:
First, I want to thank you very much for allowing me the opportunity to speak to the committee today.
In my 28 years in the music industry I've been lucky enough to see the music business from many sides. I spent 12 years with the major record label Universal Music. Additionally, I spent 12 years of running my own independent record label, Curve Music, as well as my own artist management company, Cerberus Artist Management.
In addition, I was the inaugural executive director of the Radio Starmaker Fund in 2001. I was responsible for helping set up the fund as well as operate it in its first few years. More recently, I was the vice-president and general manager of FACTOR, the Foundation to Assist Canadian Talent on Recordings, but I have now returned once again to my companies.
I can certainly speak about the necessity for cultural funding for the arts at length, especially given the more difficult climate for artists and music companies. I am of course happy to answer any questions you have for me; however, I also thought it vital that I present some additional impacts that the music industry is facing, specifically related to the digital landscape.
While the onset of paid digital music streaming services seems to somewhat be eroding the illegal download Issue and of course making music accessible to many people on a more immediate basis, it is also creating a number of other issues, the main one being that it is driving the sale value of a single song and recorded songs' value down to micro-pennies.
When the major record labels opened up their catalogues and new releases to streaming companies such as Pandora and Spotify, it was done by negotiating massive advances from the said streaming companies to the major labels, in the millions of dollars. Although the majors still see the same net profit on a single stream that an independent company or as an independent artist does, neither the independent labels nor the artists have seen any type of advance from the streaming services and must solely rely on the very low per-stream payment.
As an example, an artist whom I previously worked with named Peter Katz,who was originally signed to both my record label and my artist management company from 2007 to 2011, recently provided me with his financials for the last six months of streaming of his most recent album release, Still Mind Still. Between September 2013 and February 2014, Peter Katz's album was streamed 7,794 times on various streaming services. He was paid the grand total of $47.96 for that. With 11 songs on the album, this means that Peter was paid 0.0006 cents for each song on an album or 0.006 cents for the entire album. Compare that, if you will, to the $9.99 for the album or the 0.99 cents you would get for a song on iTunes.
On the publishing side, since Peter Is a self-contained songwriter, he wrote all the songs on his album. Despite how bad these numbers are for Peter, if you were, say, a songwriter who wrote only one of the songs on his album, your mechanical licence for a song on that album from a streaming service would be 0.00006 cents. You can see that it's not only extremely difficult to make a living as a performer and songwriter selling your music, but virtually impossible as a songwriter only. At 0.006 cents per album, you would need to stream millions of albums to even make a decent living or, as is the case for most artists these days, simply not make a living in music.
We can also use the example of David Lowery of the American band Cracker, who has openly published on his Facebook page his songwriting royalties from streaming services that Pandora, the streaming service, paid him. He received $16.89 for more than one million plays of the band's 1991 hit song “Low” during the last three months of 2012. While Lowery only owns 40% of the song as a songwriter, when you add the other writers into the share, for a total of $42.23 that Pandora would have paid all songwriters, it's embarrassingly low.
We need to investigate and to attempt to set up some legislation that ensures that artists, labels, and songwriters are paid fairly for the use of their music through digital services. Since these services may already be making millions or will eventually be making millions, it's even more imperative.
Since sales of music have been virtually eliminated as a way to make a living only for artists, then touring has become one of the few ways to both advance your career as an artist and make a living as an artist. Support for touring is crucial, both domestically and internationally. In fact, very few acts can make a living simply touring in Canada alone.
The plan for a touring artist must encompass all countries and territories around the world, as many as possible, in order to build a viable career of both touring and selling music. The international marketing and touring of an artist is extremely expensive. As well, while recording costs are decreasing, the cost of actually marketing and promoting albums is not decreasing. As any independent label or artist will tell you, they must view the world as their marketplace now and must plan to tour and promote themselves and their careers internationally.
We must ensure that there are further funding models in place to allow artists and record labels to properly market their products, both domestically and internationally. In addition, there need to be more funds directed to export-ready artists to help them tour internationally. It is also key to ensure that funding is available for cultural trade missions for both artists and companies to showcase their material in foreign territories.
Thank you.
:
Ladies and gentlemen parliamentarians, distinguished guests, Quebecor Media wishes to thank the members of the committee for giving us this opportunity to share our experience and take part in the discussion on the issues surrounding the funding of the Canadian music industry.
My name is Serge Sasseville and I am the senior vice-president of Corporate and Institutional Affairs at Quebecor Media. I also previously had the privilege of occupying the position of president of the music sector at Groupe Archambault, where it was my responsibility, among other things, to supervise of all of the activities of the music sector.
I am accompanied by my colleague Christian Breton who is the vice-president of the music sector of Groupe Archambault.
