses.  The distinction being, of course, those jurisdictions do not have the same kind of regulation in their traditional business that we have here in Canada, and therefore one could suggest that in certain instances there might be a leg up that radio broadcasters elsewhere have over Canadian broadcasters in getting into this unregulated space.


161     Before I hand it off to a few of my colleagues to answer you specifically on the corporate group stories that they would like to share, it was only a few weeks ago the Clear Channel ‑‑ as you know the largest American radio broadcaster ‑‑ announced that it was producing programming for 75 new radio channels to be made available to all forms of alternate media services.

162     Which is why we have to be careful when we say "internet".  Some people feel that's a confining statement.  But in this instance their intentions are to go well beyond the confining definition of internet and into a much broader application of alternate media, such that the original audio, video and text programming will providing a foundation for, yes, internet channels, station websites, but iPods also, satellite broadcasts, in‑vehicle navigation systems and HD radio multicasts.

163     So it's just a broader sense of the area that they are working with.

164     So on the heels of that kind of a statement, I think which is where others are going, you might want to hear from the corporate groups.

165     Maybe I will start with Rob and then let others chime in with their stories.

166     MR. BRAIDE:  Thanks, Glenn.


167     Mr. Chair, I think speaking for the industry in general there are three sort of overriding principles in assessing or evaluating the wisdom of using the internet.

168     The first is penetration of tuning, and I think particularly in Canada we are seeing that moving pretty quickly.  We are a very highly broadbanded country, as the Commission is aware.

169     I think the other two overarching concepts are metrics and monetization.

170     We are still at the infancy of figuring out how to measure internet usage and as well how to monetize.

171     Speaking now more specifically about Standard, you mentioned iceberg.com ‑‑

172     THE CHAIRPERSON:  Just on that point, and by coincidence I happen to have your icebergradio.com, and on each of the pages you mentioned 2,567,000 unique visitors, 1,500,000 total page views, a million, and so on, unique visitors.  So you are measuring something, clearly.

173     MR. BRAIDE:  The metrics are there, it's a question of having those metrics accepted by the wider advertising community.

174     THE CHAIRPERSON:  Yes.


175     MR. BRAIDE:  It is a situation in its infancy.  Certainly the internet, there have been various metric systems set up since pretty much 1995 and I think we can sort of go back to identifying it all starting.

176     Maybe Mr. Grierson can talk more about that after we're done in terms of that measurement.  But the measuring is going on.

177     Back to iceberg.com, I think the Commission has seen Standard take every opportunity to use, I guess Trout and Reese first came up with the concept of line extensions.  The internet, Serius Satellite Radio and other things that Standard has done are effectively line extensions to take our content and move them as far out as we possibly can.

178     THE CHAIRPERSON:  Yes.

179     MR. BRAIDE:  I think we see that as the potential for the internet and one of the reasons why we have invested so heavily in the iceberg.com portal and as well have developed such a strong internal mechanism to maintain website backends for our individual radio stations.

180     And with success which is yet to be measured, but which we feel guardedly optimistic about.

181     THE CHAIRPERSON:  Is it too much to ask that Mr. Heimrath, or whoever it is that runs your service, present with your group when you appear in ‑‑


182     MR. BRAIDE:  It is our intention to have Jean‑Marie Heimrath with us tomorrow afternoon, Mr. Chair.  Thank you.

183     MR. MAHEU:  Mr. Chair, if I may ‑‑ I'm sorry.  Go ahead, Rael.

184     MR. MERSON:  I'm sorry.  Go ahead.

185     MARK MAHEU:  All right.

186     In terms of the internet, right now for a lot of radio stations it's a complementary service to the over‑the‑air broadcasting that they are all doing.  The reason for that is, as we all know, our business and our industry is driven by consumer behaviour.  When that consumer behaviour starts to change, our business needs to start looking at where it needs to be to continue to be successful.

187     We saw that with the transformation of our business back in the late '80s and early '90s with the move from AM to FM, amplitude modulation to frequency modulation.  You know, it was not that long ago when AM radio led in terms of listening with people, and the standard went up in terms of sound quality to the FM.  Consumer behaviour was driven by the availability of low‑cost receivers, and AM radio's world changed very rapidly.


188     What we are seeing now with the internet is that radio, like all media, does not operate in a vacuum and people use all sorts of different medias different ways.

189     Up until this point, or until recently, radio owned that mobile content space.  We have all heard the phrase that "content is king".  If that is true, then mobile content is King Kong.  We have, as an industry, always owned that position.  That is changing.

190     The internet was really the first step in the beginning of that transformation.  It brought digitization to the forefront, MP3 transfers.  It also was the portal or the opening for podcasting to begin to take place.

191     And we are not that far away now from broadband‑enabled areas, city‑wide or in large metropolitan areas where broadband internet access is going to allow people to be able to receive broadcasts, whether they come from the Internet or regular radio stations, on a wireless basis.  Of course that would obviously concern private broadcasters.


192     But at the same time, radio has seen consumer behaviour change.  Canadian radio specifically has done quite a good job, evidenced by what Standard is doing with iceberg, and a number of other private broadcasters are doing with their internet presence, to try to at least be in that space to see where consumer behaviour is going to be.  In other words, if you are in the game and you are experimenting ‑‑ and a lot of companies are ‑‑ nobody has the silver bullet yet, as Rob said, to be able to monetize that tuning.

193     But we feel it is important to be there and invest money, so that we can at least see beyond the horizon a little bit what is out there, what possibilities lie ahead.  That is probably the most valuable thing radio is doing with the Internet right now, is being in the space, trying to figure out how our conventional platforms might be useful in the future with changing consumer behaviour, and it is extremely important.

194     But the bottom line on internet broadcasting right now, or simulcasting our over‑the‑air signals is there's no radio station that I am aware of that is able to monetize it.  It is starting to get some ratings, it is showing up in terms of tuning, but it is very difficult to monetize that today.

195     THE CHAIRPERSON:  So does that happen?  How does it get the ratings?  How is it rated when it's coming in on the computer?


196     MR. MAHEU:  What people are doing now with BBM methodology, is there are now reports ‑‑ and this has only been recently over the last couple of years ‑‑ is penetration listening on the internet has increased where people are actually reporting that they are listening to radio broadcasts on ‑‑

197     THE CHAIRPERSON:  In the diaries.

198     MR. MAHEU:  Exactly, on the internet.

199     THE CHAIRPERSON:  Over the week that ‑‑

200     MR. MAHEU:  Sure.  So some of that tuning is starting to show up ‑‑

201     THE CHAIRPERSON:  I see.

202     MR. MAHEU:  ‑‑ but it's very difficult to monetize that tuning.

203     THE CHAIRPERSON:  Right, but the viewing of the website while tuning, is that something that you are able to capture or is that something you still haven't been able to monetize all ‑‑

204     MR. MAHEU:  It's very difficult to monetize, Mr. Chair, because with internet radio you can be listening to an internet broadcast while surfing basically any site that you wanted to.  So we could be on the CRTC website looking over whatever, also listening to something coming from across the road or around the world?


205     THE CHAIRPERSON:  All right.

206     Have you experimented with different genres of programming?

207     One of the questions we asked in the Public Notice was the question about showcasing Canadian programming and the possible needs for incentives going forward, with or without licensing.

208     Have you formed any views on that or is it still too early, as to the nature of the programming that works?  Are you just streaming your own stations?

209     MR. MAHEU:  I can't speak for all broadcasters, but as a member of the CAB I can certainly speak to the company I represent.

210     We see the internet as a valuable tool to be able to promote in a complementary manner some of the things we do on the air for the development of Canadian talent.  What we are finding is that many emerging artists, especially independent artists, are making great use of the Internet to get the word out about their music and about what they are doing.


211     Certainly here in Ottawa, for instance with our alternative rock station, we make extensive use of the internet.  We have created forums for bands and listeners to be able to interact together and listeners can find out via our forum where bands are playing around town and what's happening, or listen to MP3s that the bands supply.

212     So I think there is a real benefit there and I think that type of approach is very much in its infancy and radio, being an entrepreneurial business with some very smart people, are going to take that as far as it can possibly go.

213     The big issue that broadcasters are worried about, though, are:  If we can do it, anybody can do.  So all of a sudden we are faced with the prospect of all of these potential unregulated competitors playing in that space without the same kind of obligations to the Broadcasting Act or the development of Canadian content that we have and we have to compete in an inequitable manner with those folks.

214     And it's starting.  Iceberg happens to be an endeavour that's owned by a broadcaster.  There are other ones in the United States and in Canada that are not owned by private broadcasters, and as means to receive those signals move beyond the desktop to the wireless ubiquitous device world which we are now starting to come into.  That's where we see the storm clouds.


215     THE CHAIRPERSON:  I appreciate that.  Answers are in short order, but the concept of building on your own abilities, because you certainly know how to reach audiences and you have awakened to this, varying broadcasters at varying times, and if there is a way to ensure that through us as the vehicle the Canadian objectives can be fulfilled, then in effect there is some fresh thinking that could be done regarding incentives of one kind or another that might help achieve those same objectives, to extend the regulatory bargain, I think as Mr. O'Farrell referred to it, to the wider environment.

216     I mean, we have always had to do that as Canadians, since the start of radio.  We have had to leverage the new technologies that were prima facie working against us, and I think up to now have managed to do very well in capturing them as a vehicle for our Canadian artists and performers.  We have to, with not perfect success, but I think it's something we have to continue to try to figure out how to do through a combination of entrepreneurship and regulatory backing.

217     MR. MAHEU:  It's a very good point and you are absolutely correct.


218     What makes this particular time different than any other time is the fact that the internet knows no borders.

219     And unlike any other time, potential future competition that private radio will face in the wireless world, whether it's internet or broadcasting to cell phones or devices, is that the content can come from virtually anywhere.

220     And anecdotally, it would be similar to having companies in Europe and the United States having ultra powerful transmitters that could transmit FM signals right into Canada on an unregulated basis.

221     THE CHAIRPERSON:  What you say certainly registers.  The internet has no borders, though as a concept I think is not an unequivocally true statement.

222     When we see the downloading of "Desperate Housewives", for example, on television by I think it is the ABC network, they are not accessible to servers outside the country.

223     So it seems to me that rightsholders are going to continue to want to ensure that, to the extent possible, borders can be imposed.


224     I am not suggesting borders here; quite the contrary.  I am assuming that it is going to be borderless for purposes of the exercise and figuring out ways of again leveraging the technology in a more borderless world to achieve the objectives.  I don't see the objectives that we have as Canadians are going to change all that much in regard to wanting to promote our own songs and artists and performers.

225     So it is up to all of us to try and figure out a way of doing that that is least intrusive and least chilling on the technology and on the investment while we move forward.

226     MR. MERSON:  Perhaps, Mr. Chair, I can speak to the business model.

227     We do look at the internet.  We look at the new media as an opportunity as much as we look at it as a threat.  We are in the midst of a storm so it is difficult to see sort of what the beginning and what the end of it is.

228     To us as we speak about radio, a vernacular changing, we no longer speak about radio or television but we speak about audio content and video content and data and social media and connections and stickiness, the terms that really underlie what the internet does.


229     As we think of how it is from a business point of view we organize our activities in that regard, we speak a little bit about the media finding its own way home.  So to some degree what you have to do is rethink how it is the service that you provide.  So the service you provide might not well be radio, but it might well be audio content.  Along with that audio content might be community and it might be interactivity and it might be a whole bunch of different things.

230     But whatever content you develop now has to have those characteristics.  So it has to have the characteristics of audio.  It probably has to have video.  It has to have social media.  It has to have community and it has to have all the bits and pieces.

231     As you create this, you create this in a different environment.  You don't create it as a one‑off.  The vernacular changes.  It's not radio any more; it's a stream or it's a download or it's a podcast.

232     But the key to us from a business point of view is to create once and publish many times, and publish in whatever sphere requires that content in whatever way the content is required.


233     So we from a business point of view are in the process of reorganizing our affairs and doing what we need to do to ensure that we maximize the opportunities.  We are agnostic to medium but we maximize the opportunities to find our content sort of finding its way to an appropriate home.

234     The difficulty, as Mark says, is replicating the dominance we have in the analog world in the digital world.  It is a much more open environment and it is difficult to meet all of the objectives at the same time.

235     I am one who believes that we are very much at the inception of the revolution, and the revolution goes through a couple more phases.

236     The first phase is the evolution to IP‑based protocols, and in IP‑based world there really is no distinction between one medium to the next.  Currently even though multiple media, you know a phone call or a video stream or an audio stream goes down the same pipe or across wireless, there still requires separate infrastructures in order to manage them.

237     In an IP‑based world, the same infrastructure manages all of those types of streams.

238     The second big revolution we are going to come into is software‑defined receivers.  These are true multi‑media capable devices.  We have seen them out there.  They are in Korea.  They are out there in their infancy.


239     What these devices will do is act very much like a modern PC does in the sense that if you have a Windows media file and somebody sends you a Real Player file, you go down and the software is intelligent enough to go to the internet and download the drivers necessary to make all that happen.

240     So it's another phase of the revolution that will come over the next couple of years.

241     And the third ‑‑ and this is one that we sort of are involved in in a very big way ‑‑ is the roll out of wireless and the fact that wireless is going to become ubiquitous.

242     And the radio industry has had some real barriers to entry into its current business based on the fact that it ultimately was the only portable medium out there.  What we are seeing now are real incursions into the wireless base through DVBH, through Flow, through all the other technologies out there.

243     The question you asked us was:  How do we monetize this?  To some degree, we reorganize our activities to ensure that we give the maximum exposure to the content that we create.  And on the other hand we know that what has made radio successful in the past has been localness.  And to some degree we have to recreate that localness as adjuncts to our businesses in the digital space.


244     We are doing that to some degree.  The biggest revenue producer on the internet has been Search.  So if you look at most of our websites you will see Local Search in the sense of recommendations.

245     What we can do that is different from the Googles of this world who provide sort of global access into the internet is to editorialize, and that is what we have done in the past as Canadian media.  We take your question about what restaurant to visit in the local area and we say:  Look, our experience is this is what's best and this is where you should go to.

246     So we've got to make that evolution.  We've got to sort of repurpose our content.  We have to try to anticipate what the world is going to look like, and we've got to stick with what it is that sort of brung us to the party, which really is localness and our hold on the local markets.

247     But it is not obvious.

248     M. PARISIEN : Monsieur le Président, si vous permettez, j'aimerais vous donner quelques perspectives du marché francophone, suite à la question que vous avez posée.


249     Alors, toutes les plate‑formes n'ont pas, évidemment, le même impact.  Il y en a certaines qui créent une concurrence accrue, particulièrement au niveau du revenu commercial.  D'autres, tout simplement, réduisent nos auditoires, mais c'est non négligeable.

250     Il y a définitivement des opportunités pour les radiodiffuseurs francophones de profiter de cette révolution et d'investir maintenant, mais le constat, évidemment, des principales entreprises qui sont impliquées dans les marchés francophones, c'est que ça prend énormément, énormément d'argent et que l'horizon n'est pas très clair encore.

251     Le temps d'écoute se fractionne énormément, et c'est la radio commerciale francophone, le marché francophone qui en fait les frais, et ça fait partie de la révolution qu'on vit, évidemment.

252     Un facteur important aussi, c'est que l'industrie de la musique est peut‑être intervenue sur le tort, afin d'empêcher le téléchargement de fichiers, ce qui a développé une culture auprès d'une nouvelle génération que la musique, c'est gratuit, et que la musique aussi, c'est gratuit et c'est surtout facilement accessible en anglais.


253     Alors, dans le marché francophone, pour nous, les activités web ne sont pas nécessairement complémentaires aux activités de base de nos radios commerciales.  C'est pour nous maintenant de trouver un modèle d'affaires qui va faire qu'on va pouvoir compétitionner adéquatement avec l'érosion de tous ces auditeurs‑là.

254     On a un cas vécu, nous, qui est Radio‑Libre.ca, que je vous encourage, d'ailleurs, à aller visiter pour mieux comprendre comment...

255     LE PRÉSIDENT : Je l'ai déjà fait.

256     M. PARISIEN : O.K.  Nous avions, comme concept, développé Radio‑Libre autour de la thématique de la diversité et aussi de la découverte musicale.  Radio‑Libre est un site qui a mis en ondes, en français, tous les produits francophones disponibles.  On les a numérisés, on les a mis en ondes, et on vendait ça par abonnement parce que c'est des coûts assez élevés.

257     On s'est rapidement aperçu que la musique c'est gratuit, la musique ça ne se paie pas par abonnement, dans ce cas‑là, surtout quand c'est une auditoire plus jeune, et on a été obligé de fermer le volet abonnement pour retourner à un volet public gratuit.


258     La conclusion à laquelle je veux en venir, c'est que le constat principal qu'on fait, c'est que oui, la musique est gratuite, oui, ça défie toutes les structures d'affaires de notre radio commerciale, mais aussi ça glisse rapidement pour l'auditoire francophone vers une écoute accessible, facilement accessible de musique en anglais aussi.

259     THE CHAIRPERSON:  Mm‑hmm.

260     Mr. Hildebrand, speaking for a smaller market broadcaster, I know you have had experience with the use of the internet.

261     MR. HILDEBRAND:  Certainly what we have been doing in the prairies, we have not been streaming because, as you have already heard, nobody has figured out yet how to charge or monetize anybody that is listening over the internet.

262     So we have developed a business model that works in our environment where we are setting up community portals and, as a result, actually using all of the local material that we generate on a day‑to‑day basis then is also used on the internet.  That has resulted in many communities.  We are now upwards of tens of thousands of individual users and this seems to be growing.

263     We have been able to develop a business that actually generates a secondary revenue stream to radio advertising.  So we see this as something that may be a big adjunct to whatever we do on the air.


264     So it is a little different maybe than some of the other ones that you are hearing about, but we are finding that that works in the smaller communities and we are actually ramping up that whole process to do a lot more of it.

265     THE CHAIRPERSON:  So using it essentially as a parallel service rather than as a carrier for your radio station.

266     MR. HILDEBRAND:  Right.  We haven't done any original programming.  We are basically using local news, local weather and anything that happens in the community.

267     We are providing job opportunities, both for jobs wanted and jobs looked for.  We are providing a trading opportunity, plus everything that happens in the community is on the site.  As a result, it is sort of a community shopping centre.

268     We have been able to provide a revenue stream that is actually growing and becoming significant.

269     So the other thing that works well is that one complements the other:  a radio station can drive people to the site and the site can put people back to the radio station.  So it is sort of a complete circle.


270     THE CHAIRPERSON:  Thank you.

271     Mrs. Crawford, are you in the position to speak for CHUM or would you prefer that I wait until they make their appearance?

272     MS CRAWFORD:  I would encourage the Commission to address our panel tomorrow.

273     THE CHAIRPERSON:  Okay.

274     MS CRAWFORD:  There are people on that panel who are much more knowledgeable than I am and can speak in more detail.

275     I would emphasize that we have been very active in that area and echo some of the comments made this morning.

276     It is challenging to monetize one's activities in that area.  We are active in both the television and the radio side and so we see it as a somewhat platform agnostic venture for content creators to really fully explore all of the new media.

277     In terms of what our radio stations are doing, again there will be those on our panel tomorrow who can speak in much more detail about that.

278     THE CHAIRPERSON:  Sure.

279     MR. O'FARRELL:  Mr. Chairman, if I may, just to complete the answer...


280     THE CHAIRPERSON:  Go ahead, Mr. O'Farrell.

281     MR. O'FARRELL:  I would like to ask Ken Goldstein to offer perhaps a broader view or a wide‑angle view on the situation because Ken has done some work in this area.

282     Before I pass it to Ken, I want to make one remark with regard to your comment pertaining to "Desperate Housewives" and downloading it in‑country only.

283     The distinction we have to be careful of is that is exclusive content as opposed to ‑‑ and we are talking about music, music being non‑exclusive content.  There are obvious differences that apply there.

284     THE CHAIRPERSON:  And to Mr. Parisien's point, I understand that.  But I guess exclusivity is one of the things you will experiment with, as difficult as that concept is in the world of music, with all the avenues.

285     Before Mr. Goldstein responds ‑‑ because I will let him respond to this next point ‑‑ it is again in Mr. Osborne's brief.  He is conveying the view that ‑‑ this is on podcasting.


286     He says it is generally perceived as a positive development that may help the radio broadcasters repatriate the younger listeners.

287     I haven't heard any of your spokesmen on that.

288     So if there is anything that Mr. Goldstein or others would add on that, we recognize that that is the demographic that appears to be least tuning to radio among the entire population.

289     I am wondering whether you would agree with those views conveyed through Mr. Osborne and whether in fact your use of the internet is able to address connecting with that demographic any better than perhaps you have over the air.

290     MR. O'FARRELL:  I will let Mr. Goldstein take it and if anybody wants to add.

291     I think the evidence you have heard this morning is that where there are activities online, they basically have not been monetized in a manner that has proven to be successful to date in any demographic group, including the potential repatriation or attraction to the younger demographic group.

292     Ken?

293     MR. GOLDSTEIN:  Thank you.


294     I think on the question of the internet, one could obviously deal with it at many levels in terms of how it affects the use of time, in terms of how advertising is growing rapidly on it.

295     But I think I would limit my comment on the internet in a contextual sense in terms of what you heard and picking up on what you yourself said about borders.

296     There are geographic borders but there are two other kinds of borders that the internet also shatters.  I think it is important that we have to remember that.

297     Yes, geographic borders are at issue, and although one attempts to limit the reception of something like "Desperate Housewives", I suspect I could walk not more than a hundred yards from here and find a teenager who would tell me how to do it from anywhere.

298     But the other borders ‑‑

299     THE CHAIRPERSON:  He could probably tap into the satellite signal as well ‑‑

300     MR. GOLDSTEIN:  Right.  I wouldn't know from such things but...

‑‑‑ Laughter / Rires

301     THE CHAIRPERSON:  We are trying to combat all of that.

302     MR. GOLDSTEIN:  Yes.


303     The other two borders, though, are equally important and they go to the question of monetization and the increased fragmentation conversation.

304     The first is of course the borders between and among other media because if radio is going to be occupying some of the text space, the people who were text‑based are going to start occupying some of the audio space.

305     But the most important border in all of this is the border between and among media and non‑media.

306     If the large advertisers themselves, all of whom have websites, decide to put entertainment content on their websites, the same kind of entertainment content as media have traditionally delivered as a way of attracting people to their websites, that not only adds competition but that means the cost of what we as broadcasters consider the cost of programming to them now becomes part of the advertising budget.

307     That really changes the economics of everything.

308     I think that was the only additional contextual comment I could make.


309     On the notion of attracting young people, podcasting and vlogs and blogs and broadly speaking consumer‑generated media seems to be where young people are at and increasing, not just young people but as the age moves up.

310     The important point to remember about radio and young people is that it is not just radio; that if you take a look across all media you find young people are being drawn to all of these new devices, to all of the consumer generated media.

311     So if we only say well radio may have a problem with the teen and young adult market, so does television, so do newspapers, so do magazines, so does everything we thought were the traditional media.

312     So I think that again is a little bit of context.

313     THE CHAIRPERSON:  Thank you very much.

314     The next question is probably for you, Mr. Goldstein.  It has to do with your study for the intervention.

315     It is your assessment of impacts of the new technologies on radio broadcasting.  You have numbers in your study.

316     Let's see if I can get to it quickly.


317     Your scenarios of impact in year 5, of a 4.9 reduction in overall tuning and a 1.0 percent reduction in ad revenues and a heavy scenario, a high impact scenario, of approximately 8.5 percent reduction in overall tuning and 3 percent in ad revenues.

318     It is reproduced, I guess, at page 110, I believe, of the intervention.

319     Do you happen to have that?  I'm having a little trouble putting my finger on it right now.

320     MR. GOLDSTEIN:  I have it.  It is pages 31 onward in our report.

321     THE CHAIRPERSON:  Right.

322     MR. GOLDSTEIN:  I have it in that form in front of me.

323     THE CHAIRPERSON:  Yes, there it is.

324     My question is how you arrived at those numbers governing impact in the high and low impact scenarios, at page 31.

325     MR. GOLDSTEIN:  Well, I ‑‑

326     THE CHAIRPERSON:  Without going through your study.

327     MR. GOLDSTEIN:  Right.


328     THE CHAIRPERSON:  I guess the question is the assumptions are not, if you like, data‑based as much as they are based on the assumptions that you sum up at page 1 of your report, where you talk about potentially cyclical downturns and thresholds biting at technology.

329     So it is that kind of assessment going forward.

330     Is that a fair comment?

331     MR. GOLDSTEIN:  That's absolutely correct.

332     On page 31 in the little box at the top where it says "Assumed Annual Percentage Change in Tuning", those were the numbers we put in and then we just let them flow out cumulatively.

333     I didn't just pull these out of thin air.  I reviewed a bunch of financial analyst reports, particularly from the American market.  And I'm not saying the American market is the same as the Canadian market, but they have had some of these technologies a little earlier and therefore there are more reports floating around that try to go forward and say, you know, what percentage of this, and so on.

334     I actually found a number of the American reports too pessimistic.  They did a one‑to‑one relationship between tuning reductions and advertising reductions and I didn't accept that.


335     I said that radio is well‑run in this country, radio has a good local record.  I think a little bit of erosion can be overcome with pricing, with promotions, with all of the entrepreneurial things the industry can do.

336     That's why, for example, in the low scenario with a 4.9 per cent decline you only have a 1 percent decline of what the revenue otherwise would have been.  Then I just put the numbers out and drew the lines and applied it as if it would have been last year.  So it's just to give an idea of how much a bite might happen at certain levels.

337     THE CHAIRPERSON:  Right.  I guess when you try to gauge the impact, and if you look at both, either satellite radio or the internet ‑‑ I have looked at a number of American studies and there is a Credit Suisse study of Canada on potential impact of satellites, and I guess in‑car tuning in Canada is lower than in the United States, 25 percent compared with 35 percent.  When they do their analyses, the numbers that they come up with are relatively modest.

338     In the United States for instance, the cannibalization ‑‑ I'm looking here at a study by J.P. Morgan done about a year ago where the estimate is that cannibalization of radio listening in '06 at about 1.5 percent.


339     Are you familiar with that study?

340     KEN GOLDSTEIN:  It sounds familiar.  I have some more recent ones.

341     But again, what we are talking about is '06.  We are going forward from that.

342     THE CHAIRPERSON:  You go forward, yes.

343     MR. GOLDSTEIN:  Yes.

344     THE CHAIRPERSON:  Their estimate going ‑‑ and the farther out you go forward, the more difficult it is.

345     Would you say, from your knowledge, that the subscriptions of Canadian satellite operators are making an impact on radio at this point?

346     KEN GOLDSTEIN:  I don't think so yet.  I think it's too early.

347     The interesting place that Jeff Osborne has talked about in his work ‑‑ you have his study ‑‑ it sometimes will affect ad agency attitudes before it turns up in the tuning.

348     I think Pat Grierson could speak to that in more detail.  But sometimes if all the media buyers have the new services, they start making some assumptions that aren't yet supported by the data.


349     But it's very early days here for that particular item.

350     THE CHAIRPERSON:  Yes.  I think, as Mr. Merson was saying before, radio succeeds as a local medium and one thing that satellite isn't is local.  It's also a pay medium, a subscription medium that requires an upfront payment every month.

351     I haven't, frankly, been able to discern impacts in the financial reports that I have studied.  That doesn't mean it won't happen.  Certainly I grant you that.

352     But in the reports in this proceeding and elsewhere it could happen, but again it hasn't happened yet.  So we are left, as with so many areas dealing with the new technologies, the numbers are hard to come by and you have done a good faith effort to try to make projections going forward, but it's hard to base it on substantive data.

353     MR. GOLDSTEIN:  I would agree completely with that comment.


354     I would only add one thing, that is of course we did not limit our impact to satellite.  We didn't say, "Well, this will be satellite, this will be iPods, this will be internet, this will be mobile", because at the moment we don't know the precise mix.  But we said, if you take them all together ‑‑ plus, as Glenn O'Farrell pointed out at the beginning, something that might be around two years from now that nobody knows about today.  I took that all into account.

355     THE CHAIRPERSON:  Yes.  All right.

356     I guess Mr. Osborne points out on the internet that his people that he interviewed don't anticipate any significant revenue ad implications in the short or medium term.  So I guess it's a bit of a guess going forward and you have every reason to be concerned, particularly, as you have said, from unregulated media who may not have the same obligations.

357     Which is I guess why in the Public Notice and in this hearing I would appreciate whatever help you can give in terms of leveraging the fact that you are regulated and turn it into a benefit in the sense of suggesting incentives or other ways of ensuring that Canadian music artists are carried on these new media to the maximum extent possible.

358     MR. O'FARRELL:  May I jump in very quickly, Mr. Chairman?

359     THE CHAIRPERSON:  Yes.


360     MR. O'FARRELL:  In our brief, and I don't have the exact page in front of me, we presented to you some information in chart form that showed how there was a rise in particularly the youth demographic segment, but across all demographic segments where people were actually ‑‑ the increase in non‑use of radio.  To make sure that we made the point perfectly clear in the materials we distributed to you this morning we also produce the inverse chart, which shows the clear decline in tuning to radio across all demographic segments, in particular the youth segment, but across all demographic segments in the past five years.  This is 2001 to 2005.  It is in the attachments that we circulated this morning.

361     My point here is, these facts don't lie.  The decline is real, the decline is demonstrable, and it's across all demographic segments.  That's number one.

362     Number two is, we cannot necessarily and certifiably tell you this morning that the impact is due to one or another of the new technologies, but we do know that the new technologies are competing.  In fact, we don't have to tell you that other than anecdotally.  We all know that it's a fact that we are dealing with today and we will be dealing with more so going forward.


363     Hence, what we feel is absolutely clear to us is that as we step into this open marketplace with these competing technologies and these competing delivery mechanisms and this competing content, much of which is unregulated ‑‑ satellite, yes, is slightly regulated.  That is only one form of fragmentation ‑‑ we do feel that it's not unreasonable to suggest that the chart that shows the decline overall is not, in all likelihood, going to bounce back.  If anything, there is every indication that the more these kinds of technologies come on‑stream and the more access is given to consumers in more and more ubiquitous devices at lower and lower cost to purchase, with greater and greater accessibility, the likelihood is these facts will continue to show decline.  That's number two.

364     The last thing I wanted to mention was, you mentioned in your comments a few seconds ago about music.  As much as music is an important part, and has been an important part of radio, radio is not just about music.  In fact, to be perfectly candid, I get caught up in that sometimes too, thinking about it only in those terms.


365     Music is a fundamental component of radio, there is no doubt, but what is absolutely fundamental to the business of music is serving consumers ‑‑ I think that's what Marc said earlier ‑‑ of which music can be a component.

366     But more and more, as the experience of the Québec market has indicated ‑‑ and Mr. Parisien spoke of that ‑‑ where music as a non‑exclusive product is being made available and one where this is so much more competition, there may well be a greater migration towards exclusive content to further differentiate and to further make the commercial viability of local radio more likely going forward than less.

367     So I think that we have to remember the fundamental concept of radio as a medium, while having enjoyed a great relationship with radio ‑‑ that music has enjoyed with radio, I'm sorry, there are other contents and, frankly, the exclusive contents may well be the place to go if you want to make sure that you have more differentiation capabilities than less and you are offering to consumers.

368     THE CHAIRPERSON:  I'm trying to reconcile your chart that you just drew our attention to with the total hours tuned numbers which we have which show that since 1997 roughly total hours tuned across all persons 12‑plus has remained pretty stable, 516 million hours in '97; 531 million in 2005, with dips around 533, 540, 529, 538 in between.


369     How do you reconcile those?  What is the chart purporting to say?

370     MR. O'FARRELL:  The chart you are making reference to is...?

371     THE CHAIRPERSON:  Your chart.

372     MR. O'FARRELL:  The chart that we just handed out, yes.

373     THE CHAIRPERSON:  In the face of those numbers that show pretty stable total hours tuned and pretty flat ‑‑ a pretty flat graph over the last five years, both in the 12‑plus and the 25‑to‑54 demographics, a change of 1 percent a year.

374     MR. O'FARRELL:  I'm afraid we are not on the same page exactly.

375     Are we referring to the chart that was attached to the oral presentation?

376     THE CHAIRPERSON:  Yes.

377     MR. O'FARRELL:  Okay.  So we are talking about this five year tuning trend that shows decline since fall 2001?

378     THE CHAIRPERSON:  Yes.  I'm trying to reconcile it with a pretty stable total hours tuned data that we got from BBM over the past five years.  Over the past five it seems to be stable, plus or minus 535 million hours a year tuned, all persons 12‑plus.


379     MR. O'FARRELL:  Well, it's what you are reconciling it to that I'm having trouble following.

380     The chart that we just handed out I think makes a statement.  How it reconciles back to the data that you are referring to, I'm not quite sure.

381     But I do think that it is fair to say ‑‑

382     THE CHAIRPERSON:  Why do you show a downward trend, I guess, in the different demographics?

383     MR. O'FARRELL:  Well, effectively all demographic trends are tuning less to radio today than they were five years ago.

384     THE CHAIRPERSON:  Percentage of the total population.

385     So is it fair to say, if total tuning is roughly flat and the population grows your tuning as a percentage is down?  Is it as simple as that?

386     MR. O'FARRELL:  Ken, do you want to jump in?

387     MR. GOLDSTEIN:  That's the answer.

388     THE CHAIRPERSON:  That's the answer.  Okay, thank you.


389     Looking again at other challenges that might be coming down the pike ‑‑ again, as you go into the future there are no facts and you are crystal gazing a bit.  But when we look at GDP and retail sales projections, Conference Board figures, others as well, we see a fairly optimistic set of projections.

390     The Conference Board of Canada, Winter 2006, shows a percentage change in GDP going up roughly 3 percent a year over the next five years and retail sales going up about 4.1 to 4.7 percent, roughly 4.4 average.

391     Are those projections you are using in your own analysis, gentlemen?  Mr. Goldstein or Mr. O'Farrell?

392     MR. O'FARRELL:  Ken...?

393     MR. GOLDSTEIN:  We didn't actually do a projection.  We did an impact assessment.  But I mean we do use the same Conference Board figures all the time in our underlying models.

394     THE CHAIRPERSON:  So I guess the question is:  If those numbers hold, does it counteract the impact sufficiently?  I guess that's a tough question to answer.

395     MR. GOLDSTEIN:  Again, that's why we did it the way we did it, which is to say:  How would this affect what it otherwise would have been?


396     THE CHAIRPERSON:  But did you actually use those kinds of projections in the "what otherwise would have been"?

397     MR. GOLDSTEIN:  Well, no.  The "what otherwise would have been" is the unknown, and so we say let's say radio ‑‑ if you look at Figure 10 and Figure 11 in our report you will see a tracking of radio with both GDP and retail sales, and you will see that it's a fairly constant relationship, which is not particularly surprising, although slightly ‑‑

398     THE CHAIRPERSON:  You only go backwards on those.

399     MR. GOLDSTEIN:  We go from '91 to 2005, yes.

400     THE CHAIRPERSON:  The question is:  Did you factor into your projections those kinds of growth rates that might ‑‑ given that there tends to be a pretty close relationship between radio advertising and retail sales, would that have counteracted the impacts that you are projecting?

401     MR. GOLDSTEIN:  Well, that's it.  It's not a counter acting.


402     Let's take a hypothetical example.  Let's say that radio and retail sales in a given year go up 3 percent, so all our analysis is basically saying:  If it would have been 3 percent higher based on normal occurrence, these new technologies will have the following impact on that 103.

403     THE CHAIRPERSON:  So you are taking that into account.  But I didn't notice that.  Perhaps I missed it.

404     MR. GOLDSTEIN:  But the point is ‑‑

405     THE CHAIRPERSON:  Can you draw my attention to where you actually ‑‑

406     MR. GOLDSTEIN:  But I want to say that if it would have been 106 or 102, it's the same thing.  In other words, what you are assessing is the old model that we understand has a relationship between GDP, radio and retail sales.  Whatever that relationship may be will be affected by the new model and we are trying to measure the effect.

407     THE CHAIRPERSON:  Right.  All right.  I see.

408     But the dollars could well increase as a result of the ‑‑

409     MR. GOLDSTEIN:  The dollars, if we are projecting that let's say in a given year it would be 2 percent less than it would have been, and if GDP or retail trade go up 4, you would have expected radio to go up 4, instead it would go up 2.

410     THE CHAIRPERSON:  It's going to go up 2, all right.


411     MR. GOLDSTEIN:  That's the point.

412     THE CHAIRPERSON:  I see, yes.  All right, I take that.

413     Again, I guess it would be fair to say there is a lot of optimism in the industry as reflected in the applications that we get whenever there is a new call for licences, which is a healthy thing and welcome, but I suspect that radio broadcasters are still pretty optimistic, as I think their performance says they have a right to be.

414     MR. MAHEU:  Mr. Chairman, you are absolutely right and I don't think anyone should confuse our concerns about the future in talking about how we can make this work for everybody with a very healthy radio environment.  I think everybody in this room today knows that radio is still a fantastic business to be in and Canada is a great place to be in that business.

415     The numbers that the Commission published last week on revenues and PBIT bear that out, that there is no question that radio, like the economy, has been doing very well.  We were kind of matching the economic activity that's going on out there.


416     But going forward we are still very bullish and very positive on radio's future.  The questions before you and before us are trying to figure out ways to keep radio relevant and local in a world of consumer behaviour that's changing rather rapidly.  That is the $64,000 question.

417     THE CHAIRPERSON:  All right.

418     I don't know whether you have had an opportunity to read the brief of the Competition Bureau and the paper by Dr. Winter.  He concludes in that that radio advertising is complementary to rather than a substitute for other media, and he lists reasons why he believes that's the case.

419     Would you agree with that?

420     MR. O'FARRELL:  We don't happen to agree with that and I will ask Pat Grierson to speak to it.


421     Under the heading of just something that we thought was the right thing to do as an industry group that looks forward and sees a lot of potential change on the horizon, particularly in the media space that we are talking about today, radio, we thought it was a good idea for us to write to the Competition Bureau and suggest that it might be a good idea for the industry, the broadcasting industry, to make a presentation on the changes and so on that we see and that we are currently absorbing to better share the perspective that we think is missed or lost in some of those conclusions.

422     Patrick...?

423     MR. GRIERSON:  Thank you.

424     Clearly, to your earlier point, radio revenues have been strong.  We benefit from an extraordinary economy, great consumer confidence, and some of the struggles of conventional television.  We even had pressure on availabilities which has also driven the prices up.

425     In short, we have enjoyed the benefit of a very positive cycle.

426     Although clients and agencies tell us, of interest anecdotally, that their Ad Spend is now going to grow more slowly than it has in the past few years, though certainly not in new media.

427     And to your point, is radio a silo unto itself?  Clearly not.

428     From an advertising perspective one tends to approach it from a media‑neutral perspective, that is to say:  Where are my primary consumers, which medium are they using and therefore how do I best reach them.  To suggest that there is a radio budget would be ludicrous actually.


429     Ad Spend will find all manners of ways to follow the changing media consumptions and habits of all consumers.  To understand where media really is going, one has to watch the consumers.  So no, clearly we have seen the likes of Proctor and Gamble, and many others, announce cuts in conventional television to support new media initiatives.

430     So I think that responds fairly directly to your question.

431     THE CHAIRPERSON:  Yes, it does.

432     I know in the past the Commission has not taken the view that it is complementary rather than a substitute and in a number of decisions has looked at the entire advertising market, the Competition Bureau frequently tells us that it is a market unto itself.  So I'm interested to get your views on that.

433     So I assume that ‑‑ well, let me not assume, let me ask the question:  Their recommendation on LMAs and LSAs, which is that they be subjected to a merger analysis prior to the Commission making a decision on them, is that a position you agree with?

434     MR. O'FARRELL:  Because it flows from the wrong assumption we don't.

435     THE CHAIRPERSON:  Would you like to comment on that, Mr. Grierson?

436     MR. GRIERSON:  Certainly.


437     Yes, I believe LSAs can have a very positive effect on radio and can enable us to present the medium more effectively against other media and make the process easier for the buying community.

438     Radio classically is a difficult and time‑intensive medium to purchase, which from an advertising perspective makes it a difficult one to recommend.  If in fact we can streamline their process for them, which cluster selling and LSAs have been enabled us to do, or did enable us to do, then clearly it does have a positive impact.

439     THE CHAIRPERSON:  Right.  But their position I think is, I guess flowing from the view that the advertiser is the customer in the relevant market and the relevant market is radio broadcasting in that community, that where an LMA or LSA is proposed, before the Commission approve it it allow merger analysis to be done in the classic form in order to determine whether there is a limitation of competition for the customer, the advertiser in this case, prior to the Commission making a decision and then to make its decision based on either accepting that or overriding that view expressly in its decision, as I take it is their proposal.


440     I don't think they are appearing, but they will have an opportunity to file comments at the end if they wish to bases on what goes on in the record.

441     So I assume that your answer is that you don't agree with that as an approach?

442     MR. MAHEU:  Mr. Chair, I can certainly from a radio broadcaster's perspective, agree with Mr. O'Farrell's comment that the Competition Bureau ‑‑ it flows from the wrong assumption.

443     You know, we operate, Newcap operates in some of the smallest markets and some of the largest markets in Canada.  I have been in the business 27 years and I have made lots of sales calls, as I know this room full of my colleagues have as well, and I would suggest that you would get the same answer from any radio broadcaster, that when we are talking to clients and customers that we depend 100 percent of our revenue upon, I would suggest that 99.99 percent of them will talk to you in terms of their advertising budget.


444     We never talk about radio budgets, we always talk about advertising budgets, and we compete for advertising with every other media, especially in smaller markets where there is the one local newspaper and maybe a local television station and a couple of radio stations.  We are competing against those and outdoor.

445     So we are not competing for share of radio budgets as the Competition Bureau would seem to suggest, we are competing for advertising dollars and we are trying wherever we can to increase our share and to be competitive with media rivals who bring a much larger, more consolidated reach and critical mass to the table.  That's where it's difficult for some of the smaller markets and smaller broadcasters to get their fair share of advertising budgets.

446     So, quite clearly, radio is in the business of competing for advertising dollars, not radio budgets.  That is the reality that is going on out there in every market in Canada.

447     M. PARISIEN : Monsieur le Président, si nous lisons le mémoire du Commissaire à la Concurrence jusqu'au bout, c'est assez intéressant de voir qu'il supporte la position de l'ACR sur l'assouplissement des règles que nous avons soumises dans notre mémoire afin que nous puissions mieux compétitionner contre les autres médias, qui, eux, ne sont pas réglementés.


448     Donc, ce que nous avons dit ici, c'est que nous ne sommes pas d'accord avec leur définition du mot * marché +, mais la réalité, ils la reconnaissent au même point que nous, que nous compétitionnons dans les marchés locaux ou non, toujours contre d'autres médias qui sont moins réglementés.

449     THE CHAIRPERSON:  Merci.

450     We will take a break now.

451     Nous reprendrons dans 15 minutes.  We will resume in 15 minutes.

‑‑‑ Upon recessing at 1106 / Suspension à 1106

‑‑‑ Upon resuming at 1127 / Reprise à 1127

452     THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

‑‑‑ Pause

453     THE CHAIRPERSON:  Just to finish off the line of questioning before passing it to my colleague Madame Noël, Mr. O'Farrell and ladies and gentlemen, as you know, in the Competition Bureau brief, in Appendix A, where they refer to radio market definition in other jurisdictions, they point to the U.S., Australia and the U.K., in each of which they show that the radio advertising market is seen as a separate product market.


454     I raise it for your comment but also for the fact that going down into the future this may be something that you are going to have to take account of in your submissions here and elsewhere.

455     So I don't know whether you have a comment at this point or you simply want to note that.

456     MR. O'FARRELL : I think we stand by our earlier comments but perhaps Mr. Merson would like to add a few additional views.

457     MR. MERSON:  Just a quick take on LSAs and the level of consolidation.  Again, you know, it is a broad economic view of the situation and what we were trying to impart is the difficulty of competing in smaller markets where ‑‑

458     THE CHAIRPERSON:  Excuse me, Mr. Merson, this isn't so much of that as it is on the definition of the radio advertising market as being a separate market from other media.

459     As I say, the Commission, in its request typically when there is a new application, we ask where the impact is going to be and we include print and television and other media.  That has been our practice.

460     In these other jurisdictions, the Competition Bureau is pointing out they don't look at it that way.  They basically take radio advertising as the sole market ‑‑


461     MR. MERSON:  Yes.

462     THE CHAIRPERSON:  ‑‑ for purposes of doing competition law analysis and it was only to note that point because I think not so much perhaps with us as going forward you are probably going to be confronted by that same point again.

