Every day private media companies take risks to establish profitable business models by growing their shares in competitive digital markets without direct government subsidies.
Various music industry and digital media firms offer all-you-can-stream services to attract online audiences and paid subscribers. Some speculate on-demand content will soon replace owning music
Meanwhile, these companies face tough competition from media heavyweights as Apple, Amazon and Google focus their online distribution channels on the digital music business.
When CBC Music
launched last Feb., the Canadian Broadcasting Corporation's foray into this arena started to threaten private media groups domestically.
, on behalf of a coalition of private music licensors
, submitted an application last April 11 to the Canadian Radio-television and Telecommunications Commission (CRTC) to argue exactly that: CBC Music relies on public funding not available to private broadcasters; and it receives preferential royalty rates from copyright collectives because of its not-for-profit, public status.
Their application asks the CRTC to order the CBC to either shut down CBC Music or modify it to focus exclusively on Canadian artists and programming.
Stingray, the Montreal-based creator of Galaxie music app
, cites how CBC Music violates the Broadcasting Act and the CRTC’s new media broadcasting regulations.
The Crown corporation’s mandate under the Broadcasting Act (1991)
is to “provide radio and television services incorporating a wide range of programming that informs, enlightens and entertains.” The outdated Act, which outlines the CBC’s operating procedures and policies, makes no mention of the Internet.
When the CBC began expanding online—republishing its TV and radio programming like Shovelware—no one complained because their operations did not encroach on enemy territory.
But now private broadcasters complain the CBC overstepped its mandate, which stipulates emphasis on public service media. The gripe has been forwarded to Canada’s national broadcast regulator for a ruling.
“It has been an ongoing debate as to whether CBC should be allowed to use public funds to compete directly against private broadcasters for sports content or foreign television programs,” the group wrote in a letter to Heritage Minister James Moore
. “It appears that this debate is now relevant to the radio and music industries as well.”
The CRTC’s new media broadcasting regulations forbid content providers from abusing any “undue preference
” as leverage against competitors.
Contention with CBC Music derives from genre streams curated by the public broadcaster’s programming staff. These channels make the CBC’s extensive music library available to Canadian audiences on-demand via genre-specific stations.
The music service delivers content through web browsers and mobile devices (Android and iOS).
This development does not limit audiences to public programming on CBC Radio, but now allows listeners to switch from 40 stations like all-rock, all-indie, all-country or all-electronic anywhere in Canada with Internet access.
Private companies, including Stingray Digital and others like Astral Media
and Groupe Archambault
, have similar online streaming services—but charge fees.
The CRTC classifies all these services under “broadcasting” systems. Thus, the government agency should enforce regulations fairly.
Unless the CRTC intervenes, CBC Music will likely destroy private competitors without clarification. From a consumer standpoint, free products are tough to beat.
CBC lawyers responded to the application by (unsuccessfully) requesting
summary CRTC dismissal. Legal counsel argued if the CBC couldn’t use taxpayer funds against private broadcasters, then the public broadcaster would have to shut down its radio operations.
And while the CBC concedes the same royalty framework as commercial radio does not apply, it denies licensing agencies give it preferential deals.
Due to its not-for-profit status, most tariffs the CBC pays are based on flat rate, annual fees rather than a percentage of revenues typically applied on services offered by private media groups like Stingray.
According to Eric Boyko
, Stingray’s CEO and president, the company’s various music services generate more than $12 million annually in payments for rights and royalties. A “good portion” of this money goes to Canadian licensing agencies and copyright holders.
Conversely, CBC Radio paid just over $3 million in tariffs for 2011, he says.
Does it make sense that Canada’s public broadcaster sends rights and royalties cheques to established, internationally popular artists—who don’t need subsidies from Canadian taxpayers to get by—when Canadian artists really need the money?
CBC Music countered its opponents with a campaign urging fans to submit letters to the CRTC by last May to voice their support for the new service. Most of the comments praise CBC Music for offering a hub for Canadian artists to thrive online.
However, these opinions
don't deviate much from Stingray’s position that CBC Music should become a platform for exclusively Canadian artists—both emerging and established—underplayed on traditional and new media.
Stingray cites Espace.mu
, CBC Music’s French language equivalent, as the model to copy for English programming.
The company has no objections to that almost-exclusively Canadian music service, while it argues CBC Music is “indistinguishable” from existing user-pay services with plenty of American and international music on-demand.
“Financed by Canadian taxpayers, an all Canadian CBC Music service would…align with the CBC’s mandate to give a voice to Canadian artists,” says Mr. Boyko. “(Modifications) would also ensure…copyright payments generated…would stay in Canada…and help build new stars.”
The CBC won’t make changes voluntarily in response to the complaints.
Chris Boyce, CBC’s executive director for radio and audio, disagrees with critics
because “ghettoizing” Canadian music on an all-Canadian website would not adequately promote it.
“People don’t get out of bed wanting to listen to Canadian music; they want to listen to good music,” Mr. Boyce says. “Creating a service that’s counter to how people consume music would mean giving up an opportunity to expose Canadian artists.”
Presently, the CRTC stopped accepting public comments as it turns to Stingray and the other plaintiffs for their final arguments.
The dispute may conclude with arguing semantics, but one thing’s for sure: unless the CRTC rules in the plaintiffs’ favour, more domestic and foreign music services (including Pandora and Spotify) will continue to avoid Canada by investing and expanding in more competitive markets.
The CBC should leave entertainment to private broadcasters and stick to what it does best: news and current affairs from a Canadian perspective.