Written Submission to the Standing Committee on Transport and Communications on Bill C-11: The Online Streaming Act. August 18, 2022

2 Members of the Standing Committee on Transport and Communications, Thank you for the opportunity to provide written comments and recommendations to the Committee in its review of Bill C-11, the “Online Streaming Act.” We appreciate the Committee’s openness to our input in this process and its careful deliberation of a bill that will have a significant impact on the future of music streaming services and their innovations that have substantially benefitted Canadian rightsholders, artists, and music fans alike.

Digital Media Association (“DiMA”) represents the world’s leading audio streaming services – Amazon, Apple Music, Spotify, YouTube, and Pandora. Together, these services connect millions of fans across Canada and around the world with tens of millions of songs and podcasts providing unique listening experiences and constantly innovating to strengthen the connection between creators and fans. Streaming services generate clear and direct benefits for Canadian music fans, creators, and rightsholders alike.

DiMA’s members offer to millions of Canadian music fans a captivating experience that combines your record store, jukebox, talk and music radio stations, mp3 collection, set of liner notes, and smart music friend, all wrapped into one. And all of that can be accessed anywhere and anytime. For creators, particularly emerging, independent, or D-I-Y artists, streaming has broken down the traditional gates of the industry, presenting opportunities to connect directly with fans and get music and podcasts to listeners around the world without the barriers of traditional distribution models.

Streaming has a global impact, for fans, creators, and rightsholders. The advent of streaming has turned what had been a collection of fairly rigid local markets where access to music was dictated by retail store shelf space and broadcasting limitations into a globally interconnected landscape where listeners in nearly every country of the world have access to the history of recorded music.

Not only does that mean that Canadian artists and songwriters now have access to fans thousands of miles away, but Canadian music fans have access to incredible music and podcasts being produced around the globe, in addition to music and podcasts by mainstream, independent, and rising Canadian artists, in the language of their choice. Audio streaming services did not launch until the mid-2010s in Canada. Since that time, the growth has been remarkable, with benefits to Canadian music fans, creators, and rightsholders.

Canada currently ranks eighth in the list of top countries in recorded music revenues, and in recent years streaming has played a larger and larger role in music consumption. 1 In early 2021 (the most recent publicly available data), there were over 9 million music streaming subscriptions in Canada, up from less than 8 million the year before.2 According to the International Federation of the Phonographic Industry (IFPI), in 2021, 1 IFPI Global Music Report 2022. 2 Music Ally, Canadian music industry encouraged by 2020’s streaming growth, https://musically.com/2021/03/09/canadian-music-industry-encouraged-by-2020s-streaming-growth/

3 streaming revenue in Canada increased by 18% year over year, continuing a trend of annual double-digit growth.3 The rapid expansion of streaming represents a true sea-change from the circumstances of just a decade ago, when the music industry was faced with declining revenues and was struggling to get people to pay for music. Music streaming services changed that trajectory and continue to power growth in the music industry. The growth of online music streaming in Canada has benefitted creators and copyright owners.

While industry-wide data can be difficult to identify, streaming services in Canada have paid well over $2 billion in royalties since 2016. 4 The 2021 Study of the economic impacts of music streaming on the Canadian music industry (the “Wall Study”) highlights additional relevant figures, including nearly 300% growth in streaming revenues for recorded music from 2016 to 2020.5 That same study estimated that Canadian rightsholders, including songwriters, publishers, performers, and record labels, earned nearly $500 million in 2019 alone.6 In short, millions of Canadian music fans now experience the innovative offerings of streaming services and Canadian creators and rightsholders are participating in the resurgence of the music industry, finding new fans in Canada and around the world.

And notably, this incredible growth and economic benefit in the Canadian music industry was all achieved in the absence of regulation. Regulations imposed now that are anything less than optimized for the ecosystem threaten to harm, not improve, the economic benefit and cultural vitality of the music industry in Canada. Broadcaster Regulations Do Not Fit the Innovative Streaming Service Model Bill C-11 attempts to impose a system of regulation that is designed for traditional broadcasters onto streaming services.

Imposing this antiquated system onto innovative streaming services—in an era of consumer choice, where there are no g atekeepers to content as there are in the broadcasting context—is the wrong approach and unlikely to be the most fair, economically efficient, and effective form of regulation. Chief among those reasons is that streaming services operate in a completely different fashion from traditional commercial radio broadcasters.

