A new report by the CD Howe Institute came out today. It’s not big, just 3 pages and seemingly informed by a bunch of guys sitting around a table at the Howe’s ‘inaugural meeting’ last week (June 17).
It is brash, and some might dress it up as bold: drop all limits on ownership of telecoms and media industries in Canada, it says. Full stop.
No phase out. No ‘newcomer advantages’, full stop again. No attempt to separate the ‘medium’ (wires, spectrum, sewer access) and the message (broadcasting, integrated suite of ‘content’ from mags to blogs) from one another. A digital free for all, you might say.
Perhaps the gentlemen, and they were with the exception of only a single woman, thought this might be a good idea while they sat around and chatted last Friday afternoon. Apparently, there were not so many women ‘law & economics’ types available to join them, given that all but out of the 16 places apparently went to the guys and boys from Bell (see below). I guess ‘law and economics’ types like Sheridan Scott, a hard liner in these matters, and Monica Auer, who generally takes the opposite tack by speaking eloquently and passionately on the telecom and media workers’ behalf, weren’t available, or any of the other smart dames roaming these circles as I saw, in the minority, at the CRTC’s hearings this week.
I looked at the composition of ‘the deciders’ not just because their gender was so obviously skewed, but because I recognized the names of most of the guys. One in particular leapt out, Jeffrey Church, a University of Calgary economics professor. By all accounts, he’s an excellent teacher. Professor Church caught my eye because, in addition to advising the ‘big 3Ps’ in Canada as I’ll call them — Petroleum, Alberta Beef Producers, Pharma — Professor Church just wrote an economic analysis for Bell as part of the very, very important vertically-integrated telecom-media-Internet hearings now being held by the CRTC.
According to Church in his voluminous 93 page submission on Bell’s behalf, vertical integration is good for consumers and for Canada (p.5). I disagree, strongly, for reasons set out regularly in this blog (e.g. here) and my column for the Globe and Mail on Monday.
It’s not just Church that is so closely tied to Bell, but also Marcel Boyer, Bell Canada Professor Emeritus of Industrial Economics, Université de Montréal, as the CD Howe report indicates on the back of this slim 3 page ‘report’. 2 out of 16 does not a majority make, obviously, but their presence does stand out.
The rest of the lot in this ‘law and economics’ crowd does not seem very adventuresome, either. I know one professor occupying a BCE endowed chair that won’t be called upon, Professor Robert E. Babe at the University of Western Ontario, for he has traced the propensity of telecoms historically to go from limited competition to ‘total consolidation’ on a regular basis. Let us say that the fact that Howe ‘report’ has zero to say about such notions is not all that surprising.
The 3 page ‘report’ is candid that dropping the foreign ownership limits on everything — telecom, media, internet — will not increase the number of competitors in the market. As it states, “given the small size of the Canadian market, the consensus view saw no major change in the number of national competitors”.
Translation, the big three companies in wireless telecoms — Bell, Rogers, Telus — for instance will still account for about 94% of the market (according to CWTA 2010), but they might be owned by yet a larger foreign based telco (Vertizon, the ‘new’ AT&T, Deutsche Telekom, etc.) or may private equity funds. Me, I have doubts many foreign investors — telcos, priv equity funds, banks — will even come if permitted to do so (or if we want ’em to on such ‘carte blanche’ terms). I’m not alone on this, and hardly radical, given that even the World Bank states that the keys to effective foreign ownership is a ‘strong state’ able to regulate and competition.
Instead, the Council of 15 wise men and 1 smart woman says, drawing on newfangled theory about ‘competitive innovation’ drawn from the right-wing side of Schumpeterian ‘innovation economics’, that “the gains from liberalization would likely result . . . from better performance by telecommunications market participants”. Umm, I hope so, especially because its this same crowd breying for the withdrawal of any meaningful conception of regulation or state intervention. The CRTC’s horizons have been blinkered and public ventures like CANARIE have had their wings clipped. How foreign capital will ‘improve’ performance standards in Canada is not clear to me/self-evident.
The report advocates this ‘regulatory shock and awe’ to be developed in one swell swoop, with no distinctions kept between telecoms and broadcasting, between networks and content, between incumbents and newcomers. The telecom-media-Internet sectors are now so entangled on account of digitization and how people use media that they must be treated together as a whole. Partial agreement there about treating things ‘holistically’.
More targetted measures are suggested as alternative to foreign ownership for whatever “cultural policies” might be left over. Some of these ‘targetted measures’ I believe in — securing financing for content production, shelf space, strong CBC — and they have been promoted by at least two of the same writers involved in today’s 3 page missive (e.g. see Hunter and Iacobucci, with a third author Michael J. Trebilcock).
There are several problems with this “report”, however, that make it’s contribution to public discussion dubious, despite the fact that it will gain much attention.
1. Three pages is not a report and should not be pitched as one.
2. The Council of the Wise is skewed along lines suggested above, ie. by Bell and by Gender. Bell has always had a visible hand in the telecom, broadcasting and media industries, indeed, since it began broadcasting speeches, songs and sermons in the 1880s and took-over the Chairmanship of the 1905 Mulock Commission which had originally been convened to look into the underdevelopment of the telephone system in Canada in the early days of the 20th century.
So, that Bell continues to be front and centre 100 years later, at the dawn of the 21st century, is both a marker of continuity and somewhat unsurprising, but equally suspect/problematic in each of these occasions. The presence of Bell’s hired gun (Church), a Bell sponsored ‘academic chair’ (emeritus, Boyer), and BCE CEO George Cope’s speech at the C.D. Howe two months ago all so bunched up in time and common stance has a whiff of something not quite right about it.