Whether we are talking about Quebecor or Archambault, our passion for music goes back a long way.
Quebecor began its first music-related operations in 1976 by purchasing Distribution Trans-Canada, one of the most important record distributors in Quebec, which began its activities in 1958. Then in 1986, Quebecor got involved in record production and retail sale by purchasing Kébec-Disque. In 1995, our presence in the musical field took on a new dimension with the acquisition of Archambault.
Founded in 1896, the Archambault company specialized originally in the sale of sheet music and musical instruments. Over the decades, it broadened its activities into the production, distribution and sale of records, among other cultural products.
All of this has made Québecor Média and Groupe Archambault the most important independent disk distributor in Canada today, via Distribution Select. This also has made it the largest music retailer in eastern Canada, through the Archambault stores and their online sales sites. This has also meant that we operate the largest disk store in Quebec, Musicor, which houses artists such as Marie-Mai, Kaïn, Bruno Pelletier, Marie-Élaine Thibert and Francis Cabrel. We are also an important player in the production of all types of musical shows through Musicor Spectacles.
Finally, I should also mention the role our broadcaster TVA plays in getting the public to know new artists and Quebec musical heritage by broadcasting programs such as Star Académie and La Voix, whose final show earlier this month drew over 2.7 million spectators and a market share of over 60%.
In short, Quebecor Media is today an important player in the musical sector in Canada.
Despite all of the success our artists have had, the fact remains that the music industry in Quebec or in Canada is largely dependent on public funding.
And that said, we wish to thank the current government for its decision to make the sums allocated to the Canada Music Fund permanent. As I was saying, these public funds are unfortunately still essential to maintaining the Canadian musical industry. I say “unfortunately”, because Quebecor would like the Canadian music industry to be able to get along someday without public subsidies and create players that would be solid enough to fly on their own and compete with foreign players. Unfortunately, it seems that day has not yet come.
On the contrary, Canadian players must now face world players who are more powerful than ever. Of course I mean Apple and other international digital sales platforms that take up more and more room in the Canadian musical landscape, creating new issues for local actors.
The most urgent issue, we feel, is the price discrimination Canadian music retailers face in competing with retailers such as iTunes, because they do not have to charge sales tax. If you take the example of an artist such as Marie-Mai, her albums are produced by our company Musicor, distributed by our firm Distribution Select, and sold among other places in our Archambault stores, the brick and mortar stores. If a Canadian wants to purchase a Marie-Mai song he has the choice of buying it from iTunes for $1.29 tax free, or on a Canadian site, for instance our site archambault.ca, for $1.29 plus taxes, that is to say $1.48. We are talking about 19¢ more. Clearly this is bad, artificial competition that works to the detriment of Canadian retailers, both digital and physical ones.
Ultimately, in a highly competitive market where margins are very small, such a disadvantage will inevitably lead to the disappearance of Canadian retailers, and to the consolidation of the industry around foreign players. with all of the job losses and loss of tax revenues that that will entail.
Beyond the financial repercussions, it is unthinkable that Quebecor Media let the sale of music go into foreign hands alone, for the plain and simple reason that in our opinion Canadian and Quebec retailers will always be in a better position to showcase our artists than the retailers from other countries. Indeed, they do not necessarily have the same priorities or the same interests.
When Canada completely loses control of the platforms that broadcast Canadian music, our country will also lose control of the positioning of its music and of its artists. You do not have to be a rocket scientist to understand the catastrophic consequences this will have on our artists and on an industry that according to a PricewaterhouseCoopers study commissioned by Music Canada, provides a livelihood for about 4,000 people and generates annual revenue of close to $400 million.
In addition, it is one thing for a Canadian artist to see his or her works available on iTunes or any other digital platform, but his albums also have to be promoted on the home pages for consumers to buy them.
Access to promotional space on digital platforms is very difficult to obtain. Unfortunately, there are no subsidies at this time for promotion on those platforms. And so we feel the time is more than ripe for public funding programs to be adapted to that reality in the promotion of music in the digital era.
Also, we would like to see some funds allocated to the digitization of the older recordings of our musical heritage, as is currently being done for literature and cinema, so as to make those works accessible on new digital platforms, thus ensuring their availability for future generations.
In closing, please allow me to make one last, more specific comment, this time about the Canadian Heritage MEC program.
On behalf of several artists and producers who shared this with us, we deplore the fact that artists whose record companies receive funding from the MEC are not eligible for touring assistance from Musicaction, even when their shows are not produced by their recording companies.
For several artists, whether they are already well-established or are newcomers, this is a terrible choice to make; they have to choose between receiving funding to tour, and signing with a larger record company that may invest more resources in their albums. That situation has a perverse effect on newcomers especially, who see themselves relegated to smaller record companies while they should be allowed to join the big leagues.
