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The Rambler by Graham Henderson: The Broken Promise Of A Golden Age – How Creators Underwrote A Tech Revolution And Were Betrayed

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

This is the text of a speech I delivered to a sold out crowd at the Econonmic Club of Canada on the 1st of November 2016.  It is much longer than my usual posts, but then the issues at stake are in some respects deserving of the additional words.

This is also an edited and expanded version with sources for quotes and references included.

The Economic Club of Canada, which is where I spoke, has earned the prestigious reputation as Canada’s “National Podium of Record”. In the last two years the ECofC has welcomed reputable names such as Ontario Premier Kathleen Wynne, Canadian Heritage Minister Melanie Joly, Toronto Mayor John Tory, Ontario Finance Minister Charles Sousa and the Chair of President Obama’s Global Development Council Mohamed El-Erian. The ECof C mission is to “educate, inspire new ideas and connect our members with the most influential leaders of our time.”  Having been offered an opportunity to address the Club on cultural issues at a critical juncture in the history of the creative sector was an honour.


Back in 2003, a famous Canadian recording artist had this to say when he was asked about his prospects in the new digital economy: “we are entering a golden age……a golden age.” This was an idea embraced by artists, the media, pundits, professors and most importantly, policy makers around the globe.

The reason for this heady optimism was the seismic events which were then unfolding in the online distribution and consumption of creative content. Peer-to-peer file sharing had become the default way for people to access virtually unlimited music for free, and the iPod had taken mobile digital music into the mainstream.

The artist who praised the unfolding of this golden age believed that the digital era would usher in a utopia for both musicians and the consumer. Artists would gain access on the Internet to a larger audience than ever before, and in return for the collapse of their traditional marketplaces, they would make more money from the sale of concert tickets, merchandise and other means. This was an epic leap of faith with virtually everything riding on one thing – the promise of digital technology.

The passage of time has instructed us that we might have benefited from a judicious skepticism, that we might have done well to have questioned the extraordinary promises and prognostications that were being made at the time. Had we done so, I wonder if the world in which we now live would have the characteristics that it does – a world in which the creative middle class, within the span of a single generation, has virtually ceased to exist.  A world in which artists struggle more than ever before to earn a living wage and put food on the table. As they transition to the world of the self-employed “entrepreneur”, they are working longer hours and are sometimes engaged in activities for which they have little aptitude, such as data entry clerks – all for scandalously less money.

Jaron Lanier is an author, composer, computer scientist and, some say, the father of virtual reality. He is concerned about the challenges facing creators. In a recent edition of the World Intellectual Property Organization’s magazine, Lanier concluded that,

“We have seen an implosion of careers and career opportunities for those who have devoted their lives to cultural expression. … Opportunities are rare compared to the old-fashioned middle-class jobs that existed in great numbers around things like writing, photography, recorded music and many other creative pursuits.”

jaronlanier

Jaron Lanier

Here in Canada, our creators, the people who build our nation’s cultural foundation and much of the intellectual property we export – are struggling, and along with them the people and businesses who support their work are struggling. Well paid jobs with benefits are disappearing and being replaced by precarious employment. Culture today, more than at almost any time in our history, is dependent on the largesse of the government.

One of the most deeply unpleasant aspects of the past 20 years has been the manner in which the gutting of the creative class, and now an entire way of life (think of youth being told they must accept a world of precarious employment), has been presented as an inevitability. At a recent round table, I sat beside a young entrepreneur who was beside himself at the idea that the Minister of Heritage was having hearings on the digital economy. For him it was simply case of the “horse having left the barn.” There was no turning back the clock, and no point belabouring the issue: “This is the world we live in. Get used to it.”

Today I want to question that supposition. The idea that we cannot change the circumstances in which we live seems to be, dismayingly, widely held. I believe this outlook is founded on a sort of market-driven, hyper-capitalism, a debased and absolutist form of economic, technological determinism. Ayn Rand would love this; it is a sort of libertarian fantasy: the market determines how we live our lives and governments need to get out of the way – and that means us, the people. But let’s remember that we live in a social democracy – we live in a place where the people, not corporations, and not plutocrats, get to decide how to order their lives.

We must (and I include our government policy makers here) harness our imaginations. We cannot look at the world and see it only as it is. We have to be able to see it as it might and should be. And frankly, creators are really good at doing that. This was the skill that Percy Bysshe Shelley would have had us all learn.

Creators for centuries have fought and in some cases died to change the worlds in which they lived. Oppressive forms of employment were ameliorated and tyrannical regimes were overthrown. In the case of Canada, an opposition politician named Tommy Douglas, (who famously stated, “Courage, my friends; ’tis not too late to build a better world.”) set out to change the public morality as a method of forcing the government of the day to adopt universal health care – he succeeded.

tommydouglas

Tommy Douglas, leader of the New Democratic Party pictured in 1953.

The people demanded change. People got change because because they decided that they wanted to live in a better world – a world hey were prepared to fight for.

We are inheritors of this great tradition. And we can deploy it to restore the balance. Minister Joly, for example, as part of her cultural consultations, has asked us to think outside the box, to be bold and to think big. Well, one way to do that is to ignore the conventional wisdom that tells us: this is the way it has to be. And that is what I hope to do today.

But first, let’s look at how we in the creative community got to where we are today.

The foundation for most of the rules and regulations which govern our modern digital environment are two treaties adopted by the World Intellectual Property Organization in 1996: The WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.

To help us better appreciate the magnitude of the task the negotiators of those treaties faced, we need to understand what the world looked like at that time. This was a world in which digital technologies – and their adoption by consumers – were in their infancy.

In 1996, less than 1% of the world’s population was online. If you were one of the few, it was via a dial-up modem that delivered websites at the rate of 30 to 60 seconds a page. You searched the 100,000-odd websites using AltaVista or Yahoo – Google wouldn’t launch for another two years.

In 1996, email had yet to surpass the U.S. Postal Service in terms volume of messages delivered. Alanis Morissette’s Jagged Little Pill was the world’s top selling album – though fans were more likely to purchase it from a mail-order club than an online retailer.

After the adoption of the WIPO treaties, it would be a full two and a half years before Napster appeared. It was four and a half years before the introduction of the iPod (2001), six years before the advent of the Blackberry “smartphone”, eight years before the first video was uploaded to YouTube and over a decade before the first song was streamed on Spotify.

The people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing. Now there is nothing wrong with guessing. We all make educated guesses on which we base our actions.  But the beauty of our world is that with the passage of time and the accumulation of experience, we have the luxury of reassessing our situation, and adapting our behaviours when those first guesses clearly turn out to have been ill-founded. We have now had 20 years of experience with those early WIPO guesses.  How are we doing?

Well, the preambles to these treaties give us an idea of what WIPO wanted to do. The people who drafted the Copyright Treaty, told us that it was designed to:

(1) recognize the profound impact of the development and convergence of information and communication technologies on the creation and use of literary and artistic works,

(2) emphasize the outstanding significance of copyright protection as an incentive for literary and artistic creation, and

(3) recognize the need to maintain a balance between the rights of authors and the larger public interest.

These are laudable goals.  But very clearly everything would come down to the question of balance. If balanced correctly, the new rules would supercharge the digital marketplace – a boon to both creators and the public.

But very quickly, fissures began to appear. Technology advocates and so-called intermediaries argued that in order for the new technological infrastructure to get off the ground, creators were going to have to give up something to get something. What they would give up would be copyright payments that would otherwise have been required under the pre-WIPO rules: exceptions would be created.  In return, creators would benefit from a larger, more diverse marketplace.  So-called “middle men” would disappear.  All manner of economic miracles would take place. It would be win-win.

So when the first major country to implement the WIPO Treaties, the US, did so in 1998, the intermediaries and other technology companies insisted on a quid pro quo:  a series of “safe harbours” from liability.  These safe harbours were codified in the Digital Millennium Copyright Act, and subsequently served as a template to legislators around the world. Almost every exception excused someone from making a payment to a copyright owner that they would otherwise have had to make. But there was also a social quid pro quo that was articulated over and over and over again: creators would be better off.  In my view this amounted to more than a bargain, more than an article of faith: it was a social contract. A bargain which very quickly turned Faustian; a social contract that is now in a shambles.

The French economist Olivier Bomsel was among the first to call this arrangement out for what it was – a massive system of cross-subsidies. By foregoing money otherwise payable to them, the creative community would subsidize the development of the technology infrastructure.

olivierbomsel

Olivier Bomsel

Up to this day, much of the policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy.

Until very recently, however, the hypothesis that digitization and the Internet would unleash a Golden Age for the creative economy had not been adequately put to the test. Music Canada decided to address this information gap by commissioning an independent analysis to measure the impact of digitization on the creative economy.

