Good morning, everyone.
We are going to call this meeting number 16 of the Standing Committee on Canadian Heritage to order. We are currently undertaking a study of the Canadian music industry.
This morning we have, for our first hour, an esteemed panel before us. We have three organizations with us today. First of all, from the Alliance nationale de l'industrie musicale, we have Natalie Bernardin, president, and Benoit Henry, the chief executive officer. From the Songwriters Association of Canada, we have Greg Johnston, vice-president, and Jean-Robert Bisaillon, vice-president. As well, from the Gospel Music Association of Canada, we have Martin Smith, president.
Each group will have, between them, eight minutes.
We will begin with the witnesses from the Alliance nationale de l'industrie musicale. You have eight minutes.
I will provide a brief report on the current situation, as Benoit said.
The Canada Music Fund, through Musicaction in particular, helps provide direct funding for recording projects and marketing projects. That means the promotion and circulation of our artists.
ANIM monitors the allocation of that funding. We are pleased to note that we have managed to obtain funding roughly commensurate with our demographic weight. We are involved in this monitoring effort with Musicaction, working with that agency to try to maintain this level. Musicaction's budget is unfortunately not rising even though music production in the Canadian francophonie and Canada as a whole is increasing, resulting in greater pressure in this area.
We are very pleased and satisfied that the Music Showcase program is being extended. This is a program that enables artists from the Canadian francophonie to circulate in the same way as those from Quebec. Consequently, it is a real success for us because they are circulating now more than ever.
The picture is less positive with regard to the Canada Council for the Arts. With a budget of $8 million, the francophone communities are not even receiving 1%. That is an approximate statistic for the period from 2007 to 2012.
With respect to industry professionalization, although progress has been made in production in particular, there are still deficiencies, particularly in artist support infrastructure. Artists thus receive little support from professional services. That means management, production and promotion. It also means that limits are being placed on the outreach of artists and their products. This is quite a significant missing link. Associations that provide services to the arts of course play this support role, but in too many cases they lack the resources they need to do it, even though they are meeting industry demand for the moment. This is still a significant missing link in artist support.
With respect to market penetration and development, despite the fact that distribution structures are developing, we are still facing challenges associated with market size, circulation across the country as a whole, which is immense, and the ability to penetrate the Quebec and international markets. This is improving thanks to the Music Showcase program in particular, but the battle is far from won. This is a long-term effort, and we must not give up.
As a result of all this, commercial activities still show poor profitability. This is the new music economy, and it requires new funding sources: sales of products such as CDs, digital and other tracks, fundraising campaigns, the collection of royalties, shows, publishing and so on. All these funding sources help artists live from their music. CD sales or tours alone are no longer enough for artists to live on their music incomes.
As regards promotion, production among Canadian francophone artists is becoming more and more varied in an increasingly segmented market. There is something for everyone. However, these artists remain relatively unknown. Initiatives such as the Gala des prix Trille and the Gala des Éloizes give these artists access to a national platform thanks to Radio-Canada in particular. It is here especially that our arts service organizations and our media can play a major role. With more promotional resources, our organizations and media, such as 100 Nons in Manitoba, Musique Nouveau-Brunswick and APCM in Ontario, offer stability and legitimacy for our artists' work and products. They can rally audiences and inform the general public about artists' new offerings and activities. They are genuine hubs of information and support for the music industry and for these artists with whom we work.
As for strengthening our national organization, ANIM fully plays its role with the help of a single employee. I am always amazed to see how actively involved ANIM is. It carries out numerous projects and plays the roles of analyst, mediator, guide, promoter and so on.
I repeat that the health of our organizations is an essential link in the chain of healthy music production, particularly in the Canadian francophonie.
Good morning. My name is Greg Johnston, and I currently serve as one of two vice-presidents on the board of the Songwriters Association of Canada. On behalf of the S.A.C., I'd like to express our thanks for the invitation and opportunity to speak with you this morning.
The S.A.C. is a registered national arts service organization with approximately 1,500 members dedicated to educating, assisting, and representing Canadian songwriters. An association run by accomplished and active writers, the S.A.C. is committed to the development and recognition of Canadian songwriters by pursuing: their right to benefit from and receive fair compensation for the use of their work; the advancement of the craft and enterprise of songwriting through educational programs, networking opportunities, dissemination of business knowledge, and other services; and the development of activities that allow members to reach out and enjoy the sense of community shared by songwriters.
The board of accomplished songwriter-directors of the S.A.C. is drawn from across Canada. The association works in cooperation with and supports regional associations across the country.
