4.2.3 Cultural/creative industries: policies and programmes
Cultural industries are defined by Statistics Canada for the purpose of the construction and refinement of the North American Industry Classification System (NAICS) in 2002. The latter comprises establishments primarily engaged in creating and disseminating (except by wholesale and retail methods) information and cultural products, such as written works, musical works or recorded performances, recorded dramatic performances, software and information databases, or providing the means to disseminate them. Establishments that provide access to equipment and expertise to process information are also included.
The government of Canada has developed a broad range of institutions, policies and programmes that provide support to the cultural industries, the arts and heritage via the Department of Canadian Heritage and through relevant agencies or Crown Corporations. The Department has grouped the cultural industries within the Cultural Affairs Sector with separate divisions responsible for: broadcasting (television, radio, cable, satellite); film and video; sound recording; publishing (books, periodicals, newspapers); Canadian Culture Online; and the arts (see chapter 8). While traditionally neither the arts nor heritage are defined as cultural industries, they co-exist quite effectively with the commercial cultural industries listed above. The Department is structured to include both private (commercial, for-profit) cultural industries and public (not-for-profit) cultural industries and organisations. Heritage, formerly part of the Cultural Development Sector in the late 1990s, has since migrated to the Department's Citizenship and Heritage Sector.
Some issues beyond the availability of funding are common to many cultural industry-support programmes in the Department of Canadian Heritage and Portfolio organisations. The Department is also preparing an integrated audio-visual strategy which:
A second common theme of cultural industries in Canada is their relatively low level of domestic market share and the correspondingly high share of foreign market share in Canada as represented in Table 1.
Table 1: The market share of foreign media products in Canada, 2004
95% of cinematic theatre box office revenues (86% US and 9% other)
46.6% of the industry's total domestic revenue (there is currently no accurate figure available for the market share of foreign books in Canada. Instead, we traditionally use the revenue share of foreign publishers in Canada).
41% of sales (The vast majority of foreign titles circulating in Canada are US titles
75% of all sound recordings sold in Canada in 2004 by foreign artists. (The basis of the calculation is the top 2000 sales chart for the year. Only Canadian artists are identified. Foreign artists are not distinguished by country of origin).
52% viewing share of English-language programming and 34% of French-language programming. For drama and comedy, the viewing shares of non-Canadian English-language and French-language drama and comedy are 80% and 65%, respectively (country of origin in data is identified as Canadian or non-Canadian).
Source: CRTC Broadcasting Policy Monitoring Report (2007).
Broadcasting: Broadcasting accounted for almost three-quarters of total federal spending on the cultural industries in 2003-2004. Most of this spending can be attributed to large annual Parliamentary appropriations to the federal public broadcaster, the Canadian Broadcasting Corporation / Radio-Canada. The priority accorded broadcasting speaks to its perceived roles in connecting, nation building and nation binding in a country as geographically large as Canada. Public broadcasting (largely federal -just under two-thirds were comprised of public subsidies and slightly less than one-third of advertising. Privately-owned and -operated broadcasting revenues totalled CAD 14 billion in 2006 including private radio and television, pay and specialty services (digital), cable (excluding growing revenues from high speed access to the Internet), wireless and satellite distribution services. (Statistics Canada 2007) Among the more salient issues facing broadcasting in Canada are:
Since 2003, the government has actively addressed many of these issues. The Standing (Parliamentary) Committee on Canadian Heritage released its Report, Our Cultural Sovereignty: the Second Century of Canadian Broadcasting in June 2003. The Committee made recommendations in respect to many broadcasting issues: Canadian programming, the CBC, not-for-profit broadcasting, the private sector, community, local and regional broadcasting, northern and Aboriginal broadcasting, ownership, the digital transition, accessibility, the black satellite market, globalisation and cultural diversity and governance issues. The government responded in regard to three priorities: Content, Governance & Accountability and Looking to the Future.
Also in 2003, the Standing Senate Committee on Transport and Communications launched a major study of the state of the Canadian news media to examine the role of public policy in ensuring that Canadian news remains healthy, independent and diverse. It concluded that while Canadians are generally well-served by news gathering organisations, recent changes in cross-media ownership and consolidation may threaten the diversity of views and services offered to Canadians. It urged the government to make modifications to legislative, regulatory, policy, and programme frameworks to ensure that the media, particularly news media, continue to serve Canadians. Some Recommendations of the Telecommunications Policy Review Panel, established by the Minister of Industry in 2005, involved or impacted on the CRTC structure, role, and functions, and the way in which it regulates broadcasting. In an Afterword to the Report, the Panel suggested that an outside panel of experts undertake a comprehensive review of Canada's broadcasting policy and regulatory framework.