463     MR. MERSON:  Well advised, thank you.

464     THE CHAIRPERSON:  Yes.

465     MR. O'FARRELL : Mr. Grierson, I think that you have some comment to add.

466     MR. GRIERSON:  Yes.  Frankly, if somebody suggested to me ‑‑ at the risk of sounding slightly facetious, anyone from the Competition Bureau could come with us on calls on the street and they would find rather quickly that we were competing head‑to‑head with almost every medium for dollars from advertisers.

467     THE CHAIRPERSON:  Well, perhaps you will invite them and they will accept your invitation.

‑‑‑ Laughter / Rires


468     MR. O'FARRELL : Well, we have invited them to have, as I mentioned earlier, an information session with a view to exchanging information not only on the current practices but on the shifting circumstances that we see and hopefully that will occur and it will produce a positive and useful outcome.

469     THE CHAIRPERSON:  Thank you.

470     Madame Noël.

471     COMMISSIONER NOËL:  I thought you were going on for more time than that.

‑‑‑ Laughter / Rires

472     THE CHAIRPERSON:  Surprise!

‑‑‑ Laughter / Rires

473     COMMISSIONER NOËL:  I thought you still have a long ‑‑ I am sorry, it is okay.

474     Alors, bonjour, mesdames et messieurs du panel.  Vous avez été questionnés, je pense, à fond par le Président du Conseil sur un certain nombre de sujets, et je n'ai pas l'intention de revenir sur ces questions‑là en français.  En fait, je vais plutôt aborder avec vous des questions plus spécifiques qui se rapportent au marché francophone.

475     Alors, nous allons parler, dans un premier temps, de la rentabilité * relative +, pour utiliser ce qualificatif‑là, de la radio de langue française par rapport à la radio de langue anglaise.

476     Nous allons parler de la musique vocale de langue française, des montages, de la nouvelle musique et des artistes de la relève.


477     Nous allons aborder la contribution au développement des talents canadiens, la diversité de la musique, le contenu canadien, les mesures de surveillance des obligations réglementaires.

478     Nous allons parler des bénéficiaires des contributions annuelles au développement des talents canadiens, aux bénéfices découlant des transactions.

479     Nous allons également parler de la promotion des artistes, le coût, et du reflet de la diversité culturelle, et nous allons aborder brièvement la question de la création d'un fonds de soutien à la production de nouvelles et d'information.

480     Finalement, nous allons aborder la question des fonds MUSICACTION et RADIOSTAR.

481     Si on parle de rentabilité... et peut‑être que la question devrait s'adresser plus particulièrement à monsieur Parisien, bien que, dans son cas, on pense que les stations affichent une assez bonne rentabilité, mais peut‑être aussi madame Randall du réseau de Cogeco.

482     Qu'est‑ce que le CRTC pourrait faire pour améliorer la rentabilité des stations de langue française?

483     M. O'FARRELL : Alors, Jacques, si tu veux commencer, et, Pierre‑Louis, si tu veux enchaîner.


484     M. PARISIEN : Bien, faisons un survol du contexte pour peut‑être, après ça, conclure sur certaines options.

485     Les revenus des marchés francophones sont en moindre croissance année après année que les revenus des marchés anglophones.

486     Dans le marché francophone du Québec, il y a aussi plus de petits marchés desservis par des stations proportionnellement que dans le reste du Canada, donc, moins de stations pour amortir les coûts fixes.

487     Vous avez vu dans toutes les statistiques qui ont été déposées au Conseil que le BAII pour l'année 2005 se situe aux alentours de 11.6 pour cent, ce qui est la moitié de ce qu'il est pour le Canada anglais.

488     Un des problèmes dans le milieu des francophones, c'est la difficulté de se distinguer sur le plan musical, et cette différentiation a un coût.


489     Dans les marchés francophones, la seule façon de se distinguer, à cause du problème musical, c'est par l'animation vocale, par le contenu vocal, et dans les marchés francophones ‑‑ là aussi, il y a des chiffres qui ont été déposés au Conseil ‑‑ les dépenses sont de l'ordre de 31 pour cent des revenus, alors que les dépenses équivalentes dans le marché anglophone sont de 15 pour cent des revenus.

490     Là, je parle des services, je parle de l'humour, je parle de tout ce qui n'est pas musique.

491     En fait, c'est que la distinction culturelle, les différences culturelles ont un coût, et le système québécois, qui aussi a sa propre culture, qui est enrobé d'un star système différent, un star système réel... et n'oubliez pas, on fait de la radio pour les gens, on fait de la radio pour l'histoire, donc, il faut se connecter sur ce star système là.

492     La relation avec l'auditoire, avec les artistes, ce sont tous des coûts additionnels que nous vivons au Québec, petit marché comme gros marché, et ça fait que notre rendement financier est ce que vous avez constaté.

493     CONSEILLÈRE NOËL : Vous parlez aussi de partage dans les marchés bilingues.  Dans les marchés bilingues, vous avez parlé de partage d'auditoire avec les stations anglophones.

494     Pouvez‑vous élaborer un peu plus là‑dessus et voir qu'est‑ce que c'est qu'on pourrait faire pour régler ce problème‑là?


495     M. PARISIEN : Oui.  Ce que nous proposons que vous pourriez faire, c'est de maintenir la réglementation qui est en place présentement, qu'on appelle communément ou cavalièrement le hit/non‑hit là, qui fait que les stations francophones limitrophes à un territoire anglophone ou bilingue ont un minimum d'avantages compétitifs sur les stations anglophones.

496     D'ailleurs, les trois diffuseurs francophones du Québec ‑‑ Corus, Cogeco et Astral ‑‑ dans le mémoire de l'ACR, demandent que ça soit maintenu.

497     Vous avez aussi... on a déposé des chiffres éloquents à l'appui du glissement de l'auditoire dans les marchés de Gatineau vers les stations d'Ottawa et dans le marché de Montréal vers les stations anglophones de Montréal, et ça se produit depuis plusieurs années.  Cette érosion‑là est principalement due au profil jeune qui veut de la musique anglophone.

498     Donc, la moindre protection pour les stations établies, ça serait de maintenir cette réglementation‑là.

499     CONSEILLÈRE NOËL : D'accord.


500     Maintenant, certains intervenants soutiennent que les radios francophones n'obtiennent pas leur juste part des revenus publicitaires parce que les décisions d'investissement des grosses entreprises se prennent soit à Toronto, soit aux États‑Unis.

501     Avez‑vous des commentaires à cet effet‑là?

502     M. PARISIEN : Bien, j'aurais pensé avant tout que les intervenants auraient mentionné que dans les plus petits marchés, donc, à l'exclusion de Montréal, Québec et Ottawa, un des problèmes que les radiodiffuseurs ont, c'est l'inventaire de télévision, qui est un inventaire qui est très abondant et qui est vendu à des prix très compétitifs ‑‑ je parle d'inventaire local ‑‑ très compétitifs à la radio locale dans les marchés francophones.

503     CONSEILLÈRE NOËL : Si je comprends bien...

504     M. PARISIEN : J'aurais vu ça plus comme une raison de la situation que ce que vous avez mentionné.

505     CONSEILLÈRE NOËL : Si je comprends bien ‑‑ vous l'avez déjà dit, d'ailleurs, un peu plus tôt ‑‑ vous n'êtes pas d'accord avec les conclusions du directeur de la Concurrence...

506     M. PARISIEN : C'est une habitude que j'ai développé...

507     CONSEILLÈRE NOËL : ...à l'effet que les marchés publicitaires sont...


508     M. PARISIEN : ...au cours des années.

‑‑‑ Rires / Laughter

509     CONSEILLÈRE NOËL : Hein?

510     M. PARISIEN : C'est une habitude que j'ai développé au cours des années.

‑‑‑ Rires / Laughter

511     M. PARISIEN : Je n'ai pas dit une expertise.

‑‑‑ Rires / Laughter

512     CONSEILLÈRE NOËL : Maintenant, l'ADISQ, elle, prétend, via une étude qu'elle a fait faire, que la moins grande rentabilité de la radio de langue française s'explique par un accroissement notable des frais généraux et d'administration.

513     Est‑ce que vous pourriez nous expliquer pourquoi ces frais généraux et d'administration sont plus élevés, en quoi ils consistent, et pourquoi ils le sont?

514     M. PARISIEN : Ce qu'on a... à défaut de me répéter, les frais généraux et d'administration sont plus élevés tout simplement parce qu'il y a un nombre plus petit de marchés plus petits, donc, moins de stations performantes sur lesquelles amortir les dépenses.  C'est, a priori, la raison principale.


515     Il y a aussi le coût de faire de la programmation francophone et le coût de se différencier en du contenu verbal, qui est nettement supérieur à ce qu'il est dans les marchés canadiens anglais.

516     CONSEILLÈRE NOËL : Oui, mais ça...

517     M. PARISIEN : Alors, comme raison des deux...

518     CONSEILLÈRE NOËL : Ça, c'est des dépenses de programmation.

519     M. PARISIEN : Oui, mais il n'y a pas juste programmation.  Il y a toute sorte d'autres coûts aussi qui va là qu'on ne met pas en programmation, mais qui sont rattachés à notre façon de faire les choses et à notre façon de mettre en ondes un produit qui se tient, que ça soit des coûts techniques, que ça soit des coûts de réseau, des choses comme ça.

520     M. SMITH : Si je peux me permettre, d'ailleurs, Madame la Conseillère, ce qu'on observe si on prend juste les stations de langue française, les stations FM de langue française, en '98, avant l'entrée en vigueur de la nouvelle politique, si on fait un exercice par station, en moyenne, les stations de langue française, leur budget de dépenses en programmation était moins élevé que les stations FM de langue anglaise.


521     Or, au cours des cinq dernières années, depuis 2001, systématiquement, les dépenses en programmes sont plus élevées du côté des stations de langue française que du côté des stations de langue anglaise et la part des revenus qui est affectée aux dépenses de programmation au FM est de l'ordre de 20 pour cent plus élevée du côté francophone que du côté anglophone.

522     CONSEILLÈRE NOËL:  Que du côté anglophone.

523     M. PARISIEN:  Et aussi, vous constaterez que le même phénomène se reproduit en télévision quand on compare les coûts généraux des deux marchés.

524     CONSEILLÈRE NOËL:  Merci.   Alors, maintenant, on va parler de musique vocale de langue française, la fameuse MVLF.

525     Vous ne remettez pas en cause dans votre mémoire les pourcentages établis, soit le 65 pour cent et le 55 pour cent, mais vous soutenez que:


*Ils ont des incidences négatives, indues et non souhaitées sur la diversité des formules musicales à la radio de langue française et la diversité des pièces musicales de nouveaux artistes francophones qu'elle est en mesure de diffuser.+

526     Pouvez‑vous nous expliquer la corrélation entre les quotas et les incidences négatives sur la diversité des pièces musicales et des nouveaux artistes?

527     M. O'FARRELL:  Madame la conseillère, je vais demander à Pierre‑Louis Smith de prendre la question, mais j'aimerais commencer en vous disant que, à prime abord, il faut s'arrêter deux instants et se rappeler qu'au Québec ou du côté de la radio de langue française, il y a quand même ces deux quotas et quand on vous a montré un tableau tout à l'heure pendant notre présentation orale, ça dénote assez clairement que le Canada et surtout pour ce qui est du secteur de langue française, excède toute autre juridiction en matière de contenu et en matière de contribution financière aussi à l'industrie.

528     Ce qui fait que si vous regardez le nombre de formats musicaux disponibles aux États‑Unis aujourd'hui, vous en avez 50, du côté du Canada anglais, vous en avez 17 et du côté du Québec, vous en avez cinq.


529     Alors, je pense qu'il y a une certaine conclusion à tirer par rapport à la réglementation et au nombre de formats qui contraignent, qui dirigent le nombre de formats musicaux en place.

530     Pierre‑Louis?

531     M. SMITH:  Et j'ajouterais, des cinq formats musicaux qui sont disponibles au Québec, il y en a deux, le jazz et le classique, qui n'ont rien à voir avec la réglementation en matière de musique vocale de langue française.

532     C'est aussi une question... au Québec, on s'est développé des approches de formats qui sont plus hybrides et qui ont fait en sorte qu'on a concentré vers le centre.

533     Et, en réalité, il y a deux formats réellement qui existent, ce qu'on appelle le *pop adulte+ qui est l'équivalent adulte contemporain et le *pop rock+, qui est l'équivalent, si vous voulez, de ce qu'on appelle communément *top forty+ et qui se décline sur le FM en réseau pour la plupart maintenant dans les principaux marchés du Québec.  C'est aussi relié au niveau, je vous dirais, de disponibilité du produit francophone.


534     On dénombre, bon an, mal an, environ 300 disques de musique vocale de langue française disponible sur le marché ou commercialisé sur le marché québécois, dont 200 environ produits au Québec, de langue française produits au Québec.

535     Or, ce que le public souhaite entendre d'abord et avant tout lorsqu'ils écoutent de la musique vocale de langue française, c'est du produit québécois.  Ça n'a pas toujours été le cas.

536     Au moment de l'élaboration des quotas dans les années soixante‑dix, l'alimentation des produits francophones était nettement... provenait nettement du produit européen, du produit français notamment et le goût de la population allait vers, encore une fois lorsqu'ils voulaient écouter de la musique en langue française, allait essentiellement du produit européen.

537     Trente ans plus tard, c'est une situation qui est diamétralement opposée où en moyenne, maintenant, on diffuse 80 pour cent de la musique vocale de langue française et québécoise et la presque totalité des nouvelles pièces diffusées à l'antenne sont aussi québécoises.


538     Alors, dès lors, quand il y a ces deux formats musicaux et une concentration sur le produit francophone d'ici, c'est évident que le niveau élevé du quota a un impact sur la capacité des différentes stations et des différents réseaux de se démarquer les uns des autres.

539     Ceci étant dit, je pense que Lilianne a des analyses sur le fait que dans les formats pop adultes et dans les formats pop rock il y a quand même une très grande diversité dans ce qui est des pièces qui sont diffusées selon le palmarès.

540     Lilianne.

541     Mme RANDALL:  Si on regarde toute la quantité de produits québécois qu'on reçoit à tous les jours... moi, je suis directrice musicale dans une station de radio adulte contemporain, ça fait 20 ans que je fais ça et puis je m'aperçois que de plus en plus, on nous achemine énormément de produits québécois.  À chaque semaine on a une quantité énorme de produits à écouter.

542     Il y a des périodes de l'année, le printemps et l'automne qui sont des grosses périodes, c'est la période où l'on reçoit le plus de... on est le plus sollicité pour entrer des nouveaux artistes ou des artistes déjà établis.


543     Ce que j'ai fait comme analyse, on réussit quand même avec tout ce qui sort comme produits, à faire une diversité parmi les formats qui existent au Québec et si on regarde, il y a la revue palmarès qui sort à toutes les semaines et qui représente...

544     Il y a une page qui représente un top 20 pop rock et un top 20 pop adulte qui se retrouvent à être les 20 chansons les plus diffusées dans quand même deux formats différents.  On s'aperçoit qu'il y a seulement que trois chansons qui se retrouvent à jouer dans ces mêmes formats‑là.  Tout le reste des 20 chansons, c'est toutes des chansons que les formats de radio pop rock et pop adulte ont développé individuellement.

545     Alors, je pense que la radio présentement fait quand même un grand effort et même si je vous montrais la liste de ceux qui se retrouvent dans le top 20, il y a quand même une bonne partie de ces artistes‑là qui n'étaient pas là l'année dernière, qui n'étaient pas là il y a trois ans.

546     Alors, la radio fait quand même, pour ce qui est du produit québécois, quand même une bonne variété, une bonne diversité à l'intérieur de leurs formats spécifiques et il ne faut pas oublier en tout cas qui est une... les radios sont là pour faire plaisir à un auditoire et on n'est pas là pour faire plaisir à l'industrie.

547     Mais malgré tout ça, on réussit quand même à faire développer beaucoup de nouveaux talents.


548     M. SMITH:  Non seulement ça, mais il faut évaluer la diversité musicale offerte dans le marché francophone, non seulement à travers l'offre de la radio commerciale, mais aussi à travers l'offre de la radio publique et des radios communautaires et universitaires et par le travail qui est fait.

549     CONSEILLÈRE NOËL:  Et ethnique.

550     M. SMITH:  Et ethnique, effectivement, vous avez raison.  Quand vous regardez la complémentarité de l'offre de Espace Musique, par exemple, Pierre Lapointe, pour ne citer que cet exemple‑là de son premier compact ou son premier DC,  a vendu plus de 200 000 copies de ce compact‑là en ayant une visibilité illimitée à la radio... à la radio commerciale, ce qui n'est pas le cas pour son deuxième compact.

551     Mais par le biais de la diffusion sur Espace Musique, il est allé chercher un auditoire intéressant et a réussi à faire des ventes qui sont très significatives.

552     La radio universitaire a aussi contribué à permettre à des groupes comme, par exemple, les Trois Accords qui ont débuté leur carrière à la radio universitaire et qui, par la suite, ont été repris par la radio commerciale.


553     Et si ma mémoire est fidèle, à peu près cinq ou six simples de l'Album des Trois Accords ou leur premier long‑jeu... long‑jeu, ça ne se dit plus, mais son premier compact, qui se sont retrouvés en rotation à un moment donné ou à un autre.

554     CONSEILLÈRE NOËL:  J'ai remarqué dans les tableaux que vous nous avez soumis dans votre rapport, dans votre commentaire je devrais dire, que vous classez ‑‑ parlons de choix, par exemple, qui se voulait une radio de rock alternatif, c'est du moins ce que l'on nous a dit pendant certaines audiences ‑‑ et vous la classez dans la même catégorie que le réseau énergie.

555     Est‑ce que c'est parce qu'ils ne font pas exclusivement du rock alternatif ou est‑ce qu'ils ne sont pas capables de se différencier suffisamment parce qu'il n'y a pas assez de répertoire de rock alternatif ou si c'est une question d'auditoire?

556     Je me pose la question, là, parce qu'on l'avait identifiée assez abondamment comme étant une espèce... la radio X, la radio rebelle où on diffusait une musique beaucoup plus agressive que le baroque mettons.

‑‑‑ Rires / Laughter

557     M. SMITH:  C'est un euphémisme, ça.


558     CONSEILLÈRE NOËL:  Pouvez‑vous m'expliquer pourquoi vous la catégorisez dans votre mémoire comme dans la même catégorie que Énergie, par exemple?

559     M. SMITH:  C'est plus dans la mesure où c'est une formule qui mise sur les succès, tout comme Énergie et CKOI vont miser sur les succès populaires.  Ceci dit, effectivement, soit une approche qui est orientée plus vers le rock et plus particulièrement sur ce qu'on a défini comme étant le rock alternatif qui, de plus en plus, devient un peu... un peu mainstream parce qu'il y a une espèce de créneau où des croisements, si vous voulez, avec la musique rock plus populaire, si vous voulez.

560     Mais ceci étant dit, et j'y vais de mémoire, à ma connaissance, la situation de choix était de recourir beaucoup à de la production qui émanait de la station; c'est‑à‑dire que la station encourageait spécifiquement un produit.

561     CONSEILLÈRE NOËL:  Certains artistes.


562     M. SMITH:  Certains artistes et avec une production où il y avait... il y avait un lien.  Il y a très peu de stations de radios qui ont des studios de production pour produire de la musique et c'était une des problématiques qui était reliée au format spécifique de CHOI.

563     Et je vous dirais que la formule de CHOI était à la fois une hybride musicalement plus rock, mais également misant énormément sur une formule à prédominance verbale aux heures de grande écoute où la station cherchait à solliciter les auditoires en grand nombre.

564     CONSEILLÈRE NOËL:  Est‑ce que c'est parce qu'une formule de rock alternatif pure musicale là, n'a pas de perspective de viabilité ou si c'est parce que l'inventaire de pièces n'est pas suffisant pour...

565     M. SMITH:  Bien, c'est un défi, madame Noël.  Le meilleur exemple, je pense, c'est les gens de Corus vont être devant vous demain ou mercredi, mais l'expérience de COOL‑FM, par exemple, à Montréal en est un bon exemple.

566     CONSEILLÈRE NOËL:  Qui a changé sa vocation, oui.


567     M. SMITH:  Qui a changé sa vocation, mais l'exemple... l'exemple est bon.  Cette station‑là, et je le sais parce que j'ai commencé ma carrière en radio à CLMF qui était l'ancêtre de COOL‑FM, était un format adulte contemporain à prédominance musique vocale de langue française et qui, malheureusement, traînait dans les cotes d'écoute à chaque année et à chaque sondage.

568     Et lorsque... d'abord, les gens de Métromédia et, par la suite, de Corus ont racheté cette station‑là, ils ont changé le format pour en faire un classique rock qui n'a pas fonctionné et après, un format modern rock ou rock alternatif et l'alimentation en produits étant limitée dans la sphère francophone, il faut comprendre que parce que le public francophone québécois préfère le produit d'ici, on ne peut pas rencontrer l'exigence de 65 pour cent en se servant de l'ensemble de la sphère de productions en langue française, le produit français qui pourrait correspondre au produit alternatif, puis ce qui me vient en mémoire c'est des exemples comme... vous allez rire là, Beverié Noir ou Parabellum qui étaient des groupes dans les années quatre‑vingt qui étaient des groupes de rock alternatif en France n'ont jamais vraiment percé ici auprès de l'auditoire francophone.


569     Donc, vous devez travailler avec une sphère qui est beaucoup plus limitée et les parts d'écoute de la station COOL‑FM ne justifiaient pas les investissements qui ont été faits, qui ont entraîné le groupe Corus à demander un changement de format pour un format à prédominance verbale, le premier FM à prédominance verbale au Canada, à ma connaissance, et probablement même en Amérique du Nord.

570     M. O'FARRELL:  Madame la conseillère, si vous me permettez de revenir à l'essence de votre question, je pense que la réponse, c'est oui, en terme d'approvisionnement de produits, mais il nous est difficile quand même de vraiment traiter de la question à fond, devrais‑je dire, parce que ces informations‑là ne sont pas disponibles régulièrement ou d'une façon qui nous permet vraiment de savoir quel est le niveau de production du secteur du disque.

571     On se fie aux informations qui nous parviennent et puis je pense que Pierre‑Louis a dit qu'il y avait 200 albums québécois par année qui sont produits en français et ça, c'est toute catégorie de musique confondue.  On parle de country, on parle de jeunesse, on parle de classique.

572     Alors, ça laisse quoi finalement, comme bassin de produits à partir duquel bassin les radiodiffuseurs peuvent puiser pour alimenter leur programmation?

573     CONSEILLÈRE NOËL:  J'ai très bien lu votre tableau à cet effet‑là, monsieur O'Farrell.

574     M. O'FARRELL:  Merci.


575     CONSEILLÈRE NOËL:  Alors, ça m'amène, moi, à vous demander en quoi un système de prime... j'aimerais ça que vous nous décriviez un peu plus votre système de prime de 150 pour cent de musique vocale de langue française pourrait aider à régler ce problème‑là.

576     M. O'FARRELL:  Je vais laisser la parole à Pierre‑Louis et si Jacques veut enchaîner quant à la façon qu'on voit le modèle du système de prime fonctionner pour justement accroître la diversité.

577     Pierre‑Louis?

578     M. SMITH:  Le système de prime va accroître la diversité dans les formats qui existent... qui existent déjà.  C'est de donner la possibilité aux radiodiffuseurs de pouvoir mesurer leur degré de tolérance au risque, c'est‑à‑dire la diffusion de produits qui sont peu ou pas connus du public et, en fonction des différents formats ‑‑ je reviens à mon exemple de tout à l'heure ‑‑ dans le format pop rock, les stations diffusent un plus grand nombre de nouveautés, donc auront un incitatif à diffuser encore un nombre plus élevé de nouveautés sur leurs stations, sur leurs réseaux.


579     Et dans les formats pop adulte qui, par définition, s'adressent à un auditoire qui est plus âgé, donc en définition ou on peut s'attendre à ce qu'il soit moins réceptif à la nouveauté par des artistes qui sont peu ou pas connus, ça va leur donner un incitatif à en ajouter davantage, à en diffuser davantage et ce qui va faire en sorte que chaque réseau ou chaque station va trouver sa niche ou son niveau naturel d'utilisation de diffusion de produits francophones provenant de la relève.

580     CONSEILLÈRE NOËL:  Est‑ce que je peux vous demander maintenant, de commenter sur la proposition de l'ADISQ qui, elle, demande, afin de palier au manque de nouveautés que le CRTC impose un nouveau quota réglementaire, de nouveautés francophones de 40 pour cent aux grandes écoutes... aux heures de grande écoute ‑‑ excusez‑moi ‑‑ soit 40 pour cent de 55 pour cent et de 50 pour cent sur toute la semaine de radiodiffusion, soit 50 pour cent du 65 pour cent.

581     Mme RANDALL:  C'est que quand on... j'essaie de... je vais essayer de vous expliquer un peu quand on entre des nouveaux artistes de la relève dans une station de radio, ce qui arrive c'est qu'on ne peut pas entrer une grande quantité de nouveaux artistes de la relève, une trop grande quantité de nouveautés.


582     Ce qui arrive c'est que, normalement, quand on veut faire découvrir un nouvel artiste, on veut l'entourer de grands succès lors de la diffusion pour valoriser l'artiste.  Si on met une série de nouveaux artistes un en arrière de l'autre, ce qui peut arriver, c'est qu'on met en péril l'artiste parce que, là, il se retrouve à être dans un état un peu plus vulnérable parce qu'il est alentour de différents nouveaux artistes, de n'est pas une bonne façon pour valoriser un artiste.

583     Ce qu'on fait présentement souvent pour développer un nouvel artiste, on l'entoure... on le diffuse à l'intérieur de musique de grands succès, on le fait grandir.  À partir du moment que l'artiste devient un peu plus établi et reconnu de notre auditoire, là, on peut lui donner une plus grande rotation.

584     Mais c'est sûr que chaque format essaie de développer leurs propres nouveaux artistes, alors ce n'est pas qu'un même artiste, toutes les stations, tous les formats vont faire tourner sur ce nouvel artiste‑là.  Chaque format va développer ses propres artistes dans le domaine.


585     Le fait d'avoir un système de bonification nous permettrait lors de comité d'écoute. Lorsqu'on écoute de la musique, on peut écouter à peu près une dizaine de chansons, peut‑être même... il y a des semaines qu'on a peut‑être 30 chansons qu'on écoute, nouvelles.

586     Ce qui arrive, c'est que ces nouveaux artistes‑là de la relève sont insérés parmi tous les artistes déjà établis.  Alors, quand on vient à faire un choix d'entrer une nouvelle chanson, souvent on en rentre deux ou trois par semaine dans le format adulte contemporain que je m'occupe principalement puis même dans les top 40, je ne pense pas qu'il en rentre plus que cinq, six par semaine.

587     Alors, ces artistes‑là de la relève, ils se retrouvent jugés en même temps que tous les artistes établis quand on fait de l'écoute parce qu'on choisit la meilleure chanson qui serait disponible... que nos auditeurs aimeraient.

588     Si on fait un système de bonification, ce que ça nous permettrait, c'est de faire un comité d'écoute pour les artistes de la relève et on déterminerait dans les artistes de la relève qu'on écoute celui que, mettons cette fois‑ci, on va développer.


589     Mais c'est sûr que... je ne pense pas qu'on va se mettre à diffuser une quantité d'artistes de la relève pour augmenter nos quotas de musique anglophone.  Je ne crois pas qu'il y a aucune radio qui va faire ça, qui va se mettre dans une période de... dans un état vulnérable comme ça.

590     M. SMITH:  Si je peux me permettre de compléter, la proposition de l'ADISQ sur la question d'accroître la diversité musicale ou d'accroître la présence des artistes de la relève par le biais d'un quota, un des problèmes avec une approche comme celle‑là, c'est que les radiodiffuseurs ne sont pas... ne contrôlent pas le niveau de production de l'industrie, n'ont jamais contrôlé ce niveau‑là.

591     Or, il y a des périodes de l'année comme il vient de vous le mentionner où il y a des nouveaux artistes, où il y a des nouveaux disques qui rentrent à la station, il y a d'autres périodes de l'année où c'est plus tranquille.

592     On ne contrôle pas le moment de l'approvisionnement en produits et on ne contrôle pas le niveau d'une année sur l'autre de nouveaux artistes qui vont être développés par l'industrie du disque.


593     Donc, nous, on pense qu'une approche qui mise plus sur des mesures incitatives fait en sorte qu'on peut développer des artistes ou accroître la visibilité des artistes et fluctuer en fonction des périodes de l'année où on a de l'alimentation en nouveaux artistes et en nouveaux... en artistes de la relève, de façon à ce que la radio commerciale ne se mette pas en péril d'avoir à sur‑exposer le phénomène du burn des artistes de la relève alors que c'est important de les partir et de les encadrer proprement, de façon à bien développer leur carrière.

594     CONSEILLÈRE NOËL:  Maintenant, je vous ai écouté tout à l'heure nous dire que, bon, il y avait un certain nombre d'albums ou de CD qui étaient produits chaque année et que ce chiffre‑là comprenait un peu de tout ‑‑ de la musique classique, de la musique pour enfants ‑‑ je suppose que c'est des genres Annie Brocoli et compagnie auxquels vous faites référence.

595     Par contre, l'ADISQ, elle, nous dit qu'en 2005 il y a eu 299 albums d'artistes francophones québécois mis en marché pour une moyenne de 4 000 nouvelles pièces et que, de ce total, il y en a seulement 137 qui ont été diffusées et sur les 137 qui ont été diffusées, il y en a seulement 35 qui ont accaparé environ 70 pour cent du nombre de diffusions totales.

596     D'après l'ADISQ, l'offre est suffisante; d'après vous, quel serait votre commentaire à ce propos‑là?


597     M. O'FARRELL:  Je vais commencer, Pierre‑Louis, et enchaîne, s'il vous plaît.

598     Premièrement, je reviens au commentaire de tout à l'heure, tout simplement  pour vous rappeler que si on avait des informations annuellement disponibles sur tout ce qui s'appelle production du disque, catégoriser, ventiler pour qu'on puisse avoir des données prévisibles et certaines d'année en année, ça nous aiderait à faire certaines peut‑être projections pour l'avenir, basé peut‑être sur du *trending+ historique.

599     Malheureusement, on se fie aux informations qu'on a devant les yeux et quant aux questions que vous... la question que vous soulevez maintenant, je pense qu'il faut se rabattre sur la question de dire quel est l'univers à compter... compte tenu de l'année et du niveau de production que vous citez dans votre question, quel est l'univers disponible qui est adaptable et adapté à la radio commerciale dans les formats qui existent parce que, au fond, comme l'a dit, madame Randall tout à l'heure, la radio est au service de son consommateur, de son auditoire premièrement.


600     Donc, c'est sur cette base‑là qu'on dit : le niveau de production qui change d'année en année a une certaine incidence sur ce que la radio peut jouer dans ses formats musicaux.

601     Pierre‑Louis, veux‑tu enchaîner?

602     M. SMITH:  Oui, juste pour compléter ce que vient de dire Glenn, les données dont on dispose et on a regardé les données de Statistiques Canada qui ne remontent pas plus loin que 2003.

603     CONSEILLÈRE NOËL:  Deux mille trois (2003).

604     M. SMITH:  Et en 2003, ce que ça nous montre, c'est que dans le produit canadien de disques en langue française, il y aurait 205 albums qui auraient été produits, ça, tous genres confondus.

605     Maintenant, quand on regarde la nomenclature, la ventilation par genres musicaux et malheureusement, Statistiques Canada ne fait pas une ventilation linguistique, fais une ventilation canadiens versus étrangers, et ce qu'on voit c'est qu'en production canadienne en 2003, tout l'univers canadien, anglais et français, on aurait 300 albums qui se retrouvent dans le populaire et le rock.


606     Si on regarde la moyenne que... le ratio entre la production musicale de langue française et la production musicale de langue anglaise, c'est à peu près un ratio un tiers, deux tiers; deux tiers en langue anglaise et un tiers dans la langue française, ce qui fait en sorte qu'on aurait à peu près 100 albums qui correspondraient sensiblement à ce qui...

607     CONSEILLÈRE NOËL:  Sans *s+, 100, s'il vous plaît.

608     M. SMITH:  Pardon?

609     CONSEILLÈRE NOËL:  Sans *s+, le 100, 100 albums.

610     M. SMITH:  Ça m'arrive de faire des erreurs comme ça, alors 100 albums.

611     CONSEILLÈRE NOËL:  C'est comme la compagnie des cent associés ça.

612     M. SMITH:  Cent albums et... maintenant, les compagnies de risque, de la façon dont ça fonctionne, c'est qu'ils envoient des... ils ont un plan de marketing pour chaque album ou chaque compact qui est publié et, généralement, en moyenne, c'est deux à trois chansons par album qui est commercialisé.

613     La façon dont ça fonctionne maintenant, c'est que les compagnies de disques envoient des fichiers électroniques aux stations de radio, même pas le compact, ils envoient le fichier.  Donc, vous devez jouer l'ordre du plan marketing qui a été... qui a été prévu par les compagnies de disques.


614     Ce qui fait que la proportion de diffusion si vous reprenez votre 137 pièces distinctes diffusées et établir sur un ratio d'à peu près, disons, 300... 300 chansons de langue française correspondant aux formats identifiés de musique populaire et de rock, ce qui nous donne une proportion qui est quand même assez élevée de diffusion de pièces différentes.

615     Et ça, c'est à mettre en relief par rapport au fait qu'il y a plus de 4 400 albums de langue anglaise, canadiens et étrangers confondus, qui sont distribués et commercialisés au Canada.

616     Mais pour les stations de langue française de ce 4 430 quelque chose albums, ils n'ont de plage pour diffuser ce matériel‑là que 35 pour cent de leur programmation.

617     CONSEILLÈRE NOËL:  Que 35 pour cent.  Maintenant, est‑ce que vous pensez que... j'ai entendu... j'ai entendu les commentaires de monsieur O'Farrell qui disait qu'on n'avait pas l'information pertinente pour...

618     Alors, est‑ce qu'il n'y aurait pas lieu d'avoir une plus grande collaboration entre l'industrie de la radio et l'industrie de la musique, spécialement au Québec où le marché est assez... est assez serré.


619     M. O'FARRELL:  Oui, on le souhaiterait, mais vous savez mieux que nous les informations qui sont déposées annuellement par le Conseil sont déposées en vertu de la réglementation du Conseil et il n'y a aucune obligation semblable qui est imposée aux compagnies qui oeuvrent dans le secteur de l'enregistrement sonore et ce n'est pas qu'on leur en souhaite des réglementations bien que ça peut être une bien bonne chose, comme ça peut avoir ses... disons, ses avantages et ses désavantages.

620     Mais le fait est que l'information qui tient du secteur de la radio est complètement devant le public pour commentaires et observations.  D'ailleurs, vous avez soulevé u ne question tout à l'heure par rapport à un commentaire de l'ADISQ sur une catégorie de dépenses.

621     On ne connaît pas leurs dépenses, on ne connaît pas la structure de leur business, on ne sait pas de quelle façon ces informations‑là sont rapportées et on ne voit pas d'une façon pertinente ou régulière.  Donc, ça fait en sorte que le débat n'est pas nécessairement facile.

622     Est‑ce qu'il y aurait possibilité d'avoir une plus grande collaboration?  On le souhaiterait, volontiers on accepterait de regarder toutes ces informations‑là pour mieux se renseigner, mais ça ne nous est pas disponible, malheureusement.


623     CONSEILLÈRE NOËL:  Si on parlait de la promotion, est‑ce que vous pensez que l'industrie de la musique fait une promotion efficace des nouveautés?

624     M. O'FARRELL:  Pierre‑Louis, veux‑tu enchaîner avec Lilianne?

625     Mme RANDALL:  Oui, je pense que l'industrie du disque c'est une bonne promotion de leurs nouveaux artistes.  Quand ils ont un nouvel artiste de la relève, ils ont des gens qu'ils engagent qui viennent faire le tour des postes de radio, qui nous donnent un peu un compte rendu de qui est ce nouvel artiste puis quelle sorte de musique qu'ils diffusent.

626     C'est sûr que quand ils viennent faire la promotion, ils savent le format de station que nous sommes, alors ils nous proposent souvent des artistes qui vont être...

627     CONSEILLÈRE NOËL:  En fonction de votre genre musical?

628     Mme RANDALL:  Exactement.

629     CONSEILLÈRE NOËL:  D'accord.


630     M. SMITH:  Et j'ajouterais, si vous me le permettez, que l'orientation qu'a pris Fonds Radio Star depuis les quatre dernières années en mettant une emphase principale sur les artistes de la relève fait en sorte de contribuer par une contribution financière à l'effort de commercialisation nationale à l'effort de promotion de l'industrie de la musique... de la musique francophone.

631     En moyenne, 73 pour cent des sommes versées par Fonds Radio Star depuis la création du fonds vont vers les premier ou deuxième albums produits par des artistes de la relève francophone.

632     M. PARISIEN:  Si vous permettez, madame Noël, je voudrais juste compléter avec des statistiques parce que j'avais prévu la question.


633     Alors, les statistiques que je vous donne sont ceux d'Astral, mais je suis convaincu que CHUM, Rogers et tous les autres joueurs à la table ont des chiffres aussi éloquents que ça, mais dans la dernière année, strictement dans le marché francophone du Québec, on a diffusé 2 665 heures d'entrevues avec des artistes canadiens‑français dans le cadre de la programmation de leurs spectacles, où tu vas jouer, qu'est‑ce que tu vas jouer, quand puis quelle ville puis comment puis combien ça coûte, et caetera, 1 800 heures d'entrevues avec des artistes canadiens dans le cadre de la promotion de leur nouvel album, 1 800 heures.  Ensuite, on a diffusé 1 123 heures de performance en direct ou d'entrevues approfondies de spectacles de l'artiste en question, pour un total de 5 600 heures, soit plus de 105 heures par semaine, juste pour nous autres.

634     Si j'additionnais tout le monde ici à la table là, ça serait impressionnant comme chiffres.  C'est juste pour votre gouverne.

635     CONSEILLÈRE NOËL:  Cent cinq heures sur 126 heures?

636     M. PARISIEN:  Cent cinq heures par semaine, oui; 105 heures par semaine.

637     CONSEILLÈRE NOËL:  C'est parce que vous additionnez toutes vos stations?

638     M. PARISIEN:  Bien, évidemment; ce n'est jamais le même artiste.

639     CONSEILLÈRE NOËL:  Oui.  O.k.   Non, non; c'est ça parce que autrement, 105 heures sur 126 heures, il ne vous resterait pas grand temps pour faire d'autres choses.


640     M. PARISIEN:  II faut.  Il faut additionner... il faut additionner toutes les stations parce que ce n'est jamais les mêmes artistes, ce n'est jamais la même semaine, ce n'est jamais le même contenu.  Mais si les artistes avaient à payer pour cette promotion‑là ou s'ils le considéraient dans les bénéfices qu'ils reçoivent de l'industrie et de la radio, c'est considérable.

641     CONSEILLÈRE NOËL:  Écoutez, j'en suis parfaitement consciente.  On écoute la radio en... moi, je suis souvent sur la route entre Montréal, Ottawa, Montréal et Sherbrooke puis des fois on a l'impression d'avoir... d'écouter des infos... de l'info publicité, hein!  C'est un petit peu... comment je dirais, self serving, mais c'est ça.  C'est ça de la promotion.

642     Maintenant, si on abordait un autre sujet, Corus a soumis une proposition relative au contenu canadien.

643     Elle propose qu'un propriétaire qui exploite plusieurs stations dans un même marché puisse répartir son quota puis, là, je parle de musique canadienne, mais je veux voir si on pourrait faire une transposition pour la musique vocale de langue française.

644     Ils proposent que le quota de 35 pour cent de contenu canadien pour un propriétaire qui a plusieurs stations dans un même marché soit réparti entre ses stations, avec un minimum de 15 pour cent pour chacune des stations.  C'est une proposition que Corus a lancée.


645     Maintenant, est‑ce que vous pensez que ce genre de proposition pourrait avoir... pourrait avoir des résultats heureux si on l'appliquait ou on le transposait dans le cadre de la musique vocale de langue française?

646     M. O'FARRELL:  Madame la conseillère, on pourrait, effectivement, étudier la chose et vous soumettre nos commentaires par écrit en... qu'est‑ce qu'on a dit, 12 points tout à l'heure?

647     CONSEILLÈRE NOËL:  Oui.

648     M. O'FARRELL:  Pour les commentaires avant la fin mai?

649     CONSEILLÈRE NOËL:  Double interligne hein!

650     M. O'FARRELL:  Double interligne, sur la question.  Alors, ça va être un oui ou un non, tiens.  Mais on vous reviendrait dans nos commentaires par écrit, si ça vous convient.

651     CONSEILLÈRE NOËL:  Merci.  Maintenant, il y a certains intervenants qui ont demandé d'exiger que les stations de langue anglaise diffusent une ou deux chansons en français sur un total de... pour un total d'à peu près 10 par journée de radiodiffusion.

652     Est‑ce que vous avez des commentaires à faire là‑dessus?


653     M. O'FARRELL:  Je pense qu'on va vous répondre dans notre mémoire à déposer parce qu'on n'a pas de commentaire, on n'a pas discuté de la question, madame la conseillère.

654     MR. BRAIDE:  I think you could have a different answer if it was an English broadcaster or French broadcasters responded to that question.

655     CONSEILLÈRE NOËL:  Gosh!  You forgot your French, Mr. Braide.

656     M. BRAIDE:  Vous pouvez avoir deux options : une pour les anglophones, une autre pour les francophones.

657     CONSEILLÈRE NOËL:  Maintenant, pensez‑vous que lorsqu'on diffuse des nouveautés, on devrait aussi diffuser des nouveautés, puis là je parle aux francophones, des nouveautés en langue anglaise?

658     M. O'FARRELL:  Encore une fois, madame la conseillère, malheureusement, ces questions qui sont très pertinentes, nous ne les avons pas abordées, mais nous aimerions y revenir par écrit pour répondre succinctement à vos questions et sur celle‑là aussi.

659     CONSEILLÈRE NOËL:  J'en ai encore une autre; peut‑être que vous allez me donner la même réponse.


660     Il y a une intervenante qui s'appelle *L'ANIM+, et je vais vous donner son vrai nom parce que je l'ai cherché longtemps avant de m'apercevoir de qui c'était : L'Alliance nationale de l'industrie musicale.  C'est le commentaire numéro 87 de monsieur Benoît Henri et qui suggère de mettre en place un mécanisme en vertu duquel au moins cinq pour cent des pièces de langue française de catégorie 2 proviennent d'artistes qui sont issus d'au moins deux provinces canadiennes différentes de la province de résidence du radiodiffuseur.

661     Supposons, par exemple, pour monsieur Parisien, c'est à une station de Montréal, il devrait mettre à l'antenne des artistes du Nouveau‑Brunswick ou du Manitoba ou de l'Ontario ou, enfin, même de la Saskatchewan ou de la Colombie‑Britannique, dépendant où vous allez trouver des artistes francophones à l'extérieur du Québec, qu'est‑ce que vous pensez de ça?


662     M. O'FARRELL:  Encore une fois, madame la conseillère, on va vous revenir sur la question, mais je vais vous avouer bien franchement c'est que ça s'inscrit en faux de la direction que nous souhaitons prendre avec vous dans le cadre de ce processus de réforme, à savoir où on reconnaît qu'on habite maintenant dans un marché ouvert où on doit passer à des modifications à la réglementation pour la rendre plus modeste et plus légère, mais transitionnellement, bien entendu, plutôt que dans un marché fermé où on peut recourir à des mesures comme celle‑là, mais vu qu'on n'en a pas discuté, on aimerait faire le point là‑dessus et on vous répondra par écrit.

663     CONSEILLÈRE NOËL:  Maintenant, si on... si on passe, peut‑être parce que... parce que vous l'avez cité abondamment le modèle français dans votre comparution à toutes sortes... à toutes sortes de sauces, je vais vous poser une couple de questions là‑dessus.

664     Qu'est‑ce que vous penseriez d'une approche un peu comme celle qui existe en France où les stations de radio sont assujetties à une obligation de diffuser un pourcentage minimum, environ 40 pour cent je crois, de chansons d'expression française durant les heures... eux autres, ils appellent ça *l'écoute significative+, ce qu'on appelle, nous, *de grande écoute+, dont la moitié au moins doit provenir de nouveaux talents ou de nouvelles productions et qui doivent être, elles aussi, diffusées aux heures d'écoute?


