Wired to Win !
Canada’s Positioning Within The World’s Technological Revolution
IV. ELEMENTS OF POLICY FOR THE NEW MEDIA ENVIRONMENT
The Web as Delivery System for
Cultural Products
Intellectual Property &
Privacy Rights
Promoting Canadian Content
Supporting Canadian Productions
Shelf Space for Canadian Content
French-Language Cultural Products
Developing Young Talent
The Self-Employed
International Strategic Alliances
IV. ELEMENTS OF POLICY FOR THE NEW MEDIA ENVIRONMENT
The Web as Delivery System for Cultural Products
ive years ago, if you were a telephone or cable company, the World Wide Web would have been considered a threat. Today, it is an opportunity because both cable lines and phone lines offer significant, although very different, kinds of gatekeeping for the delivery of content on the Internet. Bell Canada, through its Sympatico service, and the cable TV companies are positioning themselves to tap into the major new revenue streams created by the popularization of the Internet. In Canada, Rogers initially began a trial rollout of an Internet-access service called "the Wave." That service has now been branded as @Home, which is owned by major North American cable companies. In addition to Rogers, other big cable companies, such as Shaw, offer the @Home service for a monthly fee. @Home is also a provider of Web-based new media content.
The Canadian Cable Television Association told the Subcommittee that while the @Home service is still an infant service with a relatively low penetration level of Canadian Internet users, it could represent a major revenue source for the cable industry. However, as customers switch from telephone-based access providers, such as Bell, to cable-based access, the telcos can expect a major drain on revenues. The association noted:
Our general sense is that when we see the speed with which people have taken up the high-speed cable modem offer to have access to the Internet, the response in the areas where we have been able to offer it has been very good. People like it for the obvious reasons. It is very fast, it is always on, so you do not have to dial it up or anything.
Meanwhile, the phone companies have countered with their own high-speed access involving ADSL technology, which is many times faster than traditional phone lines.
That said, cable’s entry into the Internet-access business raises a more complex competitive question: How can non-allied Internet Service Providers (ISPs) lease access to cable wires? Canadian-based ISPs can already lease access to wires owned by telephone companies, although some ISPs claim the rates charged by the telcos are too high. The real conflict, though, is that the telcos themselves offer access to the Internet through such companies as Bell Canada’s Sympatico, which is the largest ISP in Canada with well over half a million subscribers. This raises concern that many of them could offer high-speed access at below cost in order to price the independent ISPs out of the market.
On the cable access front, the battle has similar protagonists. On one side are the cable companies and on the other are Web-based services, such as America Online, which want to gain access to the companies’ coaxial cable wires running into the homes and offices of their millions of subscribers.
In fact, the emergence of Web "portals," – for instance, AOL and Yahoo! – presents a major new threat to cable’s gatekeeper powers. The ISP giants are quickly becoming popular intermediaries between consumers and the Web-based content they seek.
Portals, which are in effect gateways to the Web, attract customers by offering one-stop Internet-access and then direct Web-users toward revenue-generating commerce sites. The value of portals is derived from the tremendous number of Internet users who access the Web through their sites. Their domination of Internet gateway traffic allows them to command a huge premium from advertisers. Soon, with the introduction of so-called "streaming" technology that offers broadcast-quality video on the Internet, the portal companies will become serious competitors to the cable companies as an entirely separate distribution system for home entertainment products. In fact, AOL today views television as its main rival as a provider of video content. With a prime-time audience of nearly 700,000 simultaneous users, AOL’s audience rivals the ratings of conventional channels, such as CNN and MTV.
However, some portals are still intermediaries because they don’t control the network connections used to log onto the Internet. Thus, they don’t have a direct billing relationship with their customers – unless they partner with an Internet Service Provider. A few portals, notably America Online which has a customer base of some 15 million subscribers, has the advantage of operating as both an ISP and a Web portal.
In Canada, portals have been developed by major owners of print media, such as Southam’s Canada.com. Another, the CANOE (Canadian Online Explorer) portal is jointly owned by Sun Media and Bell Canada Enterprises. As noted, the two main wireline gatekeepers – cable and telephony – have developed Web-access gateways with cable’s @Home and Bell Canada’s Sympatico.