In conclusion, we believe that the main question the committee must answer is the following: How should government assistance be structured in order to allow music industry actors to compete in the digital arena, which is increasingly controlled by international giants?
The suggestions we humbly submitted today had to do with that.
Thank you for your attention. We are available for your questions.
:
Thank you very much for inviting me to speak on behalf of the Polaris Music Prize.
I realize in the preparatory material that I read, it said not to describe what you do too much but to get to the matters at hand, but if you'll just permit me I'll mention the following.
We are a not-for-profit organization that annually honours, celebrates, and rewards creativity and diversity in Canadian recorded music by recognizing, then marketing, the albums judged to have the highest artistic integrity, without regard to musical genre, professional affiliation, or sales history, as judged by a panel of over 200 select music critics from across the country. Previous winners have been Arcade Fire, Feist, Caribou, Karkwa, Patrick Watson, Godspeed You! Black Emperor, and Owen Pallett. Nominees have included Metric, Neil Young, Ron Sexsmith, Tegan and Sara, K'naan, Sarah Harmer, and Kathleen Edwards. I wanted to throw a few more artists names into the mix, just as the other two witnesses have been doing here.
Our jury includes media from coast to coast in Canada and excludes anyone who makes a living from musicians, or as a musician. It was inspired by both the Giller Prize for fiction in Canada and the Barclaycard Mercury Prize in the U.K. for album of the year. It is an award strictly for the quality of the main artistic work in a recording artists canon: the album. This is our ninth year.
We are based in Toronto where our annual gala is held each September. Polaris season starts in June with the release of our 40-title long list. The ten-album short list is announced in July. We select 11 critics from our larger panel to pick the winner the night of our September gala. This year it's September 22, and you're all invited.
We've been called “prestigious” by The New York Times and the BBC. The Chicago Tribune calls us "Canada's top music honour". The Globe and Mail has said that Polaris is "something that matters on the international stage". But any credit that Polaris takes from this must really be given to the artists themselves. They are making world-class artistic statements.
A lot has been said and during this review l'm sure you will hear from others a lot about how well our artists perform commercially around the world. What Polaris has done, if anything, is to celebrate the quality of our musical works in a way that the world notices. Canadians are known as innovators and explorers in music in almost every genre, from Polaris nominated Drake and his producer, Noah “40” Shebib, in hip hop, to Cirkut in pop, to inaugural Polaris winner Owen Pallett, who along with another Polaris winner, Will Butler of Arcade Fire, was nominated for an Oscar for best original score recently. We're known for our natural beauty and resources, our comedians, our authors, our politeness and now, more than ever, around the world for our great musicians.
We believe that part of that credit can be given to a history of policy that supports music culture and musicians both directly and indirectly, from FACTOR, to the Canada Council to the Radio Starmaker Fund, and various talent support initiatives required of broadcasters through the CRTC, not to mention Canadian content requirements, our artists can survive next to the cultural behemoth that lies to our south, and often with work that inspires, challenges, and stands the test of time.
It's no secret, and it's been mentioned here before, that sales for albums have been declining. Yet album recordings are still the cornerstone of most artists' commercial and public presence. Albums are the nucleus for all the other activities that allow our musicians to make a living: touring, merchandise, grants, publishing, and master royalties licences. This is why Polaris chooses to celebrate the album above all else. It's the pinnacle of a recording artist's creativity and the thing they generally spend the most of themselves on.
Making the long or short list, or winning Polaris, has many positive effects, the most obvious one being a dramatic uptick in sales and digital streams, often months after the record has exhausted its initial-release promotional activity. It also results in increased international media coverage, better paying gigs, and more promotional opportunities. But it's not just for these benefits that we believe music celebrations like ours are an important part of the music ecosystem. Celebrations and awards give artists something to strive for, in our case for their actual work. To our surprise and delight over the years, we've heard from a few talent managers or artists that they have driven themselves to make better recordings in hope of a Polaris nomination. In an age of dramatically declining sales, we're giving artists something to strive for with these recordings. We're encouraging innovation and excellence.
We believe that existing government policy and programs as they pertain to the Canadian music industry are effective in allowing our artists to excel at being themselves and telling Canadian stories that they then share successfully around the world. There have been many positive articles in U.K. and U.S. media outlets written about Polaris. l'd like to summarize two thoughts that appear to be common to a lot of them: (1) Canada is making amazing music; (2) Their government support for music is incredible. To us the correlation is real: accessible funding that takes chances on more challenging artists results in music that leads the world. This results in the very real perception that Canada is a world leader in music.