665     Pouvez‑vous nous dire ce que vous pensez de cette... l'approche française dans ce domaine‑là?  Évidemment, les quotas sont sensiblement plus bas là.  On parle d'un maximum.

666     M. O'FARRELL:  Je pense que c'est la prémisse de la réponse qu'on parle d'un autre système avec des quotas qui sont plus bas, mais encore une fois, nous n'avons pas discuté de la discussion et vu qu'on est un regroupement où il y a plusieurs intérêts autour de la table, on va devoir en discuter et vous revenir par écrit.

667     CONSEILLÈRE NOËL:  Alors, je pense que je vais abandonner ma ligne de questions sur le... vous nous reviendrez par écrit sur l'approche française et ce que je voudrais peut‑être souligner pour que vous prépariez votre réponse, c'est qu'il y a des ajustements dans cette formule‑là.

668     C'est une formule à géométrie variable et qui pourrait peut‑être être intéressante là dans le cadre de la différentiation des formats.  D'accord?

669     Maintenant, si on revient à la question du crédit de 150 pour cent de musique vocale de langue française et de 125 pour cent pour les autres nouveautés de contenu canadien, comment vous êtes arrivé à ces chiffres‑là?


670     Pouvez‑vous nous expliquer un petit peu comment vous avez déterminé 150 pour cent pour la musique vocale de langue française et 125 pour cent pour le contenu canadien en terme de nouveautés et de crédits pour les nouveautés?

671     M. O'FARRELL:  Bien, premièrement, on a... Oui.  Premièrement, on s'est inspiré des mesures incitatives que le Conseil lui‑même a déjà mis en place dans d'autres secteurs, toujours en sachant que... et toujours en se référant au fait que ce genre de mesure‑là est tirée d'un travail exploratoire qu'on fait pour trouver la juste mesure pour aider une situation où on veut encourager un certain résultat et la distinction entre les deux.  Je vais laisser Pierre‑Louis vous faire le point là‑dessus, mais c'était pour essayer de vous proposer quelque chose qui tenait compte aussi du fait qu'il y a deux marchés qui se distinguent : celui du Québec et celui du Canada anglais et au niveau du contenu canadien, le contenu canadien traverse les deux, mais le quota de musique locale de langue française ne traverse pas dans le deuxième système.  Il reste...

672     CONSEILLÈRE NOËL:  Mais à quelques exceptions près?

673     M. O'FARRELL:  À quelques exceptions près, excusez‑moi.


674     CONSEILLÈRE NOËL:  Quelques stations francophones à l'extérieur du Québec.

675     M. SMITH:  J'ajouterais juste pour compléter que si vous regardez l'approche du système de prime sur le marché francophone donne un crédit à la diffusion et de la pièce nouvelle qui a une durée de vie en terme de nouveauté, selon ce que nous avons... la définition que nous avons mise de l'avant de 12 mois à partir du moment où elle apparaîtrait dans la publication de palmarès et aussi un crédit de 25 pour cent pour l'artiste sur une période de temps et établie.

676     Et dans le cas que nous avons présenté au Conseil sur une fenêtre d'environ 48 mois à partir de la première publication ‑‑ excusez‑moi, du côté du Canada anglais, pour le marché anglophone, le crédit est de 25 pour cent également, mais uniquement sur l'artiste et c'est pour ça qu'il y a une distinction et une différence dans l'approche du système de prime et pour tenir compte du fait que sur le marché francophone, effectivement, il y a deux niveaux de quotas et que le quota de musique vocale en langue française et très très très significativement plus élevé que le quota de contenu canadien.


677     CONSEILLÈRE NOËL:  Si dans sa grande sagesse le Conseil décidait d'imposer un pourcentage minimum de nouveautés à même le pourcentage de contenu canadien dans le cas des stations anglophones, quelle serait, d'après vous, l'approche la plus appropriée pour atteindre les mêmes objectifs pour les artistes canadiens de langue française.

678     M. O'FARRELL:  Alors, pour reprendre la question, si vous décidiez pour le contexte du marché...

679     CONSEILLÈRE NOËL:  Si, dans notre grande sagesse on décidait...

680     M. O'FARRELL:  ... dans votre grande sagesse.

681     CONSEILLÈRE NOËL:  ... d'imposer un quota de nouveautés?

682     M. O'FARRELL:  Alors, une bonne question hypothétique quoi?

683     CONSEILLÈRE NOËL:  C'est une hypothèse.  Je n'ai pas dit que c'était une réalité.

684     M. O'FARRELL:  Écoutez, au risque de me répéter parce qu'on n'a pas fait de... on n'a pas fait de consensus sur ce type de question hypothétique, je n'ai pas de réponse claire à vous soumettre ce matin.


685     Mais si vous souhaitez en avoir une sur la question hypothétique, on pourrait sûrement se porter sur la question et vous répondre par écrit.

686     CONSEILLÈRE NOËL:  Dans vos 20 pages.

687     M. O'FARRELL:  Mais, là, on va être rendu à du 10 points, là, je pense.

688     CONSEILLÈRE NOËL:  Attention!  En bas de 12 on ne lit plus.

689     M. SMITH:  Je fais juste mentionner, si vous me le permettez, que d'après les analyses du Conseil, effectuées par le Conseil, qui comparent le portrait de 1997 au portrait de 2005, déjà on remarquait une augmentation assez significative de la présence des artistes de la relève à l'antenne des stations de langue française, on est passé de sept pour cent en 1997 à 16,4 pour cent en 2005.

690     CONSEILLÈRE NOËL:  Sans quota.

691     M. SMITH:  Sans quota.  Merci.


692     CONSEILLÈRE NOËL:  Maintenant, si on retient la même hypothèse et vous nous répondrez par écrit en temps utile, si on retient l'hypothèse où le Conseil mettrait un quota pour les nouveautés sur le 35 pour cent de contenu canadien, est‑ce que le pourcentage de nouveautés pour les stations francophones devrait être déterminé en fonction du pourcentage de musique vocale de langue française; c'est‑à‑dire de 65 pour cent ou le pourcentage de contenu canadien, c'est‑à‑dire de 35 pour cent?

693     M. O'FARRELL:  Nous nous pencherons sur cette question, madame la conseillère et vous répondrons par écrit, mai vous avez de très bonnes questions je vous en félicite et on va faire nos devoirs et on va chercher à vous satisfaire avec la qualité de nos réponses.

694     CONSEILLÈRE NOËL:  Ah! mon Dieu.  Alors, on va lire beaucoup.  On va lire beaucoup tout à l'heure hein!  On va lire beaucoup après, j'ai l'impression.

695     Je pense qu'on va passer et peut‑être commenter sur la proposition de l'ARC du Canada qui propose qu'une façon efficace d'avoir de la diversité au niveau de la diffusion des talents francophones en onde serait que le CRTC impose un quota raisonnable.

696     Ça, ça rejoint un petit peu ce que l'ANIM disait tout à l'heure, mais exprimé différemment, un quota raisonnable de musique des autres communautés francophones canadiennes.  Vous allez nous répondre par écrit?  Merci.


697     M. O'FARRELL:  Bien, toujours avec le même préambule, madame la conseillère, que d'ajouter des niveaux de réglementation de ce type ne nous paraît pas nécessairement dans la bonne direction du... ne nous paraît pas prendre la bonne direction pour l'avenir d'un système qui va devoir faire face à toutes ces nouvelles formes de concurrence dont on a discuté avec le président tout à l'heure mais parce qu'on veut vous répondre en bonne et due forme, nous le ferons par écrit.

698     CONSEILLÈRE NOËL:  D'accord.  Maintenant, Astral a proposé quant à elle qu'une façon de contrer la progression des transferts d'écoute des francophones vers les stations locales de langue anglaise dans les marchés bilingues serait de réduire le pourcentage de diffusion de musique vocale de langue française des stations musicales de langue françaises des marchés de Montréal et d'Ottawa‑Gatineau.

699     Est‑ce que...

700     M. O'FARRELL:  C'est une position d'Astral, madame.

701     CONSEILLÈRE NOËL:  C'est la position d'Astral.  Et la position de l'ADISQ d'imposer un minimum de 48 pour cent de programmation musicale aux heures de grande écoute pour palier au manque de programmation musicale et francophone aux heures de grande écoute, est‑ce que je peux avoir votre commentaire?


702     M. O'FARRELL:  Absolument; Pierre‑Louis?

703     M. SMITH:  Je vais laisser Jacques compléter ma réponse si besoin est, mais d'ajouter un quota pour déterminer le niveau de la programmation musicale qu'il devrait y avoir aux heures de grande écoute va à l'encontre du développement normal qui s'est fait au Québec dans le milieu francophone au cours des... au cours des... je dirais, des cinq dernières années.

704     Ce qu'on a mentionné abondamment est le fait qu'un des éléments pour les diffuseurs de langue française de se distinguer les uns des autres...

705     CONSEILLÈRE NOËL:  C'est la création orale.

706     M. SMITH:  ... et se démarquer de la concurrence qui vient d'autres plate‑formes, c'est d'aller vers des produits exclusifs et il semble que le fait d'aller vers des produits exclusifs a un impact important au niveau de l'écoute.


707     Je sais que les cotes d'écoute de Corus pour son FM parlé de Montréal sont nettement plus élevées que les cotes d'écoute qu'ils avaient lorsqu'ils avaient un format musical et je pense que dans les stations ou dans les réseaux en général, les émissions du matin et de l'après‑midi qui sont de plus en plus au FM à prédominance verbale, ont aussi... obtiennent des succès d'écoute importants.

708     Jacques, si tu veux compléter.

709     M. PARISIEN:  Non, ça me va.  Moi, c'est effectivement la raison, c'est une question de différentiation de contenu verbal qui, pour le moment, est porteur de cette différentiation‑là et non le contenu musical.

710     CONSEILLÈRE NOËL:  Et quand on parle de cette période‑là, on parle de la radio le matin, quand les gens s'en vont travailler puis le retour à la maison.

711     M. PARISIEN:  Oui, mais tout l'esprit du mémoire de l'ACR est le consensus auquel les radiodiffuseurs du marché québécois en sont venus, c'est : ça ne nous prend pas plus de réglementation ou plus de carcan...

712     CONSEILLÈRE NOËL:  Ça nous en prend moins.


713     M. PARISIEN:  Ça nous en prendrait moins, un allégement, ça, je pense que c'est clair d'entrée de jeu, monsieur O'Farrell l'a adressé dans son introduction, si on veut considérer d'autres enjeux, l'enjeu de la différentiation en heures d'écoute, de grande écoute le matin et au retour, ce n'est pas un problème musical pour le moment, c'est un problème de contenu verbal.

714     CONSEILLÈRE NOËL:  Merci.  Maintenant, si on parlait des montages, vous, votre position, c'est de ne rien changer de ce qui existe à l'heure actuelle, mais l'ADISQ et l'Union des artistes ont dénoncé le fait que plusieurs radiodiffuseurs francophones font usage de longs montages de pièces anglophones avec pour résultat que le temps dévolu à la chanson anglophone demeure plus élevé que celui considéré à la chanson francophone... que celui consacré à la chanson francophone.

715     Est‑ce que c'est pertinent d'avoir des montages et si oui, pourquoi?

716     M. SMITH:  Je pense que les montages sont encore pertinents dans certains formats musicaux, moins dans d'autres et les informations dont on dispose, nous, c'est qu'il y a eu, à un certain moment donné, des problèmes spécifiques reliés aux montages, à une certaine époque avec un certain diffuseur qui était relié, entre autres, au fait qu'il avait une très faible alimentation en produits... en produits francophones.


717     Dans les formats prédominants, je dirais, pop adulte ou pop rock, pop adulte, Lilianne pourra compléter, je ne crois pas qu'il y ait un usage très grand des montages.  Ça se fait davantage dans les formats, disons, pop rock ou top forty et, à ma connaissance, toutes les stations respectent la réglementation du Conseil telle que stipulée, sans abus.

718     Mme RANDALL:  C'est exactement comme Pierre‑Louis a dit, il n'y a pas beaucoup de... l'utilisation des montages, ce n'est pas énorme puis même dans le format où je suis, moi, présentement, ce n'est... on en utilise rarement, quelque peu, mais rarement.

719     CONSEILLÈRE NOËL:  Alors, quant à vous, il n'y a aucun problème et vous ne retenez pas les propositions de l'ADISQ et de l'UDA à cet effet‑là.

720     M. O'FARRELL:  C'est exact.

721     CONSEILLÈRE NOËL:  Merci.  Maintenant, vous nous parlez de nouvel artiste, un nouvel artiste, ça, c'est 12 mois puis... non, une nouvelle chanson c'est 12 mois puis un nouvel artiste a une vie de 48 mois, lui.


722     Comment est‑ce que vous réconciliez ça avec la définition du Conseil qui définit le nouvel artiste comme un enregistrement... l'enregistrement d'un nouvel artiste comme un enregistrement paru depuis moins de deux ans et qui, au moment de la diffusion de l'émission, l'artiste associé à cet enregistrement ne comptait aucune entrée qui datait depuis plus de deux ans dans la base de données de la musique canadienne du Conseil; c'est‑à‑dire le 24 mois partout?

723     M. SMITH:  Écoutez, l'approche que nous avons prise pour déterminer ou définir ce qu'est un nouvel artiste et encore une fois, il y a une approche une définition qui est différente pour le marché francophone que pour celle du marché anglophone, mais sur la plage du marché francophone, nous sommes... et je vous dirais que comme on a fait un effort, un exercice pour essayer de développer cette définition‑là en ayant à coeur deux éléments fondamentaux.

724     Le premier: que ce soit facile pour les stations de radio de l'exploiter ou d'exploiter cette définition‑là.

725     Autrement dit, quelque... les artistes qui font... qui feraient partie plutôt de la liste des artistes éligibles, soient facilement identifiables et c'est pour ça qu'on a fait référence au fait que les artistes... que la liste soit publiée dans le palmarès qui est d'utilisation généralisée dans l'industrie auprès des radiodiffuseurs francophones.


726     Le deuxième élément, c'était aussi un exercice pour faciliter l'exercice du Conseil de mesurer ou de *monitorer+, pour prendre un mauvais anglicisme, l'application de la mesure... du système de prime de la mesure de bonification.

727     La définition du Conseil est sans doute très intéressante, le problème que les diffuseurs ont identifié par rapport à cette définition‑là, c'est encore une fois la notion que tout le monde ait... sache qu'elle est... quels sont les artistes qui font partie de la bande de données, si vous voulez, du Conseil.

728     Sur la période du 48 mois plutôt que 24, nous sommes partis de l'analyse suivante :  en moyenne, d'après les informations que nous avons colligées, un premier album prend entre 24 et 33 mois à se commercialiser.  Un bon exemple: les Trois Accords dont je faisais... dont je parlais un peu plus tôt, a lancé leur premier compact à l'automne 2003 dans une situation qui était assez, je dirais, intime, a fait un deuxième lancement au printemps 2004.

729     CONSEILLÈRE NOËL:  Du même compact?

730     M. SMITH:  Du même compact avec un rayonnement ou une diffusion beaucoup plus large et la commercialisation de cet album‑là a... s'est poursuivie jusqu'à l'automne 2005.


731     Donc, comme on le voit, il y a une plage de, au minimum deux ans, et dans certains cas c'est 30 mois.  Donc, on se disait pourquoi devrions‑nous exclure le deuxième album qui souvent est important de... un artiste peut bien performer sur un premier album et avoir moins de succès sur le deuxième et nous ne voulions pas exclure des artistes en raison d'une date qui soit trop courte et c'est encore une fois en fonction des informations qu'on a colligées.

732     La production du deuxième album intervient généralement entre le trentième et le quarantième mois et donc, on voulait avoir une plage de... une période où l'artiste pourrait encore se qualifier comme artiste de la relève.

733     Et ce n'est pas tous les artistes qui vont vendre 200 000 copies de leur premier compact.

734     Mme RANDALL:  Si je pouvais... excusez‑moi, si je peux ajouter quelque chose.

735     CONSEILLÈRE NOËL:  Oui.

736     Mme RANDALL:  Aussi on s'est dit que ça arrive souvent si un nouvel artiste, son premier album, il n'y a rien qui se passe, il n'a pas réussi à tourner à la radio, au moins s'il arrive le deuxième album, ça lui donne une deuxième chance à être diffusé à la radio en étant comme artiste de relève.


737     CONSEILLÈRE NOËL:  D'accord.  Maintenant, vous référez au palmarès comme outil pour fixer le point de départ d'une nouveauté ou d'un nouvel artiste.  En France, c'est le CSA qui publie ou qui tient à jour mensuellement une liste de nouvelles productions françaises et une liste des artistes confirmés, laquelle est actualisée deux fois par an.

738     Ces listes servent à aider les stations à s'acquitter de leurs obligations pour faire tourner des nouveautés.

739     Est‑ce que... qu'est‑ce que vous pensez d'un système comme le système français?  Réponse par écrit?

740     M. O'FARRELL:  Oui, madame la conseillère.

-‑‑ Rires / Laughter

741     CONSEILLÈRE NOËL:  Maintenant, pourquoi le Conseil devrait‑il utiliser le palmarès plutôt qu'un autre outil de référence?  Est‑ce que vous avez... par écrit?

742     M. O'FARRELL:  Ça nous semble être la référence, mais Pierre‑Louis?

743     M. SMITH:  C'est la référence dans l'industrie de la radio du côté francophone.


744     CONSEILLÈRE NOËL:  C'est la référence dans l'industrie.

745     M. SMITH:  De la même façon que le Conseil, je pense, utilise pour certaines de ses politiques des revues spécialisées du côté... du côté anglophone de façon régulière.

746     CONSEILLÈRE NOËL:  Maintenant, est‑ce que le palmarès fait état de toutes les publications... de la date de publication de toutes les oeuvres musicales francophones, canadiennes ou même celles de producteurs qui ne seraient pas représentés, par exemple, par l'ADISQ?

747     M. SMITH:  J'allais dire, écoutez, à notre connaissance, présentement ce n'est pas le cas.  Dans les discussions que nous avons eues avec l'industrie du disque, c'est une suggestion que nous avons faite pour dire justement, ce serait... le meilleur véhicule à utiliser serait d'utiliser le palmarès.  Il faudrait l'adapter de façon à ce que les informations soient communiquées très clairement.

748     CONSEILLÈRE NOËL:  Alors, ça fait partie de votre problème d'appariement avec l'industrie de la musique, si je comprends bien?


749     M. SMITH:  Mais si ma mémoire est fidèle, c'était une approche à tout le moins sur cette question‑là spécifique que ça ne semblait pas poser de problème avec les représentants de l'ADISQ.

750     CONSEILLÈRE NOËL:  Maintenant, je sens que je vais avoir une autre réponse par écrit.

751     L'ARC du Canada propose la création d'un palmarès national hebdomadaire des artistes francophones du Canada, pour mieux faire connaître les artistes francophones canadiens à l'extérieur du Québec.

752     Qu'est‑ce que vous pensez de la proposition de l'ARC?

753     M. O'FARRELL:  Nous répondrons par écrit, madame la conseillère.

754     CONSEILLÈRE NOËL:  Et y aurait‑il moyen de concilier ces deux palmarès: celui de l'ARC et celui de l'ADISQ et est‑ce que vous allez répondre par écrit aussi?

755     M. O'FARRELL:  Dans l'éventualité que la réponse est positive, oui et sinon, non.

756     CONSEILLÈRE NOËL:  Bon, on va changer de sujet.  Peut‑être que je vais avoir des réponses verbales.


757     Contribution au développement des talents canadiens.  Comment est‑ce que vous justifiez l'adoption de mesures différentes en matière de développement de talents canadiens pour les stations de langue française et de langue anglaise et de quelle façon suggérez‑vous d'administrer ces mesures différentes?

758     M. O'FARRELL:  Je vais commencer et je vais passer la parole à Pierre‑Louis et, ensuite, à Jacques s'ils veulent bien commenter.

759     Premièrement, bien entendu, on s'inspire de l'expérience vécue de Fonds Radio Star et de Star Maker Fund.  Du côté du Québec, il n'y a pas de doute que le Fonds Radio Star c'est vu... bien, le modèle des fonds au Québec entre ce qui se fait entre Radio Star et Musique Action est un modèle beaucoup plus intégré que celui du côté du Canada anglais entre Factor et Star Maker Fund.


760     Donc, à partir de là, on parle de deux données différentes sur deux marchés différents et l'approche cependant, elle est singulière dans la mesure où l'on croit qu'il serait utile pour ce qui est de la nouvelle période... la période de la nouvelle politique de la radio, de voir à ce que toutes les contributions financières faites par l'industrie de la radio soient dirigées vers un seul fonds et ce, dans le but d'obtenir une plus grande transparence, une plus grande redevabilité, mais aussi une utilisation beaucoup plus efficace, selon nous, aux objectifs des réalités ou de la musique commerciale et donc, de la radio commerciale.

761     Ça, c'est notre principe fondateur tant pour un que pour l'autre.

762     Sur la façon que les sommes seraient administrées, il y a deux conseils d'administration.  Il y en a un chez Fonds Radio Star et il y en a un chez Star Maker Fund, les deux ont été approuvés dans leurs constitution et de leur gouvernance par le Conseil.  Alors, on ne changerait rien là.

763     Et on laisserait à chacune de ces institutions‑là, chacun de ces conseils de direction‑là de prendre des décisions qui s'imposent dans chacun dans leur marché pour la façon de gérer ou administrer les fonds.

764     Ce qui veut dire que dans certains cas, il est bien possible qu'on décide de faire gérer des programmes par Star Maker Fund ou par Fonds Radio Star ou par Musique Action et par Factor de l'autre côté.


765     Ce que nous prétendons être la formule la plus efficace et la plus transparente, c'est de permettre à ces deux conseils de prendre les meilleures décisions possibles dans chacun dans leur marché pour atteindre les meilleurs résultats, compte tenu des divergences et des distinctions dans chacun des marchés de la radio et de la musique de langue française par rapport à celui du côté du Canada anglais.

766     Pierre‑Louis.

767     M. SMITH:  Je vais juste compléter en disant que la différence aussi... d'abord, un point commun entre les deux, c'est le fait que la démarche que nous mettons sur la table, c'est de placer l'artiste au coeur de la démarche.

768     Dans ce sens‑là, on croit que l'approche de concentrer le financement à travers un fonds dit commercial, contrôlé uniquement ou financé uniquement par le biais de la contribution des radiodiffuseurs est la manière la plus efficace.

769     Deuxièmement, il y a une distinction, par contre, entre le marché francophone et le marché anglophone.  C'est‑à‑dire que sur le marché francophone, il y a un consensus très large de la part des diffuseurs qu'il est important aussi de développer la relève, ce qu'on appelle la relève radiophonique.

770     CONSEILLÈRE NOËL : J'étais pour y venir.  Je vous laisse aller.

771     M. SMITH : Je vous devançais légèrement.


772     Donc, dans cette optique‑là, toujours par le biais de Fonds RadioStar ‑‑ on ne veut pas recréer d'autres structures administratives ‑‑ à travers un véhicule qui, jusqu'à date, a très, très bien rempli sa mission, d'avoir un programme à l'intérieur de Fonds RadioStar qui aurait pour effet de développer ou de soutenir les efforts de développement de la relève radiophonique.

773     Jacques, si tu veux compléter.

774     CONSEILLÈRE NOËL : Dans le domaine de la création orale?

775     M. SMITH : Dans le domaine de la création orale.

776     M. PARISIEN : Le domaine de la création orale, journalistes, chroniqueurs, humoristes, et caetera, donc, dans le sens large du mot, oui, tout à fait.

777     CONSEILLÈRE NOËL : Oui.  Alors, on ne parle pas exclusivement de nouvelles là?

778     M. PARISIEN : Non.

779     CONSEILLÈRE NOËL : Quelle proportion des montants de contribution au développement... des montants qui seraient, dans votre scénario, remis au Fonds RadioStar, quelle proportion de ces montants‑là serviraient au développement de la création orale?


780     M. SMITH : Ce qu'on a déterminé, c'est que environ 10 pour cent de l'enveloppe globale de Fonds RadioStar pourrait être affecté au développement de la relève radiophonique.

781     CONSEILLÈRE NOËL : D'accord.

782     Maintenant, il y a d'autres associations qui ont fait des commentaires, notamment les associations de radios communautaires qui proposent de créer un fonds canadien de la radio communautaire qui aurait pour mandat de supporter le développement des radios communautaires au Canada.

783     Est‑ce que je peux vous demander vos commentaires sur cette proposition, sur les montants qui devraient servir à l'alimenter?

784     M. O'FARRELL : Notre proposition, Madame la Conseillère, c'est de stabiliser la formule et le véhicule de Fonds RadioStar sur le marché francophone pour les raisons qu'on a invoquées dans notre mémoire, à savoir que, premièrement, il y a eu des nouvelles licences, il y a eu des transactions qui ont produit des avantages tangibles bien au‑delà des attentes de certains et bien d'autres quant aux sommes investies.


785     Mais tout ça pour dire que si vous regardez les contributions financières du secteur de la radio privée, pour ce qui est du Fonds RadioStar et MUSICACTION sur la période de l'ancienne politique, on parle d'une augmentation d'au‑delà de 1 330 pour cent par rapport à ce que c'était auparavant.

786     Je pense que la contribution financière du secteur privé de la radio ‑‑ qui est la seule, comme on l'a dit tout à l'heure, au monde où on oblige le secteur privé de la radio à faire une contribution directe au secteur de l'enregistrement sonore ‑‑ est nettement suffisante.

787     D'ailleurs, si on se reporte à la question de la demande sur le fonds, la preuve est dans les faits ‑‑ je pense qu'ils sont étayés, d'ailleurs, dans notre mémoire aussi ‑‑ à savoir qu'on répond à un pourcentage très élevé du nombre de demandes dans le marché francophone par les programmes qui sont en place de Fonds RadioStar, et on pense qu'on peut poursuivre cette démarche‑là encore pour quelques années.


788     On dit, d'ailleurs, dans notre mémoire et dans notre présentation à nouveau ce matin, dans trois ans, on proposerait revenir au Conseil et rendre compte sur l'état des choses telles qu'elles sont, mais aussi prendre leur ‑‑ et avec les partenaires, que ça soit le CRTC, mais aussi l'industrie du disque, mais aussi les paliers gouvernementaux qui, eux, sont des contributeurs à l'enregistrement sonore, eux aussi, pour savoir où est‑ce que tout ça s'en va et quelles sont les meilleures politiques à mettre en place pour l'avenir, qui serait aussi, je pense, fonction, bien entendu, de la capacité financière du secteur de la radio de maintenir les mêmes niveaux de contribution ou encore de les augmenter ou de les revoir, compte tenu des réalités, rendu à ce moment‑là.

789     CONSEILLÈRE NOËL : Alors, ce que vous me dites, c'est que de contribuer 5 millions qui proviendrait des radios commerciales au fonds des radios communautaires, ce n'est pas ce que vous envisagez comme politique ‑‑

790     M. O'FARRELL : Si vous me permettez deux instants, je voudrais ajouter pour expliquer davantage pourquoi.

791     La radio privée commerciale de demain, comme d'aujourd'hui, fait face déjà à une grande concurrence, comme on en a parlé tout à l'heure, dans un contenu qui est exclusif et à fortes dépenses, comme monsieur Parisien vous a expliqué, d'ailleurs, aussi, mais aussi dans un contenu non‑exclusif, qui est la musique, contenu que d'autres compétiteurs utilisent pour faire concurrence à la radio privée commerciale.


792     On croit que, dans les circonstances et compte tenu de ces réalités qui nous pendent au bout du nez et des impacts qu'on voit déjà, qui sont quand même assez significatifs, surtout sur le marché du Québec lorsqu'on se rapporte à la profitabilité moyenne de la radio par rapport à la profitabilité ailleurs, on pense que ça serait, d'ores et déjà, un engagement supérieur de maintenir ou de stabiliser, si vous voulez, ce qui est déjà en place au‑delà de sa période, d'ailleurs, de vie naturelle ou de cycle naturel d'un bénéfice tangible ou d'un avantage tangible au sens de la politique du Conseil, qui mettrait fin, si vous voulez, aux contributions.

793     Mais ce qu'on pense, dans les circonstances ‑‑ et ça revient à l'essence même de notre proposition ce matin ‑‑ le système réglementaire en place, je pense qu'on peut continuer de vivre avec, de sorte que je ne propose pas de changements majeurs.  On propose des modifications légères au niveau du...

794     CONSEILLÈRE NOËL : Des destinataires?


795     M. O'FARRELL : Exactement, et c'est dans cette foulée‑là que, nous, on pense qu'il faut s'assurer que ces fonds‑là, qui sont des fonds qui proviennent du secteur privé de la radio, servent à la musique commercialement disponible pour la radio commerciale.

796     CONSEILLÈRE NOËL : Alors, si on continue dans le secteur du développement des talents canadiens, l'idée de faire passer la contribution, lors des transferts de contrôle, de 6 à 10 pour cent, pouvez‑vous élaborer là‑dessus?

797     M. O'FARRELL : Je pense que si on avait à parler de cette question‑là, bien qu'on n'a pas de position officielle, je serais porté à dire que l'ascenseur s'en va dans l'autre direction plutôt que dans celle que vous proposez.

798     CONSEILLÈRE NOËL : Maintenant, il y a eu des suggestions à l'effet de consolider toutes les contributions, que ce soit les bénéfices au moment d'une demande de licence, les paiements statutaires annuels selon la taille de marché, et puis la politique de bénéfices au moment des transferts et d'avoir un montant global de 2 pour cent des revenus.

799     Qu'est‑ce que vous pensez de ça?

800     M. O'FARRELL : Notre proposition, Madame la Conseillère, en matière de...

801     CONSEILLÈRE NOËL : C'est le statut quo.


802     M. O'FARRELL : Bien, c'est plus que le statut quo, c'est de bonifier et de stabiliser un système qui est en place, qui, je pense, qui est plus que le statut quo.

803     CONSEILLÈRE NOËL : Maintenant, il y a l'ARPIF qui propose la création d'un fonds ARPIF consacré à l'appui des tournées en région au Québec, au Nouveau‑Brunswick et en Ontario ‑‑ parce que, comme vous le savez, l'ARPIF, c'est l'Association des radiodiffuseurs privés indépendants francophones et non pas québécois ‑‑ avec des contributions semblables à celles de l'ACR.

804     Que pensez‑vous de la proposition de l'ARPIF?

805     M. SMITH : Nous croyons que c'est une excellente proposition, d'autant plus que la proposition de l'ARPIF s'articule à la fois... au lieu de créer un fonds à part, administré à part, ce serait... les contributions dans le fonds, si je comprends bien le sens de l'intervention de l'ARPIF, ce serait les contributions des radiodiffuseurs des petits marchés qui seraient consolidées, si vous voulez, à l'intérieur de Fonds RadioStar, mais avec un fonds...

806     CONSEILLÈRE NOËL : D'accord.

807     M. SMITH : ...un programme qui serait spécifique.


808     CONSEILLÈRE NOËL : Alors, ce serait dans la façon de dépenser de Fonds RadioStar que l'ARPIF trouverait son compte...

809     M. SMITH : La compréhension que j'en ai.

810     CONSEILLÈRE NOËL : ...ou espérerait trouver son compte?

811     M. SMITH : Oui.  Pour éviter d'avoir à créer des fonds qui, évidemment, doivent nécessiter des coûts d'administration, c'est une approche qui nous apparaît être constructive.

812     CONSEILLÈRE NOËL : Maintenant, si on parle de diversité de la musique, l'ADISQ, elle, propose l'adoption d'une règle qui serait liée au groupe cible que chaque station s'engage à servir, le respect de celle‑ci à son engagement de servir ce groupe‑là pouvant être mesuré de façon précise par des critères de profilage des groupes cibles, et notamment de l'âge.

813     Que pensez‑vous de cette proposition?

814     M. O'FARRELL : Nous ne sommes pas d'accord avec cette proposition, Madame la Conseillère.

815     CONSEILLÈRE NOËL : Si le Conseil l'adoptait, quel serait l'impact sur le marché francophone?


816     M. O'FARRELL : Nous ne l'avons pas évalué en chiffres et nous n'avons pas fait ces calculs‑là.  Nous ne les avons pas avec nous aujourd'hui.

817     Mais encore une fois, Madame la Conseillère, je pense que, au risque de me répéter, ça va à l'encontre du système que nous voyons pour l'avenir.

818     CONSEILLÈRE NOËL : Maintenant, l'ADISQ propose également la production de rapports annuels concernant la diversité sur les ondes.

819     Est‑ce que je peux avoir votre opinion là‑dessus?

820     M. PARISIEN : Oui.  Étant précurseur dans les rapports annuels sur la diversité, on est rendu à notre deuxième qui a été tablé, et on va continuer à émettre un rapport annuel si ça répondait à une spécificité exclusive à Astral Media dans le cas de l'acquisition de Télémédia.

821     C'est lourd comme processus.  Je ne suis pas sûr que ça l'a rajouté beaucoup au paysage qui était déjà en place, et je vous suggère que, comme c'est lourd comme processus, ce n'est certainement pas quelque chose qui est bienvenue pour l'ensemble de l'industrie.


822     CONSEILLÈRE NOËL : Les gens de l'ARPIF en particulier ne seraient pas très heureux d'avoir un système comme ça, c'est ce que vous me dites?

823     M. PARISIEN : Je suis convaincu que non.

824     CONSEILLÈRE NOËL : Maintenant, Monsieur Parisien, vous nous avez parlé du Star système au Québec.  Il y a d'autres groupes ou individus qui sont intervenus dans le processus et qui nous ont parlé du besoin de diversité et de la présence d'artistes émergents.

825     Est‑ce que vous croyez qu'il y a un certain équilibre qui pourrait être atteint entre ces deux concepts‑là à l'intérieur du système actuel de développement des talents canadiens?

826     M. PARISIEN : Je n'ai pas les chiffres sous la main là ‑‑ peut‑être que Pierre‑Louis les a ‑‑ mais je sais que depuis 1997 et particulièrement dans les dernières années, au Québec, sur les principales chaînes radiophoniques francophones, il s'est joué plus de relève qu'il s'en jouait avant, et que ces pourcentages‑là sont en croissance et de façon assez intéressante.


827     Alors, moi, je pense que le système fonctionne.  Ce qu'on a suggéré, aujourd'hui, au Conseil, c'est comment le bonifier avec un incitatif intéressant et qui va probablement l'améliorer encore plus.

828     CONSEILLÈRE NOËL : If it ain't broken, don't fix it; c'est ce que vous nous dites.

829     Maintenant, contenu canadien.  L'UDA, elle, propose 40 pour cent, de hausser le quota de contenu canadien à 40 pour cent.

830     Qu'est‑ce que vous pensez de ça?  Quel serait l'impact de cette proposition‑là auprès des radiodiffuseurs, notamment des radiodiffuseurs francophones?

831     M. O'FARRELL : Nous sommes contre cette proposition‑là, Madame la Conseillère.

832     CONSEILLÈRE NOËL : Et qu'est‑ce que vous pensez de la proposition de l'ADISQ de hausser à 20 pour cent pour la catégorie 3, notamment la musique classique, et à 35 pour cent pour la musique de jazz?

833     M. SMITH : Écoutez, si je... la proposition de l'ADISQ, c'est de dire puisqu'il y a des diffuseurs, dans le cas présent Radio classique et Couleur FM, qui ont proposé des niveaux...

834     CONSEILLÈRE NOËL : Couleur Jazz.


835     M. SMITH : ...Couleur Jazz, merci, qui ont proposé des niveaux plus élevés de contenu canadien, dès lors, l'ensemble de l'industrie devrait être assujetti à ces augmentations‑là.

836     J'aimerais juste attirer votre attention que, toujours selon les données de Statistiques Canada ‑‑ évidemment qui ne vont pas plus loin que 2003 ‑‑ quand on compare 1998 et 2003, on constate que dans le domaine de la musique classique, il y a eu une réduction substantielle du nombre de nouveaux enregistrements, passant de 159 en 1998 à 97.  Dans le jazz, par contre, jazz et folk, il y a eu une augmentation légère de 62 albums canadiens à 73 albums canadiens en 2003.

837     Donc, c'est variable, et je pense que l'approche que le Conseil a, d'y aller au cas par cas en fonction des caractéristiques des diffuseurs concernés dans le domaine de la musique spécialisée, devrait continuer à s'appliquer.

838     CONSEILLÈRE NOËL : À votre avis, est‑ce qu'il y a assez d'approvisionnement en musique dans ces deux catégories‑là, jazz et musique classique, pour rencontrer des quotas plus élevés, soit 20 pour cent pour le classique et 35 pour le jazz?


839     M. SMITH : Encore une fois, si je me fie aux données, je vous mentionnais, on a eu une réduction assez significative du nombre de nouveaux enregistrements en musique classique entre '98 et 2003.  On est passé de 159 albums nouveaux en musique classique à 97 en 2003, et c'est une tendance qui est mondiale.  L'industrie du disque en général a réduit sensiblement le nombre de nouveaux enregistrements en musique classique.

840     Ce qu'on constate, c'est que ça représente 9 pour cent de l'approvisionnement ou des commercialisations en 2003... le contenu canadien représentait 9 pour cent.

841     CONSEILLÈRE NOËL : Donc, de doubler le quota poserait un problème?

842     M. SMITH : À l'évidence, en fonction des informations...

843     CONSEILLÈRE NOËL : Ou bien on entendrait les Quatre Saisons de Vivaldi plusieurs fois...

844     M. SMITH : Sans doute.

845     CONSEILLÈRE NOËL : ...joué par la même personne.

846     M. SMITH : Sans doute.

‑‑‑ Rires / Laughter


847     CONSEILLÈRE NOËL : L'ADISQ a suggéré dans son rapport que les mécanismes de surveillance qui sont actuellement en vigueur ne permettent pas d'offrir un regard juste sur l'état de conformité d'une titulaire de licence d'entreprise de programmation de radio relativement à ses obligations réglementaires.

848     Qu'est‑ce que vous pensez de cette affirmation de l'ADISQ?

849     M. O'FARRELL : Nous pensons que le Conseil fait un travail très complet au niveau des rapports qui sont demandés.  D'ailleurs, il est à supposer au cours des prochaines années quelle formule de * relèvabilité + on va devoir prendre pour s'ajuster aux nouvelles réalités.

850     Donc, je pense que ce n'est pas une question d'en ajouter, c'est plutôt une question d'en faire le streamlining et de le rendre plus précis.

851     CONSEILLÈRE NOËL : Alors, je pense que je ne vous poserai pas ma deuxième question parce que je vais avoir un "non."

852     Dans l'éventualité où le Conseil décidait de les modifier, quels seraient les nouveaux critères ou les nouveaux mécanismes de surveillance qui devaient être implantés?

853     M. SMITH : Nous n'en voyons aucun qui serait utile, Madame, au débat ou qui ajouterait une plus‑value au paysage.


854     CONSEILLÈRE NOËL : Maintenant, vous avez suggéré qu'on modifie... dans votre programme, si vous voulez, de développement des talents canadiens, vous avez suggéré qu'on modifie les bénéficiaires de contributions annuelles statutaires et les bénéficiaires des contributions découlant des transactions.

855     Qu'est‑ce que c'est que vous entendez par un Fonds RadioStar amélioré?  Dans votre mémoire, vous parlez d'un Fonds RadioStar amélioré.  Il serait meilleur en quoi?

856     M. O'FARRELL : Lorsque vous posez la question, est‑ce que vous parlez et de RADIOSTAR et de STARMAKER ou que de RADIOSTAR?

857     CONSEILLÈRE NOËL : Je parle seulement de... on est du côté francophone pour le moment.

858     M. O'FARRELL : Merci.  Alors, je vais passer la parole à Pierre‑Louis ou à Susan si elle veut rajouter.


859     Mais ce qu'on propose, Madame la Conseillère, pour revenir à la réponse qui était peut‑être incomplète tout à l'heure, c'est le fait que, en dirigeant la totalité des contributions financières du secteur de la radio privée vers un fonds avec un conseil d'administration qui en fait l'administration ou qui en délègue l'administration de ces fonds à de tierces parties, dont MUSICACTION, et comme je vous mentionnais tout à l'heure, où au Québec, il y a déjà une grande intégration entre les activités de MUSICACTION et de Fonds RadioStar, on prétend que c'est effectivement d'en faire un RADIOSTAR amélioré, parce que c'est plus transparent, toutes les contributions rentrent au même endroit, et c'est sous la gouverne d'un conseil d'administration.

860     CONSEILLÈRE NOËL : Quel impact ça aurait sur MUSICACTION et sur les artistes que MUSICACTION subventionne?

861     M. SMITH : Écoutez, ce qu'on a expliqué dans notre mémoire, le gouvernement fédéral a mis en place un programme qui s'appelle le VEM, le Volet des entrepreneurs en musique, qui prend en considération un certain nombre d'entreprises, les principaux producteurs indépendants qui se retrouvent maintenant sous le programme du VEM.

862     Le gouvernement fédéral...

863     CONSEILLÈRE NOËL : Ça va dégager des sommes.

864     M. SMITH : ‑‑ voilà! ‑‑ maintient jusqu'en mars 2010 ses investissements au même niveau dans MUSICACTION.


865     Mais il y a une partie de la clientèle historique de MUSICACTION qui migre vers un programme du gouvernement fédéral qui s'appelle le VEM et qui dégage, dès lors, des sommes importantes pour tenir compte des besoins des entreprises, je dirais, intermédiaires ou de plus petite taille et qui nous permet de concentrer notre effort du côté des radiodiffuseurs à pérenniser Fonds RadioStar et assurer que Fonds RadioStar ou l'artiste va être placer au coeur de la démarche, ce qui découle de nos obligations en fonction de la Loi sur la radiodiffusion.

866     CONSEILLÈRE NOËL : Maintenant, si on parlait des initiatives locales, parce que dans le développement des talents canadiens, ça prend souvent de la place les initiatives locales.

867     Quel pourcentage global des sommes que vous consacrez au développement de talents canadiens devrait aller aux initiatives locales, d'après vous autres...

868     M. SMITH : La proposition que nous avons mis sur la table...

869     CONSEILLÈRE NOËL : ...pour développer les artistes locaux, et caetera?

870     M. SMITH : ...passe par l'entremise des fonds que nous voulons pérenniser, c'est‑à‑dire Fonds RadioStar sur le marché francophone.


871     CONSEILLÈRE NOËL : Alors, c'est ça.  C'est Fonds RadioStar qui déterminerait... tout serait canalisé via Fonds RadioStar, et Fonds RadioStar, elle...

872     M. SMITH : À l'exception, Madame la Conseillère, que les entreprises qui appliquent pour des nouvelles licences et font des propositions individuelles.  Dans la très, très vaste majorité des cas, je pense, de mémoire, que plus de 80 pour cent des contributions proposées qui deviennent condition de licence sont généralement orientées vers le marché local où la station va être exploitée.

873     CONSEILLÈRE NOËL : D'accord.

874     Maintenant, le Ministère de la Culture et des Communications du Québec est d'avis qu'il faut soutenir une production accrue de nouvelles et d'information locales, et ils recommandent la mise en place, tant pour les radios commerciales que communautaires, d'un fonds de soutien à la production de nouvelles et d'information locales qui pourrait être alimenté à même une partie des droits de licence de radiodiffusion versés en vertu de la Partie II.

875     Qu'est‑ce que vous pensez de la proposition du Ministère de la Culture et des Communications?


876     M. O'FARRELL : Nous sommes heureux de voir que nous avons l'appui du gouvernement du Québec dans notre démarche sur les frais de la Partie II, et d'ailleurs, sur la foi de leur appui, on va chercher à partager nos frais d'honoraires avec le gouvernement pour s'assurer qu'ils sont vraiment à la table avec nous.

877     C'est un débat, pour l'instant, qui est prématuré, Madame le Conseillère, en ce sens qu'on ne sait pas où cette chose‑là, qui est présentement devant les tribunaux, va se terminer.

878     Donc, je pense que c'est une proposition, comme bien d'autres, sur l'utilisation éventuelle d'un fonds qui pourrait être libéré, qui est présentement dirigé au fonds consolidé du gouvernement fédéral.

879     Mais savoir quelle est la valeur de cette hypothèse‑là ou de cette utilisation‑là par rapport à une autre, je pense qu'on devrait attendre pour voir quelle sera la conclusion du tribunal, et ensuite, on pourra faire les déterminations qui s'imposent, avec l'aide du gouvernement du Québec au d'autres qui veulent bien nous aider dans notre démarche.

880     CONSEILLÈRE NOËL : Merci.


881     Maintenant, une dernière question.  Vous avez indiqué que vous vous étiez engagé à travailler avec le Ministère du Patrimoine canadien pour discuter de la possibilité de collaboration entre le fonds STARMAKER et FACTOR.

