Senate Hearings on Bill C-11 – A Look at Hearing 13 (First Segment)

We are continuing our special coverage of the Bill C-11 hearings at the Canadian Senate. This covers the first segment of hearing 13.

The hearings continue at the Canadian Senate. This hearing is the first of week 6 which we earlier brought up. This first hearing occurred on the very same day as disaster struck when the Senate voted to pass Bill C-11 49-19. So, it’s unclear prior to the hearing that the witnesses even knew what had happened at least before getting in to this hearing.

For those who are curious, here is the coverage of the previous hearings:

Hearing 1 – Privacy Commissioner and Global Affairs/Justice Department
Hearing 2 – Digital rights organizations and lobby groups (1)
Hearing 3 – Lobby groups (2) and platforms (1)
Hearing 4 – Lobby groups (3) and lobby groups (4)
Hearing 5 – Lobby groups (5) and lobby groups (6)
Hearing 6 – Music Canada / platforms (2) and lobby groups (7)
Hearing 7 – Scholars/researchers (1) and digital first creators (1)
Hearing 8 – Digital first creators (2) / lobby groups (8)
Hearing 9 – Digital first creator (3) / lobby group (9) / platform (3) / Lobby group (10)
Hearing 10 – Record Label / Lobby Groups (11) and Scholars/Researchers (2)
Hearing 11 – Scholars/Researchers (3) and Lobby Groups (12)
Hearing 12 – Scholars/Researchers (3) / Digital First Creators (4)

As usual, you can check out the video we are following here. While nothing will beat the thoroughness of an official transcript or the official video itself, we will try to provide a detailed summary of what was said as well as offer some analysis of the legislation. So, with that in mind, lets step right inside this hearing.

Opening Statements

David Coletto of Abacus Data opened with his statement. He mentioned how he is a millennial and how he was part of the first generation that was less hierarchical and more technological. He said that we live in a world where consumers no longer expect to wait for what they want. We live in a world where what goods and services we want are sometimes delivered instantaneously. Add to that, we live in a mobile world where those goods or services can be accessed anywhere at any time of day. (This was probably the shortest opening statement I’ve seen so far)

Martin Lavallée of the Society of Composers, Authors and Music Publishers of Canada (SOCAN) then opened with his statement. He said that he supports Bill C-11 and said that he is very pleased that the bill was adopted at the House of Commons in its current form. The bill delivers on the promise to regulate online streamers while excluding individual creators (that’s a lie). The bill before Senators, he believes, is a big step in the right direction for the promotion of Canadian songs while avoiding unintended consequences (If you believe that, I have a bridge to sell you). As such, he asked that the Senate adopt the legislation without further amendment. (You know, so we can finally get to the business of destroying people’s lives.)

He continues by saying that as many of you know, the internet is now the dominant delivery method of music. Online streaming has experienced exponential growth of the last number of years, so SOCAN has received considerable growth in revenues from online streaming. In 2021, SOCAN has collected $460 million on behalf of Canadian and foreign rights holders – of which, $100 million was from digital sources. SOCANs digital collection may soon overtake the collections from traditional sources such as radio and television. However, Canadian’s are not receiving their fair share of that growth. This inequity is due, in large part, to the fact that the foreign streaming services that have benefited greatly are not required to support Canadian creators.

He continues by saying that only a fraction of streaming revenues stays in Canada. For every dollar generated on TV and radio, approximately 34 cents gets sent to Canadian songwriters and composers. However, of the revenues generated on online streaming services, only ten cents is distributed to Canadians. The situation is even more dire for Francophone songwriters who only receive 1.8 cents per dollar generated by online streaming services as opposed to 7.4 cents from Canadian broadcasters. He then argues that it’s vital for online platforms to contribute because it’s vital to Canadian sovereignty.

