Proceedings of the Standing Senate Committee on
Transport and Communications
Issue 10 - Evidence, November 4, 2014
OTTAWA, Tuesday, November 4, 2014
The Standing Senate Committee on Transport and Communications met this day at 10:03 a.m. to continue examining the challenges faced by the Canadian Broadcasting Corporation in relation to the changing environment of broadcasting and communications.
Senator Dennis Dawson (Chair) in the chair.
[Translation]
The Chair: Honourable senators, today, we are continuing our study of the challenges faced by the Canadian Broadcast Corporation in relation to the changing environment of broadcasting and communications.
Our witness today is Éric Albert, executive vice-president of Stingray Digital Group. Mr. Albert, the floor is yours. Senators will have an opportunity to ask you questions afterwards.
Éric Albert, Executive Vice-President, Stingray Digital Group: Good morning, honourable senators. I would like to let you know that I will be giving my presentation in English, but I will be happy to answer questions in French if you wish.
[English]
Good morning and thank you for inviting me to present to the committee. I am Éric Albert, Executive Vice-President at Stingray Digital.
Headquartered in Montreal, Stingray is the leading multi-platform music service provider, with more than 120 million subscribers in over 100 countries around the world. Our services include digital music and video services Stingray Music, previously known as Galaxie, Stingray Concerts and Stingray Karaoke. The company also offers music services to more than 70,000 commercial establishments in Canada.
A majority of the presentations made to this committee to date have been around CBC's activities in video content, while less has been said on the public broadcaster's initiatives in music. As such, the emphasis of our intervention will be primarily on the music industry and CBC's presence within this industry.
The recent Let's Talk TV proceedings at the CRTC have highlighted the extent of the changes under way in the Canadian media landscape. Most notably, the increasing prominence that foreign players, such as Netflix and Google, have in the television industry and the significant influence that these players are now having was discussed at length during those proceedings.
Over the last decade, the pace and the magnitude of the changes affecting the music industry have been even more significant. Consumers listen to more music today than they did 10 years ago, yet the industry's revenues are down by more than 50 per cent from its peak. According to the CRTC, the number of hours spent listening to radio in 2013 was down to just over 19 hours per week, and most believe that the decline is due, at least in part, to the changing habits of consumers who now listen to music on the Internet for more than seven hours per week.
According to the IFPI, the organization representing the worldwide-recorded music industry, 61 per cent of Internet users around the world now access licensed digital music services, and more than half of the industry's revenues now come from digital platforms.
Though Canada has taken longer to develop a competitive market for music online, Canadian consumers now have access to several international services, including Spotify, TuneIn Radio, Deezer, Rdio, Google Play and others. This is in addition to homegrown Canadian services, including Stingray, Mediazoic, the online services of commercial radio broadcasters Zik.ca and CBC Music.
The sea change in media consumption habits of Canadians is forcing every industry player to adapt. In its planning document, A space for us all, CBC/Radio-Canada established a goal whereby in 2020, 50 per cent of Canadians will use the corporation's digital services each month. The public broadcaster is already making very good progress in achieving this goal by offering compelling content on digital platforms, as demonstrated during the Winter Olympics in Sochi earlier this year, or more recently during the tragic events that occurred in Ottawa a few weeks ago.
In contrast, the public broadcaster's vision for its involvement in the promotion of music does not appear to be as clear or as elaborate. Over the last several years, the corporation has cut back its involvement in the promotion of Canadian music by eliminating long-standing initiatives such as the CBC Radio Orchestra. It also modified its radio programming, shying away from certain music genres, like classical, while increasing its offering of content in popular music. In parallel to these developments, the corporation launched its CBC music Internet service in 2012.
Considering the evolution of the market and changing music consumption habits of Canadians, the migration towards digital platforms, supported by the launch of initiatives like CBC Music, makes perfect strategic sense and is the logical evolution if the public broadcaster is to remain relevant with its audiences. Increased online presence for CBC Radio also allows the public broadcaster to reach audiences that may not be otherwise reachable via its over-the-air networks.