882     Est‑ce que cet engagement s'applique également à la possibilité de collaboration entre le Fonds RadioStar et MUSICACTION?

883     M. O'FARRELL : Absolument.

884     CONSEILLÈRE NOËL : Ce sont mes questions, Monsieur le Président.

885     LE PRÉSIDENT : Merci.

886     Monsieur Arpin.

887     COMMISSAIRE ARPIN : Merci, Monsieur le Président.  Je n'ai qu'une question.

888     Monsieur O'Farrell, en réponse à une question de madame Noël, a dit qu'il y avait 50 formats musicaux aux États‑Unis, 17 au Canada et cinq au Québec.

889     Avez‑vous une idée de combien de formats distincts il y aurait en France?

890     M. O'FARRELL : Je ne l'ai pas sous la main, mais...  Jacques, est‑ce qu'on a...

891     On n'a pas ces informations sous la main, malheureusement, et ma mémoire fait défaut.


892     M. PARISIEN : Peut‑être que, Monsieur Arpin, vous l'avez, vous?

893     COMMISSAIRE ARPIN : Non, je ne l'ai pas...

‑‑‑ Rires / Laughter

894     COMMISSAIRE ARPIN : ...puis je cherche à l'obtenir depuis deux semaines.

895     M. PARISIEN : Alors, Monsieur Arpin, ça nous fera plaisir de vous le déposer avant la fin de la semaine.

896     COMMISSAIRE ARPIN : Merci beaucoup.  Ça fait deux semaines que je cherche à l'obtenir.

‑‑‑ Rires / Laughter

897     COMMISSAIRE ARPIN : Merci.

898     LE PRÉSIDENT : Merci bien.

899     Nous allons maintenant arrêter pour le déjeuner.  We will take a lunch break now and resume at 2:00 p.m.  Nous reprendrons à 14 h 00.

‑‑‑ Upon recessing at 1303 / Suspension à 1303

‑‑‑‑ Upon resuming at 1400 / Reprise à 1400

900     THE CHAIRPERSON:  Order, please.  A l'ordre, s'il vous plaît.

901     On va continuer la questionnement avec M. Arpin.


902     COMMISSIONER ARPIN:  My order of questions will be related to the digital environment and I will end with some questions pertaining to copyright.

903     Let me preface with some remarks.  Well, obviously we need to have a better understanding of what happened between 1995 and today when the Commission issued it's traditional digital radio policy by which the Commission authorized the existing radio broadcasters to seek transitional digital radio licences.  So far 76 licences have been issued and, according to our own records, some 50 stations went on‑air.

904     In the same transitional radio policy, the Commission authorized licensees to initiate various experiences such as up to 14 hours per week of original programming and transmission of ancillary data.

905     Could someone in your group tell us what are the results of, say, a decade long of experimentations regarding DAB?

906     MR. O'FARRELL:  Merci, Monsieur Arpin.

907     To respond to your question I'm going to ask Rael Merson to lead off and perhaps Wayne Stacey can fill in and complete the answer.


908     So I will turn it over to Rael.

909     MR. MERSON:  I guess in retrospect, you know, we were right.  We needed a digital solution 10 years ago and 12 years ago.  What we didn't anticipate was that it was going to come in different ways.

910     So where is digital radio?  It is all over the place.  It is internet radio, it is satellite radio, it is podcasts.  It is soon going to be digital video broadcast to homes and to handhelds and all over the place.

911     So somehow what we didn't anticipate was exactly where the digital revolution was going.

912     What was our ambition?  Our ambition really was to try to find a way to duplicate in the digital world the tuning and the mass audience that we had already sort of put together in the analog world.  And somehow the digital world seems to have evolved in a different way, with peer‑to‑peer file shares, and in a much more ‑‑ I don't want to say "open", it a wrong word, in a much more pluralistic kind of way.

913     So the question we ask ourselves is:  Where does that leave us in terms of our digital radio ambitions at this point?


914     We were chatting a little bit this morning about how it is, where again to have to reorganize how it is we build our content and develop our content to ensure that whatever content we develop is in fact exploitable over the broadest possible range of media, simply to amortize the cost of that content.

915     We know as we go forward that probably the model for content in English radio will look a lot more like the Québec radio market at this point in time, where we need to differentiate our content much more with personalities, with social media and the like.

916     So the question we ask ourselves is:  In that environment does the L‑band and the investment that we have made on the L‑band still apply?

917     I like to think of it as radio in the future might well become ‑‑ I don't want to say a barker channel, because it's the wrong word, but essentially a marketing tool for all the other uses to which you will put your content, and the best shot that Canadian radio has of developing that sort or barker environment is within the L‑band.


918     So it is again to be DAB, is it going to be digital audio broadcast the way we know it partly?  It's probably not.  It's probably going to be an IP‑delivered service that is going to be made available to handheld devices of some wort, whatever they happen to be, or sort of rich‑media, multi‑media‑type devices, or sort of rich‑media, multi‑media type devices, and it will be our attempt as a Canadian radio industry as it currently exists, to go back in and build the critical mass in the digital world that we currently enjoy in the analog world.

919     It means, again, that we are going to have to sort of broadcast into all these media, wherever they happen to be.

920     But somehow I think:  What have we done right?  We have done right by sort of not over investing in the DAB space at this point.  We have kept our powder dry to some degree.

921     We are going to have to step up as soon as we see how this IP multi‑media wireless world evolves and find out how it is we can place ourselves within that environment.

922     So I will hand it over to Wayne.

923     MR. STACEY:  Well, I guess there are a couple of things about where the broadcasters have been and where they are heading.


924     The first is that back in 1995 and prior to that we had a vision of course that there could be a transition and that analog radio itself could eventually disappear.

925     I don't think that vision has changed substantially, because in the long term all forms of radio are going to move from analog to digital, it's just that the transition period has taken quite a bit longer than we anticipated.

926     So what has evolved since then ‑‑ and these are not just discussions within the CAB context, but also in other bodies that we have created in Canada, such as the Digital Radio Coordinating Group where we are addressing the technical questions, is what avenue could we take that is most likely to produce the kind of digital services that are going to be attractive to the public.

927     So what we are looking at is perhaps a model that could include several different platforms that broadcasters could move to relatively easily in terms of over‑the‑air services, and that would include, as we suggested in our submission, the possibility of using in‑band on channel services, particularly during a transitional phase and, as Mr. Merson has said, perhaps relying to a greater extent on the L‑band portion of this strategy in order to allow diversity.


928     COMMISSIONER ARPIN:  But before going that route ‑‑ I understand your submission very well, but I want only to, at least at this stage, to look a bit backwards and look at what happened during that timeframe.

929     The policy that the Commission had put in place was allowing for some experiment to take place in both transmitting ancillary data and doing up to 14 hours of different programming than what you were supposed to simulcast.  Have any of the organizations here around the table done any of that type of different programming?

930     Have you transmitted for up to, say, the allotted 14 hours of other programming?  What kind of programming was it?

931     Obviously there have been very few receivers ‑‑ I still have one.

‑‑‑ Laughter / Rires

932     COMMISSIONER ARPIN:  And I know that the CBC is on the air, I have checked once in a while, here in Ottawa.

933     But other than being capable of seeing if they are on the air ‑‑ I don't think currently anybody does anything ‑‑ but over time during that timeframe of 1995 say to today, has anyone done any experimental programming?


934     MR. BRAIDE:  Generally speaking, Mr. Arpin, we haven't as an industry.

935     I think one of the reasons is that we approached the technology with some hesitation.  In models in other countries, for example Britain, DAB, whether it has been in the L‑band or another space, has been more successful when it has been seen as an additional service as opposed to a replacement technology.

936     Clearly the Commission in its early directions suggested that if you had an AM and FM licence you got two digital frequencies and that a 14‑hour differentiation per week would have been permissible.  Our sense now is that we might have the ability to go a little bit farther in that regard.

937     But basically I think the answer is no, and that's why.


938     MR. O'FARRELL:  But I think I can add just one quick comment, Mr. Vice‑Chair, by suggesting that certain groups ‑‑ as an industry‑wide experiment it is fair to say, as Rob has, there has been no general effort.  But there have been individual efforts by certain groups.  I think you will hearing from CHUM in this process later and I'm sure that their representatives will be able to fill you in in greater detail, for instance, what they have done to perhaps bring more specific detail to the response that I think you're looking for.

939     MR. MERSON:  It has been a chicken and egg process in the sense that sort of what we did was build the stations and build the format and the market just didn't develop.  In retrospect, the satellite radar industry, the biggest impact the satellite radio industry might have on us is the fact that they really have upset the business model in the sense that they are subsidizing the rollout of receivers and the way they have gone through that subsidy.

940     But to me, the subsidy they receive from a business point of view is as important at the differentiated content and the fact that we built out the system.

941     Certainly when you look at the Americans, the progress of HD radio in the States ‑‑ and they are up there and they are adding differentiated content onto their offerings, but until they can find a way to convince the public to buy those receivers it is going to be a long row to hoe.


942     COMMISSIONER ARPIN:  If I do understand your submission right, you still believe in a digital world and you still are of the view that radio broadcasting has to transform its service into a digital format but there are numerous ways to achieve that.  One of the ways that you have now been contemplating is IBOC, but also keeping the assigned L‑band for still doing some digital broadcasting but in a much broader sense and not necessarily in the DAB mode.

943     MR. MERSON:  That's exactly accurate.  When you look at the developments in the United States and you see what Crown Castle has done with accumulating spectrum all across the United States, and you see what Qualicom has done to do the same thing, what they are trying to do is lay the groundwork for building a broadcasting system in ancillary bands to the cellular spectrum.

944     Those are broadcast plans.  I mean, they are plans to deliver television to mobile devices.  But, as we know, it's going to be that much easier to deliver audio content to mobile devices as they go forward.


945     So whether it turns out to be DAB that the broadcasters use for broadcasting in terms of the protocol in the L‑band, or something a little different like DVB‑H or perhaps like some sort of internet‑based protocol, it is the space that sort of we ultimately evolve to as we evolve from the analog world into the digital world, but what that technology is or what that broadcast protocol actually is hasn't crystallized.  Nobody yet has developed a sort of critical mass in digital broadcasting over‑the‑air.

946     COMMISSIONER ARPIN:  Do you see it as being the role of the broadcasters to develop that, or is it the role of the telecom industry?

947     MR. O'FARRELL:  We maintain, Mr. Vice‑Chair, that to serve the Broadcasting Act goals and the policy that this Commission articulated initially in the digital broadcasting area, fast‑forward to today's reality that private radio broadcasters are still the very best option, in our view, subject to and qualified by the caveats that Mr. Merson has put on the record here as to where this is going and the uncertainty that that represents as to the future.

948     But we do believe that private radio broadcasters are the best option for the system in terms of the objectives of the system if there is going to be a rollout for DAB or digital broadcasting.


949     We feel that it still is with the private broadcasters that there is the best chance possible for the system to find itself into that space in a way that would be consistent with what was initially articulated, qualified by there are a lot of uncertainties out there and in fact the record has shown that some of the expectations that were initially shared didn't produce the outcomes that they were initially expected to produce.

950     COMMISSIONER ARPIN:  As you know, spectrum management is not the purview of the CRTC.

951     Have you initiated discussions with Industry Canada with regard to the future use of L‑band?

952     MR. O'FARRELL:  The discussions we have had with Industry Canada, the most recent discussions have not altered the course that we were on.  We still believe that Industry Canada is disposed to hearing and working with broadcasters in a solution that would satisfy this Commission, but also its expectations as well as to the use of that spectrum.

953     But I would not want to make further representations than to say our ongoing discourse has been to confirm that course of conduct and we certainly would want to ensure that that was the case.

954     If Wayne has something specific to add, maybe I could ask Wayne Stacey, Mr. Vice‑Chair.


955     MR. STACEY:  As Mr. O'Farrell has said, there really have been no discussions about different ways of utilizing the spectrum, but within the allotment plan and the technical standards that have been created, there is a fair degree of possibility there for different uses of that particular spectrum.  So we could certainly see it being used fairly extensively by broadcasters if the environment is modified to make it an attractive proposition and something that has a good business case behind it.

956     COMMISSIONER ARPIN:  Now let's deal with IBOC.  Am I right to understand that you are saying ‑‑ well, you want to have as open as possible the various options that are available and you think that some of your members might be interested in implementing IBOC over a short period of time, in both AM and FM.

957     MR. MERSON:  We are in the process of obtaining some IBOC equipment in order to do a test under the auspices of the Digital Radio Rollout Inc.  For my sins, I serve as President of it.


958     So we are committed to testing it.  It has the same inherent limitation that digital audio broadcast has, which is that there is no obvious plan for the rollout of new receivers.  It is going to be a very long road to hoe.  It's something they are going to have to figure out.

959     We know it provides an ability to add differentiated content because they can add one and perhaps two incremental channels to the existing ones they produce, but we are sceptical about whether that is going to be sufficient to really drive people to buy new receivers, particularly in the face of competing industries like the satellite radio industry that really does subsidize the cost of the rollout of that receiver.

960     But we are committed to testing and we have allocated funds to it.

961     COMMISSIONER ARPIN:  I see.

962     What is the current receiver situation, say in the United States?  Are they implemented by the car manufacturers or is it still an after market?

963     MR. MERSON:  I'm going to ask Wayne to add to whatever I have to say because I have a bit of a sketchy knowledge of it.

964     But the rollout is sporadic.  They have announced a couple of deals with car manufacturers to add the receivers into cars on an "as requested", as a paid‑for‑by‑the‑consumer basis.  But that is the extent of my knowledge.


965     Wayne, maybe you could add something.

966     MR. STACEY:  We hear announcements periodically about deals between car manufacturers and receiver manufacturers, but the problem remains that they still have the same problem in the U.S. as we do here.  It is difficult to find those receivers, and they are fairly expensive once you do find them.

967     They are hopeful that that will improve, but I guess time will tell whether or not that will be a product that will be attractive to the marketplace.

968     COMMISSIONER ARPIN:  We have been made aware, obviously through various stories or articles that are published, that there are significant interference problems encountered in the U.S. with the roll‑out of AM IBOC.

969     There have been suggestions that the analog AM band shall be replanned.

970     One option being discussed is a reduction of the analog bandwidth to better accommodate the digital service.

971     Are you in favour of such a review?  And in your view, what minimum analog bandwidth shall be retained in order to ensure an acceptable analog service?


972     MR. MERSON:  Just to confirm all of those, we understand exactly the same thing:  that the analog interference is significant; that IBOC does not work as well as a substitute or as an evolution point for the AM band.

973     I don't think we have had a discussion internally, so I couldn't represent that we have a consensus at all on what a transitional policy to HD might be, except to say that it really is not a fundamental part of our vision of the digital world for a radio going future.  If everything changes and they are able to prove out the acceptability of FM and AM IBOC, I think we would have to revisit our position.

974     But as of this point, there is no consensus within the industry as adopting it as an industry standard.

975     Again, Wayne, I don't know if you want to add anything.

976     MR. STACEY:  On the question of bandwidth, which was your specific question, the reason you would reduce the bandwidth is primarily to reduce interference that occurs at night when the signals travel long distances.


977     What we are hoping to do in the tests that we are going to be undertaking this year, probably in Toronto, is to do a little bit of assessment along those lines and see whether or not there can be a meaningful improvement if all stations were to reduce their bandwidth.

978     The cost of doing that, however, is the analog stations that are there today would have to reduce their bandwidth as well, and that of course would reduce the quality, especially for those that are still maintaining a music format.

979     So there are trade‑offs here and these are part of what we would hope to assess as we move ahead.

980     COMMISSIONER ARPIN:  And obviously to do it, you will have to do it at the North American level.  You cannot do it only for Canada or cannot do it only for the U.S., I suspect.

981     MR. STACEY:  Well, there have been some discussions at the international level about how we accommodate digital broadcasting in the AM band.  The current agreements that we have with all of the countries in the Americas do not really provide for digital broadcasting.


982     We have been having discussions with Industry Canada who in turn has had some discussions at the international level about how these agreements might have to be amended.

983     I think there will be a process, because everybody recognizes we have to eventually move to digital.  But to do that, the agreements are going to have to track.

984     Unfortunately, international agreements take a good long time to work their way through the system.

985     I could easily see it being two, three, four years before you could get an agreement like that that would apply, say, to Canada, Mexico and the United States.

986     COMMISSIONER ARPIN:  Are you contemplating DRM as an alternative to HD radio, to IBOC?

987     MR. STACEY:  It is one of the systems that we would like to test in the AM band, yes.

988     COMMISSIONER ARPIN:  I see.

989     It is also my understanding that DRM is currently being extended to the FM band.

990     Are you contemplating having some tests with DRM on the FM band?

991     MR. STACEY:  As far as I am aware, there is no equipment available at the present time.  So it is not part of the current test plan.


992     But it could be an addendum to the plan if equipment were to come available.

993     COMMISSIONER ARPIN:  I am now looking at the FM band.

994     The conversion to IBOC digital might allow for the broadcast of multicast services.

995     In your view, what quality trade‑off shall be considered?

996     For example, at a minimum, shall the digital service maintain the same quality standard as the analog service it replaces?

997     Is there any need to set a quality standard for multicast services?  If quality is set by the marketplace, who makes the final decision, the provider of the service or the provider of the multiplex?

998     MR. MAHEU:  That is a very good question, Vice Chair.

999     MR. O'FARRELL:  I'm not sure if Wayne is prepared to give you some comments on that, but we'll let him loose.

1000     COMMISSIONER ARPIN:  If you notice, my question was written.

1001     MR. O'FARRELL:  You wouldn't happen to have a written response there, would you?


‑‑‑ Laughter / Rires

1002     MR. STACEY:  I guess the feeling in the long term is that this has to be something that the industry agrees on as a whole.  I don't think it would be something that would be imposed.

1003     We obviously have to deal in this world with technical standards.  In this country those technical standards are set by Industry Canada.

1004     The usual way we proceed is when the industry perceives a need, it will make a recommendation to Industry Canada.  That will be assessed.  There will be some public discussion and eventually the standards get set.

1005     Insofar as the fact that you can make some choices in digital radio about trade‑offs between reliability and quality and robustness of signal, these are all things that you can have almost a family of standards, if you want, where you can choose certain reliability and trade that off against quality, which in turn can be traded off against quantity in terms of the number of signals that you can add to a channel.

1006     I think at the end of the day those are probably things that are best worked out through an industry consensus.


1007     MR. MERSON:  Perhaps I can add to that too.

1008     It all depends to some degree on what your vision of the future is.  If your vision of the future is that ultimately the world might evolve to an IP based standard and devices might become that much more intelligent in the sense that they can get out there and download the drivers necessary no matter what it is you broadcast, it really says the broadcasters, or whomever is putting out the signal at that point, have the ability to make that choice on a rational basis.

1009     To suggest that even within our office we have any agreement about sort of what an appropriate level of quality is would be not telling the truth.  The engineers think anything below sort of imperfect pitch is perfect and the sales people think as long as you can get the advertising out, it's good enough.  And somewhere in between is a compromise that we will invariably reach.

1010     But I do think it will be one of the issues that technology will solve for us, because it will evolve to a more intelligent software based receiving device that will allow you to move between these kinds of standards on a fairly fluid basis.


1011     I don't think you have to choose at this point.

1012     COMMISSIONER ARPIN:  Still on the IBOC issue, I suppose that you have read the CBC intervention in which they made comments about both AM IBOC and FM IBOC.

1013     I don't know if you have comments on the CBC concerns.

1014     MR. STACEY:  I think we have found that what the CBC has said in its submission is very much complementary to what the CAB has said.

1015     I think certainly public and private broadcasters have the same ambition to eventually transition to digital radio.

1016     There might be some subtle differences in how it is achieved, but I wouldn't say there are any substantially large differences in the way we would approach it.

1017     COMMISSIONER ARPIN:  Obviously the IBOC technology is a proprietary system that belongs to iBiquity.

1018     Is this an issue for your members or do you have any suggestion as to how this issue will be addressed?


1019     MR. MERSON:  Clearly we would choose an open system over a proprietorial system if we had the choice.

1020     To some degree, we are going to be takers rather than givers.  We will have to follow how the U.S. evolves and what they do with iBiquity and how it rolls out.  It might be a technology that gains so much critical mass that it is something that we have to leap on board.

1021     But all other things being equal, we would choose open systems over closed systems.  And based on sort of our belief in how the world will evolve, we feel the better position is to bide our time a little bit and see how it evolves over the next year or two before really leaping in.

1022     COMMISSIONER ARPIN:  And DRM is an open system versus iBiquity, which is proprietary.

1023     MR. MERSON:  Absolutely.

1024     COMMISSIONER ARPIN:  Mr. Merson, you have addressed a few times how you want to use L‑band.

1025     Do you foresee any problems ‑‑ again, in the various experiments that you are talking to, do you foresee problems in getting your receivers?

1026     MR. MERSON:  I think if the L‑band solution was to broadcast in DAB, I think we would be faced with the same situation that we are faced with currently.


1027     If it was DRM, I think it might even be more difficult, just because it really hasn't gained that much momentum at this point.

1028     If it is DVBH ‑‑ and the cell phone industry has proven its ability to turn its receivers over; people sort of go out and re‑buy cell phones once every three years ‑‑ it might be a more logical roll‑out to the extent that DVBH receivers are added to ipods, for example, and you go through a natural replenishment, natural replacement cycle, it might be a much more easy transition or easy growth for us into that industry.

1029     So I think it depends on the technology that is chosen and where you go.

1030     I think DAB, HD radio, I think they face the same issues, which is a limited number of receivers out there and no obvious subsidy, no obvious way to help the consumers out in terms of the purchase of the equipment.

1031     But if it is matched with another device, if it goes into normal replenishment cycle, I think we have that much more chance of making a success out of it.


1032     MR. BRAIDE:  Mr. Arpin, we also have to remember that it is a market‑driven situation and we are sleeping next to the 800‑pound gorilla.  We constantly have to remind ourselves of that.

1033     If we decide to perhaps go with multiple channels in the existing L‑band, increased signals and diversified service, we still may have a hard time getting receivers into the marketplace because of the IBOC situation in America, which has as yet to be proven.

1034     COMMISSIONER ARPIN:  Mr. Merson just said ‑‑ and Mr. Stacey confirmed ‑‑ that even with HD radio, the issue of receivers is still at the high level.  There is only an aftermarket situation.  Only some manufacturers may start to implement it in their cars.  We have learned that the AB was to be implemented in a series of up to 26 models of General Motor cars.  We have seen one in an exhibition, in the city across the river, not even on the street, in a hall.

1035     So I think the issue of receivers still applies to each and every of those technologies.

1036     One that we didn't mention here but surely was part of your submission is DMB.


1037     I know that it is currently contemplated to be implemented in some European countries, and it is my understanding that they have started to implement DMB as well in the U.K.

1038     Do you have any comments regarding DMB?

1039     That one wasn't mentioned at all.

1040     MR. MERSON:  I would be lying if I told you that I had an in‑depth knowledge of DMB.

1041     In our presentation tomorrow, we have asked David Neil, who is Rogers Chief Technology Officer, to come along and show some of the devices.  And he has a DMB device from Korea that is a multimedia capable device.

1042     COMMISSIONER ARPIN:  All right.  We are capable to wait until tomorrow.

1043     We will now move to the copyright section, if I may, of the discussion.

1044     In your submission you have said:

"Radio plays an important role in exposing, promoting and supporting Canadian music and Canadian artists through airplay, the contribution of significant funding through CTD and the payment of copyright fees."


1045     That is paragraph 296 of your presentation.

1046     How does the payment of copyright royalty expose and/or promote Canadian music and artists?

1047     MR. O'FARRELL:  I think what we are trying to bring this Commission's attention to is the fact that over the past number of years what was a static line in the business plans and the radio realities of radio operators has become very much less than a static line and a very dynamic and very costly, expensive cost centre.

1048     As you know, the numbers speak for themselves.

1049     Between 1995 and 2005 the copyright costs to radio stations have jumped by a fairly important margin, going from $25 million in 1995 to $70 million in 2005.

1050     That is as a result of a whole variety of new layering of costs and tariffs that have been added to what was once the single tariff, being SOCAN.


1051     Our contention comes from the perspective that there is a school of thought that you are familiar with, Vice‑Chair Arpin, and others are as well, that suggests that copyright payments are more than payments made by users for the right to use the music as a commodity.  It is indeed that and more:  that and more being a cultural subsidy of sorts that is built into the copyright payment.

1052     When you see the escalating costs going from $25 million to $75 million and you know that the role of music in the radio medium has not varied that much over that period ‑‑ in fact, certain indications would suggest that the capacity of music to actually generate revenue may be in decline.

1053     When you look at daytime parts that are generating revenue for radio stations as opposed to day time parts that are generating less revenue and then you look at the content in those day time parts and you analyze where music is and where music isn't leads you to the conclusion that the cultural subsidy element of the equation may in fact be growing, at least in the appreciation of those individuals who are making assessments on copyright matters at the Copyright Board.

1054     And of course we respect the jurisdictional difference between the CRTC's scope and the jurisdiction of the Copyright Board.


1055     But because both these agencies of the federal government directly relate to a core issue of the business of radio, being music, and because the CRTC looks at the radio component in the overall equation of radio as an industry, and we look at issues like content exhibition, and we look at issues like Canadian Talent Development, we thought we would draw your attention, as in fact your Public Notice also indicated, that this was a matter that was deserving of some concern.

1056     How does it actually promote in terms of the actual causal relationship between the copyright payments and the promotion is not a demonstration we can bring to you this afternoon.

1057     What we do suggest, though, is that in that cultural subsidy component that we believe has indeed inflated over time as the cost of music, the use of music has gone up so significantly, that it is something that this Commission should be considering when looking at this industry's capacity and its obligation to the objectives under the Broadcasting Act that you are required to enforce and to sanction as it relates to music and contributions to music generally.

1058     I don't know if Ken Goldstein, who is an expert that we retained at the CAB in our last SOCAN NRCC proceeding, would like to add something to that.


1059     MR. GOLDSTEIN:  What he said was right.

‑‑‑ Laughter / Rires

1060     COMMISSIONER ARPIN:  Obviously it is not a shared view by all the other intervenors that we are going to hear over the next couple of days.  I know that both CIRPA and ADISQ, in the comments they made, surely held a very different point of view, saying that copyright payments are a financial compensation for the use of the works of the creators, the producers and the performers.

1061     That being said, I will say that they are saying that it is a cost of using the music.

1062     Do you have any comment on the views of CIRPA and ADISQ?

1063     MR. O'FARRELL:  Well, obviously, we have a difference of opinion on that particular matter because we don't see it necessarily from exactly the same perspective.

1064     With due deference to the Copyright Board and the people who sit on the Copyright Board and who try their best to make balanced determinations, we feel, quite frankly, that in the broader picture we as an industry are looking at the subject of copyright as it relates to the business of radio.


1065     Who wouldn't, when one has seen a cost base grow from what it was in 1995 to what it is today, with some degree of anxiety about the future is going to unfold when the last ten years have seen that kind of exponential increase?

1066     So no, we don't share that point of view, and our comments are frankly that radio since its very inception has had a relationship with music that has been very much built around the concept that there was a payment to be made for the use of music.

1067     What we are finding now, particularly as we turn our attention more and more to the digital domain and the rights that will be ascribed to and the payments that will be required of radio or other players in the digital era, including, if I may just by quick reference, Mr. Chairman, go back to the discussion we had this morning on radio or musical content on the internet, we still don't know what the cost to our radio operators who are in that space will be to make use of that commodity and own those platforms.  It's a big question mark still.

1068     It may be fundamentally very prohibitive when measured against the prospect for revenue.  We don't know that yet.


1069     I guess where we take all this discussion is to suggest to you that as you make your determinations on the radio policy review for the future, we ask you to simply consider the fact that as a radio industry dealing with music, that has seen its payments and the copyright burden as a result of multiple rights be added to what was once a very simple commodity‑based situation with one tariff, multiply, we would hope that you would, as we turn our attention to a world that is unregulated more than regulated in terms of our competitors, that that be part of your consideration and that be taken into account for whatever forms of contributions the Commission would expect the radio industry to be cable to make on a going forward basis to the music industry.

1070     COMMISSIONER ARPIN:  Mr. Chairman, that ends my questions.

1071     THE CHAIRPERSON:  Thank you.

1072     Commissioner Cugini.

1073     COMMISSIONER CUGINI:  Good afternoon.

1074     I am going to be talking to you today about your definition of emerging artists for the English language market, its impact on Canadian content obviously, and then ask you to comment on some suggestions made by other participants in these proceedings.


1075     I have to admit to you that I had to read your definition a couple of times to understand it, and I still have some "how to" questions.

1076     So let's do the easy part first.

1077     I get the 12 months from the date they reach the Top 40.

1078     So if I'm looking at a BDS list, for example, and the policy is effective today, does that mean that every artist who is in the Top 40, your members will receive the credit until May 15, 2007?

1079     MR. O'FARRELL:  I am going to ask ‑‑ and I was asked to give lots of advance warning before I was going to throw a question this way.  So I am going to give lots of advance warning to Susan that this is a question for her to respond to.

‑‑‑ Laughter / Rires

1080     MR. O'FARRELL:  But before I lob it over there, I do think you are right.

1081     But I stand to be corrected by Susan, who will now respond to the question.

1082     MS WHEELER:  That is correct.

1083     COMMISSIONER CUGINI:  Irrespective of how long they stay in the Top 40?

1084     In other words, they are there.  If they are there for one week, you get the credit for a year?


1085     MS WHEELER:  That is right.

1086     COMMISSIONER CUGINI:  The area I had the most trouble with was the up until the 12 months from the date.

1087     So if I am looking at a BDS list and I am looking at one which just happens to be the week of October 4th ‑‑ but I guess it could be any week ‑‑ does that mean that every artist from No. 41 to 328, if radio stations play those songs, those Canadian songs, they receive the credit?

1088     MS WHEELER:  Are they in the Top 40?

1089     COMMISSIONER CUGINI:  Not in the Top 40.  I'm referring to the part of your definition that says "up until".

1090     MS WHEELER:  Right.  So they would receive the credit.

1091     COMMISSIONER CUGINI:  Every artist from 41 to whatever.

1092     MS WHEELER:  On the All Formats chart.

1093     COMMISSIONER CUGINI:  On the All Formats chart, right.

1094     Irrespective of the release date?

1095     MS WHEELER:  Yes.


1096     COMMISSIONER CUGINI:  So based on your definition, "Don't Forget Me When I'm Gone", by Glass Tiger, released in 1986, would be considered an emerging artist?

1097     MS WHEELER:  It has never reached the Top 40?

1098     COMMISSIONER CUGINI:  I don't know.

1099     I'm asking based on your definition.

1100     MR. BRAIDE:  I think we are saying that is part of the proviso, that they haven't reached the Top 40 before.

1101     Once they reach it, they are disqualified.  So Glass Tiger wouldn't...

1102     COMMISSIONER CUGINI:  So they could be on this list and there wouldn't get the credit if in the past they had reached the Top 40.

1103     MR. BRAIDE:  They had reached the Top 40.

1104     MS WHEELER:  That's right.

1105     COMMISSIONER CUGINI:  Now you know why I had to read this thing a couple of times.

1106     Or become gold certified for the first time is the other; okay.

1107     So unlike the definition that will be applied to French language, you don't draw any parameters around the release date.


1108     MS WHEELER:  No.  We arrived at the definition through consultations with representatives from the music industry who expressed an interest in seeing an incentive system for emerging artists.  So we took a lot of their input into crafting the definition.  And it was seeing that this would be the most straightforward and effective way to really hone in on those emerging artists.

1109     COMMISSIONER CUGINI:  Okay.

1110     The other area I had a problem with or didn't understand was the area of a solo artist who was part of a group, or becomes a new group or performs part of a trio.

1111     So let's take Chad Kroeger, for example, lead singer of perhaps one of Canada's today's most successful bands.  He launches a solo career.

1112     Do you consider him to be a new artist for 48 months?

1113     MR. SMITH:  That's on the French side.

1114     COMMISSIONER CUGINI:  That's only applicable on the French market, not for the English market at all.

1115     MR. SMITH:  Correct.

1116     COMMISSIONER CUGINI:  All right.


1117     You know that the critics of your plan, of course, are not very happy with the fact that this will ultimately reduce the level of Canadian content that will be broadcast, from 35 to 30 percent.

1118     Did you consider a Smart 40 policy?

1119     I ask that in view of the fact that some of our members in the most recent years were licensed to operate radio stations that have a 40 or even 45 percent CanCon level.

1120     Currently some radio stations, in particular CFMY, programs at an average of 37 percent CanCon.

1121     Did you consider a Smart 40 policy?

1122     MR. O'FARRELL:  Madam Commissioner, when we developed this proposal, we considered many variations on the proposal before we landed where we did.

1123     What brought us to land on this proposal was, as Susan said, some consultation with the music industry to try to figure out an approach that was a reasonably straightforward approach, even though it raises a few questions until we all get used to it.  Any novelty will.


1124     But yes, we have suggested that it should apply to the 35 percent level as opposed to any higher or lower level, largely because we think that for an industry‑wide policy where we are still on a "one size fits all" level across all markets, across all stations, across large, small and very small operators, that this was the right approach because of, frankly, two things.

1125     One, what we have spoken about this morning and we continue to feel is a very important consideration going forward, is that this is an open market where all forms of other competitors that are unregulated have no rules at all.

1126     Therefore, yes, this would be a measure of flexibility to the system that would afford an opportunity for commercial radio broadcasters to be somewhat more competitive.

1127     But, moreover, the second reason was we thought it was a creative and frankly reasonable response to ensure that there would be more room on playlists for emerging Canadian artists, albeit as defined under the proposal, that would ensure that a larger number of Canadian emerging artists would have an opportunity to be placed on commercial radio playlists and hopefully assist them in their commercial music careers.


1128     So fundamentally we thought that this proposal balanced those two objectives and spoke to what we felt was the best measure going forward.

1129     COMMISSIONER CUGINI:  Do you feel that this should be a change in our policy or should radio stations apply for this change as a condition of licence?

1130     MR. O'FARRELL:  Frankly, that's a good question.  I don't know that we landed on one form or the other.

1131     I think intuitively I would say that we would suggest that it be part of the policy as opposed to a COL approach.  But there may be some requirements for certain stations under the specific circumstances that would require a change to their conditions of licence.

1132     I frankly haven't thought it through as it relates to some of the circumstances that you were just relating to.

1133     COMMISSIONER CUGINI:  So would those stations operating at 40 and some at 45 percent CanCon apply this incentive bonus program and therefore be at 30 percent CanCon if we apply it as a policy as opposed to changes to their COLs?


1134     MR. O'FARRELL:  At the end of the day, whether it is by policy or by way of condition of licence, we think that it should be an industry‑wide rule, absolutely.

1135     COMMISSIONER CUGINI:  All right.

1136     Mr. Braide, this morning you said unlike the quota system, programmers will be engaged in actively seeking out and fostering new talent in a manner that responds to the demands of their listeners and is conducive to their market and the supply of Canadian music available for their format.

1137     Why is that not true under a quota system?

1138     MR. BRAIDE:  A quota system, first off, is hampered by sort of the timing of the arrival of product.  It continues to be a great issue for the Canadian industry.

1139     It also has the variation from format to format.

1140     If you look at the availability of music leading up to Christmas time ‑‑ although it is not necessarily always the case now.  Certainly back in the eighties and nineties record companies would release a lot of product heading up to Christmas time, because they counted on people going into the retail stores.


1141     We feel that a quota system is somewhat counter‑productive and that the supply of material fluctuates.

1142     The bonus system that we are proposing allows us an ongoing flexibility to sometimes take more advantage of the situation and at other times to take less advantage of the situation, if that answers your question.

1143     COMMISSIONER CUGINI:  Well, it is the supply of material that I would like to ask you about because, as we have just heard, the only condition on this BDS list from the example that we talked about with Ms Wheeler is that it had reached the Top 40.

1144     So why is supply of material a problem in meeting a quota if a quota was imposed?

1145     MR. BRAIDE:  Because the supply fluctuates on a very significant basis.

1146     COMMISSIONER CUGINI:  But wouldn't this list fluctuate as well because it's based on whether or not it had reached the Top 40?

1147     MR. BRAIDE:  Not necessarily.  I'm not quite sure I follow your logic.

1148     COMMISSIONER CUGINI:  It's just that some of the songs that are 41 to 300 are eliminated because they would have reached the Top 40.

1149     MR. BRAIDE:  Precisely.


1150     COMMISSIONER CUGINI:  Right.

1151     Well, that will change according to this list.  Right?

1152     MR. BRAIDE:  Yes.

1153     COMMISSIONER CUGINI:  Therefore, the supply of what is available for the credit would change as well.

1154     MR. BRAIDE:  Okay, I understand.  I am referring more to new arrivals, new releases.  The supply of new releases into the system is what I was referring to.

1155     COMMISSIONER CUGINI:  Then I guess my point is your argument would have more logic for me if this was tied ‑‑ this being the BDS list ‑‑ to release dates.

1156     MR. BRAIDE:  I understand that.

1157     COMMISSIONER CUGINI:  So the key is, I guess, landing on a definition of emerging artist that could work for either a quota system or your incentive bonus plan.

1158     MR. BRAIDE:  By all means.  It has been a matter of huge discussion, not only within CAB members but also in our discussions with industry representatives.  This is the place we feel most comfortable.


1159     COMMISSIONER CUGINI:  Okay.

1160     A number of participants in these proceedings have said that radio formats have begun to merge.  In fact, in one of the appendices of your submission, "The Making of a Commercial Music Playlist", it says that building a playlist is highly dependent on a station's format.

1161     How would you respond to those who might say that your incentive bonus plan is only encouraging radio broadcasters to play tracks that may not necessarily fit their format just to get the credit?

1162     MR. BRAIDE:  I don't think that is the case at all.  I don't think that is the case at all.

1163     I think what we are trying to enter into here is an extension of the relationship that is sort of defined by our access to the public airwaves.

1164     We make an agreement with the Commission that in return for access to this precious resource, we agree to foster and develop the Canadian music industry as a function of the Broadcasting Act and the imperatives under which you and us both function.


1165     I think what we are saying is that we are willing to make a real step toward drilling down and to finding new, exciting, developing emerging Canadian talent, and we will play more of that, which increases our risk.

1166     The bottom line is we have to attract listeners.  If we have an attractive radio signal, more people come to it, which gives more people the opportunity to hear some of these new and developing artists.

1167     So it is a trade‑off situation we are suggesting.

1168     We feel the number 35 is correct.  We feel the definition of emergency artist is correct to put us in a situation where we can fulfil that contract that we have with you as representatives of the Broadcasting Act.

1169     We feel it is an opportunity to take more risk but get a bonus such that we can continue to maintain good listening levels, high listening levels, and as a result profitability.

1170     COMMISSIONER CUGINI:  Just one final question.


1171     In your written submission you said that low power radio stations should be subject to the same content rules and regulations as those applying to full power radio stations.

1172     Does that include this bonus incentive program?

1173     MR. O'FARRELL:  If the Commission were to move in that direction, that is an open question that I think would be deserving of discussion.  We had not contemplated that in our proposal per se.

1174     Certainly if the Commission were to extend it to private commercial broadcasters for that category and were to extend the same conditions to lower power players, one would expect that there would be a certain degree of rationale to also extend the same bonus system to those low power players.

1175     But frankly we had not given that specific consideration as you framed it.

1176     COMMISSIONER CUGINI:  Because your statement was pretty decisive.

1177     MR. O'FARRELL:  Yes, it was.

1178     It was designed, frankly, to address ‑‑ and Pierre‑Louis might like to join me in answering this question.


1179     It was designed to address what we feel is a concern that has emerged as one of those unintended consequences of the situation.  It simply takes on a certain practice where:  Is there a back door entry to commercial radio through lower power?

1180     The point was we don't think there should be.  We think it would be preferable to avoid that as opposed to fostering that, which is where that statement comes from.

1181     How does it relate to this particular proposal?

1182     I think it is an open question.

1183     COMMISSIONER CUGINI:  All right.

1184     Thank you, Mr. Chair.

1185     THE CHAIRPERSON:  Thank you.

1186     Commissioner Pennefather.

1187     COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.

1188     Good afternoon, everyone.

1189     We are going to go through the proposal on Canadian Talent Development and then your proposals regarding cultural diversity.

1190     On Canadian Talent Development, I may take us back through some of the points that you discussed earlier with Madame Noël.  I think it bears repetition, though, so that we have a good sense of the overall approach.


1191     I looked at your Executive Summary as a capsule of the proposal.  So let's see if I have understood it.

1192     Then we will drill down a little bit on some of the details.

1193     As I understand it, your proposal involves the three types of CTD:  benefits, new licences and renewals.

1194     Am I correct?

1195     MR. O'FARRELL:  That's correct.

1196     COMMISSIONER PENNEFATHER:  On the last, on the renewal component which is currently managed under the 1995‑196 policy, wherein the specific amounts per market are the bottom line and there is the mention of third parties, which include FACTOR, Musique Action, national‑provincial music organizations, performing arts groups, school and scholarship recipients.

1197     As I understand your proposal, all CTD funding would go to your new consolidated fund, unlike this arrangement.

1198     MR. O'FARRELL:  That is correct.

1199     COMMISSIONER PENNEFATHER:  That is correct.


1200     Have you got an estimate, looking at this perhaps a little on the negative side for the moment, on the loss that would mean to the other third party organizations who would have benefited from the CAB plan to date?

1201     MR. O'FARRELL:  The simple answer to that is we don't think that there is a loss to this.  We think there is an absolute upside or a gain to this which is to be achieved by funding it through one funding source.

1202     As I was saying this morning in French, but as you have invited me to do, I would be happy to try to clarify that in English, our proposal is structured in a way that we would hope leaves no doubt whatsoever in the Commission's mind as to where we would like this to go.

1203     It is effectively a proposal that would take all of private radio's CTD contributions and direct them to Radio Starmaker Fund in the English marketplace or Fonds RadioStar in the French marketplace.

1204     Both organizations were approved as constituted by the CRTC with a governance formula and boards and how boards are established and who can sit on the board and the sharing of seats between industry representatives from music and radio and so on.


1205     We believe that those organizations, those independent directors, would be best suited then to ensure that commercial radio music ultimately is served by the monies that would be invested in programs that would be either administered internally by Starmaker Fund or Fonds RadioStar, or that they would confer the administration of programs to FACTOR or other organizations who are best capable of carrying out the particular program mandate of a particular program.

1206     Hence, we don't think that it's about taking money away.  We think it's about channelling and focusing.

1207     So your question as to a calculation on how many losers would there be in this, I don't think that there are losers.  We think that in fact more channelled, more directed funding is going to produce more winners, and we think ultimately the winners are the audience that we want to maintain service to that are commercial radio audience members across the country.

1208     COMMISSIONER PENNEFATHER:  Okay, Mr. O'Farrell, I follow you.

1209     If I continue, then, I'm going to come back, though, and ask you just again to clarify for us a little bit more in detail the financial impact on the other organizations.


1210     The next component is the benefits policy.  Here you have a change.  You propose, again, status quo at 6 per cent of benefits, but that instead of the 3, 2, 1 formula it becomes 5 percent to the consolidated fund and 1 percent discretionary.

1211     Is that correct?

1212     MR. O'FARRELL:  That's correct.

1213     COMMISSIONER PENNEFATHER:  So there was in that formula a 2 percent FACTOR/Musicaction.

1214     Have you any sense of the amount of money that then would be going to this consolidated fund instead of FACTOR/Musicaction under that proposal?

1215     MR. O'FARRELL:  In dollar terms?

1216     COMMISSIONER PENNEFATHER:  That is correct.

1217     MR. O'FARRELL:  I don't have the information right in front of me, but I think Susan Wheeler does.

1218     MS WHEELER:  In terms of the redirection of funds it would be approximately $2.4 million.

1219     COMMISSIONER PENNEFATHER:  Finally, there is also the voluntary contributions and that forms the package.


1220     If we look at the annual reports of the Starmaker Fund and FACTOR, just as a start ‑‑ let's look at FACTOR and your annual report of 2005.  I see here broadcaster contribution significant benefits 3.678 million, and broadcaster contributions voluntary 1.7 let's say.

1221     So  I wanted to be clear that under your proposal that amount would no longer be directed to FACTOR but would be directed to the consolidated fund.

1222     Is that correct?

1223     MR. O'FARRELL:  Which amount were you specifically ‑‑

1224     COMMISSIONER PENNEFATHER:  I'm referring to FACTOR's annual report.

1225     MR. O'FARRELL:  All right.

1226     COMMISSIONER PENNEFATHER:  It has an amount of broadcaster contributions from significant benefits of $3,678,000; broadcaster contributions voluntary $1,696,984.