In the context of this committee's work to study the state of the Canadian music industry, I believe it is of great importance to define who we are as songwriters. We are entrepreneurs. We are self-employed. We are artists. Some of us are performers as well, but a great many of us are not. We work mostly behind the scenes utilizing our talent, wisdom, experience, and skill to build the foundation of the music business—the song. Socio-economically we are a diverse community. A great deal of us are, like myself, middle class. We raise families, pay taxes, participate in our communities, and are essential to the music industry.
Canadians are highly successful exporters of music, but it is important to remember that although the record labels and performers are the face of this success, it all starts with a song. Songwriters are in essence the raw material of the industry. I make this point to illustrate the uniqueness of our place within the business. Our challenges, our successes, our needs, and our concerns are better understood when one first recognizes songwriters as a distinct and autonomous sector within the music industry.
We at the S.A.C. also believe it is important to examine the economic influence of the songwriter-publisher, or creator, side of the business as it compares to the record label-performer, or maker, side of the business. In the end, it was probably Mr. Reynolds, former president of Universal Music Canada, who best stated the conundrum when he expressed the view that establishing the relative value of the authors' and performers' contribution in a successful recording was the classic chicken-and-egg situation. He didn't think you could extricate the two to say one was more important than the other.
Recently the S.A.C. has joined the ACCORD group representing almost all Canadian songwriters and publishers through their unions and associations. Research is being carried out on the contribution of the ACCORD community to the Canadian economy, and although the study is incomplete, it is clear that the songwriter contribution is roughly the same as that of the Canadian record labels, both major and independent, according to the CIMA and Music Canada studies.
Considering the current state of the industry, we at the S.A.C. know that the ability of songwriters to earn a living is in jeopardy. Over a decade of escalating unauthorized uses of our works has eroded the royalty stream we rely on almost exclusively as income. The hardest hit will be the songwriting middle class, the group that is undeniably the engine of the sector. Although pundits and experts alike expect new streaming models of music consumption to reach the $40-billion mark globally within five years, creators must be represented fairly in the value chain. When artists like Zoë Keating are reporting 2013 Spotify earnings of $808 from 201,402 streams, it becomes apparent that there is still much work to do on the sustainability of the streaming model.
We ask the Government of Canada to support the Songwriters Association of Canada in our efforts to research and establish guidelines for fair compensation for songwriters in regard to new digital models. We must do all that we can to ensure that individual Canadian music creators receive a fair share of the new and growing revenue streams that without our work would not exist.
My name is Jean-Robert Bisaillon and I am an elected member of the board of directors of the Songwriters Association of Canada. I am co-vice-president together with Greg Johnston.
I too would like to thank the Standing Committee on Canadian Heritage for allowing me to speak as part of its consultations on the Canadian music industry.
To begin with, I will cite one of our joint objectives.
“Ultimately, the Canadian Sound Recording Policy will...adopt a more holistic approach to developing this sector.”
For the SAC, this holistic approach is based on the fundamental fact that all links in the industry chain that produces great Canadian music must be valued equally.
We feel that current support measures for singer-songwriters and the royalties we receive from online music providers will ultimately be inadequate to enable us to stay in business. Consequently, for us, a holistic approach means establishing a sustainable industry that can regenerate itself.
New technologies are fabulous. I myself am involved in the software sector. However, they also have very disruptive effects. Our sector has suffered a 40% loss in value since physical music media disappeared. This has disrupted the experience of Canadian consumers without any satisfactory new models being introduced. We are dealing with permanent downloading from iTunes and file-sharing on BitTorrent networks using USB keys and cloud storage. There is also interactive and semi-interactive digital radio and online mobile listening. We are even seeing a return to vinyl. We believe that consumers are completely lost in all this.
One of the objectives of the music industry consultation exercise is to find ways, and I quote:
“To enhance Canadians' access to a diverse range of Canadian music choices through existing and emerging media”.
Our music industry, like consumers, does not have access to Canadian music platforms or digital apps created by Canadian tech start-ups. No one has access to satisfactory new distribution or consumer models.
The Songwriters Association of Canada is constantly looking for ways to study and document this situation. Out of our own resources, we funded a study on Canadian peer-to-peer music-sharing practices, that is to say file-sharing. We are currently conducting a study on fair compensation for creators in accordance with effective royalty rates based on digital use. The following statements are taken from that study.
The songwriting model is no longer sustainable. Despite our role as the primary content provider, our revenue share is largely insufficient relative to those of other industries. In streaming radio, our share of costs incurred by the platforms is less than 1%.
As Greg mentioned, we are saying that digital streaming radio industry revenues should increase. Most subscriptions to those services are currently free of charge and generate royalty levels that are tantamount to piracy. Even an increase in paid subscriptions for these services would not help us. Music creators must invariably receive a larger share of the revenue stream.
Several income sources are currently excluded from the calculation of royalties. Please note that contractual advances paid by some labels from certain music platforms are excluded from the calculation, as are revenues from the sale and mining of user data, some ad revenues and gains generated by the issuance of public shares by certain players.