Unlike radio where programming is controlled by the broadcaster, airtime is finite and prime time airtime is even more coveted, streaming is controlled principally by individual listener preference anywhere and at any time of day. “Shelf space” is limitless and streaming occurs simultaneously in millions of one-to-one 3 IFPI Global Music Report 2022; see also 2021 Study of the economic impacts of music streaming on the Canadian music industry, Prepared for Canadian Heritage by Wall Communications Inc., at Figure 6 (Jun. 2, 2021), available at 2021 Study of the economic impacts of music streaming on the Canadian music industry - Canada.ca. 4 This estimate is based on the Wall Study's 2019 estimated total streaming revenue paid to rightsholders combined with the reported recorded music revenue from other years from IFPI.

See 2021 Study of the economic impacts of music streaming on the Canadian music industry, Prepared for Canadian Heritage by Wall Communications Inc., at Figure 7 (Jun. 2, 2021), available at 2021 Study of the economic impacts of music streaming on the Canadian music industry - Canada.ca.; see also IFPI Global Music Report 2022. 5 2021 Study of the economic impacts of music streaming on the Canadian music industry, Prepared for Canadian Heritage by Wall Communications Inc., at Figure 6 (Jun. 2, 2021), available at 2021 Study of the economic impacts of music streaming on the Canadian music industry - Canada.ca. 6 Id. at Figure 7.

4 personalized transmissions for users. Any listener, anywhere in the world, already can: make their own playlist of Canadian music from a comprehensive library; share it with friends and other subscribers; and boost it on social media, among other innovative features. By contrast, traditional radio broadcasting is a single, one-to-many, scheduled transmission of the same program of content to all listeners.

Imposing traditional broadcasting industry regulations, especially rigid content quotas, on a fundamentally different industry that operates using broader, more technologically flexible and iterative platforms and already makes its own unique contributions to the Canadian economy and culture would do little to benefit Canadian artists and rightsholders, much less Canadian music fans.

For instance, in the event Bill C-11 becomes law, the definition of Canadian Content (or “CanCon”) – which is central to any content quotas or prominence requirements that may be imposed – would require significant updating to reflect the complex and global reality of the modern music industry. As such, we expect that the CRTC will take significant industry input on this topic at the appropriate time. As another example,

Section 9 of Bill C-11 would allow the CRTC to impose “must- carries” and force online streaming services to carry emergency messages. These potential regulations fail to take into account the practical and technical problems in doing so, not the least of which is the global nature of streaming services and the relevant technologies.

For example, streaming services do not collect location data granular enough to accurately target emergency messages to the relevant recipients – nor should they. 7 Accordingly, we urge this Committee to pause and consider the significant contributions that streaming services already make to the Canadian music industry, not to mention the critical role streaming services play in ensuring the preservation of culturally and historically relevant music.

In large part thanks to audio streaming services’ openness and global reach, the culture of Canada’s past can be enjoyed today; and music once loved by past generations, can find a new audience - both throughout Canada and across the globe. Streaming Services Already Provide Significant Benefits to Canadian Artists The misconception that appears to motivate many of the Bill C-11 amendments is that digital streaming services do not currently make substantial financial and other economic contributions to the Canadian broadcasting system. This assumption is incorrect.

DiMA members already offer access to more Canadian content and contribute more revenue to artists, songwriters, and rightsholders than many organizations in the regulated Canadian broadcast system do today. DiMA members also provide a wide variety of benefits to Canadian artists of all sizes, including opportunities to showcase and advance their music to fellow Canadians and global audiences alike. Moreover, the services that DiMA members offer 7 See Comments of Digital Media Association before the U.S. Federal Communications Commission, In the Matter of Amendment of

Part 11 of the Commission’s Rules Regarding the Emergency Alert System (May 14, 2021) available at https://www.fcc.gov/ecfs/file/download/Comments%20of%20the%20Digital%20Media%20Association%20in%20 Response%20to%20EAS%20NOI.pdf?folder=1051463389099.

5 demonstrate consistent, strong growth in terms of usage and revenues, which shows no sign of abating. Under the existing pro-innovation regulatory landscape, streaming is demonstrating in Canada what it has shown in other countries: that the overall benefits to the music industry are substantial. Financial Contributions Streaming is popular in Canada and, as a still-developing market segment, its popularity will continue to grow in the coming years.

