Digital Media: Creating Canada's Digital Content Advantage
For generations, we have sought as a country, through appropriate market frameworks and policies, to promote the creation of and access to Canadian creative content made by Canadians, designed to inform, enlighten and entertain, and that is reflective of our linguistic and ethnocultural diversity. Today, Canadian artists, producers and creators are admired in Canada and around the world, and our public policies are emulated by many. Nevertheless, the digital revolution has profoundly affected how all Canadians create, share and consume creative content. Rapidly emerging digital services and applications stretch and challenge the bounds of creativity and imagination, and provide Canadians with an unparalleled opportunity to seize a digital advantage on the creative global stage. As more and more everyday activities (entertainment, communications, work, learning etc.) are done on digital platforms like TV, computers, cell phones and other portable devices, the Canadian economy needs a strong and competitive digital media industry (creators, enablers and aggregators) to be well positioned and take a leading role in shaping the global digital economy.
"Digital content will increasingly become the basic creative infrastructure underpinning the knowledge economy and be at the centre of health, educational, and cultural activities."22 — OECD
Weekly hours spent by English and French Canadians were respectively: 9.7 and 10.7 hours listening to satellite radio; 7.1 and 5.6 hours listening to iPod and MP3; 5.3 and 5.4 hours streaming online audio; 4.2 and 4.6 hours streaming online radio; 2.2 and 2.5 hours Podcasting; and 1.5 and 1.2 hours viewing online TV in 2008.24
Ninety percent of Canadians (6 years old to adult) spent an hour or more per week playing computer and video games in 2009.25
Mobile phone penetration in Canada increased to 64.41 % in 2008 from 42.0 % in 2003.26
Digital media creators are at the centre of all creative industries, producing information, entertainment, services and applications using digital technology. The sector includes, but goes beyond arts and culture traditionally defined, and is driven by the same creativity that inspires Canadian artists. Digital media has been described as the "soft infrastructure" that is equally as important as the "hard infrastructure" like broadband connectivity. Both elements have a profound impact on Canada's ongoing success in the digital economy.
With the right framework, digital media entrepreneurs have the ability to create Canada's digital content advantage with vision and boldness to unleash the potential of content to capitalize on our investments in digital infrastructure and drive more innovation in the years ahead. Those who get it right will find ways to meet the needs of Canadians as citizens, consumers and creators, and in doing so, will drive the uptake of infrastructure and devices, distinguishing Canadian digital offerings in a crowded global marketplace.
As broadband networks spread around the world, digital media and the content are the advantage; they will be what attracts continued investment and talent, improves productivity, promotes prosperity in the digital economy and secures Canada's place in the digital world. This diverse sector will contribute in new ways to citizen engagement, quality of life and will open up new opportunities for all Canadians to participate in Canada's democratic, economic, cultural and social life.
Canada has reasons to be confident. Right now, the Canadian arts and culture sector generates about $46 billion to Canada's GDP or 3.8 % of Canada's real GDP and directly employs approximately 662 000 people, or 3.9 % of national employment.27 As the composition of this sector and opportunities expand in the digital economy, the economic potential of Canadian creative industries producing Canadian content will be recognized as central to Canada's success. We have world–class companies, entertainment software developers, architects and filmmakers. From Derek Gour the Ottawa developer of a local application on iPhone that helps commuters access their bus schedules to big–budget and award–winning productions, such as ReGenesis, the Canadian animated series for children, Iggy Arbuckle, and the popular website and television program Têtes à Claques, Canadian entrepreneurs and creators are turning to new ways to engage and reach audiences. We have public organizations, such as the National Film Board of Canada (NFB) and the Canadian Broadcasting Corporation (CBC/Radio–Canada) who are also leading the way in attracting users at home and abroad to cutting–edge Canadian content and applications. We have community groups who are seeking ways to use digital media content and applications to innovate and interact. And none of this would be possible without Canadians who, whether at home, school, work or play are using digital media more and in new ways.
There is great opportunity and with that comes uncertainty. Content producers continue to struggle to attract audiences given the extensive amounts of foreign content available online. As well, a major transformation is under way in the structure of the digital media sector. The environment is volatile and change is happening at breakneck speed. The challenges are particularly acute for legacy players that are accustomed to an orderly marketplace. They have the dual task of meeting consumer demand for their established products while at the same time creating the business opportunities of tomorrow.
Canada has no time to lose — this is our moment to define how we will create Canada's digital content advantage.top of page
New business models and new market strategies will be needed if the Canadian digital media sector is to succeed in the global digital economy. The Government of Canada recognizes that while growth will be influenced by public policy, ultimately the private sector will bear the risks and reap the rewards. Changes in behaviour and adjustments to policy in both public and private sectors will be required. The Government of Canada's role is to put in place a marketplace framework in which our creators, inventors and entrepreneurs have the incentives to innovate, the confidence to take risks and the tools to succeed.