Recognising that the Canadian broadcasting industry is going through a fundamental transformation, in June 2006, the government of Canada requested, by Order-in -Council under the terms of Section 15 (1) of the Broadcasting Act, the CRTC to undertake a study of how continuing technological changes are expected to shape the broadcasting environment in the future. On December 14, the CRTC submitted to the government, it's Report examining the future environment facing the Canadian broadcasting system. The Future Environment facing the Canadian Broadcasting System (2006) found that any negative impact on the broadcasting system from shifting media consumption patterns has been marginal to date, while Canadians still consume the vast majority of programming through regulated Canadian broadcasting undertakings. The Report also noted, however, that many Canadians and younger Canadians, in particular, increasingly access programming through unregulated electronic platforms (e.g. Internet and mobile networks). It concluded that ongoing monitoring of developments in audio-visual technologies will become an ever more important foundation of an informed public policy response to the introduction of new, heretofore unregulated broadcasting services and their increasing impact over time.
The CRTC also conducted a review of Canada's commercial radio policy. While the Commission chose not to increase the minimum level of Canadian popular musical selections from 35% to 40%, it did propose to set minimum levels of 25% for Canadian concert music and 20% for Canadian jazz and blues, up from the existing levels of 10%.
Yet another example of regulatory re-thinking in Canada is encompassed by an independent report by Christian Leblanc and Lawrence Dunbar to the Chairman of the CRTC entitled, Review of the Regulatory Framework for Broadcasting in Canada (August 2007). While the mandate of the report's authors does not include any recommended legislative change, it does refer to the need for "smart regulation" and regulatory reform. The Report addresses all broadcasting regulations in Canada and is based on existing policy objectives detailed in subsection 3(1) of the Broadcasting Act and the regulatory principles in subsection 56(2) of the Act. The Report calls for the creation of a multi-disciplinary committee to address issues of common concern including digital media. It recommends a number of actions in regard to greater competition, Canadian content (Cancon), access, and new media. To cite just two examples, the Report contends that it is imperative to develop more targeted and effective measures to provide an incentive for scheduling more Cancon drama, and not just entertainment magazines and reality programming, in peak viewing times throughout the year. The Report is also critical of simultaneous substitution whereby Canadian broadcasters substitute their own signal to broadcast American TV shows with Canadian advertisements. The authors of the Report urge the CRTC to begin a process of consultations with other departments and agencies in order to develop a national policy for digital media. There is, as yet, however, no clear signal as to whether the CRTC will act on the Dunbar-Leblanc recommendations although the Report will be considered during a review of its broadcasting distribution undertakings and discretionary programming services regulatory framework policy beginning April 7, 2008.
Canadian Broadcasting Corporation / Radio-Canada (CBC / SRC): as a federal Crown Corporation, Canada's national public broadcaster operates at arm's length from the government and is the largest cultural institution in the country. The role of the CBC / Radio-Canada is set out in Section 3(1)(m) of the Broadcasting Act (1991) which outlines eight elements of the Corporation's mandate pertaining to its programming which should:
CBC / Radio-Canada programming includes news and current affairs, sports, arts and culture, and children's and youth while services include: French and English language radio, including broadcasting in Northern Canada and CBC / Radio-Canada International, including the Web-based radio service, RCI viva for recent and aspiring immigrants to Canada, French and English language satellite radio, French and English television including continuous news channels (RDI for the French language and Newsworld for the English language), Internet, and new communications and information platforms.
In recent years, the CBC / Radio-Canada has been the subject of considerable public and internal governmental debate on issues including its role as described in the Broadcasting Act (1991), the question of access to advertising revenues, the disposition of local, regional and national coverage, the continuing vagaries of audience and advertising market share competition from private broadcasters in Canada and the United States and the continuing difficulties in attracting viewers for Canadian content programmes on prime-time television. Total revenues for the Corporation are CAD 1.62 billion in 2006-07 comprising, inter alia, just over CAD 1 billion in Parliamentary appropriations, CAD 328 million in advertising and programme sales, and CAD 150 million from specialty services. In addition, the government allocated CAD 60 million for each of the two following fiscal years, 2007-08 and 2008-09 to be expended on Canadian programming. Over the last decade, CBC appropriations declined from 40% of total federal spending in culture in 1995-96 to 30% in 2004-05. However, on an internationally comparative basis, the CBC ranks third from the last in per capita public funding for public broadcasters (CAD 33 per capita), less than one-quarter of funding of the BBC in the UK and one-half of France-Television. (Nordicity 2006)
In November 2006, the Parliamentary Standing Committee on Canadian Heritage announced its intention to "undertake a full investigation of the role for a public broadcaster in the 21st century, an examination of the various services including the adequacy of regional programming, and an examination of the issues posed by new media; the study will gather public input from stakeholders." The Committee heard testimony in 2007 from a variety of sources affected by or involved in public broadcasting in Canada. The President of the CBC called for a new contract with Canadians over ten years. This does not imply legislative change but might act as an additional link between the federal government's public broadcaster and Canada's population, or its 32 million "shareholders". The CBC suggestion would be based on five principles: mixed public / private system, programming independence, distinctive programming, serving all Canadians and adequate resources to meet requirements. To date, there is no indication when the Standing Committee will complete its work in Canada's 40th Parliament and release a report.