The author of this study is Dr. George Barker, Director of the Centre for Law and Economics at Australian National University, and currently a visiting fellow at the London School of Economics. His paper examines the data on the effect of digitization and the Internet on among other things, Canadian music industry sales.

The paper seeks answers to the questions:

  • Have digital technologies and the Internet –together with the copyright liability exceptions adopted to spur them — spawned a Golden Age for creative content?”, and
  • Has the need for intellectual property protection fallen in light of these benefits?

The answer to both questions, according to Dr. Barker, is no. His study found that digital technologies and the Internet were associated with sharply reduced demand, prices and sales, and consequently, to lower investment and employment.

The evidence he cites overwhelmingly supports this finding, and here are but two examples from music:

  • Globally, music sales fell about 70% in real terms between 1999 and 2013.
  • In Canada from 1997-2015, music revenues fell to 20 percent of what they would have been had they kept pace with inflation and real GDP growth – a modest expectation, to say the least.  This resulted in a cumulative revenue gap of over 12 and-a-half billion dollars.

Put another way, over 12 and-a-half billion dollars that would have gone to artists and rights holders simply disappeared. Most remarkably, this happened at a time when music consumption rose to record levels.

As music was gaining in value and use to the consumer, its value to the creator was going into sharp decline.

Francis Gurry, the Director General of WIPO, decried this phenomenon in 2013, concluding that the migration of creative works from analog formats and physical distribution to digital technology and internet distribution had been accompanied by an “avoidable and inappropriate loss of value to creators, performers and the creative sector.

Here is the full text:

The past 20 years has witnessed the steady migration of creative works from analogue formats and physical distribution to digital technology and distribution over the Internet. This has been a classic process of creative destruction. It is a normal part of any such process that value shifts. But what has been worrying in the transition from analogue to digital is the seemingly avoidable and inappropriate loss of value to creators, performers and the creative sector. A multiplicity of studies have been undertaken to measure this phenomenon and discussion, if not arguments, abound about methodology and magnitude. What is clear, however, is that the impact of illegal downloading is significant and negative. While the value of digital sales has been rising, they have not been rising at the same rate as analogue sales have been falling and value is being lost.

At least for musicians, a key component of the social contract was that while the market for the sale of music might decline, new and different income sources would arise.  Infamously, this came to be associated with the idea that touring and merchandise income would supplant the sale of music products.  It has not. If there is a Golden Age, it has eluded a new generation of musicians.

It comes as no surprise then that, in 2011, the average artist in Canada earned about $7,200 per year from music-related activities, according to a 2013 study conducted for the Canadian Independent Music Association. This reflects the sharp erosion of the ability of artists, especially young ones struggling to build a career, to earn a living from their creative work.

As alternative income sources failed to appear, a new and offensive concept has appeared: the idea that creators have an inner compulsion to create, and that remuneration is not integral to the creative impulse – an idea which reached its nadir in Amanda Palmer’s remark that musicians would be happy to perform with her for “beer and hugs”.

Musicians aren’t the only creators feeling the pinch. According to a 2015 survey by the Writers’ Union of Canada authors are earning 27% less from their craft than they did in 1998, after taking inflation into account.

The survey also found that median net income from writing was less than $5,000 and the average income was about $12,900 – far below the average Canadian income of $49,000. More than 80% of writers earn an income from their writing that is below the poverty line!

Creators are not alone in their struggle to stay afloat in the new economy. Taking a broader view, British economist Guy Standing argues that technologies are disrupting the way income and earnings are distributed.  Standing is known for his conception of a new class of society, the “precariat” and has just published a new book, “The Corruption of Capitalism:  Why Rentiers Thrive and Work Does not Pay.”  In a review for the Guardian, Katrina Forrester noted that:

the ‘precariat’ is defined by the insecurity and instability of the work it performs. Its members are diverse: immigrant Uber drivers and millennial interns, part-time lecturers and the cleaners and couriers of the “gig economy”, the old working class forced into temporary and casual labour.

She continues:

“For Standing, what matters is that technologies are destroying the way our income and earnings have been distributed. A new “rental wedge” has been created – between profits, which are growing, and ever more concentrated, and wages, which are falling and ever more uncertain. Work is no longer the road to riches, or even the way out of poverty. There may be more work, but it pays less.”

Creators belong on this list as well – as its charter members, I would argue. I have heard corporate executives and government policy makers discuss the “gig economy” in almost breathless terms – and invariably the people extolling its virtues have full time jobs with benefits and pensions.  They have no IDEA how desperate life in the gig economy can be. Musicians know.

All of this is taking place in an environment in which music is generating fabulous amounts of money. It is just that, as Gurry points out, very little of it seems to be finding its way on to the creators’ side of the ledger.

Part of the problem has to do with how people are consuming music online.  There are two principal methods – subscription and ad-supported.  It is the latter – ad-supported, on-demand music services such as YouTube and SoundCloud – that have driven most of the increase in digital music consumption – largely because they are free to the consumer. According to a recent study by the IFPI, the problem is that those services deliver far less revenue than paid services.

A subscription service, such as Spotify for example, returned $18 (US) a year per consumer in 2014 – compared to YouTube’s $1. Ad-supported services, with more than 13 times more users than paid services, delivered less than one-third as much money to artists and other rights holders.

The effect of this gaping disparity is that overall digital music revenue growth has lagged far behind consumption.

This disparity has been dubbed the “Value Gap” – which Music Canada defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”


So where to from here? What can be done to restore the creative middle class and level the playing field?

As I noted when I began, we are fortunate in Canada to live in a well-functioning social democracy. We can make choices about the type of society we live in, and collectively, through our political representatives, we can take action.

Music Canada is among those now calling for reforms. But the entire creative community, here in Canada and around the world, is speaking up. The Writers’ Union views the situation we face as nothing less than “a cultural emergency for Canadians.” They argue, “If we want a strong and diverse publishing and cultural industry, it is essential that creators are reasonably and fairly compensated….If writers continue to be compensated…at these low rates it will inevitably become impossible for professionals in the field to earn a living.”

This year in Europe and the US, thousands of artists have petitioned their governments to address the value gap and rebalance the rules.  Expect more of the same, very soon, in Canada.

There is very clearly a call to action – so what should this action look like

Well for a start, any approach to the problem should be holistic and multijurisdictional.

Municipal Action!

Music Canada has been aggressively opening new channels to do this. For example, we have been taking the message to municipalities that they can implement simple, straightforward local policies to improve the business environment for creators and the businesses that support them.

Music Canada identified these options in a 2015 report, The Mastering of a Music City. The report has gone viral all over the world.

The idea of local governments creating music cities and mayors running on pro music platforms would have been ridiculous just a few years ago. Yet today, in Canada alone, nine municipalities of various sizes across the country have Music City strategies in place. And more are coming.

Municipalities are taking these steps because they now understand that the benefits are worth the effort. For example: job creation, economic growth, tourism development, city brand building, artistic and cultural growth. Perhaps most importantly, strong music scenes have also been proven to attract other business investment along with talented young workers who put a high value on quality of life, no matter what their profession.

Provincial Action!!

At the provincial level, Ontario and BC are trailblazers having created music-friendly programs that are almost unique in the world.  Both provinces have dedicated substantial music financial resources and have created music-friendly policies such as the BC’s red tape reduction strategy that is designed to supercharge the live music economy.

Federal Action!!!

For her part, Minister Joly has been crisscrossing the country, asking people to think big, to be ambitious and to step outside the box; these are her exact words.

Minister of Heritage, Melanie Joly

Minister of Heritage, Melanie Joly

So let’s do that – let’s think big. How can the federal government get involved? How can it innovate and, like Ontario and BC, blaze a new trail? The government has made it clear that it wants a new toolkit to confront the challenges facing Canada’s creators and that it seeks a new social contract for creators. This comes after almost two decades of federal government policy-making that has almost exclusively favoured the user community.  A favoured rubric of the previous Conservative government was that creators and the creative sector would have to take “water in their wine” if they wanted any change at all to the copyright framework. By the time the wine was finished being watered, it bore little resemblance to wine at all.

If the Minister of Heritage is serious, then the government of Canada has to employ a creator-centric approach.  And to do this it has four “levers” in its toolkit: legislation, program funding, policies and treaties, and institutions. Here are some thoughts about how those levers might be manipulated to benefit our creative community:


Legislation

This one is simple.  End all the cross-subsidies paid by creators. Now.

The businesses that benefit from these cross-subsidies have become wealthy beyond imagination over the years. The goal initially was to get them off the ground. Job done. The creative community has been making its contribution for two decades. It’s payback time.

Policies and Treaties

First, I’d like to applaud the federal government on signing the CETA agreement with the European Union. This treaty contains provisions that will encourage the creation of intellectual property assets.   The production of these assets results in a double dividend for our country: firstly they are material assets, which are owned by Canadians and are exportable, and secondly they are cultural assets which allow us to tell our story to the world.  More of this please!