3. While I don’t actually have many problems with increasing competition and dissolving lines between the medium and the message, or the network infrastructure and content, we also need to be upfront about the fact that the former (media infrastructure) are generally scarce and the latter (messages) abundant. In today’s OECD Communication Outlook 2011, it is clear that, generally speaking, the top 2 ‘netcos’ in each of the OECD countries account for between two-thirds and three quarters of fixed and mobile telecom network markets in each of the OECD countries (pp. 56-59). This means:
- that Netcos generally should be regulated for market power, ‘messagcos’ generally not.
- ties between Netcos and Messagcos are congenitally fraught with problems and propensity for anti-competitive behaviour.
- Free speech standards and the values of a ‘networked free press‘ are also at play (and here). As the United Nation’s Human Rights Council recently stated, those standards apply to the Internet and people should have, as Article 19 of the Universal Declaration of the Rights stated before it in 1948, the freedom to receive and impart any information, through any media regardless of frontiers. At the CRTC Hearings on vertical integration the other day, Bell’s Mirko Bibic and Shaw’s brass called the idea that people should have access to any content on any device “preposterous”. The C.D. Howe ‘report’ is oblivious to these considerations.
4. The C.D. Howe report misses reality and the ‘big picture’. Perhaps this is because there is not a whiff of heterodox thinking among the ‘law & economics’ experts who wrote it. Not one ‘ecclectic’ economists, not one wild eyed, crazy lawyer, not a communication and media scholars or a historian in sight.
This is too bad because as long as it continues to be the case, people will continue to talk past one another. And it also means that ‘reports’ like this one, and the policies and approaches that actually do follow close in tow in the ‘real world’, will lack legitimacy.
5. Without being able to expand their horizon, the authors of the C.D. Howe ‘report’ blithely countenance “North American integration”. Economically, as I said above, I don’t have a particular problem with that, although I doubt that things will pan out as they expect, and even that what the Howe folks do expect ain’t much (“better performance” from same number of players).
Politically and culturally, however, there is a problem, not with Cancon and ‘traditionalist/romanticist’ conceptions of culture, but ‘network culture’. Netcos and search engines are now closely allied with state security, military strategy and defense contractors. It’s probably best to keep some clear blue water between these domains. The authors give no hint that they have even thought of this.
Netcos, ISPs, search engines, etc. are also constantly being badgered by lobbyists as well as politicians in Canada and the U.S. to play a greater role on behalf of media and entertainment industries (for most recent and strong opposition to this from within just the mainstream’, see here). The approaches have differed, with the last government in Canada wisely turning down lobbyists push to have ISPs play the role of ‘copyright cop’, disconnecting people who repeatedly are identified as ‘copyright bandits’.
The International Federation of Phonographic Industries (IFPI) launched it’s efforts to lean hard on ISPs and search engines, and less on Digital Rights Management (DRM), in 2008. It has been picking off ‘wins’ for this agenda around the world, but not so much yet in Canada.
Yesterday, CNet journalist Greg Sandoval reported that AT&T, Comcast, and Verizon “are closer than ever to striking a deal with media and entertainment companies that would call for them to establish new and tougher punishments for customers who refuse to stop using their networks to pirate films, music and other intellectual property”. That turn-of-heart, in turn, he reports, was eased by coaxing from the Obama Administration and the National Cable TV Association.
The pressure is already strong in Canada, but so far government and regulators have refused to make ISPs the deputies of the media and entertainment industries or to regulate the Internet as a broadcast distribution medium. On law and order, however, the push is for a stronger state and more compliant Netcos and Searchcos.
While there’s lots of dots to connect between all of these latter points, the key idea is that integration at the network and market levels is going to increase pressure to harmonize tougher matters that impinge greatly on network media, and thus network culture. That the blokes and one women from C.D. Howe have nary a word about this and don’t dare let the phrases ‘network neutrality’ and ‘open media’ cross their lips is a problem of the first order because those concerns, as sure as night follows day, are at the heart of the emergent network media culture. How can foreign ownership be reconciled with these concerns should be the question, rather than if it if good or bad altogether.
In sum, until we can start speaking one another’s language and stop passing off economic and policy platitudes backed by those with big stakes in the game, the nominal ideas presented in this “report” should be shelved and other big questions — vertical integration, for example — put on hold.
Ultimately, Pork, Petroleum and Pharma are not the same as telecoms and media. We need some new thinking for ‘new media’.
Until we recognize this, we’re not going to get very far, at least in a a way that takes into account the full range of issues at hand, rather than the economists narrow measuring rod of value.
While writing the last post on the potential termination of funding for CANARIE, I got in touch with someone who I have recently come to know and have a great deal of respect for, Bill St. Arnaud. Bill’s important to the CANARIE story because he was Chief Research Officer with it for fifteen years before starting off on new adventures in early 2010.
After reading CANARIE’s annual reports for the last decade and the Government’s budget for 2011-12 tabled last week in Parliament that signals the end of CANARIE as a government funded initiative, I got in touch with Bill to see if I was understanding things correctly. Here’s a brief reprisal of the email conversation we had:
Dear Bill, I was wondering if you could please help me make some sense of some numbers related to Canarie that I’ve recently come across in the Governments Budget for the upcoming year? I see that they refer to the ‘sunset’ of $31m in funding to Canarie last year, and zero allocated for the upcoming year. Surely that doesn’t mean that Canarie’s entire budget has been eliminated, does it?
BSA: CANARIE receives only block grants approximately every 5 years. The last block grant was for $120m in 2007 . . . . So currently CANARIE’s funding sunsets next March. . . . CANARIE has virtually no other sources of income.
Over its 15 years existence CANARIE has received almost half billion dollars in funding made from a multitude of block grants. After the receipt of each block grant many times the government has told CANARIE that it should be self sustainable from that point on. Finally I think this government actually means it this time. But CANARIE’s board and management is actively lobbying government for another block grant when the current one expires next March.
