No, I think we have work to do. I think we should do the work.
We have two groups of witnesses today, Magazines Canada and the National Campus and Community Radio Association.
I must say that we're looking forward to hearing not just from Magazines Canada, but specifically from the National Campus and Community Radio Association. If anybody is local, you guys are, because you're so very focused on campus. I'm glad you were able to come.
Here's how it works. You have 10 minutes to do a presentation. I'll try to give you a two-minute call so that you know you have two minutes left, but I'll have to cut you off at 10 minutes. This means 10 minutes for one group and 10 minutes for the other. Then we will move into a question-and-answer period.
I know the clerk briefed you on the themes we're studying. I won't go over them, but I hope you will address some of the issues we are looking at in our themes. Thank you.
Perhaps we will begin with Magazines Canada, represented by Matthew Holmes, president and CEO, and Douglas Knight, board chair.
Have you decided who will speak?
Thank you, Madam Chair and honourable members. It's a pleasure to appear before you today.
My name is Matthew Holmes. I am the president and CEO of Magazines Canada, the national body representing Canada's magazine media, including arts and culture, consumer, and business titles. I'm joined by the chair of our board, Douglas Knight, who will share our time.
There are roughly 2,000 Canadian magazines in the market today, including 1,300 consumer and 700 business titles. Given what's facing the papers, you may be surprised to learn that this number represents an increase of 30% in Canadian magazine titles since the year 2000. This is a $2-billion sector directly creating tens of thousands of high-quality knowledge economy jobs.
Here's what you need to know. In addition to our stable numbers, we also have a committed and stable readership; in fact, the latest figures released just three weeks ago show that more than 70% of Canadians read Canadian magazines across all platforms, print and digital. This is true for all age groups, young and old alike.
There has been a history of protective legislation put in place to allow Canadians equal access to Canadian voices in the media. This goes back to before Confederation and in the establishment of Canada Post, which ensured that there was equal access to the same service, and the same postal rate charges, regardless of where you lived in the country or where you were distributing to.
Policies such as these have contributed to the fact that 80% of the base of readership of Canadian magazines comes through subscription. This is one of the highest magazine subscription rates in the world, ensuring that Canadians remain major consumers of Canadian content, even though U.S. imports have historically dominated newsstand displays.
Magazines Canada feels that we must maintain our current policy framework for magazine media, including the Canadian periodical fund, to guarantee that Canadian content and voices continue to reach their audiences.
Finally, as we grow new audiences on new digital platforms, it's important to know that the magazine sector in Canada has been an absolute leader in digital innovation. Upwards of 90% of our members are publishing on digital platforms, often on multiple digital platforms. We even developed the country's first digital newsstand in partnership with Zinio years before Apple or Texture launched their products.
The question is not whether magazines are print or digital. With 92% of Canadian readers still choosing print as part of their reading experience, the question instead is how to support both print and digital.
To speak more to these issues, I'd like to introduce the chair of the board of Magazines Canada, Douglas Knight, president of St. Joseph Media, publisher of numerous Canadian magazines and digital properties, including Toronto Life, a former publisher and CEO of various Canadian newspapers, and founder of ImpreMedia, the largest Spanish-language media company in the United States.
Good morning, Madam Chair and members.
I just bumped into Jim Balsillie in the hotel as I was leaving. He's about to testify at the international trade committee. He challenged me to open by saying “Deep thoughts”, and that is what I'm going to say: “Deep thoughts.”
Voices: Oh, oh!
Mr. Douglas Knight: I don't know if I have deep thoughts, but I do hope that at the end of this you will go away saying, gee, I hadn't thought about it that way.
Many years ago I was teaching a course at the University of Toronto on the politics of Canadian cultural institutions. As a result, believe it or not, I've actually read the 1920 Aird commission on radio, the Massey commission, the Fowler commission, the O'Leary commission, the Davie report, and the Kent commission. Of course, I have followed all of these issues since.