He then says that he wants the government to require platforms to promote Canadian content. He says that SOCAN does not propose any amendments because the legislation needs to remain broad so it can adapt to future online businesses (and murder the competition). After that, he calls on senators to adopt this legislation as soon as possible.

Questioning the Witnesses

Senator Julie Miville-Dechene opened up questions by asking about unique identifiers so they can distinguish one work from another and have enough information in order to discover it. Is she right in understanding that more work needs to be done?

Lavallée responded by saying that the data that identifies a work as Canadian has to be entered into a database as soon as the creation is made.

Senator Miville-Dechene asked if this database is complete or if there are still shortcomings.

Lavallée responded responded by saying that the work is ongoing, but they will never have a database that is 100% accurate.

Senator Miville-Dechene then asked if the platforms can enable discoverability with the data that we currently have.

Lavallée responded that, in some cases, yes. His concern is of works that are not as well known. He’s no expert in this field.

(You could almost get whiplash how quickly Lavallée torpedoed his own talking point about how the smaller players won’t be affected by this. He said in his own opening statement that smaller players won’t be affected by it, yet in the very first question, he was very open with how databases are being built to enable discoverability on platforms. As pointed out countless times before, when you promote one kind of content, you demote another. It’s basic math. So, good job on sinking your own argument.)

Senator Rene Cormier asked about three criteria of commercial value and if it’s sufficient for platforms.

Lavallée said that he leaned towards saying “yes”, the criteria is sufficiently broad. They may seem vague, but the broader the definitions are, the more the Act will be useful.

Senator Cormier asked about the ratio of royalties.

Lavallée responded that they already see the impact of non-discoverability and non-promotion in royalties. He said that Canadian content is being drowned out on platforms. He says that there needs to be balance.

Senator Leo Housakos then asked if he has any data on how Canadians feel on C-11, or more specifically, how millennial’s feel about this legislation. he also asked about what the expectations and preferences are about millennial’s and how they consume content. He also asked about data that he could share with them in regards to what we can do to get millennial’s to consume more Canadian content.

Coletto responded that he doesn’t have any publicly available data on this bill in question, but he can confirm that he has done a study on this legislation for YouTube Canada, however, those results have not been made public. He then commented that the technological gap about how Canadians consume information and consume content, he thinks, has shrunk over the last two and a half years. He cites the pandemic where everyone is stuck at home.

He then notes that younger generates rely and use different platforms to access content on a daily basis. He cited the Canadian Millennial Report that they do every 6 months. Podcasts, for example, back in 2018, 17% of millennial’s say that they listen to a podcast every single day. Today, in their most recent survey, that is up to 33% – almost double.

When you ask what you should consider, he continues, always start with what that user wants and what that user has come to expect. When you look at the generational or age divides, his generation, millennial’s, are often described as digital natives. They grew up accessing information in ways that you could only imagine in previous generations. He then cites his opening statement saying that it’s about how we access it and in a way that is affordable. Being able to access that content, affordability is at the top of the list. Since all generations are feeling the squeeze, that is something to consider. At the end of the day, the question is, what is the user experience and how that might be impacted by this piece of legislation and future regulations as they come?

Senator Fabian Manning noted that a theme that they’ve heard often repeated is that Bill C-11 is important for ensuring that streaming platforms pay their fair share to Canadian culture ecosystem. However, the MPA told the committee that companies like Disney and others have spent more than $5 billion across Canada in 2021. This counts for more than half of all production in Canada and 90% of the growth in the sector over the last decade. How does SOCAN think that they are not paying their fair share and how should they be doing that?

Lavallée responded that it’s great to see support in Canadian culture in all forms, but that doesn’t change the fact that decades of disappointment have created a situation that social media platforms have been able to profit from it without helping the national sector. Despite the contribution that Manning mentioned, regulation is required. The money doesn’t go to the creator here in Canada.