Canadian Radio-television and Telecommunications Commission (CRTC): in accordance with the Broadcasting Act (1968), the government of Canada established the CRTC as an independent public authority that regulates broadcasting undertakings including the CBC and telecommunications common carriers. The CRTC is mandated by legislation to balance the cultural, social and economic goals of the Broadcasting Act (1991) while broadening Canadian content choices. It is also mandated to ensure that programming in the Canadian broadcasting system reflects Canadian creativity and talent, linguistic duality, Canada's multicultural diversity, its Aboriginal Peoples, and Canadian social values. The CRTC also regulates issues of portrayal, employment equity, multicultural, ethnic and Aboriginal broadcasting. In January 2008, the CRTC conditionally approved the Journalistic Independence Code proposed by the Canadian Broadcast Standards Council (CBSC) provided the CBSC includes a minimum number of journalists on the panels that study complaints and formalizes the process used to select panel members. The CRTC is of the view that the principles in the Code will ensure a diversity of professional editorial voices and will eventually apply to all broadcasters who own a newspaper in the same market.
Film and video: Federal investment in Canada's growing film and video sector is designed to encourage and facilitate the production and distribution of Canadian films for theatrical release and television exhibition. Federal support is based on the perceived importance of film to cultural development as well as its powerful and enduring influence on cultural expression and identity. In 2005-2006, total production volume of film and television production reached just under CAD 4.8 billion, a 5.8% increase over the previous year, comprising CAD 1.8 billion in Canadian television production, CAD 323 million for Canadian feature films, CAD 995 million in broadcaster in-house production and CAD 1.7 billion in foreign location shooting. Foreign financing of Canadian television production dropped from 28% to 10% between 1999-2000 and 2005-06. Real GDP in the motion picture and video production, distribution and post-production industry grew by an average annual rate of 5% between 1998 and 2004, and 1.5% in 2005. The export value of Canadian film and television production was up by 11% to almost CAD 2 billion in 2005-06 (Canadian Film and Television Production Association 2007).
Looking at the economic profile of feature films alone, Canada produced 76 feature films in 2005-06 and Canadian feature and short film directors and actors continue to attract attention in international film festivals. However, in 2006, Canadian feature films attained a total Canadian box office market share of only 4.2% in Canadian theatres (17% French-language films, 1.8% English-language films). A total of 99 Canadian theatrical films played in Canadian movie theatres in 2006, down from 105 the previous year. 295 American films played in Canadian theatres in 2006 (up significantly from 257 in 2005) and 218 foreign films, other than American, played in Canadian theatres the same year (also up significantly from 202 in 2005). Total paid admissions (attendance) declined to CAD 105 million in 2005 from the preceding figure of CAD 114 million in 2004. Across both official language film markets in Canada, the average production budgets for feature films increased from CAD 2.4 million in 2000-01 to just under CAD 5 million in 2005-2006, while average marketing budgets for Canadian feature films increased from CAD 226 000 in 2000-01 to over CAD 500 000 in 2005-06. The average hourly production budget of English-language Canadian television programming in fiction in 2004/05 was CAD 1.3 million and CAD 259 000 for French-language fiction.
Some of the main issues facing the film industry include:
Federal film programmes and institutions include:
Book publishing: While the book publishing industry in Canada is faced with limited economies of scale in the domestic market, it continues to grow steadily over the past thirty years the industry Canadian book publishing. This is reflected in growing revenues from both domestic sales and exports of Canadian books abroad. Total revenues in the industry reached CAD 2.15 billion in 2004, up 12.5% from 2000. However, 19 foreign-controlled publishers, which represent less than 6% of all companies surveyed, accounted for 46.7% of revenues of Canadian-based companies that is held by foreign-owned, Canadian-based companies in 2004. 350 book publishers produced nearly 17 000 new titles in 2004 (especially trade books) and reprinted over 12 000 existing titles (especially educational books). Canadian-controlled book publishers produced 86% of all titles printed and about two-thirds of all reprinted titles. Foreign controlled publishers accounted for 59% of revenues from book sales in Canada and 67% of all educational book sales in Canada in 2004. The overall profit margin of book publishers is relatively high in large part owing to substantial skewing of the data on profit margins caused by a few large and / or non-traditional publishers in the sample utilised by Statistics Canada. Main challenges for the Canadian-owned book publishers in Canada include:
The issue of foreign ownership and market share is particularly acute: 5% of foreign publishers operating in Canada generate more than 33% of total industry profits which are generally 10% higher than those of the average Canadian-owned book publishing firm. Four out of five foreign-controlled book publishers earned a profit in 2004 compared with just 40% of Canadian publishers. Canadian-controlled book publishers are considerably smaller, on average, than foreign-controlled book publishers. Nevertheless, the result of 25 years of focused government support to the book sector has been an increase in annual revenues not to mention the considerable critical success and international acclaim of a generation of Canadian writers. To illustrate, in the first year of the BPIDP (see below), funding recipients published 2 162 new titles and in 2005-06, almost three-times as many, 6 083 new titles.