However, these initiatives, at least in their current form, raise questions that others have already presented to this committee, including: Should the corporation use public funds to compete directly with the private sector? Should the public broadcaster focus solely on the creation and promotion of Canadian content? Should the CBC focus on offering content that appeals to large audiences or should it focus on addressing areas not currently serviced by the private sector?
Over the last several years, the corporation has clearly had to make difficult choices as to where it will invest its shrinking resources. In various corporate planning documents published by the CBC, the corporation has indicated that it will reduce its investment levels dedicated to the music category. In these same documents, CBC's music strategy is presented as follows:
The focus on music will be to continue to connect Canadian artists with Canadians and, for the duration of the plan, CBC Radio 2 and ICI Musique will remain national services with distinct market strategies to maximize audience and revenue opportunities until digital consumption reaches a tipping point.
I emphasize the part of the strategy where it states "maximizing audience and revenue opportunities," since this goes to the heart of the questions raised previously.
Reduced public funding has forced the public broadcaster to seek alternate sources of revenue. However, the quest by the corporation of driving larger audiences to generate advertising revenues, both on its broadcast radio networks and online, has clearly positioned it in a space currently occupied by private entities, such as commercial radio broadcasters and online music services.
For example, on October 28, the CBC Music online site was featuring Bob Dylan, an American artist, on its front page while also promoting the "Best of British" channel as part of its linear music channels offering.
"Radio 2 Broadcast Logs" on the morning of October 30, between the hours of 6 a.m. and 9 a.m., indicate that out of a total of 40 songs played during that time, 20 were Canadian, resulting in a CanCon ratio of 50 per cent. The other 50 per cent consisted mostly of songs from internationally recognized pop artists who get substantial airplay on commercial radio.
With the arrival in Canada of international online services like Spotify, Deezer or Rdio, who offer upwards of 25 to 30 million songs in their catalogues, it is increasingly difficult for any artist to receive visibility and emerge from the masses of content available, let alone for new artists to get discovered.
This situation is compounded by the fact that these international services have no minimum Canadian or French language content requirements, making it even harder for Canadian creators and performers to be discovered. This was also identified as a key challenge in a study published recently by the trade group Music Canada in the document titled The Next Big Bang, A New Direction for Music in Canada.
In this particular context, when the Broadcasting Act states that the programming provided by the corporation should ". . . be predominantly and distinctively Canadian," it is even more pertinent today than it was just a few years ago.
By expanding its presence in online digital services, which the corporation must do to adapt to the changing environment, the public broadcaster must also consider the current economic dynamics of online music services. The business models of these services are still very much in development and most have yet to reach a point where they can cover their operating costs, let alone turn a profit.
During copyright board proceedings in 2012, the CBC stated that its CBC music service would cost between $5 and $6 million per year to operate, while it projected revenues in the range of $700,000 to $800,000 per year.
It should be noted that the current copyright regime in Canada differs considerably than the one that existed in 2012 as a result of a recent decision issued by the Copyright Board of Canada for tariffs related to online music services. However, those rates are currently being challenged by the industry and could be modified.
The corporation does identify music rights, royalties and tariffs in its annual report as one of the key risks it faces. Should the courts determine that the tariffs established for online music services are inadequate, the costs to operate a service like CBC Music could increase considerably in the future, making it more difficult to operate such a service.
So in light of this challenging environment, what could the public broadcaster do to ensure it offers a differentiated and sustainable music offering to Canadians while ensuring that it delivers on the promises of its mandate? One possibility is by building partnerships and alliances with other participants of the music industry. Instead of focusing on initiatives that essentially dilute the public broadcaster's contribution in the development of a strong Canadian music ecosystem, the CBC could focus its limited resources on creating content that, in addition to being offered on CBC's platforms, could then be syndicated to other providers, maximizing the diffusion of such content while also generating a revenue stream for the corporation.