He then says that creators need tools in order to develop in the digital world (I guess FL Studio, OBS, free platforms, and free instructional video’s don’t count). He then cited a survey saying that Canadians support platforms paying their fair share. (the phrasing of that question alone throws into question the legitimacy of that survey.)

Senator Manning noted that they’ve heard a lot of feedback that a lot of ordinary Canadians are going to be affected by the bill in many ways by this piece of legislation. He’s not as sure that many of them are even aware of what they are doing here. As an example, they had a truck parked across the road with a flashing sign saying pass Bill C-11. He walked by and asked the driver what Bill C-11 was about and he responded that he didn’t know. So, he was wondering where Canadians are. Is there any data collected on Bill C-11 that he is aware of that shows how Canadian’s really feel about this piece of legislation?

Coletto responded that YouTube has done a study, but he can’t share the results of that study, so he encouraged Senators to reach out to them. Speaking more broadly of how Canadian’s feel and speak to more broadly about what goes on in Ottawa, his hypothesis is that many people are not following the proceedings and what happens in the House of Commons that closely. However, it doesn’t mean that they won’t care about the consequences of any piece of legislation that is passed. That’s why he comes back to considering the impact on the user and the other stakeholders that are involved, and in terms of working with any consumer facing organization, when it comes to change that is unexpected, that often creates friction with their own customers. However, as to the specifics of C-11, he can’t speak publicly to the specifics.

Senator Manning asked if there were any plans to do so under his own company.

Coletto responded that he has no plans to do so.

Senator Pamela Wallin noted the Canadian Millennial report and she wanted to run past him a message that they’ve heard loud and clear from the last week from some of their witnesses. Among all the technical problems that they have with Bill C-11 and the conflicting messages and all of that, one of them specifically talked about the psychological impact. They don’t want to be lumped into “Canadian content” that is going to be force-fed to an audience because they want to be chosen and selected because they are good by listeners and viewers, not because their content is pushed up because it meets some sort of content requirement. They don’t want government regulation. They don’t want government help. They don’t want government handouts. They are entrepreneurs and they think that they can make it on their own. Is that unique for millennial’s who work in this field? They are YouTuber’s or TikToker’s. Is that unique to them or is that a general state of mind for millennial’s?

Coletto responded that he can’t speak for the research that confirms or denies that particular claim. He can say that content is king or queen. As anyone knows, given the pandemic, there is an insatiable appetite for good content was very clear. As a person who creates a podcast and creates content every day with Abacus as they do interviews with Senators about their careers, he wants everybody to view that. He can’t speak to whether all creators share his view, but he does think that consumers are looking for content that they want and that they are going to get value from it and, in some cases, be entertained by it.

Senator Wallin then turned to Lavallée and said that hearing this message over and over again, she knows that he made the case that if more and more Canadian content is played, then creators will make more money, but aside from that, this is a whole industry that is built around consumer choice. The reason she is hearing certain music or watching certain movies is because her behaviour and her likes and dislikes have been recorded by the streamers. So, if he wants to, in fact, change that, do you not risk people saying that I didn’t ask for that, I don’t like that, I’ve already given you my preferences. This as well as the psychological impact that the content creators themselves talked about.

Lavallée responded that what strikes him in that question and the questions raised by others is that right now that the online social media platforms choose or are already choosing the criteria for the programs that are being pushed (he dodged the question). There is already an effort to curate that goes beyond consumer choice (that’s an assumption, not a fact). They way they understand it, there is absolutely no transparency involved here as to how these choices are made for these online platforms. The current rules before the CRTC would require platforms to bear in mind Canadian content. Let’s remember that the bill provides latitude for how the platforms choose to promote Canadian content with playlists and with ads and with hash tags (doesn’t change anything in the debate. Half of the examples don’t even make any sense). These all can be used to influence these curating decisions.