The challenge for Canadian portal sites is to win the loyalty of Web-users with more than the data and information produced by their affiliated companies, and to attract advertising dollars. They face competition not only from major U.S.-based portals, but also from their Canadian affiliates – Yahoo! Canada, America Online Canada, and a Canadian version of the Microsoft Network.
American portals have developed strategies to provide local Web gateways in countries around the world. This has been taken by even strident nationalists as evidence that locality, geography, culture and local identity may be more important on the Internet than is commonly assumed. Certainly this is so in Britain where the most popular site in the country is the portal BBC Online.
RECOMMENDATION 10:
Incentives should be provided for Canadian portal companies to give prominence to domestic cultural content on their sites.
RECOMMENDATION 11:
The Canadian Broadcasting Corporation, as this country’s public broadcaster, should receive resources to establish a search engine, or portal, to provide access to Canadian content on the Internet.
America Online is by far the most successful Web portal. To increase its delivery capacity, AOL has demanded leased access to cable TV wires to offer high-speed interactive service. The cable industry has resisted AOL’s attempt, mainly because it fears AOL will effectively compete with @Home and potentially supplant cable as the industry’s gatekeeper.
In the United States, the telephone industry is bundling AOL with its new high-speed Internet access service. For U.S. phone companies, the attraction of AOL will likely help them increase the subscriber base to their high-speed service. In Canada, AOL has complained that companies such as Bell Canada have priced their high-speed lease rates at least four times higher than the retail cost of Bell-owned Sympatico, thus making high-speed access to the telephone system prohibitive for competing services.
In like manner, AOL and other ISPs have complained that cable companies are attempting to block access to their wires by potential competitors which, like @Home, package interactive content with high-speed Web access. In the United States, the Federal Communications Commission has so far left negotiations between cable companies and ISPs to market forces. However, AOL has led a lobbying effort in Washington calling for legislation that would prevent cable companies from showing undue preference for Web-access services, such as @Home, in which they have an ownership stake.
The situation is different in Canada and, not surprisingly, more regulated. Here, the cable industry has agreed to offer access to Internet Service Providers, but only on a wholesale basis. In other words, ISPs would have no direct billing relationship with cable’s customers for local service. The cable industry also has argued that negotiations with ISPs be left to market forces and not mandated by regulation. The cable industry clearly does not wish to surrender its privileged "gatekeeper" position, which in the television industry has given cable companies tremendous market power.
Richard Stursberg of the Canadian Cable Television Association explained to the Subcommittee his industry’s position on the tensions between AOL and the cable industry:
The Commission has already mandated access to the cable company networks by the Internet service providers. There are two issues associated with doing this. One is a technical issue. It cannot be done technically right now. We have been doing a lot of work with Cisco for the creation of policy-based routers that will allow this to happen, and we have been working with the Internet Service Providers to put up some technical trials to allow that to happen.
Second, how will this work? We have guaranteed them access to the network and then we will send a customer a bill for the local access part and you can send them the bill for the long-haul Internet service part. They do not want that. They would like to bill the customer right through from beginning to end, including the local transport component which is what we would provide to them…They do not want us to have anything to do with the customer as far as service. We are prepared to look at that too.
As noted, ISPs can directly reach customers through leased access to telephone networks, though there have been some obstacles to high-speed access. Cable companies, on the other hand, have resisted any form of leased access that would give ISPs a direct billing relationship with cable subscribers. There is no policy rationale, however, to prevent Web-based packagers of content – whether AOL or a similar Canadian service – from gaining leased high-speed access to cable networks and establish a direct billing relationship with their customers. Indeed, if the result is increased competition between new media services and the monopoly cable industry, this outcome should be encouraged. Policy should seek to promote actively the emergence of new forms of content packaging by ensuring that they obtain leased access to all distribution systems on fair and reasonable terms – including the right to establish a direct billing relationship with consumers.
RECOMMENDATION 12:
Web-based content services and Internet Service Providers should be able to obtain leased high-speed access to cable systems and all other distribution networks on fair and non-discriminatory terms, including the right to establish a separate and direct billing relationship with customers.