However I have been arguing for some time that CANARIE should be self sustainable, at least on a day to day operational basis. Many of CANARIE’s counterpart research networks around the world are operationally sustainable like those in Australia, US, Nordic countries, Netherlands, etc.
Although some of these networks, from time to time do receive capital funding to invest in new infrastructure or build community networks. Being operationally sustainable, has its challenges (especially at this late hour), but it has a number of advantages:
(a) It would give CANARIE the freedom and independence to pursue more aggressive broadband strategies without fear of reprisals from incumbents lobbying government to prohibit such activities. Internet 2, in the US for example, when it was created deliberately eschewed government funding for this reason
(b) CANARIE can do much better long term planning instead of having to stare at a 5 year horizon. The last block grant literally came at the midnight hour – and we had to start to give layoff notices to many staff just prior to receiving the funding
(c) CANARIE can be a much greater force for innovation if it is self sustainable by offering innovative new services such as national wireless, zero carbon Internet, community networking etc
So, if Bill is right, then the end of government funding doesn’t necessarily mean the end of CANARIE.
But will it continue to operate as a semi-independent actor capable of experimenting with advanced versions of the Internet that will only become widely available years from now? Will it continue to push the envelope when it comes to open network and interoperability principles that define the original, non-commercial Internet?
In other words, will it continue to set an independent, alternative high-bar standard against which the incumbent telecom providers — Bell, Shaw, Rogers, Telus, Quebecor, Cogeco, etc. — can be critically assessed?
While I struggled to get my head around the idea that it could be okay to cut CANARIE off of government funds cold-turkey, it also took a while to fully realize Bill’s first point: that CANARIE has been put under incredible constraints already by incumbents constantly badgering the government to keep it on a short leash. In other words,the incumbents have pushed to keep CANARIE from actually competing with them in ‘the market’. It’s done what its done, so to speak, with one arm tied behind its back.
So getting CANARIE off the government trough seems to be Bill’s way of hoping that doing so might give it greater room for manouver outside the constraints imposed on it by governments acting at the behest of incumbent lobbyist. This is an incredibly important point, but one might wonder if government ought not steel its spine and actually stand down the lobbyists?
My feeling is that it would be better, in short, to have continued public funding and proper shielding from undue commercial influence. In a perfect world, we could have both, but I now understand why Bill doesn’t see cutting funds for CANARIE as the death blow I originally anticipated.
Maybe this can all be made a bit clearer by drawing parallels to television and hockey. It is commonplace in Canada and all countries with any kind of public service media for commercial broadcasters to whine about the CBC ‘unfairly’ competing with them for the rights to air NHL hockey games and anything else that draws eyeballs and attention. And so too for CANARIE, because the comparisons drawn with the private sector might not prove so favourable, better to cordone it off in areas the private sector is willing to leave behind to begin with. Seeing things from Bill’s perspective we can only imagine what CANARIE might it do if set loose after being held on a short leash for all these years?
In all of this is a vital demonstration in the political economy of communication, and it is as old as the first telegraphs, submarine cables and so forth in the 19th Century, and that is that governments shall never compete with private capital for markets. In ‘normal economics’ it’s called crowding out, while a more radical perspective sees this as the subordination of democratically elected governments to the interests of capital, or business to put it more simply. Today, it’s putting things like CANARIE and the CBC on short leashes, so that they can be ‘remedial public’ programs, not hardcore alternative providers in ‘the market’.
We can also see this kind of thing in familiar terms when we look across the Atlantic to the UK, where the BBC — a core public service media provider — is constantly under pressure from the likes of James Murdoch of News Corp. and the Newspaper Publishers Association, for instance, to trim its sales. The Newspaper Publishers Association, for instance, argues that the BBC’s online news ambitions “threaten to strangle an important new market for news and information”.
Translation? The BBC should be tied to the mast of a sinking ship: television broadcasting, with rabbit ears preferably, while the rest of the explosive digital and commercial media market is handed off exclusively to ‘market forces’. This is a point that has also been driven home to me by my friend and NZ communication scholar, Peter Thompson, who recounts how Canwest Media used its ownership of television and radio interests to similarly argue against anything other than the most minimal role for TVNZ. It is also the basis of our own Conservative Government’s Directive to the CRTC to ‘rely on market forces to the maximum extent possible’ (for another post on this with respect to UBB and bandwidth caps, see here).
But back to CANARIE, some economic independence from government coffers could lead to greater autonomy and fewer shackles. Yet, CANARIE could also simply be sold to the highest bidder, likely those who previously fought tooth and nail to constrain it? In that sense, it would be grafted onto the operations of one or other of the existing incumbents and constitute yet another moment when government policy serves a primary purpose: to expand markets and open new sources of revenue for the private telecoms carriers.
These are some critical questions and with nothing more than a line item buried in the budget alerting us to any of this, we should start thinking about these questions now before CANARIE really does come to the end of the line in March 2012.
** With thanks to Bill St. Arnaud for his help and agreeing to let me use our correspondence for this post. Bill’s blog can be seen here.
Whew, I’m just coming back from blogosphere, and sheesh can things sometimes get tough out there. I’ve been thinking the last few days about an idea based on these forays into blogs, columns for newspapers, and stuff like that: Blogoslama, or what happens when the trolls of cyberspace get nasty.
That’s the title I have for people like Know Your Facts, RightTruth, TheFactCorrector, TheCorrectOpinion, SeektheTruth and, well, you get the picture, that run around blustering and puffing up their chest in umbrage over something or other that you’ve wrote.
Now don’t get me wrong, and sometimes these strange combinations yield fruit. I enjoy the to and fro of online conversations and generally think highly of them, for reasons that I’ve attributed in previous posts to scholars like Yochai Benkler, Nancy Baym, and others who see these activities of valuable forms of ‘sociality’ and public communication.