Second, I note that Ontario, BC and municipalities across Canada are all designing policies to attract foreign direct investment in the domestic music economy.  The federal government would do well to heed those examples, and pitch in with supportive policies of its own.

Third, Canada is home to one of the most vibrant live music scenes in the world. Provinces and municipalities are awake to the music tourism opportunities this presents. This is an easy one Ottawa:  tell the rest of the world what a brilliant destination we are for music tourism; market music! Brand Canada as one of the greatest live music scenes in the world, and brag about it!

Program Funding

First, Canada currently boasts an enviable system of programme funding for music. But that funding needs to keep pace with inflation as well as the changing realities of the marketplace and creators’ lives. I have repeatedly urged the government to pay attention to how the lives of creators have changed. For example, in a globalized market, developing export opportunities is critical for them. So? Spend money on the Trade Routes programme – a LOT of money; earmark some of it for music.

Next, artists’ incomes have cratered. What could that mean? Well, how about the fact they can’t afford homes. Housing affordability has become an increasingly urgent issue for them. The federal government should seriously examine this issue in the context of cultural infrastructure.  And by the way, Ontario? Get with that as well … cultural infrastructure has to be part of your infrastructure spending.

Finally, musicians used to be surrounded by a plethora of enablers and supporters. They are gone with the ecosystem, gone with the money. Musicians are now more often than not micro businesses, sole proprietors and individual entrepreneurs. Has any thought been given to a programme that would fund skills and entrepreneurial training?   This is actually an initiative in which municipalities could also play a large part.

Institutions

Here, the federal government has already taken positive steps such as increasing funding for the CBC and the Canada Council for the Arts. During her recent consultations, Minister Joly made the point that the government is looking to go in new and bigger directions. She looked back to eras in which the CBC, the CRTC and the Canada Council had been created.

But before we create something new, let’s fix something old.  One institution that needs to be reimagined and reinvented for the digital era is the Copyright Board of Canada. The Senate of Canada itself is conducting hearings into the operation of the Board – that is how serious the problem has become. The government needs to turn it into a true business development office for the creative and user communities.

As for something new, here’s a really big idea. Right across the country music education is in jeopardy; frankly it is under assault. Increasingly, the students with access to music education are from more affluent families. Inner city youth, remote, rural and indigenous communities are getting shut out. But it is not just music, it is the liberal arts in general that are at risk.

We need to reconnect our young people with the importance of a liberal arts education, with the importance of creativity. One of the things we’ve seen is an erosion of respect for the creative process. Rebuilding respect for the humanities will assist us in rebuilding our shattered framework. Someone who has done an enormous amount of thinking about this, and who sees the value of humanities is Charles Fadel. An example of the type of work he and his Center for Curriculum Redesign have been doing can be found here. Today it is all to common to attend conferences on innovation at which the topics of culture and the humanities are literally never raised; instead the four-headed god of STEM is worshiped with a fervour the catholic church can only wish to entertain from its adherents.

The Federal Government needs to exercise a leadership role because this is a national issue of national importance.  The Government already supports a programme like this – focused on science.  It an absolutely wonderful programme called Let’s Talk Science.  Their own description of their mission is as follows:

Let’s Talk Science is an award-winning, national, charitable organization focused on education and outreach to support youth development. We create and deliver unique learning programs and services that engage children, youth and educators in science, technology, engineering and mathematics (STEM).

If Science, then why not Humanities?  I urge the Department of Heritage to convene an expert panel to consider this issue.  I urge them to go further than simple funding a charitable endeavour to promote the humanities to our youth, I urge the government to establish a permanent National Humanities Council.

CODA

I will offer a coda at this point.

One of the questions being asked by the Minister of Heritage is “how can we (I assume she means both the people of Canada and the government) use content to promote a strong democracy?” This got me thinking about the intimate connection, throughout history, between creators and democracy.

Poets, film-makers, and novelists have always played an essential role in the fight for democracy and civil rights.  Here in Canada we have an immediate example at hand, Gord Downie’s The Secret Path. But to his name we can add Pete Seeger, Alexander Solzhenitsyn, Vaclav Havel, Billie Holiday, Nina Simone, Percy Bysshe Shelley, Fela Kuti and many, many more. These are all people who were banned, exiled or jailed for their fight for justice and democratic principles.

It is instructive, is it not, that after the revolution in Czechoslovakia, the people turned not to a strongman but to a playwright. A playwright whose velvet revolution had been powered by illicit tapes of Lou Reed’s band, The Velvet Underground. You can read the story here.

As you may have heard when you entered the room, our background music was a selection of protest songs.  That has been one of music’s great contributions to our world: music and protest anthems have been associated with just about every social change for decades.  I’ve put a Spotify playlist of protest songs together that you can find here. BUY SOME OF THESE SONGS!!

Creators are truly, as Shelley famously said, “the unacknowledged legislators of the world.”  Now, when he says they are legislators, he doesn’t mean they’re lawyers, he doesn’t mean they’re necessarily politicians. What I think he is saying is that creators predict our future, they underpin our future, and they create a framework (political AND cultural) for our future. To the extent we allow these voices to be in any way compromised or marginalized, our democracy will suffer a great loss.

Should we just “get used” to the way things are?  Some of our politicians and virtually the entire techno-utopian community are saying so.  Why? Why should we get used to the way things are?  The citizens who opposed the brutal child labour regimes of the 1st Industrial Revolution did not “get used to” those conditions – they fought to change them – and they did change them.  They changed the world for the better.  We’re are in the midst of what some are calling the 4th Industrial Revolution.  And while it has ushered in great boons, just the way the 1st Industrial Revolution did, so too it is ushering in banes.  Mary and Percy Shelley fully understood this when they wrote Frankenstein.  They understood that the unmediated introduction of new technology into world cancreate monsters.  But it does not need to, not if technology is accountable to the people – all the people.

The members of the modern technological “precariat” are also objecting to the circumstances of their lives. And I warrant they will fight to change them.  As I said at the outset, in a social democracy we do not have to get “used to it”.  We have the right to decide what sort of world we live in.

So my answer to the Minister’s question is this: If you want a stronger democracy that is less vulnerable to special interests, that distributes wealth equitably, then do everything in your power to restore balance to the world in which our creators live. Encourage and enable them.  Our creators are not living in a golden age.  That was the promise but they didn’t get their golden age. The promise was broken.  We owe it to them.  And we owe it to them now.

We would do well to remember that the fight for democracy and justice has always had a soundtrack.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: Thoughts on Minister Melanie Joly’s speech to the Economic Club of Canada

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

This article was originally published on www.grahamhenderson.ca

On 9 June 2016, Minister of Heritage, Melanie Joly addressed the Economic Club of Canada on the topic of “Canada’s Culture Dividend: The Creative Sector As Economic Driver.”  I believe this was her first public, policy-oriented speech and it is significant that she chose the Economic Club as the venue.  As a sponsor of the event, Music Canada was afforded a podium opportunity to thank the Minister and reflect on her remarks.  Before we get to what I said then, I will draw attention to a few important aspects of her speech. Unfortunately, and for reasons I do not understand, this important speech has not yet been published by the Minister’s office, so I cannot link to it.  An official request has been made by Music Canada.

MJ

The Minister put on a bravura display which showcased an extraordinary grasp of a complex topic.  Clearly much thought had gone into what she said.  She was conversant with all of the facts and figures and conveyed the important message that culture is big business in Canada.  She noted that government support for the arts should not just be about funding – that funding was only part of the answer.  She bluntly stated that cultural policy in Canada needed a “new toolbox.” and pledged to create it.  This is one of the most prescient and important undertakings that any Heritage Minister in memory has made, and with a mandated review of the Copyright Act coming in 2017, it will be very interesting to see how the Minister intends to put her words into meaningful action.

There was one interesting moment in the event that actually took place during my remarks.  I was in the process of discussing the music industries transition from an analogue to digital economy. I had pointed out the extent to which we had embraced this evolution but then remarked that the Government needed to work together with the creative community “to ensure one critical result: appropriate remuneration of artists for their work.” This drew a veritable storm of sustained applause that even surprised me – I hope this is something the Minister and her staff noticed.

For all of the positives in her speech, there were some very surprisingly sour notes. The entire literary world was completely ignored; a fact that drew a measured but forceful rebuke from a member of the audience during the question and answer period. A question from a member of the fashion industry about whether or not the Minister considered fashion design to be a part of Canada’s cultural mosaic was met with what amounted to a flat out “no”. It is hard to understand why, say, videos games are considered to be “cultural” products but fashion designs are not. A question about just how substantive the government intended its mandated 2017 copyright review to be was met with a surprisingly inchoate response.  I would have thought that a Minister of a government in search of a new “toolbox” would have responded to that question with an emphatic “We intend our review to be VERY substantive.”

