Music Canada reacts to 2017 Federal Budget

Music Canada is pleased to see that the 2017 federal budget, which was tabled yesterday in the House of Commons, contains encouraging language for Canada’s music sector.

Intellectual Property Strategy 2017

The budget announced that the Government will develop a new intellectual property strategy over the coming year. The budget notes that “intellectual property rights incentivize creativity and the development of new ideas and technologies by helping companies, academics and inventors recoup their investment once new products reach the marketplace.” This is especially true in the music business, as music is intellectual property, and musicians are innovators.

Recorded music is an investment intensive business, and a strong intellectual property regime gives labels the confidence to invest in new artists and recordings, which helps all parties in the recording ecosystem. Record labels are the primary investors in music, investing 27% of global revenues into discovering, developing, and marketing artists. A & R (artists and repertoire) is record companies’ defining skill, and the equivalent of R & D (research and development) in other sectors. We welcome the Government’s IP Strategy, which the budget states will “help ensure that Canada’s intellectual property regime is modern and robust and supports Canadian innovations in the 21^st century.”

Canada’s Digital Future

In this budget, the Government has placed a priority on supporting Canada’s digital innovation, with a section on Canada’s Digital Future. Recognizing that Canada’s creative entrepreneurs and cultural leaders are essential to building an inclusive and innovative Canada, the budget acknowledges that Canada’s creative industries are facing rapid and disruptive change, which includes both risks and opportunities. The budget states that the Government will outline a new approach to growing Canada’s creative sector – “one that is focused on the future, and bringing the best of Canada to the world.”

The music industry has extensive experience in adapting to digital disruption. In many ways, the music sector was “the canary in the coal mine” in this regard: with the launch of Napster in 1999, the music industry was the first media sector to feel the full impact of the Internet. But, after almost two decades of nearly uninterrupted declining revenues, the global music sector reached a key milestone in 2015, with a return to positive revenue growth and digital revenues surpassing income from physical formats for the first time. This achievement was made possible by the transformation of record companies to meet changes in consumer behavior, the proactive licensing of new digital services, and continued investment in talent and innovation in bringing artists to a global audience. We have some perfect examples of the last point; last year, Drake topped IFPI’s Top Ten Global Recording Artist chart, while fellow Ontarians Justin Bieber and The Weeknd reached #5 and #10, respectively.

However, despite these encouraging results, the music industry’s transformation is not complete. There is a weakness in the foundation, known as the “Value Gap.” While music is now being consumed at record levels around the world, the surge in consumption has not been matched by coinciding remuneration to artists and producers. Addressing this market distortion is crucial to ensuring creators are fairly compensated. We look forward to working with the Government of Canada to address the Value Gap as part of the plan for Canada’s digital future.

Promoting STEM to Young Canadians

The budget also includes a laudable section on promoting STEM to young Canadians, noting that they are “curious, talented, entrepreneurial and well-educated”, making them “well-positioned to deliver the next great breakthrough in science, technology, engineering and mathematics (STEM).” This is very true, though we note the equal importance of studying the humanities, and encourage the Government to consider a broader outlook, by including the arts in this strategy.

An arts education does more than prepare students for careers in the culture sectors. Arts educations instill the importance of creativity, and teach students to apply creative thinking and design skills to STEM projects. By expanding the outlook from STEM to STEAM, the Government can help students develop the full skillset required for careers in tomorrow’s labour market.

Budget 2017 rightly states that changes in the economy presents incredible opportunities for middle class Canadians, and that Canadians’ future success “will be determined by our ability to prepare for and adapt to change.” As we strengthen Canadian content creation and prepare for the future, Music Canada is committed to working with government to ensure music is properly valued & creators are fairly compensated.