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TRANSCRIPT OF PROCEEDINGS FOR THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION TRANSCRIPTION DES AUDIENCES DU CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES SUBJECT / SUJET: PUBLIC HEARING EXAMINING NEW MEDIA / AUDIENCE PUBLIQUE SUR LES NOUVEAUX MÉDIAS HELD AT: TENUE À: Place du Portage Place du Portage Conference Centre Centre de conférences Outaouais Room Salle Outaouais Hull, Quebec Hull (Québec) Decembre 1, 1998 Le 1 décembre 1998 Volume 7 tel: 613-521-0703 StenoTran fax: 613-521-7668 Transcripts Transcription Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières. Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique. StenoTran Canadian Radio-television and Telecommunications Commission Conseil de la radiodiffusion et des télécommunications canadiennes Transcript / Transcription Public Hearing / Audience publique New Media / Nouveaux médias BEFORE / DEVANT: David Colville Chairperson / Président Vice-Chairperson, Telecommunications / Vice-président, Télécommunications Françoise Bertrand Chairperson of the Commission / Présidente du Conseil Martha Wilson Commissioner / Conseillère Cindy Grauer Commissioner / Conseillère Joan Pennefather Commissioner / Conseillère David McKendry Commissioner / Conseiller ALSO PRESENT / AUSSI PRÉSENTS: Carolyn Pinsky / Commission Counsel / Karen Moore Avocates du Conseil Ted Woodhead Hearing Manager / Gérant de l'audience Daphne Fry Manager of Convergence Policy / Responsable de la politique sur la convergence Diane Santerre / Secretaries / Secrétaires Carol Bénard HELD AT: TENUE À: Place du Portage Place du Portage Conference Centre Centre de conférences Outaouais Room Salle Outaouais Hull, Quebec Hull (Québec) December 1, 1998 Le 1 décembre 1998 Volume 7 StenoTran ii TABLE OF CONTENTS / TABLE DES MATIÈRES PAGE Presentation by / Présentation par: Sheridan College 1766 Canadian Screen Training Centre 1811 Canadian Independent Record 1835 Production Association Canadian Recording Industry Association 1900 Alliance of Canadian Cinema, Television 1932 and Radio Artists Society of Composers, Authors and Music 1966 Publishers of Canada / la Société canadienne des auteurs, compositeurs et éditeurs de musique StenoTran 1766 1 Hull, Quebec / Hull (Québec) 2 --- Upon resuming on Tuesday, December 1, 1998, 3 at 0858 / L'audience reprend le mardi, 4 1 decembre 1998, á 0858 5 7580 THE CHAIRPERSON: Good morning. 6 7581 I think it's a minute or two before 7 nine, but it seems everybody is ready, so we might as 8 well begin. 9 7582 Madam Secretary, would you call the 10 next party. 11 7583 MS BéNARD: Thank you, Mr. Chairman. 12 7584 The next presentation will be by 13 Sheridan College and I would invite Mr. Levy to 14 introduce his colleagues. 15 PRESENTATION / PRÉSENTATION 16 7585 MR. LEVY: Thank you very much. 17 7586 Mr. Chair, members of the Commission, 18 thank you for inviting us to meet with you today. 19 7587 My name is Sheldon Levy and I am the 20 President of Sheridan College. I am very pleased to 21 have with me two of my Sheridan colleagues in new 22 media. 23 7588 To my right is Robin King, Director 24 of the School of Animation, Arts and Design, who set up 25 computer graphics and animation as a program at StenoTran 1767 1 Sheridan in 1980, almost ten years before they matured 2 as viable industries. He has been in featured in 3 "Toronto Life", "Maclean's" magazine and the "Financial 4 Post" as a world leader in the world of digital media, 5 imaging and communications. 6 7589 To Robin's right is my colleague 7 David Tucker, whose is Associate Director of the School 8 of Animation, Arts and Design, who is an established 9 television writer, director and producer. As a regular 10 content provider for CBC, TVO, The Discovery Channel 11 and other broadcasters, David has won numerous 12 international awards, including most recently a Freddie 13 from the American Medical Association for his work on 14 the CBC series "The Nature of Things". 15 7590 We appreciate the chance to be here 16 today because one of the things we do best at Sheridan 17 is teach new media. It is our job to educate students 18 about new media production and to prepare them to 19 function within this new environment as professionals 20 and entrepreneurs. 21 7591 From our own experience at Sheridan 22 and looking at the wonderful list of our new media 23 colleagues form other organizations and companies with 24 whom you will be meeting or have met, we have one 25 message to deliver and it is this. StenoTran 1768 1 7592 The quality of new media in Canada is 2 outstanding. It is internationally competitive and we 3 are at the leading edge. It needs no defense, no 4 protection, no apology. Rather, new media in Canada 5 needs to be acknowledged with pride as a source of 6 cultural and economic strength and resourcefulness. 