New and increasingly more affordable technology is putting creative control directly in the hands of consumers and creators. When the value of our digital infrastructure depends on the content it carries, when carriers and content creators, applications and services are converging, the way the money flows — the value chain — is undergoing a fundamental shift and multiple value networks are emerging.
Consumer demand, in particular the increasing desire for on–demand content on every platform, is putting pressure on companies to adjust their offerings and, at the same time, is opening up new business opportunities. As businesses respond to changing consumer expectations they are seeking to protect the value of their assets while growing new, strategic business lines. From the individual creator to the multinational company, experimentation and taking risks will be critical, knowing that success is not guaranteed and definitive business models remain elusive.
While the Government of Canada has undertaken a significant body of research and analysis28 to identify the conditions necessary for Canadians to meet future market demands, we are seeking your views on what elements of this marketplace framework would be most essential to your future success.
This framework should support the development of the digital media sector and recognize the important role of this sector to Canada's prosperity. The talent is here; if the framework is right, more talent will surface, the demand will be there and Canada will be a destination of choice for investment and innovation.
The Government of Canada recognizes that it plays an important role in creating a climate for innovation and economic growth for the digital media sector in Canada. This is done through direct investments, incenting and encouraging other sources of financing, ensuring national institutions do their part and by promoting modern rules and regulations.
Targeted and strategic public investments, both direct and indirect, can and do make a difference.
The Government of Canada recently renewed a suite of programs in digital media and content, listed below, representing a total federal investment of $290.2 million per year. Together with our private sector funding partners, over $450 million is invested in Canadian creative industries each year through direct funding programs. These programs will support the creation of compelling content on multiple platforms and an enhanced capacity to innovate. They are already leading to new partnerships and experiments among various creators — gamers and producers, software developers and distributors, interactive media producers, telecommunications companies and broadcasters, book publishers, music producers, technology developers and consumers. It will be these new alliances that will spark development of the new products and services that will improve prosperity in the digital economy. These programs provide powerful examples of how the Government of Canada is using its investments to support the creative industries to innovate and to leverage private investments, in some cases at a ratio of 3:1 .29 Government investments also foster the creation of Canadian content for under–represented communities, including official language minority, Aboriginal and ethnocultural communities. The Government of Canada will continue this work, and plans to review federal policies related to feature film.
The Canada Media Fund30 recognizes the change in how Canadians create and access media, and will support multi–platform projects. The fund will also encourage the development of experimental, non–linear content and applications.
The Canada Interactive Fund31 will encourage official language minority communities, and Aboriginal, ethnocultural and other not–for–profit cultural organizations to take advantage of new and emerging technologies, including social networking tools. The Virtual Museum of Canada and the Works of Reference Licensing Initiative provide access to extensive, innovative heritage collections.
The Canada Book Fund32 will support the creation of digital content and will encourage new approaches to reaching readers on digital platforms.
The Canada Music Fund33 will support digital market development to expand markets for Canadian artists through the digital promotion and sale of music online in Canada and abroad.
The Canada Periodical Fund34 will provide publishers with the flexibility to manage funds strategically; enriching their web content and incenting online publishers in finding innovative and profitable ways to reach Canadians.
Opening the Doors to Other Sources of Financing
A challenge for the creative industries can be access to early stage financing. Digital media projects are often considered to be high risk, and can involve significant upfront costs before prototypes can be shown to potential investors. The Government of Canada recognizes that the ability to access early stage financing has a significant impact on the rate of digital media innovation and the medium–term viability of companies.
The Government of Canada is prepared to examine whether there is sufficient access to capital and whether existing mechanisms should be more open and accessible to the creative industries. Federal lending institutions, for example, play a key role in stimulating business development and economic growth.
Venture capital funding will also be investigated for its potential to increase the financial capacity of the digital media sector to take risks and achieve commercial success. This exploratory work will examine whether the creative industries face particular issues or have specific needs when it comes to venture capital and how this could be addressed.
Talent and Sector Development
With a near–constant evolution of technologies, and an emerging industry comprised often of small and medium–sized companies, the Government of Canada recognizes that there is a need to develop skills, and share expertise and best practices. The federal government is interested in exploring with the private sector and the provinces and territories, the emergence of both physical and virtual digital media clusters, such as the Stratford Institute of the Canadian Digital Media Network, that would bring together the diverse richness of Canadian creative talent, provide exposure, contribute to building strong companies, generate new business opportunities, develop entrepreneurial skills and showcase Canada as a world–class producer of digital media and content. Further, given the Government of Canada's commitment to explore how to better attract and retain international students and permanent immigrants along sectoral needs, it will review which areas of activity digital media businesses most need to bolster their talent.