For example, Stingray currently licenses content that was produced for or by public broadcasters such as the BBC in the United Kingdom and PBS in the United States. The corporation has started doing this in the video space with some of its shows now available on over-the-top platforms such as Netflix. By extending this practice to music, the corporation could fill a gap that exists in the Canadian music industry while helping Canadian performers and creators expand their visibility in a space that is increasingly being occupied by foreign digital music services.
In concluding, I point out that Canada's public broadcaster has played a key role in helping Canadian artists emerge domestically, and in some cases, become international success stories. Today, with the arrival of the international digital music services, the CBC has an even more important role to play in ensuring that Canadian talent is discovered and promoted. It should therefore direct its limited financial resources to this very important purpose.
Thank you for your time, and I welcome the opportunity to answer your questions.
Senator Plett: Thank you for being here this morning. You've raised a number of questions, and I'm not sure that you gave us the answers. Maybe you did. Your company, Stingray, in May 2011, purchased Galaxie from CBC/Radio-Canada. Has that been a successful transaction for you?
Mr. Albert: Let me clarify that the acquisition of the assets was actually done in 2007, not 2011, and it has been very successful for us. If you look at what Galaxie was when it was part of the CBC, there were approximately 6 million subscribers that had access to that service in Canada. Today, in Canada, it's over 10 million households, actually getting close to 11 million subscribers, but not only in Canada have we had some success, we've also been able to expand that service into, as I mentioned, just over 100 countries. We're now reaching over 120 million households.
So Galaxie, outside of the corporation, if you will, has had a tremendous amount of success on a commercial level. It's also allowed Stingray to build on that success, basically in expanding to additional service categories, as I mentioned, music videos, concerts, the commercial music space in Canada specifically where we do service approximately 70,000 commercial establishments; so it has been very successful.
Senator Plett: This is a completely privately held company, though? CBC doesn't have any part as far as ownership shares?
Mr. Albert: No.
Senator Plett: That's a pretty good shot in the arm for private business versus public broadcasting, or is it not?
Mr. Albert: I think it depends on the perspective. If you look at Galaxie within the CBC, there were certain considerations, including, obviously, respecting the CBC's mandate, which is to operate in Canada. To take Galaxie internationally, when it was part of the CBC, would have been practically impossible.
Taking it out of the CBC and putting it into a private enterprise did absolutely give it a shot in the arm. We have, as Stingray, been able to invest a lot more in the service by expanding to additional platforms, by expanding to mobile, by expanding to connected televisions, and expanding internationally as well, using private funds and private investments to achieve that goal.
Senator Plett: What do you do now with CBC? Do you have some business relationship with them at all? You have no connection with CBC at all now?
Mr. Albert: None. Would we want to have connections with the CBC? As I mentioned, one possibility that the CBC could and should consider is partnering with private enterprise, for example, to broadcast the content.
As I mentioned in my presentation, Stingray already does this with content that is featured on the BBC in the U.K., PBS in the U.S. Not only should the CBC partner with Stingray, but it could partner with some of the international services coming into the country, ensuring that Canadian artists and content gets the visibility it deserves.
Senator Plett: You talked about what CBC has done over the years in promoting and finding Canadian artists and giving them a chance. With companies like yours and other companies running competition with CBC, is it possible for CBC to do what they did in the past?
Mr. Albert: I think it's possible, if it modifies certain things that it does. One of the challenges that the CBC has is competing with private entities for advertising dollars. If it has to compete with private entities for advertising dollars, there's no incentive for the corporation to provide the content that it produces to private entities. It will want to keep that content as much as possible on its own platforms to drive the traffic and drive the advertising revenues, which sort of goes against, in my opinion, the mandate that it has, which is to promote Canadian content.
Senator Plett: And they still get over $1 billion dollars a year of public money which should give them an incentive to continue to do some of what they have done.