If there's anything we might suggest, it's that we, along with other music celebrations and awards, are considered under slightly different criteria when it comes to funding, as we tend to get either wedged into other development categories like conferences and festivals, or at times don't qualify for other funds because we are not rights holders. Refinement of the criteria to consider music awards and celebration under different and more pertinent criteria could make things more efficient for our category.
Also, a word about music education. Any charity efforts we undertake are aligned with MusiCounts, which provides instruments to schools that can no longer afford to provide them for their students. We believe the excellence we have just outlined starts with music education from the very early years. The benefits to child development have been well documented, but we believe the development to Canadian music cannot be overlooked. We fully support any effort for a national music strategy that includes music education as an important part of that strategy.
Once again thank you very much for inviting Polaris to this discussion, and as everyone else here, l'm happy to answer any questions.
:
If you want me to break down the payment, you have two streams of thought. One would be an artist signs to a major label. Without getting into the finances of how that deal is initially instigated, how the payment breaks down is rather simple.
Once the artist recoups their money, perhaps their deal is at 25% royalty rates. So, perhaps you look at a dollar download on iTunes for the best example, because if we try to break down the micropennies on the streaming side it would be almost next to impossible to do. But if you're looking at, say, just simply a dollar for a single download on iTunes, under a traditional deal, if the artist has recouped their expenditures on the recording, they would get, say, 25¢ of that dollar.
What happens is iTunes sells it for a dollar. Seventy-two cents goes back to the label, whether it's a major or an independent. From that, 72¢ is broken out 25:75—75% to the label and 25% to the artist.
So you can see, even on an album, if an artist was to get, say, two dollars, at best, and that's a really extremely high royalty rate, you would have to sell literally hundreds of thousands of records to make a living off just solely your album sales. And it's virtually impossible to sell hundreds of thousands of records.
:
Good morning, everyone. Thank you very much for being here.
This is a study that everyone is undertaking with a lot of good will. It is wonderful to hear testimony from so many people in such an important industry. To my mind and that of many of us here, this industry has a heritage dimension. I think that today's group of witnesses reflect that very well. Their experiences are at both extremes.
There are people who lived through the good years Mr. Boughen talked about when there were vinyl record stores everywhere. The display cases were incredible and showcased Bee Gees albums, for instance. At that time people purchased music because that was the only leisure source they controlled.
Then the VCR appeared, and people began to control what they wanted to listen to in a way, because they no longer needed to have a turntable to play their vinyl records.
I am referring to the two bookends of the issue: the cultural aspect and the business aspect.
Mr. Hetherman, in your testimony you mentioned the fact that it has become extremely difficult for artists to try to live from their art.
Mr. Jordan, you are among those who took part in the creation of the “Canadian sound”. All of the artists who received awards from your organization were very relevant creators. They really broke through artistic frontiers and that was excellent.
We also have here representatives from the industry that decided to focus on finding talent, fostering it, growing it and showing it off internationally. Those people often refer to Marie-Mai, and quite rightly so. She is certainly the best example of the success of Star Académie. Last Sunday, we saw her once again and that was fantastic. We were able to see the conjunction of English-language music from Montreal, with Adam Cohen, and that of Marie-Mai.
I congratulate all of you on what you do. You do good work and it is absolutely crucial. And that is why we wanted to hear your comments.
This morning I am concerned by what Mr. Sasseville said concerning taxes that are not collected by services like iTunes. We are going to have to find some way of building a legal framework around that type of service.
In fact, as Mr. Jordan and Mr. Hetherman said, services like Deezer are used more and more. The day before yesterday, I was cruising through my Deezer account and received a half-price subscription offer, for $5 a month. At that price, there is not a soul who will purchase a disk. You can listen to your music as often and as long as you like and it is even available for mobile devices.
My question is for Mr. Sasseville.
You referred to the issues surrounding the MEC program. I would like you to outline for us again the choice a young artist faces when he or she has the possibility of signing a contract with a big record company.
Thank you to the witnesses for your presentations this morning. It's a very interesting discussion, for sure.
This Sunday I logged on to YouTube and could listen to the top 40 hits for February all free. You can do that any day, which really causes one to wonder how those artists make money and a living today. It's not just the top 40, but it's everywhere. You go to a bluesfest or a jazzfest and you go home and you can go onto YouTube and look for those songs, the music, those artists and you can listen to them and it doesn't cost you anything.
When I hear what you're saying this morning with regard to where music sales have gone in the country, a drop by 46% since 2008, and how this is affecting artists and how they are able to contribute artistically via their music in this country, I can see where your concerns are.
It's very interesting that you just talked about live streaming and the fact that nobody is making money off it. My question this morning would be, what would your recommendations be to our committee to go forward to the federal government and how we make changes in the country to allow for some profitability for these artists and people who are involved in the music industry?
