{"id":265240,"date":"2017-06-16T10:31:30","date_gmt":"2017-06-16T14:31:30","guid":{"rendered":"https:\/\/policyoptions.irpp.org\/issues\/value-gap-canadas-cultural-industries\/"},"modified":"2025-10-07T21:39:42","modified_gmt":"2025-10-08T01:39:42","slug":"value-gap-canadas-cultural-industries","status":"publish","type":"issues","link":"https:\/\/policyoptions.irpp.org\/fr\/2017\/06\/value-gap-canadas-cultural-industries\/","title":{"rendered":"The value gap in Canada\u2019s cultural industries"},"content":{"rendered":"

Back in 2003, a famous Canadian recording artist had this to say when he was asked about his prospects in the new digital economy: \u201cWe are entering a golden age. A golden age.\u201d This idea was embraced by some artists, the media, pundits, professors and, most importantly, policy-makers around the globe.<\/p>\n

Their heady optimism stemmed from the seismic events then unfolding in the online distribution and consumption of creative content. Digital technologies allowed instant global distribution at what was somewhat optimistically touted as no marginal cost, and the iPod had taken mobile digital music into the mainstream.<\/p>\n

The artist who praised the unfolding of this golden age believed that the digital era would usher in a utopia for both musicians and the consumer. Artists would gain access on the Internet to a larger audience than ever before and, in return for the collapse of their traditional marketplaces, they would make more money from the sale of concert tickets, merchandise and other sources. This was an epic leap of faith, and virtually everything was riding on one thing \u2013 the promise of digital technology.<\/p>\n

The passage of time has taught us that we would have benefited from a judicious skepticism; that we should have questioned the extraordinary promises being made and the extravagant assumptions upon which those promises were based.<\/p>\n

Nearly 15 years later, we can say with certainty that the promised golden age did not materialize for the creative class. Today, more music is consumed, in more ways and by more people, than ever before. It is streamed for personal use, it plays in the background nearly everywhere, and it provides intensity and emotion to our favourite television shows, movies and video games. And yet, artists today are worse off than they were 20 years ago \u2013 perhaps the first creative generation in hundreds of years to experience such a dramatic degradation in their standards of living. This mess has resulted from what we now call the \u201cvalue gap.\u201d<\/p>\n

The value gap is an international phenomenon. Music Canada\u00a0defines it as \u201cthe gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.\u201d In fact, all cultural industries are experiencing a value gap, including publishing, film and television and journalism. The end result? Within the span of a single generation, the creative middle class has almost ceased to exist.<\/p>\n

Where has the money has gone? What needs to be done to restore balance to the system? How can the mandated five-year review<\/a> of the Copyright Act<\/em> help Canada\u2019s cultural industries before it is too late?<\/p>\n

How did we get here?<\/strong><\/p>\n

In order to truly comprehend the magnitude of the value gap, we must understand that it is about more than changing consumer habits. The value gap is a product of decisions made by governments around the world that have allowed cultural content to be distributed, made available, consumed and monetized by others without proper payment to creators. Creators today are living in a world they did not create. This new world order is perpetuated by out of date rules and regulations based on faulty assumptions and promises.<\/p>\n

For instance, 20 years ago, exemptions were created in the Copyright Act<\/em> to protect Canada\u2019s struggling locally owned and operated radio stations. Today, the vast majority of radio stations are owned by major, vertically integrated media corporations, and much of their programming is centrally controlled, making Canada\u2019s radio industry more profitable than ever<\/a>. Similarly, Internet service providers \u2014 also owned by massive media conglomerates \u2014 were protected from liability on the Internet to allow them to grow.<\/p>\n

Exemptions like these have been implemented around the world. The French economist Olivier Bomsel was among the first to call this arrangement out for what it was \u2014 a massive system of cross-subsidies. Forced by law to forego money otherwise payable to them, the creative community has directly subsidized the development of the technology infrastructure.<\/p>\n

At least for musicians, a key component of the promise of the golden age was that while the market for the sale of music might decline, new and different income sources would arise.\u00a0Infamously, this came to be associated with the idea that touring and merchandise income would supplant the sale of music products.\u00a0It has not. According to a study commissioned<\/a> by the Canadian Independent Music Association, the average artist in Canada earned about $7,200 per year from music in 2011.<\/p>\n

Musicians are not alone in this: according to a\u00a02015 survey\u00a0<\/a>by the\u00a0Writers\u2019 Union of Canada<\/a>,\u00a0authors are earning 27 percent less from their craft than they did in 1998, while median net income from writing was less than $5,000. In a recent speech<\/a> to the Economic Club of Canada, artist-activist Miranda Mulholland poured scorn on the idea that touring could be a panacea.<\/p>\n

As the government undertakes to review and reflect upon the last two decades of digital policy in Canada, it should take a clear-eyed look at the market distortions that the legislation it enacted 20 years ago has created. The government must help to restore a functioning marketplace. It should hold itself accountable for the rules it enacted \u2014 rules founded on assumptions that we now know were wrong. The upcoming review of the Copyright Act<\/em> must level the playing field. It needs to examine each instance within the Act<\/em> where creators are cross-subsidizing major media corporations and end those cross-subsidies.<\/p>\n

What can be done now?<\/strong><\/p>\n

Music Canada is just one of many creators\u2019 groups now calling for reforms. This year in Europe and the United States thousands of artists petitioned their governments to address the value gap and rebalance the rules.\u00a0In Canada, the Focus On Creators<\/a> campaign has united to send a joint letter<\/a> to<\/u> Minister of Canadian Heritage M\u00e9lanie Joly, urging her to put creators at the heart of future policy.<\/p>\n

The Canadian government has made it clear<\/a> that it wants a new toolkit to confront the challenges facing Canada\u2019s creators and has at its disposal a number of different levers it can pull as part of a robust review of the Copyright Act.<\/em> Actions it should take include the following:<\/p>\n