The government must attempt to see that any benefits of competition are distributed widely and that the system does not skip from one of regulated monopoly to a brief competitive era followed by a new monopolistic era. Just as the government must ensure that barriers to entry are not erected to thwart competitive forces, so it must be on guard to see that adjustment in the industry does not lead to the re-establishment of large monopolies.
RECOMMENDATION 13:
The government should monitor trends toward reinforced monopolies, or the emergence of large-scale oligopolies, in telecommunications and the new media, and act accordingly in the public interest.
Intellectual Property & Privacy Rights
The companies that own billions of dollars in intellectual property are naturally both intrigued by the opportunities presented by the Internet and concerned by its "frontier" mentality that has scant regard for intellectual property.
Indeed, intellectual property right protection has been a major obstacle to the emergence of a market for digitally distributed cultural products – i.e. movies, music and written materials on the Web. Movie studios, record companies and other players in the entertainment industries are exceedingly reluctant to exploit commercially their intellectual property as digital products on the Internet.
In music, the so-called "Big Five" global giants – PolyGram, Sony, Warner, EMI and Bertelsmann – are concerned that their market share will be seriously eroded by the growth of independent record labels operating on the Internet. According to a recent industry study, between 1998 and 2008 the Big Five will see their global market share decrease from 78 percent to 64 percent, while the market share of independent labels, many of them selling their products on-line, increases from 22 percent to 36 percent. The Big Five say they will likely lose even more market share to illegal music piracy on the Web.
Several witnesses told the Subcommittee that content supply and availability could be limited if issues surrounding intellectual property rights and the new media are not soon sorted. These witnesses would like to see, for example, further revision of Canada’s copyright laws, commonly referred as Phase III, expedited.
Paul Davidson, executive director of the Canadian Association of Publishers (CAP), told the Subcommittee:
One of the very serious issues on the agenda is protecting the electronic rights of authors and of rights holders. It is a contentious issue with regard to periodical writers right now, but it is very important as Phase III unfolds that Canada continue to protect the rights of authors, protect the rights of rights holders, and ensure that they are paid for their work, that they are compensated for the work that they do.
Witnesses representing the interests of the major Hollywood studios also took a firm position on the issue of intellectual property. Susan Peacock of the Canadian Motion Picture Distributors Association told the Subcommittee that revisions are needed to the Copyright Act so copyright owners can "build some electronic fences around their works" and thus protect their rights against infringements facilitated by new technologies.
Ms. Peacock added:
Many years ago, in 1977, when the government did a study on copyright revision, one of the authors referred to VCRs as home infringement kits. Well, they are not just home infringement kits. With the new machinery, new equipment that people are going to have in their homes, when movies are available on a digital video disc, they will be able to make an infinite number of perfect copies. These are not grainy, crummy, twelfth generation VCR copies, but perfect copies. Copyright protection has to be there and the enforcement by the RCMP or the municipal police for these sorts of offences, the support for that has to be there as well.
Right now we have a situation where the copyright board is in the midst of considering a tariff for the use of music on the Internet. Copyright law is always domestic law. That process is going to raise a number of very complicated questions such as whether Canadian law applies when the Internet communication originates in Canada, does it apply when it is received in Canada, or must it be both? If it is one or the other, there are tremendous enforcement difficulties. If you have to have both, then it will almost never apply.
In Europe, the European Parliament recently voted to extend EU copyright legislation to protect music and audio-visual material from Internet piracy and to limit home copying of videos and music. The European legislation was not passed without considerable controversy, however. Telecommunications companies, Internet service providers, and hardware manufacturers attempted to persuade the European Parliament that copyright legislation should not give copyright holders a stranglehold on distribution of films and music on the Internet. A coalition of European producers, publishers, writers and musicians argued, however, that tougher copyright rules were needed to stop illegal duplicating of films, music, and texts from the Internet. This is an increasingly widespread problem as digital technology makes it easier for audio-visual pirates to make high-quality copies. The European law opens the way for levies on blank tapes and other copying equipment so copyright holders can be given "fair compensation" for copies made of their work.
Some witnesses said privacy issues, including the security of credit card transactions over the Internet, would have to be dealt with before Web-based content delivery takes off. There is pressure in some countries to place obligations on new gatekeepers – notably ISPs and Web portals – to act as copyright and privacy police by ensuring they do not distribute content that is in violation of intellectual property.