In 2021, for example, on-demand audio streams increased by 12.6%, helping to increase overall music consumption by 9.2%.8 This usage growth has corresponded with revenue growth, as well. The over-9 million Canadian streaming subscriptions deliver hundreds of millions of dollars in royalties every year to rightsholders who then pay creators.

The 2021 Wall Study estimated that Canadian rightsholders, including songwriters, publishers, performers, and record labels, earned over $500 million from streaming in 2019 alone. 9 And according to IFPI, 2021 total recorded music revenues in Canada were CAD 742 million (USD 583.6 million), with streaming representing 77.9% of the market.

Streaming revenue continues to power the music industry, increasing 18% year over year in 2021 and outpacing growth in all other segments. 10 And we expect that streaming revenue will continue to grow to reach new audiences across the globe, particularly in untapped markets such as Francophone nations (which is particularly relevant for French Canadian artists). The foundation for the substantial annual royalties paid out by streaming services is the fact that streaming services generally pay between 65-70% of all revenues they receive as royalties to music rightsholders.

This baseline ultimately provides much greater aggregate financial benefit to Canadian music rightsholders than commercial radio. By sharp contrast, the commercial radio sector pays a mere 8.2 percent of their revenues to music composers, publishers, performers and record labels. 11 The net effect of this discrepancy in royalties paid is that streaming services effectively pay 8.5 times more of their revenues directly to music rightsholders than the commercial radio sector does.

Efforts to Highlight Canadian Music in Both Official Languages Beyond pure compensation, DiMA’s members have invested in the success of Canadian artists in many other ways.

This includes: deep catalogues of hundreds of hand-curated Canadian artist-focused playlists made available for fans globally; specific stations for Canadian listeners in both official languages, featuring a robust selection of Canadian content; local teams in Canada; significant partnerships with Canadian music organizations and Canadian charitable 8 MRC Data’s 2021 Canada Year-End Report, available at https://luminatedata.xyz/reports/mrc-data-2021-canada- year-end-report/. 9 2021 Study of the economic impacts of music streaming on the Canadian music industry, Prepared for Canadian Heritage by Wall Communications Inc., at Figure 7 (Jun. 2, 2021), available at 2021 Study of the economic impacts of music streaming on the Canadian music industry - Canada.ca. 10 IFPI Global Music Report 2022. 11 This figure is calculated by combining the tariff rates certified by the Copyright Board of Canada in Commercial Radio Reproduction Tariff (2020-2023) and the applicable rates in “Statement of Royalties to Be Collected by SOCAN, Re:Sound, CSI, Connect/SOPROQ and Artisti in Respect of Commercial Radio Stations .”

6 and community organizations; and advertising/promotion of Canadian artists. This also includes artist marketing support to promote Canadian artists and their works in a variety of languages including English and French among others, as well as a means to enable fans around the world to discover the creative work of Canadian artists in new and innovative ways. Our members are proud to work with a wide diversity of Canadian artists and rightsholders to support and promote their work to Canadian and global audiences.

They embrace a wide array of artists, from the budding new artist to the established global superstar and everyone in between. Below are just a few notable examples of those efforts: ● Amazon Music has partnered with Canadian artists across all stages of their careers, investing in on- and off-platform support for the most popular Canadian artists today, while helping customers discover the next generation of Canadian superstars such as Tate McRae, renforshort, and Sacha through its ‘Breakthrough’ program.

Amazon Music has also invested in the production, recording, and global support of Original Content from artists including - but not limited to - Arkells, Coeur de pirate, Alessia Cara, Chiild, Luna Li and Donovan Woods. In addition to these campaigns, Amazon Music regularly delivers Canadian customers content which celebrates the diverse artistry of this country, with playlists and programs focused on supporting Indigenous, BIPOC, and LGBTQ+ creators across Canada, in two languages.

Finally, Amazon Music’s support of the future and present Canadian creator community extends to several charitable and community organizations, including the Unison Benevolent Fund, Unity Charity, Amazon Future Engineers’ Your Voice is Power program, and the HotDocs Podcast Development Lab for BIPOC Creators. ● Spotify’s efforts are driving success for artists of all tiers, from the Weeknd to the growing Quebécois rap scene to Canadian Punjabi musicians experiencing huge success in India.