1227     So the proposal is that that amount would end up in the consolidated fund.

1228     Is that correct?

1229     MR. O'FARRELL:  Yes.

1230     Go ahead, Pierre‑Louis.


1231     MR. SMITH:  Except for the contribution that comes directly to FACTOR that flows from new licences that were approved by the Commission.

1232     COMMISSIONER PENNEFATHER:  Except in your proposal, further on into the bulk of the proposal, the new contributions is included.  As I said, the three components.

1233     So could you clarify?  Are you saying the new licences procedure is not part of the proposal?  According to this, it is.

1234     MR. SMITH:  No.  What it covers, it's the CAB/CTV plans and also the benefits flowing from transferable ownership.

1235     COMMISSIONER PENNEFATHER:  And the voluntary through new licences?

1236     MS WHEELER:  Just to clarify, it would be the portion of the voluntary contributions that are directed towards national funding agencies that would then be put into the commercial funds.

1237     COMMISSIONER PENNEFATHER:  Understood.

1238     So as per page 103, paragraph 410:


"Through directed to FACTOR and Musicaction through significant benefits and voluntary contributions and new licence commitments."  (As read)

1239     So basically the three components of the system.

1240     I think you mentioned earlier the governance point for the funds, the new consolidated fund.

1241     Would the mandate change?  Again I'm looking at the annual reports of the Radio Starmaker Fund and Fonds RadioStar.

1242     Would the mandate of the organization change?

1243     MR. O'FARRELL:  Only to the extent that the Commission found in our proposal the wording or the intent to be inadequate and requiring focusing or completion, if you will, that would carry forward to the mandate of both of those organizations.

1244     We don't think that it's necessary, but there may well be room, in your view, to better target the agency to meet the new expectations that flow from this proceeding as opposed to the proceeding that gave them birth initially, which was the last radio review proceeding.


1245     If there was room, if there was room to enforce one key point ‑‑ that maybe we didn't make well enough and maybe it needs to be reinforced yet again ‑‑ we believe that the fundamental underpinning of wanting to do it this way is all about trying to adapt what we have learned through the experience of Starmaker Fund and through the experience of Fonds RadioStar, which we think is a fairly successful record.

1246     We don't want to suggest that it's the only record, but it's one that I think has had some success so we would like to draw as much in the way of a lesson from that.  It's one that goes to adapting funding mechanisms to the new reality of how music is made.

1247     I think the new reality is something that we all know intuitively, but experts who sit on that board, be it Fonds RadioStar or Starmaker Fund, are even better able to understand.  But it's an artist‑centred world.  It's a world where artists no longer depend on recording companies and label deals the way they once did in the past.


1248     It's a world where ‑‑ and I don't profess to be more of an expert on this than anybody else, except that it's obvious when one reads the multiple stories and examples of people like Joel Plaskett and others who are out there doing things on their own with different approaches to how to commercialize their music.

1249     There are people who buy $3,500 software packages, record something in their home, send it to producers, have CDs produced from that, commercialize them themselves, which various approaches.  It's simply no longer an approach that should be so reliant on the former infrastructural approach which seemed to dominate the former funding model as one that is more artist‑centred.

1250     It's one also, Madam Commissioner, where we try to recognize the fact that the revenues that the artists are making, the Canadian artists that are out there, is no longer drawn principally from record sales.  It's from touring.  I think the number is 75 percent is from touring now.  If it's not exactly 75 percent, it's overwhelmingly greater than it ever was before, but it also flows to the merchandising deals and a whole variety of ways that they are commercializing themselves with various agents and partners in that equation.


1251     That's why we think that going forward to support Canadian artists that would have a chance to make it on commercial radio, the best way to do it is put it through one fund with a simplified mandate, allow that board ‑‑ or both those boards of both those organizations to make the right decisions for the purposes of mandating ‑‑ not mandating, but carrying out that mandate.

1252     As we said earlier today, and we stand by this, we would want to come back and report to you on the success or, frankly, the failure of that approach or what we have learned three years from today, which would be two years into the new policy.

1253     COMMISSIONER PENNEFATHER:  I will get back to that transition model.  I was going to end with that question just because I'm not 100 percent clear on it.

1254     It's clear your explanation for the rationale as you see it, and the rationale, as I understand too from the written submission, is to support the future of the funds and consolidation transparency accountability, and particularly in light of perhaps decreasing benefit transfers, that those benefits would decrease.

1255     But that being said, it's clear that there will be an impact under your proposal on FACTOR and Musicaction in terms of dollar amounts.


1256     Now, I think you described on page 100 that the infrastructure fund, grassroots fund and a commercial fund, the latter being your new proposal, the grassroots fund would be then the work of FACTOR and Musicaction in your proposal, and I think in l'ACR, on décrit ça comme un fonds plus public maintenant.

1257     This means your proposal is FACTOR/Musicaction would rely totally on government funding.

1258     Am I correct?

1259     MR. O'FARRELL:  No, that's not correct, Madam Commissioner.  I'm sorry if we weren't clear on this.

1260     We are not suggesting that FACTOR or Musicaction should be divested of funding going forward.  We are suggesting that we would like ‑‑

1261     COMMISSIONER PENNEFATHER:  Funding from broadcaster, mr. O'Farrell?

1262     MR. O'FARRELL:  Correct.  Because we are suggesting that it would be the board of both these organizations, Starmaker Fund and Fonds RadioStar, to make the determinations as to where would the monies best be administered?  How would the programs be best administered and by whom?  If it's by ‑‑ let me go back to the Québec market for a moment.


1263     The model that exists and that has operated quite successfully in Québec is a very integrated model between Musicaction and Fonds RadioStar.  It is one where basically it is almost totally integrated.  I don't want to overstate it, but it's highly integrated.

1264     We are not suggesting that we want to undue what seems to be working there.  We think that it is just smarter, though, to channel it through the board of Fonds RadioStar to make the determinations and to have the monies delegated to Musicaction that are currently being administered by Musicaction, but though a channel that calls for more accountability and transparency, and the same is true on the Starmaker/FACTOR side of the equation.  That's all we are saying.

1265     And we believe that the best people to make the determination, frankly, are the people who sit on both of those boards that this Commission has approved as to where the funds for those programs would be best administered and by whom.

1266     We are not prejudging this.  We are saying allow those experts to make those calls.

1267     COMMISSIONER PENNEFATHER:  This is what ‑‑

1268     MR. BRAIDE:  If I could add briefly, Madam Commissioner?


1269     It's important that the Commission understand that we believe in a fully funded FACTOR, and it's worthy of note that with the establishment of the MEC program heritage has not removed those monies that those labels were previously accessing.  FACTOR and Musicaction actually have more funding currently than they did before the MEC, because again ‑‑ I'm not sure of the exact number, but it strikes me as being $6 million on the FACTOR side, I'm not sure what it is on the Musicaction side.  That money stays in.  So FACTOR's funding is actually increased.

1270     We are enthusiastic about a FACTOR which continues to be strong within that three‑layered funding of the situation.  As Rael said, the ecosystem or the three legs of the milk stool, the MEC to look after the more established independent record labels, FACTOR which goes out and finds La Rèleve, like Musicaction, finds up and coming artists, develops new and expanding talent, and then the commercial fund which allows us to help those artists that have been discovered move to the next level and help them with their marketing and their touring and those kinds of things which demonstrably are making their careers happen at this point.


1271     COMMISSIONER PENNEFATHER:  I understand, but I guess the key point to emphasize is that your proposal is that all the resources, the funds go to the fund and then back.  It would be up to the fund to send the monies back to Musicaction and FACTOR according to guidelines which you would set, "you" being the Radio Starmaker Fund.

1272     Is that correct/

1273     MR. O'FARRELL:  Approved by the Commission.

1274     COMMISSIONER PENNEFATHER:  As approved by the Commission.

1275     MR. O'FARRELL:  Well, the function of the fund since its inception ‑‑ correct me if I'm wrong ‑‑ has been approved by the Commission both in mandate in terms of reference and all manners of governance.

1276     Is that not correct?

1277     MR. SMITH:  Absolutely.

1278     Just to make it clear, on the board of both Starmaker Fund and Fonds RadioStar there are both representatives of the radio industry and the music industry who are sitting on those two.


1279     COMMISSIONER PENNEFATHER:  So at licensing time, if we take an example of a licence renewal, when it comes to a condition of licence, how would you see the Commission writing up that condition of licence which would assure not only that monies would go to the Radio Starmaker Fund or Fonds RadioStar, but also further on to Musicaction and FACTOR?

1280     MR. O'FARRELL:  Well, we certainly would not want to tie the Commission's hands in the way it would write any future conditions of licence, but we would suggest that if the Commission were to accept the legitimacy of the proposal that we are putting forward here today on the basis of the need to restructure and refocus and redefine our approach to the way the private radio industry brings financial contributions to the development and support of music that is commercial audience friendly, hopefully that would also include some indication from the Commission that in such future decisions it would perhaps show some consistency.

1281     But that doesn't mean to say that future circumstances would not warrant exceptional treatment or exceptional redirections, if you will.  We are not suggesting that it goes any further than for the purpose of the proposal as crafted in the submission before you.


1282     COMMISSIONER PENNEFATHER:  Just to drill down a little bit more on the amount of money, then, that the consolidated fund would receive, I think I understand that it would be starting with a $3.5 million for each of the first two years of the "new policy term".

1283     This is at paragraph 412.

1284     Where did you get the $3.5 million?

1285     MR. SMITH:  It's based on the forecasts based on what has been committed through transfer of ownership and approved by the Commission that are still flowing for the foreseeable ‑‑ the next three years.  So it's based on that.

1286     We never took under consideration money that's not committed yet.  In other words, we know that there will be other transfer of ownership.  We don't know the amount, but we know that there will be some.

1287     MR. O'FARRELL:  Well, let me correct.  We don't know that there are going to be other transfers of ownership, but should there be other transfers of ownership ‑‑

‑‑‑ Laughter / Rires

1288     MR. SMITH:  Did I say the opposite?


1289     MR. SMITH:  In other words, the projections are based on what has been already approved by the Commission.

1290     COMMISSIONER PENNEFATHER:  I guess, then, let me clarify that I'm looking at the Starmaker Fund and the report again, and it says in revenues, contributions from CAB $5 million, not $3.5 million.

1291     MR. SMITH:  Correct.  But the Starmaker Fund functions on a capitalized fund basis.

1292     COMMISSIONER PENNEFATHER:  All right.  No, I understand that.

1293     MR. SMITH:  So therefore there are resources that are put in the fund.

1294     COMMISSIONER PENNEFATHER:  In other words, what you are looking at are the expenses, not the revenues when you are making your calculations, because the grants are $3.5 million in the annual report.

1295     Is that correct?

1296     MR. O'FARRELL:  Yes, that is correct.  And the reason for that is because we thought that there was a certain legitimacy to our argument in suggesting that we were stabilizing something if we were basing it on the track record of what actually was doing out the door in the way of actual funding to funding projects.


1297     COMMISSIONER PENNEFATHER:  Is that the same in your analysis of the $2.4 million from FACTOR?  Repatriation of $2.4 million from FACTOR?

1298     Where did you get the $2.4 million?  I think, Ms Wheeler, you mentioned it earlier.

1299     MS WHEELER:  Yes.  That is the remaining ‑‑

1300     COMMISSIONER PENNEFATHER:  What is the source of that?

1301     MS WHEELER:  That would be remaining funds from transfer of ownership transactions.

1302     COMMISSIONER PENNEFATHER:  What was your reference point, though?  Why did you choose the number $2.4 million?

1303     MS WHEELER:  That would be the amount remaining in FACTOR at the beginning of the new policy, monies already committed and owing to.

1304     COMMISSIONER PENNEFATHER:  But is based on an analysis, let's say, of the previous 2003, 2004, 2005 amounts going to FACTOR in the licence renewal process?  Was it based on a backward looking strategy?

1305     MS WHEELER:  I's not monies in the licence renewal process, it is only the transfer of ownership funding.


1306     MR. SMITH:  Approved by the Commission.

1307     Basically what we have done is that for the purpose of Starmaker and Fonds RadioStar, we are tracking the Commission decision with respect to transfer of ownership, and therefore to invoice the radio stations that have to pay transfer benefits and then after that to redistribute the funding to both funds, Starmaker Fund and Fonds RadioStar according to a formula.

1308     If the transaction occurs on the English side it's 80 percent on the English side and 20 percent on the French side, and so on and so forth, and based on those calculations that we have forecast up until 2012, we could see also what is the 2 percent that goes to FACTOR and to Musicaction for the remaining period.

1309     COMMISSIONER PENNEFATHER:  So grosso modo the 2 percent is the ‑‑ the 2 percent component is the 2.4.

1310     Then finally you have on the voluntary contributions:


"An amount of $820,000 per year has been historically directed to FACTOR and it would be redirected to the new commercial funds."  (As read)

1311     Where did you get $820,000?

1312     MS WHEELER:  That's tracking that we have done to date on the historic contributions to the national funding agencies.

1313     COMMISSIONER PENNEFATHER:  Is it an average then?

1314     MS WHEELER:  Yes, it is.

1315     COMMISSIONER PENNEFATHER:  Because last year the voluntary, as I said earlier, was 1.6.

1316     MS WHEELER:  Was 775, yes.  It is an average over five years.

1317     COMMISSIONER PENNEFATHER:  Just back to a question Madam Noël asked this morning.  If we look at the total picture, then, am I correct that the amount you are looking at, that the combined funds we would be working with going forward would be about $5.48 million?

1318     I'm quoting from paragraph 416.

1319     MR. O'FARRELL:  Combined for Radio Starmaker and for Radiostar?

1320     COMMISSIONER PENNEFATHER:  It says Radio Starmaker here.

1321     MR. O'FARRELL:  Just Radio Starmaker, yes.


1322     COMMISSIONER PENNEFATHER:  What would be the amount for Fonds RadioStar?  Because I believe there is a little different calculation, it's based on a gel au niveau de 1995.  Est‑ce que j'ai bien raison?

1323     M. SMITH : Non.  The calculation for Fonds RadioStar is on the average base of over $2 million.

1324     CONSEILLÈRE PENNEFATHER : Pardon?

1325     MR. SMITH:  Over $2 million.

1326     If we look at the historical trend of all the transfers of ownership that have been approved, we can track that over 43 per cent of the funding went to Fonds RadioStar and 57 per cent of the funding went to STARMARKER FUND.  At the beginning, back in 1999, when we established the idea of the radio marketing fund, the split was supposed to be 80‑20.

1327     We are, on a historical level, at a split that is now 57 on the English side and 43 on the French side and therefore the forecast for Fonds RadioStar is just about $2 million.

1328     COMMISSIONER PENNEFATHER:  I am referring to paragraph 559:


* L'ACR considère que le poids des arguments en faveur d'un gel des contributions au niveau de 1995 est plus grand que celui des arguments en faveur d'une hausse de celle‑ci. +

1329     M. SMITH : Gel des contributions statutaires.

1330     CONSEILLÈRE PENNEFATHER : C'est ça, O.K.  C'est ça que je voulais dire.  Est‑ce que c'est ça ou est‑ce que c'est un gel d'un autre chiffre plus réel?

1331     M. SMITH : Non, non, non.  On s'excuse, on a mal compris la question.

1332     M. O'FARRELL : On a mal compris la question.  Désolé.

1333     M. SMITH : On n'était pas dégelé.

1334     CONSEILLÈRE PENNEFATHER : C'est ça.  Est‑ce que c'est le gel, as you called it, the inordinate amount of CTD funding, or I think in French it is called un montant en termes assez fols, les montants fols.  Alors, je voulais savoir si on gèle le montant fol ou le montant de base.

1335     Just in terms of helping us understand, at paragraphs 387‑388 of your submission you have a table, "Private radio commitments and contributions to CTD 1999‑2005," and I think you have reproduced it here today in your presentation.


1336     Could you provide us with working papers or details of the calculations just to demonstrate where the numbers come from?

1337     MR. O'FARRELL:  Is that the $168 million table?

1338     COMMISSIONER PENNEFATHER:  Yes, it is.

1339     MR. O'FARRELL:  Yes, we can provide that.  Certainly.

1340     COMMISSIONER PENNEFATHER:  Thank you.

1341     Okay, we have looked at those numbers.

1342     Now, your proposal sets an amount based on historic levels of the Fonds RadioStar and STARMAKER FUND and historic levels of FACTOR/MUSICACTION, but there are other proposals that have come forward from other participants in this process which would, for example, take an approach of a percentage of revenues either of an individual station or of a group or of the industry as a whole in any given year.


1343     Why would you feel that your approach is more appropriate in terms of the return to the music industry, let us say, looking at it from the music industry's point of view than an approach which would be based on a percentage of revenues?

1344     MR. O'FARRELL:  Well, I know that a number of people on the panel have some views on this, so I will start by saying a few things and maybe Susan or Pierre‑Louis or Jacques wish to add as they may see fit.

1345     Why do we come to this proposal the way we do, Madam Commissioner, is fundamentally because we start from the premise, again, that this is an open market and we are the only country in the world where private radio in a closed market was required to make financial contributions directly to support music.

1346     COMMISSIONER PENNEFATHER:  If I may interrupt just a moment, I see this is the chart that you closed today.  I was going to just tell Mr. Braide that he did remind us that we are dealing with the guerrilla next door.  So that may have some reason to do with the way we approach it.

1347     MR. O'FARRELL:  Well, there are guerrillas in many back yards.  Some are not necessarily the ones that Mr. Braide was referring to here.  But the fact of the matter is we are the only country in the world where we are required as a private radio industry to make financial contributions.


1348     Whatever the rationale may have been, we don't contest that.  We are just saying it is deserving of some recognition and that was the model that was selected as the right public policy model in a closed market environment, one where this Commission had absolute, singular and exclusive control over market entry.  We now know that that is no longer the case.

1349     So we say while we don't want to suggest that we want to dismantle that, which is why we haven't proposed wholesale regulatory change, we haven't come in with very aggressive proposals, we are saying we believe in this first phase as we try to assess the implications of all this new technology, that there are some things that we should start transitioning and one of those things is with regard to how this contribution is made to the sector.

1350     So we come at it, frankly, from that perspective and then what we take is the next line and we say how much has the last policy yielded, the 1998 policy, and by all accounts that was a very successful policy in terms of the net dollars it produced for the music sector in both English and in French in Canada.


1351     It is a 1,170 per cent increase from 1998 to 2005.  In Quebec alone, it is 1,330, and in Quebec we do not calculate the additional layers of funding that come from not only the federal government, which we know applies to the rest of Canada, but in addition to that, the Quebec government that supports the music recording industry.

1352     So we are saying to go forward from here what we would like to suggest is two things.

1353     What can we possibly look to that would be a benchmark as to how to take us through the first phase of transition?

1354     We have looked at what we call the record of STARMAKER and the record of Fonds RadioStar and we look at the level of demand, the number of applications for funding that have come in, and in both instances the funding requests, the number of funding requests received and the number of funding requests approved has been extraordinarily high.


1355     So we are suggesting that if we could maintain that level and not drop it or at least match it or perhaps even exceed it, with funding that is already in the system, by way of the work of this policy that I was just referring to, which is still producing contributions to the Canadian talent development initiatives, it would probably be a good thing, particularly on the STARMAKER side where the STARMAKER board adopted a capital funding model to allow for, as you can appreciate, the perpetuation of the funds on a going‑forward basis as opposed to spending them on a cash basis.

1356     So based on the historical demand, based on the funding that is already built into the system, the metaphor that we have used, and it is not a perfect metaphor, but the monies, the resources that are in the pipe that are serving Canadian talent development could continue to serve for at least two years.

1357     I think our calculations were fairly conservative.  It could well go beyond two years but we said at least if we can secure those first two years of a new policy, would it not be the right time, perhaps with a little bit of a clearer picture as to where things are going, to sit back down with the Commission, with the music industry, but also indeed with the public funding partners who contribute to this sector and see where things are landed in terms of demand, in terms of success, in terms of failures, in terms of the artist‑centred approach or not and make some assessment about going forward, which is why these other proposals, frankly, in our view ‑‑ and we say this respectfully ‑‑ they don't appear to take any of that into account.


1358     They don't take into account that from over a seven‑year period, what can be equated to nothing other than a windfall of new contributions, financial contributions that come into the music recording sector, which has been a good thing, how do we perpetuate it?

1359     We say we can stabilize it and hold it for at least another two years with the resources that have already been committed, do some things, bring you a reporting, bring you an accounting, bring you an accountability factor to it and make it an artist‑centred approach and have a discussion two years out ‑‑ three years from today but two years into the new policy as to what it all amounted to and where it can take us from here.

1360     COMMISSIONER PENNEFATHER:  Have you discussed this proposal with FACTOR and MUSICACTION?

1361     MR. O'FARRELL:  Have we discussed our proposal?  Absolutely.

1362     COMMISSIONER PENNEFATHER:  If we take your transition proposal, my understanding is that it would not be the status quo but rather the consolidation of the funds would occur pursuant to this process and I believe you are saying that you would undertake then negotiations and report back.


1363     Have I understood it correctly?

1364     MR. O'FARRELL:  Well, let me just be perfectly clear because I want to be absolutely clear on this.

1365     First of all, we have had discussions with many, many industry partners and players who navigate in this space about our proposal.  They have ranged from discussions around how to work better together, including discussions about what we don't agree on, and obviously this is perhaps one of the points on which there is not agreement between ourselves and some of our partners in this area.

1366     Going forward if this Commission were to approve the proposal, yes, we ‑‑

1367     COMMISSIONER PENNEFATHER:  The proposal being the consolidation of the funds?


1368     MR. O'FARRELL:  The consolidation of the funds, yes, exactly.  Yes, it would be our intent to absolutely sit down with the other players to see how we can make this work in everybody's best interest and the most seamlessly possible, including, I might add, and very respectful, I might add, of the role of both the federal and provincial governments who are major funding partners in this initiative as well, because I think the funding partners have to understand where things are going and to the extent possible agree on the objectives that are being pursued and to be as complementary and effective as possible in pursuing them.

1369     COMMISSIONER PENNEFATHER:  If such a report went forward, Mr. O'Farrell, and the Commission received this report and the Commission felt that certain adjustments were required, would that mean another policy process?

1370     MR. O'FARRELL:  I don't think another policy process would be necessarily required.  I think that if it were to focus and to fine‑tune some of the issues that may be of some concern, we certainly would have ample, I think, goodwill on our side to engage in a discussion with the Commission or Commission staff to resolve whatever issues might be outstanding.

1371     We believe as long as the essence of it is there, which is to make it transparent, to make it accountable, to make it efficient and to make it effective, and that all of that is based on the concept that we are making artist‑centred, those are the principles.  How we actually polish them or fine‑tune them, we don't pretend to have the monopoly on good ideas.


1372     COMMISSIONER PENNEFATHER:  The FACTOR and MUSICACTION annual reports are public.  So there is, of course, as we stand now a certain ‑‑ I understand your point about efficiency and so on but there certainly is transparency there.

1373     MR. O'FARRELL:  There is a level of transparency but I think that what we are saying also is that it would be very helpful if there were standardized approaches as to how reporting on these activities occurred.  So if it was apples to apples, we knew what accounting procedures were used.  It would just simplify all of our lives, I believe, including the Commission and other funding partners such as governments in this discussion.

1374     COMMISSIONER PENNEFATHER:  So bottom line, just before we leave it and move on to my next topic, is, as you well know, whatever way we get there, other intervenors in the process look at certain amounts that they feel would be appropriate in terms of Canadian talent development funding, amounts such as $17 million or $16 million.

1375     Under your proposal, the amount of money per year available for CTD funding through the consolidated funds as a process, as you have proposed, with the governance you have proposed, what amount would be available for CTD funding?


1376     MR. O'FARRELL:  The amount that we have proposed, Madam ‑‑

1377     COMMISSIONER PENNEFATHER:  Five million?

1378     MR. O'FARRELL:  Pardon me?

1379     COMMISSIONER PENNEFATHER:  Five million?  Is it $5.49 million?

1380     MR. O'FARRELL:  Well, I just wanted to back up just for a second to say that the amount that we have proposed is built into our overall submission as to how the funding should go forward as a stabilized vehicle for the next two years into the new policy.

1381     COMMISSIONER PENNEFATHER:  And ‑‑

1382     MR. O'FARRELL:  That's number one, if I just may add.

1383     Number two is we have made a full accounting, we think, a transparent demonstration of how we arrived at those numbers.  In other words, we did not pluck numbers out of the air and put them on paper for you.


1384     We tried to build them in a way ‑‑ we may not have done as good a job as we would have like but we have done as best a job we could to provide you with some of the background calculations as to how we got to those numbers.

1385     COMMISSIONER PENNEFATHER:  And if you provide us with a little bit more information on ‑‑

1386     MR. O'FARRELL:  Under $168?

1387     COMMISSIONER PENNEFATHER:  ‑‑ how you got to the numbers.

1388     But also what I needed to know from you today was the source of the $3.5 and the $2.4 and the $800,000, so that, as I understand it, for the next two years, it is an amount of $5.4 million a year.

1389     MR. O'FARRELL:  We will provide you additional details on those numbers to satisfy the questions you have just raised.

1390     And I think in addition to what you also asked, which was the calculations on the chart which showed the $168.5 million to CTD over the course of '99 to 2005.


1391     COMMISSIONER PENNEFATHER:  And I think what would also be helpful for the Commission is how you would see ‑‑ you did mention under the approval of the Commission but particularly, understanding that your approach is to place the entire amount of funds in the hands of the consolidated fund, for reasons which you have described quite thoroughly, on what basis would the Commission be able to know what impact and, going forward, what amount of money would be available for MUSICACTION and FACTOR going forward, in your proposal?  So what guarantees could be provided, what formula could be provided, what guidelines?

1392     You said that it is not our intention and it is a mistake in assumption that we are removing money from FACTOR/MUSICACTION in our proposal.

1393     Let us assume we go forward with your proposal, what can you propose to the Commission which would be a way to assure that we would know what funding was going forward to FACTOR/MUSICACTION, if any?

1394     MR. O'FARRELL:  Again, we would be happy to provide that, with the caveat that we would not want to prejudge the decisions of both of those boards that are made independently of the CAB and independently of third parties who are sitting on behalf of organizations or otherwise.

1395     COMMISSIONER PENNEFATHER:  Well, that is my point exactly, it is a proposal which does move the governance of the CTD funding into the hands of this fund.  So it is a significant change ‑‑


1396     MR. BRAIDE:  Madam Commissioner, I think you would get that information out of the annual reports of Fonds RadioStar and STARMAKER FUND or whatever it would be.  It would be a transparent process.

1397     COMMISSIONER PENNEFATHER:  Exactly, somewhat along the lines that are here.

1398     I am going to move very quickly to cultural diversity and I am going to begin by saying that you are to be commended for ‑‑ Ah! Sarah is getting her microphone.

‑‑‑ Laughter / Rires

1399     COMMISSIONER PENNEFATHER:  I am not surprised.

1400     But you are to be commended for your leadership in this area and for your proposals regarding cultural diversity in radio.

1401     We have in Appendix D and E the proposed best practices and the template for annual reports and I think it is very complete.

1402     I just have a couple of clarifications which ‑‑ if you wouldn't mind, just going through that.

1403     First of all, backing up a bit, how did you go about developing these best practices?

1404     MS CRAWFORD:  Thank you, Commissioner Pennefather, for recognizing that we have taken a leadership role in this.


1405     We are very serious ‑‑ our CAB members are ‑‑ about advancing diversity among our membership on our stations and it is for that reason that we were proactive in undertaking the initiatives that we already have.

1406     We formed a diversity working group within the CAB members to create a set of best practices that you have referred to and also to look at other undertakings such as the renewal of "The Betrayal Code" on behalf of both radio and television, which we might talk about later.

1407     I am sorry, your question in particular about the best practices?

1408     COMMISSIONER PENNEFATHER:  How did you go about developing them?

1409     MS CRAWFORD:  Oh!  We ‑‑ our approach generally was informed by extensive consultations that we private broadcasters have done with numerous stakeholder groups.

1410     As you are well aware, on the television side, private broadcasters had a task force for cultural diversity and also a working group to increase the presence, participation and portrayal of people with disabilities in broadcasting.


1411     Through those consultations on the television side we had outcomes and findings that informed our approach to advance diversity within media overall.  In other words, some of the findings, may of the findings told us about what special and necessary components are within the communications sector to advance diversity.

1412     So we took those approaches and imported them into our work that we did on the radio group but, of course, created our instruments to be very specific and mindful ‑‑

1413     COMMISSIONER PENNEFATHER:  To radio?

1414     MS CRAWFORD:  ‑‑ of the fact that radio is, of course, a very unique and specific medium.

1415     As well, we borrowed from other best practices from existing corporate groups such as those of CHUM.  We know that they work in the communications field.  We know that they work in the radio sector, speaking for CHUM, and we feel that ‑‑ we are confident that these best practices do contain the components that will do what it takes to advance diversity in radio.

1416     COMMISSIONER PENNEFATHER:  That was one of my questions, the specificity of radio, and if you have undertaken to look at that in particular, that answers our question there.


1417     Are you proposing that adherence to the best practices and annual reporting to the CRTC be mandatory?

1418     MS CRAWFORD:  Well, I think there is a very useful function that the regulator has performed in asking licensees on the television side to hold themselves accountable to their public and to the regulator in filing annual reports and that is one of the reasons that we have created the reporting template for radio.

1419     We think that, again, borrows from the approach on television in so far as it hits the major ingredients that we found to be ones that work on the television side but also that we know the Commission through its undertakings and consultations has found to be effective and important in advancing diversity.

1420     COMMISSIONER PENNEFATHER:  So it could work either through this policy or through a condition of licence for individual radio stations?


1421     MS CRAWFORD:  Well, we feel the self‑regulatory protocol that is working very well right now for television would similarly work very well for radio.  The thing that's important to understand in our motivation for doing this, voluntarily and fairly aggressively I might add, is that we live or die by attracting as large an audience as we can as radio broadcasters.  If we do not remain relevant, if we do not remain reflective and inclusive of our audiences, we lose a valuable competitive advantage in this fragmented media world.

1422     We know that we have to, and we will and we want to, fully become as diverse as we possibly can to reflect all of our audiences and we are highly motivated to do so.

1423     COMMISSIONER PENNEFATHER:  In your Best Practice No. 4, "Recruitment Hiring Retention" as an example, as you know some intervenors have commented on the importance of research.

1424     Do you intend to include research to prepare appropriate benchmarks to measure success?

1425     MS CRAWFORD:  Well, we think that each licensee in their reporting and setting out their own corporate goals and objectives, and station goals and objectives, would have to know about their respective market and it's respective diversity and then reflect and include that as appropriate to that station or station group.


1426     We feel that we have done a tremendous amount of research, as I mentioned earlier, that informs our approach and tells us, not only through experiences in Canada but experiences with not only media internationally but other companies internationally, what the best approaches are and tools and initiatives to really advance diversity.

1427     COMMISSIONER PENNEFATHER:  So you have done this research?  You have done this research?

1428     MS CRAWFORD:  We feel the research we have done which has been extensive and unprecedented ‑‑

1429     COMMISSIONER PENNEFATHER:  And it is been shared amongst the various broadcasters?

1430     MS CRAWFORD:  Well, I'm talking about the research that was made public as part of the task force and also as part of the people With disabilities process.

1431     COMMISSIONER PENNEFATHER:  But specific to this radio exercise, would you do research?

1432     MS CRAWFORD:  You know, frankly, we feel that we know we need to advance diversity.  We know there's work to be done.  We don't want to hold up the process by undertaking research further to what we have that's going to tell us what we already know.


1433     Do we feel that we have the tools that are the ones to get the job done?  Do we have the buy‑in?  Do we have the commitment?  Do we have the transparency?  Yes, we believe that we do.

1434     COMMISSIONER PENNEFATHER:  All right.  Thank you very much.

1435     Thank you, Mr. Chairman.

1436     THE CHAIRPERSON:  Monsieur Arpin.

1437     COMMISSIONER ARPIN:  Mr. O'Farrell, could I bring you back on CTD?  I have a few questions.

1438     I am referring you back to the table that you showed us this morning to the second footnote, which reads:

"Unassigned copyright payments target to support independent music recording".  (As read)

1439     If there are unassigned royalties in France ‑‑ I think I could suggest that there is probably unassigned royalties here in Canada.  Have you ever discussed with the collectives and with the various interested parties if it could be used to support the development of the Canadian industry?

1440     MR. O'FARRELL:  Whether there have been discussions on that historically, I do not believe there have.  To my knowledge there have not been, but I may be wrong.


1441     I would, however, based on the suggestion you are making, want to certainly encourage that we take those steps and I would want to be consulting our copyright committee on point to see how we could possibly encourage that kind of a discussion to take place, because it might in fact be very useful.

1442     But as far as I know, Mr. Vice‑Chair, I don't believe those discussions have occurred.

1443     COMMISSIONER ARPIN:  We will now need your comment on ‑‑ as you know, there have been submissions by music industry organizations that they are asking the CRTC to clarify to whom belongs the money that goes to Starmaker and Radiostar funds.  There seems to be a debate about it.  Some have been saying that the money belongs to the broadcasters and the other, the music industry organizations say that it's their money.

1444     Do you have any comments on that?

1445     MR. O'FARRELL:  Do you want the long version or the short version?

‑‑‑ Laughter / Rires

1446     COMMISSIONER ARPIN:  I need the appropriate version for that, at least for the record.

‑‑‑ Laughter / Rires


1447     MR. O'FARRELL:  We feel that those contributions that emanate from the private radio industry are indeed contributions that are made possible through the success of commercial radio broadcaster operations and that are required to be contributed to public policy goals set by the Commission, but ultimately they are set through this process and ultimately the Commission directs the private industry to make those contributions for the purpose of those goals.

1448     COMMISSIONER ARPIN:  My final question to you, Mr. O'Farrell, is:  The Heritage Canada funding to FACTOR is tied to the private broadcaster contribution.  What will the impact be on FACTOR of your plan to finance FACTOR through the money to be allocated by Starmaker?

1449     Will that create a problem with Heritage?

1450     MR. O'FARRELL:  We think that's a premature topic of concern.

1451     I think Commissioner Pennefather asked the question earlier which was how would be intend to go about implementing this?  We obviously would want to settle any possible any wrinkles or difficulties that there may be to the extent that we can, but we would engage in those discussions with a view to addressing any of the concerns that may arise, including the one that you have just mentioned.


1452     COMMISSIONER arpin:  Thank you very much, Mr. Chairman.

1453     THE CHAIRPERSON:  Gentlemen, two final areas, hopefully briefly.  One is your small markets.

1454     At paragraph 162 you refer to the four areas of flexibility that you would like to see: reporting requirements, licence renewal procedures, local sales operations, and transition into digital and you don't elaborate.

1455     Do you have elaboration at this point?  Can you elaborate on these?  I don't believe I saw elaborations on these four areas of flexibility that you were seeking for small markets.

1456     MR. O'FARRELL:  I will ask Pierre‑Louis and Susan to take you through that question, and maybe Mr. Hildebrand would like to add some comments as well.

1457     MR. SMITH:  Thank you, Glen.


1458     In fact, we had internal discussions with our members that evolved in small markets across the country and among the discussions those are the four areas where the broadcasters were saying that there should be more flexibility coming from the Commission, but we haven't fleshed out the yet those elements.

1459     THE CHAIRPERSON:  If that's the state of the record, that's fine.  I don't know whether you want to add anything, Mr. Hildebrand?

1460     Then the issue of market entry test which, as you know, the Commission previously had set it out in a '91 policy notice and then changed it in the commercial radio policy.  You are recommending that we go back to the market entry test and I had a few questions on that.

1461     First of all, you suggest that we should make data available on small, medium and large markets.  I wasn't quite sure, in some of your statements small was below 100,000 and then I think you came a view that small should be defined as markets with fewer than 250,000, but I'm trying to reconcile what you mean by small, medium and large.

1462     I'm referring to paragraph 186 of your brief.

1463     MR. SMITH:  A small market is defined, at least for the English side, as less than a 250,000 population.


1464     On the French side, given the fact there are, I believe, two or three markets that are under 250,000 and more than 100,000, I believe that small market would remain under 100,000 population.

1465     THE CHAIRPERSON:  So what is medium, then, for the English‑language market, in your view?

1466     I'm just trying to get the ‑‑

1467     MR. SMITH:  That's a good question.

‑‑‑ Laughter / Rires

1468     THE CHAIRPERSON:  Your own proposal.

1469     MR. O'FARRELL:  It's somewhere between the small and the large.

‑‑‑ Laughter / Rires

1470     THE CHAIRPERSON:  I have that sense.

1471     You can think about it after the break if you like.

‑‑‑ Laughter / Rires

1472     THE CHAIRPERSON:  The other thing is, in the test itself which you set out further on in those paragraphs, in the Commission's previous test in '91, a five‑year period was used, you are recommending that a three‑year period be used.

1473     Is that correct?

1474     MR. SMITH:  That's correct.

1475     THE CHAIRPERSON:  Is there any reason why you have reduced to three over five?


1476     MR. SMITH:  Again, in the discussion that we had within the CAB, talking to our members who were involved in both applying for new licenses and those who are incumbents in the market, we felt that three years was a reasonable time period, but shows the importance of having some kind of a measure established, historical measure based on at least three years.

1477     THE CHAIRPERSON:  All right.  I see.

1478     Don't let me press you beyond your state‑of‑the‑art or census is here, but I'm trying to flesh it out, to understand it, because when we license radio stations now ‑‑ you can almost describe it a grid comparing the offerings of the applicants Canadian content CTD, local news programming, and so on, which you can almost place on a grid, and then the only other issues becomes:  Can the market absorb it?  And we use a variety of tests, which since '98 we have opened up to whatever evidence parties which to discuss and intervenors bat it back and forth and we make that assessment.

1479     Now, the old test, as you know, group profitability, individual profitability and revenue growth was a pretty low threshold.  It was basically, you know, group profitability, if it wasn't negative then the market might be okay.  That's a fairly low threshold.


1480     Similarly in revenue growth, if there was no positive growth within the previous five years the market will have failed the test, otherwise it becomes open again.

1481     So I'm wondering whether you have given any more thought to these all three tests were really pretty well low threshold tests and they were really, I suppose, meant to break the circuit.  If those tests failed to be reached, the market test would fail, but it didn't provide much guidance going forward on what success would be and what the criteria would be there.

1482     So again, I don't know how far your thinking had been, but these are the questions that came to mind when I looked at what you were putting forward.

1483     MR. SMITH:  Well, we haven't fleshed out in the submission too much about this.

1484     Maybe Ken would like to add a few comments on this idea.

1485     Basically what's important is to have financial information widely available.

1486     THE CHAIRPERSON:  Mr. Goldstein can address that, too.


1487     When you subdivide these categories, which previously weren't subdivided, into small, medium and large markets, are looking at different tests apply to each?

1488     Again, I'm sure your thought hasn't gone that far, but these are some of the questions that arise when you put that forward.

1489     Mr. Goldstein, you can ‑‑

1490     MR. O'FARRELL:  Just before Ken adds, I think that the preoccupation that was motivating much of this is that we feel that the small markets are the most vulnerable in the radio chain.  They are most vulnerable to competition, they are most vulnerable to over‑licensing, and they are most vulnerable to, effectively, the unregulated media that are going to be or are already available.  So we were trying to address what we felt was perhaps the most vulnerable area of the economic equation of radio markets.

1491     Ken?


1492     MR. GOLDSTEIN:  One of the other documents filed as part of the CAB submission of course is the analysis we did by market size and I would be remiss if I didn't take this opportunity, through you, to thank your staff for the help they gave us on doing that report, because that was a lot of work for everybody to break down the data by market size.  So that is another thank you from me to them through you.

1493     THE CHAIRPERSON:  Your Part A licence fees at work.

‑‑‑ Laughter / Rires

1494     MR. GOLDSTEIN:  On that subject I have no comment.

‑‑‑ Laughter / Rires

1495     MR. GOLDSTEIN:  I think that what we have now ‑‑ I mean I remember the old market criteria and there was also once a policy of course of having analyses done in certain cases, independent analyses which lasted for a while and then was not followed up on.

1496     Now, I think we should be informed by the data by market size generally, but I think obviously the Commission is going to do a case‑by‑case analysis based on a given market, a given set of applications, a given set of incumbents.


1497     What would be very useful in this process is to have on the public record as full a record as possible, understanding the needs to maintain confidentiality, so that if we are going into a market A ‑‑ market A of a certain size, certain number of stations ‑‑ we don't only have the data in that proceeding, but we have the data for all the other markets of the same size available at the same time and we can then say, "Okay, well wait a minute.  There are eight other markets across the country that are comparable.  What can we learn from them as opposed to only looking at the one that is immediately before us?"

1498     MR. MERSON:  Perhaps I can just add a quick point, Mr. Chair.

1499     THE CHAIRPERSON:  Mr. Merson...?

1500     MR. MERSON:  That is just to sort of convey the discussions that I think the membership held on the point.

1501     The point wasn't to speak to the desirability or the lack of desirability of a licensing policy or how the licensing policy might actually work or what the criteria might actually be, but simply to convey the notion that we thought we could use a little bit more ‑‑ I don't want to say order to the process, but a little bit more certainly to the process and how the process might actually work.  That was the sole objective, was to be constructive and not obstructionist.

1502     THE CHAIRPERSON:  Oh no, I don't think you have been obstructionist, but I'm not sure you have contributed much more to certainty.

‑‑‑ Laughter / Rires


1503     MR. MERSON:  Except to say that we would like it.

1504     THE CHAIRPERSON:  Mr. Hildebrand...?

1505     MR. HILDEBRAND:  I would just like to make a comment on licensing.

1506     By the criteria that you just heard, many communities in the prairies they are all small markets.  There are no large markets there.  If we are looking at, just as an example, in Saskatchewan, which is under a million people, we have over 24 radio stations serving those people already.  The population of Saskatchewan is declining so the province may be a small market one day.

‑‑‑ Laughter / Rires

1507     MR. HILDEBRAND:  If we look at Calgary, which is going the other way, by that same standard then, Calgary should have twice the radio stations as it has now, so hence Calgary is growing.

1508     So I think the Commission needs to look at the markets on a case‑by‑case basis to see where there is already enough service and where more is needed.

1509     THE CHAIRPERSON:  Thank you very much.

1510     Counsel?


1511     MS MURPHY:  Thank you, Mr. Chair.  I have two points to address.

1512     The first is in response to questions by Commissioner Noël and questions from Commissioner Pennefather.

1513     You have undertaken to further elaborate on your views and/or provide additional information.  Given that this information and your views will be relevant to parties making submissions in their final argument, I wish to confirm that this information will be filed by May 29th.

1514     MR. O'FARRELL:  Confirmed.

1515     MS MURPHY:  Thank you.

1516     Second, to follow up on questions by Commissioner Cugini, with respect to the definition of emerging Canadian artists in English markets you have indicated that the part of the definition that relates to artists that are members of a duo that then become single artists and vice versa only applied to the French market.

1517     I note that on page 94 of your submission, footnote 75 would seem to indicate that that part of the definition does in fact relate to the English market.


1518     Given that this is not consistent with your response, I am asking whether you are willing or whether you could revise this definition and provide us with a corrected version, again by May 29th.

1519     MR. O'FARRELL:  Madam counsel, if that is the only inconsistency today, it's our pleasure.

‑‑‑ Laughter / Rires

1520     MS MURPHY:  The only one noted so far.

1521     Thank you very much.

1522     MR. O'FARRELL:  Thank you.

1523     THE CHAIRPERSON:  Thank you very much, Mr. O'Farrell, ladies and gentlemen.  That concludes our questioning of this panel.

1524     We will now take a break and resume in 15 minutes.  Nous reprendons dans 15 minutes, at 4:15.

‑‑‑ Upon recessing at 1600 / Suspension à 1600

‑‑‑ Upon resuming at 1620 / Reprise à 1620

1525     THE CHAIRPERSON: Order, please.  À l'ordre, s'il vous plait.


1526     To give participants in the hearing some indication of our timing, we will sit until about 7:30 tonight with a break at 6:00 briefly.  We will resume tomorrow morning at 9:00 a.m., although we don't want to make a habit of doing that.

‑‑‑ Laughter / Rires

1527     Madam Secretary, would you call the next item please?

1528     THE SECRETARY: Thank you, Mr. Chairman.  I would now invite the Canadian Independent Record Production Association to make their presentation.  Ms Cori Ferguson and Pegi Cecconi will be appearing for the participant.  You will then have 15 minutes for your presentation.  Please go ahead.

