IP Osgoode

Graham Henderson’s 5 Easy Steps to Fixing Canada’s Music Industry

#MusicCanHelp – This Twitter hashtag and motto for Graham Henderson’s recent address is now being used to inspire communities, industries, and politicians to help music help Canada.

Graham Henderson, the President of Music Canada for the past eight years, has led an illustrious career over his lifetime.  Before serving as an advocate of the music industry in his current position, Graham Henderson was a lawyer at McCarthy Tétrault LLP, founded his own entertainment law boutique, and served as Senior Vice-President of Business Affairs and eCommerce at Universal Music Canada. On Friday, March 1st, 2013, only a few weeks before his imminent induction into the Canadian Music Industry Hall of Fame, Mr. Henderson spoke to an attentive audience about the importance of the music industry in Canada and the five main areas in which Canada’s music scene can be supported, and in turn boost Canada’s economy and improve how the world views our country and culture.

The talk began with an overview of the importance of the music industry to the Canadian economy. Quoting a study commissioned by Music Canada, it was shown that the broader Canadian recording industry generated $400 million in spending nationwide and contributed $250 million to Canada’s gross domestic product.  In a letter by the Ontario Chamber of Commerce, the music industry was referred to as one of the province’s “competitive advantages” and ranks alongside the other “M” industries of the province – manufacturing and mining.

On a global scale, our musicians make up a large contribution to how the world views Canadian culture and society.  Canada being only the 35th largest population in the world has the 7th largest music market, which demonstrates that “Canada consistently punches above its musical weight”. This is a point of pride that Mr. Henderson says should be held on to and built upon.

The effects that have been felt across the music industry as a result of digitization were also highlighted. What was once a $38 billion market has now shrunk to $16 billion. However, the recent but slight increase in industry growth (the first in 13 years) has given the President of Music Canada reason to celebrate.

Mr. Henderson’s speech focused on information gathered as a result of efforts by Music Canada  that is slated to be released on March 21st, 2013 as a part of Canadian Music Week. While this report may not hold all of the answers, Mr. Henderson hopes that it would be key in getting the discussion going.  The following is an outline of the five key areas for exploration and investment that were discussed.

Music Education

Music education can “raise the bar” of Canada’s music industry.  The Information and Communications Technology Council (ICTC) has been leading the charge in this area by making connections between music education and a skilled, tech-savvy workforce. Their research shows that by emphasizing the importance of this workforce, it will be easier to draw high-tech employers and employees to our country.

Better music education is an integral structure to making Canada an attractive place for investment. Improved music education would not only benefit young Canadians attempting to pursue careers in music, but will also provide benefits in a number of other areas such as collaborative skills and mathematics. However, as it stands, our school systems do not support music education in a very meaningful way. Research by Music Makes Us found that the main deficiency in the system is lack of funding and low prioritization of music programs, resulting in “music rooms losing out to janitorial closets”.

On the bright side, the private sector has been stepping up in these areas, providing money for programs and instruments. Regardless of this, there is still a role for the government to play. Giving the example of ParticipACTION – the successful nation-wide fitness initiative that receives much of its funding from the federal government – Mr. Henderson asked, “If physical fitness is important, why not music education?”

Digital Innovation

In order to be successful in this new digital age, the music community must adapt and evolve alongside society.  In this regard, research has shown three areas of opportunity:  innovation as a centerpiece of existing funding models, leveraging industry partnerships, and the creation of new models for monetization.

In the area of monetization in particular, the industry faces the challenge to “generate dollars from this business of pennies.” With the transition to digital consumption, there are often horror stories such as one physical CD sale being worth more to an artist than several hundred thousand streams of their music. The Canadian music industry also faces some market-specific issues – in a market where almost all digital retailers are foreign-owned, how can we ensure that Canadian content is given shelf space? In order to ensure this occurs, we need to get more retailers to prioritize our market, launch their services here, market here, hire Canadians, and build relationships with Canadian artists.