Margo Langford, chair of the Canadian Association of Internet Providers (CAIP), told the Subcommittee:
If licences for intellectual property are to be granted, the question is more about where is the proper locus for that to happen. We suggest that the Web site and the content creator are the appropriate people to obtain those licences and, if they have not obtained it, the proper party to be pursued in court or otherwise. To in any way involve the ISP is to take a completely different model that is not actually the model that has been chosen around the world and would create inequity in terms of trying to conduct commerce in Canada versus elsewhere.
Web site licences would absolutely be required for intellectual property. It cannot be used without permission to do so. It becomes complex when you figure out how to do that on a global basis with global collectives because access is available worldwide if you create a site in Canada. There are many issues to be worked out from the creator's side, but obviously intellectual property must be licensed. We would agree with the creators on that point.
Recent polls have revealed that while millions of people are beginning to use the Internet for e-commerce, many more are holding back purchasing goods and services on the Net because they do not believe their credit card transactions and personal information will be secure. Some witnesses said privacy issues are so significant that neither e-commerce nor the delivery of Web-based content will really catch on with consumers until privacy issues are resolved. The Canadian Association of Internet Providers (CAIP) noted that Quebec is the only province in Canada with privacy legislation. The CAIP told the Subcommittee:
As an association we came up with our own strong view of privacy. We strongly believe that privacy is essential online to protect and attract consumers. You picked a good issue to raise because the federal government has now decided to regulate this. We could probably live with their regulation because we matched our code to their law. My understanding, however, is that there has been very little enforcement of the privacy legislation in Quebec. Some big companies have complied, but many smaller companies have ignored it. There has been no penalty for that. There is no guarantee that a law will be passed and that it will have a positive impact. The fact is that the law must be enforced. The question in both cases, federally and provincially, is how will they enforce it. Will they create offices across Canada, or will people have to be hauled in front of the privacy commissioner in Ottawa and endure an expensive two-year legal process to enforce it?
New media gatekeepers are also under pressure to ensure certain material, such as child pornography, is not distributed through their choke points in the distribution system. Legislation in Germany, for example, has singled out ISPs as the choke point that can be targeted for regulations applicable to the Web. Given the power of new media technologies, these controversial, and often volatile, issues related to moral values and property rights will challenge traditional policy tools and reflexes.
So far, efforts in the U.S. to encourage industry self-regulation of on-line privacy have been disappointing. In 1998, an industry-wide coalition was created to encourage companies working on-line to disclose what they do with the personal data of their customers and browsers. The Online Privacy Alliance counts some 50 major companies working in media, retail, database marketing, Internet service and telecommunications. These include AOL, Disney, Microsoft, Netscape and IBM. One component of this self-regulation is the use of "TRUSTe" certificates, which are given only to companies whose Web sites post privacy policies.
Despite these initiatives, a recent U.S. study by the Electronic Privacy Information Centre revealed that industry self-regulation was not working because of widespread abuses and lax standards. As a result, there have been calls for tough legislation by the U.S. Congress to replace self-regulation, particularly in regard to children surfing the Internet.
In Europe, meanwhile, the European Commission has drafted a Data Protection Directive that pushes the EU to impose strict international rules governing the collection, use and exchange of personal information about European citizens.
However, getting nations, let alone entire continents, to agree on the privacy issue is obviously a difficult task, especially given America’s penchant for self-regulation and Europe’s for government intervention. One solution – although by no means perfect – would be to compel Web sites to disclose which jurisdictions they abide by in terms of privacy standards and security issues. This would at least allow consumers to make purchases on the Web with some idea of the laws under which the companies they do business with operate. Clearly, though, the fundamental global nature of the Internet makes the need for an international agreement self-evident, given that the Internet is an essential global medium that transcends national borders.
RECOMMENDATION 14:
Intellectual property and privacy rights for new media and Web-based products must be adequately protected through legislation and international agreements. Canadian policymakers should move in a timely fashion to expedite Phase III revisions to Canada’s copyright law as well as take appropriate measures to ensure privacy rights on the Web.
