Bill C-11 will derail progress technology brought to Canadian culture

Regulators should be careful not to undermine the success ushered in by streaming

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As a Scotsman, I appreciate Canada’s impressive array of policies meant to prop up Canadian culture: both of our relatively small countries will always face the threat of brain drain and creative exodus to our bigger southern neighbours, making it entirely rational for our governments to intervene on behalf of protecting our creative industries and cultural heritage.

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But the current form of the hotly debated Bill C-11 would obligate international streaming services to make an additional contribution to domestic music as well as ensuring a Canadian shop front on their apps. While it’s true that some regulation here is better than none, more is not necessarily better than some.

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What C-11 is proposing is nothing new in substance: its basic rules have existed since 1971. And these rules often work, providing effective and efficient state support to cultural markets at little marginal cost, and giving the Canadian taxpayer a cultural bang for their buck (or loonie). What’s changed is the bill’s scope: a framework originally designed for linear broadcasters of domestic radio and television networks is now poised to cover new industries that were hardly conceivable when it was first written. Put another way, C-11 is a blunt instrument that threatens to derail the significant progress that technological innovation has brought to Canadian culture, including in my area of expertise – music streaming.

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I was there when Spotify officially launched in Canada in late 2014, a full three years after its U.S. launch. During that interim period, Spotify dominated the front page on Can’tada – a website documenting cool things Canadians couldn’t access. The holdup, as in many markets at the time, stemmed from the fear that streaming would cannibalize Canada’s incumbent creative industries. But during that limbo period — before Spotify, iTunes Radio, Pandora, or any other usual suspect could be blamed – music downloads in Canada went into terminal decline, and its music industry was suffering. Consumers had grown tired of the old music-ownership model before the new model of access ever entered its borders.

That’s changed beyond anyone’s wildest imagination. Canadian record label revenues have swelled by over 80 per cent, from around $340 million in 2014 to $730 million in 2021, with streaming making up almost 80 per cent of label income. On top of boosting artists and labels, performance-rights organization SOCAN recently celebrated record-high revenues for its roster of songwriters, composers, and music publishers. With over 14 million music subscribers in Canada, the new streaming economy can take a bow in driving this impressive turnaround. Strange, then, that music streaming platforms, which now pay 70 per cent of their revenues to Canadian rights holders, would be obliged under Bill C-11 to pay even more; never mind that domestic radio stations pay barely seven per cent of their own.

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Before I was at Spotify, I was a government economist, so I’m well aware of policymakers’ tendency to overlook the unintended consequences of their actions. And while I fully support regulators’ aims to prop up Canadian music, they should be careful not to undermine the success ushered in by streaming.

Rather than helping artists in the long tail widen their exposure, the bill as written stands to help artists who already have the broadest reach. As the founder of Sound Diplomacy and Canadian policy expert Shain Shapiro puts it, requiring streaming platforms to meet obligations of how much Canadian repertoire they prominently surface can have a perverse hourglass effect. “Forcing more Canadian content from multinationals won’t expand the breadth of music being featured. With no requirement to diversify the Canadian music featured, we could see more of Drake and Michael Buble, at the expense of everyone else.”

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The best advice I can offer from afar to avoid such unintended outcomes is to mandate, rather than dictate.

Rather than applying Canadian content thresholds that were designed for linear domestic broadcasters, the Bill should allow for market-friendly solutions that align with the on-demand nature of streaming. Spotify, for example, invested in the Momentum Music Fund in England and Deezer supports Bureau Export, French’s music export office. Mandate that streaming services help foster local economies, but don’t dictate how they do it.

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Better still, rather than focusing on Canada’s domestic economy, Bill C-11 would do well to account for streaming’s global market. Canadian artists face an increasingly difficult time of reaching listeners in other countries. In my home country of Britain, for example, 2022 marked the first time that all top 10 songs were from British acts. Curb the enthusiasm as ditto in Italy (all Italian) and Germany (all German). That’s great for artists in those local markets, but not so great for artists from elsewhere, including Canada, competing for international eardrums. Prioritizing Canada’s already impressive music export strategy over expanding domestic regulations would make for a better use of policy makers’ time. The domestic broadcaster’s horse bolted, and there’s a new international sheriff in town, but C-11’s approach to streaming hasn’t gotten the memo.

Canada has admirably been a world leader in supporting its music economy, but replicating rather than reforming the framework in C-11, and applying it to borderless, on-demand streaming services, is like trying to fit a domestic square peg into an international round hole.

Will Page is the author of Tarzan Economics, published by Little Brown & Company. He is the former Chief Economist of Spotify and PRS for Music.

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