Right now, he continues, we don’t know how they make these decisions about how content is pushed onto consumers (and the bill doesn’t address this). 80% of consumers go with what the machine recommends (citation needed). What they’d like to see is that we bear in mind the promotion of Canadian content. (I’m not even sure he understands how platforms work based off of that answer)

Senator Marty Klyne turned to Coletto and asked if any of his research provide any preference for Canadian content. If so, does he know how they discover or proactively seek out Canadian content? Is it proactive or is it through promotions?

Coletto responded that he has no clear data that he’s done that can answer that question.

Senator Klyne turned to Lavallée and said that he’s heard from many groups and there seems to be a divide between the platforms and the artists. The platforms are generally not in favour of this legislation while that many artists support it (this is flatly untrue. The divide is between platforms, creators, consumers, researchers, and many others on one side with legacy corporations and organizations on the other side supporting it). SOCAN believes that many artists would benefit from this legislation. Could he explain to the committee what he expects the benefit to be. Is he measuring that benefit by increased exposure, more money in the artists pocket, enhanced opportunities to build a bigger audience, or some combination of all of these things.

Lavallée responded by saying yes, but fundamentally, they have been basing their opinion on what they have been canvassing. He commented that this will have a beneficial impact on their members. The most important benefit to this bill would be more money coming from these platforms for Canadian members.

Senator Paula Simons turned to Lavallée and says that she understands that there is a concern for the future of French music. It’s because of that this that they have this bill before them. However, she asked Miville-Dechene this question, wouldn’t it be better if there was promotion in Quebec, New Brunswick, or Alberta where there is a Francophone community? However, it seems to her that they have a bill before them that is so complicated. Wouldn’t it be easier to give money to people to do things for discoverability to help the French language in Quebec?

Lavallée responded that he believes that we are talking about two separate things. He agrees with the notion that it would be easier just to give money for promotion, but he doesn’t agree that the bill is complicated (that may be the worst lie yet about this bill). He said that this is about modernizing the broadcasting Act. He then suggested that platforms take, but gives nothing back to creators. He then called for the bill to be adopted so they can have a real debate (away from public scrutiny behind closed doors with only support friendly crowds at the CRTC to talk about how best to screw over digital first creators, got it.) Today, we are talking about the impact of the bill, but the real debate will happen before the CRTC. What they are asking is for the government to enable them to have this debate (Impressive he is so open about the blatant corruption of the system).

Senator Bernadette Clement commented that she was doing commentary on the television quite aware that very few millennial’s were watching her commentary. This is important to know how different generations take in information even with their democratic processes. She says that she worries about cozy listening experiences. We presume that Canadian content is going to disrupt that cozy listening experience. She would presume that younger Canadians might want to hear Canadian content (this is an oversimplification of what is being discussed and assumes a lot). That question is for Coletto.

For Lavallée, she asked about transparency of the algorithm. Hip hop gets pushed to her because she prefers this type of music, but isn’t it already possible to push Canadian hip hop? It seems to her that the platforms are already constructed to be able to give her all of that (depends on the platform). So, she would like to hear what he has to say on that

Coletto said that he’d like to give a little anecdote in response. He spoke about a tornado that hit a while back. Four days later, he got a text from his sister asking if he was OK. He said he was fine, but he then wondered why it took four days to find out. She responded that she doesn’t subscribe to TV, she doesn’t listen to the radio, and he didn’t post anything on social media, how was she supposed to find out? Despite how connected everyone is, all of us have the potential to be isolated from the world from things that we may or may not like. We also have to think about the ways in which the user will seek out certain content.

He adds that just because it is forced upon them, it doesn’t necessarily mean that they are going to consume it. On the other hand, if they are never shown, they may never know. So, finding the balance, for him, is very important between ensuring that you are exposing things to people that they may not know otherwise exists while making the experience convenient for the user.