Virtually every witness before the Subcommittee agreed that Canadian culture must be supported and preserved. The need for high-quality Canadian cultural content was put several ways. ACTRA told the Subcommittee:
Canadians want to be able to see ourselves reflected in what we watch, hear and read and be able to choose to view the world from our own perspective as well as that of others.
The need to ensure a constant supply of high-quality Canadian content, not only in "old" media such as radio, television and newspapers, but in new media, such as the Internet, was frequently echoed by witnesses in similar terms: "Canadians talking to Canadians," or "Canadians being able to see themselves on television, in films, or the Internet."
The problem is, and always has been for Canadians, that high quality programming of the kind that competes technically and artistically with the flood from America and elsewhere is expensive to produce. Given Canada’s inability to spread production costs over a large market, lack of funding has always been a barrier to the supply of Canadian content.
In the age of the Internet, that problem has only become worse as largely American-generated Internet content spills over the border. Yet, it is virtually impossible for distinctive Canadian content to flow the other way. Indeed, some witnesses noted that distinctively Canadian programming might be more difficult to export than clones of U.S. shows.
Digital Renaissance told the Subcommittee:
We must dilute the identity of the product to sell it to the U.S. or internationally and that does not speak to our identity as Canadians but rather speaks to our ability to dumb it down in a sense to appeal to a universal rather than a Canadian identity.
Several witnesses cited the successful domestic program This Hour has 22 Minutes and noted that it would be difficult to export. One witness did, however, argue that the show offered an opportunity for Canadian entrepreneurs, as the concept of the show did have export potential.
The tendency for American cultural works to suffocate domestic Canadian content evoked recitations of familiar statistics on the prevalence of non-Canadian cultural products in Canada. ACTRA’s comments were, in this respect, representative of others:
In television, despite the proliferation of new Canadian services, about 60 per cent of what English Canadians watch is U.S. programs. Almost 95 per cent of the time on Canadian movie screens is devoted to the films of others. Over 84 per cent of retail sales of sound recordings feature foreign content, 70 per cent of the Canadian book market consists of foreign works, and 83 per cent of (the) news-stand market is foreign magazines.
ACTRA further noted that Canada has a population of only 30 million spread over 6.5 million square kilometres. There are 22 million Canadians who share a language and idiom with the world’s largest producer of cultural material.
Some witnesses were concerned that the American dominance of new technologies – Microsoft was mentioned several times – would exacerbate Canada’s domestic problem with homegrown material. As the Canadian Conference of the Arts put it:
We must have additional financial resources in order to compete with the Americans in this field. Otherwise, technology will not only swamp us, it will kill us.
Most witnesses agreed that the key issue for the promotion of Canadian cultural production is funding. Canada has developed measures – from direct and indirect subsidies to Canadian content requirements – to compensate for our relatively small domestic market and to "level the playing field" with competitors south of the border. One important and relatively recent measure is a comprehensive funding requirement.
As the CRTC told the Subcommittee:
All players operating in the broadcast distribution business, including traditional cable operators, DTH satellite distributors, wireless cable and telcos, must contribute a minimum of 5 per cent of the gross revenues earned from program distribution activities to assist in the creation of Canadian television programming.
Some witnesses spoke of the need for direct subsidies to stimulate new media production and cited the Canada Television and Cable Production Fund as a model of cultural support. Michel Blondeau from Digital Renaissance suggested that fiscal incentives – which currently are available to producers of TV programs and movies in Canada – might be the best way to fund the production of new media.
Mr. Blondeau stated:
We need to foster this industry, that government and other industries need to support new initiatives – whether that be through R and D or tax initiatives – we need to help this business grow, but we are not protecting it from competition. We are protecting it so it can compete in the future as it starts to grow.
We need incentives to keep the talent here in Canada. We need integrated, coordinated efforts between business and government, once again, convergence. We need the support that other traditional media enjoy, tax incentive comes up again, investment in R and D, delivery channels. Finally, we need the government to be a leader on this front. The learning curve for many other private sector businesses is too high, it is too risky for them. So perhaps it is the Canadian government that needs to be a leader in shepherding this business forward as it poses so much chance for the future.
The federal government has allocated $30 million over five years for a new fund for multimedia products. This is an encouraging start that should be built upon with other measures, including fiscal incentives.