7 7593 It needs to be afforded all the 8 advantages that the federal government and its agencies 9 can devise and imagine to provide the best possible 10 environment for growth and prosperity right here at 11 home. 12 7594 Our shared goal for the 21st century 13 should be to recognize and prove that Canada is the 14 best place to learn new media, to practise new media 15 and to achieve success on a global scale. 16 7595 To acknowledge our competitive and 17 creative edge demands that we understand and embrace 18 the evolution of new media. The new media environment 19 promotes and enables a free flow of information. 20 7596 It supports collaboration and inquiry 21 on the broadest possible scale. Interactivity is the 22 defining characteristic of new media -- broadening, 23 strengthening and democratizing communications. It 24 enables and supports the rapid dissemination and 25 creative exchange of information and ideas at every StenoTran 1769 1 level from the local classroom to the global 2 enterprise. 3 7597 Information is the currency of the 4 media-rich age we are entering and new media is the 5 means by which we will build our competitiveness in 6 this new world. 7 7598 At Sheridan we offer our students the 8 chance to be involved with international competitors 9 and partners and with other students and industries in 10 ways that spur their innate creativity, enrich their 11 exchanges with fellow creators around the world and 12 encourage them to learn more skills and more ways to 13 reach out and take advantage of all their 14 opportunities. 15 7599 Communication, interactivity and 16 knowledge gathering are available at the click of a 17 mouse, irrespective of borders or boundaries. We would 18 no more think of constraining that access for students 19 than we would think of taking away their pens or their 20 library cards. 21 7600 If we truly believe that Canada can 22 compete as one of the best, and we have confidence and 23 evidence that this is true, then our approach to new 24 media has to be proactive. This means supporting and 25 encouraging the natural environment which new media is StenoTran 1770 1 flourishing. 2 7601 We are here because we are encouraged 3 to think that the CRTC has a role to play. We are here 4 because we want to support your bid to make new media 5 in Canada an international issue and a national 6 priority. 7 7602 It is not hard to imagine the forms 8 this support might take. I am sure our suggestions 9 will be consistent with the messages you have read and 10 the submissions you have received, but it might be 11 helpful to give you a specific illustration of how we 12 are preparing for the future. 13 7603 At Sheridan, initiatives in new media 14 are currently focusing on new facilities, new partners 15 and a new role in applied research and development. 16 7604 We are building an animation and new 17 media campus of the future. The Sheridan Centre for 18 Animation and Emerging Technologies, on track to open 19 in September 2000,, will offer outstanding 20 opportunities for new media education and will form the 21 hub of a land development plan that will see a business 22 and research park supporting collaboration between the 23 public and private sectors in new media. 24 7605 We are defining new ways of working 25 with visionary partners on diverse new media StenoTran 1771 1 initiatives. Silicon Graphics Canada, IBM Canada and 2 Alias/Wavefront are partners with us in the new centre. 3 Advanced Media Group and Sony Canada have announced a 4 partnership with us on a remarkable project to develop 5 expertise in high definition television and film 6 production. 7 7606 Northern Digital is making Sheridan 8 the first site in Canada for its motion capture 9 technology. We are working with the Hospital for Sick 10 Children on a multimedia centre and with Immersion 11 Studios on studies in virtual reality. 12 7607 Dalhousie University and the 13 University of Colorado are partnering with us on the 14 development of post graduate programs in new media and 15 telecommunications. 16 7608 The CRTC can offer support for these 17 kinds of initiatives at the national level. It is an 18 agency with an established mandate to uphold and 19 promote Canadian culture. What better way to do this 20 than to ensure that the new media environment is 21 acknowledged and supported as a Canadian success story 22 and offered every competitive advantage? 23 7609 For Sheridan, and we believe for 24 others as well, the CRTC could make a remarkable 25 contribution to new media in Canada in three ways. StenoTran 1772 1 7610 First, the CRTC should ensure that 2 access to opportunity is not restricted; that access 3 and distribution mechanisms, cross-cultural exchanges 4 and global collaboration are facilitated and offered 5 the best and most positive kinds of experiences. 