Lavallée responded that there are several things there. They want to disrupt the cozy experience of users. He said that he subscribes to a small platform and that they have a system for exposing Canadian artists and three quarters of that music, he has never heard of. Those artists, he would never have heard of because Spotify and YouTube only recommend American artists. All this to say that discoverability would not disrupt the consumer experience (facepalm). Quite the opposite. It will enrich it. It will expose the user to other things to a sector that they may not otherwise know about. It’s all because of this lack of transparency, he can’t stress that enough (does he know what he is even saying at this point?)

Second point, he comments that Apple told him that they can’t distribute royalties because it is impossible. Fast forward 10 years, today, it’s a standard. All platforms have to set aside money for royalties. He then says self-regulation doesn’t work and regulation is necessary.

Senator Karen Sorenson commented that for human beings, their perception is their reality. She asked about the effectiveness about the Coletto collects when the answers will be based off of an individuals perception and not a reality?

Coletto responded by talking about perception and talked about how questions are worded. He notes that people of all political stripes care a lot about the motive of decisions made in Ottawa. He comments that when a piece of legislation or decision is made for the wrong reasons, that would affect how they react to it. When it comes to online streaming, what they have and what they want, the gap is a lot more narrow between perception and reality.

Senator Housakos noted that YouTube has been before the hearing already, so he is going to ask the clerk to reach out to YouTube and ask if they can share that data with the committee.

Senator Donna Dasko prefaced her question with polling data with a natural competitor, Nanos Research. She said that two in three Canadians support the broadcasters stance that platforms should pay their fair share. That’s one small piece, there are many many pieces of Bill C-11. She said that this is a very general high level question. They’ve had witnesses come in and talk about Canadian content, sometimes in a disparaging way especially with Canadian content regulations. This country has had regulations for decades and is putting a form of content into C-11 as we move forward with discoverability. How have consumers responded to all of the Canadian content and regulations of Canadian content that they’ve had?

Coletto responded that without having the benefit of data – clear data and recent data that he can speak to – on the one hand, he thinks that Canadian’s are deeply proud of content that gets created. On the other hand, they probably don’t know very much about Canadian content. He re-iterates that he would rather have a number to give the Senator. He then notes that his mother spends far more time on her mobile device streaming endless hours of crocheting and knitting videos. He noted that his mother also watches vlogs while his dad watches TV. For her, he doesn’t know if it would matter – as long as it’s content that she is interested in. At the end of the day, Canadian consumers want the best version of what they are getting at an affordable rate. That, to him, guides his research in other sectors.

Senator David Richards commented that he’s heard that Spotify pays two thirds of revenues to rights holders which is 8.5 times as much as radio and 30 times as much as broadcasters of music videos. That’s over $8.9 billion. So, they are doing a bit more than might be suggested here earlier today.

Lavallée responded that it’s understandable that digital revenue is on the rise. Spotify is the source and they are soon going to completely exceed the revenue gathered from conventional sources. The problem is not with the increase in revenue, it’s the amount going back to Canadian’s. In the revenue that he mentioned, most of this revenue is going abroad and in a much bigger percentage than it was in the conventional area. He then plays with the numbers. He then says that the bill resets the balance so Canadians and Canadian rights holders can benefit from it.

Senator Richards cites a number of examples. He asks if we would recognize them as Canadian content, however, they all had to travel to the US in order to get recognized. How would that work in the revamping of our policy?

(this is actually a much more interesting question than you would think on first glance given how many argued that it’s all about the IP determining the status of “Canadianness”)

Lavallée responded that, unfortunately, he can’t answer that question (naturally), he’s just suggesting that they adopt this bill as quickly as possible so that the CRTC can answer in a transparent way (unlikely).

With that, the hearing concluded.

Concluding Thoughts

I guess a short response to this is to say that Lavallée has inadvertently exposed a lot of the faults of Bill C-11 supporters (and, let’s face it, it’s seemingly faults all the way down for Bill C-11 supporters at this stage).