RECOMMENDATION 15:
Fiscal incentives, such as tax credits currently available to conventional film and television producers, should be extended to creators of new media content.
Supporting Canadian Productions
The Subcommittee heard many strong opinions about the possibility of taxing the Internet to support cultural production. The Internet Service Providers adamantly opposed any such tax. Arts groups, however, saw a dedicated Internet-based tax as a reasonable source of funding for new media production. The Independent Film and Video Alliance put it this way:
We need to find the area most profitable and add a levy at that point…Internet carriers and ISPs and IPs which have gross revenues of above $750,000 (should) be required to contribute 5 per cent of their revenues to a new media fund. We suggest you create a fund like the Canada Television Fund for new media and we can catch the world's attention with the quality of the content that Canadians can offer.
The Society of Composers, Authors and Music Publishers of Canada (SOCAN) agreed with this view:
We believe that when new media generate advertising revenues by transmitting programs to Canadians, they too should contribute to Canadian content production funds. These contributions will promote the development of Canadian content which, in turn, will attract Canadian audiences, generate advertising revenues, and further the development of the new media and other industries.
The Canadian Cable Television Association was cautious about taxing the Internet, but acknowledged that funding supply would become more important:
When we think about the future of Canadian content and the Internet, therefore, it is important to recognize that the only viable way to support Canadian products will be through supply side measures. While we have done some work in this area in the past through things like the subsidies to the CBC and the Canadian Television Fund, we may have to begin to think more radically about the structure of the electronic media industries in Canada, and how their structure affects the economics of developing and distributing new content. We will have to focus less on keeping American content out than on ensuring our industries can produce content which is sufficiently vital and inexpensive that Canadians will enthusiastically buy through their net-enabled televisions and computers.
Support for taxing distribution systems to finance Canadian content on the Web came from outside Canada as well. Professor Noam told the Subcommittee:
…probably the easiest way is some form of a surcharge on the …underlying telecommunications carriers themselves rather than on the ISPs. But not just telecommunications. If cable companies were to do, and are on the verge of doing so, in the United States, and therefore I assume also here, go into cable modems and provide Internet services over cable, I think that similar neutral levies should be levied there as well.
On this subject, Yvon Thiec from Eurocinéma reminded the Subcommittee that, in France, feature film production is financed via a levy on box-office tickets at movie theatres. Mr. Thiec noted that because the Internet is similarly a distribution network, it, too, should be subject to some form of levy to help finance content production.
Mr. Thiec said:
It is easy to imagine that if the Internet becomes an important distribution system for cultural products, some form of compensation be established, notably as a tax, in order to finance the works that are distributed on the Web. These works could be audio-visual or even musical. Indeed, at present musical works are the most popular on the Internet and subject to the most piracy.
The Subcommittee believes a balance must be struck between generating funding to make Canadian content available on the Internet and curbing the growth of the Web in Canadian households. If Internet Service Providers and other Web-based services are to pay a levy in order to fund content production, it might be prudent to wait until the Internet has benefited from a higher level of market penetration – perhaps a threshold of 50 per cent of all households. At that point, the model used for broadcast distribution undertakings could possibly work for new media funding.
In the high technology world, Canadians may continue to find it hard to compete with Hollywood blockbusters. Whatever the Internet equivalent of the film Titanic may be, the U.S. will undoubtedly have scale and fiscal advantages over Canada and other countries. As is currently the case, however, Canada may have strengths and advantages in the production of high-quality programming.
To continue producing high-quality programming demands sophisticated resources and the skilled personnel to best use those resources. There is, accordingly, a continuing need for funding, both for the investment in sophisticated equipment and for training to maintain and upgrade skills.
In the broadcasting funding model, only large-scale cable and satellite TV companies – which are defined in classes according to the number of subscribers – are subject to the levy and other cultural policy mechanisms. In like manner, the size and revenue performance would be criteria for the application of a similar levy on Web-based service providers. It is likely, however, that the ISP business will soon be highly concentrated, much like the cable industry, which would oblige the few major players to make financial contributions to content production. Direct subsidies, such as the five-year $30-million federal fund, and fiscal incentives for new media producers would also inject additional funds into the production of new media content.