My takeaway is that the work of this committee, studying how Canadians are informed about local and regional experiences through news, broadcasting, and digital and print media, continues a very deep tradition of concern in this country for making space for Canadian voices and Canadian choices.
To be clear, the core focus has been, and I would argue should be, on ensuring that we make space for Canadian voices and choices to the benefit of Canadians and not exclusively through the lens of the companies who do the work.
Why are Canadian voices so important? I also happen to be the chair of Writers' Trust of Canada and was in town last week for our Politics and the Pen dinner. In some remarks I was making at a reception at the U.S. ambassador's residence the night before, I told a story I had heard from Governor General David Johnston. He was hosting a dinner for Angela Merkel at Rideau Hall, and after dinner she took him aside and said she had only one question: how do you do it?
What she was asking, of course, was how we in Canada manage to find more strength than division in our diversity.
Now, having lived and worked in New York City and having owned papers in New York, L.A., and Chicago, this is a question that I've been thinking about for some time. What makes Canada so unique? While we always aspire to be better, to the world we are a model for finding strength in our diversity. Why is this? As a country of east and west, north and south, first nations peoples, French and English, immigrants from more than 200 ethnic groups, seeing the world through others' eyes has for more than 150 years—sometimes difficult years—become who we are. It's in our DNA, and it's who we aspire to be. I suspect that nowhere will you recognize this more than in our political discourse.
If there is a particular Canadian genius, it is perhaps easiest to discover in the work of our writers and our artists. They tell our stories. They help inform the Canadian imagination, our way of seeing the world through others' eyes, finding strength in empathy, not antipathy—even, and perhaps especially, when we disagree.
My takeaway is that rarely has there been a time when Canadian voices are so important. They are important to Canada in continuing to build strength from our diversity, and they are important as an example to the world of how this gets done.
Do Canadians care? At the risk of suggesting that I don't have a day job, I'm also the chair of the Governor General's Performing Arts Awards. A couple of years ago, we introduced the notion that Canada is an arts nation. You often hear that we're a hockey nation, which has been pretty tough this year; if you're from Toronto, it has been tough since 1967.
Voices: Oh, oh!
Mr. Douglas Knight: But the digital geeks at MIT did an interesting study a couple of years ago, looking to identify the most famous citizens of 160 countries by examining their digital footprint. Canada was the only country to emerge from the study where all ten of the ten best-known Canadians around the world were writers and artists—not a politician, not a general, or a hockey player among them. That may be changing in the last six months, but we'll see.
A second surprising fact, which is reported each year by Statistics Canada, is that ordinary Canadians in all of your constituencies from coast to coast to coast spend more than twice as much attending the arts each year as they spend attending all sports put together. That's just true. My takeaway is that Canadians punch way above our weight in the creative industries and that Canadians have a real appetite for Canadian voices and Canadian stories.
The experience of Canadian magazines confirms this. Despite the enormous disruption and disintermediation of traditional media caused by the expansion of the media ecosystem, which has dramatically reduced daily newspaper readership and put pressure on traditional broadcast audiences, magazines have maintained their readership. Magazines, as Matt said, are read by seven out of ten Canadians—again, of all ages.
It should also be said that Canadian magazines have been, as Matt said, leaders and innovators in the digital space.
I'll give just a couple of examples from my own shop. Toronto Life magazine in print is read by more people in Toronto than read The Globe and Mail and the National Post combined; and several years ago, Toronto Life was the first magazine in Canada to have a larger digital audience than print audience.
In a very different space, we happen to publish Fashion magazine. Fashion magazine has the largest social audience of any magazine in Canada.
The takeaway here is that we get it and we know how do it. In fact, we offer this service to a wide range of organizations looking to understand the new media ecosystem.
We created all the content and design for the new National Music Centre in Calgary and we developed their digital platform. We are building the public portal for the celebration of 2017. It's the digital platform and content engine for the whole country. We've just completed the digital platform and content strategy for the University of Guelph's new global Food Institute. These are just a few examples; there are many more.
