Commercial Radio Policy 2006 vs. Commissioner Langford

The CRTC's unimpressive track record of enforcing its own conditions of license, let alone calling broadcasters to account for their broken promises of performance has been chastised by a dissenting Commissioner on the panel. It seems that emerging artists had better continue to rely on Canadian pay audio services and the Internet to find an audience.

Commissioner Stuart Langford says:

I disagree with my colleagues in the majority for a number of reasons. First, based on the evidence, their assessment of the future prospects for commercial radio in Canada are overly pessimistic. Second, their conclusions regarding appropriate Canadian content levels and support for emerging Canadian artists display a marked absence of imagination. Finally, their approach to Canadian talent development penalizes success, is unfairly weighted in favour of a national approach to the disadvantage of local initiatives and seems designed to produce more Canadian content for an industry unable or unwilling to broadcast most of what is already available.

Industry well-being

Paragraphs 10 to 18 of the majority decision purport to assess the financial "health of the Canadian commercial radio industry." The statistics provided are, one assumes, accurate. Where the majority goes wrong, however, is in treating all of them as equally pertinent. In my opinion, for the purposes of developing a new radio policy, emphasis must be placed on paragraphs 17 and 18.

Paragraph 17 reveals that business is not so good in AM radio land. There are exceptions, but so few exceptions that, to borrow a well known morsel of folk wisdom, they do little more than prove the rule. Paragraph 18, however, provides irrefutable evidence that all, financially, is very well indeed in the world of FM.

Still, the majority concludes in paragraph 31 that despite today's rose colored skies, black clouds are forming just beyond the horizon and soon the deluge may come: "While the radio industry is currently healthy, it is (emphasis added) entering a period of uncertainty…" For the word "is" in the second half of the quotation above, I would substitute the words "may be". Regulators should work with realities, in my opinion, not the unsubstantiated and self-serving projections of bottom line fixated industry representatives (paragraphs 29 & 30).

A shaky foundation

The questionable conclusions in paragraph 31 form the shaky foundation upon which the majority builds its case for maintaining current Canadian content levels for popular music, putting off support for emerging artists until another day and refocusing the development of talent on content. Had the majority taken another approach, beginning with a recognition that AM and FM constitute two different worlds, it is my opinion that it could have constructed a far more imaginative policy structure on a far more solid foundation of fact, simply by maintaining the existing Canadian content rules for AM radio, and in recognition of its financial well-being, formulating a new FM-only policy that reflects the objectives listed in paragraph 2 of the majority decision.

Canadian content, emerging artists and talent development

Imaginative is the absolute last word that springs to my mind when I review paragraphs 32 to 96 of the majority decision. In essence, with exceptions so minor as, in my opinion, to be practically inconsequential, the majority's view of an appropriate future approach to promoting Canadian content and talent appears to have been envisaged by looking in a rearview mirror. What they believe they saw there, though, is anyone's guess. Let's take a look.

Glancing back, I see an FM industry growing wealthy. Overall, meeting the 1999- 2006 requirement to air 35% Canadian content for category 2 popular music appears to have presented broadcasters with no hardship whatsoever. In the few instances where it did – for particular formats or stations competing directly with a myriad of U.S. signals, for example – exceptions could be and often were made. So easy has it been for the FM radio industry to meet the 35% level, that in the last six years dozens of applicants in competitive hearings across Canada have proposed launching new stations required by condition of licence (COL) to air more than 35% Canadian content in category 2.

The strategy worked. By my count, which may be understated (I might have missed a few) but is certainly not inflated, between 2000 and the middle of this year, 44 new FM stations were licensed which carried COLs requiring them to air more than the stipulated 35% Canadian popular music level. One new licence contains a 37% level, one is at 42%, a full 39 are at 40% and three agreed to and were licensed to provide a 45% level. These levels are telling. Even more telling is that they were voluntarily assumed by the applicants. It was not the Commission's idea, it was theirs.

So comfortable are FM operators with a 40% popular music COL that at the most recent competitive application hearing which began October 30, 2006 in Regina, eight of the 19 applicants for commercial licences in Saskatchewan and Alberta, proposed to accept a COL requiring them to meet a 40% level. Yet, in the face of these compelling facts, the majority has concluded that a new Radio Policy requiring anything above the old 35% level would present a hardship for broadcasters. Go figure.