I'm almost done.
In order to obtain equal remuneration, we must be able to put transparent reporting processes in place. We believe that music industry businesses could gain a competitive advantage in this area by meeting new transparency requirements.
We would like to test these Canadian music service certification models in cooperation with representatives of the entire industry chain, including content aggregators, high tech start-ups and telecommunications businesses. Songwriters must be able to conduct independent studies and compliance tests specific to their needs.
Lastly, these efforts will help restore consumer confidence in legal online offerings and in the Canadian industry in general.
A holistic frame of reference means, above all, a sustainable music industry ecosystem.
Thank you very much.
Good morning. Thank you for the opportunity to speak with you today.
My name is Martin Smith, and I'm the president of GMA Canada, also known as the Gospel Music Association of Canada.
Before I drove up here today, I was thinking about the heritage and place of gospel music in our country. It could easily be argued that the heritage of gospel music in Canada predates the formation of our country.
The Christmas hymn The Huron Carol was written in 1642 at a mission in Sainte-Marie among the Hurons near present-day Midland, Ontario. The music was based on a traditional French folk song, with the current English lyrics added in 1926. Over the years, the song has been recorded by Bruce Cockburn, Tom Jackson, the Crash Test Dummies, the Canadian Tenors, and non-Canadian artists as diverse as Burl Ives and the Vienna Boys Choir.
The Huron Carol may be the first signpost in the journey of gospel music in Canada, but it is just the tip of the iceberg and now represents music that can be heard in every province and territory, and in every conceivable genre: folk, pop, rock, country, jazz, classical, heavy metal, choir, urban rap, quartet, dance, francophone, aboriginal, gospel Caribbean, blues, roots, hymns, and yes, Christmas music. All of these things fall under gospel music.
The sound of gospel music is as diverse as our country. Whether the songs are being played in churches or stadiums, or on the radio or at home, the Canadian gospel music industry is thriving and is part of our country's legacy.
In 1974 the Canadian Gospel Music Association, now known as GMA Canada, was formed. At first the organization was primarily Ontario based and specifically linked to what we call light inspirational and southern gospel music. If you're not familiar with southern gospel music, think four-part harmony quartets with four men wearing the same suit.
Over the decades, GMA Canada has changed to reflect the changes in both the musical styles and the needs of the artists who are our members. Today, GMA Canada exists to serve and celebrate the artists from coast to coast to coast. This is done through our annual artists retreat, the annual Covenant Awards and banquet, various events, workshops and showcases, and the broadcast of the awards program on national TV each fall.
GMA Canada's work is to raise the profile and interaction of gospel music artists, songwriters, producers, promoters, radio stations, distribution, retailers, and churches. The organization is run by a volunteer board of eight women and men who work closely with the greater community to foster the impact and success of Canadian gospel music. As part of that growth and communication with artists across the country, we have introduced many new elements, such as training workshops with industry leaders, the artist songwriting retreat, and a more impactful awards program.
We introduced, for example, the lifetime achievement award that has honoured Canadians such as Tommy Hunter, the Toronto Mass Choir, and also George Beverly Shea, who sang in front of more people in the world than any other artist in history due to his travels with Billy Graham. He was born just down the road in Winchester, Ontario.
We have honoured industry builders, retail giants, groundbreaking artists, and influencers. We added several new categories to recognize music from every community, whether French, English, or aboriginal. We included awards for graphic design for albums, for songwriters, for music videos, and for a whole array of other categories. We created the Canadian Gospel Music Song Hall of Fame to pay tribute to earlier works such as The Huron Carol. If you were to look back at the original lyrics of The Maple Leaf Forever, or even of our national anthem, you would see that the lyrics are about faith and the aspirations of a nation, and they go hand in hand.
The greater gospel music industry includes 30 full-time radio stations, with twice as many repeaters, in communities as far stretched as Grande Prairie in Alberta, and Mount Pearl in Newfoundland. The country is host to major events such as YC, which is a youth event held in Edmonton, Winnipeg, Langley, and St. John's. The annual event in Edmonton has seen 17,000 young people pack the same stadium that Wayne Gretzky used to call home. There are festivals, conferences, weekend church services, and coffee shops that see the playing of gospel music each week.
Sales of gospel music in Canada exceed over $10 million annually, including both physical goods and downloads on iTunes and other Internet sources. David C Cook Distribution in Paris, Ontario, distributes the bulk of the music to religious retail stores, but most of the major mainstream record labels also have a roster of gospel artists, including Sony, Universal, and the Warner Music Group.
This income does not count the CCLI report, which collects fees for songs sung in churches each week, the fees for live performances, or other income from radio or television.