Federal cultural institutions, such as CBC/Radio–Canada, the National Film Board of Canada, Telefilm Canada, the Canada Council for the Arts, and Library and Archives Canada, continue to be redefined by changes in technology. Those who produce content will need to continue to make digitization of their collections part of their ongoing activities to serve Canadians. While priority collections in Canada's cultural institutions have been digitized over the past decade, some have suggested that the pace of digitization should increase.
Canada must also ensure that investments already made in our digital infrastructure and economy in digital and digitized Canadian content can be leveraged for long–term access and use. The government is interested in exploring whether this could be achieved through the establishment of a pan–Canadian network of trusted digital repositories (TDRs).
Further, the CBC/Radio–Canada and the NFB have reached beyond their traditional roots in broadcasting and film, to show a strong commitment to the new digital platforms to distribute content and interact with users, as a core component of their service to Canadians. The CBC/Radio–Canada and the NFB offer access to extensive online collections, social media tools, games and smartphone applications. Both organizations have been recognized, both nationally and internationally, for their innovation, including two Canadian New Media Awards in 2009 to the NFB for Best Cross–Platform Project for its "Waterlife Interactive"35 and Best Online Video Portal for its "Online Screening Room."36
As part of the marketplace framework, the Government of Canada will ensure that our public institutions have the tools they need to continue to take risks, lead by example and serve Canadians. These institutions can be a hotbed for research and development, organizational and team structures, and a training ground for the next generation of creators. They can play a leadership role in providing Canadians with access to leading edge digital content while not unfairly competing with the private sector. To that end, the Government of Canada expects the CBC/Radio–Canada and the NFB to maximize their presence on all digital platforms.
Modern Rules and Regulations
As much as digital media and content are key to prosperity, individuals and companies in this area will face stiff and growing competition from other countries. They will need modern rules and regulatory certainty.
Some have argued for legislative change, making the case that the Broadcasting Act, the Telecommunications Act and the Copyright Act do not line up with the digital media reality and changing market dynamics.
Canada's copyright regime is the mechanism by which much of the economic value flows through the networks of creation–production–distribution–consumption. The Copyright Act is an important marketplace framework law and cultural policy instrument that must give Canadian creators, citizens, and consumers the tools they need to compete in the global digital economy. Innovation and creativity will grow where investments of time, energy and money are secure and fairly rewarded. Throughout the summer of 2009, Canadians were invited to participate in national consultations to provide an understanding of their experience with copyright and to inform the modernization of the Copyright Act, and the Government of Canada is committed to taking action.
Legislative reform is but one means to address issues around digitization. The digital environment is posing particular challenges for creators, both for how they create, and for the business environment in which they operate. On the one hand, there are growing possibilities for new forms of content and new channels of distribution and access to current and emerging markets; on the other hand, new technologies have disturbed existing means of control or appropriate compensation for the use and copying of their works. New business models are developing — some complement while some compete directly with more established copyright industries. Fair and appropriate remuneration for creators is essential to the growth of digital media content in Canada. The Government of Canada recognizes that copyright reform, in addition to legislative change, must include engaging with creators. This will allow for an examination of, and practical approaches to fair and appropriate remuneration for creators, which is essential to growth and prosperity.
Another key issue is the approach to regulation in the converged digital media context. Regulatory agencies, such as the CRTC, are being challenged to find ways to transform their approach, away from complex and micro rules, put in place when access could be controlled, roles were well defined and interdependencies could be managed, to devising simpler rules to reward success and require innovation. Regulators also now have access to technology that will allow them to fulfill their public service mandate by empowering the consumer and ensuring meaningful public participation in the regulatory process.top of page
The economic impact of the transformation of media from analogue to digital engages a significant part of the Canadian economy. Canadians' use of digital media continues to grow each year. Digital technologies are being integrated into the production, distribution and consumption of content. In parallel, the digital media sector is shifting away from linear production chains with distinct players and discrete products into three main areas of activity: 1) the creation of content; 2) enabling content creation and distribution; and 3) the aggregation of content. A significant part of the innovation taking place today and the prospects for future prosperity are related to these activities. An up–to–date marketplace framework for Canada's digital media sector will create Canada's digital content advantage and position Canada as a destination of choice for creativity and innovation.
- What does creating Canada's digital content advantage mean to you?
- What are the core elements in Canada's marketplace framework for digital media and content? What elements do you believe are necessary to encourage the creation of digital media and content in both official languages and to reflect our Aboriginal and ethnocultural communities?
- How do you see digital content contributing to Canada's prosperity in the digital economy?
- What kinds of "hard" and/or "soft" infrastructure investments do you foresee in the future? What kinds of infrastructure will you need in the future to be successful at home and abroad?
- How can stakeholders encourage investment, particularly early stage investment, in the development of innovative digital media and content?
- How can we ensure that all Canadians, including those with disabilities (learning, visual, auditory), will benefit from and participate in the Canadian digital economy?