I also like the interesting characters like Strunk&White and UseYourSpellCheck who politely remind people how important a tidy sentence is to a civil conversation. And there’s others like Grumpy Scientist, TvWorker, and Old Green who speak wisely, although maybe somewhat slower than others in these sometimes rough and tumble places do. Amidst these different voices are some that really make you think, and sometimes to do a rethink.
Sometimes, though, I must admit, I can feel my skin growing thicker. In some wierd way, the old ‘blender theory of truth’ espoused by great liberals is alive and well. This is the theory that if we throw enough ideas into the mix, the truth, or at least the possibility of understanding, will rise to the top. Some say the Internet, and the blogosphere in particular, functions as a giant ‘echo chamber’, hardening opinions and throwing a monkey-wrench in the ‘blender theory of understanding’. In broad brush terms, I disagree.
So there I was just checking in on my recent contribution to The Mark, a piece that takes a blog entry I did on May 27th about cable media conglomerate Shaw’s new Internet pricing polices. A reworked, shorter and much polished version of that appeared this week as “We”ll Lift Your Internet Cap — If you Buy Our Cable TV” on The Mark. Between now and then, little did I know, Shaw had replaced its first new plan with a new, new one — each a ‘better response’ to ‘public consultation’ than the one before.
The story was a response to Shaw’s announcement last month that it would be doubling the bandwidth of its High Speed Internet services, while maintaining the same price and speeds for these services. Even more importantly, it announced that it would be offering two new tiers of High Speed Internet Services that offered even higher speeds and more voluminous bandwidth caps, up to 1TB in some cases and in others no caps at all. Shaw made a big deal of this, splashing about the news that it had made these ‘radical’ changes in light of recently held consultations with its subscribers.
This is and was a pretty big deal, especially in Canada where the user-centric and open Internet has been transformed step by step into a pay model where bandwidth caps are nearly universal and costs out of line with relevant global comparative standards. We have been drifting steadily toward the pay per Internet model, with Usage Based Billing and Bandwidth Caps leading the way. I am opposed generally and strongly to the direction of events.
One fly in the ointment, however, with the big splashy announcement was that the you can only get the high end Internet capabilities by purchasing one of two of Shaw’s television services . . . as they become available over the next 16 months.
As a quote from Shaw’s official site stated: “These broadband packages will come bundled with TV and will roll out in two phases.”
In other words, this was ‘tied selling’, which is a big problem with vertically integrated media conglomerates. It also looked like a Business Protection Plan for Shaws vast television interests, from cables, to DTH satellite service, the Global network and a vast stable of television and radio broadcast stations. And in this regard, Shaw is symptomatic of a broader problem in Canada: the extent that such integrated media conglomerates continue to roam the earth. Elsewhere, such beasts are generally on the wane, although Comcast’s acquisition of NBC earlier this year is an important exception.
Otherwise, in the US, media behemoths such as AOL Time Warner and ATT fell apart (although Comcast NBC is making a comeback), Vivendi in Europe exploded, and the story is similar from one country to the next. The main point for here, though, is that Shaw appeared to be merely tinkering generously with the ‘pay-per Internet’ model and then using it to defend other elements of its media stable. I was also circumspect of its claims about all of this coming from the good graces of the company after a series of consultations with subscribers. I think it had more to do with the intent politics of the Internet that have been at a steady and high boil for at least the past six months — a kind of late realization of the gravity of the stakes at hand, after years of slumber.
Anyway, to make a long story short, as soon as you start talking about concentrations of corporate power and the Internet being bent to private interests, people get their backs up, and in cyberspace, where anonymity is the lubricant of choice, they let you have it
Know Your Facts, who I introduced to you above, blasted me, stating that I should, umm, in his very own words, “No your facts before you write a objective review”. I don’t think that I ever claimed to be objective, but I do claim to be thorough and honest and good with the evidence at hand and that I produce, interpret and put in context. But before I could talk to KYF about the production and interpretation of facts, and how that renders notions of ‘objectivity’ problematic, he wound up and smacked me, FULL CAPS ON.
High Speed Internet services from Shaw are available from Shaw. He sent me a link that went to a Shaw page that required me to tell them where I lived so that Emma, or whatever their silly ‘agent’ is called, could tell me what’s on offer. It was a dead-end.
But I was wondering, had I made a mistake, lost the plot? Was it true, as WordUp said (slinking into the saloon), that by just referring to the ‘big 5’ other media behemoths alongside Shaw that I had blinded myself to reality?
Umm, no. I checked again. And again. The document I was relying on was still there. It clearly said everything I said above. Here it is again for your reference.
But then Craig arrived. Craig, you see, is from Shaw. He seems like a nice guy. He posted something to The Mark, in the comments section under my article. Everything now makes sense.
Shaw changed its pricing again on June 6th. The source I had been relying on had been superceded. The new page is here.
The improvements are considerable and I am glad that Shaw has seen fit to go further than the initial scheme announced to much fanfare. There are still some quibbles that one might gnaw on, but the broad principle that access to the highest end Internet capabilities should not be tied to a subscription to any of Shaw’s television services.
To be sure, Shaw has raised the bar and it is to be applauded for doing so. If it can just get rid of the bandwidth caps altogether and make sure pricing is in line with relevant global comparisons, then, at least when it comes to Shaw, we will be able to rest at ease.
Yet, one thing that also is crucial to this is that the bar set by Shaw should also become the minimum baseline standard adopted by the rest of the ‘big 5’: Bell, Rogers, Quebecor, Telus and Cogeco. Moreover, and to repeat from an earlier post, these must not be seen as a diversion from the central issues that remain core to the upcoming CRTC hearings on vertical integration and UBB.