However, this does not mean that digital has replaced print, that all is well in the world, and that the problem has been solved. In our time with you this morning, with just 10 minutes, Madam Chair, to present our views—
Thank you, Madam Chair and members of Parliament.
My name is Luke Smith. I am the membership coordinator for the National Campus and Community Radio Association.
The NCRA is an association of mostly English-language not-for-profit radio stations committed to volunteer-driven, community-oriented radio across Canada. Our goals are to ensure stability and support for stations and promote long-term growth and effectiveness in the sector. We have 95 members, including 60 community stations and 31 campus-based stations.
Radio is important to Canadians. According to the CRTC, Canadians listen to about 17 hours of radio per week, and it's still one of the largest platforms that people use to consume media. We have more than 175 stations across the country, which represent about 16% of licensed radio stations. That percentage is growing. In 2014, 30 new community station licences were granted by the CRTC. We expect this growth to continue, since some areas of the country remain unserved and underserved by community radio.
Making radio is expensive. We believe there should be more government financial support for community radio stations, especially those in rural areas. For example, I spoke recently with the “voice of Aurora”, CHRA-FM in Aurora, Ontario, a new station being led by a very devoted group of volunteers. They've obtained support from the town council and every local business organization they can find, and yet they're still struggling with the costs of setting up the station, likely to be $35,000 to $50,000 to set up, not including maintenance and operating costs.
Most community radio stations depend on local fundraising, which is insufficient, particularly in small communities. There are few operating grants available. They can't obtain charitable status, so they cannot get private charitable donations or grants from most foundations. To our knowledge, although Canadian Heritage has funded other kinds of community media, it has never funded community radio. We encourage you to consider changing that.
Local news and public affairs programming is essential to our democratic process, helping keep citizens informed and engaged. Our sector is unique in providing a forum for citizens to participate in the broadcasting process and speak to each other about important local issues. Our members broadcast local information and analysis that is not heard on other stations.
With respect to local news, we define local programming based on current or target AM or FM signal range. Our members apply this definition even when they can reach a larger audience, such as through the Internet. This is because focusing on the area around their physical station is an effective means of bringing people together and encouraging dialogue and community building.
It also helps them determine which news and information is most relevant, and community members living within a station's signal range play a crucial role in choosing and creating relevant programming. It's this feature that maintains strong community support for community radio stations, despite the preponderance of new media options.
We're discussing the erosion of local news reporting at this hearing, but we believe our sector's capacity has actually increased rather than eroded. This is due to funding from the Community Radio Fund of Canada, which distributes Canadian content development funds collected by the CRTC from commercial broadcasters to community radio stations. This new funding now represents around 11% of our sector's revenue. It has enabled many stations to provide local news coverage for the first time ever, despite how labour-intensive this work can be.
However, this funding is project-based and non-renewable, and there isn't enough to go around. For example, CICK, a tiny station in Smithers, B.C., received a CRFC Youth on Air grant in the past to hire youth reporters to cover local news and events. Without renewable funding, the station has lost an important source of programming. The CRFC funding is a huge improvement for our sector, but it's not enough to ensure that all stations can provide ongoing, high-quality news coverage.
Our members are engaged with local news in unique ways. For example, when there was a flood in nearby Minden, Ontario, that was not covered by any other station, CKHA-FM in Haliburton, or Canoe FM, broadcast live on location and overnight to give residents information about where to get help. Most commercial stations do not provide this level of local programming.
Many of the stations provide similarly unique local services. For example, CJRU in Toronto, Ontario, has programming aimed specifically at new Canadians. CHMR-FM in St. John's, Newfoundland, has a program produced by a local refugee and immigrant advisory council and broadcasts live coverage of student elections at Memorial University hosted by students. CFTA-FM in Amherst, Nova Scotia, provided the only live electoral coverage in town, including reports from the successful candidate's headquarters. CJNU-FM in Winnipeg, Manitoba, broadcasts live from locations around the city, such as hospitals and charities, thereby better connecting them to the community.