Overall it was a very satisfying speech which introduced the cultural community to a Minister with vision and passion who clearly desires to cast herself in the role of a champion.

Now, as to my speech, I spoke extemporaneously from bullet points and notes scribbled during the Minister’s speech.  What follows is the transcribed text of my remarks with a few amendments to clarify grammar!


I’m Graham Henderson. I’m from Music Canada, and it’s my honour to thank the Minister and offer some brief thoughts on her remarks.  I guess if I had been asked to do a formal review, I could do it in one word: “wow.” Minister Joly, you managed in a very short period of time to demonstrate your grasp of the importance of the cultural industries to our economy. I won’t go into all of the economic details – we are all familiar with them: for example the fact that culture represents 3% of our GDP. This amounts to a 55 billion dollar contribution to our nation’s GDP each year.  But beyond this, thanks to pioneering work being done by Music Canada, we now understand that culture’s contribution to our society is so much more complex.  Music for example has an enormous impact on the quality of life in our communities. And, as you recognize, government contributions to this sector represent an investment, and not just a financial outlay – there is an enormous return on that investment.  Additionally, as you have observed, culture is a key component of “Brand Canada.” In many respects culture is a gift to the people of Canada, and we are not doing enough to incorporate it into Brand Canada, and celebrate it around the world.

I was also very, very pleased to hear your call for more investment from business in the cultural sector. Also I was pleased by your references to and emphasis on the humanities.  The humanities underpin everything that we do, and actually, are under threat here and around the world. As you probably know, Republican governors across the United States are calling for the removal of state funding for students seeking an education in the humanities. Here in Canada the last Government financially supported an excellent STEM initiative called “Let’s Talk Science.” Well, in response to the comment that you made about the importance of the humanities, perhaps your government could introduce a program called “Let’s Talk Humanities;” a program geared to interest our young people in an education in that sector and turn STEM into STEAM!

This year is a good year for music. It’s the first year in almost two decades that there has been an uptick in our revenue picture. Global growth is up three percent. Music consumption is exploding, particularly through the streaming services. This is great news and it reflects an industry that is adapting to the rapid transformation of technology.  However, it requires us to continue to work together to ensure one critical result: appropriate remuneration of artists for their work.

I think everyone in this room looks forward to working with you in the coming months on the legislative review of the Copyright Act. This must not be a pro forma review. This needs to be meaningful. We have fourteen years of experience to guide us.

Now, in concluding, I am going to do something I always try to do whenever I’m speaking in public! I try to work in some of the ideas of my favourite poet, Percy Bysshe Shelley, which I’m going to do now. In this case, given some of the things the Minister has said, I think it’s exceedingly appropriate.

Shelley

Sketch of Shelley drawn by Edward Ellerker Williams. 1821-22. In my view the only extant image that captures the man.

Shelley wrote a defence of creativity almost two hundred years ago to which he gave the title “A Defence of Poetry.” When Shelley wrote this, he was responding to a pointed attack on poetry itself, but I like think of the essay as a defense of creativity in general.  In it, Shelley lists some of the important contributions of science and economics, but he then goes on to say,

“…it exceeds all imagination to conceive what would have been the moral condition of the world if neither Dante, Petrarch, Boccaccio, Chaucer, Shakespeare, Calderon, Lord Bacon, nor Milton, had ever existed; if Raphael and Michael Angelo had never been born.”

And this feeds in directly to his conclusions.  Shelley writes:

“Poets are the hierophants of an unapprehended inspiration; the mirrors of the gigantic shadows which futurity casts upon the present; the words which express what they understand not; the trumpets which sing to battle, and feel not what they inspire; the influence which is moved not, but moves. Poets are the unacknowledged legislators of the world.”

When Shelley speaks of “poets,” I believe here he means creators; and when he says they are legislators, he doesn’t mean they’re lawyers, he doesn’t mean they’re necessarily politicians. What I think he is saying is that creators predict our future, they underpin our future, and they create a framework for our future. And this is why I am excited about what Minister Joly has said.  The Minister intuitively understands this. The Minister sees that creators are deserving of our respect and protection.  I am so glad to see that we actually have with us an elected legislator who sees that it is our poets who are the true legislators of the world.

Thank you.

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Music Canada’s Graham Henderson remarks on ‘BC’s Music Sector – From Adversity to Opportunity’ report

Yesterday, Music Canada President and CEO Graham Henderson unveiled our latest report, BC’s Music Sector – From Adversity to Opportunity, at an event at the historic Warehouse Studios in Vancouver. At the event, Premier Christy Clark announced a $15 million grant towards the creation of a BC Music Fund, which will be administered by Creative BC. The event also included remarks from Jon Garson, President and CEO of the BC Chamber of Commerce, Diamond-certified artist Michael Bublé, and Scott Johnson, Chair of Music BC.

Supporting BC Music

Henderson’s remarks on the BC Music Sector report are available below:

“My name is Graham Henderson, President of Music Canada.

The social media hashtag for this event is #musiccanhelp.

Welcome to the official launch of Music Canada’s study of the music industry in BC which we have titled “From Adversity to Opportunity.” A study perhaps long overdue given the importance of the BC music scene to Canada’s national and international identity.

Now, obviously, based on who is up here on this stage with me, we are here to do more than talk about the realm of possibility…about what could or might happen.

I think we are here to talk about action, about what IS going to happen. But we will need to wait a moment longer to hear about THAT.

Music Canada is a national organization that aspires to be a trusted source, a respected forum and an inspirational advocate for all things music. Our members, Sony, Warner and Universal are the folks who stand behind and funded this research. And we all owe them a debt of thanks for what is a very significant investment.

But it is the music community of BC who supplied the impetus, the motivation and the passion upon which our work was based.

And while the instigators are many, a few do stand out. My dear friend Garth Richardson who literally berated me on FB to stand up for the BC music scene. Bob Deith and Scott Johnson, Rick Baker, Patrick Aldous and the entire team at Music BC who laid so much of the groundwork and who supplied us with local wisdom and know how. Nick Blasko whose advice and connections were indispensable. And, of course Bruce Allen – what can I say – when Bruce Allen starts demanding your attention….well…I think we all know where that leads – ACTION!

So why are we here? We are here because BC has one of the world’s great music scenes. We are here because the people of BC – and its government – care passionately about their music and their artists. But we are also here because this great natural resource is imperiled.

We heard this message loud and clear from the over 100 music community leaders that we interviewed. Their opinions and recommendations form the basis of our report.

The genesis of the idea was simple yet daunting. Why not imagine, why not implement, a provincial programme which would take into account the vast changes that have swept through music’s ecosystem.

To do this requires us to change the way we think about music. In international surveys people repeatedly rank music as one of life’s supreme sources of pleasure and emotional power, says a recent NYT article. But a new MIT study goes further — apparently our brain gives more a specialized treatment to music than it does to speech itself. This clearly underscores the absolutely crucial importance of music education to the growth and development of young minds. Music also has a cohesive, healing potential – a subject which will be celebrated by Music Canada at our upcoming Global Music Forum at CMW in May where we will celebrate the pioneering work of Laura Hasler and Musicians Without Borders.

Musicians without Borders is a global network of musicians and music lovers based in the Netherlands that uses music to heal the wounds of war. They design community music projects around the world that help people deal with trauma, fear, isolation and the effects of conflict.

Music in a very real and meaningful sense can be said to be who we are as a species.

Studies undertaken by Music Canada demonstrate the importance of music to tourism, to education, to the diversification of municipal, provincial and federal economies. Music, as it turns out drives not just our culture, but our economy. We now understand that thriving music scenes attract and retain young, talented workers and the businesses that employ them. Music, in effect, can be the glue that holds communities together.

It is this aspect which is attracting the attention of Chambers of Commerce across the country, including our friends at the BC Chamber of Commerce, the “Voice of Business” in BC. We are so thankful to have the endorsement and support of the BC Chamber and it is a sign of the importance of music to the economy that Jon Garson is here and that the Chamber has partnered with us in this launch.

Our report has collected a wealth of wisdom from the people of BC. From those inside the music industry and in government itself. The report was in effect a collaborative effort with the government of BC. They were excited by what we were telling them and we were urged to press on and come up with recommendations.

Embracing our recommendations would help BC to:

  • Create and retain jobs
  • Grow and diversify the economy
  • Attract foreign direct investment
  • Build more vibrant music scenes
  • Boost tourism development
  • Attract talent to other sectors like the digital arts
  • And contribute to cultural and artistic growth

We argue that BC does not just need a fund, BC needs a Music Strategy. BC needs to brand itself nationally and internationally as the music mecca that it is. BC needs to provide the policy framework to offer a turbo boost to that which it already has.

Our recommendations in this report are tailored to the specific needs of BC and are designed to position the province to compete in an increasingly global marketplace while also creating more opportunities for emerging BC artists to succeed and earn a living from their music.