:
Some international artists in the past and currently—Rolling Stones, AC/DC, bands that are massive historical bands—don't make their recordings available for those streaming services, but they are in the fortunate position to be able to say “you can't have it”. In many cases, some of them prevented their music from being available on iTunes for many years as well.
The problem, if you're a developing or a current artist, is that it's not as though you're making the sales up in other areas. In other words, if you withhold your music from a streaming service, you aren't automatically selling more CDs or even the same number of CDs or the same number of digital downloads. Basically, what is happening is that those sales are eroding regardless, so whether you have your music on a streaming service or not, your sales are decreasing.
Most people I think do it. As someone running a record company, I was certainly resistant at first at making my music available on streaming services, especially after I got the first royalty report. But to not be there means that you're not living in the current world of the way people consume music.
To the point earlier about YouTube, I know that probably 80% of the people who experience the artists whom I work with do so on YouTube or some service like it, from which I get paid a minimal amount or next to nothing. But it continues to build the artist's profile in the hope that, if there's a perfect storm and we get a radio hit or get a song on the video channel, the YouTube streams are—
:
I think as someone who's done A and R, which is artists and repertoire, for pretty much 20 years of my music career—in other words, finding artists—if I knew exactly the answer to that question, I would be a millionaire. But, I get where you're going with this.
I think one of the key factors that I alluded to a few minutes ago is that perfect storm, which is something that can't be created. That is, you take a song to radio. Radio picks it up and starts playing it at the same time that the video gets played, and at the same time as 10,000 or 100,000 kids are on YouTube searching the song out. Maybe you get nominated for the Polaris prize, or maybe you get featured on a number of TV shows at the exact same time, or you're touring at the same time. It's very hard to create those opportunities, especially at the same time. Sometimes it's very hard to create any of those opportunities. When they all come together at a certain point, generally you've created a perfect music storm that allows for the artist to get elevated to the next level.
People get attached to it. Yes, people still buy music, but not anywhere near the way they used to. They buy 10,000 copies instead of the 100,000 they used to buy. At least you've sold 10,000 instead of zero. Maybe they'll pay $20 for a concert ticket, or maybe they'll pay $20 for a T-shirt. Whatever the case may be, people start engaging in the music, and it builds. The word spreads, and it creates this opportunity for the artist to get to the next platform.
In my experience, if I can go quickly back to when I first started in the music business, I think it was one in ten artists was successful. Those were your odds, and that was a number of years ago. Now I think the odds are probably more like one in maybe forty-five is successful.
:
Thank you so much, and again, thanks for inviting me here today. Honestly, I was surprised to get the call, but I'm happy to give my thoughts on a number of different fronts and I'll try and stay within the eight minutes.
The first thing I want to touch on, which has really been a topic over the last few years, is the demise of the record industry and how that affects live music. The one thing I have noticed is that with the demise of the record industry, live music has actually proliferated more than ever, which is kind of odd because we hear so much about the fact that people can get their music for free. They download the music and people aren't buying records anymore. Well, if there were a typical supply-and-demand relationship, that would have led to less music being created. In fact, the opposite has happened. More music is being created. More music is being watched and listened to, and more people are going out to see live music. That is kind of an odd thing, given all of that. My observation is that the demise of the record industry is really about the demise of the recording executive industry, not really about music, and 95% to 99% of musicians, are still making about the same.
Why is music becoming more popular? One thing I would argue is that there are so many events, and today I'm going to touch on the notion of not-for-profit music events because that's who I represent. The RBC Bluesfest is a not-for-profit and almost every festival across Canada is a not-for-profit event. There's a big distinction between that and a for-profit event. I'll mention that five to 10 years ago, really, the market in Canada shifted from concerts to more what I call “destination music” events. Destination music events are large-scale music events that attract tourism and large numbers of people to different communities.
Those destination music events, I would argue, are events like the Montreal Jazz Festival, the RBC Bluesfest, and the Festival d'été in Quebec City. All these events have been tremendously successful over the last 10 years, for a number of reasons. One reason is that they've been supported in large part by government, but also that there has been a huge interest in music, and the things that these not-for-profit events have been able to do have had a huge impact. We're a member of FAME, Festival and Major Events Canada. There are 15 of us right now and that list is growing, but the economic impact of the 15 FAME members is $1.1 billion to the economy. These organizations are making a huge impact.