Spotify’s music editorial teams curate 90 unique playlists that spotlight Canadian artists across a range of genres such as Rap québ, Mood Ring, Live Country, Café montréalais, Northern Bars, Les classiques Francophones, and Canadian Weekend.

Flagship playlists include: RADAR Canada (showcasing rising stars, including over 1000 emerging Canadian artists since the playlist began in 2020); New Music Friday (featuring an average of 50% Canadian content each week); Nouveautés de la semaine (promoting 100% new Francophone releases each week from Canadian and international artists); Du Quebéc (spotlighting Quebéc artists to highlight culturally important new releases and celebrations); and Indigenous (a promotional conduit that provides curatorial control for Indigenous artists across the country to share their work, with supporting video content for Indigenous storytelling and cultural awareness).

Spotify is the 2022 official playlist sponsor of Les Francos de Montréal, the world’s largest Francophone music festival and official partner of Les Rendezvous-Pros des Francos which promotes exchanges between music industry professionals from all Francophone countries.

Spotify Canada has also launched content hubs like Equal, Frequency, and Pride Canada to celebrate the expression of Canadian women, Black, and LGBTQ+ creators and impact campaigns including Caribbean Carnival, Asian Heritage Month, and Punjabi 101. ● Apple promotes Canadian artists such as Charlotte Cardin, Savannah Raé, Loud Luxury, and many more through its curated programming. Apple has also supported and

7 promoted internationally a number of developing Canadian artists including Jessie Reyez, Tate McRae, and Daniel Caesar in its global “Up Next” program, which spotlights interviews with and performances by rising talents. And Apple has extended this initiative to a local “Up Next” program celebrating a new Canadian voice every month. By regularly promoting Canadian content in a set of playlists dedicated to Canadian songs (e.g., Made in Canada, Made In Quebec, Canada’s Country, etc.), Apple provides international visibility for Canadian artists across Apple’s global platform. Apple Music also celebrates the diversity of Canadian creators by, among other things, providing a dedicated

section for Indigenous music and French-language songs, and launching editorial campaigns celebrating the BIPOC community, such as during Black History Month, as well as other cultural moments such as Saint Jean Baptiste and Canada Day ● YouTube’s “Artist on the Rise" showcases a music video from emerging music artists to Canadian users every week within the Explore tab in YouTube Main. Since launching in December 2020, “Artist on the Rise” has featured Canadian artists such as Faouzia, JESSIA, Valley, Jonathan Roy, Pressa, Tenille Arts, Mustafa, and Melissa Ouimet.

Notably, in 2020, 90% of watch time on content produced by Canadian YouTube channels came from outside of Canada. YouTube Music also prominently displays a “Discover Canada” shelf that populates professional music content and playlists by Canadian artists, big and small. More generally, streaming enables a platform for a “D-I-Y” artist to create and deliver music to a global audience.

Canadian artists who create music without the traditional help of labels and other industry players now have the ability to reach a global fan base: a feat that is impossible for traditional broadcasting to accomplish.12 Bill C-11 Could Hinder Canadian Artists on the Global Stage Imposing national preferences and quotas on streaming services will inadvertently undo much of the democratization of streaming and risks returning us to the isolated, local markets that failed to adequately reflect the rich and robust diversity of music being created throughout the world.

While national preferences and quotas prioritizing Canadian content may, at first blush, seem to help Canadian artists, such prioritization risks disrupting consumer preferences around the world and the expectation by consumers that government will not interfere with the music they choose to listen to. In the long term, although Bill C-11 is admirable in that it seeks to promote Canadian content, we are concerned that altering the existing framework may diminish listener trust in services and ultimately backfire for the artists that Bill C-11 is designed to support.

This would be especially unfortunate in light of the fact that such prioritization is unnecessary given all the work streaming services are undertaking already to showcase Canadian artists to global audiences. 12 See Bedroom Pop and the Rise of the DIY Artist, Tea n’ Tunes (Jan. 13, 2020), available at Bedroom Pop and the Rise of the DIY Artist | by Tea n' Tunes | Medium; see The Rise of DIY Music, Caitlin Dunn, KTSW 89.9 Blog (Mar. 27, 2019), available at The Rise of DIY Music – KTSW 89.9 (ktswblog.net); see also Independent Artists: the Age of Empowerment, MIDIA. (Jul. 11, 2019), available at Independent Artists: The Age of Empowerment (midiaresearch.com).