Artists, producers, record labels, and distribution are all active in producing significant income, whether it is royalties for a recording or staying in those hotels while they tour the country. The biggest challenge for our community is being able to tap into government funding. Many artists have not been able to receive support from FACTOR, as an example, because our industry is made up mostly of independent artists whose CDs do not sell in HMV or Walmart. Our organization has struggled to gain recognition for our members and receive support for our annual GMA Canada week, which includes those key elements of training, showcasing, and the annual awards program.
Many of our artists have looked southward to record labels based in Nashville or Colorado Springs to find the kind of support they need, but as you can imagine, very few artists are signed to those kinds of deals. GMA Canada, as an umbrella organization representing a significant art form and community, continues to seek both recognition and financial support to allow our artists to grow, learn, train, and mentor the next generation. Whether the song is The Huron Carol or something from Tim Neufeld's new album “Trees”, which won a Juno Award on the weekend, the gospel music community is a Canadian heritage gem waiting, like most of the country, for spring to arrive and its bud to blossom.
Thank you for your time this morning.
That's a great question, and a very complicated one. I don't actually pretend to have all the answers, but I'll give you a couple of examples that you might find interesting.
If you have a million plays of one of your songs on Rhapsody, for instance, that will get you $11,000. That's a million plays—an extraordinary amount, a bona fide hit. Then we go down to YouTube, where a million plays gets you a whopping $1,750. This is assuming you wrote the song yourself. If you co-wrote it, then you actually get half that amount.
The problem we're seeing is that these massive, massive global companies are coming in, and basically they're start-ups. They talk to the labels, and the labels licence their entire catalogue, because that's how the service works. If you can't get all the songs, no one will want to use the service. So they licence the entire catalogue, and then there are the provisions where a company like that, if they licence the entire catalogue, doesn't actually have to share the revenue stream, because it's licensed for them as a whole, so a lot of artists don't participate in that at all.
We also have a problem with how they divide up the amount the record labels get and the amount the publisher or the creator side of it gets. We find that we're not participating in this conversation at all when these companies are starting up and they're being allowed to do business.
It's increasingly looking like it's really just not possible for us to function in this environment. There have been a lot of questions on whether there needs to be more regulation on this business or more cooperation with the government. Essentially they're a tech company, and arguably a telecommunications company.
There are a lot of challenges. Right now we just want to bring light to the issue. It's time to have some serious discussions about this, because this type of activity could be the collapse of the creator side of the business. It's very dire.
I would like to clarify one point.
In our language, when we say "the Canadian francophonie", that is shorthand for the official language minority communities. The Canadian francophonie is a shorter expression that we use to avoid referring to francophones outside Quebec. It is not very pleasant for us to define ourselves in those terms.
That being said, the music industry crisis that Mr. Bisaillon described earlier—we are not talking about the new music economy here—has not hurt just the artists. When the Alliance nationale de l'industrie musicale was established in 2001, there were enormous numbers of complaints in the francophone and Acadian communities. Access to funding was virtually impossible. You can state the figures in absolute terms or as percentages, but artists in the Canadian francophone communities barely received $200,000 in 2001. Ten years later, however, the figure was more like $1.3 million at Musicaction, for example.
So this means that there has been some catching up. For a long time, we said we had a lot of catching up to do, but we have stopped saying that because we do not want to catch up to a model that is exploding or collapsing.
On the other hand, we have clearly experienced both growth and consolidation in our communities as a result of available funding. For example, under Musicaction's Music Showcases program, which is funded under the roadmap for official languages, we are now able to obtain 15% of available funding. Francophones outside Quebec, who represent 15% of francophones in Canada, are receiving an appropriate percentage.
Many agencies and organizations in our network are funded through official language support programs, which foster the emergence of new artists. Those programs play an important role in that they help artists become professional, promote themselves and develop markets. Natalie talked about the 100 Nons agency in Manitoba. There is also APCM in Ontario and Musique NB in New Brunswick.
Thank you very much, Mr. Chair.
Thank you for being here. This has been quite an education for me, because I'm not terribly familiar with the music industry.
I keep hearing some repeated themes. Some of them disturb me very much.
Mr. Johnston, you've said twice, in a couple of different ways, that the ability of songwriters to earn a living is in jeopardy and that there could be a collapse in terms of the creator side of music. From my perspective, that's pretty much the end. If people can no longer do the creative part because they're starving, because they can't possibly do it and make a living, it seems to me that we're in real jeopardy.
What I keep hearing—and I think this may be a concrete recommendation that should be part of our report—is that there needs to be a collaborative effort. Government needs to take the lead, and we need to bring all the parties to the table: the creators, the producers, the marketers, and the providers, the Internet providers and streamers. We need to bring the parties to the table and work out a system whereby everyone benefits, where the creative process can continue, because it would seem to me that these Internet providers, the streamers, are not going to fare very well if those creators aren't there to provide that incredible product.