6 7611 Faculty, students, industry, 7 governments and business should be able to freely 8 acquire and exchange information and skills in an open 9 environment without borders or restrictions. 10 7612 Second, the CRTC should develop ways 11 to encourage public and private partnerships, 12 especially to guarantee that education and industry are 13 deriving the most benefit from their interaction. The 14 growth of Canada's competitiveness, economy and 15 cultural strength must be a natural development 16 resulting from these initiatives. 17 7613 Third, the CRTC must provide 18 assistance and incentives that will promote Canadian 19 new media as world class and globally competitive. 20 Canadian talent and expertise is outstanding and worthy 21 of promotion and support at the national level. 22 7614 We must have access to research and 23 development support, adequate funding, tax breaks, 24 matching grants and innovative programs designed to 25 ensure that the best talent finds Canada the best place StenoTran 1773 1 to work and to prosper. 2 7615 The ever-increasing role that new 3 media communications will play in Canadian society 4 will, of course, lead to new employment and jobs with 5 very specialized skills that ensure persuasive and 6 clear communications. 7 7616 One hundred per cent of Sheridan's 8 new media graduates find employment. The economic, 9 social and cultural role that these new employees will 10 play in furthering e-commerce and entertainment stands 11 to play a major part in the definition of Canadian 12 identity in the global communications universe. What 13 the CRTC must do is enable these entrepreneurs to lead 14 in the 21st century. 15 7617 To conclude, we applaud the 16 initiative taken by the CRTC in asking some very 17 pertinent questions about the changing nature of 18 communications in Canada. These are difficult and 19 complex issues and we do not claim to know all the 20 answers, but we are pleased to offer one final 21 statement in summary. 22 7618 As a world leader in new media 23 education, Sheridan is proud to say that Canadian new 24 media talent and businesses are second to none 25 worldwide, requiring from the federal government and StenoTran 1774 1 the CRTC not protection or defence, but the kind of 2 support that will keep our talent in this country and 3 our businesses competitive far into the next 4 millennium. 5 7619 Sheridan wishes you well in your 6 deliberations. Thank you for the opportunity to make 7 this presentation today. We would be happy to answer 8 any questions. 9 7620 THE CHAIRPERSON: Thank you, Mr. 10 Levy. I appreciate your presentation this morning. 11 Your reputation precedes you I think in that there have 12 been already several references to the work that is 13 being done at Sheridan College. 14 7621 To discuss that with you I will turn 15 to Commissioner McKendry. 16 7622 COMMISSIONER McKENDRY: Thank you, 17 Mr. Chair. 18 7623 Good morning and thank you again for 19 coming to make your presentation this morning. 20 7624 In your oral comments you talked 21 about the outstanding quality of new media in Canada 22 and the international recognition that we are receiving 23 for that. 24 7625 I wonder if you could just elaborate 25 a bit for us on the importance of new media in the StenoTran 1775 1 international scene, particularly from a Canadian 2 perspective. 3 7626 MR. KING: Yes. I think it's an 4 increasingly critical issue. Global competitiveness in 5 today's market requires -- demands that communications 6 producers are capable of crossing cultural boundaries 7 on a worldwide basis. 8 7627 The very nature of electric commerce 9 of the Internet, of the kinds of new forms of 10 communication that are emerging, mean that we must 11 produce the kind of talent that can cross these 12 cultural boundaries. 13 7628 The problem is that designing for new 14 media is quite different from designing for an 15 individual traditional media. It requires a far 16 greater range of professional expertise. It demands a 17 much greater variety of skills and the importance of 18 distance collaboration becomes increasingly important 19 as bandwidth increases globally. 20 7629 We have seen large numbers of 21 countries coming to Sheridan trying to partner with us 22 because they recognize the need to be able to produce 23 this kind of diverse cross-cultural communications 24 capability. To do that the new media environment is 25 critical. StenoTran 1776 1 7630 I think the key issue here is the 2 design for new media is simply not a matter of having 3 access to new technologies. It is an intellectual 4 process. It is far beyond simply the matter of 5 accumulation of digital assets in a virtual space. It 6 is also the ability to be able to use those assets for 7 communication on a global basis. 