The Subcommittee stresses that it does not wish to promote measures that would stem the growth of the Web. There are forecasts, however, according to which Internet business (or e-commerce) will soon represent a sizeable portion of developed economies – as much as 20 to 40 per cent of economic transactions. As e-commerce becomes more important, it is obvious that the Internet cannot retain the tax advantages it enjoys now as an infant industry while competing with other, mature distribution channels that continue to be taxed.
It is important to note that imposing a levy on ISP revenues in the future simply recognizes an increasing shift from traditional distributors to the new medium of the Web. Currently, most television viewers receive their programming through TV and thus contribute to Canadian content production through a levy on cable rates. In the future, as viewers rely on the Internet for their programming, a similar levy may be applied. Under some conditions, there will be no change in the levy paid by consumers. Many of them will spend the same amount of time and money on in-home media and entertainment, but will simply change the way they receive it. What might change is the distribution of the levy – the cable portion will go down and the ISP portion will go up. The total amount will remain roughly the same.
It is worth repeating that technological change has two possible effects with respect to media and entertainment. New products may be introduced, such as interactive films and games. Or traditional products may seek a new distribution channel, such as television programs shifting to Web-based delivery. It is impossible to say today how prices will change or what the demand for various entertainment and media products will be. The size of the levy-generated fund will, of course, depend on prices and demand.
What can be asserted, however, is that the underlying philosophy of the fund – the promotion of Canadian production – will be the same in the future as it is today. Therefore, support for a levy in no way favours the creation of a "new" levy, but merely recognizes the shifting trends in the new media and entertainment environment.
RECOMMENDATION 16:
Consideration should be given to developing an equitable formula for the collection and distribution of funds to support new media production
Shelf Space for Canadian Content
If Canadian content is produced and not seen or heard, it is as if it doesn’t exist. The "product" must find its way to consumers. In Canada, this has always been difficult for the simple reason that there is so little room left after American and other foreign products have filled up the "shelf space." Discussion on this issue centred on whether the Internet could be controlled or regulated to promote Canadian content. The Canadian Conference of the Arts, for example, stated:
In Canada, one normally has access to the Internet through telephone, cable, satellite, and now through wireless. All of these are regulated industries, so what is the great mystery of extending a regulatory regime to deal with the treatment of intellectual property rights and some form of responsibility for Web casting? Those who say that regulation is impossible have not been thinking hard enough about it. This is not a complicated situation.
Others argued the opposite. The Canadian Motion Picture Distributors Association referred to the experiences of the so-called "grey market" in satellite use as an obvious example of trying in vain to control new technology and warned:
When laws and regulations purport to restrict and control behaviour, but are unenforceable, there are social costs, which include a diminished level of compliance and resulting cynicism about the system of justice.
However, other witnesses took a different approach and argued, in effect, that the new technology – particularly navigator software – could be used to ensure prominence for Canadian product. The Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), which represents Canadian actors, told the Subcommittee:
In this connection as well, the guild believes that Canada must pay particular attention to the navigation systems. . .We are about to see in Canada with the roll out of the digital cable television boxes, the emergence of true video-on-demand which is where you can sit in your house and order up any movie you want which is delivered to you via the cable system directly to your television set.
In the guild's view, we must ensure that Canadian alternatives are front and centre. That comes back to the navigation system. We do not want to see a special Canadiana section in the navigation system because that would ghetto-ize the Canadian product. It must be an integral part of the menu. We cannot force Canadians to choose Canadian programs, but those who want them must be able to find them. When that is combined with efforts to continue to improve the quality and promotion of Canadian materials, we are confident Canadians will choose to watch, listen to and read Canadian materials.
Officials at the BBC also emphasized the need for navigational guides in the future. The BBC has embraced the new media with its popular BBC Online site and hopes to develop the position of a trusted guide on the Internet.
If restrictive policy mechanisms such as levies prove to be difficult to enforce on the Internet, pro-active measures, including compulsory featuring of Canadian products in drop-down menus, could be implemented. However, measures like these would rely to some extent on the willingness and good faith of Internet-based services to ensure compliance with such pride-of-place policies. Conversely, it would be difficult to imagine what constraints could be enacted in the case of non-compliance. Be that as it may, the technology exists to give Canadian products shelf-space on the Internet where it really counts – on the home pages of the makers and marketers of entertainment and cultural products.