I'm wondering if you could comment on that and if that makes sense in terms of the kind of recommendation that I think is emerging from the discussion we've been having.
First of all, I want to thank our witnesses for coming to meet with us today. I believe all committee members appreciate the information you are giving them. These are, in many cases, complex issues that we do not know very much about. Your contribution is of enormous help to us.
You all talked about issues regarding the visibility of Canadian music, but especially you, Mr. Bisaillon. Like some of you, I attended the Juno Awards ceremony last weekend. It is always stimulating to see our culture doing well and being enthusiastically received. As you said so well, Mr. Smith, things are going well at the top, but not so well in the middle or at the bottom.
I met some people from the Centre culturel franco-manitobain, in particular Ms. Molin, who told me how important events such as Coup de coeur francophone and programs like “Pour un soir seulement” are and how they help create a critical mass. These are issues that must be considered.
Earlier we tried to determine whether it was possible to take specific action. I believe you are recommending that we conduct studies soon to find a solution and draw international comparisons. This is not a simple matter, even on that scale. Creators are fighting the same battle virtually everywhere.
I was at the Governor General's residence yesterday when the Glenn Gould prize was awarded to Robert Lepage. His only message was a request that the government once again support the international visibility of our creators.
I want to tell you that I find this concept of fair trade certification very exciting. Fair trade coffee is now part of our lives, somewhat like recycling paper. No one thought about it 20 years ago. Today the word "fair" is an additional factor in our purchasing decisions. A month ago, Deezer announced a kind of Canadian subscription. We are pleased to have achieved that visibility.
You are right to ask what measures can be taken to assist you in responding to this monopoly that has been established. This is a bit of a throwback to the 1950s. At that time, big companies had set rates that were viable for them over the long term based on volume and shareholder deals. However, it is totally inapplicable to independent businesses.
What can we do to help you in this regard?
Thank you, Mr. Chair, for inviting me to meet with your committee.
First off, my name is Shawn Cooper, and I'm the president and co-founder of a company called Volu.me. We work with artists, and Canadian artists specifically, such as Hedley, Tegan and Sara, The Sheepdogs, and Sloan. We power their mobile applications, so we build native iPhone, Android, and BlackBerry apps that pull in all of their content from their various sources online and make sure that everything is live in the artist's app all the time.
I welcome this opportunity to help explain some of the ways in which technology is playing a pivotal role in the creation, distribution, and consumption of Canadian music content, while equally offering two suggestions on how the federal government could better aid in the funding of a music technology platform such as Volu.me.
The typical consumer of Canadian music content in 2014 carries an always-connected smartphone with them from the moment they wake up in the morning until the moment they go to bed at night. As a people, we've never been more connected or up to date in history.
With this new always-connected mindset have come greater expectations for intimacy with the musicians we listen to. It's no longer enough for an artist to simply write and release music for a fan to listen to. A fan wants a much deeper connection with an artist, expecting a window into their day-to-day lives and engagement on a level that is unprecedented.
Being a successful and bill-paying musician today requires fan development—the concept that you have to work to acquire your fans initially, followed by keeping the relationship with them alive and strong between album releases. An artist who fails to engage in fan development between album release cycles has little chance of being successful in the next album release cycle, because everyone who cared is no longer listening.
Without technology platforms, which enable these talented musicians to connect direct to fans on a scalable level, they would have little hope of successfully developing or monetizing their fan bases today. Building the technology platforms that help enable these musicians can often be much more complicated and expensive to develop and support than one might imagine. Today's platforms such as Volu.me are dynamic and ever-changing due to the way that they interconnect with other platforms, operating systems, or content distribution channels.
Unfortunately, this means that you can't just build, launch, and forget them, expecting them to just keep functioning. Even after initial development and launch, their operations often remain resource intensive, with developers required in an ongoing manner to keep up with changes in the other ecosystems the platform is connected to.
Easily the most expensive cost in creating and operating a music platform is that of development staff payroll. Your development team is going to make or break your ability to successfully solve and execute on a market problem. Unfortunately, with developers in high demand, often at very high salaries, it can be difficult for the Canadian music technology start-ups to attract or keep skilled developers, especially when competing against U.S.-based companies for Canadian talent.
Being able to get a platform like Volu.me to market can often include upfront costs in the hundreds of thousands to millions of dollars. Further to this, in the case of music platforms specifically, a projected break-even point on operating revenues is typically not possible or probable until you scale your users to a pretty massive level.