8 7631 That's clearly an issue that Canada 9 has very strong opportunity to lead in because of the 10 cultural diversity of our society and our ability to 11 kind of cross those kinds of cultural boundaries. 12 7632 COMMISSIONER McKENDRY: What are the 13 key barriers to crossing those boundaries that you see 14 in today's environment? 15 7633 MR. KING: One of them is the 16 difficulty of designing media for cross-cultural 17 communications. The problems of the traditions of the 18 use of things like colour, for example, topography, the 19 way messages are read, whether they are right to left 20 or right to left, et cetera, may seem like trivial 21 issues, but they are in fact very significant issues. 22 7634 If we send a message, for example, to 23 another culture in which the colour combinations are in 24 fact associated with that culture in a negative light, 25 very subtly the image is a very different one and can StenoTran 1777 1 be disastrous. 2 7635 Much needs to be done to educate 3 people to understand how to design for global 4 communications. To do that requires that you have a 5 body of information and a level of experience that has 6 been accumulated over time to understand what 7 practices, what principles and what structures are 8 needed to ensure that that effectiveness takes place. 9 7636 Fundamentally, there isn't an easy 10 access to that body of information yet. 11 7637 COMMISSIONER McKENDRY: I take it 12 this is where the importance you placed on 13 international collaboration comes in in order to help 14 you and your colleagues gain insight into these kinds 15 of cultural differences that need to be taken into 16 account. 17 7638 MR. KING: That is certainly part of 18 it, yes. There are additional issues, but that 19 certainly is why we have been spending a lot of time 20 looking at international partnerships. 21 7639 COMMISSIONER McKENDRY: You say there 22 are additional issues. What would some of those be? 23 7640 MR. KING: I would say probably the 24 most critical issue from my perspective personally, but 25 I think also for the development of Canadian new media, StenoTran 1778 1 is access to research and development funds. If I may, 2 I would like to give you an example. 3 7641 About a year ago I was involved as a 4 principal researcher on a proposal to a National 5 Centres of Excellence Program, a federal body which 6 included the Social Science and Humanities Research 7 Council, the Medical Research Council, Industry Canada, 8 National Science and Engineering and Research Council. 9 7642 The nature of this proposal, which 10 consisted of a consortium of 20 organizations from 11 across Canada involved in new media, joining together 12 to undertake a research program to improve the design 13 and production methodology for new media. In other 14 words, the notion was that we need to produce better 15 tools. 16 7643 The tools currently are primarily 17 simply extensions of the tool base that we have used, 18 the mouse, the single computer screen, et cetera. 19 7644 We recognized that new media requires 20 new toolsets and we are very strong in engineering, we 21 are very strong in software in Canada. No other 22 competitive new media proposal was made to the National 23 Centres of Excellence and yet our grant was not 24 awarded. 25 7645 Frankly, the traditional granting StenoTran 1779 1 bodies simply do not know how to evaluate and support 2 the kind of interdisciplinary projects of this kind. 3 They bridge not only engineering, but the social 4 sciences and the humanities language, culture. They 5 are complex and they are non-traditional, yet the 6 competitiveness of every industry as we move into an 7 industrial age will depend on clear and effective 8 communications delivered in a global environment. 9 7646 Because new media workers are working 10 with relatively primitive environments -- we know there 11 have been dramatic improvements in speed, in 12 processing, in communication, in bandwidth, but there 13 aren't, if you will, the improvements being made in 14 technology itself, in production methodology for new 15 media, in creating environments where we have an 16 entirely new way of looking at how to assemble and 17 communicate new media results. 18 0915 19 7647 So the question for me really is, you 20 know, new media designers need simultaneously an access 21 to a very divergent resource base, online 22 collaboration, web access, the work that they are 23 working on. It is a diverse working environment. 