Canadian Biz Debates Quota Exemption For Web, Wireless

Key Canadian music industry players are increasingly alarmed that new Web-based broadcasting and mobile music services could be exempt from statutory domestic music quotas.

In the next few months, digital music services are expected to offer multiple business models—including paid individual downloads, subscriptions and streaming radio—alongside the launch of mobile telephone broadcasting services from Bell Canada, Rogers Wireless and Look Communications.

Those operators will, in many cases, look to import content from U.S.-based services. The local music industry is keen that such services in Canada should be licensed and regulated to comply with the country's Broadcasting Act and existing "Canadian content" domestic music content requirements.

On Sept. 12, SOCAN asked the Canadian Radio-television and Telecommunication Commission to rule that the proposed mobile telephone services be treated like other broadcasters.

"We have to ensure we have measures in place that allow the products of Canadian musicians to reach Canadians," SOCAN general counsel Paul Spurgeon says.

However, within the music industry, others contend that the new services present a significantly different environment from the existing broadcasting system. They suggest that the advent of new media calls for changes in government policy and phasing out quota-based mechanisms.

"CanCon is outdated," says Nettwerk Productions CEO Terry McBride. "Kids don't care about the nationality of an act, and they can also go to any radio station in the world [that is] doing webcasting."

"These guys should be licensed like any other broadcaster," Spurgeon says, "and should adhere to the CanCon regulations. Although new technologies are being used, the fact remains they are transmitting programming content like existing broadcasters."

Universal Music Canada senior manager of business affairs and e-commerce Erika Savage adds, "If phone companies start streaming music onto cell phones, the CRTC is going to have to answer [whether] that fits their definition of a broadcast."

In 1998 SOCAN made submissions to the CRTC for new media including Internet and telecommunications-based services to be regulated like existing broadcasters. However, the CRTC declined to do so and in December 1999 announced a regulatory exemption for all new media, to be reviewed after five years. That review has not yet taken place.

Currently, mobile telephone service providers are lobbying the CRTC to extend the 1999 New Media Exemption Order to cover their proposed services.

SOCAN argues that the CRTC should first conduct its review of the exemption order and update its policies before deciding whether new services fall within the order's scope.

"If the telecommunications services are unregulated, we have a giant problem," says Brian Chater, president of the Canadian Independent Record Production Assn.

The same problem exists with online music. "With these digital music businesses mostly coming from the U.S., we need shelf space guaranteed for Canadians in the digital world," EMI Music Publishing Canada president Michael McCarty says.

However, opinions differ, even within the EMI group. "If a Canadian act has a profile or sales potential, iTunes and Napster work it," EMI Music Canada VP of marketing Rob Brooks argues.

Yahoo Canada content manager Andy West says domestic music will be fully represented when the firm's digital service launches in Canada later this year. "What happens in the United States is not always reflective in this market," he says. "We want Canadian music to be well represented." ••••