This makes music platforms, while very much required and leveraged by the Canadian music industry, a rather risky and often initially money-losing venture to create. Because of this, building out a music platform typically requires raising investment capital. This usually leaves entrepreneurs with two options: raise money in Canada or raise money in the U.S. Raising money in Canada typically means a smaller overall deal evaluation, as well as a reduced possible investor pool due to the limited number of venture capital institutions in Canada versus the U.S. Unfortunately, this often sees Canadian music platforms move south of the border just as they start to get momentum, due to a lack—again—of institutional funding in Canada as it relates to music technology ventures.
In leveraging programs made possible by Canadian Heritage, such as the collective initiatives program administered by FACTOR, along with having raised private investment capital from Canadian angel investors and music industry veterans, we've been fortunate enough to be able to fund the ongoing development of Volu.me based out of Toronto.
It is our recommendation that the collective initiatives program administered by FACTOR and Musicaction see their project timelines and budgets for technology-based projects increased to better reflect the actual budgets and timelines required to build music technology platforms that matter. Seeing an increase in project funding levels that could support several full-time developers on a project for a 12-month project timeline would enable Canadians to build the music platforms that our musicians need and could leverage worldwide.
Further to this, it is our recommendation that a grant program be set up to investment-match in Canadian music technology companies who manage to raise institutional funding. By this, what I mean is that if a Canadian tech start-up can go out and convince an institutional investor, such as a venture capital firm, to invest their own funds into a music platform, the federal government should use this vote of confidence on the investor's part as a barometer to the calibre of the project team and idea. Such investment-matching on the part of the federal government would make keeping music platforms and the jobs they create in Canada a much more viable long-term option, while equally ensuring that Canadian musicians are at the forefront of leveraging technology to further their musical careers.
I thank the committee for its time and look forward to answering any questions.
It is really a pleasure to be here with you today and to speak with the committee.
I listened attentively to the remarks by Mr. Cooper and Mr. Bisaillon and those of all the speakers. Everyone should hear what these people have to say. I think we could learn a great deal from it.
My name is Andréanne Sasseville and I am director of Canadian Content Development and Industry Relations at SiriusXM Canada.
Joining me today is Paul Cunningham, senior vice-president of marketing and sales for SiriusXM Canada.
Since the launch of satellite radio in Canada back in 2005, SiriusXM Canada and the satellite radio category have matured to a viable and sustainable business while offering Canadians more choice and diversity in their daily audio entertainment. Prior to and since the merger of both Sirius Canada and XM Canada in 2011, our efforts to consistently deliver the best in music and entertainment brands and exclusive content to our customers has resonated with the Canadian consumer. This is evidenced by a 90-plus per cent customer satisfaction rate and our subscriber growth is now up to 2.4 million Canadians.
We have clearly helped to fill a gap in providing Canadians the content they want and are looking for. This is especially true when it comes to generating and providing Canadian content to our customers. We are developing over 120,000 hours of Canadian programming every year and provide access to this programming not only to major Canadian regions but equal access to rural and remote areas with limited radio operations. We are providing increased diversity and a wide variety of programming choices, 11 genres, available to all Canadians and exposure to homegrown talent across North America.
SiriusXM is committed to being one of the top broadcasters of independent music in Canada, and since our launch in 2005 we've played a leading role in helping emerging English and French Canadian artists grow their audiences both in Canada and in the U.S. Outside of our broadcasts SiriusXM Canada is also at the forefront in providing increased exposure and financial support for Canadian musicians and spoken word artists, particularly where new and emerging artists are concerned.
SiriusXM Canada, through its subscription business model, has contributed more than $75 million directly to artists through copyright and royalty fees as a result of our continued commitment to leverage the platform for the airplay of Canadian content. As well, our contributions to developing and promoting Canadian artists and our investment in music education and the cultural infrastructure required to provide this promotion are very strong. Canadian content development contributions are approaching this year $70 million since we began operating in Canada. This year only, we're talking about $11 million that will have been invested in CCD funding with a large portion of that investment going to institutions like FACTOR and Musicaction.
These institutional contributions, however, do not necessarily provide the best opportunity for artists, and that is our view. Where we are seeing greater success is in the development of programs that provide targeted and direct impact to artists' careers, impact where we can actually build a direct relationship with the artists. The proportion of institutional investments we support limit our opportunities to develop more grassroots initiatives that provide direct impact to Canadian artists. We could be doing much more together as an industry.
Whether it's providing exposure to emerging bands on movie screens across the country, showcasing emerging artists at events and festivals year round, all genres, or giving bands a chance to shine in front of one of our largest TV audiences at the Grey Cup halftime show, SiriusXM's innovation in funding these initiatives and others like them are providing direct results.
For those more used to Quebec television, a program is available to new artists who are exposed to a French audience across Canada. New artists are thus being given the opportunity to be seen and known.