Name that tune, again

In my mind, even more confusing than the majority's apparent inability to recognize that the FM industry itself has set 40% as the new standard for popular Canadian music, is the fact that the majority has identified another problem, but done nothing about it. I refer to the sad fact that though broadcasters have adhered to the letter of the law requiring 35% or more, many have openly defied the spirit underlying it. They meet the 35% level but they do so by playing just a few marquee artists over and over again. That's great for big names like Shania Twain and Avril Lavigne, but not so good for lesser known performers.

The majority, judging by the language in paragraph 85, has thrown up its hands and declared that this problem defies remedy. One of the reasons it cites for keeping Canadian music levels at 35% is, "that an increase could lead to more repetition of the musical selections by Canadian artists that are already established." That's not solving a problem, it's running away from it. Solving this problem and promoting Canadian talent, as the Broadcasting Act requires, means enshrining the 40% level most new licensees say they are comfortable with in a new FM policy, and requiring broadcasters to meet that level, not by spinning the same selections over and over but by providing as many Canadian artists as possible airtime on their stations. That's what I would have done. That's what the majority should have done. Instead, it has bowed to industry pressures and done nothing.

Chicken and egg conundrums

The problem with moving to 40%, according to the Canadian Association of Broadcasters (CAB) is that, "listeners are not seeking more Canadian music." In support of this view, the CAB provided sales figures revealing that during three monitored years (1998, 2000 and 2003) Canadian recordings accounted for only 16 or 17% of total sales in Canada.

In paragraph 84, the majority indicates that it finds this CAB argument persuasive: "The Commission is of the view that these sales figures do not indicate a level of demand that would support a further increase in the required levels of Canadian category 2 selections at this time."

Apparently it never occurred to the majority to turn the problem around and look at it differently. In my opinion, the reason sales of Canadian CDs are so low is that in most instances buyers don't know they exist. With most FM stations playing mostly U.S. artists with just a few big name Canadians featured over and over so as to meet the 35% content requirement, most Canadian artists are simply never aired. Who is going to buy a CD they've never heard by an artist they've never heard of?

Emerging artists

Lack of imagination also appears to be the hallmark of the majority's reaction to the plight of Canada's new and emerging artists. Rather than solving the problem by requiring FM licensees to provide airplay opportunities for as many Canadian artists as possible, the majority has decided to duck the problem today and leave it to be solved on a case-by-case basis during future licence renewal processes. This is simply unacceptable.

To say to emerging artists that some day down the road things will improve is the regulatory equivalent of promising pie in the sky when you die. The Commission's case-by-case approach (paragraph 92) once more leaves most Canadian musical talent out of the new radio policy as they were left out of the old. The case-by-case approach will result, not in the establishment of a clear regulatory directive supporting these artists but in the equivalent of a crazy quilt policy made up of dozens, perhaps hundreds, of rulings, each more or less different than the last.

If flexibility is necessary, the better way is to set a standard and put the onus on licensees either to meet it or to apply to the Commission for a variation in light of their particular circumstances. Supporting new and emerging Canadian artists by playing their music should be the rule, not doing so, the exception. The majority has got it backwards. As to the sort of bonus or credit systems the CAB and other industry representatives suggested, I say no. With the right to exclusive use of valuable and scarce public property, a radio frequency, comes a duty to Canadians. Broadcasters should not have to be bribed to do their duty.

Talent development

Finally, I come to the majority's new Canadian Talent development scheme. It is flawed from start to finish.

What's in a name?

First of all, the decision to replace the word "talent" with the word "content", though simply window dressing and, practically speaking, valueless, is incredibly ironic. The sad fact is that because airplay opportunities are almost non-existent, there is already too much Canadian "content" being produced. What is needed is more airplay for Canadian artists, not money to produce recordings that sit gathering dust somewhere.