Ooops, I did it again. Did that screw it all up for you?
The following is my column for the Globe and Mail today, with the addition of a few links here and there. I am fully alert to the fact that this is a very, very touchy subject, not least because musicians and artists are at the centre of the debate, but have been, other than a few megastars, the least to benefit financially from either conditions in the past, or those that prevail today.
Those interested in the topic might find my previous two posts of interests in this regard: the first one looks at the ‘methods’ involved in assessing the state of the music industry. It ends with the crucial proviso that we can collect “all the evidence in the world but still be morally stupid because you’ve thrown the artists and musicians amongst us under the bus”. In other words, this is not just about fun and games, but real people trying to make a real living.
That said, however, I am skeptical of the claims typically made on behalf the ‘music industry’, and equally circumspect that the interests of musicians are interchangeable with those of ‘the suits’ in the business. For those who want to hear something similar from somebody ‘inside the biz’, and who really knows his stuff, look at Bob Lefsetz’s newsletter.
Thanks to Bob, I’m listening to two great bands right now: Fleet Foxes and Mumford & Sons. It’s all about the music, being good, nay great, at what you do, and crucially the fans, those who adore your stuff and rave about you to others.
The second of these two posts sets out the idea that the music industry was in many fundamental ways the offspring of rivalry between the telegraph giant Western Union and then snarly upstart Bell Telephone Company in the late-1870s and 1880s. If rivalry between ‘network technologies’ gave birth to the music industry in the late-19th century, I think it is unlikely that ‘network technologies’ like the Internet and P2P are going to lead to their demise in the 21st century. History, in short, may be a useful and sturdy guide for thinking through the issues now in front of us.
Now, I’ll turn to the slightly revised/extended version of my column from today.
For more than a decade, the music industry in Canada, and globally, has been cast as being in dire straits — a portent of things to come for all media in the ‘digital age’, unless copyright laws are updated soon to combat illegal downloading.
The notoriety of file-sharing networks from Napster in the late-1990s, to Pirate Bay and the meting out of stiff punishment to Limewire is legendary. New sites emerge as swiftly as old ones are prosecuted out of business, fueling perceptions that the music industry is under siege.
Many claim this will only get worse as broadband Internet becomes a taken-for-granted fixture of everyday life. Copyright legislation has been proposed three times since 2005 by Conservative and Liberal governments alike.
Last year’s effort, The Copyright Modernization Act (Bill C-32), died when the election was called. It’ll be back. The Conservative’s election manifesto said it would be.
The Canadian Recording Industry Association (CRIA), backed by the Recording Industry Association of America (RIAA) and International Federation of Phonographic Industries (IFPI), argues that legislation delayed is justice denied. While Parliament dithers, they say, musicians and the music industry are getting slaughtered.
According to the IFPI, “overall music sales fell by around 30 per cent between 2004 and 2009” worldwide. The trend in Canada appears even worse, with “recorded music sales” plunging to a third of what they were in 2004, as the following figure shows.
‘Recorded Music Industry’ Revenues in Canada, 1998 – 2010
Source: Statistics Canada; PriceWaterhouseCooper.
But stop the music. What if this image of a beleaguered music industry is badly flawed?
Cont’d on Page 2 . . . . . . . .
A strange confluence of forces has just made the push to have Netflix and other over-the-top video distributors (OVDs) such as Amazon, Apple and Google regulated by the rules of the Broadcasting Act a whole lot stronger.
Astral, Bell and other incumbents are coming under increased scrutiny from investment bankers worried that OVDs could wreck their bottom line and this seems to have increased their resolve to thwart would be rivals. Moody’s — the investment ratings agency – also recently raised such concerns, while casting doubt on the dominant integrated media companies’ — Bell CTV, Shaw Global (Corus), Rogers City TV and Quebecor Media – decisions to acquire ever bigger stakes in the television business.
When investment bankers worry, CEOs tremble and Netflix as well as the open Internet generally could end up paying the price.
The Canadian Media Production Association‘s recent appeal to the CRTC to regulate Netflix under the Broadcasting Act added to the full court push, as did the Supreme Court‘s decision last month to hear a case from various groups representing media workers who want ISPs as well as Netflix, Apple, Google, and so on to be regulated like broadcasters.
Lastly, a Standing Committee on Canadian Heritage report published last month and the CRTC’s upcoming reviews of its unpopular wholesale UBB decision and vertical integration have also brought the issues to a head.
These issues are not new. In fact, in its famous “new media” decision in 1999, the CRTC categorically asserted its authority to regulate broadcasting services delivered over the Internet, but decided to stand on the sidelines while such services were in their infancy.
The vertically-integrated, dominant telecom, cable and internet service providers love the approach because it has given them a green light to develop new markets while letting them off the hook with respect to issues about vertical integration, anti-competitive behavior, Cancon requirements and funding commitments in the emerging digital media universe.
The CRTC’s decision to stand on the sidelines has no doubt played well to the ‘hands-off-the-Internet’ crowd, as well. The truth is, however, that this has only postponed the day of reckoning.
That day of reckoning has been moving ever closer since broadcasters finally made a concerted effort to launch substantial video portals in 2007/2008 (e.g., CBC.ca, CTV.ca, GlobalTV.com), while offering some programs through Apple iTunes and YouTube. Simultaneously, they have fought tooth and nail to defend their existing markets and expand into new ones, while using a well-stocked arsenal of measures to block rival OVDs such as Netflix. Six such tactics stand out:
First, bandwidth throttling was used by Bell in 2008 to cripple the CBC’s attempt to use BitTorrent to distribute an episode of Canada’s Next Great Prime Minister, while today Rogers’ throttling of P2P applications causes no end of frustration for those who play World of Warcraft online.