PRESENTATION / PRÉSENTATION

1529     MS FERGUSON: Thank you.  It appears I was a little optimistic with my written remarks, so I will be changing good morning Chair and commissioners to good afternoon Chair and commissioners.  My name is Cori Ferguson, I am the new President of the Canadian Independent Record Production Association.  With me today is Ms Pegi Cecconi, a CIRPA board member and Vice‑President of Anthem Entertainment Group and SRO Management.


1530     Established in the early 1970s Anthem is one of the most important and successful independent music companies in Canada and is home to Canadian artists Rush, Molly Johnson and Stabilo.  We appreciate your invitation to appear at these hearings and are pleased to be here today.

1531     For those of you who may not be completely familiar with us, CIRPA is the national trade organization representing the interests of the English language Canadian‑owned companies in the sound recording sector.  Our members are directly involved in the day to day careers of such established Canadian artists as Bruce Cockburn, Sarah McLaughlin, Sum 41, Cowboy Junkies, Gordon Lightfoot and Rush.  They also represent some of the hottest emerging Canadian talent, including Broken Social Scene, Feist, Sophie Milman, Matt Mayes & El Torpedo, Alexis on Fire, Corb Lund and Metric.

1532     As you are aware from our submission, CIRPA presents arguments in many of the areas the Commission wishes to address in this hearing, all of which we consider important, but we will limit our remarks today to highlighting the critical points we wish to stress.

1533     On the matter of Canadian content we believe CIPRA's proposals positively address both the level of Canadian content airplay and the diversity of artists listeners are exposed to, including new and emerging Canadian talent.


1534     As you know, Canadian‑owned record labels are heavily involved in the development of the Canadian artists and therefore have a direct interest in whether or not their recordings reach Canadians via the public airwaves.

1535     We see from international sales, chart positions and media coverage that Canadian artists are experiencing a global resurgence.  We believe these same artists deserve greater presence on the airwaves at home as well.  CIRPA proposes that the level of Canadian content be raised to 45 per cent for all categories of music.  Many recently licensed category 2 stations are all already required to pay 40 per cent Canadian content and meet that percentage.  It should not be a hardship for stations to reach a 45 per cent Canadian content target.  As noted in our submissions, the number of Canadian tracks released each year exceeds 20,000 and most stations currently add less than 60 Canadian tracks per year.

1536     There is a plethora of Canadian music for stations to choose from.  We believe this to also be true for specialty music stations playing classical and jazz genres.


1537     With 36 years of catalogue development the Canadian market place now produces more than enough quality music in all genres to reach a 45 per cent target.  However as most, if not all, submissions filed by music industry groups including CIRPA have noted, simply raising the level of Canadian content will not likely result in much change to the breadth of Canadian radio play lists.

1538     Currently, there is little difference in play list diversity between radio stations licensed at 40 per cent and those licensed at 35 per cent.  Those licensed at 40 per cent tend simply to play the same artists and songs more often.  Radio airplay is clearly very important to artists' development.  To capture the public's attention most independent record companies and artists releasing their own material in this country cannot afford to compete with the marketing budgets of the major foreign‑owned record labels, never mind those selling other consumer entertainment products, such as DVDs and video games.

1539     Without radio airplay it is difficult to establish new artists and develop their careers and yet radio play lists are dominated by the same artists and the same songs often across multiple formats, very few of them are from independents.


1540     Artists signed to independent record labels or releasing their own material deserve a fighting chance to reach the Canadian public via the airwaves as well.  It is in the second part of CIRPA's Canadian content proposal that we see the greatest potential to expand the diversity of Canadian artists heard on Canadian radio and to ensure that music from new and emerging Canadian artists is included in the mix.

1541     We propose that 50 per cent of the Canadian content level must be owned and controlled by Canadian independents, whether they are companies or artists releasing their own records.  We feel strongly that this proposed initiative will have many benefits:  it will increase airplay of Canadian‑owned master recordings and contribute to great diversity to the music Canadians are exposed to; it will offer new and emerging Canadian artists, most of whom would qualify under this criterion, a better shot at meaningful airplay; it will provide a place for new releases by Canadian artists that maintain healthy careers and fan bases but that radio may now consider passé, so fans can be exposed to new music from these Canadian legends.


1542     It also helps to meet two essential objectives of the MAPL system which are, in the Commission's own words, to support a Canadian‑based music and recording industry and to ensure that Canadian artists and their works have access to Canadian airwaves.  This system means that regardless of where they are signed, every Canadian artist meeting the MAPL requirements would qualify for Canadian content.  It would also ensure that there is more space on the airwaves for music from artists signed to independent Canadian labels or releasing their own material.  This cannot help but address the Commission's concerns regarding diversity of radio play lists.

1543     We support a quota system rather than a bonus system to encourage airplay for Canadian independents.  A bonus system includes no actual requirement to play anything and may act as an incentive to play less overall Canadian music.  We cannot support any proposal that lowers current Canadian content levels or that introduces a bonus system that could result in the same outcome.


1544     Turning now to the matter of Canadian talent development monies.  CIRPA would first like to acknowledge the financial contributions from the radio broadcasting community to CTD funding bodies.  They contribute greatly to the growth and development of Canada's next generation of talented recording artists.  Without this money many artists and record labels could not have succeeded either at home or abroad.  It is essential that money continue to flow to the Canadian music community and the independent recording sector to ensure the identification and development of future stars continues.

1545     The last change in the level of CTD funding was in 1995.  We believe it is time to substantially increase broadcaster contributions to bring them in line with the current and future economic realities of Canada's radio industry.  As noted in statistics provided by the Commission, the CAB, CIRPA, ADISQ and others, the Commission's 1998 policy approach to ownership worked admirably.  Radio's financial situation is very healthy and has become increasingly so over the past decade.


1546     The Commission's recently released figures on radio's profitability in 2005 clearly demonstrate this showing nearly 24 per cent growth in PBIT, almost 100 per cent higher than the per year average over the last five years and nearly 9 per cent growth in revenues to a total of $1.3 billion, which is approximately 60 per cent higher than the average rate for the past five years.  Even AM radio's PBIT number has quadrupled over the last 12 months.  Compare these numbers with those generated by StatsCan, which show that in 2003 Canadian‑owned record labels operated on a 0.5 per cent profit margin.

1547     Despite broadcaster concerns about new technology and increased competition from unregulated platforms, there is no obvious reason why positive financial trends and growth will not continue.  Because these new forums are still in their infancy traditional broadcasters are well positioned to take advantage of them rather than view them as threats.  As we heard this morning, standard broadcasting provides an excellent example of this and is leading the way by diversifying its holdings to include both satellite and internet radio broadcast undertakings.


1548     A central question surrounding Commission mandated CTD contributions, however, is once contributed who owns these funds?  We believe the purpose of CTD money is to develop a healthy supply of top quality domestic recorded product.  While the contributions originate from the broadcasters in return for access to the public airwaves, the funds contributed by radio licensees have a significant impact on Canadian music production.  For that reason, we feel the music industry should be in majority control of deciding how the funds will be spent.  After all, it is the record labels and music industry professionals, not broadcasters, who are experts at finding and developing recording artists, a practice we engage in on a daily basis.

1549     CIRPA believes that the majority of new CTD funding should be directed to FACTOR, where the music industry maintains a majority interest in the board.  The scope and variety of programs that FACTOR offers benefit a far large constituency than the Radio Starmaker Fund programs do.  And although we recognize the need for the Radio Starmaker Fund and its place in the funding ecosystem, we believe that a 70/30 split of new CTD contributions with the larger percentage being directed to FACTOR would be both fair and reasonable.  Additionally, we support an equitable 50/50 split between FACTOR and Radio Starmaker on all monies generated through transfers of ownership.


1550     We would also suggest that money earmarked for local initiatives be directed to music industry associations already running local artist and industry development programs in their regions rather than being left to the broadcasters alone to administer.  We believe the time has come for English Canada to emulate the Quebec funding model and recommend that the existing funds be integrated into one administration.  We feel that FACTOR, because of its extensive experience with a variety and complexity of projects and its history of success over the years, is the natural choice to oversee this combined funding.

1551     Regarding levels of CTD contributions, CIRPA has proposed the following.  Tying CTD contributions to revenues is a much fairer way to calculate CTD contributions from the license renewal process than the current CAB plan.  Given the desperate need for funding, we believe the appropriate amount for CTD contributions should be $15 million per year, barely over 1 per cent of total radio revenues.

1552     In the case of transfers of ownership, the value of the transactions should be raised from 6 per cent to 10 per cent, the television broadcasting standard.  CIRPA does not support the creation of new funding bodies to administer CTD contributions.  Between FACTOR and the Radio Starmaker Fund the two organizations can adequately meet the needs of talent at all developmental stages, especially when the overhaul of FACTOR's programs and additional CTD contributions are taken into consideration.  There is no reason to add additional levels of administrative bureaucracy that will only further reduce the amount of money available to recording artists and the music industry for artists' development.


1553     Additionally, CIRPA objects strenuously to the CAB's proposal to consolidate its members' CTD contributions into one commercial fund for English Canada, the Radio Starmaker Fund.  The broadcaster‑generated funding that flows through FACTOR is essential to the program's ability to meet the industry's needs.  As difficult as that task currently is, it would be utterly impossible to do without the CTD support from the broadcasters.

1554     The Department of Canadian Heritage is already on record indicating that it's support of the FACTOR program may require re‑examination if the broadcasters are allowed to redirect this money to a fund they currently exercise control over.  The loss of this vital program for artists and their support systems would have an absolutely devastating effect on the health of the Canadian music industry, it should simply not be considered.


1555     After examining the other submissions for this hearing, we wish to offer a few comments regarding other proposals that have been put forth.  First, regarding the artist‑centred universe theory, we are in complete agreement that the success of Canadian artists and creators is a critical policy point.  But it must also be stressed that artists don't operate in a vacuum.

1556     Despite the fact that some costs associated with recording music have been reduced and technological advances have made it somewhat easier to enter the digital marketplace, there still remains a need for artists to surround themselves with a highly skilled and motivated support team in order to attain success.  It is because of the involvement of managers, booking agents, record labels, accountants, promoters, tour personnel, etc. in the career development process that artists are afforded the necessary time to create.  As in any other business, a healthy infrastructure is critical to success.


1557     That said, the CAB's proposed consolidation of funds to Radio Starmaker, an artist‑centred program that makes no allowances for a healthy infrastructure to parcel out as it sees fit, would meant the domestic music industry would take a critical blow in terms of financial support.  If the broadcasters are allowed to exercise total control over mandated CTD contributions, including being able to decide how much money, if any, is distributed to FACTOR or other programs, they would in effect have undue influence over public policy and over programs that distribute Canadian taxpayers' money earmarked for the development of Canadian talent.

1558     And finally, we wanted to quickly highlight the matter of copyright payments, which predictably the CAB has raised.  In our submission we suggested the broadcasters could be relied upon to raise this red herring in relation to these hearings and we were not disappointed.  We would like to reiterate that copyright payments are for the use of music as programming for the station and, as such, are a necessary cost of doing business, much like office space, personnel, transmitters and telephones are.  It is about as relevant as complaining that the cost of gas is too high.  These payments should not in anyway be related to the amount of money committed to Canadian talent development programs, as they are entirely unrelated payments that cover totally different uses.

1559     I wish we had time to delve more deeply into the nuances of these issues and the other points CIRPA made in its filing, but we thank you for the chance to appear today and look forward to the continued opportunity to work with the Commission to carryout the mandates of the Broadcasting Act and bring more excellent Canadian music to Canadian airwaves for Canadian listeners to enjoy.  Thank you.


1560     THE CHAIRPERSON:  Thank you.  Commissioner Cugini.

1561     COMMISSIONER CUGINI: Thank you.  Well, perhaps we will give you the opportunity to delve a little bit more deeper through our questions.

1562     MS FERGUSON: I thought you might.

1563     COMMISSIONER CUGINI: Good afternoon and welcome.  I guess you should be thankful we are not saying good evening.  Let us go forward.

1564     I want to talk to you a little bit this afternoon about your proposed Canadian content level ‑‑

1565     MS FERGUSON: Yes.

1566     COMMISSIONER CUGINI: ‑‑ as well as the criteria by which you say that 50 per cent of that 45 per cent would come from independents.

1567     MS FERGUSON: Yes.

1568     COMMISSIONER CUGINI: So first, let us start with the 45 per cent.  You cited in your presentation this afternoon that 20,000 new tracks are available each year.  Is that the one factor that went into your coming up with the 45 per cent as an acceptable level or are there other factors?


1569     MS FERGUSON: We had a long discussion on 45 per cent before we settled at that number.  I mean, when you look at the amount of tracks that we are talking about it is probably ‑‑ to reach from 35 per cent to 45 per cent ‑‑ it will be somewhere in the neighbourhood of adding an additional five, six, seven songs to play list which we did not think was ‑‑

1570     COMMISSIONER CUGINI: Daily or weekly?

1571     MS FERGUSON: On a daily basis, which we did not feel was a difficult thing to do especially when you look at the fact that there are 20,000 songs being released every year and obviously those songs compound over the course of time.  So there is an absolute plethora of Canadian music out there that's not being played.

1572     COMMISSIONER CUGINI: How do you respond to those that would say well if you just raise Canadian content you are just going to end up getting more of the same thing, you are going to get more artist burn, you are going to get more, you know, repeats of the same songs over and over again just to fill that increased quota.


1573     MS FERGUSON: I would absolutely agree that that would be the case, which is why we have suggested ‑‑ I mean we saw when it went up from 30 to 35 and literally what ended up happening was that it was the same artists, just more times and more songs by them.  They would go a little deeper into the records.  It didn't mean that new artists were getting on the air.  We are still in a situation where new artists are having an incredibly difficult time getting on the air.  So that was why, in addition to the 45 per cent, we proposed the 50 per cent for Canadian‑owned masters, which we feel would absolutely broaden the play list.

1574     If you look at the actual songs that are being played on the radio the majority of them are released through the major foreign labels, the Canadian content songs and the Canadian independents' share of overall radio airplay is minimum.

1575     COMMISSIONER CUGINI: And to that point and I am going to read this just to make sure I got it right.  In your written submission you say that the 50 per cent of the 45 total CanCon should be recordings owned by Canadian independents.

1576     MS FERGUSON: Yes.

1577     COMMISSIONER CUGINI: You acknowledge that some of Canada's biggest names, and you repeated some of them here today, would be captured by that definition.

1578     MS FERGUSON: Yes.


1579     COMMISSIONER CUGINI: And you say that there are also emerging artists under there.  So under your plan, how would you define an emerging artist?  Because if we were just to say the 50 per cent from independents what guarantee under your plan is there that emerging artists would be represented, because the independents do also sign major names?

1580     MS FERGUSON: We have major names, definitely.  The majority of artists that are signed to Canadian independent companies would be considered, regardless of what definition you used for emerging artists, most of them just simply haven't been getting airplay, they haven't been getting access to the marketplace, they are smaller artists and we believe that there's not enough of the larger artists.

1581     What we want to do is we want the smaller artists to get up to the level of the Sarah McLaughlins, the Sum 41s.  There are not enough of them to take up that entire 50 per cent at this point.  I think it would virtually open the doors to some of the younger artists that we have been having a much greater time getting on the airwaves.


1582     COMMISSIONER CUGINI: But the question really is how do we distinguish?  The CAB has said if it hits the top 40 or if it has hit the top 40, radio stations get the credit for 12 months.  So they have decided that the top 40 is it, that is going to be the distinguishing between an established artist and emerging artist.  Do you have such a yardstick?

1583     MS FERGUSON: At this time no, we do not and there is a reason why.  Because the way that we approached this, we were aware of the fact that the vast majority of new artists that are being signed or releasing records on their own are not signed to major labels.  The ones that are signed to major labels would obviously have a greater chance of getting airplay.  So what we felt in our 50 per cent was that, you know, however anyone ‑‑ because there have been a million different definitions that have floated around as to what an emerging artist is and you can play with them and you can manipulate it so that, you know, and artist can last for a very very long time selling 45,000 records as long as they don't quite get to their, you know, to the top 40, as long as they get in the top 100 and they can be making a pretty successful career for many many years.

1584     We don't necessarily feel that that is fair as a definition for an emerging artist, so just did not define emerging artist, we define it as Canadian‑owned knowing full well that the vast majority of young artists that are being signed these days are being signed either to Canadian independent labels or releasing their material on their own.


1585     COMMISSIONER CUGINI: So based on what you have read so far, because you haven't heard it all yet, is there one definition that you prefer over another?

1586     MS FERGUSON: Not really.

1587     COMMISSIONER CUGINI: I mean there has to be ‑‑ this line of questioning is because there has to be a way for us to measure and for you as the music industry to measure whether or not, whatever regulatory framework we put in place, is successful.

1588     MS FERGUSON: Yes.

1589     COMMISSIONER CUGINI: And without appropriate barometers, I just don't know how we can do that.

1590     MS FERGUSON: Well, in our case we weren't focusing directly on the emerging artist question, we were focusing on the overall Canadian independents of which the majority would be emerging artists.  So we figured that by concentrating on independents in general that that smaller group of young up and coming artists would in fact be included in that group.  So our standard for measurement is the 50 per cent.


1591     COMMISSIONER CUGINI: And further to that, because you do also provide a bit of a qualifier in your definition of an independent in your written submission ‑‑

1592     MS FERGUSON: Yes.

1593     COMMISSIONER CUGINI: ‑‑ and you say that what does qualify as independent is 50.1 per cent or more Canadian ownership of the company or the master if the artist is the label, right?

1594     MS FERGUSON: Yes.

1595     COMMISSIONER CUGINI: You then give us what would not qualify and that is artists or labels that retain ownership but give up effective control over their masters to companies not meeting ‑‑

1596     MS FERGUSON: Yes.

1597     COMMISSIONER CUGINI: ‑‑ the 50.1 per cent Canadian ownership test.  Why the distinction between the two and who does this definition disqualify in terms of artists?

1598     MS FERGUSON: This definition would ‑‑ and it is not disqualifying from Canadian content, I want to make that perfectly clear, because there is a further per cent.

1599     COMMISSIONER CUGINI: From the 50 per cent of the 45, yes clear.


1600     MS FERGUSON: But from that 50 per cent it would disqualify artists who ‑‑ there is a trend with the major labels these days that they will pick up artists on licensed deals ‑‑

1601     COMMISSIONER CUGINI: Yes.

1602     MS FERGUSON: ‑‑ so that they can take advantage of things like FACTOR, so that they don't have to necessarily be signed to the major label, but the major label effectively is looking after all of their marketing, all of their promotion, all of their distribution and they are being treated as if they are a signed artist internally at the record label, but they are using the licensing process to be able to access public funding through FACTOR and those sorts of things.

1603     If an artist takes ‑‑ so we look at it if an artist or if a company licenses the product to a major label and effectively gives up control of that product for marketing, for distribution, for promotion, for publicity, then at that point it would be deemed to be controlled by the major label.  Now, if an artist had signed a licensing deal or signed a deal for distribution with a major label it wouldn't be the same thing.  As long as the artist and/or the independent record label were to be able to exercise control over the direction of the promotion, marketing and sales of an album then we feel that that should count.


1604     COMMISSIONER CUGINI: In the 45 per cent CanCon overall, but not the 50 per cent as defined by an independent ‑‑ as you defined it independents.

1605     MS FERGUSON: Yeah, if they don't give up control to the major label we feel that they should fit into the 50 per cent Canadian‑owned masters and if they do give up control ‑‑ and it could be just, it may not necessarily need to be a major label that is in Canada but if, for instance, they for whatever reason decided to give up control to a company from England perse, then we would not qualify them for the Canadian‑owned as well.

1606     COMMISSIONER CUGINI: Okay.  You mentioned that you prefer a quota system ‑‑

1607     MS FERGUSON: Yes.

1608     COMMISSIONER CUGINI: ‑‑ and the Canadian Independent Recording Artists Association has proposed such a system, that we should require that one‑third of Canadian selections must be by emerging artists between 6:00 a.m. and 6:00 p.m. and 50 per cent must be by emerging artists between 6:00 p.m. and midnight.  I was just wondering if we could get your reaction to that proposal and..


1609     MS FERGUSON: I think we are talking about different constituencies.  They are talking about artists that are completely and totally unsigned and we are talking about artists that would be signed to independent record labels or acting as their own label.  So what they are proposing is a different I guess look at it and I think what they are proposing is related to the artists that are currently unsigned, the smaller level artists.

1610     COMMISSIONER CUGINI: So do you have any suggestions as to how this framework could make room for those artists?

1611     MS FERGUSON: My framework or theirs?

1612     COMMISSIONER CUGINI: Oh our framework, the regulatory framework for radio going forward.

1613     MS FERGUSON: From the suggestions that we have made, the artists that, the Canadian Independent Recording Artists Association, would qualify in our 50 per cent for emerging.  The 6:00 a.m. to 6:00 p.m. side of things I mean, yes, you know, I would have to certainly talk further with my board of directors, but I can pretty much expect that they would want to see more airplay of Canadian independents between 6:00 a.m. and 6:00 p.m.

1614     COMMISSIONER CUGINI: Thank you, Mr. Chair. Thank you, those are all my questions.


1615     MS FERGUSON: Thank you.

1616     THE CHAIRPERSON: Commissioner Pennefather.

1617     COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.  Good afternoon.

1618     MS FERGUSON: Hi.

1619     COMMISSIONER PENNEFATHER: I am going to talk about Canadian talent development and I wanted to clarify some of the points you made in your written submission.  Actually, you have provided some further detail this afternoon, so I hope I won't ask you to repeat, but just to make sure.

1620     The first question is you propose that the appropriate amount for broadcaster CTD is $15 million per annum.

1621     MS FERGUSON: Yes.

1622     COMMISSIONER PENNEFATHER: How did you arrive at that number?


1623     MS FERGUSON: We took into consideration the monies that would be required to go to the French funding agencies as well at a 60/40 split.  And then we took the remainder and divided it 70/30 between FACTOR and Radio Starmaker Fund.  And we checked to confirm that those numbers, through the reports that you had referenced earlier, we checked to confirm that those numbers were in line for what the requests, for instance, that FACTOR gets and we feel those numbers should adequately get us to a place where hopefully the industry will be stable.

1624     COMMISSIONER PENNEFATHER: So you used the 2005 numbers or 2004?

1625     MS FERGUSON: No, what we did was we took an overall ‑‑ we took the numbers that they were currently giving and then we expanded it knowing that there was going to be a certain percentage of that amount.  We based it out based on the English language, because obviously we work with the English language companies, so we based it on what funding we were looking to see for English language funding organizations and then added a 40 per cent on top of that for the French market.

1626     COMMISSIONER PENNEFATHER: In your written submission the number $15 million comes up in the section dealing with license renewal.  So is your $15 million the total, whether the CTD is coming from renewals, new licenses or benefits?

1627     MS FERGUSON: It is renewals.

1628     COMMISSIONER PENNEFATHER: Just renewals?

1629     MS FERGUSON: Yes.


1630     COMMISSIONER PENNEFATHER: So what would be the total, considering that you also have proposals for transfers which would raise from 6 per cent to 10 per cent and new initiatives?

1631     MS FERGUSON: I honestly couldn't tell you because, again, as somebody mentioned earlier today, I  am not sure how many transfers of ownerships are going to take place in the next little while.  That was part of the reason why we felt that 30 per cent of the renewals money would be best invested in Starmaker to continue to drive funding for Starmaker, so I can't be sure on that number.  And again, I wouldn't want to put a cap on new licenses.  If people were willing to promise, you know, $100 million to FACTOR who am I to say no really?

1632     COMMISSIONER PENNEFATHER: Yes, you mention that in your written submission, $100 million, eh?

1633     MS FERGUSON: Well, you know, I would take $250 million too.


1634     COMMISSIONER PENNEFATHER: I just wanted to go through in a little more detail your written comments about each of the components new, transfer and license renewal.  In the section on new radio where you don't see a cap and where you would love to see $100 million you do say, however, two things of interest right now, is that you recommend national initiatives as opposed to local initiatives.  Can you explain why?

1635     MS FERGUSON: I have never met a recording artist that was looking to develop a regional career.  Recording artists, the vast majority of them, yes, they want to start out in their own region, but they want to grow and in Canada it is absolutely necessary to grow beyond your region.  It is a very difficult country to tour, it is a very difficult country to make money in as an artist.  You have to work really hard to be able to do that.  So we believe that nationally‑based programs are far more helpful to artists who are looking to develop nationally‑based careers.

1636     COMMISSIONER PENNEFATHER: Now, in the same section at paragraph 140 you talk about the artist‑centred approach.  I think in your comments earlier you clarified that a little bit more for us, but you do indicate that you thought that the majority of Canadian Talent Development funding should be earmarked for companies.  How does that connect to an artist‑centred approach?


1637     MS FERGUSON: I am sorry, where was that?

1638     COMMISSIONER PENNEFATHER: Paragraph 140 of your written submission.

1639     MS FERGUSON: We definitely believe that a portion of the money should be put aside for companies, absolutely.

1640     COMMISSIONER PENNEFATHER: The point is to help us understand what artist‑centred approach means to you.

1641     MS FERGUSON: An artist‑centred approach ‑‑ we agree with the concept that it all starts basically from the artist, from a song.  That is where ‑‑ I mean, somebody has to find that talent.  And so we believe that basically everybody that is working in the music industry is centred around the artist, because without the artist we don't have companies.  And so we are absolutely supportive of making sure that, you know, the artists are well taken care of.

1642     But at the same time we're not supportive of making sure the artists are taken care of to the detriment of the companies that are required to help them expand their careers and to actually achieve success, both domestically and internationally.  So really what it is is that we don't want to see one sacrificed for the other.


1643     COMMISSIONER PENNEFATHER: In your view, what is a grassroots approach?

1644     MS FERGUSON: A grassroots approach to..?

1645     COMMISSIONER PENNEFATHER: To funding of CTD?  There are a number of interveners who have emphasized the importance of grassroots funding.

1646     MS CECCONI: From a FACTOR perspective, grassroots is ‑‑ those are those first demos working their way up to the point where they actually can go to Radio Starmaker because they have sold X amount of records.  Without the farm team, you know, it is just like sports, it is like anything else, grassroots is your farm team, it has to be built before it Starmaker is of any value.

1647     COMMISSIONER PENNEFATHER: Now, were you here earlier for the discussion with the CAB?  I am sure you have read their intervention.  Would you like to comment on their recommendation that the Commission should proceed to allow the CAB to conduct a full review of its CTD contributions and undertake negotiations in 2008/2009?  Do you have any comment on that?


1648     MS CECCONI: I do not understand the question.  Can't they review it anytime they want it anyway?  They are reviewing FACTOR and Starmaker all along.

1649     S COMMISSIONER PENNEFATHER: Well, the CAB put together a basic ‑‑ part of their proposal is to proceed over the next three years with a change which would centre and you said you object strenuously to the consolidation of CTD funding into Radio Starmaker Fund.  And that they would thereafter conduct a report and report back to the Commission on that procedure.

1650     MS FERGUSON: If they want to review their CTD funding, that is fine, as long as that doesn't end up meaning that their money is all concentrated in a fund that they control.

1651     COMMISSIONER PENNEFATHER: So, as you said earlier, you do not approve of the idea of consolidated fund ‑‑ all funds going into Radio Starmaker Fund?

1652     MS FERGUSON: Absolutely not.

1653     COMMISSIONER PENNEFATHER: Okay, I think I had one other question for you.  When we are talking about cultural diversity in radio what, in your view, would be ways to approach cultural diversity in radio, either through companies or through an artist‑centred approach?


1654     MS FERGUSON: That is a good question and you stumped me.  Damn, I thought I had everything down.  I mean, honestly I would prefer to discuss it at greater length with some of the radio people to come up with a way that we could make it work for both sides.  I mean, part of what the music industry has to do in order to broaden diversity is to search out those artists that may be more ethnic and to continue to be able to develop them and to grow their careers.

1655     I mean, there are some pretty interesting artists in Canada that play to ethnic crowds and draw thousands and thousands to concerts that no one has ever heard of on the radio ever.  And I think that, you know, if you have artists that are selling that kind of numbers and can draw those kinds of crowds it kind of makes sense to me that people who are going to see them might want to hear them on the radio too.  So, you know, I can't offer the best suggestion, because I don't program a radio station, but if I did it would be very diverse and there would be lots more music on it and I would probably be poor.


1656     COMMISSIONER PENNEFATHER: I am asking you the question also as members of the music industry and particularly on your comment which Vice‑Chair Arpin raised earlier with CAB on who owns these funds, namely CTD funds and whether as you looked to the dispersal of CTD funds and other aspects of your industry, whether you had any specific discussions or approaches to diversity, cultural diversity?

1657     MS FERGUSON: Well, I think and I am speaking semi on behalf of FACTOR without not being involved in FACTOR.  One of the great things that I see about FACTOR is that FACTOR does fund various types of music, various artists across the country that are not necessarily going to be commercially successful or certainly not commercially successful in a way that most people would think.  You may not see them on the top 40, you may not see them on the top 200 chart, but at the same time their music deserves to be supported, it deserves to be heard and it deserves consideration.

1658     And to move monies that are used at FACTOR into a commercial fund, which the broadcasters have made very clear they want to use for the most commercial of music that they can play on the radio, defeats the purpose of doing it that way.  So to concentrate monies in a commercial fund means non‑commercial artists and non‑commercial music goes unheard and undeveloped.


1659     COMMISSIONER PENNEFATHER: Okay.  I also mention it, because I believe on page 16 at paragraph 61 you say it is critical for radio to respond to Canada's multicultural landscape.  So I was just wondering if you had anything on that.  I just forgot to ask you clarification on one point back to the Canadian Talent Development.  Paragraph 127 you recommend and suggest the time is appropriate to follow the lead of Quebec and integrate the various funds into one administration.

1660     MS FERGUSON: Yes.

1661     COMMISSIONER PENNEFATHER: I assume by that you don't mean into a Radio Starmaker Fund?

1662     MS FERGUSON: No.  And as we said, it is not integrating the funds perse, but it is integrating the administration portion of it.

1663     COMMISSIONER PENNEFATHER: Which funds are you referring to in that sentence?

1664     MS FERGUSON: Both FACTOR ‑‑ and I speak only on the English side of things in this ‑‑ both FACTOR and Radio Starmaker.

1665     COMMISSIONER PENNEFATHER: You would integrate the two in one administration?

1666     MS FERGUSON: Into one administration with two separate funds.

1667     COMMISSIONER PENNEFATHER: Two separate funds?


1668     MS FERGUSON: Yes.  And certainly, for the time being, we see it with two separate boards of directors as well to develop policy for each one of those funds keeping in mind the goals that each one of those funds has, because they are separate and they have different goals and different concerns.  But we feel that right now ‑‑ and we have two administrations doing this, we can easily do it by moving them into one administration.  We feel that FACTOR's administration, because of the fact that they have been going for 25 years, they have managed a variety and complexity of projects, that they would be the best suited to be able to handle a combined administration overseeing the two funds.

1669     COMMISSIONER PENNEFATHER: That is different from what the CAB has recommended?  It sounds very similar.

1670     MS FERGUSON: Yes.  The CAB has basically recommended that all their money go to the Radio Starmaker Fund and then the Radio Starmaker Fund, from there, will make a decision as to whether or not they want any money to go to FACTOR or anybody else.

1671     COMMISSIONER PENNEFATHER: So you are saying CTD funding would go separately, but to a joint administrative body?


1672     MS FERGUSON: We are saying that the commitments to each fund should be made separately, but that they would be administered by one overall body.

1673     COMMISSIONER PENNEFATHER: Thank you, that clarifies it.  Thank you very much.

1674     THE CHAIRPERSON:  Thank you.  Just a few follow‑up questions, Ms Ferguson.  I don't know whether you have the CAB's brief there.

1675     MS FERGUSON: I do not have it in front of me.

1676     THE CHAIRPERSON: If you don't it is okay, I'll ‑‑

1677     MS FERGUSON: I am sorry, I only had one suitcase.

1678     THE CHAIRPERSON: I will read you the ‑‑ they make the point at paragraph 3(10) that radio's role has effectively moved from what was previously a key driver for the sale of music to what is now a key driver for the promotion of music.  Would you agree with that?


1679     MS FERGUSON: I think that there is certainly some truth to it.  Definitely, promotion is an added value of having your music on the radio, I mean it certainly helps to get the word out.  But, you know, you watch some of the bigger singles, the songs that they play a lot, and it absolutely affects the sales of those songs as well, so it is a combined thing really in our view.

1680     THE CHAIRPERSON: Why do you think that sales of Canadian music have essentially remained flat since the late 1990s, hovering around the 16 per cent level, notwithstanding Canadian content levels have more than doubled?

1681     MS FERGUSON: I think actually the last number that I saw that Canadian records were about 25 per cent of the top 200 as opposed to 15 per cent.  I think some sales have gone up.  I mean, the music industry has taken an absolutely critical blow from the internet and it has taken years and years for us to, you know, wrap our heads around how it is that we can make some money off the internet and people are just taking our music and trading it around for free, so it is difficult to make money when people are doing that.


1682     So there have been different models and certainly there is grand debate within the industry as to the best way to solve that problem.  But regardless of that the fact that, you know, Canada has got the greatest broadband penetration in the world has added to the fact that our sales are going down.  Now it doesn't mean that our artists are not as popular, if not more popular today.  And we certainly see that a lot of these young acts, the Broken Social Scenes, the Feists of the world are selling records all over the world and so there are opportunities there for sales, but they need to be mined.

1683     THE CHAIRPERSON: Yes, I think the point here is that whatever the level of total sales is, that of that level the percent of Canadians seems to be hovering at around 16 per cent.  I don't know, you indicate that you think you have different figures.  You may, it is paragraph 3(11) of their brief and you may wish to ‑‑

1684     MS FERGUSON: I think their number may be wrong.

1685     THE CHAIRPERSON: ‑‑ with reference to Statistics Canada and you may wish to comment on it now or later on.

1686     MS CECCONI: We have SoundScan figures for the year 2005 that clearly show Canadian sales were at 24 point something, that is 2005 Canadian sales.  So I am not sure where their 16 per cent comes from.  Ours is ‑‑ I mean, admittedly, ours is one year on a very specific thing, records that have sold, but that is what we are talking about.


1687     THE CHAIRPERSON: Well they give a reference here to Statistics Canada and the three years they quote are 1998, 2000 and 2003.  You can look at it and choose to provide updated information on that.  But these figures, based on your information, appear to be low?

1688     MS CECCONI: Incorrect, yes, I think they are low.

1689     THE CHAIRPERSON: Okay, well then you may wish to file on that.  Final question is the CAB brief speaks of artist burn, you know, the outcome of playing songs or a given artist for too long.  You are recommending that Canadian content levels be raised.  Are you concerned about artist burn?

1690     MS CECCONI: Well, it gets down to diversity, doesn't it?  They have got to play more tracks, different tracks.  I mean, obviously we don't want our artists to burn out, radios shouldn't either, but there are options, there are tons of tracks coming out every week.

1691     MS FERGUSON: I can't tell you how many times people working in the music industry have had conversations with radio programmers who have said I am sorry we have one CanCon slot this week ‑‑

1692     MS CECCONI: And it is gone ‑‑

1693     MS FERGUSON: ‑‑ and it is gone ‑‑


1694     MS CECCONI: ‑‑ it is not yours.

1695     MS FERGUSON: ‑‑ it is not yours, you will have to wait another two weeks before we have another meeting where we will put another song in.  The reality is 35 per cent is a minimum, it is not a maximum, it is a minimum and they treat it as if it is a maximum and I don't understand why.  I mean, part of the thing that ‑‑ I guess that sort of drives a little personally crazy is the fact that they are asking for a bonus system to play music that they should already be playing.

1696     THE CHAIRPERSON: Right, and your way of dealing with the phenomenon ‑‑ I mean, what makes you think that at 45 per cent it won't be treated as a minimum?

1697     MS FERGUSON: Well, that is why we have asked for the 50 per cent guarantee for Canadian independent masters.

1698     THE CHAIRPERSON: So that is the way of your ‑‑

1699     MS FERGUSON: Absolutely.

1700     THE CHAIRPERSON: ‑‑ trying to ensure diversity of airplay and a reduction of artist burn?

1701     MS FERGUSON: It means they can't play all Celine Dion all the time.


1702     THE CHAIRPERSON: Okay good, I think I have the point.  Thank you very much.  Those are our questions.

1703     MS FERGUSON: Wow, that was easy.

1704     THE CHAIRPERSON: Madam Secretary.

1705     THE SECRETARY: Thank you, Mr. Chairman.  I would now invite the next participant, the Canadian Recording Industry Association, CRIA, to come forward with their presentation.

1706     Appearing for the participant is Mr. Graham Henderson.  Mr. Henderson, if you can introduce your colleagues and then you will have 15 minutes for your presentation.

PRESENTATION / PRÉSENTATION

1707     MR. HENDERSON: Thank you, Madam Secretary, and good afternoon, Mr. Chairman, Mr. Vice‑Chairman and members of the Commission.

1708     My name is Graham Henderson, I am the President of the Canadian Recording Industry Association.  My members and I thank you for this opportunity to address you today.  I do want to point out that in this proceeding CRIA's representing the interests of Warner Music Canada, Sony BMG, EMI Music Canada and Universal Music Canada.


1709     I am joined today by Duncan McKie President of POLLARA Research, Deborah McLaughlin President of Strategic Inc., Stephen Zolf a partner at Heenan, Blaikie and our regulatory counsel.  Also joining us on my right is Jeremy Summers who is the Director of National Promotions at Universal Music.

1710     We have brought Jeremy today because we believe he can add something important to the hearings, he is one of the country's top radio promotion executives.  His world commissioners is the world that you in many respects create.  He lives with the consequences of rules that are set here.  Day in and day out Jeremy works to get Canadian artists on the air.  And in the preparation of our submissions, executives like Jeremy spent days in airless rooms like these providing us with input based on their practical day to day experience.


1711     If I might begin then.  CRIA's major label members play a vital and often misunderstood role in the Canadian music system.  We are not just about distributing foreign‑owned masters.  Last year alone major labels invested in excess of $10 million in the production of masters recorded by Canadian artists.  Our members are also routinely signing new and emerging talent such as Hedley, DD Clifford, Tomi Swick, Matthew Barber and Amanda Stott.  And if these artists aren't known to you today, just give them time.

1712     But we are about more than just investing directly in Canadian artists as tables 1 and 2 in our written submission make clear.  If we aren't actually producing masters we are in the business of distributing them.  CRIA's major labels have distribution agreements of one sort of another with over a hundred independent labels.  For example, all but two of the English language Canadian albums appearing on last year's top 200 passed through the major label distribution system.  This is because distribution is often complex and expensive and independent labels throughout Canada eagerly seek out the access to distribution networks that are developed and established by major labels.


1713     It has been almost 10 years since Canadians had an opportunity to review the role of commercial radio in Canada and its relationship to the development of Canadian artists, particularly new and emerging talent.  Over that period of time a number of issues identified in the Commission's call and by the various parties to this hearing have gone awry.  Of particular concern is the lack of access to radio for new artists and the consequent lack of diversity in the radio system.  The label community has not stopped producing these artists, they just aren't getting radio anymore and Canadians deserve better.

1714     They have told us time and again in our research, particularly young listeners, that they want and expect to be able to hear new and emerging talent on the air.  And as Ms McLaughlin can tell you, when they get it they are loyal to the stations that provide it.  Providing access to new and emerging artists and displaying them to Canadian audiences directly meets the objectives of the Broadcasting Act and the Commission is the custodian of these objectives.

1715     At the last commercial radio hearing the Commission established a flexible regulatory framework in reliance on certain promises from radio.  The framework itself was not the problem.  What was missing was a system for adequately monitoring compliance with the rules and attaching consequences for non‑compliance.  Accountability, which should be a watchword in any rule‑making system, was lacking.  These hearings come at a crucial juncture in our history.  Radio is arguably more important today to the health of the music ecosystem than it was eight years ago.


1716     MR. SUMMERS: Two nights ago Mobile, a recent Universal signing, played before a sold out house in Toronto.  I was there.  It seems like forever since we shipped their first single, but in fact it was only nine months ago.  The story of how we got from there to here would be incomplete if radio didn't feature prominently in it.  The first single became the No. 1 Canadian rock track in the country.  Single No. 2 was a perfect fit for rock and top 40 radio.  And just three weeks ago their CD debuted in the top 10 sales.

1717     This is a rare and amazing feat for a debut record by a Canadian and news of this home‑grown success went around the world that day.  As a result, we have secured a priority release in at least one country based on our success here.  That day newspapers that were, until then, not interested have called or interviews.  A career was launched and it started with radio.


1718     Something wonderful happens when radio supports new Canadian talent. The music lovers, the artists, the retailers, the label team and radio itself, we all win.  And every year our company makes investments in new talent, knowing that some will fail to break through or even break even.  We have always been committed to launching new and emerging talent knowing that they are the life blood of our community.  We rely on our aesthetic judgment, trend analysis, timing and often sheer gut to determine who will have the best chance of success.

1719     When radio supports new and emerging talent there is a chance that bands like Mobile or the Trews could become the next Tragically Hip and Julie Black the next international superstar.  We know that many stations would rather play familiar songs by familiar artists and we are told often that radio exists to play the hits and not break the hits and that kind of thinking can stifle the music industry in Canada.  We can live with that or starting here, starting today, we can give our radio stations an incentive to break new Canadian music.

1720     MR. HENDERSON: The label‑radio relationship should be synergistic.  Labels identify and develop new and emerging talent producing records.  Radio plays those records to attract audience and market it to advertisers.  The success of these emerging artists then allows the label community to invest in newer talent creating a regenerative cycle.


1721     The Commission itself has recognized the importance of this cycle and has, over time, established a framework that facilitated it.  This framework was renewed in 1998 at which time the Commission mandated in effect a bargain involving the Canadian people, the broadcasting industry and the label and artistic communities.  A key aspect of the deal was this, liberalized rules that resulted in an increased concentration of ownership in return for promised diversity, but the diversity failed to materialize.  Diversity, we maintain, that can be restored even in the present inclement climate without doing violence to the broadcasting system itself.

1722     To achieve diversity in the system we need to increase the opportunities for new and emerging talent.  Any business that doesn't do this, doesn't develop new products for its consumers, in this case music for radio audiences, is bound ultimately to fail.  And radio is in danger of permanently alienating a large portion of its youngest audiences, its nest egg of the future.


1723     Accordingly, CRIA proposes a recipe for change, a recipe that really won't work unless each of its constituent parts is added to the mix.  Our ultimate objective is increased diversity through access to the airwaves for new and emerging talent.  However, there is a key proviso, without accountability, without transparency and without monitoring we can propose any set of rules we want, we can establish any goals we want, but we will windup back here in a few years worse off.  Accountability, transparency, monitoring, these are watchwords, watchwords that companies such as Warner, Sony BMG, Universal and EMI live by on a daily basis in the post‑Enron world.  And Canadians have a right to expect that any framework established for our broadcasting system will be similarly governed by these watchwords.

1724     Unfortunately, the rules established for radio in 1998 were honoured in a highly eccentric manner, to say the least.  And CTD money, it may not always have been spent as judiciously as it might have been.  As the Commission itself noticed in its calls for comments, new and emerging talent remains a rarity on Canadian airwaves.  As we say, the yardsticks have not moved.  Here then is our recipe and we note that this recipe is different from that that we proposed in our written submissions.


1725     Since March 15 we have had access to thousands of pages of written filings as well as crucial new information relating to certain of the presuppositions up on which our submission was based.  First, we propose to increase CanCon levels to 40 per cent including peak audience periods.  At the same time, we propose a market‑based non‑intrusive bonus system that would allow broadcasters the opportunity to drop back to a floor of 35 per cent by playing new and emerging artists in the peak audience periods.  We have proposed the definition of new and emerging artist that is both clear, we believe, and easy to apply.  What could be a clearer indication that a given artist is leaving the ranks of new and emerging than the achievement of gold status and/or reaching the top 40 on the BDS all format audience chart?

1726     Our definition relies on objective and widely available data for measuring the achievement of a given artist as new and emerging.  It ensures that a greater number of new and emerging artists will access the broadcasting system on a regular basis.


1727     We believe that the focus of Canadian content should not be on tonnage, but rather on an approach that enriches the 35 per cent mix with these new and emerging talents.  The tonnage system is in effect what we are living with now and it has not worked well for the new talent, nor has it achieved the diversity and other broadcasting policies, policy objectives for the system.  But to be clear, under our proposal 35 per cent is a floor.  What we have now is a dumb 35, a quota that has been satisfied through the overplay of gold tracks.  As the strategic study included with our submission demonstrates, the average age of Canadian tracks on commercial radio is eight years old.