Mr. Albert: Indeed. If you look at the online music space in Canada today, I wouldn't say it's becoming crowded, but there are certainly more offers in that space today than in 2012 when CBC Music became available. It's becoming increasingly difficult for anybody, including private enterprise, to compete in that space.
The global music industry is very much a global marketplace. In the case of Stingray, for example, one of the reasons we've had success is our global reach. When we negotiate with rights holders — record labels and the publishers — we have to have a certain amount of scale to have credibility and the means to pay for that content when we negotiate with them. Stingray has been able to achieve that through its growth.
If you look at the way CBC promotes CBC Music today, the online service, it is difficult to differentiate itself, and it will be even more difficult to differentiate themselves in the future as more international services come to Canada and establish themselves and start offering services. It is great for the consumer, by the way, but from an industry perspective and a Canadian content perspective, it will be very difficult to survive in that space.
Senator Plett: It's been said by witnesses here a few weeks ago that CBC couldn't survive in the present environment and they were going to die a slow death. I don't know if that was a direct quote, but certainly they were not going to be able to survive the way things are going. I think we need to look at ratings. Their ratings aren't what they should be. You mentioned Netflix in your presentation, and there are many competing factors, and there's nothing that we will do unless CRTC comes along and outlaws services that the Canadian public clearly wants.
Mr. Albert: Yes.
Senator Plett: This would be a personal opinion, I'm sure. Consider all the services available on the Internet and the iPad. You talked about the Sochi Olympics. There weren't iPads at the Vancouver Olympics; there were in the Sochi Olympics. They have more and more competing interests here that go beyond just advertising dollars, trying to get people to watch. The other broadcasters have the same challenges. I watch Netflix a lot. In the present environment, do you think that CBC is viable and will they continue to be viable?
Mr. Albert: I think it depends on how you measure success, frankly. You mentioned audience numbers, which is always, I believe, a dilemma the CBC faces: driving larger audiences versus servicing segments of the industry that are not currently serviced by private enterprise for whatever reason. If it doesn't make business sense for somebody to offer a certain music genre radio station, for example, in a given market, nobody's going to do it. Would the CBC be able to fill a gap in such an environment? Absolutely. If the quest is to drive larger audiences with the intention of driving larger advertising revenues, I think it will have a very difficult time surviving in that environment.
Private broadcasters today will have increasing competition from the international content providers as well. We all know that the Internet today is not regulated. Should the Internet be regulated? We don't believe so. That will create a situation where companies like Netflix and others will be coming to the Canadian marketplace in the very short term, and that will increase competition for everybody, the private broadcasters and also the public broadcaster. As the public broadcaster today, do they have the tools they need to face that competitive environment? I think the jury is out on that one. I don't believe it does.
Senator Plett: Should the Netflixes of the world be more regulated than they are?
Mr. Albert: That's a question that was debated at length during the Let's Talk TV proceedings at the CRTC.
Senator Plett: Yes, it was.
Mr. Albert: People have an opinion on that, depending on which side of the table they're sitting on. Existing players in the industry obviously believe that they should be regulated the same way that the existing broadcasters are regulated. Stingray services today on television, for example, are regulated, so we have Canadian content requirements and French content requirements that we have to meet, and we're happy to meet those requirements. Yet, when a service like Spotify comes into the marketplace, or Songza or any of the services coming to the marketplace, they don't have those same requirements. Should they? Again, a lot of people have different opinions.
Senator Plett: You said Stingray has those requirements?
Mr. Albert: For the broadcast environment, absolutely. The Galaxie service that is available on television is a regulated service. We have a CRTC licence for that service, and we have to meet Canadian content and French content requirements. Those requirements don't translate onto the Internet, which is not regulated today. It's exempt. However, because we produce programming for the television platform in a regulated environment, that same programming goes onto the Internet. If you listen to Galaxie on the Internet today, you're going to get the same level of Canadian content that you do on television, or French content, for that matter, which, like I said, the over-the-top providers, the non-regulated providers, are not providing today.