24 7648 The research needed to do that has 25 not been done, and yet the traditional research bodies StenoTran 1780 1 that grant money to do this kind of research simply 2 don't know how to evaluate new media projects because 3 of their interdisciplinary nature, and are more likely 4 to give money to traditional disciplines. 5 7649 So that I see as a significant 6 challenge, and where we would see the CRTC and the 7 federal government as helping to put these kinds of 8 projects together. 9 7650 MR. TUCKER: If I might just add a 10 point, we at Sheridan thought that we might be able to 11 provide something to you in terms of some of the 12 consultative activity that might go on in some of these 13 initiatives. Robin has mentioned the R&D area, but 14 also funding agencies and so forth that will fund new 15 media activity. 16 7651 We would see, possibly because of the 17 role that we currently play, which is a bit hands-off 18 from the industry directly, that we might be able to 19 help in that consultative process. 20 7652 COMMISSIONER McKENDRY: Are you 21 suggesting, or have you thought that far along with 22 respect to this problem, that you need a new funding 23 body, or is it, in effect, a reform of existing funding 24 bodies that will address the problem you have 25 identified? StenoTran 1781 1 7653 MR. KING: I think it has to be a new 2 funding body personally. 3 7654 I mean, the diversity that we deal 4 with is very significant. These are engineering 5 problems, these are social problems, these are problems 6 of psychology and methodology of work. 7 7655 We have entered an information age in 8 which we know very little in fact about the working 9 methodology required to produce new media. It is still 10 done on a single screen with an archaic device called a 11 mouse for the most part. These are just extensions of 12 traditional technology, and yet we know with kind of 13 emerging and embedded technologies that other devices 14 need to be designed to make the free flow of creative 15 information for the producer, as well as the receiver, 16 far more effective in the design and development of new 17 media. 18 7656 There is very little research being 19 done, and I think it will take a cross-disciplinary 20 body to be able to understand how to fund, how to 21 evaluate, and how to support that kind of initiative. 22 7657 MR. LEVY: Could I just add one part. 23 I'm sorry to interrupt. 24 7658 In Ontario I chair a committee for 25 the Minister of Science and Technology which is the StenoTran 1782 1 first of a kind, which is the establishment of a 2 digital media fund where the objective is to promote 3 the industry in partnerships. And I believe it is a 4 recognition in Ontario that this type of support, and 5 the type of encouragement from the government is 6 necessary. 7 7659 I think what Robin is referencing is 8 that the granting councils at the federal level have a 9 more traditional view on disciplines, and digital media 10 doesn't have what I will call champions yet, and you 11 need champions on the funding counsels so that when 12 submissions come -- whether they are from one end, UBC 13 or Memorial or Sheridan or anyone, that they are 14 received with the knowledge base that is necessary to 15 help others understand it. 16 7660 So I think it is a function of time, 17 and right at the moment the champions are more 18 disciplined-based, but not new media-based, and I think 19 where CRTC and the federal government can help is 20 opening up or broadening the view of research in Canada 21 to include new media as a legitimate player in 22 research, but not limited to an engineering sense of 23 new media, but a content sense of new media and an 24 engineering sense. 25 7661 That is where the cross-disciplinary StenoTran 1783 1 part comes, because we will get, no doubt, engineering 2 support for new media and the development of new 3 technologies. 4 7662 But where do you pull it together as 5 new media and get content and technology coming 6 together? I think in Ontario Minister Wilson, who has 7 asked me to chair the committee, has that in mind, that 8 there is no place that is open to that, and I think 9 CRTC can make a major contribution to open up the 10 playing field a bit wider to recognize new media. 11 7663 MR. TUCKER: To get back to your 12 point about funding bodies, I would certainly agree 13 with Robin that there perhaps needs to be a new body 14 created, or perhaps a merging of existing ones. 15 7664 We have gotten rather hung up on the 16 notion of new media, seeing it as something distinct 17 from media, and really it is the integration of 18 existing and new medias, and I think the mechanisms to 19 support that industry will have to similarly reflect 20 that merging, that integration so that you have these 21 cross-disciplinary skills when it comes to evaluating 22 and assessing projects and initiatives. 