One argument and one question maybe is, what is important about a not-for-profit music event, and why do we merit support from different levels of government? One of the main things we do is encourage the proliferation of non-commercial music. For instance, the Montreal Jazz Festival or the Festival d'été in Quebec City spend probably a million dollars on non-gated events. These are events that are free to the public, and many of those events have the biggest impact. The Festival d'été sells a 10-day, 200-act event passport for roughly $70, and for that $70 you can not only go and see Metallica and Bon Jovi, but you can also see phenomenal Canadian artists, ethnic and cultural artists, and street performers. They sell a hundred thousand of those passes, and the only reason they sell them is that the passes can be a huge deal. One of the ways they can do that is by using the public funding they received to do the important things they need to do to generate that impact.
We in fact spend $200,000 on local artists. Those local artists don't really contribute to the people who are buying tickets to the event, but they contribute tremendously to the community. One thing I would note is that with a for-profit enterprise, the general goal is to maximize shareholder value. Well, not-for-profit companies don't do that. Not-for-profit companies maximize community value and that is the biggest difference between those two organizations. We do things like employ many local artists, non-commercial artists, who appear alongside commercial artists and who therefore gain a broader audience.
At the end of the day the question is, what should Heritage should be doing to support the live music industry in Canada? I think the argument that I would make is that it's time to really take an inventory of where the money is going. I think the not-for-profits make a huge impact but there also has to be accountability.
So it's not just music for music's sake. What is the impact these funds are making and what does each organization use the funds for? At the end of the day, there has to be accountability on the money that we're receiving and what the impact is in the community. That also has a huge impact on the tourism community and industry.
Those really are the several points that I'd like to make today. I'm open to questions and thank you very much for entertaining me.
:
Thank you very much, Mr. Chairman.
It's a pleasure to join you here today. I'm sorry I'm not here in person, but I do appreciate this very much and thank the committee for including the tourism perspective in your important study.
I would like to offer just a quick overview, if I can, of the organization that I represent—the Canadian Tourism Commission— and really give you a bit of a picture in terms of how the CTC incorporates Canadian music, Canadian festivals and events, into our international tourism marketing, and why it's important for us to do that.
First of all, we are Canada's national tourism marketing organization. We're a crown corporation that leads the industry in marketing Canada as a premier four season destination.
We know that travel and tourism is one of the world's fastest-growing sectors. It is an $84-billion industry for Canada's economy, but a very competitive marketplace.
Through our international tourism marketing activities and our trade and sales activities in 12 countries, we really are competing hard for a visitation, supporting over 170,000 mostly small and medium-sized businesses in every nook and cranny and region of our country.
Our model is really partnership-based. We work with the Canadian private sector, from hoteliers to chefs to ski resorts and the cultural industry, to leverage every dollar that we get and double our marketing impact. We work with our international travel trade by connecting international buyers with Canadian sellers. We have a meetings and conventions division called Business Events Canada. Its mission is to create awareness of Canada as a great place to hold international conferences. We know that holding international conferences is great for filling hotel rooms, cultural centres, and restaurants, but we also know that we bring very important people to our country. It's like a big familiarization trip to our country, where, when they get here, they see what they see, and they invest here, they send their kids to school here, and perhaps even buy Canadian products from here. We know that the long-tail effect of that is significant.
We also work, of course, with the public sector, the provincial and territorial tourism marketers, to leverage their investments.
We're always looking about 5, 10, or 20 years out, to see what competitive advantages we can create and develop. One of these opportunities relates to our music industry in Canada and, of course, to some very important people who really appreciate great music—I think we all do—and that would be youth.
We know that young travellers represent a large and lucrative market for Canada. Internationally, it totals to about 187 million travellers, representing about 20% of our annual global arrivals, and it is the fastest-growing segment.
We're focusing domestically on youth because they present a large domestic tourism opportunity as well. There are 5.2 million Canadians up to the age of 29, reflecting about 15% of our population. Canadian youth travelling in Canada spent an average of about $1,400 over 14 nights, and that's pretty much on par with what our international long-haul travellers are spending.
And yes, music festivals and events are significant motivators for youth travellers, and this is a key pillar in developing the youth travel strategy that we have under way at the CTC.
While still in development and only seed-funded by us at this point, our youth strategy focuses on the opportunity of leveraging existing Canadian festivals and events to attract those travellers. We've pulled together a youth council, and we're pleased to have representation of that FAME group—Festivals and Major Events Canada—that was mentioned by Mr. Monahan as an important contributor to help us build the right plans for the travel movement.
In the future, we're planning on hosting two influencer programs this summer focused on youth and music. These will focus on the Osheaga Music and Arts Festival, in Montreal, and Pemberton Music Festival, here in British Columbia.
We're also market-testing new concepts around youth initiatives connected to music festivals and events, and we will have this analysis completed later this spring. We're doing a little bit of research on that.