Second, ‘bandwidth caps’ and Usage-Based Billing are being used by all of the major ISPs to deter online video use. Netflix has deliberately degraded the quality of its service to help subscribers avoid these punitive and restrictive measures as a result.
Third, the incumbents do not apply the same measures to their own services. Bell’s chief regulatory officer, Mirko Bibic, recently provided a great example of the tortured logic used to justify such treatment when he argued that, despite using the same network facilities, Bell’s OVD service is not a ‘true’ Internet-based service, while Netflix is.
Fourth, the incumbent telecom and cable companies’ refusal to interconnect their systems with others has blocked large OVDs and Internet companies such as Amazon, Apple, eBay, Facebook, Google, and Netflix from bringing their ‘content distribution networks’ as close to users as possible.
Fifth, Canada’s integrated multimedia conglomerates have used a combination of program rights, geo-gating and digital rights management (DRM) technologies and a smattering of deals with Apple and Youtube to shore up their control over access to our ‘national media market’. The Rogers, Bells, Shaws, Quebecors, and so on of this country do not like the prospect of having to compete for each and every new digital market with newcomers one bit; nor do cable providers in the United States.
As a recent New York Time’s article observes, Time Warner and Cablevision are locked in battle with Viacom (MTV, VH1, etc.) and Scripps Howard (HGTV, Food Network, etc.), with the cable companies arguing that the rights they have acquired to deliver channels to audiences’ tv sets also lets them beam those same channels over the Internet to iPads and iPhones. Viacom and Scripps Howard vehemently disagree.
In the incumbents’ “perfect world”, they would simply fold the OVD market into the suite of rights they acquire for traditional television markets without having to compete with Netflix at all. If they had it their way, the Internet would just be bolted on to the side of their lucrative television business.
Netflix strengthens the hands of content creators and rights holders on both sides of the border relative to traditional broadcasters. In Canada, this battle over the essential resources of the media economy — networks, money and copyrights — are concealed by a fog of sanctimonious rhetoric about cultural policy led by vested interests.
Seen from the broadcaster’s point of view, Netflix’s recent acquisition of new drama series and its deal with Paramount Studios for online video distribution are just further evidence that the company is steadily encroaching on their turf — one more reason why it should be quickly brought to heel. Even if we thought for a moment that regulating Neflix and OVDs was a good idea, what should we do as Hollywood experiments with using Facebook as a new ‘window’ for blockbusters such as The Dark Knight, Philosopher’s Stone, Yogi Bear, and Chamber of Secrets, among others?
Do we regulate Facebook as a broadcaster too? I’m all for attending to that company’s privacy issues and other mattters, but Facebook and broadcasting? Obviously, there is no shortage of slippery slopes and pitfalls along the incumbents’ garden path.
The sixth defensive weapon in the incumbent’s bid to hobble new rivals is their coordinated push for government regulation. Perhaps the award for sharpest U-turn on these issues goes to Shaw after it acquired Global TV in the fall of 2010.
After a decade of opposition to the CRTC in general and to the regulation of the Internet specifically, Shaw President Peter Bissonnette laid out the new gospel in front of the Canadian Heritage Committee referred to earlier: “If there’s one message we want to leave with you . . . it is that over-the-top competitors have a free ride. They’re aggregators of broadcasting. They provide broadcasting services in Canada.” They should be regulated like broadcasters.
For anybody still under the illusion that the Internet is unregulable, Shaw and others point to extensive regulatory tools that they’d like to see pressed into service: e.g. ISP levies; extending Section 19 Income Tax Act Exemptions so that adverting on Canadian Internet sites can be written off just as it is for Canadian-owned newspapers, magazines and broadcasters; Canadian Media Fund contributions; Cancon Quotas, etc.
Acceding to the full sweep of this agenda would not just wreck Netflix’s ‘business model’, it would destroy the future of the Internet. To stem the tide, we need to understand just how wildly out of synch the ‘sky-is-falling’ rhetoric is with the fact that the television industry is more lucrative then ever. We also might wonder if Netflix, Apple, Google, Amazon, et. al. might agree to adding some water to their wine in return for a quick stop being put to the discriminatory practices that now hobble their activities in Canada?
No Australian Broadband for Canada, or much to do with the Internet, media, telecoms and copyright issues at all in tonight’s federal election debate.
Before I go any further, though, let me confess that I did not watch all of the federal election debate tonight. I’m sorry, I had other things to do. But I did catch about a half-hour of the debates on tv, another 10 minutes on radio while in the car, and another 15 minutes of video with no sound while at the gym. I may have missed something. Zygmunt Bauman calls it the ‘liquid life’ — that is, cobbling things together to make up your life on the fly.
But, I think I caught the gist of things and that is that none of the leaders really had much to say on media and Internet issues. Nothing about copyright or the uproar over Usage-Based Billing. In other words, none of the ABCs of ‘digital media policy’ merited much attention.
To be sure, I didn’t expect broadband Internet, media, copyright and UBB to be at the top of the agenda in tonight’s federal election debates. In fact, such issues probably should not be at the top of the agenda and generally I agree that funding pensions, healthcare, the general state of the economy, widening economic inequality, and the moral integrity of the Government-of-the-day are probably more important. Still, though, I didn’t expect digital media and Internet issues to be left out altogether, either.
There are a great many who wield fancy labels like the digital media economy, creative industries and the lot to give such issues a lustre and limelight they may not deserve. Big economic numbers for the media, telecom and Internet industries, and their contributions to the economy, culture and society, are often wielded about to underscore the impressiveness of these things. There is, truth be told, a great deal of puffery involved when it comes to talking about these things.
All of which is to say, that while I agree that digital media and Internet issues probably should not be artificially hyped, they should not be peripheral too the election, or just a blip that gets twittered about opportunistically amongst the twitterati. Why should we care if these issues are not at the centre of televised electoral debates?