23 7665 COMMISSIONER McKENDRY: There has 24 been quite a focus, at least at Industry Canada, on the 25 information highway and connecting Canada, and so on, StenoTran 1784 1 but I take it from your comments today that that has 2 probably been, in your view, a focus on the technology 3 of the highway and you are suggesting that it is very 4 important to reach out beyond the technology and to 5 think of the technology along with content, and that 6 is, I guess -- I just want to make sure I understand 7 the information highway focus hasn't addressed what you 8 are suggesting needs to be addressed. 9 7666 MR. TUCKER: We feel this 10 particularly acutely in education because training 11 students on technology gives them a very short lifespan 12 in the job market. It is the people who can provide 13 content, the intellectual property holders that have 14 the staying power. So that would certainly be 15 reflective. 16 7667 MR. KING: And we are dealing with 17 new forms of communications strategy. Just the issue, 18 for example, of designing navigation on any interactive 19 system is something that essentially is a new art, if 20 you will. It involves the analysis of information, the 21 restructuring of information, the organization of 22 information in new ways. 23 7668 And yet the quality of how that is 24 done, the quality of the result is critical to 25 producing effective communications, and yet we don't StenoTran 1785 1 have the opportunity to do the current design work, 2 either engineering or the time taken to put together 3 new strategies, because the evolution of the technology 4 is just so fast. 5 7669 COMMISSIONER McKENDRY: I would like 6 to take advantage of your visit today just to talk with 7 you for a while about how you see the future unfolding 8 from the technology and content perspective. 9 7670 I thought it might be helpful to look 10 at Appendix A to the Business Plan that you attached to 11 your oral comments where you set out several emerging 12 technology markets and key trends. 13 7671 I just wondered, thinking about 14 those -- or others that aren't listed there, because I 15 notice it was written about a year ago, so I suspect 16 there are some changes, but I just wonder if you could 17 set out for us how you see the technology content, new 18 media, digital media world unfolding from where you sit 19 today. 20 7672 MR. KING: It is always easier to 21 predict in hindsight, but when we look back I think 22 there are two issues here. 23 7673 We know a lot about the linear 24 extrapolation. We can make some judgments about how 25 the speed of things will change. We know about StenoTran 1786 1 processing power and bandwidth, et cetera. We can 2 predict from the linear extrapolation a great deal 3 about issues around speed. 4 7674 What we can't predict are the non- 5 linear. The emergence of the internet was something 6 that we sort of predicted four or five years ago and 7 became involved in fact in the precursors of that, 8 Teledon some 18 or 19 years ago. We were involved with 9 interactive design almost 20 years ago. 10 7675 Fundamentally, the underlying 11 principles are the things that will always carry us 12 into the future. It is not the specifics of the 13 technology, the amount of bandwidth or the particular 14 nature of new technologies, it is the ability 15 underlying all of that to be able to communicate well 16 irrespective of the medium. 17 7676 I think the reason that Sheridan has 18 been successful in media, in animation and in some of 19 the other technologies, is because we have not lost 20 sight of the fact that content for the most part is the 21 most important, and we will continue to believe that, I 22 believe. We will adjust to changes in technology. 23 But, fundamentally, if we can't communicate ideas to 24 people effectively then we will not be in business. 25 7677 So I think the greatest challenges in StenoTran 1787 1 the future will be in the analysis of complex 2 information, and the ability to be able to take complex 3 information and bring it into visual and multi-media 4 form in ways which reflect what needs to be understood. 5 For example, new ways to develop business information 6 so that people can make real-time interactive decisions 7 about markets, for example. It is the ability to be 8 able to do that translation of information into 9 effective knowledge that is more critical than the 10 individual technology. 11 7678 So we will adjust to the specifics of 12 the technology, but underlying that is a strong 30-year 13 commitment at Sheridan to the development of effective 14 content. It is just that that is becoming a lot more 15 complicated because of the range of new technology and 16 the range of new media extends the ways in which that 17 can be distributed. 