We look to the Canadian music industry for inspiration when we do our marketing in general. Last summer we asked Canadians to help us create an anthem for Canada. We created this program called 35 Million Directors, one of the most viewed tourism videos around the world of all time. The video connected us to a soundtrack that was Yukon Blonde, which is also a Canadian band, and we were able to highlight them to Canada and the rest of the world.
We focus on the Canadian signature experiences collection, which includes major cultural events in those experiences, including the Calgary Stampede, the Montreal Jazz Festival, the Harvest Jazz and Blues Festival in New Brunswick, and Celtic music in Cape Breton.
The long and short of it is that the tourism industry really relies on the culture and the music industry to help us round out that experience for Canada. We're known broadly and widely for our great outdoors, our beautiful cities. What we need and what we need to support is more the culture, and music plays a huge role in that culture to help us round out the experiences that Canada has to sell and offer.
We're highly supportive of this industry. We really like to partner with it, work closely with it, to help us collectively inspire the world to find a destination in Canada.
Thank you.
[Translation]
Mr. Vice-Chair, members of the committee, it's a pleasure to join you today and be part of this important study. This was a suggestion the president made when he appeared before the parliamentary tourism caucus. We appreciate the opportunity we are given to discuss with you the impact of music and music festivals on the tourism industry.
[English]
Again for the record, my name is David Goldstein. I'm the President and CEO of the Tourism Industry Association of Canada. TIAC represents the full cross-section of Canada's travel and tourism sector, including major music festivals such as the Festival International de Jazz de Montréal, Ottawa Bluesfest, the Winnipeg Folk Festival, and Osheaga as well as other clubs and restaurants and venues of all sizes that host music events.
Our sector generates annual revenues of $84 billion. We employ over 600,000 people and are in every riding of the country, and we've left you information today on the impact in your riding. And most notably, over 204,000 of those employed are under 25 years old, making us the sector that is the largest employer of young Canadians. Canada's most important services sector, export, is where we generate $17.4 billion worth of international revenue.
Our mission at TIAC is to grow Canada's competitiveness as a global destination. Specifically we are working to boost Canada's international visitation growth rate from 1.5% in 2012 to meeting the global average of 5%. A recent Deloitte report states that every one percent increase in international visitation generates $817 million more in general exports. So our 5% objective would mean an additional $1.4 billion in general exports.
How do we get to 5%? TIAC is working within the federal tourism strategy to address the policy barriers, such as marketing investment, access investment, and tourism product like music events. And we are working to encourage more U.S. visitation, in particular, who are key consumers of Canadian music festivals. In fact, a recent study of Ontario statistics show that almost half of U.S. visitors to that province came for arts and cultural events.
Cultural events, including concerts and music festivals, are major draws for Canadian visitors. In 2012, 3.5 million international visitors attended cultural events. On average these visitors spend $768 per trip, meaning these events contribute at least $2.6 million to the economy every year. That is on top of the immense domestic spending and spin-off impacts.
Members of this committee can easily envision the economic benefits from a major festival like the Montreal Jazz Fest, or Mark's excellent product here in town. The Montreal Jazz Festival brought in $72 million in tourism alone. But even smaller-scale festivals in smaller markets can have a major impact. Furthermore, as festivals grow and expand, so does the capacity to showcase and fund Canadian music.
Music Canada, who has already appeared at this committee, says that the limited size of Canada's domestic market means that some of the greatest opportunities for growth and development lie abroad. The same is true for the travel and tourism sector in Canada. However, small gains in quarter-to-quarter growth are masking a very disturbing over-reliance of our Canadian domestic market on tourism. Currently 80% of travel revenue is derived from Canadians travelling within Canada, up 65% from only a decade ago.
American visitors are particularly enthusiastic participants in Canada's cultural scene, with almost 2.5 million attending events in 2012, up 13% from the previous year. When compared to the overall visitation rate of only 2.5%, it becomes clear that music and culture are leading drivers for American visitation.
Since 2002, Canada has lost almost 3.5 million overnight visits from the U.S. Fortunately, many of the structural barriers facing the U.S. market have lifted, making this an ideal time to re-engage. Our currency is stabilizing below par, U.S. passport ownership has doubled and now sits at over 120 million Americans, the border is thinning, the American economy is rebounding, and the U.S. outbound travel to overseas destinations is up.
This brings me back to the question of how music events will play a part in increasing visitation by 5%. TIAC has a whole-of-government approach to increasing tourism's competitiveness which includes advocating for government support for marketing, access and product. Music festivals are among the most compelling tourism products that spark economic growth in all regions of the country. Therefore, TIAC recommends that the committee support festival funding in partnership with the industry and other levels of government, including a broader approach in getting back into the U.S. market leading up to 2017, and we would add that any such initiative be done on a partnership basis with the private sector. Part of the metric should be delivering incremental international visitation to Canada.
