Music Industry Observer Warns Bill C-11 Could Undermine Years of Technological Progress

Parts of the music sector has seen slow, but eventual progress. Now, industry observers are warning that Bill C-11 could torpedo it.

When Napster came about, the music industry was effectively unprepared for the technological change it would bring about. Debates about where the music industry should head also largely kicked off at the same time, during the late 90’s and early 2000’s. The major record labels made the horrible mistake of simply trying to litigate away these technological change, filing an endless stream of lawsuits against companies, alleged file-sharers, and anyone and everyone else they could think of. It was exclusively an effort to try and put the genie back in the bottle.

The world had changed. No longer was the number one source of music the record store in a physical building. People were getting their music online. Sadly, the major record labels chose to ignore this technological shift and, for years, insisted that suing their own music fans into going back to the record store was the only way to go. This kicked off years of litigation and regular rounds of the industry shooting themselves in the foot.

Eventually, other businesses started up to try and bridge the two polarized sides of the debate. While DRM would prove to be a significant stumbling block, eventually, record labels were dragged kicking and screaming into the internet era. Indeed, skirmishes continue to carry on to this day, but in the world with iTunes, Spotify, Bandcamp, and many other online sources, the changing business model would be the only thing that actually successfully challenged “piracy”. What’s more, it proved critics right that changing the business model was the only way to break the stalemate.

While the blame for the slow transition to the digital era falls entirely at the feet of the major record labels, it’s impossible to say that this business transition was the wrong decision in the end. Now, more and more profit is sourced to online store fronts, streaming, and other digital services. Over the years, there has been an increasingly large share of revenue being derived from online sources.

In the process, we are increasingly living in a more new reality. The file-sharing debates are largely a thing of the past. While much of my early career revolved around covering the file-sharing debate, even before the initiation of this website, my coverage was increasingly less file-sharing and copyright centric. Even when starting this website up, part of that transition had to be built into the foundation of this website itself. Instead of focusing on file-sharing and copyright, we more broadly cover the world of digital rights in general. File-sharing can have it’s place, but it shares a much smaller presence here today simply because society has largely moved on.

The transition, of course, paid off in spades. We were able to more easily cover the modern debates more effectively. Those being, of course, freedom of expression, censorship, social media, privacy, and security. This is where the action largely moved to and these debates have certainly kept us busy to the point where we just can’t cover it all (volunteer positions available, let us know how you would like to contribute!).

Indeed, we spent a lot of time focusing on Bill C-11 and the seemingly impending demise of freedom of expression in Canada. While a lot of focus has been on what it means to small independent creators like us, the implications are much wider than that. The implications for the music sector are huge and not good. We covered a bit of this during the hearings both with what Nettwerk Music Group and Music Canada. Nettwerk Music Group explained that this bill would have a huge negative impact on his operations. Music Canada, meanwhile, did the extraordinary thing of siding with the platforms and looking at Senators with a white face and wide eyes and pleading with senators to not go through with this bill.

At the time, their positions were actually very understandable. If you are pushing a new act, the process of trying to license them as “Canadian” is a long and overbearing process that often takes months, if not, years to go through. When you have a new album coming out, you can’t wait over a year for approval as that would be commercial suicide. Yet, without that certification of being “Canadian”, those acts will see their content get demoted on platforms like Spotify. As so many have stated for so long, obscurity is an artists worst enemy. Being demoted means that the artist would have to fight obscurity in spades and rely entirely on foreign audiences to pay the bills.

No matter how you slice it, this is a very bad situation for both artist and record label alike. A lack of music sales means less revenue. A business environment designed to exclude new acts means less of an incentive to invest in any Canadian act at all. A vicious circle that hurts everyone involved. Yet, it’s a vicious circle that the Canadian government seems bent on putting in place to ensure that Canadian acts have a much harder time standing out and being financially viable.

Those warnings of a Bill C-11 cutting down the music sector recently got repeated. Will Page, former economist of PRS for Music, has published a dire warning in the Financial Post about Bill C-11:

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

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

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

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

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

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

These warnings are not new, but have been having a tough time trying to stand out in this debate. It is, nevertheless, an important perspective to have as it shows that this bill goes far beyond the also important world of digital first creators and independently created video streaming sector. The problems are very similar in that smaller voices will get shut out and only the biggest voices will have space to be heard. It halts progress and means cultural diversity will get stunted. Put it another way, it’s like a mirror reflection of the debate for digital first creators such as YouTubers and TikTokers.

Sadly, it’s voices like that that went largely ignored along with everyone else trying to make a living in Canada. As the Section 4.2 rejection showed, regulating user generated content and controlling what Canadian users get exposed to is entirely the point of the legislation. The harm will be wide-ranging and far reaching should this rejection stand.

Indeed, there’s little denying that Canada has a brain drain problem where lots of talent goes elsewhere to seek success. Many people would agree that it would be ideal to give Canadians the option to stay here and become successful if they so choose. The internet has been gradually offering better and better opportunities to be able to choose to stay in Canada.

Bill C-11 is threatening to undermine that, putting in place a legal regime that puts this brain drain into the system. This pushes a lot of talent and investment away from Canada which Canada should not want to see. Yet, as the Canadian government continues to ignore increasingly loud and dire warnings of the consequences of Bill C-11, it seems that this country is headed into a society that pushes the best and brightest out of the country like unwanted garbage. It’s a terrible message to send, but a message that the current government seems to be committed to sending.

(Via @[email protected])

Drew Wilson on Twitter: @icecube85 and Facebook.

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