We suggest in this report that a $15 million investment will produce an estimated total GDP impact of $73 million for BC’s economy.

Additionally, further red tape reductions would boost music activity relating to venues and festivals throughout the province.

Importantly, we believe more focus and funding on music education is a linchpin to this strategy. And in this regard our discussions with Minister Bernier have been fantastically encouraging.

Surely all of this suggests that music deserves special attention from policy makers. Surely you would think governments should respond to these new ways of understanding the importance of music. Surely governments should act! But, oh! People will tell you that governments do not move at the speed of business. That they are incapable of nimbly responding to the rapidly changing environment. That the bureaucracy of government is impenetrable – change takes years.

Well…..they are WRONG!! At least in the case of BC. At every point, our message has been embraced with enthusiasm by the government of BC and in particular by the Premier. We have received valuable guidance and advice. All of which has led to to where we are right now. Trembling in anticipation of what the Premier is about to tell us!

Now, before I turn the podium over to Jon Garson, President of the BC Chamber of Commerce who will introduce the person everyone REALLY wants to hear from, there is someone else I must acknowledge. And he is not here today only because he is performing a sold out show tonight in New York. And that is Bryan Adams.

From the first moment that Bruce Allen put me in touch with Bryan, it was clear that this was a cause he would embrace wholeheartedly. He has been a passionate supporter of our work and I can say without a hint of exaggeration that his involvement was pivotal. Bryan flew in especially to attend our reception at the Museum in Victoria. In addition to speaking, folks who were there will recall that he doubled as Jesse Roper’s guitar tech when a microphone failed. But what he said there I think reflects what this all about.

This is not about preserving the past, or even the now. This is about the future. Young musicians, he said, face a very different reality. There was a system, a “ladder”, if you will, that yesterday’s aspiring young musicians were able to ascend. Well that world has vanished and businesses, governments, and yes fans, need to think about how we can all work together to create a more congenial, and yes, PROFITABLE environment for our musicians. They must be able to earn a decent living as professionals. If music is one of life’s supreme sources of pleasure and emotional power, then we should all honour and support those who create it.

And with that said I will turn the podium over to Jon Garson who will introduce the premier.”

 

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The Rambler by Graham Henderson: 3 Ways John Tory’s Announcement Will Help Toronto’s Music Sector

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

Last week, I had the pleasure of visiting South by Southwest in Austin, TX, as part of the delegation that included Mayor John Tory, Councillors Michael Thompson and Josh Colle, as well as Zaib Shaikh and Mike Tanner from the City of Toronto, Jeff Cohen of Collective Concerts, Sari Delmar of Audio Blod, Jesse Kumagai of Live Nation, and my Music Canada colleague Amy Terrill, and I am pleased to see the mission bearing fruit as this week the Mayor announced the steps the City of Toronto will take to better utilize the terrific competitive advantage that music offers our city.

The mayor ran on a platform that specifically included music, which was an amazing first for Toronto. By choosing to make his first business mission all about music, the Mayor not only demonstrated his belief in the importance of music to Toronto, but he also sent a strong signal to Toronto’s music community that he intends to make good on his promises. Many of the changes that Mayor Tory promised this week are very achievable and will bring swift improvements to the livelihood of Toronto’s artists and others working in the music sector, and in turn, benefit the entire city.

For example, Mr. Tory announced that he will conduct a thorough review of existing city bylaws and the permitting policies that affect music events and musicians. There are many small steps that can be taken to remove red tape, which will have an immediate impact on Toronto musicians and venues. A perfect example: last Friday I attended an excellent show at Hugh’s Room, and was dismayed to learn that the venue received a $490 fine for a poster on a nearby utility pole.

Who does this help? It makes it harder for the venue to operate, certainly. For many venues, it would wipe out their profits for the night – too many of those, and they may decide it’s not worth the hassle and close their doors. Fortunately, Mayor Tory has recognized that this type of red tape counters our efforts to establish Toronto as a Music City. During Monday’s press conference he stated: “We will miss opportunities where our own talent will get impatient with us and go somewhere else.” This is very true, and I am glad the Austin example has impressed the importance of City Hall working in concert with the music sector on the Mayor.

The Mayor also spoke of the need to promote Toronto specifically as a music destination for tourists. This was one of the key recommendations from our Accelerating Toronto’s Music Industry Growth, Leveraging Best Practices from Austin, Texas report, and Music Canada has already started down this path with the creation of the 4479 initiative, which celebrates what makes Toronto one of the greatest music cities in the world: the music, the people, the places, and the city. Mr. Tory identified several opportunities to include a strong music presence in large Toronto events that the City is already taking part in, such as the Pan Am Games, Pride, and Caribana. The Mayor also spoke of looking into public-private partnerships in this space, which presents many opportunities. For example, Tourism Toronto has been a fantastic champion of the power of music tourism, highlighting local music offerings in their 2014 and 2015 editions of their flagship Toronto Magazine. A coordinated music tourism promotion campaign would also dovetail very nicely with Ontario’s Live Music Strategy, which is strengthening the live music scene across the province. At his announcement, the Mayor mentioned Austin’s live music guidebook and smart phone app, which helps tourists find live music easily in the city, helping promote local artists and venues. OntarioLiveMusic.ca, which was developed by Music Canada under contract to the Ontario government, provides a comprehensive listing of live music in Ontario – the Toronto data could be localized and licensed for the City’s use to quickly create a comprehensive listing for Toronto.

Another major point from Mr. Tory’s announcement was how a strong music scene can benefit businesses in other sectors. “The table stakes for economic development in cities like Toronto and Austin is the ability to compete successfully for talent,” said Mayor Tory. “I have been to Austin and I have seen how creative sectors like music, film and technology drive economic growth, job creation, investment and tourism – and help attract and retain young talent. If we’re going to bring more jobs, and attract and keep world class talent in Toronto, we need to focus on promoting and growing our creative sectors and this summit will be critical to that process.”

This is an important point, and something that we learned through our research with the Information and Communications Technology Council (ICTC) last year. The ICTC report, Music – A Catalyst For Technology Hubs And Innovative Talent, found that a strong cultural scene can be a significant advantage for a city looking to retain the creative and innovative workers that today’s creative industries require. Austin has utilized this strategy very effectively, and now makes music an explicit part of their economic development pitch to tech companies. We have also completed research in Alberta, and found that a strategic approach to developing their music sector could lead to economic diversification, and help attract the young, affluent workers that other industries desperately need. Currently, Music Canada is developing a report that examines global best practices for music sector development, which will be released this summer.

Mayor Tory also outlined several other steps and goals in driving economic development through music, including:

  • Hosting a summit with business and key music industry stakeholders from Toronto and Austin this fall
  • Strengthen the City’s Entertainment Industries Office to assist in putting music on a growth path similar to that of film.
  • Explore the opportunity in the initiation/expansion of an interactive conference similar to the SXSW Interactive Festival

As always, it will take both effort and commitment to achieve these goals. But as our research indicates, the benefits will make our efforts worthwhile – both for our musicians and those working in the music sector, and for the community at large. Mayor Tory has shown that he recognizes the opportunities that the music sector presents, and he has sent a strong signal that he intends to achieve these goals. I am glad to have a strong champion of music at City Hall, and I look forward to working together to harness the power of music in Toronto.

 

Graham Henderson is the President and CEO of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: Tariff 8 decision establishes “10% of Nothing Rates”

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

Six years (think about that people, SIX YEARS!) after the Copyright Board of Canada began the rate-setting process for non-interactive and semi-interactive music webcasting, they finally have released their decision, a decision with far-reaching, deleterious repercussions for the music community around the world. The Copyright Board of Canada has decided that the music produced by our marvelous creators is essentially without value.

The new music streaming rates certified by the Board amount to 10% of what digital services companies have been paying while the slow wheels of the bureaucracy turned, and less than 10% of what those same services pay in the United States. And, by the way, the rates in the United States are no great shakes either and have been the subject of intense criticism from the artistic community for years. I therefore refer to the new Canadian rates as the “10% of Nothing Rates”. The decision is unconscionable. It compounds the damage done by many of the Copyright Board’s decisions on major new tariffs, which have also been the subject of Judicial Review by the Federal Court of Appeal. It will further imperil artists’ livelihoods, and threatens to rob them of the fruits of their labour in the new digital marketplace. And it will further undermine the business environment, undercutting the ability of labels and other music companies to make future investments in Canadian talent.

Let me pose a rhetorical question that throws everything into relief: Do Canadian plumbers get paid wages equivalent to 10% of American plumbers? Teachers? Auto workers? Farmers? Who? What profession receives compensation in Canada for their labour that is equal to 10% of the wages paid across the border? I will tell you who: NOBODY. So, why does the Copyright Board of Canada think this is okay to stick musicians with rates like this? Is it because they essentially think that the creative process is valueless? That is a question which will have to be answered; it and many other hard questions.