First of all, he accidentally exposed that Bill C-11 is very averse to transparency. The fact that he said that he wants this legislation passed so they can have a “real” debate at the CRTC really spoke volumes about the recklessness of C-11 supporters. Numerous witnesses have pointed out already how not transparent the CRTC actually is. So, the goal for supporters is to try and ensure that any critical decisions about this legislation is done in a way that is secret and out of the light of public scrutiny. They’d prefer that the process be unaccountable and as corrupt as possible. They don’t see the debates and hearings at the House and Senate level as “real” debates probably because it’s possible to still have public input. So, eliminating that transparency seems to be priority number one for the C-11 supporters.

The second thing is that when supporters talk about Canadian content, there really should be a small asterisk next to that. When they talk about Canadian content, they don’t mean the online creators or anyone who is a Canadian resident making content. What they really mean is content that they stand to make a profit off of. Basically, content that the big traditional organizations own. For them, people who are producing content on YouTube are “not real artists” and, for them, those creators need to just go away and let the “professionals” take their place. That seems to be another high priority for C-11 supporters.

Thirdly, C-11 supporters are demanding that captive audience they had in the 70’s and 80’s. Only their content gets promoted on any medium. Whenever anyone brings up the point that maybe not everyone will like it, it always seems to be responded to by saying that Canadian content is good. It’s a non-answer to a very specific criticism. They seem to think that if the only content that can be seen is their content, then people will be non the wiser and just consume it so they win through and through.

What I think they don’t understand, or should I say, not paid to understand, is that if their content isn’t good enough for those consumers, those consumers are going to reject that content. Many of these supporters have gotten it in their head that they can decide what consumers like or don’t like and that is the end of the debate. The truth in the matter is that this is not their decision. It’s the decision of the users. If the C-11 supporters managed to get everything they want and force feed consumers Canadian content, people are going to start to leave those compliant platforms for platforms that deliver what consumers want. Maybe that is a decentralized platform? Who knows? Because of that, the conspiracy theory that the evil platforms are pushing content that is good for them and not for the consumer is going to come crashing down because people are still not choosing to view their content.

It is precisely why so many critics have pointed out that if digital first creators actually got supported to produce higher quality content, then the vague goals of the legislation might actually have a chance to come to fruition. Empowering the creator is always going to trump ramming bad content down consumers throats and screaming that they like it. Instead, for supporters, they have chosen to instead view creators who have actually figured out their audience needs as this massive obstacle somehow conjured up by the big tech platforms that must be destroyed to achieve the goals of supporters. It’s a plan that is doomed to fail one way or another.

One last thing to point out is that, at first, I was probably like other Senators and getting annoyed at Coletto for repeatedly saying that there is no data or information to answer any of the questions. However, I then thought about this in a more holistic point of view and realized that this is actually a problem of where we are at the debate rather than a problem of his organization only having limited research.

The legislators have been pushing this bill through so hard, that they never bothered actually analyzing the situation with platforms. They, along with supporters, have been pushing this bill through based on assumptions and false guesswork without even coming close to understanding what is going on. I mean, how else could one could magically come up with the obviously false notion that platforms are out there with the sole intent of destroying Canadian culture? So many reasons for supporting the bill is based on stuff that was obviously completely made up, rather than actual analysis. So, Coletto’s lack of data being brought forward is not an implication of him or his organization, but rather, a damning condemnation to the Bill C-11 process itself.

If anything, in a more ideal scenario, you’d have many statisticians coming forward, having completed years worth of research, and provide an abundance of numbers and data to Senators showing what the information they have is showing. This issue would have been well studied and researched and Canadians would have a very clear indication of what the reality is with regards to digital first creation, how Canadian’s are fairing, if there is an issue in promotion that needs addressed, etc. Supporters don’t have that and, instead, opted to float a bunch of conspiracy theories based on a series of assumptions that are more often then not, false. So, really, Coletto’s responses are not actually that surprising.

Drew Wilson on Twitter: @icecube85 and Facebook.

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