First, because as a study by Canadian Media Research Consortium just released underscores, television is still people’s preferred medium for information and news. Television still plays an extraordinary powerful role in bringing things to people’s attention. This not just true for old people or couch dwellers, either. The fact of the matter is that those who spend the most time online are also the heaviest traditional media users, too.
Second, most of the primary news sources behind online news sites are creatures of the dominant traditonal news providers: CTV, Global, CBC-Radio-Canada, Globe & Mail, Toronto Star, Le Presse, Quebecor Media Inc. These entities largely, although not exclusively, play a big role in setting the news agenda for the country’s media as a whole, including the ‘news aggregators’ and blogosphere that thrive off of their efforts.
Of course, we can gain access to the New York Times, Le Monde and the Guardian or the Huffington Post, but they aren’t going to be much help on matters specifically Canadian in focus. Elections are one just such crucial matter.
For issues to be taken as a going concern in a democracy, they must be on the media screen, and in today’s world that means being on at least three different screens: the ‘big screen’ of tv, the glowing screen of the computer, and the wee screen of portable ‘devices’.
Third, media and Internet issues have been central themes in other national elections and politics. Network neutrality and broadband development were cornerstones of the Obama campaign in 2008, for instance; his administration has also paid considerable attention to issues surrounding the so-called ‘crisis of journalism’ and media concentration since then.
In Australia, the Government’s creation of a National Broadband Network to do an end-run around a recalcitrant incumbent — Telstra — in order to bring about a ultra high speed, broadband Internet service to ninety-plus percent of all Australians was extremely prominent and divisive in the 2010 federal elections. The Labour Government now in power supported the initiative, as did the Greens, a few independents, Microsoft and Google.
In Canada, the Usage Based Billing issue has received pretty good coverage in general, but broader media and Internet-related issues and, specifically, their place within the context of the elections, have not fared so well. The link between the media and Internet, on the one side, and electoral politics, on the other, has mostly been made on the Internet and Twitter.
This is important because, as the Canadian Media Research Consortium study pointed to above states, if stranded on a desert island, the internet is the least likely of all media to be let go by people. The importance of the internet in general is reflected in the uses of Facebook and Twitter in particular.
Facebook has been central to the efforts of the advocacy group OpenMedia.ca to make these issues an important part of the election campaign and all the political parties have responded rather eagerly, even if sometimes opportunistically, to ‘trending Twitter topics’ and Facebook-based campaigns.
At the end of 2010,Twitter had an impressive average number of monthly users in Canada of around 3.5 million, according to Comscore (p. 19). That’s a lot. Many fear Twitter-induced attention deficits and depraved forms of journalism will be the natural upshot of Twitter’s 140 character per tweet format, but Alan Rusbridger, the editor of the Guardian in the UK, offers a rousing defense of its contributions to journalism and to public discourse.
However, we also must remember to keep things in perspective. The number of people who use Twitter — roughly 3.5 million a month — is less than the number of people who watched the debates last night or that buy a newspaper every day. In terms of credibility and trust, the press blows away online sources, and television still fares somewhat better as well — although not much (see p. 14 of the Canadian Media Research Consortium study).
The Twitterverse is also a lot smaller than Facebook. With 22 million unique users a month, Facebook has nearly 7 times the number of unique monthly viewers in Canada (22 million) than Twitter has.
Interestingly, the Broadcast Consortium overseeing the organization of the federal election debates had the foresight to add a Facebook page to the mix of how political debate is circulated in the emergent network media ecology. The development suggests an interesting attempt to meet people where they are.
Facebook also raises anew questions about the relationship between popular culture, the media and politics. Its increasing pivotal role has drawn it closer to traditional conceptions of news and politics. Its inclusion as a formal part of the ‘operational machinery’ of the first televised English-language debates are one indicator of that. Recent overtures by Facebook to news executives is another.
Indeed, as a story on the Globe and Mail’s technology website the other day relayed, Facebook “is looking to strengthen its relationship with the news media and has already helped boost traffic to news websites” (see here). It also created a special Facebook page just for journalists who want to integrate social media into the journalism process.
The New Yorker drew the connection a step further this month by requiring online readers of the magazine to use Facebook’s “Like” icon to gain access to one of its articles. The experiment essentially sets up the “Like” button as a kind of “paywall”, but one that tries to translate the ‘social capital’ of Facebook users into a real pot of gold that many commercial media providers hope exists at the end of the digital rainbow.
All of this, of course, adds yet another wrinkle in the ‘evolution of the news’, to put it somewhat grandiosely. To date, the debate has been much about the impact of ‘content aggregators’ like Google and Yahoo on the news industry, and wails from many stalwarts in the latter that the blogosphere lives parasitically off the hard labour of real news organizations and journalists. Enter Facebook stage left.
There is something in all this related to the ‘functional convergence’ between ‘search’ and ‘social’ that I spoke about last week in relation to what I called the Google Switch — i.e. Google’s response to increasing competition from Facebook by increasingly adding ‘social capabilities’ such as ‘+1’ to its ballooning suite of functions such as Orkut, YouTube, Blogger. However, in the circumstances just outlined, the drift is not from search to social, but rather the other way around. If such a ‘functional convergence’ is in fact taking place, then perhaps it is not just Google, but Facebook and other social networking sites, that will emerge as pivotal to the ‘future of the news’.
Communication researchers have always understood how media and information flows are nestled within existing networks of personal relationships. Now the process is being digitized, fully commercialized, and rendered visible. Through all of this, will Google and Facebook be good for the News, good for democracy? Hmm, now there’s a question ripe for pondering in the context of the 2011 election.