RECOMMENDATION 17:
Canadian products should be accorded prominence or pride-of-place on the Web. Incentives should be offered to Internet Service Providers and those operating Canadian-based Web portals to provide this shelf space.
French-Language Cultural Products
French-language cultural production is unique in Canada, largely because of the specific character of the Quebec market where demand for French-language television shows, movies, songs, books and music is very high. The popularity of téléromans and téléséries is testimony to the extraordinary success of Quebec-produced television shows in French Canada.
In the new media world of the Web, the French language could be challenged by the overwhelming dominance of English on the Internet. It must be said, however, that French-speaking Canadians have actively embraced the Internet and their Web usage is well ahead of that in other French-speaking countries. When the Subcommittee visited France, for example, it learned that the French often consult Quebec-based Web sites for information due to the lack of domestic Web sites in France.
Still, governments can play a role to ensure that both official languages are accorded pride of place on the Web. It is encouraging to note that Telefilm Canada financed the production of a multimedia production called L’Encyclopédie de l’inforoute, which won a silver prize at a festival in Biarritz, France, in 1998. Similar initiatives should be encouraged in the future.
RECOMMENDATION 18:
Canadian policies should take into account the specific nature of French and English markets.
Information technology has opened the world to the quality and diversity of Canadian talent. We must shake off whatever insularity and defensiveness we might harbour, and become more confident of our culture strengths. We must assume a more self-assured air – and we must encourage Canadian creators to speak not only to their fellow Canadians, but also to a worldwide audience.
As already indicated, Canada possesses a wealth of talent. Thousands of award-winning Canadian performers, fine arts professionals, writers, producers, technicians and artisans are recognized world-wide for their accomplishments. What is not generally known is that the majority of our celebrities – Anne Murray, Frederic Back and Daniel Lavoie among them – developed their talent through public radio and television stations. It is the Subcommittee’s view, therefore, that our public institutions should augment their support of young Canadian talent throughout the land.
By virtue of its regional outlets and affiliations, the CBC is in the unique position of being able to foster talent in all parts of the country.
In short, our cultural organizations should help promote young local talent and provide the stepping stone to the national and international stages.
RECOMMENDATION 19:
Canada’s cultural agencies, especially the CBC, are urged to put more emphasis on promoting the development of talented young Canadians by providing regional exposure that will prepare them for national and international exposure.
With the dramatic changes that have taken place in the workplace through downsizing, restructuring and buyouts, the ranks of the self-employed are swelling. In many cases, Canadians are setting up cottage industries in their own homes. Yet it seems little has been done to compensate them for lost benefits that are customarily provided by employers, such as life insurance, sick time, disability insurance, RRSP contributions and vacations.
This is particularly the case for Canadians working in the cultural industries and new media content, most of whom are contractual employees, or rely on selling what they produce.
Part I of the Status of the Artist Act, which reports to the Minister of Heritage, created a committee composed of representatives from different professions to safeguard the interests of the self-employed in the cultural sector. This part of the Act has been inactive for some time, but could be reactivated by the Minister to examine the current realities of the workplace.
A newly constructed committee could include representation from the main cultural pursuits, as well as officials from the Finance, Industry and Labour departments to undertake a study of the working conditions of the self-employed, particularly those in the new media. Income tax policy is one example that could be reviewed as a means of promoting the creation of new media content.
RECOMMENDATION 20:
The Minister of Canadian Heritage, with the cooperation of the Ministers of Finance, Industry and Labour, should reconstitute a committee under Part I of the Status of the Artist Act to examine the working conditions and laws affecting the self-employed, particularly those in the cultural arena and new media.
International Strategic Alliances
Broadcasters in French-speaking countries formed a consortium in the late 1980s to provide a new international television service. TV-5, as the consortium is known, is expanding its distribution and enhancing the quality of its productions. The public broadcasters in English-speaking countries might wish to investigate a similar venture, either as a traditional broadcaster or as a new media service.
RECOMMENDATION 21:
Given that Canada needs to promote domestic culture, English-language public television broadcasters, such as the CBC and TVOntario, should be encouraged to form strategic alliances with their international counterparts to provide a new global network offering top quality programming.