18 7679 Some of the challenges I guess would 19 be things like online collaboration for example. What 20 are the dynamics of online collaboration? How do we 21 work with other parties and other countries in real- 22 time. Those kinds of things will be new challenges 23 that we know very little about right now. 24 7680 And they are certainly a challenge 25 for television production and new media production, how StenoTran 1788 1 we collaborate in virtual teams in a worldwide 2 environment and stay competitive. It is the 3 methodology and it is the process more than it is the 4 technology and the bandwidth. 5 7681 MR. TUCKER: One small add on to that 6 too, Robin, I guess is the democratization of the whole 7 process too that will be a fundamental shift. 8 7682 Certainly increasingly individuals 9 will be able to, in a sense, become their own 10 broadcasters and content creators, and that will 11 certainly have an impact on the future of all media. 12 7683 MR. KING: A good example would be, 13 for example, in 1985 there were 12 large animation 14 companies in North America. Eleven of them disappeared 15 within three years. The whole industry is moving 16 towards boutique operations. Democratization of the 17 technology means that it is the individual and small 18 group environment that can be the most effective 19 producer. They bring and sell their own creativity, 20 their own design talent, their own content expertise to 21 the process. 22 7684 Their value in the chain becomes 23 really significant, so that we are seeing a 24 disappearance of the medium sized production industries 25 compared to the very large and the very small. StenoTran 1789 1 7685 But the very fact that you can by the 2 technology now at very low prices means that the kinds 3 of things that David is talking about, the non-linear 4 video editing, for example, can be done by somebody in 5 their basement. It is the talent and the creativity 6 underlying the production which is the value in the 7 chain which will make the difference globally in the 8 long run. It will not be the bandwidth. It will not 9 be the hardware. It will be the talent of the 10 producer. 11 7686 MR. LEVY: Could I give you sort of a 12 glimpse of a potential future, to give you some idea of 13 a practical answer to your question. 14 7687 We are engaged in a project with the 15 Hospital for Sick Children at the moment, and we are 16 thinking of the following project: When a child, let's 17 say breaks their arm -- I will use this as an 18 example -- and has to go for physiotherapy, one of the 19 difficulties is what happens between physiotherapy 20 sessions. How does this child exercise to ensure that 21 the type of exercise is in fact improving the 22 condition? 23 7688 Well, right now we have technology 24 that could help the child with the physiotherapist move 25 their arm and capture the data points of that movement StenoTran 1790 1 to make sure it is right, so that a movement, say of 2 this order, which is the right movement, is captured in 3 data. So just imagine that you now have the Hospital 4 for Sick Children webTV page, and the child goes home 5 and does exercises, but the data points that were being 6 captured with the physiotherapist are now known by the 7 technology, and as the child is doing their 8 physiotherapy it is making sure in a matching way from 9 the movement of the child to those data points that 10 they are right, that they are doing the right exercise. 11 7689 Furthermore, the child wants to have 12 fun and be encouraged to do it, so we animate the child 13 as a cartoon figure while they are doing those 14 exercises. 15 7690 But let's just take it a bit further. 16 Those exercises are progressive, so that as the child 17 masters one the exercises become more difficult but 18 more helpful, says the doctor and the physiotherapist. 19 7691 But let's go a step further, that as 20 the child is doing it, if the child is getting into 21 difficulty an e-mail is sent automatically to the 22 physiotherapist. 23 7692 Now let's take it one bit further, 24 that the child happens to be in Brazil or some other 25 place and interacting with the Hospital for Sick StenoTran 1791 1 Children. All that technology is presently available. 2 It is pulling it together. 