The MLA serving the CJMP-FM area in Powell River, B.C., phoned them to ask to appear on their radio show, because it was one of the only ways he could communicate with his constituents. CKUW-FM in Winnipeg, Manitoba, provided provincial election coverage, focusing on issues that other media didn't cover, such as child welfare, disability issues, poverty, indigenous rights, and climate change. CFUZ in Penticton, B.C., and CFAD-FM in Salmo, B.C., provide live coverage of council meetings. CJSW-FM in Calgary, Alberta, hired summer students to create news programming featuring small sub-communities in Calgary, including LGBT groups, artist communities, and more.
Our members also serve local ethnic and third-language communities by providing training and opportunities for community members to produce their own news and public affairs programming. Across the country, our members serve more than 60 linguistic and cultural communities. For example, CHHA in Toronto is the only Spanish radio station in Canada. It also has programming in Italian, Portuguese, and Tagalog.
Each community station approaches local news differently, but most involve teams of volunteers. Few grants are available for long-term operational staff, so news-related jobs in our sector are usually low-paying, temporary, and project-based. This makes it difficult for stations to provide consistent support to volunteers to ensure high-quality programming.
For example, CKUW-FM's news programming focuses on voices not heard in other media and in-depth discussions of local issues. They recently won the community radio award for programming that featured local perspectives on the Museum of Human Rights, but the part-time news director works twice as many hours as the station can afford to pay him.
As well, CJMP in Powell River, B.C., is the only local news source but could not fulfill this role without the CRFC grant. CHXL-FM in the Okanese reserve in Saskatchewan wants to develop programming in the local indigenous language, which was nearly wiped out by residential schools, but they don't have enough staff or resources to do so.
Media concentration creates challenges and opportunities for community stations. For example, it is hard for community stations to compete with more powerful commercial broadcasters for advertising dollars. On the other hand, community stations offer a wider diversity of voices and perspectives on local issues, deeper local insight, more unique local content, and a hyper-local perspective that consolidated commercial stations cannot provide.
To turn to the issue of new media, we see it as a way for our members to extend their broadcasting reach to more members, including millennials, but it's not a replacement for AM or FM. Most of our members have websites that simulcast their signals. Many provide streamed or downloadable archived programming. Some provide video streams, audio web streams, and blogs. Most use social media.
The NCRA's radio exchange, which is a website for stations and producers to share programming, allows stations to obtain and broadcast each other's niche programming.
That's terrific. Thank you.
The point I wanted to make is in terms of the difference of the business model. There is a narrative that suggests we're going from print to digital, and that if we could simply replace our print audience with our digital audience, the advertisers would follow and all would be well. This is not true.
For a number of reasons, it just isn't true. We can have much bigger digital audiences than print audiences. That's no problem; we've already done that. The advertisers don't follow. Advertisers have migrated from content producers to distributors, so Facebook and Google now have the vast majority of the digital revenue, and that's growing. Facebook will take 43% of all global growth in digital revenue in this year. That's just true.
There's something else that's happening, and that is, believe it or not, that desktop and laptop use has flattened and in fact is beginning to decline as mobile is taking over. Mobile is the seventh mass media. Mobile is a different media. All digital is not alike.
Eighty-three per cent of Facebook's revenue this year will come from mobile, and here's the dirty little secret: advertising doesn't work in mobile. It's just less effective as a medium, so advertisers, who have been disrupted just as much as the media has been disrupted—and you have to broaden your view and not just look at media—are now pursuing content strategies, where they can actually go around media and go onto Facebook, Google, and other platforms and create their own stuff. As for the idea that the simple answer is “let's just help people get better at digital”, that's not the answer.
Is that helpful?
Thank you. That's a very good question.
The CPF, the Canadian periodical fund, is a successor to the Canadian postal subsidy that happened before Confederation. The idea with the postal subsidy was that every Canadian would be treated equally. It didn't matter where you lived in the country, it would cost you the same to get your weekly newspaper, your magazine, and your mail.
Over the years, that transferred from Canada Post to the Department of Canadian Heritage and became what we have now, CPF, which is based on providing a very important subsidy to Canadian magazine publishers and weekly newspaper publishers to do exactly what I was talking about, which is to make sure we're providing content.
