Doom and Gloom Or Boom? Canadian Content in the Internet era

What is the role of Canadian content in a digital world characterized by fewer borders, fewer regulations and more of everything else? A group on the front lines of the debate assembled recently. Whereas some are deeply optimistic, others are cautiously pessimistic.

It is news to no one that many traditional media organizations are in crisis and have been for some time. The Internet giveth and the Internet taketh away. Or, perhaps more accurately, the Internet rearranges (rearrangeth?) locations of value.

This is why, across the country, discussions are taking place on the implications for Canadian content, aka ‘CanCon’, in this new reality of content anywhere and everywhere. Content that is available legally, less than legally, and in formats ranging from bite-sized to feature film length, all on demand, 24/7.

One such discussion recently took place when a group met at the University of Toronto’s McLuhan Centre for Culture and Technology to trade thoughts—and a few barbs—about CanCon’s fate in this new world of seemingly limitless media choices. Among the speakers were Richard Stursberg, CBC’s former head of English services and former executive director of Telefilm Canada, broadcast and communications lawyer Peter Grant as well as Tessa Sproule, founder of the Vubble online video company and the CBC’s former head of digital content.

When comparing conventional media such as The New York Times, The Globe and Mail and network television to online media, one quickly realizes that apple-to-apple comparisons don’t work for the online and offline worlds.

The legacy media organizations generally reach audiences in the hundreds of thousands to tens of millions, and do so with a cost structure that includes everything from printing presses to underwater cable. Meanwhile, their digital counterparts reach audiences in the tens and hundreds of millions to well over a billion, with a cost structure that varies little, serving a few thousands or millions. This is the sweet spot of many digital business models: the unit economics of Internet distribution are irresistible.

Take Facebook, the little dorm room website that could… It has become the Internet’s de facto front page for more than 1.5 billion people around the world. Or, with its low flat monthly fee for an ‘all you can eat’ offering, Netflix now boasts 5 million Canadian subscriptions, a 58% increase since 2013.

And it’s not only the software platforms that signal immense change, but also the devices used to consume the media. Well over half of Canadians are now spending the bulk of their online time on mobile devices such as smartphones and tablets.

How can the shift from the old regime to the new regime be made? In a phrase, not easily. Beyond the economic and technological considerations, there are also the cultural policies and regulations that have become deeply ingrained over the years. This is why the role of Canadian content—in the quota system that has ensured that Canadian artists receive a certain amount of guaranteed placement on radio and television since decades now—has become a hotly debated topic once again.

Stursberg opened the evening with a few sobering factoids about the state of traditional media in Canada:

  • Newspaper revenues continue to fall each quarter. In the case of Postmedia, the cost of servicing the debt is now almost equal to the debt itself and will shortly cross over.

  • All major English language broadcasters in this country—Global, CTV, City, Omni, CBC—are underwater as their ad revenues disintegrate

  • There’s usually a small number of Canadian programs in the Top 30 most watched shows in the English-speaking market.

Peter Grant was then passed the baton by Stursberg, moving the discussion to the topic of skinny bundles, or the new cable TV offerings that allow consumers to pick individual channels as opposed to paying a flat fee in exchange for a bundle of channels—many of which are not necessarily watched or even desired. For Canadian writers, directors, actors and producers, the skinny bundle is a big fat threat. It’s not unlike a whole bunch of shelves being removed from the store.

Who will be impacted the most by this scenario? According to Grant, “[…] the niche services in popular cable packages will feel the pain of the skinny bundles.” He then brought up the elephant in the room, i.e., Netflix, which for $9.99/month lets viewers return to the media smorgasbord as often as they wish. Viewers may not find everything they want on Netflix, but they will generally find something. And, at a price point that is a small fraction of the cable bill, it has become a no brainer for millions of Canadian households.

Grant is quick to point out the political and cultural issues that Netflix brings to the surface: “They're exempted from Canadian content quotas because their content is hosted on servers located outside of Canada. They’re exempted from paying HST for the same reason.”

But does this mean they carry no Canadian content? No, it does not. Netflix does deals with Canadian content on a voluntary basis, such as the one it has with Degrassi, which they will offer in Canada after it aired on the Family Channel.

Should taxes and quotas be imposed on services such as Netflix in Canada? Can competition occur when some players are regulated while others are not? Cultural policymakers and certain stakeholders are currently engaged in such discussions.

Meanwhile, Tessa Sproule, the CBC’s former head of digital content and now a digital entrepreneur with her company Vubble, focuses on the road ahead. “I’m deeply optimistic and see huge opportunities,” said Sproule. “Why? Because Canada excels at niches.” She references Canadians’ impressive record on YouTube, where Canucks making short-form videos for global audiences routinely “punch above their weight.”

She cites the example of the YouTubers behind the AsapSCIENCE channel with 5.2 million subscribers and over half a billion views. They had tried to land jobs teaching science in the Toronto high-school system and, after failing to do so, started producing science-related videos on YouTube. In short order, they had more subscribers on Youtube than Rick Mercer and Hockey Night in Canada channels combined.

Rather than focusing on changing the legacy funding and broadcasting systems in Canada, Sproule asks: “How do we replicate this kind of lightning in a bottle?”

Clearly, the Canadian media and cultural industries face challenging circumstances but the situation is not unique to Canada. Regardless of one’s country of origin, competition now comes from creators from all corners of the map as well as from new formats, platforms and devices.

With these new avenues for media production and consumption come new logics and new behaviours, hence the caveat that arose more than once during the discussion between Stursberg, Grant and Sproule: “Let’s be sure not to feed the dinosaurs and starve the mammals.”

Leora Kornfeld
So far in life, Leora has been a record store clerk, a CBC radio host, a Harvard Business School case writer, a blogger and a crossword puzzle clue. Currently she’s a media and technology consultant, working with clients in the US and Canada.
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