Senator Housakos: Welcome to the committee this morning. The CBC has an app that allows the streaming of numerous music channels, which is online.
Mr. Albert: Yes.
Senator Housakos: Do you guys view that as a form of competition to Stingray?
Mr. Albert: The short answer is "yes." There are only so many people listening to music on the Internet today. That number is increasing. Obviously, if everybody is fighting for the same listenership, it is competition.
As you might be aware, we filed a complaint with the CRTC against the CBC when it first launched CBC Music, claiming different things. The CRTC ruled against us, if I can say that, in that situation, and we respect the CRTC's decision. I don't have numbers to demonstrate this, but it should be pointed out, as well, that I believe that the CBC has modified CBC Music compared to what it was when it first launched in 2012, taking into consideration some of the issues that we raised in terms of Canadian content levels and so on.
To answer your question, we see it as competition, absolutely, like we see the international services coming to Canada as competitors as well.
Senator Housakos: What would it cost the CBC to provide this service on an annual basis?
Mr. Albert: I referred to an appearance by the CBC at the Copyright Board back in 2012, six months after we filed a complaint with the CRTC, when they said they were going to invest $5 to $6 million dollars per year in support of that service. That's in contrast to revenues of approximately $700,000 to $800,000 per year that they were expecting to generate through advertising revenues. The net investment based on that testimony at the Copyright Board would be around $4.5 to $5 million dollars.
Senator Housakos: For a service of this nature, is the music that they offer exclusively Canadian cultural music, Canadian content?
Mr. Albert: It's not. As I mentioned in my presentation, if you go on the CBC Music website today, there is a lot of Canadian content and a lot of Canadian artists being featured, but there are also many international artists. I referenced Bob Dylan, for example, who was on the front page of CBC Music. I believe it might still be there this morning. On CBC radio, the broadcast network, for example, during the prime time hours of 6 and 9 in the morning, CBC last week played over 50 per cent of non-Canadian content, if you will, including some very well recognized American artists.
Senator Housakos: A number of witnesses have come before us and claimed that we shouldn't be so preoccupied by the changing environment in technology, that technology to many of them is just pipes and wires and tools, and that the only thing that really matters is content. What is your view on that?
Mr. Albert: The thing that matters is content. The old saying of "content is king" is extremely important. However, how people consume that content is even more important today. Senator Plett mentioned Netflix. Obviously, that is an increasing trend. Netflix's subscriber numbers in Canada are not public; however, it is believed that they have several million subscribers in the Canadian marketplace. If people consume content on Netflix, it could be argued that they're not going to be consuming content in the long run on traditional platforms like broadcast television. Will that happen overnight? Most likely not. But if broadcasters, including the CBC, don't follow those trends, eventually they will become obsolete.
Senator Housakos: Thank you, chair.
[Translation]
The Chair: My first question is about the CBC's French-language component and about competition. Overall, your presentation dealt with CBC Radio, but what is the equivalent in terms of competition for this market on the French side?
Mr. Albert: That is an excellent question. The French-language Radio-Canada seems to focus a lot more on its mandate of promoting French Canadian and Quebec content and thereby is less focused on internationally renowned artists.
As you rightly noticed, we did not talk a great deal about Radio-Canada in our presentation. The reason for that is simple: we feel that Radio-Canada is focusing a lot more on its mandate today; as a result, its impact on the competitive market is significantly lower and the competition with existing broadcasters is also significantly lower. Radio-Canada addresses a current need; gaining recognition as a French-speaking Quebec artist is just as difficult as gaining recognition as an English-speaking Canadian artist; Radio-Canada makes the artists more visible, which is good for everyone.
The Chair: Once again, the unique nature of Radio-Canada clearly shows that having a "one for all" model for digital music at CBC/Radio-Canada is just a pipe dream.
Mr. Albert: In 2012, it was difficult when they launched CBC Music, and it will be even more difficult today with the advent of international services that have much greater resources to provide services that better meet the needs of Canadian audiences.
