November 29, 2023
BROADCASTING NOTICE OF CONSULTATION 2023-138
THE PATH FORWARD –
WORKING TOWARDS A MODERNIZED REGULATORY FRAMEWORK REGARDING CONTRIBUTIONS TO SUPPORT
CANADIAN AND INDIGENOUS CONTENT
Madam Chair, Commissioners, and Commission staff, thank you for the opportunity to participate in this important hearing.
My name is Kirsten Donaldson. I am the Vice President of Legal at the Digital Media Association, or DiMA.
We appreciate the Commission’s efforts to modernize and create a new, flexible broadcasting system. In our view, flexibility will mean recognizing and building on existing successes. We believe we have a great story to tell.
DiMA represents the world’s leading audio streaming services: Amazon, Apple Music, Spotify, YouTube, Pandora, and Feed.fm. Founded in 1998, DiMA is the leading organization advocating for the digital music innovations that have revolutionized the way music fans and artists connect. Our members work tirelessly to drive innovation that benefits creators, rightsholders, and fans. Today, DiMA’s members are the economic engine that has revitalized the music industry, bringing it forward from the depths of the harm caused by piracy into a brighter future.
That brighter future is clear in Canada. As our written submissions highlight:
- Canadian music streaming subscriptions are rapidly increasing, year over
year; - Canada ranks eighth in the list of top countries in recorded music revenues, and;
- Streaming revenues in Canada – where currently, approximately 70% of audio streaming service revenues are paid to rights holders in the form of royalties – are continuing a trend of annual double-digit growth.
This is nothing short of a success story. Only a decade ago, the music industry faced declining revenues and challenges to get listeners to pay for music. Working alongside creators and rightsholders, music streaming services invested time and resources to provide legal access to music in a compelling manner that benefits music fans, creators and rightsholders alike, in Canada and around the world. Streaming services are the number one source of music discovery; they provide unlimited shelf space, curated experiences, endless opportunities for personalization and discovery as well as rediscovery, information about music, and recommendations – all accessible anywhere, anytime. DiMA members have also broken down geographic boundaries, allowing Canadian artists (and others), particularly emerging artists, to access new audiences and build new engaged and supportive fanbases in ways they could not have dreamed of in years past. And we expect that streaming will continue to grow to reach new audiences across the globe, particularly in untapped markets such as Francophone nations (which is particularly relevant for French Canadian artists). Today, streaming is the number one source of music discovery, and fans overwhelmingly embrace its features. 88% of fans support services providing recommendations based on their listening habits, and 87% rank their favorite services as good or excellent on the ability to create their own playlists.
As revenues grow, the percentage of revenue licensing model allows rightsholders to be the biggest beneficiaries of streaming’s success. As noted a moment ago, audio streaming services currently pay rightsholders around 70% of every dollar of streaming revenue in the form of royalties. This 70% contribution is 8 and a half times more of a revenue share than commercial radio stations pay (commercial radio stations pay just 8.2% of revenues). In short, streaming services provide more, while operating on the lowest margins of any other distribution model.
With the remaining 30% of each dollar received, streaming services not only operate their services at a global scale with a catalog of virtually all the world’s music, but they also invest in a range of financial and non-financial initiatives to support creators, including Canadian creators, innovate in new technology, provide new tools and data to the industry, and build compelling fan experiences. We’ve explained these investments in our written submissions: they include large catalogues of Canadian playlists, dedicated pages and stations for Canadian listeners with a great selection of local content, bilingual programming and user interfaces, marketing teams on the ground in Canada driving the promotion of local artists and music, and partnerships with Canadian music organizations. In short, our members are already deeply engaged in the financial support, promotion and discoverability of Canadian artists and Canadian content.
Like other participants in this proceeding, we have called on the Commission to evaluate the contributions streaming services already make to the Canadian system, before deciding whether it’s appropriate to impose an initial base contribution. Whether or not the Commission conducts a further assessment of these existing contributions, we firmly believe that our members’ existing contributions already fulfill the kind of support, and the amount of support, required by the Broadcasting Act and sought by the Commission.
You’ve asked whether and how any new financial contributions should flow to existing or newly created Canadian funds. Given that audio streaming services already pay around 70% of all revenues they receive for music streaming to music rightsholders and make significant financial and non-financial contributions to artists and Canadian content beyond that, a new category of regulated financial contributions would be inappropriate and against the Commission’s intent. In fact, they could actually harm existing investments, which have contributed to the success of Canadian artists both at home and abroad. Drawing revenues into a regulated fund – without mind to existing investments – would only draw such revenues away from successful ongoing initiatives that our members have undertaken to support Canadian artists in Canada and around the world.
Thank you, Madam Chair, Commissioners and staff. I look forward to answering your questions.