1728     Second, we propose an artist‑centric minor amendment to MAPL that will embrace the contributions of bonafide Canadian artists who are currently excluded from the Canadian content system.  The industrial strategy of 1970 does not seem to apply today.  It is time to focus on the artist.  Now, this is not a scheme dreamed up by my major label members to attain some sort of hegemony over the airwaves, nothing could be farther from the truth.

1729     Our proposal was simply designed to ensure that our 1970 model is updated for modern times.  Who among us thinks that a system that denies Nelly Furtado and Michael Bublé recognition as Canadian artists is a sound one?


1730     Third, FACTOR.  CRIA views the continued viability of FACTOR as one of the central pillars of a successful and thriving Canadian radio broadcasting system.  We have never differed with our friends in the independent community on the need for CTD funding levels to dramatically increase.  Where we did differ was on exactly how the money should be divided between Starmaker and FACTOR.  What is clear, however, is that money does make a difference.  Money, not to put too fine a point on it, talks and our independent community, specifically FACTOR, needs money now, more money.

1731     And as to the exact levels of funding that are appropriate and how the money should be divided between the two funds, we leave that to the wisdom of the Commission and those with a more direct stake in the outcome.  We do not support any capping of FACTOR's CTD funding.  In fact, we support an increase in such funding from any new CTD requirements subject, of course, to the appropriate rules regarding accountability, transparency and monitoring.

1732     We will say this, we are strongly opposed to the creation of new funds.  If there are gaps in funding, then this can be addressed by the two existing funds and the Commission could send important signals in that regard in its final determinations.   We would propose that the Commission, after having developed a new commercial radio framework, assemble a working group of stakeholders to assist with the implementation of a plan to monitor compliance.


1733     There are existing mechanisms that can be adapted.  The development of appropriate monitoring will create transparency in the system and lead directly to accountability.  It will help to ensure the success of young artists in the Canadian radio system.  CRIA would be pleased to participate in such a process.

1734     Finally in closing, we note that a vibrant Canadian music scene depends on a workable system for delivering Canadian artists to local, national and international audiences.  If one part of the system fails, we simply cannot wait for another eight years or even three before addressing any shortcomings.  Our collective responsibility to Canadian artists requires more vigilance and attention than this.  The technology, data gathering mechanisms and the will surely exists to monitor changes to the system on a yearly basis.  We believe that it is within the power and capacity of the Commission to allow for prompt, timely mid‑course corrections, if needed.

1735     We appreciate this opportunity to appear before the Commission and we welcome your questions.

1736     THE CHAIRPERSON: Thank you very much.  Commissioner Pennefather.


1737     COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.  Good afternoon.  Yes, a few changes from your written submission here.  So I am going to look at the Canadian Talent Development component of your overall picture and perhaps you can, as we go through some of your comments in the written intervention, bring us along to how you have come to today's discussion.

1738     One of the principal points you make in your submission is looking at ‑‑ generally, you are looking at a "super fund" you call it and you say, "CTD should focus on a single artist‑centric commercial super fund".  Have you changed your position on that?

1739     MR. HENDERSON: Yes, we have in fact.  And part of that, again, has to do with new information.  At one point we were under the impression that a significant number of the sort of senior members, if you will, of the FACTOR community, the independent community were going to be graduating, if you will, to the MEC fund and we now understand that it is a mere six which leaves, in effect, the FACTOR universe relatively intact.  So that piece of information alone meant it was important for us to rethink our prescription.

1740     COMMISSIONER PENNEFATHER: So what you are saying here today is that FACTOR should continue to get money, not only that, more money?

1741     MR. HENDERSON: Yes.


1742     COMMISSIONER PENNEFATHER: Which is a little different from what you had here.

1743     MR. HENDERSON: Correct.

1744     COMMISSIONER PENNEFATHER: So can you give us a sense..?  Let us back up a little bit.

1745     MR. HENDERSON: Yes.

1746     COMMISSIONER PENNEFATHER: I am going to push you a bit on the point you said you would leave it to us to decide on how much and how.  But let us push it a little bit since you were quite detailed first round.

1747     MR. HENDERSON: Yes.

1748     COMMISSIONER PENNEFATHER: Looking at the universe you have described, what is your sense of an appropriate amount out there for CTD funding?

1749     MR. HENDERSON: Well, there is the three sources, the renewals, the applications and the license transfers.

1750     COMMISSIONER PENNEFATHER: That's right.


1751     MR. HENDERSON: I don't think anybody disagrees that the question of the amount of money that is going to be driven from license transfers is up in the air.  So to the extent that there is money there, that may well be gravy for the system.  The key seems, to me, to be focusing around application ‑‑ sorry, renewals.  That is where we can focus into sort of a surer, you know, way to measure the contribution and it happens on a yearly basis.

1752     What is the appropriate amount?  It costs a lot of money to break records in this country.  And one of the key factors in inducing radio to chase after a record can be ‑‑ and Jeremy might be able to speak better to this ‑‑ is the amount of resources that a label, any label, whether major or independent, can apply to do heavy lifting to support the record at radio, whether it is touring ‑‑ and it costs a lot of money to tour in this country for a breaking act.  It is not something that you can just go out and do and expect to make money to supplement what else you are doing, it actually can cost money.


1753     So whether it is tour support or whether it is point of purchase advertising, all of these are important supplements to breaking music, to breaking artists into the broader community.  So whether you are a major or an inde you need access to that.  And whether it is within FACTOR or Starmaker ‑‑ that is, I would guess, one of the principal points in putting the money there, whether it is in FACTOR which funds, at this point anyway, principally production and marketing or Starmaker, which has slightly different goals, it is all part of a value chain that has to sort of feed in and all components of it have to be healthy.

1754     COMMISSIONER PENNEFATHER: Well, I understand that.  What you are describing, and forgive me if I am wrong, but I what I read here, heard today and what I hear you saying, particularly in your comment about radio's role being even more important ‑‑

1755     MR. HENDERSON: Yes.

1756     COMMISSIONER PENNEFATHER: ‑‑ and I am sure my colleagues will want to talk about that a little bit more ‑‑

1757     MR. HENDERSON: Sure.

1758     COMMISSIONER PENNEFATHER: ‑‑ sounds essentially more to the promotion and marketing side, which would shift the balance to a Starmaker Fund approach.  So that if one is looking at more or less money what would you say to that?


1759     MR. HENDERSON: We are not a direct stakeholder in the sense that we are not a recipient of FACTOR money.  What I think you heard CIRPA say very clearly is that at the front end of the entire process begins an artist or is an artist and an investor.  And sometimes the artist can be their own investor, but more often than not it is the label and they need money to produce the masters that get fed into the system and they need money to market it.

1760     So to denude that component would be, in a sense, to starve the system at the front end.  Does that make sense?

1761     COMMISSIONER PENNEFATHER: Let me put it this way so we understand a little more where you are coming from.  You maintain now, rather than one super fund FACTOR ‑‑

1762     MR. HENDERSON: Right.

1763     COMMISSIONER PENNEFATHER: ‑‑ should remain and the Starmaker Fund ‑‑

1764     MR. HENDERSON: Well, I actually think you end up with two super funds in a sense.

1765     COMMISSIONER PENNEFATHER: Why are they super funds?

1766     MR. HENDERSON: Well, I mean it is just a term, I mean they are two great funds.

1767     COMMISSIONER PENNEFATHER: Okay.

1768     MR. HENDERSON: Yes, they are two great funds.

1769     COMMISSIONER PENNEFATHER: You use the word recalibrate.

1770     MR. HENDERSON: Yes.


1771     COMMISSIONER PENNEFATHER: And would you still maintain that Starmaker should be refocused on supporting the actualisation of the digital marketplace developing ‑‑

1772     MR. HENDERSON: Yes, I absolutely agree.  I think that this is vital at this stage.  What we have experienced in the past seven or eight years has been a cataclysmic upheaval and it has impacted artists at all levels:  artists that were formerly on major labels, have left and they may be on major independents; artists that were on major independents are on now minor independents; artists that were on minor independents may be completely independent altogether.  A lot of it has to do with the pressure of piracy.

1773     But also, on the other side of the equation, are those artists who are taking advantage of the digital environment to move out of the system, to disintermediate the middleman and access their audiences directly.  What this means is you have artists in different proportions, in different areas of the music ecosystem than they were ever before. So funds that primarily focused once upon a time on marketing and promotion at radio now have to think seriously now wait a minute, records break differently now, artists can establish themselves differently now.


1774     And if you read in the press you will see this happens everyday, artists who stay right outside of the system and use file sharing knowingly and in an authorized manner to increase their audiences, to develop a touring base and then work back into the system where they can actually make money selling their records.

1775     Now, with these new realities that means all of these funds need to think about different ways to assist artists in the careers they choose and, for those artists who may not have chosen to be out on the fringes, we need to help them.  It is like a fish tank which needs oxygen and some portions of our fish tank are oxygen starved we need to get oxygen to it.


1776     COMMISSIONER PENNEFATHER: Let me go back to your point about money talks.  So I am going to ask you to talk to me again about the money.  As my colleague said, one point in time while we look at different mechanisms, different models we have enough of a history now and you certainly have the experience to give us a sense of ‑‑ I asked you this before ‑‑ if you could ‑‑ and you know there are models that have come into this proceeding $17 million, $16 million ‑‑ if the Commission is looking at different models and says the results come out to approximately 16 or 17 or 26 what, in your view, should we be looking for?

1777     MR. HENDERSON: In terms of a number?

1778     COMMISSIONER PENNEFATHER: Yes.

1779     MR. HENDERSON: You know, we actually don't have an opinion on the number, except to say that it needs to be significantly more than it is.

1780     COMMISSIONER PENNEFATHER: Significantly meaning double, triple..?

1781     MR. HENDERSON: Well, you know, 1.8 million from license ‑‑ there is another aspect to this as well and that is the system is kind of confusing.  I mean you have a bit of money coming from here and then you have a bit of money coming from applications and you have a bit of  money coming from transfers.  If I recall correctly, earlier today some of the questions were sort of directed at the complexity.  And as a businessperson, if I was sitting across the table would I do a deal like that?

1782     No, I am more interested in what is the total quantum and how do I get it.  And it may be that there are those in the radio community who would agree, let us just come up with a number and then figure out ‑‑ I almost don't care how it comes to me.


1783     But clearly, if the transfers of ownership, money, if that tails off then 1.8 million isn't going to do it.  And I think you have heard very clearly from the independent community that numbers in double digits are within a reasonable range.  And if it is correct, that this amounts to 1 per cent or less than 1 per cent, that does not seem to be fantastically unreasonable numbers.  But again, I think it all has to be considered in the context of moving yardsticks.

1784     The Commission, in my view, set a very clear target for us.  You showed us that in the course of seven or eight years we have added almost nothing to the equation, whether it is money or whether it is an adjustment to MAPL or whether it is CanCon, whatever it is we have to find a way to get these new and emerging artists and I think money is a key component to this.

1785     COMMISSIONER PENNEFATHER: Okay, I think using the 1.8 through that model of the transfers is one bottom line.  But in actual fact contributions, as the broadcasters have made the point, have tended to be higher even through that one door.

1786     MR. HENDERSON: Right.  Through the renewals?

1787     COMMISSIONER PENNEFATHER: Through the renewals, for the transfer benefits ‑‑

1788     MR. HENDERSON: Yes, yes, correct.


1789     COMMISSIONER PENNEFATHER: ‑‑ with a total of 5 million going to Starmaker Fund ‑‑

1790     MR. HENDERSON: Yes, yes.

1791     COMMISSIONER PENNEFATHER: ‑‑ in 2005.  In the transfer benefits the formula is 3 per cent to Starmaker Fund and 2 per cent to FACTOR, 1 per cent to the other initiatives.  On those other initiatives in your written application you talked about Commission improved eligible initiatives.

1792     MR. HENDERSON: Right.

1793     COMMISSIONER PENNEFATHER: This would also apply I think to the new license procedures wherein you said there should be a cap.

1794     MR. HENDERSON: Yes.

1795     COMMISSIONER PENNEFATHER: Can you gives us a sense of what kind of initiatives you have in mind?


1796     MR. HENDERSON: Well, and Deborah may be able to help me out a little bit here, I think what we are getting at is that everything has to work for this to work.  Local initiatives are absolutely vital, but not if there is sort of a scattergun approach to it.  And if we just leave it to applicants who, you know, gather in front of you in large numbers trying to come up with great ideas, that may not necessarily help this Commission and this community move the yardsticks, then I say that is not particularly useful.  I mean, we have examples where local initiatives have involved funding band uniforms.  Now, I don't necessarily think that is helping us move the yardsticks.

1797     So again, it comes sort of back to monitoring and accountability and transparency.  Maybe some basic set of rules that would help applicants to sort of channel local initiatives into something that might make more sense would be called for and I can't say what that list would be and maybe that is part of this working group, that it needs to meet and decide what will move the yardsticks.  But they key is sort of imposing some order on the chaos.

1798     COMMISSIONER PENNEFATHER: You don't feel the current list in Public Notice 1995‑196 gives us an appropriate list?

1799     MR. HENDERSON: You know, I am not familiar with that.


1800     MR. ZOLF: If I could answer that, Commissioner Pennefather.  We looked at that list and we think it is a good start.  We just think thought that a more consistent approach has to be brought to bear in all forums, whether it is new license applications, etc.  But we have looked at that list and indeed it lists quite clearly what are acceptable direct and indirect CTD benefits.  But we think that further focus and further tightening and refinement of that approach needs to be done.

1801     COMMISSIONER PENNEFATHER: Well, as you know, some interveners are coming forward to discuss music education as a component of the list.

1802     MR. HENDERSON: Yes.

1803     COMMISSIONER PENNEFATHER: Do you have any comment on that?

1804     MR. HENDERSON: Well, I mean not perse, except that we think that it sends an important signal that interested stakeholders like that feel that they need to come before this Commission to identify needs that are going unmet and I think that is a signal for us, for the Commission, for the community, for everybody that the way we are spending our money right now might need some fine tuning and adjustment.

1805     COMMISSIONER PENNEFATHER:  Thank you.  Thank you, Mr. Chairman.

1806     THE CHAIRPERSON: Thank you.  Commissioner Cugini.


1807     COMMISSIONER CUGINI: Good afternoon.  You change your position, it forces us to go back to your original submission. So I just want to make sure that there are some elements of your original submission for you to confirm whether or not you still believe that that is what should make up your now 40 per cent Canadian content.

1808     MR. HENDERSON: Correct.

1809     COMMISSIONER CUGINI: I think in your original submission you said 125 per cent or .25 for ‑‑

1810     MR. HENDERSON: Yes.

1811     COMMISSIONER CUGINI: ‑‑ for ‑‑

1812     MR. HENDERSON: 1.25, yes.

1813     COMMISSIONER CUGINI: ‑‑ for ‑‑

1814     MR. HENDERSON:  For new and emerging.

1815     COMMISSIONER CUGINI:  For new and emerging.

1816     And 1.50 for those new and emerging played in peak.

1817     MR. HENDERSON:  Right.

1818     COMMISSIONER CUGINI:  Is that still your position?

1819     MR. ZOLF:  Commissioner Cugini, that has evolved slightly, given our discussions, looking at the all the filings that have been filed, as Mr. Henderson said.


1820     So I think in fact it has evolved slightly to look more at including the bonus only in peak periods.

1821     MR. HENDERSON:  Correct.

1822     COMMISSIONER CUGINI:  So 150 percent or 125?

1823     MR. HENDERSON:  No, 125.

1824     MR. ZOLF:  One hundred and twenty‑five.

1825     MR. HENDERSON:  In fact, I think we can ‑‑ and Debra or Duncan may be able to give you a better breakdown on this.

1826     We sort of know exactly what that means.

1827     If we go to 40 and we offer a 1.25 bonus that is taken advantage to the max, to lower the overall content to 35, that would amount ‑‑ and correct me if I am wrong, Debra ‑‑ to 56 additional spins in a given week.

1828     MS McLAUGHLIN:  That's correct.  That is new and emerging spins.

1829     MR. HENDERSON:  New and emerging spins.

1830     And Jeremy, I think from your perspective as a promotion guy, that is a lot of new spins in a week.


1831     MR. SUMMERS:  Well, it's a great opportunity for all of our new artists, of course.

1832     MR. HENDERSON:  Right.  So that is kind of how we came up with that number.

1833     The other important factor in thinking about this was there is no point in giving bonuses that are too large, because if they are too big, if it's 1.5, then you get down to your 35 percent too easily without enough new and emerging spins to make a difference.

1834     So in the two months since that time, doing an awful lot of thinking about this and refining, we felt 1.25 seems to be right and most importantly Canadians need to hear this.  You don't want to bonus somebody for playing something at a time when nobody is listening.  You want to bonus them for playing it when they are listening.

1835     And the point that I think I made in our presentation is that Canadians actually want this.

1836     Debra's study, which I am sure you have read and are familiar with, suggests that in those markets where diversity is offered, then the listenership in that key demo is more loyal.  It stays with the station.  The tuned times in the 18‑to‑24 bracket are not down to the same extent that they are.


1837     That's what Duncan's polling has told us.  That's what Debra's research has confirmed.

1838     COMMISSIONER CUGINI:  Can you also then confirm what it is that you mean by peak listening times.

1839     Your original submission also alluded to perhaps increasing quota levels during drive home and morning drive periods on radio.

1840     Is this bonus to be applied from 6:00 a.m. to 6:00 p.m. or only for those drive home and morning drive peak hours?

1841     MR. ZOLF:  Commissioner Cugini, it would only be applied in the peak hours, from 6:00 to 9:00 in the morning, and I guess the drive ‑‑ the drive and drive periods as often referred to; and I guess the 3:00 to 6:00 period or the drive‑home period.

1842     I think Debra could clarify that.

1843     MS McLAUGHLIN:  There are some variations across markets in Canada drive starts.  The intense listening peaks a little bit earlier in Toronto, for example, than it would in Regina.

1844     So there are some variations.


1845     One of the things we have discussed is the working committee that has been proposed would actually look at that, because there is no intent to disproportionately disadvantage any smaller station or not to take advantage of the opportunity to have this played in peak periods.

1846     I think the original intent was 6:00 to 9:00 and 4:00 to 7:00, but it would have to be examined.

1847     COMMISSIONER CUGINI:  Therefore, would your recommendation be that in recognition of the various markets across the country that radio stations apply for this change to their conditions of licence as opposed to it being in a general regulatory framework?

1848     MR. ZOLF:  I could answer that, Commissioner Cugini.

1849     I think that discussion took place earlier today, and I think to some extent going by condition of licence may be a more appropriate way to calibrate, to use that word, the applicable restriction, given that licensee's condition on a case by case basis.  Yes.

1850     COMMISSIONER CUGINI:  Is your definition of a new and emerging artist unchanged from your original submission?

1851     MR. HENDERSON:  Correct.

1852     COMMISSIONER CUGINI:  So you still contend that gold certified for the first time could be part of the definition.


1853     MR. HENDERSON:  Correct.  And I think, if I may, some of the potential negative outcomes that you suggested are actually obviated if you are focused on the artist.

1854     By the way, I do think that this working group, or however we figure this out, there is going to have to be a list of grandfathered artists that don't somehow get to qualify.  We are going to have to comb through the list to a certain extent to make sure that we have this right.

1855     But once we've got it dealt with from a heritage perspective, going forward it should be very, very easy.  I don't think you are going to find the Glass Tigers of the world sneaking in.  That is certainly not the intent.

1856     COMMISSIONER CUGINI:  Just one more question with regard to your original submission, because you alluded to making the Maple system more artist ‑‑

1857     MR. HENDERSON:  Yes.

1858     COMMISSIONER CUGINI:  So your original position with regard to the changes to Maple are still a go.

1859     MR. HENDERSON:  Yes.

1860     COMMISSIONER CUGINI:  All right.


1861     Mr. Summers, your example of Mobile, you said Universal released their first single nine months ago.

1862     MR. SUMMERS:  Yes.

1863     COMMISSIONER CUGINI:  Is Universal the first record company that they signed with?

1864     MR. SUMMERS:  Yes.

1865     COMMISSIONER CUGINI:  Have they reached Top 40 status?

1866     MR. SUMMERS:  They have now, yes.

1867     COMMISSIONER CUGINI:  They have now.  And how long has it been?

1868     MR. SUMMERS:  On their second single now, we hit probably a month ago; maybe six weeks ago but probably a month ago, right in time for release.

1869     COMMISSIONER CUGINI:  So based on that and based on the fact that you just released their single nine months ago, and based on your definition, do you feel that it is appropriate that from now until a year from now is when radio stations receive the credit?


1870     In other words, should new and emerging artists be given more credit, I mean for a longer period of time?  Is a year enough, in other words, once they hit the Top 40 to become an established artist?

1871     MR. SUMMERS:  We feel that a year in the life cycle of a project is a reasonable amount of time to allow this artist to go to the next level.

1872     MR. HENDERSON:  If I might add, also if it's too long, then we are sort of replicating the problem.  We want to create churn in the system.  You want artists who have achieved that level.

1873     And a year is a significant period of time, in the case of Mobile, to be considered to be a new and emerging act while Universal is consolidating their career and they have commitments around the world.  That is a significant period of time.

1874     But yes, then it is time to accept the fact that you are not new and emerging, and now it's time for radio to move on to a new new and emerging act.

1875     I might add that by focusing in this way, we avoid a lot of anomalous circumstances.  If you focus on say the release of a record, I can think of a number of artists' careers, who if you were talking about ‑‑ let's look at when their first record was released and then add two years.


1876     My wife's own band, Cowboy Junkies, put out a record called "Whites Off Earth Now!!" in 1985 and it wasn't until 1989 that "The Trinity Session" ‑‑ and I might add that was a full year and a half into that record's life ‑‑ started to achieve the sort of level of success that would have made people say well, you know, maybe they are not new and emerging any more.

1877     So I think the key is:  What is an issue that we can agree on?  You're a gold act.  That's the certification.  You are on the Top 40.  That's something we can all agree on.  And if it's not, let's find a better one.  It's the one that we thought works best.

1878     That is a really clear number and then we add a year and then we move on.  We feel that that will significantly add to the churn of new and emerging talent so that Canadians get the diversity they want.  They will be hearing new stuff all the time.

1879     COMMISSIONER CUGINI:  Just one final question.

1880     You volunteered to be on this working group.  Who else do you suggest or who else do you recommend be represented in the working group?


1881     MR. HENDERSON:  I think it's going to have to be every stakeholder that has something to say about this.  Clearly, that is radio, the independent community, the artist community.  They are all going to have views on this.

1882     But I honestly think it is not going to be that difficult.

1883     The Commission has existing sort of methods to monitor and reports that are required, as I understand.  So I don't think we are starting from scratch here.

1884     We have a firm basis on which we can start and then to that we add the incredible advances that technology has given us in terms of our ability to measure spins and to keep track of what different stations are doing.

1885     We now can do that on a level that was unthought of before.  Somehow I am sure we can come up with a relatively simple, streamlined approach which doesn't involve this Commission in a heavy foot onto a free market.

1886     COMMISSIONER CUGINI:  I lied.  That wasn't my final question.

1887     What was the tipping point in the thousands of pages that you read that made you change your position to a Smart 40?


1888     MR. HENDERSON:  Well, for one, I think it was a misunderstanding.

1889     Our original proposition never envisaged going below 35.  I have to apologize everyone who formed the opinion based on reading those paragraphs that we were proposing something that started at 35 and would allow people to go.  I read this in the newspaper today, and it is just not what we said.

1890     In the aftermath, when you look at it and you realize that it is 56 tracks, 56 new spins, while it's significant, it's not onerous.  Forty percent seems to be a reasonable number; 35 percent we deem to be an optimal number that the system seems to be able to support with new and emerging acts in the mix.  It can work.

1891     So I would say that was the tipping point, was just realizing that we probably had not been clear enough.

1892     So I don't think our position on 35 or 40 ever really changed.

1893     I think what we said was:  Look, it's either going to be done by a quota or it's going to be done by some sort of a bonus system.


1894     But 35 is the number.  And what's wrong with 35?  What's wrong with it?  It needs a better mix.

1895     So this is how we propose.  And we propose a bonus system which we think is less invasive but ‑‑ and we stand by this in our submissions ‑‑ as we monitor this two years on, if we find that we are encountering the same sort of problems, then the Commission may have to look at that mid‑term course correction and that may mean quotas.

1896     But I really doubt that that is going to be the case.  I am persuaded from all of my conversations with radio.

1897     Jeremy and I met with radio in the run‑up to this.  I think there is a real appetite for this bonus.

1898     Even among stations ‑‑ correct me if I am wrong, Jeremy ‑‑ that play sort of classic formats that might otherwise not today consider adding a new artist would consider.

1899     Is that correct?

1900     MR. SUMMERS:  Yes, and I think that addresses the burn factor that they are dealing with now.

1901     MR. HENDERSON:  Tonight in Ottawa ‑‑ or was it yesterday?

1902     MR. SUMMERS:  No, tonight.


1903     MR. HENDERSON:  Black Crowes playing with Matt Mays.  Now there's a mix.

1904     If we can get Matt Mays on the radio with Black Crowes, then we are doing something.  And I think radio will do that.

1905     COMMISSIONER CUGINI:  Thank you very much, Mr. Chairman.  Those are all of my questions.

1906     THE CHAIRPERSON:  Thank you.

1907     Mr. Arpin.

1908     COMMISSIONER ARPIN:  Thank you, Mr. Chairman.

1909     I have a few questions regarding your Smart 40 percent.

1910     I want to learn a bit more about your own experience with promoting Canadian new and emerging artists in French Canada.  I am not talking new and emerging French Canadian artists, but I am talking, say, Mobile, say the groups you have been referring to earlier.

1911     What has been your experience so far?


1912     MR. SUMMERS:  Well, Mobile is a fantastic example because they are actually from Montreal.  So that is one area that we have been very fortunate with the players in Quebec, that they have really embraced Mobile as a local group and a local entity and really been huge drivers for us in that area.

1913     I will be honest with you.  Outside of removing that exception of the local English artist, it is difficult for us to take a west coast English Canadian rock act, English Canadian pop act and have great success in Quebec.

1914     It is much more difficult to get them started on the air.

1915     COMMISSIONER ARPIN:  And I will say I suspect the same thing happened with Simple Plan and Arcade Fire.  I have read that Arcade Fire had never been played on the French broadcast until they reached the top 40 in the U.S.

1916     MR. SUMMERS:  Well, someone actually said to me when I was introducing Mobile and enlisting their support that they had told Warners, when they came with Simple Plan, that right now I can satisfy my English quotient with Madonna.  As long as I can do that, then you need to go build Simple Plan into a hit so that my listeners are demanding it.

1917     And that was said in reference to Mobile.


1918     I am proud to say that we did and that the audience demand called for that group on the air.

1919     COMMISSIONER ARPIN:  Mr. Henderson, as you know, the Commission is trying to apply national rules and that means that the same standard will apply in French Canada as in English Canada.

1920     Have you thought how the smart 40 percent will work in French Canada?

1921     MR. HENDERSON:  I think we are not necessarily thinking, am I correct, that this would apply in Quebec.  There are very different standards for the performance of French language music in Quebec.

1922     I wouldn't advocate a smart 40 for Quebec.

1923     MR. ZOLF:  Just to reiterate that, Commissioner Arpin, the bonus system that CRIA came up with was really calibrated for ‑‑ the objective of it was to focus on the English market and based on its experience in the English market.

1924     If the Commission would want CRIA's views on that, we would be happy to do some thinking and provide it.

1925     COMMISSIONER ARPIN:  Surely we will like to get your comments, because obviously when it comes time to make our own decision we will like to see what you have been able to come up with.


1926     MR. HENDERSON:  I think the situation in Quebec is measurably different.

1927     COMMISSIONER ARPIN:  Oh, it is.

1928     MR. HENDERSON:  I looked at the Commission's Public Notice in effect as a call to arms to English Canada, because the development of new and emerging talent in Quebec is substantial, significant, noticeable, measurable, everything, and we had not done that.

1929     So I feel that all of us on this side ‑‑

1930     COMMISSIONER ARPIN:  But your members' companies are trying to promote Canadian emerging and new artists all across the country.

1931     MR. HENDERSON:  Yes.

1932     COMMISSIONER ARPIN:  Not only in nine of the provinces and three of the territories.

1933     MR. HENDERSON:  Our members?  Well, in fact, in Quebec our members have very little involvement.

1934     COMMISSIONER ARPIN:  Yes.  But even if it's little, there is some ‑‑

1935     MR. HENDERSON:  Correct, yes.  That is correct.


1936     COMMISSIONER ARPIN:  So that's the why of my question.

1937     Could I try a different assumption on your smart 40.  Rather than promoting new Canadian and emerging artists, I want to have your comment.  Say the first 35 percent is the usual Maple, and the remaining 5 percent is the Canadian artist that are not meeting the Canadian Maple.

1938     Do you have any views on that?

1939     We are hearing that Michael Buble, Bryan Adams, Celine Dion, Shania Twain are no more Canadians.  And obviously listeners, when they are hearing that, are totally flabbergasted that they are not Canadian.

1940     MR. HENDERSON:  Right.

1941     You know, we gave an example in the brief of how this can happen.  We gave the Michael Buble example, how the points just don't add up for him.  And we gave the example of Nelly Furtado.

1942     I can imagine that there would be a lot more artists in the same boat.  It is reflective of the fact that people tend to record and work differently today.


1943     MR. ZOLF:  Just to add to that, Commissioner Arpin, that proposal would certainly meet the issue of the Michael Buble problem, but of course it wouldn't deal with the problem of a new and emerging artist.

1944     COMMISSIONER ARPIN:  Right.

1945     MR. ZOLF:  So you would hate that to be a mutually crowded out that objective to be mutually exclusive.

1946     COMMISSIONER ARPIN:  But again, the reason I am asking the question, Mr. Henderson, is that your member companies are the ones who hire the labels of all those Canadian artists.  They surely have a view about it.

1947     MR. HENDERSON:  I think I may have not understood the question.

1948     COMMISSIONER ARPIN:  What I said earlier is that Michael Buble ‑‑

1949     MR. HENDERSON:  Yes.

1950     COMMISSIONER ARPIN:  ‑‑ and Company Limited are not meeting the threshold of the Canadian status.

1951     MR. HENDERSON:  Correct.

1952     COMMISSIONER ARPIN:  Some are claiming that ‑‑

1953     MR. HENDERSON:  They should.

1954     COMMISSIONER ARPIN:  ‑‑ that they should.


1955     MR. HENDERSON:  Yes.

1956     COMMISSIONER ARPIN:  ‑‑ and some are saying that they are not played enough by the existing radio stations ‑‑

1957     MR. HENDERSON:  Right.

1958     COMMISSIONER ARPIN:  ‑‑ because they are not meeting the Canadian status.

1959     MR. HENDERSON:  Right.

1960     COMMISSIONER ARPIN:  You member companies are the labels of those major acts.

1961     MR. HENDERSON:  Right.  Well, but at one point I guess I would say Michael Bublé was not a major act.  He was a new and emerging talent.

1962     COMMISSIONER ARPIN:  Yes.

1963     MR. HENDERSON:  And by simply broadening the definition slightly, as a new and emerging talent his song would have qualified and so sort of you enrich the pool for CanCon and you give radio a greater opportunity to play ‑‑ you know, it just makes the pool that much bigger.

1964     Now, Mr. Bublé today doesn't qualify as new and emerging, so he wouldn't ‑‑

1965     COMMISSIONER ARPIN:  And that I understand.

1966     MR. HENDERSON:  Yes.


1967     COMMISSIONER ARPIN:  I'm saying rather than say that ‑‑ I'm working under different assumptions than the one that you brought here to the table ‑‑ say rather than opening up the credit for ‑‑ giving a bonus for new and emerging artists, the Commission doesn't give any bonus at all, says the rule is 40 percent, but made up 35 percent of standard MAPLE and for the other 5 per cent we will allow the Céline Dions of this world, and Michael Bublé, to make up that difference to achieve the 40 percent.

1968     MR. SUMMERS:  I'm not sure that that would accomplish the aim of getting new artists.  In fact, what it would do is it would increase the quota from 35 to 40 and with that 5 percent it would really only add in music that is currently not in the 35 percent.  So it would be in effect the status quo.

1969     COMMISSIONER ARPIN:  I have a last question and it is based on your presentation.  It is the bottom of page 3 where I find an interesting sentence.

"A Radio is arguably more important today to the health of the music ecosystem than it was eight years ago".  (As read)


1970     Now, I remember eight years ago how radio was vital to the music industry and 15 years before radio was the essential component of ‑‑

‑‑‑ Laughter / Rires

1971     COMMISSIONER ARPIN:  So what do you mean by that statement?

1972     MR. HENDERSON:  It's that they have achieved some kind of apotheosis, I think.

‑‑‑ Laughter / Rires

1973     MR. HENDERSON:  I would think that's what it is.

1974     I guess what I'm saying, and in fact our research has shown this ‑‑ Duncan did some research for us a little while ago ‑‑ when Canadians are asked, you know, "Think of your last purchase.  Where did you hear about it?"  The number of Canadians who say from radio is in fact increasing.

1975     Now, there are other avenues that are also increasing.  Television advertising, which when I started practising law as an artist lawyer wasn't even in the picture.  We considered artists ‑‑ you never advertised anything on television except for K‑Tel‑type records.  Now, it's a staple of how we break artists.


1976     And word‑of‑mouth.  Word‑of‑mouth has always been a major component.  In fact, to go back to my wife's own career, Cowboy Junkies, that was a huge factor.  I remember her going around to retail thanking everybody for the word‑of‑mouth component.

1977     But, you know, in those days word‑of‑ mouth was literally in‑store play and people talking.  Now word‑of‑mouth is much more pervasive due to the digital evolution of our marketplace.

1978     So those evolved, but radio continues to have that sort of central position and it is where large audiences congregate and as a result it is very valuable, and in a fragmented environment maybe more valuable.

1979     COMMISSIONER ARPIN:  This is it for me, but I know that my colleague, Mrs. Pennefather, wants to ask some questions.

1980     COMMISSIONER PENNEFATHER:  Just a quick follow‑up on that.  Is it airplay or is it promotion?

1981     Because this morning also we talked with the panel and Mr. Parisien gave examples where what we were talking about promotion.  Obviously through the course of many hearings we have heard a lot about airplay, not that it's one or the other, but what I'm hearing is the reason for your statement is more the promotion side rather than the playing of the actual piece.


1982     Is that true?

1983     MR. HENDERSON:  Duncan...?

1984     MR. McKIE:  It's a distinction that I have had trouble conceiving myself, but I would say ‑‑ we asked people open‑endedly why they listened to radio and over half of them said to listen to the music.

1985     COMMISSIONER PENNEFATHER:  Okay.

1986     MR. McKIE:  Off top of mind.  We asked them ‑‑

1987     COMMISSIONER PENNEFATHER:  All demos?  All age groups?

1988     MR. McKIE:  Yes, I mean it is pervasive.  Music still ‑‑ across all age groups the playing of music is the principal reason people listen to radio.

1989     Is it greater or lesser than it was eight years ago, I couldn't really tell you that.  But certainly people can't be dismissive of the effect that that will have, both in introducing new music to people, especially new Canadian music to people, and the effect subsequently that would have on sales.


1990     So this distinction between promotion and sales is somewhat lost on me.  I think it's the effect, not the intent that you have to look at, and the effect is people buy records as a consequence of hearing them on the radio.  That hasn't changed.

1991     Whether people intend to promote more or not is another matter.  It is effectively pushing the sale of records.

1992     I think Jeremy may have more to say about this than me.  He does this for a living.

1993     MR. SUMMERS:  I would submit that one feeds the other, in that the successful radio stations, and many of them sitting in the room here, will not execute a promotion or include in a promotion an artist that they are not playing.  I think that it helps to build a familiarity which ultimately helps to make the connection for the consumer.

1994     COMMISSIONER PENNEFATHER:  That's helpful.  I was thinking also about our discussion this morning about new technologies and the world of programming your own music and how that connects to the role of radio now in terms of promotion.

1995     Thank you, Mr. Chairman.

1996     MR. McKIE:  Can I make a comment on that, because I think we submitted quite a bit of research on ‑‑

1997     COMMISSIONER PENNEFATHER:  Yes, I have it here.


1998     MR. McKIE:  ‑‑ the relative use of various sources for music amongst the consumer today and you can see what the trends are.

1999     But certainly other research we have done, especially on downloading for CRIA and other parties, doesn't indicate that that is the sampling source that people think it is.  I think that has been overblown.  I mean there are people that have an interest in suggesting that that is the case, but clearly intermediated recommendations by people who play music on radio are important to people's selection and it creates that kind of momentum that records need to be sold.  You don't necessarily get that by going to some P2P site and downloading 1,000 tracks willy‑nilly.

2000     THE CHAIRPERSON:  Thank you.

2001     Ms McLaughlin, notwithstanding the late hour, I would appreciate a clarification of, I think it's your study submitted with the CRIA brief.

2002     Do you happen you happen to have a copy of it?  Could you turn to page 12?

2003     MS McLAUGHLIN:  Yes.

2004     THE CHAIRPERSON:  I'm trying to fully understand the point you are making on that page.

2005     This is the one, "Range of artists played", No. 5.

2006     MS McLAUGHLIN:  Yes...?


2007     THE CHAIRPERSON:  Moving from the bottom up, I take it that if I wanted to know the top 10 percent, would I go to the bottom chart ‑‑

2008     MS McLAUGHLIN:  Yes, you would.

2009     THE CHAIRPERSON:  ‑‑ down to Santana basically?

2010     MS McLAUGHLIN:  Yes.

2011     THE CHAIRPERSON:  Okay.  So those are the top 10 that you are referring to, and you are saying that ‑‑ I'm not sure what the number on the table above 867,175 is?  I'm not quite sure.  I know that on the following page when you provide the number of spins you provide a number of a total of 84,354 and I'm trying to reconcile that, because I took that to be the spins of the top 10 artists and I'm just not sure what that 867 figure is.

2012     McLAUGHLIN:  The 867 is the spins of all of the artists.

2013     I have to admit that I don't have all of the backup with me so I can't really go back and confirm this, but my summary is that it is all of the spins of the artists over that period of time, and the 10 percent is the 84,354 approximately.


2014     THE CHAIRPERSON:  So that number, it should really be 84,000 in there?  Because if you look at the 27,836, it clearly would be 3 percent of that, not 33 percent of that.

2015     MS McLAUGHLIN:  You know, I'm going to have to admit to it being very late in the day and I'm very tired and I'm sorry, I can't ‑‑

2016     THE CHAIRPERSON:  No, I don't want to press you on that.

2017     MS McLAUGHLIN:  But I will be glad to clarify it.

2018     THE CHAIRPERSON:  What is the point being made here?

2019     When I look at the spins and the artists and I look at the average on the next page, other than the year and I'm not sure ‑‑ I take the point that Canadian spins seem to be older slightly.  But, I mean, if the ratio of Canadian content to non‑Canadian is 35 to 65 and the spins is 33 to 67, what is the point that you are making here in this?  I mean, that would seem to line up pretty well.

2020     MS McLAUGHLIN:  It does line up if you are looking at Canadian content as a whole mass, and any Canadian content is good content.


2021     But I think the point of this entire document and my examination was to understand how audiences are declining if we are doing such a great job in providing diversity as the 1998 policy was intended to create.

2022     It was prefaced, and it led me to look at the media‑based data, my findings of other studies that I had done, and just looking at the public record from the CRTC I see the complaints, as it were, or the same reasons for dissatisfaction scores that in any other sort of consumer environment would be of a great deal of concern.  There is less diversity, there is more repetition.

2023     So if you look at it, yes, it probably pretty well balances out to the intent, but the very high concentration on a very few artists is the problem that I have identified.

2024     THE CHAIRPERSON:  All right.  I see.

2025     And the fact that the Canadian spins attract some even older than the average by two years.

2026     MS McLAUGHLIN:  That's right.

2027     THE CHAIRPERSON:  All right.  Thank you.

2028     Those are our questions for this panel.  Thank you.

2029     Oh, counsel, you do have a question?  I thought I was given a negative.

2030     Go ahead.


2031     MS MURPHY:  Just a clarification to confirm our understanding of the means by which you propose to implement the CanCon and the bonus system.

2032     Our understanding would be that you would impose the 40 percent by way of regulation and invite licensees to avail themselves of the bonus system by way of condition of licence.

2033     MR. ZOLF:  Yes, counsel, we think that would be, for administrative ease purposes, the best way and to reflect the necessary case‑by‑case assessment of it.

2034     MS MURPHY:  And yet have the general 40 percent applying to everyone by way of regulation?

2035     MR. ZOLF:  By way of an amendment to the regulations, correct.

2036     MS MURPHY:  Yes.


2037     So our question then is:  Given the number and types of formats of existing stations right now, and the number of new and emerging artists that maybe be available in each of these formats, what proportion of radio stations do you think would avail themselves of this exception by way of condition of license, given that perhaps ‑‑ I guess our question is whether there may not be as many new and emerging artists available in certain formats and therefore stations would have no inclination to apply for such an exception?

2038     MR. ZOLF:  Just as a process matter, I would probably suspect that licensees of almost every format would apply for the condition.  How many in fact would avail themselves of the condition ‑‑

2039     MR. HENDERSON:  Right.

2040     MR. ZOLF:  ‑‑ is probably what you are asking, and fair enough.

2041     I mean, certain formats may enjoy a greater benefit of the proposal but, as we said in the written filings and today, there are a surprisingly significant number of formats that could benefit from the bonus and indeed use it.

2042     MR. HENDERSON:  And I just think that we have to just keep right in front of us that the central objective here is diversity in the system and if there is a format or two out there that might not be able to fully avail itself of the bonus system, then I would hate to see that affect what would otherwise really tangibly benefit the majority of Canadians and artists.

2043     MS MURPHY:  Yes.  Thank you.

2044     I guess it's not a question of a such a factor preventing us from going ahead ‑‑


2045     MR. HENDERSON:  Right.

2046     MS MURPHY:  ‑‑ but rather perhaps thinking of ways of encouraging it.

2047     MR. HENDERSON:  Right.  My impression today, and from our meetings with the broadcasting community, is that they are rather enthusiastic about the idea of a bonus system.  Certainly in our one‑on‑one meetings that we had, there were radio executives who were saying, "Yeah, hell, I'll give this a chance.  If I could ‑‑ if it meant getting a bonus, I'll do it".

2048     MR. SUMMERS:  While it's hard to project, we can certainly go through our own rosters and the independent labels that we work with as well and I can think of artists that fit each format, if specifically you are thinking the adult formats, that there are new and emerging artists coming out that fit AC radio.

2049     MR. HENDERSON:  Right.  Yes.  And they are not on at all.

2050     MR. SUMMERS:  And we go back to sonically we feel that there are a number of new and emerging acts that fit with the heritage music as well.

2051     MS MURPHY:  Thank you.  That information would be valuable.


2052     MR. HENDERSON:  Yes.

2053     MS MURPHY:  If possible, if you could you have that accessible for us by May 29th it would be greatly appreciated.

2054     Thank you.  Those are my questions.  Thank you.

2055     MR. HENDERSON:  Thank you.

2056     THE CHAIRPERSON:  Thank you.

2057     We will break now and resume in 15 minutes.  Nous reprendons dans 15 minutes.

‑‑‑ Upon recessing at 1817 / Suspension à 1817

‑‑‑ Upon resuming at 1835 / Reprise à 1835

2058     THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

2059     Madame la Secrétaire.

2060     LA SECRÉTAIRE : Merci, Monsieur le Président.

2061     I would now call on the next participant, Friends of Canadian Broadcasting, to come forward for their presentation.

2062     Mr. Ian Morrison is appearing for the participant.  Mr. Morrison, you have 10 minutes for your presentation.

PRÉSENTATION / PRESENTATION


2063     M. MORRISON : Monsieur le Président, membres de la Commission.

2064     Les Amis de la Radiodiffusion canadienne remercient le Conseil de cette occasion qui nous est offerte de participer à cette révision de la politique sur la radio privée.

2065     Comme vous le savez, les Amis jouent le rôle de chien de garde pour le compte de 100,000 Canadiens qui tiennent à défendre et à augmenter la programmation canadienne dans le système de radiodiffusion anglophone.

2066     As you know, my name is Ian Morrison and I speak for the Friends.  We are a group supported by 100,000 Canadians and our mission is to defend and to enhance Canadian programming, not altogether unlike your own mission.