On the francophone side, we feel, and I think most people will agree, that Radio-Canada's music services are much more varied and meet a more significant need than the services on the CBC English side.
The Chair: I remember the deal; you were part of the furniture in the sense that, when they bought Galaxy, they bought the vice-president too. You followed your product. Senator Housakos was very kind to ask you whether Radio-Canada kept its promises to the buyer. At that time, did you think that you were going to do something and that no one at the CBC was going to take over your job?
Mr. Albert: That is a very good question. We first addressed that question when we filed the complaint with the CRTC. At the time, Radio-Canada or the CBC maintained that we were using the regulatory process to settle a business dispute. There was a non-competition agreement with the CBC when the services were sold to Stingray. The issue is to figure out whether CBC Music, in its current form, is directly competing with a service such as the one provided by Stingray. We have not decided to go to court to settle the matter. We consider the CBC to be a competitor, in the same way we consider all services from abroad to be competitors.
The Chair: In the CRTC's very limited vision, Internet competitors do not pose a problem, but in terms of the commercial transaction in which you were involved, the landscape has clearly changed, because the technology has changed. I am just wondering. It was easy for the CBC not to honour its agreements with you, because it could once again blame international competition, which is not regulated by the CRTC.
Mr. Albert: Yes, that is the position that it took, saying that it had to provide services on the Internet to meet the changing needs of consumers. However, it had entered into a business arrangement then. Our goal today is not to find out whether or not the corporation is honouring the agreement.
Yes, it has commitments and I honestly think the CBC has no choice but to do what it is doing on the Internet today. It has to have a presence on the Internet; otherwise it will have no purpose at all. Is that direct competition for us? Yes. Does it have a major impact on a daily basis? More or less. Do we feel that the corporation is using public funds to compete with the private sector? Absolutely. If we are talking about funding CBC Music, which costs between $5 million to $6 million per year, not many people in the private sector would draft a business plan to justify an investment like that, especially if the service tends to offer the same thing as private broadcasters are already offering — American artists with no differentiation.
The Chair: Thank you.
Senator Unger.
[English]
Senator Unger: Thank you, Mr. Albert. Your presentation is very impressive.
Stingray has expanded at rate which most companies could only envy. Since 2007, you're now posting $100 million a year in profit.
Mr. Albert: In revenues.
Senator Unger: In revenues, I'm sorry. Nonetheless, you have expanded. I was reading an article in the paper a week ago, and I was amazed at what you have accomplished.
Was the CBC so inefficient in what they were doing that you took it over from them or made a deal with them, and you were obviously aware that there were profit opportunities that the CBC wasn't aware of? Could you elaborate on that, about your advantage now over what CBC might have had?
Mr. Albert: Sure.
Senator Unger: Then my second question is: You operate outside of Canada. In your opinion, are there lessons from other countries that could be useful for the committee to hear about?
Mr. Albert: Very good questions. Regarding your first question, I'm not sure that the CBC is that inefficient. As I mentioned previously, for CBC to go internationally, there were hoops that we had to jump through, basically, such as getting an order-in-council, to be able to offer Galaxie outside of Canada. It falls outside of the mandate. I'm not sure at that time that it was a priority for the CBC to be expanding the Galaxie service outside of the country, which Stingray obviously saw as a huge opportunity.
As I mentioned previously, the music space is becoming more and more global. To be a relevant and credible player in the music space, including in Canada, you do have to have a presence pretty much on an international scale. Because the CBC couldn't do that, I think it was basically a shackle, to a certain extent, that prevented it from taking full advantage of what that opportunity was.
Is a company like Stingray more nimble than the corporation? I would say so. But Stingray, I would argue, is more nimble than pretty much any large organization that might have red tape and bureaucracy that it has to deal with.