8 Bill C-11 Must Serve to Advance Canada’s Innovation Agenda Canada is a country that is dedicated to innovation, yet innovation is not reflected in the text of Bill C-11. Canada’s Innovation Agenda seeks to make Canada a “world-leading centre for innovation”13 but Bill C-11, as currently drafted, does not advance this goal. Streaming has been rightly hailed as driving a resurgent global music industry.

Rather than continue to foster and advance the industry-changing innovation that now allows Canadian music to be streamed all over the world, Bill C-11 will undermine Canada’s broad innovation goals to the detriment of Canadian creators, rightsholders and consumers. Ideally, Parliament would pause the process of passing Bill C-11 to better examine the impact that the Bill’s approach will have on innovation for streaming services and the likely negative impact that the Bill will have on Canadian creators, rightsholders, and consumers.

At a minimum, however, the Bill should support listener experience and explicitly capture the importance of fostering innovation; it should promote clarity and predictability and must not disrupt the existing innovations that have contributed to the global success of audio streaming to the benefit of Canadian artists. We urge this Committee to include the following clear, limited amendments specified below, which would correct both imprecise drafting issues in the Bill and foster innovation moving forward. 1.

Add a provision that prevents the CRTC from interfering with algorithmic decision making (which threatens to diminish the consumer music streaming experience) While Bill C-11 contains an important exception to prevent the CRTC from making an order that would require “the use of a specific computer algorithm or source code” by an online undertaking, this exception, as drafted, does not address the real source of risk.

The restriction is clearly designed to prevent the Commission from imposing orders that would interfere-with algorithmic decision-making and harm consumer experience, but the current text neither reflects nor ensures this intention. Relatedly, it is very unlikely that the Commission would ever order the use of a specific algorithm, making that provision too narrow to achieve its intended purpose. Additional statutory language is required to ensure that the Commission will not impose orders that hamper innovation in customizing streaming features to listeners’ tastes.

To do so, we encourage the Senate to include a restriction that prevents the CRTC from making an order that would “require changes to a broadcasting undertaking’s algorithm or source code, or the use of any algorithm or source code by a broadcasting undertaking.” We propose adding a subsection after the existing restriction on orders related to source code to clarify that the Commission must not interfere with the algorithms or source code that are central to streaming services’ success, are informed by user preference (are consumer driven) and do not prevent the showcasing of Canadian programs: 13 Innovation for a Better Canada, available at Home - Innovation for a better Canada (ic.gc.ca).

9 Restriction — computer algorithm or source code 9.1(

X) The Commission shall not make an order under this Act that would require changes to a broadcasting undertaking’s algorithm or source code, or the use of any algorithm or source code by a broadcasting undertaking. We believe this to be consistent with the spirit and goals of the legislation. 2. Ensure that the CRTC regulations consider the significant financial and non-financial factors and contributions made by streaming services to Canada and Canadian artists.

As detailed above, streaming services already provide significant benefits to Canada and Canadian artists, both financially and in several other non-financial ways. Such significant benefits must be accounted for during the regulatory evaluation with respect to an online undertaking or class of online undertakings. The following amendment would create a new

section 9.2 to require the Governor in Council to make regulations that enumerate the factors the CRTC must examine when imposing an order on Online Undertakings under s. 9.1 to ensure that the substantial benefits that streaming services already provide to Canada and Canadian artists is accounted for. The following s. 9.2 should be added: 9.2 Regulations prescribing criteria of Online Undertakings (1) (

a) The Governor in Council shall make regulations prescribing criteria that the Commission is required to consider prior to issuing any order under paragraph 9.1(1) with respect to any online undertaking. (

b) Such regulations shall include at least the following factors: (

i) The amount of financial remuneration already paid to Canadians by the online undertaking; (ii) The access that Canadian artists and creators have to the online undertaking to distribute and promote their content; (iii) The tools provided by the online undertaking to help Canadian creators build a domestic and international audience for their content; (iv) The in-kind or indirect financial support provided to Canadian creators by the online undertaking, including promoting content through playlists, special events, marketing, creator profiles, etc.; and (

v) The amount of Canadian content that is available from the online undertaking, and in particular content produced by artists representing Indigenous and French and English language minority communities.