2067     We endorse the objectives of the review, in particular the principle that a well financed commercial radio sector should contribute according to its means to the fulfilment of the policy objectives of the Broadcasting Act, that it should make effective contributions to Canadian artists through airplay of Canadian music and Canadian talent development, and that it should provide listeners with greater diversity of musical genres and airplay for a greater variety of Canadian artists.


2068     In a recent McKinsey Quarterly article entitled "Regulation that's good for competition," Scott Beardsley and Diana Farrell write that:

"Crafting regulations that encourage rather than hinder competition and growth is increasingly tough at a time of accelerating technological change and economic uncertainty.  Politicians are under pressure to protect troubled industries and to safeguard jobs.  The work of regulators is evermore complex which makes it evermore vital that they make wise choices."  (As read)

2069     Our advice to the Commission is that it should not lose sight of repetitive evidence from the broadcast sector that regulation can facilitate markets and is a necessary tool to ensure that the Act's objectives are attained.


2070     In this regard, the Canadian public listeners and viewers see your policies and procedures as a means to assure themselves of the quality and variety they expect from their public airwaves.

2071     Parliament has charged you with stewardship of the public interest in an environment where it is unreasonable to expect that commercial interests and the public interest can ever completely align.

2072     Friends believes that the Commission's current policies with respect to concentration of ownership in a given market and between formats therein and in the overall Canadian marketplace are functional.  You should beware of comments from vested interests seeking to persuade you to permit still further concentration.

2073     According to St. Luke:

"Those to whom much has been given, of them much is also expected."  (As read)


2074     The prophet data reflected in the Commission's recent annual reports suggest that you are dealing in the aggregate with a healthy industry and one capable of making substantial contributions towards Parliament's goals on behalf of the listening audience as reflected in the Act, and this health is important because only financially healthy radio broadcasters will be in a position to contribute to the goals of the Act you are charged with advancing.

2075     The vast majority of Canadian radio stations, especially those in major markets, are owned by public companies that must compete with all other public companies for investment.  We recognize, therefore, that their returns need to be competitive with those in other industries.

2076     Canadians want and need a distinctively Canadian presence on Canadian radio.  At the same time we need to take account of the economic and business realities of a changing technological landscape.


2077     Friends recognizes that in common with conventional television, radio is facing many sources of audience fragmentation, including iPods capable of holding thousands of songs; the introduction of iPod‑like phones which will exacerbate this tendency; the internet, not only because of the amount of time dedicated to the net especially by younger listeners but because of the creation of hundreds of alternative sources of music and internet radio stations, including peer‑to‑peer downloading of music; and the arrival of satellite radio which will also impact older listeners as it is expected that the cost of satellite radio equipment and ongoing subscription costs may create a slightly older audience skew.

2078     To a large extent, our Canadian broadcasting system is based on a cross‑subsidization model.

2079     In the case of radio, exclusive frequency franchises have been approved by the Commission in exchange for specific commitments to Canadian content and to the development of Canadian artists.

2080     We note, however, that the new content providers now have both at home and mobile access to the Canadian population without any substantial commitment to the Canadian broadcasting system.  Where possible, these platforms need to make a contribution to the Canadian broadcasting system and not just gobble audience and revenue.

2081     Cellphone companies will clearly profit from the downloading of music and digital content to cellphones as well as iPod cellphones.  A percentage of these revenues should be put back into the Canadian broadcasting system through FACTOR or similar mechanisms the Commission should mandate.


2082     With respect to local management and sales agreements, Friends' advice to the Commission is that such arrangements which inherently reduce competition and diversity should be employed only on an exceptional basis and in those circumstances require substantial supervision to ensure that the parties respect their public obligations.

2083     We remind the Commission of our intervention regarding the Sudbury market where our supporters detected abusive masquerading by two of the dominant industrial players in recent years, Rogers and Newcap.  Their behaviour amply demonstrated the need for effective regulation in an ownership‑concentrated radio broadcasting system.

2084     The 1998 Canadian Content Regulations have been a great success.  Owing to turnover in your leadership, there may currently be only a few commissioners who experienced directly the pressure from the CAB lobby when your Commission decided in 1998 to raise the bar for Canadian music.

2085     That pressure was intense, repugnant and entirely without merit, as subsequent experience has made clear, and we recommend mature scepticism to similar entreaties during the 2006 review process.


2086     We also recommend that you raise the bar for Category 2 popular music to 40 per cent on a daily 6 a.m. to 6 p.m. basis in the new policy with at least a quarter of this minimum for new and emerging genres and artists.

2087     Recent statistics on the fragile health of the Canadian music industry suggest that this recommendation is desirable both from an industrial and a listener point of view.

2088     Friends supports the logic of a 10 per cent Canadian talent development benefit upon transfers or changes of ownership and control of radio licensees.

2089     The commercial radio sector is a vital part of the communications infrastructure in communities across the land.  The Commission should beware of any proposals to reduce the obligation of commercial radio stations to present substantial amounts of locally produced news and information programming.  This should apply to all stations without exception.

2090     If any changes are desirable, they should move in the direction of strengthening these obligations.


2091     Leaving this to voluntary commitment is not warranted in view of the conflict of interest inherent where commercial radio undertakings seek to reduce local labour costs and import content from distant often non‑Canadian locations.  This factor is of greatest concern in small‑ and medium‑size markets where fewer alternative sources of local news and information are available.

2092     Strengthening local programming is also a front line in the defence of commercial radio from its distance‑free competitors.  It is a feature that advances commercial radio's competitive advantage.

2093     In the transition from analog to digital formats, the Commission should follow the principle that its prime duty is to ensure that the policy objectives of the Act prevail over technological considerations.

2094     The Commission should articulate a policy on radio infomercials akin to those in its television policy.  In considering representations from commercial radio interests, the Commission should bear in mind that only its policy protects the listening public from abuse.

2095     If a licensee were to state that such regulation is neither necessary nor desirable, the question that must be answered is how could it ever be appropriate and in the listener's interest for an infomercial to be broadcast without being clearly identified as paid commercial programming?


2096     The Commission's radio policy is a buttress for democratic participation and cultural sovereignty in a country with a relatively small population sharing the North American continent with the United States of America.  As Canada's economic relationship with the U.S. draws closer, it becomes more important than ever to strengthen Canadian cultural sovereignty.  This may be only an opinion but it is one shared by 87 per cent of Canadians.

2097     Radio policy is an important component of this task.  We wish the Commission well in addressing this challenge and we look forward to contributing further to the process.

2098     Thank you, Mr. Chair, members of the Commission.

2099     THE CHAIRPERSON:  Thank you, Mr. Morrison.  I have a few questions resulting from your written presentation and today's oral presentation.

2100     First of all, at page 4 where you reiterate the position that the Category 2 popular music level should be raised to 40 per cent Canadian content, I see you have added in your oral presentation the additional notion of a quarter of this minimum now being for new and emerging genres and artists.


2101     MR. MORRISON:  That is a more modest amendment to our original position than others that have been put to you today.

2102     THE CHAIRPERSON:  Right.  Have you thought about the test for what a new and emerging artist would be for purposes of that test?

2103     MR. MORRISON:  That is not really our area of expertise, Mr. Chair.  We will just ‑‑ if we have any thoughts we will submit them by the 29th of May and I won't waste your time with my idle chatter on that subject.

‑‑‑ Laughter / Rires

2104     THE CHAIRPERSON:  Thank you, I appreciate that.

2105     The numbers 40 and then 10 per cent for CTD, what were the bases for picking those particular numbers?

2106     MR. MORRISON:  Well, the number 40 came to us from paragraph 12 of your 1998 decision where it said that:


"The Commission is confident that as stronger, more effective strategic relationships between the radio and music industries develop, the cooperative initiatives and efforts of these industries to promote and support Canadian music will succeed in bringing about a level of Canadian content that reaches 40 per cent in five years."  (As read)

2107     It sounded good to us.

2108     THE CHAIRPERSON:  You are basing it on that?

2109     MR. MORRISON:  Mm‑hmm.

2110     THE CHAIRPERSON:  And the 10 per cent for CTD, is it as simple as that is the TV number, therefore let's go to it?

2111     MR. MORRISON:  Yes.  It has been a great success in the television world since one of your predecessors led the effort to bring it into existence and we think that it is an appropriate number that could be applied to this part of the industry.  Many of the players are the same.  Someone once said, it sounds nice, I guess.


2112     THE CHAIRPERSON:  Now on local news that you mention here, do I take it that your position is that you advise us to beware of proposals to reduce the obligation on radio stations to present a substantial amount of locally produced news and information but are you suggesting a mandatory minimum of such programming?

2113     MR. MORRISON:  I guess I would put it to you ‑‑ Jean‑Jacques Rousseau once said, I am here to discuss principles, I will not dispute the facts.

2114     We are coming from a base of a lot of Canadians who share their views about the audiovisual system with us and what we have learned, particularly in smaller and medium‑size communities, is that people are noticing that there is a lot less of here on the air.

2115     I think what we wanted to communicate to you on their behalf and on behalf of larger numbers of Canadians ‑‑ we know through public opinion research ‑‑ this is an issue that is of very great concern.

2116     So your Commission, with its staff and your own wisdom, and your other witnesses will come along with proposals, we are just urging you to keep an eye on the need to defend the local in radio as a very important value.  How you do it, again, is not necessarily our expertise.


2117     THE CHAIRPERSON:  Okay.  On infomercials you have noted that the CAB in its proposal basically accepts the proposition you are putting forward of identifying infomercials as paid commercial programming.

2118     MR. MORRISON:  Yes.  An alternative would be indefensible, I think.

2119     THE CHAIRPERSON:  Okay, thank you.

2120     Just a word about the Association.  You are mentioning that you are supported by 100,000 Canadians.  Is this through annual donations of that number of people?

2121     MR. MORRISON:  Yes.  There are about 66,000 households that ‑‑ I will answer you very briefly and then I will write you a letter in detail by May 29 but 66,000 households contribute to us over about a 24‑month cycle, maybe only 50,000 of them in a given year.  We estimate that in those households there is an average of 1 and a half supporters.  So we go from 66 to 100 in that way.

2122     That is direct financial support.  We raised $2 million from the public in that way.  We are not a charity.  So it is after‑tax contributions averaging something in the range of $40 to $50, Mr. Chair, but it is based on their decision of how much they wish to invest.

2123     THE CHAIRPERSON:  Thank you, those are my questions.  Those are our questions.


2124     MR. MORRISON:  Take care.

2125     THE CHAIRPERSON:  Thank you very much.

2126     Madame la Secrétaire.

2127     THE SECRETARY:  Thank you, Mr. Chairman.

2128     I would now call on the next two participants to appear on a joint presentation, The Emerging Artist Research and Rating Service (EARRS), and the Canadian Independent Recording Artists' Association (CIRAA).

2129     Mr. Gregg Terrence is appearing for the CIRAA group.  You have 15 minutes for your presentation, including the one for EARRS, as we have understood before.  Thank you.

2130     MR. TERRENCE:  Yes, of course.  Thank you.

PRESENTATION / PRÉSENTATION

2131     MR. TERRENCE:  Good evening.  Bon après‑midi, Mr. Chair, Monsieur le Président, Monsieur le Vice‑Président.  Je vous remercie de m'avoir invité pour discuter des points de vue des artistes indépendants canadiens.

2132     Je vais continuer mes commentaires en anglais.


2133     We would first like to thank the Commission for inviting Canada's emerging and independent artists into this very important process.  Your recognition of this important stakeholder group is critical.

2134     I would also like to thank my associates at the CAB, CRIA, CIRPA and CMPA for the endless meetings at which we attempted to find common ground.  CIRAA believes that much was gained through these meetings and that ongoing dialogue will continue to bear fruit.

2135     In our 15 minutes we would like to address three items, CanCon, CTD and EARRS for about five minutes each.

2136     CanCon.  Although it may appear to the Commission that very little was accomplished to settle issues between stakeholders before coming here, in fact, much work has been done to create understanding for the needs of emerging artists.

2137     The broadcasters have identified the need for more emerging artist airplay within CanCon.  Record companies and publishers represented by CRIA, CIRPA and CMPA are also firmly in support of more emerging artist airplay.


2138     CIRAA can also confirm the obvious that Canadian inde artists are overwhelmingly supportive of measures aimed at making CanCon progressive or CanCon Pro as we call it.

2139     That Canadian artists, record companies, publishers and broadcasters are all agreed on the need for more emerging artist airplay leaves us in the fortunate position of focusing our discussions on how and less about if.

2140     Most participants are proposing a bonus or incentive system.  CIRAA believes a simple and fair quota is the most effective and most direct and easiest to monitor solution.

2141     Now as the author of letsfixCanCon.ca, which proposed a bonus system, it may come as a surprise to you that I am here advocating a quota.  While we appreciate that many submissions made reference to letsfixCanCon.ca and that many have endorsed our bonus concepts, this change in position did not come lightly or without much analysis.


2142     The inherent problem with bonus systems is that many stations, and in all likelihood the ones that play the fewest emerging artists today, can simply choose to keep their playlists unchanged and not take part in incentives, and the stations that are already playing some emerging artists, urban and country stations specifically, will simply see their CanCon reduced, which in turn could and would reduce emerging artist airplay.

2143     Only having bonuses may, in fact, worsen things for emerging artists and blow up in all our well intentioned faces, including my own.

2144     A simple and fair quota that requires minimum emerging artist airplay would assure that this issue is properly and finally addressed.

2145     It is worth noting that even in CRIA's final analysis of their bonus systems, they added that to avoid dependence on voluntary compliance, the Commission may wish to simplify matters and apply an emerging artist quota, and I believe they repeated it here today.

2146     CIRAA is suggesting that while a bonus system may work that there is a significant risk that it will fail to accomplish what radio labels, publishers, artists and the public are seeking.


2147     Therefore, to avoid risking a failed policy or avoid revisiting this important policy every couple of years, as CAB is suggesting, or having to constantly make adjustments to a bonus system that is never quite right, the CRTC can get to the very heart of the matter and establish a quota within CanCon that will be clear to broadcasters, clear to the music industry, and importantly, clear to the public.

2148     We ask:  Where would CanCon be if in 1970 the CRTC had decided that voluntary participation in incentives was the way to increase Canadian content on radio and TV?  Would the CRTC have accomplished one of the world's most successful cultural policies?

2149     CIRAA is proposing that one‑third or 33 per cent of all CanCon be that of emerging artists during the day.

2150     Ultimately, the actual quota figure the Commission sets must be balanced against the definition of emerging artist.  For example, if the bar is set so high that only Bryan Adams is considered established, then a 99 per cent emerging artist quota would be reasonable.  The reverse is also true.

2151     We suggest that the bar be set relatively high so that there is no question to the public or by artists or their labels when artists are considered established.  This is why a figure like the one we discussed, one billion cumulative audience number, is attractive to us.


2152     To be clear ‑‑ this is not in my written statement but to be clear, earlier today CIRPA described our proposals as aimed at unsigned artists only, which couldn't be further from the truth.  Our definitions of "emerging" and our viewpoints are not ‑‑ just because that is who we represent doesn't mean that that is what our proposals are suggesting.

2153     We are not suggesting that commercial radio begin sounding like college radio.  We are saying that Universal has emerging artists, Maple Music has emerging artists and there are unsigned emerging artists, and our entire proposal is based on the entirety of emerging artists and not for unsigned artists only ‑‑ just to make that abundantly clear because the opposite was stated earlier.

2154     We believe a high graduation bar necessitates a significant quota like the 33 per cent we are proposing.  CIRAA does not believe that an artist can be considered established by merely touching the Top 40 once, as is currently the case and as many are suggesting.  The cumulative figures are available at all times and should be used to determine cumulative exposure on radio.


2155     Earlier we heard about the band called Mobile which has barely scratched the surface of exposure in Canada.  I am not sure if anybody in the room has even heard of them ‑‑ great, and I have as well but they have not had an impact on Canadian society and that in 12 months from now they are going to be considered established, to us, means the system is not quite right.  Even though CRIA used it as an example to support, we think it is a perfect example of why not, why it is not a good idea.

2156     Time should not be a determining factor at all.  If Ron Sexsmith needs six albums before hitting his stride, he should be allowed to blossom.  If an artist has not reached cumulative exposure levels over the period of a lifetime, they are still an emerging radio star and should be considered as such.

2157     This concludes our CanCon comments.

2158     CTD.  I will cut to the chase here.  CAB's proposal to withdraw CTD funding from STARMAKER, which only invests in proven successes, would be nothing short of catastrophic to the Canadian music industry.  The term "Canadian talent development" would be rendered wholly inaccurate.

2159     In fact, what is required to bolster the music industry and improve the music supply chain is investment in the other direction, towards grassroots funding.


2160     As our submission details, STARMAKER is not designed or meant for grassroots funding and FACTOR has nearly removed itself completely from grassroots funding to a point that only 9 per cent of their funds are even available to unsigned artists.  Never before now has this imbalance been more harmful.

2161     Today's inde artists can be autonomous.  New digital recording technology has made recording music affordable.  Worldwide distribution is available at the click of a button.  Worldwide viral promotion in places like My Space requires only a computer and internet access.

2162     Websites like Sonicbids allow artists to easily apply to festivals anywhere in the world.  Online resources are allowing artists to research any club or radio station, find new opportunities and network with like‑minded artists anywhere.  Artist autonomy is happening today.

2163     I point to a submission by D'Ari Pouyat of the unsigned band Nine Mile and I quote:


"My band Nine Mile has played two sold out tours in Australia and receives a significant amount of radio support there.  We've toured Canada countless times.  We've probably played to hundreds of thousands of people when you count it.  We've opened for Avril Lavigne at the sold out Air Canada Centre.  We've sold over 10,000 CDs, have a full‑time manager that's received a STARMAKER grant.  We have our own merch company, investors, a tour manager and work with the largest full service booking agency in the country, a pretty complete infrastructure by most accounts.  The funny thing is we've been refused by FACTOR five times out of five tries.  The real shame is that because the support dollars simply aren't available to unsigned bands like ours, I spend every waking moment off stage worrying about investors and creditors, finding money to put fuel in the van.  We should be writing more often and our focus should be on our craft.  We should be at our best as we tour around the world representing this great country of ours."  (As read)

2164     To us this submission stood out as the headline.  It stands out as what we believe represents what we hear on a daily basis.

2165     The experience described by Mr. Pouyat is not uncommon.  Unfortunately, our funding systems have been based on traditional music industry models on which an artist must get signed in order to be successful.

2166     We are here to say that times have changed and Canadian Talent Development funding can no longer ignore this growing and important group.  By the time the next radio review comes around an autonomous artist‑centred universe will be commonplace.

2167     Before it is too late, we must modernize CTD so that grassroots funding is in place for Canada's autonomous artists and for those that are preparing to be signed to a record company.  Either way grassroots funding will be critical in the new music industry.  New thinking is required, new programs are required, and funding is required to prepare Canada's future starts for the new music industry.


2168     This would be exactly the wrong time for broadcaster's CTD contributions to be removed from grassroots funding.  In fact, considering the enormous broadcaster profits brought about by existing policies,  now is the time to view the artist development process in its entirety and invest in the new music industry.

2169     We are asking the Commission to give CIRAA a mandate to submit a proposal for the Commission's consideration detailing how a new non‑profit grassroots fund could be administered and operated.  We will invite music industry grassroots leaders from the across the country to join the board of directors to form a representative and coherent leadership team.

2170     A new grassroots fund will specialize on the needs of unsigned and autonomous artists and would be unconstrained by traditional music industry infrastructures that require full albums that are radio‑ready.

2171     Administrative costs will be held to a minimum with modern online application systems in order to maximize the dollars going to artists.

2172     Accountability and transparency will be key words in this new organization.  Artist accountability with measurable results, fund accountability to the CRTC, the broadcasters and the public.


2173     We understand, based on everything we have heard so far today, that the music industry establishment fears the creation of a new fund because it may jeopardize other funding organizations like FACTOR.

2174     While there is no doubt that FACTOR and Starmaker are very important to the music supply chain and their funding should remain intact, neither are grassroots funds lead by grassroots leaders.  We simply believe that new CTD funds should be directed to grassroots artists through a grassroots fund led by grassroots leaders.  The grassroots are starving for care at this precarious time and we urge the Commission to consider them when determining the CTD course of action.

2175     I thank the Commission for its time and attention.

2176     This concludes CIRAA's remarks.  I will take your questions on CIRAA after the five minute EARRS time.

2177     I'm going to ask David Bray to now join me for the EARRS session.  I will just do a short intro and David can take over.


2178     EARRS, Emerging Artist Research and Rating Service.  As it began to become apparent that there was growing consensus around the need for more progressive CanCon system which provided more airplay for emerging artists, the question that began to resonate was:  Well, how will this all work in the real world?  What does the music director in Lethbridge or Moncton do when he or she gets inundated with 150 CDs a month?  How do small market radio stations with small budgets get the most out of their new emerging artist requirements?

2179     That is what myself and my associates, David Bray and Bob Mackowycz started working on a non‑profit called EARRS which efficiently utilizes CTD funding to listen to, evaluate, rank and deliver emerging Canadian music to radio.

2180     By using modern research methodology that David will be discussing, we will be offering Canadian radio the tools it needs to know everything they need to know about Canadian emerging artists that other consultants will not be able to.

2181     EARRS will provide two fundamental services, one that we actually heard discussed by the CAB about a service in France that actually exists and I only heard about it today for the first time.


2182     In association with our partner BDS and the representative board of directors, EARRS will monitor and post the defining list of established and emerging artists based on whatever definition the CRTC chooses.

2183     Two, we will gather data and research from consumers, radio programmers and music industry experts and provide all Canadian radio stations with rankings and results of emerging artist music testing.

2184     Research is in radio's DNA and EARRS will provide the missing link between the worlds of the emerging artists and the rigorous demands of radio playlists.

2185     I would like to now introduce EARRS Co‑Chair, David Bray, who is Senior Vice‑President of Hennesy Bray Communications and is one of Canada's most accomplished radio analysts.  He served as Vice‑Chair of BBM Radio Executive, Chair of BBM Survey Task Force that initiated measurement methodologies currently used in Canada.  David also chaired the National Digital Radio Programming Committee.

2186            MR. BRAY:  Thank you.  Thank you very much for the opportunity to present on behalf of Emerging Artist Research and Rating Service.


2187     When it comes to broadcasting in Canada most of us ‑‑ that being broadcasters, advertisers and the music industry ‑‑ play by the numbers in one way or another.  Audience reach and hours tuned, ad expenditures and target demos, chart positions, playlist ads, the key is understanding the interrelationship of all these disparate factors.

2188     We must also establish comprehensive definitions.  This kind of substantiation is critical if we are to keep the discussion moving forward beyond the lobbies which offer a variety of differing opinions.

2189     EARRS began by looking at 427 stations for which we have BBM audience tuning figures based on an 8‑week survey.  From there we broke out the total audience percent reach, total hours tuned and percentage share of all hours tuned to each format nationally for various demographics.

2190     Next we examined playlist ads to commercial stations for eight random weeks.  We used a sampling of stations from each category to determine the average number of weekly playlist ads, the average number of weekly CanCon playlist ads and the number of playlist ads which were independent releases.  We defined "independent" as those releases without major label distribution.


2191     Last, we looked at the percentage of all radio buys for target demos across Canada.  Again I want to stress that.  The rationale for this is the fact that potential ad revenue has a major impact when determining format profiles from a programming perspective.

2192     We also looked at the anomalies when these percentages were compared to the make‑up of the Canadian population.  This is a pivotal point that is rarely discussed and I find it shocking given the cultural mandate of the Broadcast Act that this point hasn't even been raised today.  But, at any rate, we did take a look at that.

2193     We analyzed the average number of weekly playlist ads by format.  Given the different nature of these formats, the averages differ substantially.  I have given you those numbers and I won't take up your time to cover that off.

2194     I will summarize by saying, opportunities for independent recording artists are best with CHR and country, but extremely limited for all other formats.  Even with CHR at just a little over 19 ads per year per station, and country with 16.25 ads per year per station, the prospects remain very limited.  This is especially true when we look at the number of new CD releases each year.


2195     With regard to CanCon ads, the playlisted cuts are, for the most part, uniform across all stations in the format, with some very rare exceptions for regional artists.

2196     The majority of CanCon spots are taken up by a narrow list of high profile artists, those being Sum 41, Shania Twain, Simple Plan, Avril Lavigne, et cetera.

2197     Critically acclaimed artists, for example Bruce Cochburn, Susan Aglukark, Kathleen Edwards, et cetera, that did not fit format constraints go virtually without airplay.

2198     EARRS was established to help radio deal with the vast number of Canadian recordings that would need to be assessed and filtered in a value‑added emerging artist scenario.  Thousands of CDs are released in Canada each year and the simple fact is most new releases go unheard.  This is a very real practical problem.

2199     I have had the good fortune to sit probably in just about every major radio station in the country and any music director or program director can kick out a box of CDs and say, "Do you really expect me to listen to all of these in a given week?"  It's no one's fault, there just is a tremendous amount of material to go through.


2200     EARRS guarantees that every recording submitted will be listened to, analyzed and evaluated by radio consumers, as well as radio and music industry professionals.

2201     EARRS, working with a distinguished list of partners, those being BDS and Musicrypt, proposes to deliver ground‑breaking assistance to both broadcasters and emerging artists.  We are not a lobby organization.  I'm not here to lobby for any point of view.  We are simply a bridge to work between the artists and the broadcasters, trying to understand both points of view and trying to make it work.

2202     Three panels will be enlisted which will listen to and analyze all the new releases submitted.  The research assessing new releases will be disciplined, thorough and ongoing.  Results will be quantified and issued in charts which will be updated weekly.

2203     The guarantee that all new material will be listened to and given an opportunity is unprecedented in the history of radio.  The three strategically chosen panels will be as follows:

2204     Panel 1 would consist of approximately 50 to 100 program and music directors;


2205     Panel 2 would consist of approximately 50 to 100 music industry persons;

2206     Panel 3 would be a panel of 500 to 1,000 listeners and music consumers across the country.

2207     All new emerging artist releases divided by format will sit on a secure website which will be accessed by ‑‑

2208     THE CHAIRPERSON:  Mr. Bray ‑‑

2209     MR. BRAY:  Yes...?

2210     THE CHAIRPERSON:  ‑‑ I don't mean to interrupt you, but we have read your brief and you are basically reading your brief.

2211     MR. BRAY:  Okay, my apologies then.

2212     I will simply summarize, then, by saying that we will ‑‑ bear with me.  I will cut to the chase, if I may.

2213     THE CHAIRPERSON:  Cut to the yours truly.

2214     MR. BRAY:  Cut to the yours truly, yes.

‑‑‑ Laughter / Rires


2215     MR. BRAY:  We simply want to make the point that EARRS is here to serve as a bridge, a bridge between the new music and the broadcasters, trying to understand both points of view, trying to protect the legacy of Canadian music and offering our artists a very real and very practical alternative in terms of making sure that the work is played.

2216     We are thrilled to be a part of this discussion and we would like to think that we are offering a very pragmatic solution.

2217     THE CHAIRPERSON:  Thank you very much.

2218     Commissioner Pennefather.

2219     COMMISSIONER PENNEFATHER:  Thank you, Mr. Chairman.  Good evening.

2220     We will go in the order of your presentation.  I have just some clarification questions for you regarding the grassroots fund.

2221     I guess the first question is the obvious one.  A number of participants have said that it is not appropriate to create a new fund and that in light of your concern for grassroots artists that perhaps it would be more appropriate to change or alter programs at FACTOR to put more emphasis going forward on grassroots.

2222     Do you want to comment on that?


2223     MR. TERRENCE:  That would be ideal, but it hasn't happened for the last 10 years and we are hoping it happens in the future.  Apparently FACTOR is undergoing a process of renewal.  But the Board has not changed.  There are no grassroots leaders on the Board.

2224     So fundamentally the programs may change, may not, but we haven't been involved in the process or asked to be part of the process.  We feel like there is a need for a CIRPA‑dominated funding mechanism.

2225     We do believe in FACTOR and we do believe that it should probably remain as it is so that the trees can be assisted so that the fruit may come off.  And we feel that extricating ourselves from the radio and label world, which do not require the same needs as the grassroots, wouldn't require demos, single songs, digital distribution, it is a different world all together and it is a different funding and it comes from a different place and is a different mentality.

2226     And the measurable results you are looking or are very different as well.  They are different than what radio is looking for.  They are looking for radio‑ready CDs that they can distribute.

2227     So that is why radio is kind of unhappy with FACTOR, because the expectation level is not being managed very well.  The grassroots are unrepresented and we feel that the best way around this is with our own fund.


2228     We realize it is unpopular with the rest of the music industry associations, but we still feel it's right, and we still feel that we can do a hell of a great job with the right people around the country and that it will solve this problem long‑term and not just hope that FACTOR reinvents itself in the appropriate fashions.

2229     COMMISSIONER PENNEFATHER:  So grassroots is the unsigned artist.

2230     Am I oversimplifying?

2231     MR. TERRENCE:  Typically, yes.  No, that's fine.  Yes.

2232     COMMISSIONER PENNEFATHER:  So the different goals for the unsigned artist are...?

2233     Could you expand on that?

2234     MR. TERRENCE:  You are not necessarily trying to make a CD.  You are not trying to compete with Alanis Morissette.  You are probably trying to climb the ladder and get signed to someone from CIRPA, you are trying to get signed to CRIA, or you are trying TO become autonomous and work with the tools that you have at hand to be autonomous.

2235     So those are different strategies all together.

2236     COMMISSIONER PENNEFATHER:  So it is, as you say, funding, education and support?


2237     MR. TERRENCE:  Absolutely.

2238     COMMISSIONER PENNEFATHER:  That's what you mean?

2239     MR. TERRENCE:  The education portion is ‑‑ and you know, our music education is music business education.  There are a lot of artists in this country and there are a lot of new artists entering this field and they need music business practical education coming to them across the country.

2240     If you live in Toronto, no problem.  You have North by Northeast, you have Canadian Music Week.  If you live in Vancouver you have New Music West every once in a while.  But everyone in between ‑‑ and there are, we have 150 artists in Kamloops alone ‑‑ there are a lot of artists out there that don't get the opportunity to hear from industry veterans and we feel we need to bring the education to them and we feel that that is part of what grassroots would focus on, absolutely.

2241     COMMISSIONER PENNEFATHER:  Considering your grassroots leadership and your proposal for the way the Board would be constructed, you say that:


"We will invite broadcasters to attend as observers at Board meetings."  (As read)

2242     Why would you not invite broadcasters to be more integral to your Board governance?

2243     MR. TERRENCE:  We feel that their expectations are justified in wanting radio‑ready product with artists that are touring.  We understand their wanting to invest in the end of the process and be part of the Starmaker process and be part somewhat of the FACTOR process.  They control Starmaker, they have a large stake in FACTOR, and we believe that moving further down the chain they are probably disinterested in being part of a grassroots fund, they don't necessarily care what happens in the feeder system.  I think they care about who comes out of that system.

2244     We feel like if they want to observe, that's fine.  We don't feel like they necessarily care.  Based on our discussions we don't believe that they have much of an interest in the grassroots.  Based on the way the funding has been divided at FACTOR, clearly they put their money where their mouth is and the funding does not go to the grassroots because it is not in their interest, and it is understandable.


2245     COMMISSIONER PENNEFATHER:  Now, the Campus and Community Broadcasters have also proposed the creation of a funding body for their radio stations, arguing they play a critical role in the development of independent music.

2246     Would they be eligible for support from your fund?

2247     MR. TERRENCE:  I would think so.  I think we would have to try and make that happen.  I think they would have a great position on the board.  I think we would invite them as well.

2248     There is no doubt their hearts are in the right place.  They don't get a lot of exposure for artists.  I mean, you can go to number one on college radio and not necessarily go to the next level, but their hearts are in the right place and they are playing emerging artists in Canada and they are an avenue for independence to move forward and we support them in every way that we can.  If it would mean that we work together on an emerging artists grassroots fund, it would be fantastic.

2249     COMMISSIONER PENNEFATHER:  You don't see this as serving francophone musicians, only English Canada.

2250     Is that correct?


2251     M. TERRENCE:  Nous croyons que l'ADISQ ‑‑ ils font bien au Québec.  La système de développement au Québec est différent que la reste du Canada et l'ADISQ représent bien les artistes grassroots et indépendants et les artistes émergenets au Québec.  Donc nous croyons que ‑‑ on n'est pas nécessaire là ‑‑ à ce point ici on n'est pas nécessaires à s'impliqué dans les affaires Québécoise.  On croix pas que le ‑‑

2252     We don't believe the need is the same for us there.

2253     COMMISSIONER PENNEFATHER:  In terms of financing your fund, if I run very quickly through this you certainly made proposals to us on the new licensing procedures, transfer renewals, and in each case offering different proposals for how those ‑‑ through those various steps of CTD funding would go to the new fund.

2254     MR. TERRENCE:  That's right.

2255     COMMISSIONER PENNEFATHER:  In the new licence circumstance, 50 percent to local, 50 percent to national, and of the national it would be equally divided through Star Radio Fund, Fonds RadioStar and the new fund.  So in that sense we have the francophone component there.

2256     MR. TERRENCE:  That's right.


2257     COMMISSIONER PENNEFATHER:  In transfers, you have changed it to 2 percent, 2 percent, 2 percent.

2258     MR. TERRENCE:  That's right.

2259     COMMISSIONER PENNEFATHER:  2 percent to you in renewals.

2260     You have a number of 12 million based on ‑‑

2261     MR. TERRENCE:  Revenues.  1 percent of revenues.  We believe the actual number should be 1 percent of revenues, which we kind of put in parenthesis.  I should have made that clearer.

2262     But we believe that 1 percent of revenues is a fair number.  It's a small number.  It's a capable number.  It's legitimate.  It moves.  We believe it is affordable and we believe the impact of those dollars would be enormous, if they were properly invested.

2263     COMMISSIONER PENNEFATHER:  And it is equally divided amongst the three components.

2264     MR. TERRENCE:  Yes.

2265     COMMISSIONER PENNEFATHER:  So end of the line, what kind of funding would be going to the new fund?


2266     MR. TERRENCE:  I think the only predictable one would be renewals, which we believe ‑‑ let me make this clear as well.

2267     We believe that the primary focus of the adjustments that need to be made to CTD is on the renewal side.  The 1.8 million is egregiously low.

2268     The others are less predictable.  The new licensing and the benefits, they come and they go.  There are, I believe, less new licences on a go‑forward basis, from my understanding, and I believe there are less transfers on a go‑forward basis.

2269     So we believe when it comes to renewal we are talking about only our one‑third of that funding.

2270     COMMISSIONER PENNEFATHER:  Okay.  And would that be in addition to?  Would the $12 million mean that the FACTOR funding would continue as is or would in effect your $4 million, your third, take away from FACTOR?

2271     MR. TERRENCE:  We believe that for certain programs it would be important to transfer the funding, that 9.6 percent that FACTOR spends on grassroots.  Sorry, there is about 4 or 5 percent that FACTOR spends on grassroots and 9.6 is eligible to unsigned artists ‑‑ available to them, I should say.


2272     We believe those funds, and the administrative costs associated to them, should be transferred out to a new grassroots fund.  And they can be fair.

2273     I think FACTOR would still be perfectly fine and they would be getting rid of 75 per cent of their problems by getting rid of 10 percent of their money.

2274     COMMISSIONER PENNEFATHER:  We also have another proposal in front of us here to support the rating system.

2275     MR. TERRENCE:  I'm sorry, the...?

2276     COMMISSIONER PENNEFATHER:  To support the rating system that Mr. Bray has described.

2277     MR. TERRENCE:  Yes.

2278     COMMISSIONER PENNEFATHER:  Through, again, the CTD funds.

2279     MR. TERRENCE:  Yes.

2280     COMMISSIONER PENNEFATHER:  So what level of budget do you foresee there?

2281     MR. TERRENCE:  For now, it depends on the scope of the mandate that EARRS is given.

2282     David, do you want to answer this?

2283     MR. BRAY:  Yes.  Again, the two are somewhat unrelated.


2284     We would see the funding of this process ‑‑ and again, I want to stress this is a non‑profit organization.

2285     We would probably see this funded through the auspices of one of the existing funds, be it FACTOR, Starmaker, et cetera.

2286     The key here is to work in partnership with all the participants and to have them involved at the board level.  I want to make that clear as well.  To have them involved on the board level of EARRS and then determine what the sample sizes would be.

2287     That in turn would dictate the budgets, whether the budget would be in the hundred thousand dollar range, clearly far less than a million.  But it would be dependent upon the size of the panels that were enlisted, any fees that were involved in making sure that the participants, both the consumers and the programmers across the country, were enlisted.

2288     Again, we would do that in association with the current funds.

2289     COMMISSIONER PENNEFATHER:  Is there a plan to provide French language radio with the same research and ratings?

2290     MR. BRAY:  I would like to say that this is primarily an English language initiative.


2291     That having been said, not simply we have made allowances for aboriginal music, which I think is extremely important under this particular scenario.

2292     And I would like to go further.  I think, depending upon the participation and the willingness of the participants, we would like to most certainly get into the francophone industry.  But we would also like to look at potentially the multicultural, multilingual industry.

2293     I think there is a place for South Asian music, the Chinese industry.  And you will hear from some of the ethnic broadcasters a little later on.

2294     So again, it will depend on the willingness of those participants.

2295     MR. TERRENCE:  We were only willing to tackle so much, starting out.

2296     MR. BRAY:  Of course.

2297     MR. TERRENCE:  And we decided our best approach was to start this, gain support for an English language emerging artist rating service, and we would take it from there.

2298     Certainly the next step would be opening it up to French radio stations.


2299     MR. BRAY:  There is a degree of sophistication required for the French.  We would need full participation enlisted in that community to get that off the ground.

2300     COMMISSIONER PENNEFATHER:  You say in your written submission that you have had preliminary discussions with the CAB, and you have indicated an interest in a follow‑up discussion.

2301     Has that taken place yet?

2302     MR. TERRENCE:  There has been a few, yes.

2303     I think there is an inherent interest, without putting any words into their mouths and without saying anything about their submission.

2304     When we approach them and say we are willing to ‑‑ if the emerging artist quota or bonus system is in place, we want to help with that and we believe that your CTD funds should be appropriately spent on helping you determine what you should be playing.

2305     Certainly it is a welcome approach and we are heard, and there's excitement.  But there are so many decisions yet to be made, we can't go anywhere near saying that there is commitment or excitement.


2306     But certainly there is general interest in what we have to say if the emerging artist quota or bonus system is in place.

2307     MR. BRAY:  Depending on what you decide in your infinite wisdom, we can bring a discipline to the process.  That is essentially what we are offering.

2308     COMMISSIONER PENNEFATHER:  I am just going to finally circle back to my first question.  Again it is linked to the discussion on emerging artists which perhaps my colleagues will pick up.

2309     I guess circling back to the beginning of our discussion, it is important to understand why you think that the current funds are not able to take up the work that you are proposing is missing for grassroots artists; one of the reasons being creating other levels of administration costs, other reasons being the pressure already on the funds themselves to go forward.

2310     Is the need that you are describing so specific and so ‑‑

2311     MR. TERRENCE:  Unique?

2312     COMMISSIONER PENNEFATHER:  ‑‑ not going to be, as far as you see, besides all the efforts you could make, fulfilled within the current structures?


2313     MR. TERRENCE:  We have been unable to date to work within those existing structures and to achieve the secured positions for emerging artists on FACTOR's board.

2314     We will have a formal request in to FACTOR for their AGM this summer.

2315     We would love to work within existing structures, absolutely, but we have been unable to get any attention at this time.  Those that are in control want to remain in control, and you can't blame them.

2316     We are having difficulty getting the views of grassroots artists to the table, and permanently at the table, not just a one position of an independent which I could secure fairly easily at FACTOR's board, in my opinion and from what I have been told.

2317     We are looking for permanent positions for emerging artists and their representatives on the board.

2318     COMMISSIONER PENNEFATHER:  Well, we are talking today about what we, the Commission, can do.

2319     MR. TERRENCE:  I know.  That's why I asked for the grassroots fund, because I know you cannot tell FACTOR how to run their affairs.


2320     COMMISSIONER PENNEFATHER:  Also we are looking at it in the context of overall.  As we have said earlier, what are we looking for as an appropriate amount of funding in the system for development, what that development is best designed to do and what vehicles we need, if more.

2321     I appreciate your comments and your answers to my questions.

2322     In fact, those are my questions, Mr. Chairman.  Thank you.

2323     THE CHAIRPERSON:  Mr. Terrence and Mr. Bray, thank you.

2324     Your association, is that what the Indie Pool morphed into?

2325     MR. TERRENCE:  Yes.  Well, Indie Pool is still a business in and of itself that provides services to over 20,000 Canadian independent recording artists.

2326     But when Indie Pool spoke to the CRTC, to the Commission at the satellite radio hearings, it was me representing myself as a business owner of Indie Pool working for 20 years, my whole adult life, with Indie artists, but it was not the appropriate way for me to be able to work for emerging artists.  We felt that a non‑profit association was a better voice than Indie Pool as just my business.


2327     So Indie Pool has no political policies or statements to make in any way, and it is completely with a board of directors now.

2328     THE CHAIRPERSON:  I see.

2329     How many artists do you represent at this time?

2330     MR. TERRENCE:  Just under 4,000 at this time.

2331     THE CHAIRPERSON:  And these are what, fee paying members?

2332     MR. TERRENCE:  No, they are not.  At this time we don't think they need any more fees.  These artists are among the least able to pay fees.

2333     We believe that we are seeking funding from corporate donations, perhaps other possibilities from collective initiatives.  We do not want to be funded from the artists themselves.  We want to provide services to them and provide education to them.

2334     THE CHAIRPERSON:  So you are chartered as a not‑for‑profit corporation?

2335     MR. TERRENCE:  That's right.

2336     THE CHAIRPERSON:  How is your board selected?


2337     MR. TERRENCE:  Our board at this point has been selected ‑‑ well, we had an initial board of three, which were the three founders.

2338     THE CHAIRPERSON:  Who are the three founders?

2339     MR. TERRENCE:  Pardon me?

2340     THE CHAIRPERSON:  Who are the three founders?

2341     MR. TERRENCE:  James Porter and Aisha Wickham, who is actually in the room.  She represents Urban Music Association of Canada.

2342     We together ‑‑ because Urban Music Association is 95 percent emerging in Canada at this time, so there was an inherent knowledge there.

2343     Another person that will be speaking to you at the hearings is a man called Andy McLean, who is the Executive Director of North by Northeast, which deals with a lot of emerging artists, and he is also on our board.

2344     And also Greg Stevens, who is a trademark and intellectual property lawyer, who is very well respected in the music industry.  He works with many emerging artists.


2345     We are now reviewing artist nominations to fill another five positions on our board, because we set out to call for nominations from actual artists so that they can populate the board as well with their shared experiences.  That will be happening over the course of this summer.

2346     We are a very new organization.

2347     THE CHAIRPERSON:  Right.

2348     What has your experience been?  You were in your other capacity an advocate of the licensing of satellite radio.

2349     MR. TERRENCE:  Yes.

2350     THE CHAIRPERSON:  In the name of providing access to independent artists.

2351     What have you found out in the short time since they have been launched?

2352     MR. TERRENCE:  There has been some good and there has been some less good.

2353     We wish, in retrospect, that the conditions of licence would have asked for more music channels than just channels.  It seemed to have been overlooked by many people, including all the critics ‑‑ and there were many.  It was quite the battle.

2354     And no one really picked up on that.  So there was some level of surprise.


2355     The channels that are there are great and they are doing the job.  Channel 52 on XM is blasting into the U.S. and generating a lot of interest in new artists.

2356     On the serious side, getting CBC Radio Three broadcast into the U.S. was a massive change and update, a huge export of Canadian culture.

2357     So although the Satellite Radio Association was never perfect and never offered everything that everyone wanted, we still firmly believe that we are better off with them legalized and legitimized and contributing to Canadian Talent Development and under your auspices than not and having a grey market boondoggle.

2358     But things are not perfect.  And we are lobbying them and working with them to try and do more.

2359     THE CHAIRPERSON:  Thank you very much.  Those are our questions.

2360     We will adjourn now until 9 o'clock tomorrow morning.

2361     Nous reprendrons demain matin à 9 h 00.

‑‑‑ Whereupon the hearing adjourned at 1932, to resume

    on Tuesday, May 16, 2006 at 0900 / l'audience

    est ajournée à 1932, pour reprendre le mardi

    16 mai 2006 à 0900

 

 

 

REPORTERS

 

 

                                

 

_____________________                     _____________________

Lynda Johansson                        Fiona Potvin

 

 

 

 

_____________________                     _____________________

Jean Desaulniers                                Madeleine Matte

 

 

 

 

_____________________                    

Monique Mahoney                         

 

 

  

Date de modification :