Canadian Music Publishers Association Submission to the Digital Economy Consultation

Summary

The Canadian Music Publishers Association represents music creators and rights holders through its members, who comprise of a few multinational companies but mostly Canadian owned and operated SME's. CMPA's members have been pragmatic early adopters of digital technology, and have been drivers of digital culture; therefore, we believe we have experience, expertise and a clear stake in Canada's digital future.

We are concerned that both large Canadian digital business interests and government see the greatest potential for economic growth in the digital world in distribution, and will favour distribution (in terms of investment, legal and policy structures) over content. While there are Canadian companies involved in digital distribution, the nature of the digital economy is global, and few Canadian companies can compete internationally in digital distribution. Canada can compete globally quite successfully, however, in the creation of intellectual property. We strongly recommend that the Canadian government recognise that while it is important to expand our distributions systems, it cannot be at the expense of content, content creators and their rights, since content will be the lasting global economic asset in the global economy.

Investing in digital content requires investment of money, expertise and other resources in academe, in education and training, in creation of content and the companies that do so, and in developing markets for Canadian content in other countries, particularly emerging economies. A successful outcome of the digital economy strategy would require a thorough coordination of all of its components.

Submission

The Canadian Music Publishers Association (CMPA) is the oldest music industry association in Canada, founded in 1949, federally incorporated as a non–profit corporation in 2005. We represent 75 members from across the country; our by–laws mandate that both our membership and our board of directors are comprised of a majority of Canadian owned and operated companies. Our member music publishers represent the interests of hundreds of our Canadian songwriter partners, from the highest profile writers to the up and coming. CMPA advocates for music publishers and their songwriter/composer partners for progressive copyright legislation, fair compensation, access to media and markets for our work, and recognition by the public sector and other stakeholders of the value of our work, both culturally and as an economic force.

As a result, the questions asked in the federal government's Consultation on Canada's Digital Economy are of critical importance to CMPA members and creator partners. As managers of content, music publishers have been pragmatic leaders in adapting to changing technology in the music industry. Whether the technology has been the player piano roll or the mp3 file, music publishers have quickly adapted and thrived.

We congratulate the government in recognising the importance of the digital economy to Canada. We are a nation that was built on natural resources, many of which, although plentiful, are finite. However, we have demonstrated as a people that we have an infinite capacity to create the products of the mind, and are seen as a world leader in this area. We note that other countries, and the European Union, have put the question of building a digital economy high on their priority lists. We can learn from these efforts, but we must also realise that the longer it takes Canada to take action, the further we fall behind. According to the Digital Britain report, six of the top ten global brands by value this year are in the digital sector: one is Chinese, one is British and four are American.

The EU work programme for 2010 has prioritised a "digital agenda for Europe" for the 2^nd quarter of the year. It… "will aim at exploiting the potential of Information and Communication Technologies as a major enabling technology for moving to a low–carbon, knowledge based and competitive economy. It will adopt an integrated approach to the challenges of a digital economy and society, addressing the issues both from the supply and demand side. It will identify concrete measures to be taken at EU on Member States' level for rolling out high speed internet, achieving a borderless online market for goods, services and content; upgrading skills and delivering the services of the future."
Much of the digital economy conversation focuses on hardware and distribution. Without sophisticated technology and reliable, pervasive delivery systems there will be no digital economy. However, as we have seen in the music industry, while technology comes and goes, creativity remains the constant.

Consider:

The blind spot in the Malthusian vision is humanity's bottomless capacity for innovation. The "green revolution", for example, largely eliminated food scarcity.

In other words, our wealth is all in our heads. Literally.

In the case of the United States, for example, less than a fifth of our wealth exists as material stuff like minerals, crops and factories. In Switzerland, cuckoo clocks, ski chalets, cheese, Rolex watches, timber and every other tangible asset amounts to a mere 16% of that country's wealth. The rest is captured by the expertise, culture, laws and traditions of the Swiss themselves…

The Malthusian thinks only about hardware, when the money is in software and design. China makes America's iPods; America collects the profits.

The hardware is nothing; the software, everything. All that civilisation is and can become exists within us. If we forget that, we forget literally everything.

Jonah Goldberg, LA Times, July 3^rd, 2005

This argument is the underlying premise of our submission.

Capacity to Innovate using Digital technologies

Canada should provide the foundation for digital innovation across the economy. It is impossible to predict where an idea will catch fire in the fast changing digital world, so focusing on key sectors would require making choices with insufficient information. In addition, such choices could prove to be both inefficient and detrimental to ideas with real potential. It is also important that Canada have an integrated effort, (integrating public and private sector, all levels of government) as focusing on multiple isolated efforts will waste both time and money.

We are confident that we can continue to innovate in the creation of content; we need to invest in that area because it is clear the return on investment is reliable. However, the digital sector is suffering from lack of innovation in the creation of business models, in the development of technology, in creating a legal and cultural framework to support the digital era.

Innovation is then best served by an interdisciplinary approach: to encourage innovation in the digital sectors we need to recognise the importance of broad sources of knowledge and styles of thought. The government should therefore support the creation of post secondary programmes and academic idea centres that bring together technologists, artists and designers, legal and economic minds and specialists in cultural studies, sociology and psychology. There is a need to invest in primary research, not just applied research.

