The following is a guest blog by Greg Nisbet, Founder & CEO of Toronto-based digital music company Mediazoic:
Made-in-Toronto music biz legend Bob Ezrin recently wrote about the Copyright Board ruling on Tariff 8, speculating that it may be “The Day The Music Died”. In the piece, he states the following:
Perhaps the worst result of the low rate is that we will be granting a 90% discount to American streaming companies that covet our market and will eagerly sweep in here with powerful and well-funded systems that will wipe out any Canadian-owned competition – all at the expense of the creators you have historically supported with thoughtful policy.
I run a 100% Canadian music streaming company and I agree with Mr. Ezrin. The ruling was a bad idea and the rates are too low.
It may at first seem counter-intuitive that a streaming company would advocate for paying higher costs to do business, in a business that is already notoriously expensive. Indeed, I was asked in a recent Globe & Mail article if music streaming companies will ever make money.
Well, I don’t know about other companies, but I am proud to be able to claim that ours has been built without any of the digital and entertainment grants available, and, not having had access to those deep wells of venture capital available to many of the international streaming companies, we have therefore managed any progress we’ve made through our own devices.
In our first couple years in business, that lack of funding was actually by choice 😉 People in the industry told me for years that Mediazoic was the ultimate grant magnet – Canadian, digital, music, and media all rolled into one. I used to respond that I didn’t think we could consider ourselves a viable business model unless and until the market had decided our fate. We were going to focus on getting clients, not writing grants.
Then one day we lost a huge deal to a very well-funded international service because, in order to enter our market, they were willing to do for free what I’d have actually had to pay my people to do. I understood immediately the frustration of the local merchant with the big box store opening next door (and yes, we started applying for all the grants we could!)
So yes, Bob Ezrin has a point, but mine is not an argument for protection of companies like mine up against better-funded international competitors. I still think having to stand on our own two feet helps us understand how to build something valuable and sustainable.
My concern with the Copyright Board ruling is that it will foist this “big box” model on our music creators as well. The price-driven “big box stores” (streaming companies) are set up to thrive, but their “suppliers” (artists, management, labels, etc.) are not. And listeners may think they’re better off, but when the creators suffer, it is ultimately music fans who suffer.
It would have been one thing if licensors, who have a deep understanding of the business/culture balance and of Canadian/international ownership complexities, had decided the timing and nature of a change in rates. As we all know, streaming even at low rates is still preferable to file sharing, or streaming from sources that don’t report their plays. The progress that has been made in monetizing convenient access to great music is not something likely to reverse, and in spite of the whipping-boy status earned during the piracy wars, I haven’t found anyone in the business who understands that better than label folks.
And yes, streaming companies do need an environment in which to make a profit. But rather than push for lower rates, my company chose to innovate the business model. Basically, we believe the success of each project we undertake is based on three parties – us for providing the platform, the rightsholders of the music played on our system, and our station hosts (clients) for getting it out there. As such, when planning and implementing a project, we always strive for a fair and transparent split of the revenue between the parties. This isn’t just because we’re nice and we love music – we believe that in the music business of the future, the most successful companies will be the most fair and transparent.
Indeed, we hear repeatedly that one of the main reasons our clients choose to do business with us is that they want to support a flourishing arts community, even more so if that has built-in support for Canadian artists and companies.
We live in a fishbowl. Fairness may be desirable now for organizations, but it is rapidly becoming necessary. Systems that are not based on fairness are doomed to fail, as they will not bear the ever-increasing scrutiny that comes with our interconnected world.
Simply put, the Copyright Board ruling is not fair. It is my hope that the artistic community will use every means at its disposal to support the many innovative new ways of delivering music that actually focus on giving artists a fair shake.
gregn [at] mediazoic [dot] com