It’s fine to talk about the Internet and all things digital. There’s no shortage of fundamental issues whose resolution in the near future will set things on a fairly fixed path for a long time to come. Nonetheless, it’s important to keep our eye on ‘traditional media’, too, and in the context of the current Canadian federal election, four such issues stand out in particular. They are in no special order of importance:
(1) the Broadcast Consortium consisting of CTV, Global and TVA and CBC/Radio-Canada — that sets the terms for the leadership debates. Their capacity to set the rules of debate arguably has a strong influence on national elections.
The exclusion of Elizabeth May on the basis of electoral seats held (none) makes some sense from a technical and procedural view of representative democracy; from a broader view of her significance as the embodiment of important stream in the political culture of Canada, the decision to exclude her is a no-brainer.
There is strong evidence of media concentration in Canada (see here). That less than a handful of the dominant players, and this applies just as much to the CBC as to the commercial media organizations, are able to set the terms of debate from their position at the centre of the media universe is problematic.
Off the top of my hat, I would suggest two things might help to turn things around: first, that the Broadcast Consortium be revamped as a “Network Media Consortium” (NWC) consisting of a wider array of players of a more diverse type. This might include, for example, significant online websites such as the Tyee, for example, prominent Canadian blogs, web journalists, a facebook page, etc. The structural diversity of the “NWC” is meant to better represent the structural diversity of the media environment, and the political culture of the country.
Next, we need new rules of engagement that fit our times. A couple of academics from, say, the Canadian Media Research Consortium, a political science, sociology or philosophy professor or two, and a couple of Internet-savvy people who know the politics of digital media well might all contribute to such a make-over. Among the latter, I’m thinking that someone such as Ron Diebert of the Citizen Lab at the UofT might fit the bill (as would many others).
Diebert and his colleague are experts on the worldwide political conditions of the Internet and their most recent book, Access Controlled: The Shaping of Power, Rights, and Rule in Cyberspace has been widely praised. The ultra conservative, cyber-libertarian Technology Liberation Front called it “one of the 10 best info-tech policy books of the year” and “. . . essential reading for anyone interested in studying the methods governments are using globally to stifle online expression and dissent”. That not the way I see it, but fine. The broad appeal of Diebert’s expertise would make him or others like him ideal candidates to help steer efforts to create a revamped Network Media Consortium.
(2) The second big issue that is near the surface in this election is the future of the CBC. In my last post, I indicated that the Conservative Party election platform is mum on the CBC and that could be construed as a good or bad thing.
This might be a good thing because at least it is not singled out to have its budget, or further yet, remit and even right to exist, slashed. Things could have been a lot worse. Just this week, as my good friend Peter Thompson at the University of Wellington tells me, the New Zealand Government announced that its closing down NZTV 7. The equivalent in Canada would be eliminating the CBC News Network — not the main channel, but one that supplements its offerings in light of changes in the media environment, but a move disparaged by the commercial players as encroaching on their turf.
Maybe this is just a smokescreen, though. Launching a scorched earth policy for the CBC would be too contentious during an election. Is holding back on just such a move part of Harpen’s ‘hidden agenda’?
Besides just staying-the-course or slashing and burning, however, there’s a third option: a strong commitment to a strong role for the CBC as a public service media provider that is central to the digital media ecology, morphing in line with changes in the overall environment in which it and our culture more generally are situated. Perhaps it could start by offering a more expansive digital archive of television programs along the lines already being pursued by the National Film Board (NFB) in Canada and by the BBC through its iPlayer service in the UK — both of which have had very considerable success.
(3) the third big issue stems from the volley of charges that the CBC is the hand-maiden of the Liberal Party. The claims have been trumpeted loudest by various arms of the Quebecor Media group (TVA, Sun TV, Sun Newspapers, Le Journal de Quebec, Le Journal de Montreal, etc.) — the mouthpiece of the Harper Government in Quebec.
Quebecor’s charges look like a more apt description of itself than the CBC. Its board of directors provides a comfortable perch for former Prime Minister Mulroney as well as the former Conservative appointed CRTC Commissioners (Francoise Bertrand). The sprawling, bloated, debt addled media conglomerate is ruled with an iron fist by the marxist-cum-media oligarch Karl Pierre Péladeau. The company is far closer to the reigning centre of political power than the CBC would (and should) ever be.
Its current attempt to revamp its money-losing Sun TV in Toronto into a viable national cable and satellite TV ‘brand’ is being spearheaded by none other than PM Harper’s recent spin doctor, Kory Teneycke. The outfit proudly styles itself as FNN (Fox News North).
This does not necessarily mean that the sky is falling, but it does mean that Quebecor’s charges are a better reflection of itself than the CBC. As for its claims to representing a kind of working class populism, before we buy into that line we might want to ask the workers at the Le Journal de Quebec and Le Journal de Montreal, respectively, who were locked-out (illegally) and ultimately cut loose over the past five or so years just so something that looks like a contract could be obtained.
(4) News Consumption and its not all doom and gloom (but some of it is). Two important studies came out this week, each pointing in somewhat opposite directions. One by the Media Research Consortium found that Canadians are over-whelmingly not agreeable to paying for news. As the authors state, “Canadians are more willing to pay for music, games, movies, e-books and even ringtones online than they are to pay for news . . . ” (p. 2). If news is vital to democracy, that doesn’t sound very hopeful.
The annual NADbank readership study also came out. However, it presented a rosier view when it comes to readership and the press. More people are reading more newspapers. You have to follow their logic carefully to reach their conclusion, but it is safe to say that, at least in terms of ‘attention to news’, there is no ‘crisis’ per se. This could be good for democracy.
Obviously, there is a ton to say on each of these things. For the time being, though, I thought it was time to put a few things on the map that are out there, but perhaps not quite drawn altogether as they might be.