The Department of Canadian Heritage provides direct funding to book publishers through:
Periodical publishing (including small community newspapers): Since the work of the Royal Commission on Publications in 1961, it has been recognised that, in light of strong competition from foreign publications, government action was and remains necessary for Canadian magazines to exist in sufficient quality, numbers, or diversity. The Royal Commission led to a range of measures that were successful in building the numbers and circulation of Canadian magazines over thirty years. In the mid-1990s, however, the United States launched a challenge to these measures at the World Trade Organisation (WTO). In 1999, representatives of Canada and the United States signed an agreement that led Canada to amend its periodical support structure to allow foreign magazines conditional access to the Canadian advertising market. Tariff and tax barriers were removed and exceptions in the Foreign Publishers Advertising Services Act (1999 (often referred to as Bill C-55) allow foreign publishers to supply advertising services directed at the Canadian market under certain conditions. Responsibility for enforcement rests with the Department of Canadian Heritage.
When Bill C-55 was passed, Canadian periodical publishers feared that the increased competition would lead to loss of revenues and profits. However, periodical publishing continues to grow. In 1998, 2 027 periodicals were produced with a total annual circulation of 603 million copies. In 2003, 2 383 periodicals sold 758 million copies in Canada. Industry revenues approached CAD 1.6 billion in 2003, up 22.4% from 1998. According to Statistics Canada, farm, general consumer and special interest magazines enjoyed large increases in profits from 1998 to 2003.
Other challenges to the periodical industry in Canada include:
The government uses a two-pronged approach in supporting magazines and newspapers in the face of these challenges: legislation to influence certain marketplace conditions and direct funding programmes. The three federal legislative instruments applicable to the periodical industry in Canada are:
The principal periodical support programmes in the Department of Canadian Heritage are:
Music: The music industry has been greatly impacted by the advance of technology and shift in consumer behaviour. Global trade value of recorded music has dropped from a peak of USD 25.8 billion in 1999 to USD 19.6 billion in 2005, a 24% decrease. Reasons for this decline can be explained by peer-to-peer file sharing on the Internet, a decrease in format replacement (consumers replacing vinyl with CDs) and competition from other entertainment products (DVDs, gaming, cell phone). In Canada, the trade value of recorded music sales fell 18% to CAD 192 million in the first half of 2007. However, digital sales accounted for 12% of the Canadian market over the same period, compared to 6% at the end of 2006.
Canadian domestic trade revenues in sound recordings decreased from USD 582.8 million in 2005 to USD 529.8 million in 2006 placing Canada 6th in the world with 3% of global trade revenues. Despite the downturn in overall music sales:
Notwithstanding the successes of the Canadian music industry, Statistics Canada reported that, in 2003, 287 Canadian-controlled labels produced 89% of new Canadian recordings, but earned only 21% of total Canadian recording industry revenues. In contrast, 13 foreign-controlled labels produced only 11% of new Canadian recordings and earned 79% of total revenues.
The principal instruments of federal intervention in the music industry in Canada are:
Canadian Culture Online (CCO): Established in 2001, CCO is designed to stimulate the creation of Canadian digital content in both official languages and to extend Canadians' access to a broad range of Canadian cultural choices on the Internet. The objectives of CCO in the Department of Canadian Heritage are: to achieve a critical mass of quality cultural content on the Internet in both English and French; to build a conducive environment for Canada's cultural industries, institutions, creators and communities to produce and make available Canadian cultural content on the Internet; and to increase visibility and build audiences for Canadian digital cultural content. Approximately 50% of CCO funds are dedicated to the development of French-language content on the Internet.
CCO supports the following six funding programs:
Canadian Culture Online also supports:
The Department of Canadian Heritage is undertaking a review of the Canadian Culture Online (CC0) Strategy to be completed by March 2008. This review will include consultations with the new media industry and other stakeholders to assess current and potential development and determine what types of federal support might be needed. A revised CCO strategy will be presented for government approval and implemented once approved. In October 2008, the Department refuted publicly a newspaper report that the Fund would be discontinued. The Department pointed out that the Fund was renewed in June 2007 for a period of two years up to 31 March 2009. The Department stated that no decision has been made to eliminate the CNMF.