Don't dance, don't ask me

Another small point: the majority's decision in paragraph 98 to prohibit support for visual arts exhibitions, theatre and dance is curious. Such initiatives never received much in the way of funding under the old Radio Policy, but the little they did get must have been welcome. I find it impossible to imagine what mischief the majority thinks it is curing in making this ruling.Not all visual arts exhibitions feature paintings and sculptures hanging and standing alone in the hushed silence of a gallery. Many are multi-media in nature, containing performance components that include a musical element. Why should the musical artists who take part in such creative endeavors be deprived of support? And the last time I looked, dance and music were practically inseparable, as are music and many theatrical productions. Why cut off the few dollars that may spell the difference between an artistic endeavor living or dying? It seems short-sighted to me.

Playing favorites

Now we come to the majority's views on where Canadian talent (henceforth "content") development money is best spent. Paragraph 108 recognizes that options exist, but the tenor of paragraphs 100 to 128 is that FACTOR and MUSICACTION are the Commission's beneficiaries of choice.

To ensure that they are amply funded, the new Radio Policy expands from one (transfers of ownership) to three (transfers of ownership, licence renewals and annual commitments) the occasions triggering CTD (now CCD) payments to favored recipients, i.e., FACTOR and MUSICACTION. From now on, in all three circumstances, a significant share of payments made must go to FACTOR and/or MUSICACTION:

1. They will continue to receive 2% of the value of the transaction when the ownership and control of a radio undertaking changes (paragraph 126).

2. They are guaranteed a significant annual income: "no less than 60% of the basic annual CCD contribution must be forwarded to Factor or MUSICACTION" (paragraph 118).

3. Applicants for new commercial radio licences who make CCD commitments over and above the basic annual level must direct "no less than 20%" of that amount to FACTOR and/or MUSICACTION (paragraph 124).

One wonders why. If there is one thing that eight years of sitting on radio licensing application panels has taught me, beyond the realization that, after 2000, a 40% Canadian popular music content level is what most FM radio operators saw and still see as logical, it is that FACTOR and MUSICACTION are not everyone's idea of ideal talent development organizations. Their national mandate too often turns out to be a Montréal, Toronto, Vancouver focus. "The regions," as the Maritimes, the prairies and the north so pointedly refer to themselves, do not appear to be major FACTOR and MUSICACTION concerns.

I am not opposed to increasing funding for talent development, though unlike the majority I do not regard such funding as a substitute for airplay. However, I am opposed to playing favorites. In my opinion, guaranteed funding is not a good idea. It can lead to complacency. If you are not required to prove yourself, you are less likely to work hard for the stakeholders who rely on you. I prefer a more market-reflective approach, where candidates for talent development subsidies are required to compete on a level playing field for available dollars.

Penalizing success

Who gets the money is one issue. How each contribution is levied is quite another. The old system, described in paragraph 114 of the majority decision, was not perfect. What system is? However, it was laudable in one sense; it did not penalize success. The new system does. The concept reminds one more of the Income Tax Act than a policy designed to enhance musical talent.

I believe in a regulatory environment that encourages success. Until something demonstrably better can be developed, I would stick with the existing annual financial commitment system under which payments are based on a given market's potential to deliver profits. It isn't perfect, but it does recognize the fact that in any defined market it should be ability not governmental or regulatory policy that distinguishes the winners from the losers. The old system is not a clone of the Income Tax Act either, and that's a good thing.

Final Word

To sum up, in my opinion the majority has squandered an opportunity to bring the 1998 Radio Policy into line with twenty-first century stakeholder expectations. Most successful recent applications for new FM licenses have declared themselves comfortable with a 40% or more category 2 Canadian content requirement. Most applicants for new licences over the past five years have preferred to direct the lion's share of CTD commitments to local rather that national (FACTOR and MUSICACTION) initiatives. Too few Canadian artists benefit from receiving exposure on conventional FM radio.

In light of these facts, I would have done things far differently than the majority. I would have distinguished between the financial realities facing AM and FM radio broadcasters. I would have reaffirmed the status quo for AM radio in Canada but made logical changes for FM. I would have taken my mandate as contained in The Broadcasting Act seriously and done considerably more for Canadian artists in terms of content requirements and support levels. The majority's decision to cave in to industry demands and virtually ignore the needs of Canadian artists is simply unacceptable.

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