One thing that characterizes us as a company is that we are very nimble. We have completed 23 acquisitions over the last seven years. We are well supported by our private investors. When we see an opportunity, we can jump on it very quickly, so I think that's benefited us quite a bit. In the last month, for example, we've completed two transactions, neither of which was in discussions 90 days prior to that. There are not many companies out there that can move that quickly, basically, to take advantage of opportunities like we have.
Senator Unger: In your opinion, if we used the hypothesis that the CBC should be privatized — because I agree with you, obviously, about the nimble abilities of a private operator — would they survive if they were privatized to take advantage of the explosion in new technologies and what they already know?
Mr. Albert: I think the answer would be yes. The big question mark would be how would they differentiate themselves from the other private broadcasters that exist today? What would they offer consumers that is not currently being offered in the marketplace? If they were to be privatized, they would have to survive the same way that everybody survives, which is generating revenues through advertising, through subscription fees and through other means, which pretty much everybody else in the private sector is doing today. What would the CBC be able to do differently at that point that is not currently being done? I think that would be the big question mark.
To go back to your second question, we have stated publicly that Canada is pretty much the only place where we compete directly with the public broadcaster. CBC Music, in its current form, as I said, is a direct competitor with private companies, private services that exist. Nowhere else in the hundred countries that we operate today have we had to compete against the public broadcaster for a service that is exactly comparable to what is already available in the marketplace.
Senator Unger: So should the CBC turn itself into what PBS, for example, in the United States is? Would that be a better avenue for them than trying to compete?
Mr. Albert: PBS is an interesting model, because if you look at what PBS does in the music space, they're probably one of the biggest producers of music content in the United States today. As I mentioned, we actually purchase content that was produced for the PBS for broadcasts and distribution on our existing platforms. So instead of competing with the PBS, we actually, to a certain extent, partner with their content producers to offer the same content — not only in the United States; in different distribution modes, if you will — through our mobile and online platforms but also internationally, where we can take that content to our 120 million subscribers around the world and make that content available.
We've actually proposed the exact same thing in our presentation this morning. There's a lot of great content sitting in the CBC vaults, if you can call it that, that could be dusted off and monetized by the CBC to make available not only in Canada but elsewhere in the world as well.
Senator Plett: Just a couple of real quick questions. How many subscribers do you have in Canada? You may have said that.
Mr. Albert: Just over 10.5 million subscribers, which is essentially 100 per cent of the digital households.
Senator Plett: Very good. Do you make any concentrated effort to have Canadian content playing?
Mr. Albert: Well, one, there's the need to respect our conditions of licence by the CRTC.
Senator Plett: What are those in that respect?
Mr. Albert: Every channel we produce in Canada, which is essentially the majority of our channels today, has to have 35 per cent Canadian content across the entire offering. We do offer today 19 channels in the international languages — Punjabi, Arabic, Italian, Spanish, what have you. Obviously it's a little bit more complicated to have Canadian content on those channels, but if you include it in the current offering, the majority of the providers like Bell or Vidéotron or Rogers, the majority of those providers have approximately 50 channels. So across the 50 channels, we have a Canadian content requirement of 35 per cent; and then we have a French content requirement of 25 per cent. So 25 per cent of our offering needs to be in French.
In terms of additional efforts, we started producing about six months ago what we call "PAUSE/PLAY," which is Canadian artists come to our offices in Montreal or Toronto, wherever they are, and we record an interview with those artists, we record a performance, and then we use that content essentially on our platforms to make relatively unknown Canadian artists discovered through our platforms.
One advantage that we have, if I can call it that, is that close to 60 per cent of Canadians listen to Galaxie on a weekly basis, depending on the time of the year, but it averages between 40 and 60 per cent, so if you apply that ratio to the 10.5 million households and assuming there are 2.5 people, whatever the demographics are per household, it's close to 10 million people exposed to Canadian music through the Galaxie or Stingray music service today, so it is a pretty big contribution that we make to the industry.
Senator Plett: How do you determine the popularity of an artist or certainly of an album? How do you determine popularity?