I thank you very much, again, for the opportunity to be here. The Chair and Mr. Dykstra will remember my previous life in the broadcasting business where I spent a lot of time at the heritage committee. It's been a while since I've been here and I'm happy to be back especially with regard to a subject that is of great interest not only on a local level but on an national level as well.
:
Mr. Klassen, as the MP for West Vancouver--Sunshine Coast--Sea to Sky Country, I can assure that I won't forget you on Vancouver.
Thank you, David. I know from the numbers you've provided that the riding I represent has the second number of employees in Canada in this industry right after Niagara Falls. Certainly, we see parallel things in sports, having hosted the Olympic and Paralympic games in 2010. Whistler is very keen about tourism. It's great to have good news actually after a parade of some discussions that made it a little bit hard to see where the hope was for musicians.
Mr. Monahan, I just want to tell you that our birthday gift to my son last week was a wrist band for the Ottawa Bluesfest, and so for people in the room, it's a great product. Young people love it. He's 17 and that's what he really wanted. So some good news.
Mr. Goldstein mentioned the distinction between domestic and foreign revenues. This is something that's driving a study that people in my riding are doing right now. In fact, people whom you know, Barrett Fisher, the head of Whistler Tourism, and Stuart McLaughlin and I are working on this together.
I'm really interested to hear your comments on where we should be putting the emphasis as government. Should it be bringing in the foreign dollars or taking what you said is 80%, David, domestic.
Maybe we can start with you, Greg. Just try and keep your answer to a minute or so, so we can go around the table.
:
Thank you very much, Mr. Chair.
Thank you, gentlemen, Mr. Klassen, Mr. Monahan, and Mr. Goldstein, for being here. I think you've provided a really important and interesting dynamic to this study because I think, as you've clearly indicated, that all of this fits together. There is no silo, no isolation, when it comes to how we support our communities, whether it's in the tourist trade, the kid trying to find a summer job at the local park, or the artist—the brilliant artist—who creates fabulous music.
I have a number of questions, and I hope that you'll all just jump in.
I'll start though with you, Mr. Monahan, in regard to the issue of funding and support. It seems to me that you're talking about funding security, that you need to know that no matter what, there is going to be that foundation, that secure funding over a long period of time.
It seems to me that you've perhaps suggested moving around the existing pot to increase grants where there's a desired outcome, and also to just make sure that perhaps there is that increase in granting. I wonder if you could talk about how that is important in terms of the future of the industry.
:
Great. Thank you, I'll add a little to that.
First of all, we operate, as I said, in about 12 different countries around the world. We do trade events, marketing, and PR events in all of those countries. and we frequently bring Canadian artists with us to both entertain and be part of those particular events. Because, again, that three sides of a triangle between the people we have in Canada and the geography we have in Canada, is really rounded out nicely when we talk about the culture of Canada and that's where we need a little extra oomph.
As we pointed out, fame is really the top 15. These are the ones who are best known and these are the ones who have the best international potential, and we use those 15 festivals and events to create a sense of urgency to come to Canada. It not only brings people here for the first time to discover these events themselves and Canadian artists, but it gives us a chance to have them come back year after year, especially those coming in from the U.S. So we leverage that opportunity for us to help, again, bring international travellers here and focus on them.
The third one is we've actually brought in an artist, created and commissioned pieces for music or something close to music, like spoken word poetry that has music elements to it. We brought in Shane Koyczan. We created an epic ode to Canada that ended up on the Olympic stage and many places since. So we've had an opportunity to take Shane and expose him to billions of people around the world to some great success as well. We'd love to do more Shanes if we can find them and keep rolling with that.
[English]
You spoke about FAME and the important role it plays in attracting broad audiences to big events, bringing performances live to communities, and also giving smaller talents the opportunity to be discovered and to be put in the spotlight.
[Translation]
Last week, I attended an event organized by the Montreal Council on Foreign Relations, MCFR, where a panel was held titled “The Future of Montreal's Festivals: Renewal and International Impact”. So we are on the right topic.
I was the only federal MP at the event. I was approached by the spokesperson for the Major International Events Network, MIEN, which is the Quebec counterpart of FAME. The spokesperson told me that, according to the cumulative sales of the MIEN members, the funding had dropped from 22% to 18%—a decrease attributable to the end of the Marquee Tourism Events Program. In 2010, the federal contribution accounted for 12.4%; today, that contribution is only 4.4%.
Do you see an inconsistency between the emphasis on your events and that withdrawal of federal funding?
Mr. Klassen, Mr. Goldstein and Mr. Monahan, you are all affected by this.