There is definitely no shortage to promotions and initiatives that we can develop that impact artists directly, vastly enhancing and building a measurable trajectory for their careers. I recently had the pleasure of joining in Winnipeg during the Juno Awards week last Friday. We were at a local school and helped to present a music education grant through MusiCounts, an organization that we have supported for many years now and have contributed over $1 million to. We presented to over 1,600 students and shared the news of this important grant alongside Canadian band The Trews.
This is just one of hundreds of initiatives we take part in to support our industry, and one example out of many that provide music into classrooms to help get today's young and talented musicians and aspiring Canadian artists onto the airwaves and our playlists of tomorrow.
Part of the maturing business has been to adapt to a radical change in the industry landscape. The many different ways in which Canadians are now consuming content today continues to shift and is complex. In order to continue to provide a sustainable platform for Canadian voices, we must introduce continued innovation and a level playing field from which listeners and artists alike would benefit. This is an important and vital step in ensuring that the opportunities for Canadian artists are abundant in the midst of this radical change in the ways Canadians consume music.
Broadcasters must adapt to this ever-changing environment to succeed. This is a given, but adapting within an unfair competitive environment is rife with implications affecting both the artist and the consumer. I did mention earlier a continued investment to the industry. The $11 million SiriusXM Canada invests annually is sharply contrasted with the less than $7.3 million investment from all commercial radio licensees combined per year.
We also must remain competitive with respect to unregulated music streaming services entering the Canadian market. Internet and mobile streaming companies currently pay nothing toward the Canadian industry related to artist awareness and growth, nor do they currently have any requirements to feature Canadian content or any other means that would aid the discovery of new music.
SiriusXM Canada dedicates millions of dollars and commits its platform every year to programs and initiatives designed to provide support and exposure to up-and-coming Canadian artists and especially to music education. There is clearly an opportunity for shared responsibility here. Without federal regulation and parity throughout commercial radio, satellite radio, streaming services, and other content-delivery methods, the Canadian consumer will begin to see a reduction in choice and talent, and the exposure potential of a vibrant industry will not be realized.
This is an exciting time for the music industry. There is great opportunity amidst the changing music landscape, and we do remain very hopeful that we can continue to support everything we're discussing here today. We welcome the opportunity to further work with the committee to explore these areas and to help develop with our industry colleagues an immediate strategy related to all our concerns.
Thank you very much for the time you have allotted me.
Once again, I will be pleased to answer your questions and to speak with you.
I'm so sorry I can't be there in person. I had a CTV appearance this morning and couldn't get a flight out.
I'm Vanessa Thomas, managing director of Songza Canada. I'm very happy to be asked to speak today about the ever-increasing world of digital music in Canada.
Songza came to Canada in August 2012. We actually opened our physical offices in October 2013. Prior to opening the offices we grew organically to 2.4 million monthly unique users. We are presently at 2.7 million monthly active uniques. We are a music streaming service. We consider ourselves a lifestyle enhancement company where we provide playlists to the user based on their activity or their mood at that time of the day.
It's wonderful to live in a country where the government supports music. I welcome this opportunity to discuss how the money is spent and how digital services are going to become even bigger players in years to come. As radio becomes more narrow in their formats, which is happening, and the record labels reduce their marketing and promotion budgets, the digital platforms will become increasingly important to showcase emerging Canadian talent on a North American platform. We are not restricted by formats and can seed good emerging talent into 1,800 different playlists within Songza.
We have good infrastructure in this country with our broadband services, yet we lag in our services in this space. The growth of streaming music content is far behind the U.S. Our revenues for streaming were only 7% of the market last year whereas the U.S. reported recently that 21% of their revenues were from digital and streaming.
Why is Canada behind the U.S. and other countries in the development of music streaming services? One reason is that the regulatory framework in Canada doesn't foster innovation. The rate-setting process through the Copyright Board takes far too long, up to four to five years for an industry where business models are changing rapidly.
It's hard to build a business model without certainty as to how much you have to pay for the main inputs to your business. This certainly holds true for investors investing in these businesses. That's why Songza came to an agreement with Re:Sound—the organization that represents recording musicians and record companies—that allowed Songza to launch in Canada with certainty on those rates without having to wait years for a decision from the Copyright Board.
Services like Songza want to be able to use our platform for years to come, as we are now, to showcase emerging Canadian talent to North America that may not get exposure on regular terrestrial radio. However, the environment is not built to let digital companies thrive and succeed. The streaming services in countries with the most equitable streaming rights are challenged with building a business due to the cost of content. Canada continues to be among the most challenging countries in which to strike digital rights agreements with the publishers. This challenge has dissuaded many entities from actually operating in Canada, and in the end, it is the artists who suffer from that lack of exposure.
Digital companies cannot receive funding from the Canada Music Fund or FACTOR to help grow their businesses. There are no funds available within this space. Streaming music companies are paying more per stream in royalties than we are actually making in revenue, even with dedicated sales teams, at this early stage of our development.