This all could have been easily avoided. The music licensing company Re:Sound provided compelling evidence to the Board, including market-rate benchmarks based on negotiated agreements they’ve had in place with music companies for years. It’s common sense that the fairest way to compensate artists and record companies for use of their music would be to respect the agreements they’ve already made with each other. But the Board, unfathomably, ignored the evidence and assigned one of the worst royalty rates in the world to the market for streaming.

The Board’s decision comes as the result of an inherently flawed system that lacks clear criteria for rate-setting. Their mandate allows them to set royalty rates for streaming music services based on what they think is “fair and equitable.” Yet they have no statutory or regulatory obligation to take into account existing agreements that the music industry and its business partners have successfully negotiated in the marketplace. Setting the rates that digital music service providers are required to pay at 10% of what they currently pay throws those negotiated agreements and the creators along with them out the window. The result is that the new royalties are anything but fair and equitable. Millionaire and billionaire owners of intermediaries will rejoice, and creators will wince.

The newly certified rates add insult to injury for artists who rely on fair compensation for use of their music in order to make a living. A recent study commissioned by the Canadian Independent Music Association (CIMA) found that individual artists in Canada are living well below the poverty line, with an average income of $7,228 per year.

Artists’ incomes have been eroding gradually for over a decade, and the decision to set webcasting rates at bargain basement levels will make it even more difficult to be a career musician in Canada. The Tariff 8 decision came down – ironically – just as artists were testifying before the Heritage Committee about the already bleak reality they face. There was an overwhelming consensus that it is nearly impossible to make a living today as a professional musician. When asked by a Committee member about the peaks and valleys musicians have in terms of earnings, Alan Doyle of one of Canada’s most beloved bands, Great Big Sea, responded, “When’s the peak again?” Jodie Ferneyhough, President of the Canadian Music Publishers Association, pointed out in his testimony that, “It’s hard to make a living on micro-pennies.”

Tariff 8 is a travesty, not only because it impoverishes Canadian creators, but also because it is completely offside with international standards that support the growth and development of the global music industry.  It puts a black mark on Canada, which now stands alone in its adherence to a mandatory tribunal process that allows a government-appointed board to completely set aside marketplace determined rates. Not one of our major trading partners behaves in this manner.

For those who are quick to blame the current government for this mess, stop right now. It was not the current government that created this mess; it IS however the current government that can fix it.

Not only is Canada an outlier, the new streaming rates will make Canada an international pariah as it impacts creators worldwide. Every artist in the world will be paid 10% of the U.S. rate when Canadian consumers stream their music. Digital music services, such as Pandora in the United States, will be breaking bad to use Canada as an example of why rates should be driven down and creators should be paid less in their own countries. I’ve written previously about Pandora opening up that box, when they sided with entrenched media and Internet companies to lobby the United States Congress to reduce royalty rates paid to performers. In a separate effort, Pandora launched a lawsuit against ASCAP to lower royalty rates paid to songwriters. Pandora’s part in the Internet Radio Fairness Act debacle in the U.S. backfired at Congress and caused a massive artist backlash that grew into the enormously successful “I Respect Music” worldwide grassroots movement. Started by artist and entrepreneur Blake Morgan, the “I Respect Music” campaign was a call to action for musicians and music lovers alike.  That groundswell of support and overwhelming respect for the cause, led Representative Jerry Nadler to introduce a Bill to ensure that artists would be paid for all forms of radio airplay.

We would be well advised here in Canada not to ignore the backlash that occurred south of the border when Pandora made that ludicrous play. Here, too, we are seeing rumblings beginning to reverberate throughout the music community in response to Tariff 8.

Not surprisingly, Re:Sound filed an Application for Judicial Review of the Board’s decision and, in response, more than 70 labels and other music organizations, including Music Canada, released a joint statement in support of their action.

As more and more artists, producers and businesses in the broader music community become aware of the real consequences the tariff will have on them and their ability to thrive in this industry, they are taking to social media to express their shock and outrage.

Toronto pianist, songwriter and producer Mark Masri:

London boyband Poacher:

Ottawa record store Compact Music:

As grim as it has been for artists over recent years, the Copyright Board’s decision on Tariff 8 divides us more clearly than ever before into winners and losers, with the intermediaries hitting the jackpot and the middle class of the music community going bust. We need to bring back the balance and restore order to the music ecosystem in Canada. A technoutopia may initially sound like it would be a land of happy citizens, but like all nebulous ideals, this vision has nothing to do with reality – it is an imaginary place, and literally “no place” we can all live.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: My testimony before Ontario’s Standing Committee on Finance and Economic Affairs

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

Last week I had the chance to testify before the Provincial Finance Committee in support of the government’s Ontario Music Fund. It was an excellent opportunity to remind all parties of the importance of the music community – all facets of the music community. I felt it was particularly important given that we face a potential Spring election. It was therefore timely to stand up for the Ontario Music Fund. If there is an election, we want to make sure that whatever government is returned by the people of Ontario, it is a government that support the value of music and will not only stand by the Fund, but move to increase it.

When you appear at the Committee you are offered 15 minutes to use as you see fit. I chose to speak for 10 minutes allowing time for questions. Only one of the parties is entitled to ask questions. In my case it was the turn of the Liberals; this explains why there were no questions from the Conservatives or the NDP. However, simply judging from the body language, I can tell you that music is a topic which seriously interests people in government. It is inspirational, it is exciting. It is a gift that keeps giving. As we have always said, “Whatever your problem or opportunity, music can help.” Governments at all levels are waking up to this.

The days when the sole reason for supporting music was for its intrinsic value to our society and culture are waning. Today music is increasingly seen as a critical even essential component in a thriving economy. It is claimed that Archimedes once said, “”Give me a lever long enough and a fulcrum on which to place it, and I shall move the world.” As I point out in one of my answers – music is a very long lever, and it offers advantages to the economy out of all proportion to its own economic footprint.

I was particularly intrigued by Donna Cansfield’s questions. She picked up on the theme of music education, stressing its importance and allowing me to amplify the need for governments to at the very least demonstrate leadership in this area. But she also asked about music piracy and I thought her concern was moving. It is not particularly fashionable to talk about “piracy” these days. But it continues at an absolutely rampant pace. During the copyright reform debates, opponents of the cultural industries appeared before the various committees minimizing the impact and proposing techno-utopian solutions. The most bizarre of all was the idea that touring and performing would supplant the income lost because people, FANS, refuse to pay bands for their music. That canard has died a particularly swift death and its advocates simply proved the poverty of their vision and common sense in ever having proposed it was a workable solution in the 21st Century.

The other reeking skeleton in the closet is how little intermediaries like Google are doing to make it easy for consumers to find legitimate sources. I have written about this here. I would also refer you to David Newhoff’s excellent blog on the subject of Google, as well as IFPI’s sad tale about the infestation of Google by illegal search results – about which they are doing essentially nothing. Our friends at David Lowery’s excellent blog The Trichordist have also touched on the question of exactly how little intermediaries pay creators for the privilege of leveraging their art into untold billions of viewers and by extension fabulous wealth; wealth that is concentrated in increasingly fewer hands by the moment and on a scale which would make the Borgias cringe and blush. Here is an excerpt from this blog:

One of the most accessible points of piracy starts at Google search and they can absolutely do more to assist legal and licensed businesses that pay artists. Digital Music News recently reported that “ Google Receives Its 100 Millionth Piracy Notice. Nothing Changes… ” As we’ve seen with Google’s swift retribution to Rap Genius , search can very effective to discourage or remove bad actors from the legitimate marketplace (When it is in Google’s business interest to do so!). Google is also tracking over 200,000 known domains engaged in active piracy . This seems like an easy problem to solve.

Not only did a series of research studies by the USC Annenberg Innovation Lab identify Google as one of the primary companies feeding advertising to pirate sites, but there is actually a longer darker history of Google assisting illegally operating business online .

Artists don’t get paid anything from pirate sites profiting from advertising revenue. This is the big one, those who pay nothing at all but distribute the most music at the highest volumes.

Ms. Cansfield said, “I think there are things that we can also do, working with the Federal Government, and I was surprised you didn’t mention more of that, because that pirating of music is a significant drain on the economy.” I agree with her, and we would more than welcome any assistance the Provincial Government would care to offer! Together we are stronger.

 

Here is the transcript of my presentation, courtesy of The Legislative Assembly of Ontario.

The Chair (Mr. Kevin Daniel Flynn): Our next delegation this morning is from Music Canada: Graham Henderson and Amy Terrill—or Graham by himself.

Mr. Graham Henderson: By myself.

The Chair (Mr. Kevin Daniel Flynn): It’s the same as everybody else, Graham: 15 minutes. Use that any way you see fit. If there’s any time left over at the end, questions will come from the government this time. With that, the floor is yours.