That $75 million is what Matt was talking about in terms of that program. It's a very important program. I think it's important that it be maintained. Going forward, we're not asking you to double it or anything. It's a very core part of what we do.
Insofar as changes are contemplated, whether by this group or by the department, I made the point about making sure we're supporting the professional cadre of editors, because I think we're going to get the most leverage from that support.
The danger is that we start to say anybody who puts their hand up to say they're starting a digital project should also be part of the pool, because the pool is fixed.
Asking about how advertising works is like a layup, so thank you.
Voices: Oh, oh!
Mr. Douglas Knight: However, I would start by saying that advertising in magazines is falling off precipitously. It didn't fall off as quickly as it did in newspapers, but it's catching up. Magazine advertising in Canada is down 50% plus. In fact, the advertising in 2016 is actually falling off faster than it did in the economic slowdown of 2008-09, so it's catching.
It's not because advertisers don't like magazine advertising. It's that they have to play across the whole ecosystem and they have to take it from somewhere, and they take it from where they have been traditionally spending it. The environment right now is that we are under enormous pressure with the decline of print advertising. That's our biggest threat.
The reason magazine advertising works is a two-part one. First, it's the only medium where the consumer actually likes the advertising. If you were to ask a woman if you could give her Vogue magazine with the ads or without the ads, she would say that it has to be with the ads. You're not going to get that in television, you're not going to get that in radio, and in newspapers they don't care that much, but advertising in magazines is considered part of the content. It's welcome. That's number one.
Number two, the relationship between a magazine and a reader is a long-term relationship. It's one on one, with a single reader and a single editor, and they form a relationship that lasts a long time. They either love the magazine or they don't. You will know this, I hope, from your own behaviour when you say that you really love one magazine and are not so fond of another one. You fall in love with a magazine, with the narrative arc of the magazine, the conception of the magazine, the judgments and the choices that the editor makes, the way the stories unfold, and the usefulness of the magazine. All of those things create an emotional connection, a loyalty between the reader and the magazine, driven by the vision of the editor.
That loyalty and that environment are very helpful to the advertisers. It's why the advertisers will choose to be in some magazines and not in others. As you pointed out, it's a niche medium, so advertisers will choose the environment of a magazine that's appropriate. If they're selling shampoo, cars, or banking services, whatever they're advertising, they'll choose the environment that they think works best for them. What they love about magazines and what's powerful about magazines is that openness of readers to the advertising as part of the content, and the emotional connection, the sort of warmth around that experience, as opposed to an interruptive experience.
I wish I could say yes; I cannot. I said earlier that there's a narrative saying that we're going from print to digital, and that's not true. It's not true, but there will be a lot of magazines that will not survive if this continues and if people don't discover an alternate source of revenue, and that alternate source of revenue will not be from their digital extensions. We're all over every digital platform, and the revenue is not there, so the business strategy has to be that there's the declining revenue and we know that, and we're not going to be able to put our finger in that dike.
There is the evolution, if you like, of multiple digital platforms, such that we have to be on every platform. You cannot not be on every platform. Also, you have to be good at it, and you have to develop good, strong, loyal audiences across the digital spectrum, but that's not going to replace the economics of print advertising, so then you have to ask, where is the revenue growth?
The revenue growth at the moment is coming from our clients who are saying that they have to create their own content. By that, I don't mean the advertorials that you see in the newspaper all the time. That's a 50-year-old version of it. You see a lot of that stuff every day. That's not what I'm talking about. I'm talking about clients figuring out that they actually need to be great storytellers.
We do a magazine for the Pearson airport. Why did Pearson airport do a magazine? Well, Pearson airport wanted to get the travellers from the northern part of the United States to come through Toronto instead of going to Chicago, LAX, or JFK when they go to Europe or Asia.
