Transcript Document

APPROACHES TO PROMOTING AND
PROTECTING CULTURAL INDUSTRIES:
Lessons from Canada
INTRODUCTION TO CANADA (1)
 Canada: 32 million people, 25 million English-speaking
 Pioneers of satellite rain--exposed to American signals since
the dawn of broadcasting
 Huge country, sparse population, very diverse = big
challenges
 Foreign content (mostly American):
80%+ of magazines
88% of new record releases
94% of movies in theatres
61% of English-language TV programming
 ERGO, Canadians feel strongly about shelf-space for Canada
INTRODUCTION TO CANADA (2)
 1930s: “The state, or the United States.”
 No longer fashionable, but Canadians still look to their
governments for leadership on protecting and promoting
culture.
 Americans view Canada as “canary in the mine” or “first
domino” when it comes to global success of their
entertainment and media industries.
 Canadian public policy walks a fine line between promotion
and protection.
 HENCE, leadership role in Global Convention on Cultural
Diversity.
CULTURAL ECONOMICS (A REFRESHER)
 “Public good” valued for experience it conveys, not physical
manifestation.
 Original does not deteriorate or get consumed, no matter
how many people buy it or experience it.
 Extremely high risk because nobody knows what will
succeed; each product is unique.
 Marketing muscle and ability to take on risk essential to
success; gatekeepers can determine demand.
 Pricing can be arbitrary once up-front cost is recovered.
 ERGO, bigger is better, and it’s different from conventional
goods.
CANADIAN BROADCASTING (1)
Canada is unique in receiving film, television, marketing
and promotion simultaneously with US market; US film
distributors consider Canada part of their domestic market.
1991 Broadcasting Act mandates Canadian ownership and
control, sets requirements for certified Canadian content
(Cancon):
60% of television schedule
50% of prime time hours
35% of music on radio
Complicated bonus systems can end up reducing this in real
time.
CRTC regulates broadcast licences, entry of foreign
services.
CANADIAN BROADCASTING (2)
Broadcasters are protected from American competition
through
Simultaneous substitution--replaces signal on US
stations with Canadian signal when “simulcasting”
(creates incentive to simulcast)
Tax measures--e.g. businesses cannot deduct advertising
in foreign media as business expense.
Cross-subsidy model: make money on Canadian
commercials inside American hits, use profit to fund
Canadian programming
Economics are very precarious; Cancon requires public $.
CASE STUDY Degrassi: The next generation
Episode cost is C$600,000, less than one-third US budgets
Cdn broadcaster must amortize over base 10% of US
US licence fees of US$1.3 million/hr cover 86% of cost of
production; Cdn broadcaster can have it for US$50,000.
Cdn broadcaster pays C$116,000 an episode, almost three
times cost of typical US drama, covering only 17% of
production costs; gap is three times greater than for US
producer.
Other sources of financing essential, much of it from the
public purse.
ERGO Canada has a hybrid public-private system, with
private broadcasters relying on public funds to make Cdn
programming, and public broadcaster needing advertising to
keep going.
THE FUNDING MODEL
 Patchwork, so producers spend a lot of time on paperwork.
 Funding agencies are either public, or pools of money
skimmed in small percentages from private or consumer
sources.
 Often mandated by regulator or government in exchange for
market entry (e.g. 5% of BDU revenues go to CTF).
 Problems and issues include bureaucracy, delays, integrity,
culture vs. commerce debates, governance.
 Small percentages over large body of transactions may be
worth examining for CARICOM countries--how could this
work?
FOREIGN INVESTMENT IN CANADA
Investment Canada Act provides for review of foreign
investments in cultural businesses--can refuse but in practice
rarely does; more often sets conditions.
High sensitivities (primarily about US interests) around
publishing, broadcasting: newspapers and broadcasting must
be under Canadian control by law.
Performing artists welcome, but must obtain permits to
work in bars, restaurants, film, television; may not become
employees of Canadian companies.
TREATMENT OF FOREIGN BROADCAST SERVICES
Programme supply deals such as HBO-Bravo in Canada
Canadianization through alliance controlled by a Canadian
partner (Bravo, Discovery, BBC Canada). Foreign partner
may hold up to a total of 49% through holding and operating
companies.
Carriage of foreign channel in its entirety on approved
Eligible Services List. In this case, the foreign channel is not
allowed to sell advertising in Canada, but may recover
subscription costs from the BDUs (A&E).
All services carried are subject to tiering and linkage
requirements to ensure Canadian services are not
marginalized.
TREATMENT OF FOREIGN CONTENT
Canadian content must be certified through one of three
processes; requires majority Canadian creative control.
Foreign content can only be aired once Canadianization
through alliance controlled by a Canadian partner (Bravo,
Discovery, BBC Canada). Foreign partner may hold up to a
total of 49% through holding and operating companies.
Carriage of foreign channel in its entirety on approved
Eligible Services List. In this case, the foreign channel is not
allowed to sell advertising in Canada, but may recover
subscription costs from the BDUs (A&E).
All services carried are subject to “tiering and linkage”
rules to ensure Canadian services are not marginalized.