Mr. Graham Henderson: Okay, thank you very much. Good morning, members of the committee, and thanks for the opportunity to speak today.

I would like to focus my remarks on something that was in last year’s budget, in order to ensure that you’re well aware of the positive nature of the policy and its impact on our sector. I’m talking about the Ontario Music Fund, which is a $45-million grant program spaced over three years.

As many of you know, Music Canada has actually been at the forefront of advocating for not only this initiative but also the Ontario music community in general. I’m confident in saying that the fund was designed to respond to market challenges that we brought forward to the government, and also the opportunities for growth and investment.

Allow me to explain. Music is now widely considered to be a key competitive advantage for Ontario. In a groundbreaking study that we commissioned a couple of years ago, PricewaterhouseCoopers determined that the major and independent recording companies alone generate about $400 million in spending and contribute $240 million to the national GDP. Over 80% of that activity takes place in Ontario.

Our sector employs thousands of young people in a cutting-edge digital environment, and then there is the live sector. The live sector in Ontario accounts for over half of the activity in Canada. Toronto is a “must” stop on every global tour and a home to thousands of homegrown artists. It is a key economic sector. It’s one of the top three markets for live music in North America.

The cities of Toronto, Hamilton, Kitchener, London, Guelph, Peterborough, Windsor, Kingston and Ottawa have all identified the potential of music in their communities. Each of these communities sees it as an important part of the community and a catalyst for benefits ranging from music tourism to investment and talent attraction and to community building. These same benefits were highlighted in a recent white paper released by the provincial Conservative Party. I commend them for having drawn some attention to this.

Similarly, the Ontario Chamber of Commerce has ranked music along with traditional powerhouses like mining and manufacturing as three of Ontario’s key economic sectors.

So why, might you ask, was there a need for government intervention in the form of the fund? The answer to that is germane to the issues that you deal with on a regular basis: financial liability, market imperative, investment climate, retention and attraction of jobs.

Perhaps no sector has experienced the consequences of the digital revolution more directly than the music community. Our entire ecosystem has been disrupted. Our community has embraced this challenge, and adaptation was necessary, but it certainly wasn’t easy. The process of transformation is far from over. A $38-billion business worldwide has become a $16-billion business. Revenues in Canada in the recorded music sector are less than half what they were in 1999.

While digital sales have grown significantly, they are not enough to make up for lost physical sales. Revenues from the digital market are on a completely different scale from those derived from CDs. We do not sell albums; we sell singles. Streaming music, which is becoming increasingly popular, generates a fraction of a penny per stream.

While there are more and more digital services, they are not all created equal. The landscape is littered with illegal services that do not pay artists or copyright owners. Many of them appear to be legitimate to the consumer, and they’re aided by Google. Google search results obscure the simple existence of legal sources of music.

Robert Levine, who is the former editor of Billboard and author of a book called Free Ride, wrote, “It has never been easier to distribute a creative work. At the same time, it’s never been harder to get paid for it.”

The Canadian Independent Music Association released a report recently, Sound Analysis, that concluded that 60% of the independent music companies in Canada—and these are basically small businesses—generate less than $50,000, and only the top 10% earn more than $500,000 a year. Artists, whom you should all consider entrepreneurs, earn an average of about $10,000 per year from music-related activities, and they spend about 29 hours a week pursuing music, because they must generate income elsewhere to put food on the table. This is radically different from just 10 or 15 years ago. Music is becoming a hobby, not a career.

People are also discovering music in different ways. Discovery is moving online—has moved online—yet for decades we have relied on a strategy to expose Canadians to new music using radio.

Almost all of our digital retailers are foreign-owned, posing the question, how do we guarantee shelf space?

All of this is unprecedented. Yet despite the gloom, we have learned from our research that there are unparalleled opportunities to leverage music in order to generate jobs and investment.

Austin, Texas—and we’ve spent a lot of time there—provides an example of a community that has figured out how to harness the power of music to create one of the most resilient economies in the United States while also supporting the small businesses and artist entrepreneurs who make up the sector. As the 11th-largest city in the United States, they were the last into the recession and the first out, and they credit their music community for that benefit. It’s on the top-10 list of every measurement: attracting young people, population growth, rate of venture capital investment, number of start-ups, number of jobs created. In Austin, music generates $1.6 billion.

By comparison, Toronto, which is three times as large, generates only one third of that activity. In Ontario, and we know this from the Ontario Arts Council, arts and culture tourists stay longer and spend more, and almost half of them list music as the key motivator for their trip.

In Austin, music is part of every pitch that the chamber of commerce or its mayor makes when they act as the business investment arm for the city. The government credits music for getting them the Formula 1, something that they were very, very anxious to get.

Music and tech are inextricably linked. We have seen this in Austin, but it has also been backed up by a study released by the Information and Communications Technology Council which points to a strong correlation between vibrant music scenes and technology clusters.

So it is in this challenging market environment where opportunity lies that the Ontario Music Fund appeared, to build on the competitive advantage that the music community has organically created and to turn the province into a live music and recording capital of the world. For the first time—the first time—Ontario is directly leveraging its live music prowess to generate increased tourism activity, which is a great source of jobs, if not the number one source of jobs, for young people. For the first time, Ontario is using the successful film and television model and applying it to music in order to attract and repatriate recording projects to our world-class music studios which, until now, have been suffering.

You might ask, “Why not just lower corporate taxes for companies and the artist-entrepreneurs?” Well, we believe that the stark numbers that I shared with you earlier demonstrate that the majority of our community needs access to capital and not lower taxes.

At Music Canada, we’ve identified seven key areas of growth for the music community in Canada at large and Ontario as well. They are: music education, digital innovation, music tourism, export development, tax credits or grant programs, music celebrations and community building.

With a bit of help from the government, the private sector is ready to create new wealth and jobs in this province. I’m confident that you’ll see that the Ontario Music Fund is money well spent.

Thank you.

The Chair (Mr. Kevin Daniel Flynn): Very good. Thank you, Graham. You’ve left about five minutes.

Who would like to go first? Steven?

Mr. Steven Del Duca: I’ll go first. Thanks very much, Mr. Chair.

It’s great to see you, Graham. Thank you for being here and for delivering those remarks that I think underscore the importance of the decision that our government made last year with budget 2013, around the music fund itself.

The question I have is that in terms of going forward, you talked a great deal about how important it was for us to come to the table with that $45 million, I believe, over three years. I’m wondering, as we go forward, what other steps the government can take to support the industry—perhaps not by way of more funding, because $45 million over three years is considerable, but other measures the government can consider taking to support such an important economic driver, that sometimes is counterintuitive. People might not think it provides the economic activity that it actually does.

Mr. Graham Henderson: It’s correct. It’s a fulcrum that you can use to achieve immense leverage that is totally disproportionate to the size of our own economic footprint. Music tourism is a perfect example of that.

Minister Chan has announced the Live Music Strategy. The objective is to create in Ontario a global destination. We’ve never drawn attention to the fact that we have one of the most vibrant music scenes in the world. We’ve never spent any money on it. The government could simply support Minister Chan, as could the other parties, as he focuses and concentrates resources, that exist today in the ministry, on music. That would be one key area.

Once you build a music scene, you can also use it to leverage the attraction of businesses, the retention of businesses, young people and even immigrants. So as the province of Ontario looks at how it is going to attract the right immigrants to the marketplace, simply think about the advantage that our existing scene can offer you. It’s a big advantage.

Finally, I would suggest that music education is something that has been allowed to languish across the country. Just as you’ve announced an initiative to support mathematical education, you should be thinking about what you can do for music, because it is dying in our schools.

Mr. Steven Del Duca: Interesting. Thank you.

Mrs. Donna H. Cansfield: Thank you very much and thank you for your presentation. I so wholeheartedly concur with you. Anyone who doesn’t have a teenager or who wasn’t a teenager doesn’t understand the value of music. We still have our Beatles albums. It’s just part of who you are and your heritage.

I want to ask two questions. First of all, about the education—and I concur wholeheartedly—interestingly enough, one of the countries in the world with one of the most vibrant music programs is Finland. That’s because in Finland every child takes music and every child gets an instrument.

Mr. Graham Henderson: Yes.

Mrs. Donna H. Cansfield: They have one of the best music programs in the world because they have nurtured that. I think that’s something we could work on.

The other part of it is the illegal market. I think there are things that we can also do, working with the federal government, and I was surprised you didn’t mention more of that, because that pirating of music is a significant drain on the economy.

Mr. Graham Henderson: You can help us simply by vocally demonstrating leadership, by speaking out on issues like music education. We do not have Premiers or Prime Ministers like Bill Clinton and others, who vocally stood up for the importance of music education. If you can start to do that, it helps us.