Mr. Albert: That's a very good question. There are people who are a lot more intelligent than me to do that. We have a team of programmers in Montreal and across Canada, basically, whose purpose in life is, basically, to identify those songs and artists that are going to be up and coming. Today that team is about 25 people in Montreal, and we have a network of about 50 people, mostly in Canada but also in other countries as well, whose mandate is to identify what content is going to make it into the platform.
Senator Plett: And as a private broadcaster or as a private organization, if there is an artist or certain music that is not popular, you would stop playing that?
Mr. Albert: Actually, yes, from a commercial perspective, but if you look at the channel offering we have today, in Quebec, for example, we have a French country music channel, which is listened to by some people, but it's certainly not our most popular channel in terms of listenership. So we do cater to niches, if you will, to a certain extent, even if they may not have mass commercial appeal.
We had a Celtic channel at one point. Nobody else was offering a Celtic channel in Canada. We have a Christian music channel. That offering is somewhat limited as well. We do cater to niches, and we have a fairly wide product offering to cater to those niches, including, as I mentioned, the 19 international channels that cater to some of the linguistic minorities. Those channels, for example, are available on Telus, Shaw and MTS. Many of those communities that wouldn't have a Punjabi music channel in their community can access Punjabi music through the Galaxie service.
Senator Plett: Thank you very much for your presentation.
Senator MacDonald: Mr. Albert, I'm certainly glad that the former assets of Galaxie are in your hands. I think they're in the right hands, but I'm just curious, where do you see the company in five years? Can you survive in this marketplace or do you see yourself building your company up to the point where you can flip it for a good profit?
Mr. Albert: That's, again, a very good question. Where do we see the company in five years? We are going to continue growing by acquisitions. As I mentioned, we have made 23 acquisitions in the last seven years. The majority of our acquisitions over the last two years have been in international markets. We just announced two weeks ago, I believe, another acquisition in the South American market where the TV industry is growing very rapidly. Compared to Canada and the U.S., which is sort of stagnating in terms of subscriber growth, the Latin American market is growing at a rate of 20 to 25 per cent every six months. So we're investing quite heavily in those emerging markets. Latin America, Middle East, Africa has a big growth opportunity for us as well, Eastern Europe, Russia, Asia, those are all huge growth opportunities for us, and we are then finding potential acquisitions, if you will, in those markets to establish ourselves there. So we're going to continue growing.
There are also opportunities for an IPO and so on. That's certainly not the objective. Eric Boyko, who is the CEO and founder of the company, is very much one of those entrepreneurs who wants to keep companies in Canada and Quebec. So flipping it, to use the term that you used, doesn't appear to be one of the objectives in the short term.
Senator Plett: Could I ask one more question?
So you purchased Galaxie from CBC?
Mr. Albert: Just assets.
Senator Plett: Assets, fair enough. Are there other parts of CBC that could be sold?
Mr. Albert: That's an interesting question. Honestly, I'm not 100 per cent sure. Would Stingray have any interest in acquiring additional assets from the CBC? The corporation sold a channel, I believe it was called — I don't want to be misquoted but it sold a channel recently to Blue Ant Media, which is one of our partner companies, if you will, in Canada. We see Blue Ant as being very complementary to what we do. So are there people out there to purchase assets from the CBC? Possibly, but I guess it's up to people like you to decide if it should be sold or not.
The Chair: Thank you, Mr. Albert.
Colleagues, we are meeting tomorrow at one o'clock in Montreal, those of us going to the Montreal meeting, and we will be having a list of witnesses that has been made public. We will be continuing our hearings in Montreal on Thursday morning and a visit of CBC Thursday afternoon. For those who have been following our proceedings, there's a little saga on the costumes. The CBC does sell assets. Sometimes they just close them down, and they have a costume shop that has been operating forever that seems to be creating some controversy in Montreal, so I've asked the clerk to add that to our visit if possible Thursday afternoon.
(The committee adjourned.)