Governmental incentives are often rooted in tax credits. Start-ups typically run large losses in the early years, which makes the tax credit of little or no value. However, digital music services' most significant cost is artist, label, and publisher royalties. If Canada were to develop a structure to provide subsidies for the payment of these royalties, it could both fuel technical advancement in new digital music services and distribution models, and also provide needed financial support for the creators and the performers. A subsidy approach is really a win-win for all interested parties.
Additional subsidies or incentives could be helpful to start-ups who create offices on the ground in Canada for purposes of localizing their services, both in regard to Canadian music repertoire in supporting the artist and Internet radio advertising of local Canadian businesses. Canadian ownership of the service as a whole shouldn't be the sole criteria in determining eligibility for grants, subsidies, and awards, to the extent the business operations in Canada are indeed focused on developing the domestic market, creating local employment, and breaking Canadian artists within their platform.
In summary, the government could help with marketing efforts for the pure music services to expand our reach, help with start-up funding grants for those new business models and change the criteria for those qualifications, provide tax breaks on the business costs of running a dedicated Canadian office, learn and understand the digital growth in Canada and support this digital innovation, and look outside of our boundaries to see what's happening in other countries. Accelerating the rate-setting process through the Copyright Board is essential.
Songza is a pure music service that is truly interested in music as an endeavour. We opened a Canadian office to further integrate into the fabric of the Canadian culture and promote Canadian artists. We hired a well-known industry veteran, Alan Cross, to head up our Canadian curation, and hired Canadian creators to create situations involving Canadian culture and artists.
Many streaming services are only having success as they are tied to a multinational, where the focus is not necessarily on music but other ventures. We are focused on local repertoire and are committed to supporting Canadian culture and artists. One example of this is the band Hey Ocean!, a Canadian band that we actually broke within our platform on Songza. The social media that came from that really propelled them to their first success.
I'm very excited to answer any questions. Thank you very much.
I'm not an expert on that in terms of how we're going to do it if it comes to regulating online or how we would regulate it across. I know that's more the CRTC.... I really can't answer that today. I just know that it's one of the recommendations we see. We should all be operating on the same playing field—especially the new digital online services—supporting Canadian talent, and having the same regulatory guidelines that terrestrial radio has today and that we have.
The other thing we want to talk a little more about is investing in the artists. With the change in the environment, what it really comes down to is that the days of distribution or of record companies being able to distribute an artist and sell CDs are gone. An artist is lucky to sell 20,000 CDs—a name brand artist—so that area in that distribution is gone for them.
What they're really needing is some way of being marketed better within the marketplace. They're needing genres of music that allow them to be played within the genre of where they're successful, whether that's folk or some of the other genres that are out there. We need to be able to find innovative ways to go out and market and promote those people.
We're very proud of the amount of money we've spent and how we've spent our CCD money in terms of trying to do those things. I'll use Cineplex and what Andréanne does for us.... That's an opportunity for new and emerging artists to get out in front of a whole brand-new group of people and actually be exposed to them. They wouldn't be able to do that in any other way.
To your point, Shawn, earlier on, you can have an app, but if people don't know about it or don't use it, it's never going to expose you.
We've been very proud of the way that we've gone out to try to promote talent out there. We've done it differently from a FACTOR or a Musicaction. What we believe is that we should be allowed to continue to do that and to find innovative ways to go out and really promote artists. I think we have a long track record of success in doing that.
We don't feel that institutional groups that have been out there for a long time have necessarily been progressive enough for change. They're built more on the produce-a-CD type of approach. We believe that we must have a new and innovative approach, and that's going out and actually talking to our customers as well about the new and emerging artists.
We're actually on the opposite side of it. I would say we do more for artists in music export than we do on helping them locally.
Artists are usually pretty good at getting people in their area to know about them and at getting friends to come out to shows. The successful artists are the ones who are really part of the community at that point. People know the artist's name or whatever.
A little bit over half of our installs are actually worldwide. A lot of that has to do with the fact that we do support iPhone, Android, and BlackBerry, with BlackBerry making up most of our Latin America and Southeast Asia installs.
So I don't really know how to answer you properly in that I don't think that we really help artists on a local level. We help them on the mass market level. One thing we do, however, is that in the same way a fan who has a show happening near them gets a push notification about an event, the artist, using their phone or computer, can log in and do a back-end system that lets them specifically target in certain radiuses.
Let's say an artist is playing in Ottawa tonight and tickets aren't really selling that well. They can actually jump onto their iPhone and send out a push notification only to fans within two kilometres of the venue, saying “Hey, we're doing sound check; come by”, or “We're down the street grabbing lunch; come say hi”, and that type of thing. Again, it's trying to make the personal relationship with their super-fans.