We have an initiative that raises money called MusiCounts to put instruments into the hands of young musicians. Similarly, the federal government has done a lot to help us in our battle against illegal sources, but they could certainly do more. One of the biggest problems we have is that consumers cannot find legal services on Google. Type in: “Carly Rae Jepsen”; pick your song; press “search.” You would have to look to page 7 of the results to find iTunes. Before you get there, you have six and a half pages littered with illegal sites which are constantly being taken down and constantly being put back. With government support, maybe we can urge intermediaries to actually do something to help consumers find legitimate sources, because I think they’d like to.

Mrs. Donna H. Cansfield: I concur with you, and I think it’s an education. I’m going to suggest that most young people who download music don’t realize how illegal it is. So there’s a whole education component—

Mr. Graham Henderson: Right—or the harm.

Mrs. Donna H. Cansfield: —or the harm that it’s doing to the economy.

Mr. Graham Henderson: The difference between an artist’s career today and 15 years ago is stark.

Mrs. Donna H. Cansfield: You’re right. Thank you very much for your presentation.

The Chair (Mr. Kevin Daniel Flynn): Thank you for coming.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: The Next Big Bang in Kitchener-Waterloo

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

Earlier this month I gave a presentation on The Next Big Bang to the ultra-organized music community in Kitchener-Waterloo. They seem to have ALL the right pieces in place and enormous drive and ambition.

You can visit the Music Works to see the great work the K-W community is doing to accelerate their local music cluster.

The Next Big Bang is Music Canada’s new report identifying programs and public policies to stimulate the development of Canada’s commercial music sector, available for download here.


My thanks to Silvia Di Donato, Manager of Arts and Culture at the City of Kitchener for the invitation to speak, and to Earl McCluskie, producer with Chestnut Hall Music for uploading the video.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: David Lowery & Chris Ruen Shine a Light on Brand Supported Piracy at Canadian Music Week’s Global Forum

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

Last month during Canadian Music Week, Music Canada was pleased to bring two of today’s foremost advocates for artist rights together for a discussion on brand-sponsored piracy. Music Canada has been sponsoring the Global Forum for several years now, because we feel it’s important to bring people who are connected with our world together to talk about the problems that we face. 

Brand supported piracy is a practice whereby Fortune 500 companies, either knowingly or unknowingly, purchase advertisements on illegal sites, providing the pirate sites with ad revenue while ad agencies, exchanges, and networks also make money in the process. The only ones who are not compensated are the artists whose works are exploited on these pirate sites.

This year, we were honoured to have two keynote speakers who have emerged as essential voices for musicians and creators in David Lowery and Chris Ruen. 

Many will know David Lowery as lead singer of the bands Camper Van Beethoven and Cracker, although he has also worked as a producer and started several music-related businesses including a studio, a record company, and a publishing company. Recently, he has emerged as one of the most articulate voices championing artist rights in the digital age, penning a series of blogs at The Trichordist, including Letter to Emily White at NPR All Songs Considered and Meet The New Boss, Worse Than The Old Boss?.

Chris Ruen is the author of the new book, ‘Freeloading: How Our Insatiable Appetite for Free Content Starves Creativity’, which is an essential read for those working in the music industry. His essays and criticism have appeared in The New York Times, Slate, The New York Press and Stereogum, and he brings both a music fan’s perspective and a journalist’s point of view to an issue that affects both creators and consumers. 

We were pleased to once again have Chris Castle moderate the discussion. Chris has been as one of the real, great artist advocates over the past several years, and I would encourage everyone to follow him on Twitter and his blog at www.musictechpolicy.com/. 

The video from the Global Forum is now available and embedded below; I would encourage all creators and those working in music to watch it and share it widely.


Graham Henderson is the President and CEO of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: In Conversation with Colin James

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

In my first turn in the interviewer’s chair, I was thrilled to have had the opportunity to talk with Colin James as he celebrates 25 years in the music business. Colin has dedicated his life’s work to exploring rock, blues, and swing music, and he has been a key contributor to Canada’s music scene. He’s a six-time JUNO Award winner and the recipient of seventeen Maple Blues Awards, and was inducted to the Canadian Music Industry Hall of Fame last week during Canadian Music Week.

Special thanks to Jeff Cohen at Collective Concerts for allowing us shoot the video at Lee’s Palace, one of Toronto’s great live music venues.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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The Rambler by Graham Henderson: Shining a Light on Brand Supported Piracy

Graham_headphones3Blog ThumbnailThe Rambler is a column by Graham Henderson, President of Music Canada. Graham writes from time to time about developments in the music industry, new trends or just about music! Let’s face it, Graham has been around for a long time and has a lot to ramble on about.

As Rambler readers will know, I have been monitoring Google’s promise to downgrade pirate sites in their search rankings since it was announced last August. I was initially skeptical about Google’s push, but willing to give them credit for this ‘better late than never’ effort. However, I was soon disappointed as my research showed that time and time and time again, licensed music sites and services were buried beneath dozens of links to dodgy sites that exploit artists’ work for financial gains. Unfortunately, Google’s 2010 claim that they would remove piracy related search terms from their Auto-complete feature was also exposed as bunk.

My findings were backed up today as the RIAA released their Google Report Card, a new document that shows how ineffective Google’s change was. The takeaway is clear: “Six months later, we have found no evidence that Google’s policy has had a demonstrable impact on demoting sites with large amounts of piracy. These sites consistently appear at the top of Google’s search results for popular songs or artists.”

Since Google’s pledge to downgrade pirate sites in their search rankings has been shown to be a complete farce, you’ll have to forgive me for taking their latest announcement with a handful of salt. According to the sparse details in the Telegraph, the Palo Alto search giant will now look to cut off financial payments to illegal download sites. Ellen Seidler, the independent filmmaker who became a reluctant advocate in the fight against piracy after finding her film hosted on thousands of illegal sites funded by advertising, has also announced her skepticism about Google’s latest move, asking “how much is just PR posturing versus real action?” Seidler’s blog, Pop-Up Pirates, has been documenting examples of brand supported for nearly three years.

Of course, there is a reason that these pirate sites are created: they make money from the advertisements. As Seidler said at Canadian Music Week’s Global Forum in 2011, “Online piracy isn’t about altruism, it’s about income.” Seidler’s presentation thoroughly explained how “legit” companies (such as ad service providers, advertisers, and payment processors) encourage and facilitate this theft while profiting from it. You can see video from her presentation on her Vimeo page.

Some of the screenshots below provide an example of how major brands are encouraging mass piracy by financing sites with their advertising dollars:

Here, Bell is supporting the exploitation of The Dears by placing an ad next to pirated copies of their album on 4Shared, a site that has received hundreds of thousands of copyright removal requests in the past month.

Bell - TheDears - 4Shared

Here, Lysol buys advertising on a page illegally distributing Drake’s Grammy award winning album ‘Take Care’:

Drake - Lysol - SongsloverIn this screenshot, the History Network funds advertisements next to pirated copies of The Tragically Hip’s music:

History Network - Tragically Hip - 4SharedOne of the most prominent critics of this ad-supported piracy is David Lowery of Cracker and Camper van Beethoven fame. Lowery will be one of the keynote speakers at the 2013 Global Forum at Canadian Music Week, which is coming up on March 22nd and is proudly sponsored by Music Canada.

Lowery has emerged as one of the most articulate voices championing artist rights in the digital age, penning a series of blogs at The Trichordist, including Letter to Emily White at NPR All Songs Considered and Meet The New Boss, Worse Than The Old Boss?.

The Trichordist has kickstarted discussion in this area, notably by launching a ‘name and shame’ campaign highlighting brands advertising on pirate sites. Music Canada has joined the campaign, tweeting at one brand per day to draw their attention to the problem. Canadian labels Last Gang Records and Six Shooter Records have also tweeted their support, as has the Featured Artist Coalition. The campaign has been gaining attention, and top brands have responded by ensuring their advertisements do not appear on pirate sites. For example, Levi’s was quick to respond to the news their ads were appearing next to pirated content. “When our ads were running unbeknownst to us on these pirate sites, we had a serious problem with that,” said Gareth Hornberger, Levi’s senior manager of global digital marketing. “We reached out to our global ad agency of record, OMD, and immediately had them remove them…. We made a point, moving forward, that we really need to take steps to avoid having these problems again.”

Also keynoting the Global Forum this year will be Chris Ruen, author of the new book, ‘Freeloading: How Our Insatiable Appetite for Free Content Starves Creativity’, which is an essential read for those working in the music industry.

Chris Castle will reprise his role as master of ceremonies at the 2013 Global Forum, which is sure to be an engaging conversation. I’d also like to announce that for the first time in the event’s history, the 2013 Global Forum will be streamed online and will encourage interaction through social media – which will hopefully bring the issue of brand supported piracy further into the mainstream discussion and encourage more brands to ensure they do not encourage or facilitate the exploitation of artists’ work.

Graham Henderson is the President of Music Canada. He also writes on an eclectic range of topics on his personal blog at www.grahamhenderson.ca.

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