10 3. Ensure that online streaming services are carved out from “must-carries” and requirements to carry emergency messages. Bill C-11 would allow the CRTC to impose must-carry obligations on online undertakings and force online streaming services to carry emergency messages. The practical effect of a must-carry obligation without terms and conditions for online undertakings is unclear and should be removed.

Further, the requirement to carry emergency messages fail to take into account the practical and technical problems in doing so for online undertakings, such as the global nature of streaming services and the relevant technologies. For instance, streaming services do not collect location data granular enough to accurately target emergency messages to the relevant recipients. As such, in times of true emergency, some citizens in harms-way would not receive necessary warnings, and some citizens would inadvertently receive messages not intended for them, the result of which is real world harm on either side.

The following is a surgical amendment that would carve out online undertakings from such functions that are better suited for local traditional broadcasters. Remove: (i) (a requirement, without terms or conditions, for a person carrying on an online undertaking to carry programming services, specified by the Commission, that are provided by a broadcasting undertaking) Amend: (

l) for a broadcasting undertaking other than an online undertaking, the carriage of emergency messages 4. Define “showcasing and discoverability” to foster and preserve diversity. As noted above, our members are proud to work with a wide array of Canadian artists and rightsholders by supporting and promoting their work to Canadian and global audiences. We believe that the reference to “showcasing and discoverability”, as used in s. 9.1 (1)(e), can serve to enhance diversity for Canadian artists of all sizes and genres. The following amendments would clarify the text of s. 9.1 (1)(

e) to state “the preservation of programs and programming services for selection by the public as it pertains to the showcasing and the discoverability of Canadian programs…” in addition to introducing a definition of “showcasing and discoverability” to the Act to ensure that the Act includes the ability to “find and make available” works from all Canadian artists: 9.1 (1)(

e) the presentation of programs and programming services for selection by the public, including as it pertains to the showcasing and the discoverability of Canadian programs and programming services, such as original French language programs; (2)(1)… showcasing and discoverability includes the ability to find and make available programs and programming services by all Canadian artists.

11 5. Enshrine the concept of “innovation” in the Broadcasting Act. The word “innovation” does not appear once in the current Broadcasting Act, and the amendments currently proposed will not correct this defect.

This is a glaring omission for a country with an Innovation Agenda and a long history of embracing innovation and exporting original, Canadian content to the rest of the world. 14 By failing to include “innovation” in a modern Broadcasting Act, Bill C-11 is missing an easy opportunity to encourage the type of streaming innovation that has given Canadian musicians, record labels, and publishers a platform to bring their content to the world.

The following amendment would amend the broadcasting policy objectives in the current Broadcasting Act to make clear that the Canadian broadcasting system is expected to be innovative. s.3(d)(1)(iv) of the Act is a logical place to include a reference to innovation in the broadcasting policy objectives as follows: 3(d)(1)(iv) promote innovation and be readily adaptable to scientific and technological change; 6. Revise the proposed amendment to the regulatory policy to ensure that the CRTC uses its regulation making authority to create objective, balanced, and proportionate regulations. The proposed s.5(2)(

h) is intended to ensure that the CRTC does not impose regulations that do not improve regulatory outcomes. This provision is a natural place to acknowledge the importance of promoting a variety of innovation, unique to the diversity of undertakings that would be governed by Bill C-11 and ensure that the Commission’s regulations do not prevent such innovation. s.5(2)(

h) should be amended to require the Commission to avoid regulatory measures that will limit innovation in the Canadian broadcasting system: 5(2)(

h) takes into account the variety of broadcasting undertakings to which this Act applies and avoids imposing obligations on any class of broadcasting undertakings if that imposition will limit innovation or will not contribute in a material manner to the implementation of the broadcasting policy set out in subsection 3(1) In conclusion, DiMA thanks the Committee for the opportunity to provide testimony and to offer our views, as the leading association representing audio streaming services.

We welcome the opportunity to continue the discussion of how Bill C-11 can be improved to further foster the innovation that benefits Canadian artists by providing them a global platform to connect with fans throughout the world. 14 See Innovation for a Better Canada, available at Home - Innovation for a better Canada (ic.gc.ca).