Building a World Class Digital Infrastructure

"Hard" infrastructure in this case refers to areas such as technology. The government has spoken at length about the need to extend high quality internet and mobile access to every Canadian, and we agree that this should be a critical element of the digital economy strategy. We support the notion of public investment, as long as it is combined with government regulation, to ensure that quality access is provided uniformly, regardless of profitability in rural or remote areas. However, there is an important caveat to this admirable goal: digital access to content should be a priority but not at the expense of content creators. Support for the expansion of distribution systems should be conditional on the recognition by the distributors of the ways in which they benefit as content distributors and their responsibilities as such. We cannot build our delivery systems at the expense of the content creators.

There is an opportunity here to review the mandate of both Industry Canada and the CRTC that would also include regular reviews of Canada's information infrastructure to ensure that it meets our needs for coverage, capacity and resilience.

In the case of the digital economy, "soft" infrastructure refers to things such as a relevant legislative framework, and robust business models, both of which are urgently lacking in the Canadian digital economy. While we applaud the government's interest in copyright, as demonstrated by C–32, this bill attempts to provide benefits to content users but does it directly at the expense of content creators, which is grossly counterproductive. C–32 does not represent a solution to the problem of the lack of legal infrastructure in the digital economy.

The legal framework should shut down the piracy of hard goods, and create a modern, effective streamlined licensing framework to encourage access online while compensating creators and rights holders. Instead, it weakens the private copying regime, which has proven to be an effective, pragmatic way to compensate creators and rights holders, rather than protecting it and making the logical extension to digital audio recorders, which would acknowledge the value of the vast number of unauthorised copies on iPods and the like. Furthermore, the current proposed legislation would also remove compensation for rights holders for the value that Canadian broadcasters rely upon to enhance their programming, a provision that is in violation of the spirit of ratifying the WIPO agreements.

As for business models, we note again that Canada is well positioned to be an export leader in the emerging sector. Support programmes should recognise the need to develop access to international markets. A positive investment climate is also required to inspire successful business models, and the government could play a role in encouraging the necessary expertise in the financial community for the valuation of intellectual property.

Canada's Digital content

Over the years, Canada has demonstrated a dramatic content advantage per capita over the rest of the world in the area of music. Canadian artists are consistent in their critical and commercial success around the world. This is essential, as we do not have the economies of scale to support a domestic music industry on the domestic Canadian market alone. Government programmes to support trade opportunities are vitally important, and must recognise the potential in both emerging and established markets. Intelligently designed programmes in this area will deliver very positive returns with relatively modest levels of investment. Current programmes are a sound start, but need to be regularly reviewed, and enhanced with additional funds as the digital sector needs to enable its growth.

The government also needs to recognise the nature of the content industries: they are comprised of a few multinational corporations, a few large Canadian owned companies, and hundreds of SME's. Programme and infrastructure support have to ensure the viability of all three of these configurations while recognising that their needs may be different.

We have a music industry in Canada thanks to decades of forward thinking regulatory policy that values Canadian cultural identity and cultural industries. We read with interest the recent CD Howe report on the regulatory challenges in a digital world and we support its conclusions, particularly: fundamental regulatory change will be necessary because of technology, quota based systems based on scheduling and money will be increasingly ineffective, new funding programmes and sources of revenue will be needed for CanCon, public broadcasting will be increasingly important and distributors should be subject to oversight to prevent market power abuses (Scrambled Signals, Canadian Content policies in a world of technological abundance. CD Howe Institute)

It is also important to create a climate in Canada that will encourage the retention of both our talent and our intellectual property. In order to consider staying in Canada and contributing to our economy, Canadians who create world class content will need to see that the fruits of their labour are protected and developed here. They will need to see that there is a partnership between private sector companies that specialise in marketing and distribution and forward thinking government supports for those companies and that there is an academic and creative climate that will help them find world class partners and collaborators.

Building skills for Tomorrow

The discussions around skills for the digital economy tend to silo into two areas: technology and content creation. They generally do not recognise the importance of the business skills that brings the two together. In the United Kingdom, it has been recognized there is a need to educate young people about the value of intellectual property and the laws surrounding it. These programmes are starting in elementary school art classes, teaching children that not only have they painted a picture, but that they have created something of value. These values are integrated into a "Find your Talent" programme that provides five hours a week of culture for children and young people to take lessons, go to museums or performances, etc. In addition, the UK government is assisting creative industries to provide 5,000 formal apprenticeships per year by 2013. These programmes are worth investigating to see if they may bear fruit here in Canada.

Improving Canada's Digital advantage

The questions in this section as about targets and timelines; unfortunately, the ideal timeline for a digital strategy for Canada has already passed. CMPA recommends that Canada follow the example of countries such as New Zealand, which have appointed a minister in charge of a digital economy strategy, tasked specifically with coordinating the efforts of all of the relevant portfolios and agencies. In Canada, this would include Industry, Heritage, DFAIT, Human Resources, Finance, CRTC, et cetera.

Canada needs to also thoroughly review and closely watch the efforts of other countries and the European Union in their digital efforts, in order to learn from their mistakes and to engage in dialogue where there are opportunities to grow together.

Finally, the government needs to communicate its Digital Economy strategy to all Canadians: everyone needs to understand the rights, responsibilities and opportunities that will shape Canada's digital future.

We recognise the enormity of the task ahead of the Department, and we congratulate the government for taking action on this critically important issue. CMPA looks forward to participating in ongoing discussions in the creation of the digital economy strategy.