What's happened is that Pearson has gone from 30 million travellers a year to 40 million travellers a year, and they've done that by attracting people. To do that, they wanted to create a very congenial environment. They upgraded the restaurants. They put out a beautiful magazine that was voted one of the five best travel magazines in the world in its first year. That was a client, Pearson, saying that they don't just have to advertise—they have to create an environment that achieves their business ends.
Does that make sense?
I would just make a comment about your analysis of advertising. If I had known all that when I was running, I could have placed my ads in different spots, I guess. That would have been helpful. I won, but you never know. Everything moves—
Voices: Oh, oh!
Mr. Douglas Knight: We're here to help.
Mr. Darrell Samson: Next time.
I really appreciate your comment, Mr. Knight, that the strength of Canada is because of our diversity and not despite of it. That is so important, because what we, as Canadians.... Our opinions, our way of life, and our values are what should continue to influence Canadians, and the young Canadians. If we don't have that, we are in danger of not being able to share that strength and those opinions. We have come so far as a country, and we need to continue that, because that is the strength we have. I just wanted to comment on that.
As for the radio station, I am always so impressed with community in rural areas and how it survives. I was surprised, because when you were speaking about student jobs in the summer, I looked back and asked a few of my colleagues, and I didn't see any application from a community radio station for student jobs on the list of jobs coming out this year in my riding that I have seen. Maybe I just didn't tap in or they don't have the information, because I know the needs are there. Not only are the needs there, but it is a great opportunity for a young person to be able to benefit from that experience.
There are two things I would like to ask about quickly, and then I will share my time with Mr. O'Regan. The first one is advertising on the radio. Is that increasing or decreasing?
Mr. Luke Smith: That's a brilliant station.
Mr. Seamus O'Regan: Thank you. Obviously I was there before it became brilliant.
Voices: Oh, oh!
Mr. Seamus O'Regan: No, it was pretty good back then. It was the morning shift, but it was a civilized morning shift of 10 a.m.—quite civilized.
Mr. Knight, obviously you are looking at this from a broader perspective. We are attempting to look at local news, particularly television and radio news, from a local perspective, and they are languishing, unlike the magazine industry in this country.
What do we do in that context? As you quite rightly said, every time we add a solution, the media changes. You listed everything that has gone on from Mosaic leading right up to Google and Facebook. We are dealing with a Broadcasting Act that was written in 1991, back when Al Gore was still working on developing the Internet.
What do we do now? How do we create that environment? There is a demand for local news; we just don't know how to give it to people, it seems.
Thinking about and studying the whole strength in diversity thing in this country is deeply interesting, because it's not just about making sure you've covered every niche group and you're telling their stories. That's important, but it's not just that. It's also the language Canadians use in telling everyday stories about any conflict or anything that's going on in their communities. It's the way Canadians frame their conversation that is different. It's subtly different, but once you start looking at it, you say, “Oh my God, it's a lot different.”
When I was living in New York.... This is kind of interesting. I will tell you that in a Spanish-language newspaper it's one language, but it's 22 countries of origin. They could hardly talk to each other. It was unbelievable to have a Canadian come down and say, “Okay, guys, put down the guns and let's have a real conversation.”
If you look at how Canadians talk to each other about anything, you find that there's a really interesting way of engaging that dialogue over many years. As magazines or other broadcasters, when we actually do start to drill down into the stories of newer Canadians and into the stories of first nations.... There's a tremendous focus on the Far North right now, which is really neat, with great voices. Sheila Watt-Cloutier was up for a political writing award at last week's Politics and the Pen. You hear these voices, you watch the way they construct their stories, and you say, “That's very Canadian.”
That's what we need to make sure we don't lose. If we make a story that's just about winners and losers, black and white, in that up or down kind of American dialogue.... Forgive me if there are lawyers in the room, but I will tell you, having employed U.S. lawyers and Canadian lawyers, there's a difference in how they approach the problem. My U.S. lawyers want to win. My Canadian lawyers want to get a deal done. You see that in every story you read, when you look at it and say, “Oh, okay, we heard different, a little bit different.” But we are different, and that difference is hugely important.