Music Tourism

Mr. Henderson identified tourism as an enormous latent potential that has largely remained untapped. The Canadian Chamber of Commerce identified this area as one of the top ten barriers preventing Canada from competing on a global scale; an area that could be improved through music.

Music Canada’s economic impact studies have shown that the musical diversity in Ontario and across Canada is one of the country’s global advantages. From a report by the Ontario Arts Council, we know that 9.5 million overnight tourists to Ontario (almost 25%) participated in arts and culture activities during their trips (of which music is a driving force). From the same study, it was found that these “arts and culture” tourists spend almost twice as much while visiting.  Increasing the number of these types of visitors would provide a huge boost to our country’s economy.

Mr. Henderson then compared and contrasted the qualities of Toronto and Austin, Texas – the focus of a study commissioned by Music Canada. While Austin’s population is only a fraction of Toronto’s, the plan that they have put in place has given them a reputation as a hub for live music and in turn, has provided increased local revenue and created new jobs.  Toronto’s recent decision to broadening the funding of the arts is a step in the right direction.

Export/Expansion Development

Canadian musicians and artists often act as ambassadors of Canada to the outside world – if one were to ask the resident of a foreign country of their first thought of Canada, it is likely that they would respond with a figure of our creative community. Musicians that “make it” on a global scale point to the existence of a culturally diverse landscape and make our country attractive for those looking to invest in new ventures. As a result, both tangible and intangible results will be obtained if we support artists and musicians from our country.

To this end, the forthcoming report will recommend a more elaborate private-public partnership that will require the creation of an export office that provides assistance to all that are interested. The goal of this office will be to promote Canadian content abroad, and help our musicians succeed on a global scale.  Mr. Henderson emphasized the importance of not only creating great music but also supporting it downstream. Building international fan-bases can be achieved through social media, international marketing support and technological innovation.

Interconnected Tax Credits

It is well-known that creative industries are highly susceptible to demand uncertainty – companies must make fairly extensive investments without knowing what the return for that investment will be. To alleviate some of this pressure, federal and provincial tax credits should be afforded to artists and investors.

Mr. Henderson intimated that he thinks the tax credit system for music should mirror that of the film industry in that the credits should be extended to foreign investment companies. The study shows that this would generate a further $60 million in spending and create 1,300 direct and indirect jobs.

Comments and Points of Discussion

While it was an interesting and thought-provoking speech, I was somewhat surprised that Mr. Henderson did not mention the fact that increasing music education might affect the public’s perception of the worth of creative works. Some of the discourse in the debate between creator and user rights revolves around the concept that some portion of the public sees less value in a creative work because of the existence of a “free” copy that can be downloaded on the internet. As a result, those users will be less likely to pay for a legitimate copy of the work (or will only be willing to pay when the price falls below a perceived threshold of value), thereby causing the market to change its pricing structure or suffer a loss of sales.

By educating a larger percentage of the population of our country – even if those that are educated do not choose a career in music – it may be possible to change future generations’ notions of “value” in creative works. If young Canadians can understand the work and effort required to create a musical/creative work, even the existence of a “free” copy might not tarnish the value of the work in the eyes of consumers.

My second thought while listening to Mr. Henderson’s speech was the place that crowd-funding has in the music industry’s future. Some of the problem that the industry seems to currently have is the question of whether a publisher’s return on investment with a certain artist will be profitable. Crowd-funding (seen on such websites as Kickstarter) takes some of the guesswork out of the equation but it may be that indie artists are better suited to this type of approach to monetization. However, I feel that some altered form of crowd-funding may be usable by larger-scale publishing companies.

Thanks

A special thanks to McCarthy Tétrault LLP for sponsoring a table for IP Osgoode at the luncheon event hosted by the Canadian Club of Toronto on March 1st, 2013, and for providing students from Osgoode Hall Law School a special opportunity to hear the words of the upcoming inductee to the Music Industry Hall of Fame.

Adam Del Gobbo is a JD Candidate at Osgoode Hall Law School

Related posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Search
Categories
Newsletter
Skip to content