3 7693 I think this is part of the digital 4 media world where interactivity, and new forms of 5 interactivity, which is far more than a mouse, are 6 going to be the differentiating factor. And you can 7 now just say, well, imagine you have a blood disorder, 8 and rather than looking at colours of experiments and 9 tubes, you send the data digitally over the internet 10 and it is viewed and evaluated and information comes 11 back to you to help you as to improve your conditions, 12 your diet. 13 7694 These are all parts of a new media 14 world that we are entering and designing and planning 15 and innovating for that, I think are all parts of what 16 Canadians can do extremely well, but these are all 17 e-commerce based as well. 18 0935 19 7695 This is where the new economies are 20 going to emerge, from ideas like this and entrepreneurs 21 seeing the value of these ideas. I think this is the 22 type of view of the future that I see that I would put 23 into the new media age. 24 7696 MR. KING: The mix of these two 25 technologies -- it's not just entertainment, you know. StenoTran 1792 1 It's the fact that there really is no border between 2 hard data and the way in which that data can be 3 interfaced with new media. 4 7697 I think that's a prime example of the 5 fact that as the child moves, they are getting 6 encouragement and entertainment from a character that 7 is helping them to learn. It is an integration of 8 using an attractive entertainment technology with 9 really concrete data. 10 7698 There are all of these new 11 interdisciplinary opportunities of which that is an 12 example which open up new areas of commerce. We need 13 to be able to do that research, promote that research 14 and find those interdisciplinary opportunities. 15 7699 COMMISSIONER McKENDRY: The 16 Commission has had a longstanding concern about 17 Canadian content in conventional broadcasting media in 18 achieving certain cultural objectives with respect to 19 broadcasting in Canada. 20 7700 In light of what you said about 21 pulling things together, the intellectual exercise 22 involved in this, the importance of content, not just 23 focusing on technology, do you have any thoughts about 24 the new emerging digital world and its relationship to 25 our Canadian content and our cultural concerns, how StenoTran 1793 1 they will fit together? 2 7701 MR. TUCKER: I think since we are 3 entering a brave new world, we have to think in new 4 ways. Our feeling is that Canadian content can be best 5 encouraged, enhanced, et cetera, through incentive 6 approaches. 7 7702 We feel that if you have an 8 environment that encourages production, that encourages 9 and sustains the creative talent here, that you will 10 grow a very strong industry. 11 7703 The traditional role of the broadcast 12 regulations have been enormously helpful in developing 13 and nurturing that industry, but the environment has 14 changed now so substantially that trying to regulate it 15 in a traditional way may be very difficult. 16 7704 There may be opportunity for 17 regulation, for example, in extreme instances of 18 monopoly practice if that emerges, but at this stage it 19 is very hard to predict exactly where we are headed, in 20 essence fostering Canadian through regulation may be 21 premature. There may be opportunity for it down the 22 road, but right now we see it as a very difficult thing 23 to try to regulate in the traditional way. 24 7705 As I said, really the emphasis and 25 the message we are trying to leave today I guess really StenoTran 1794 1 is that content is at the core of success and we have 2 to find ways to encourage talent to stay here in this 3 country. With democratization of resources, it also 4 means that people can work out of their basement. They 5 don't necessarily require in all cases multimillion 6 dollar budgets to produce quite world class -- I 7 hesitate to use that term -- world class product. 8 7706 We would encourage any incentives 9 that would support that kind of activity at the content 10 intellectual property level. 11 7707 COMMISSIONER McKENDRY: I am thinking 12 about new media and the new technologies, do you 13 anticipate that there will be a shift throughout the 14 type of content that we now find in traditional 15 broadcasting media to new delivery systems such as the 16 Internet? 17 7708 MR. TUCKER: In a word, yes. We 18 would see things such as the webTV scenario, for 19 example. Certainly a lot of new delivery systems 20 advancing technology will provide, you know, immersive 21 and other forms of entertainment that haven't really 22 developed fully to this point. 23 7709 There will be all kinds of -- beyond 24 high definition there will be 3D, I'm sure, and a lot 25 of other extensions. It's both a revolutionary and an StenoTran 1795 1 evolutionary process that happens in conjunction. It 2 will take time for all of those elements to unfold. 3 7710 At that time I think we will be 4 better positioned to know what we can or can't regulate 5 successfully and where we need to foster greater 6 support of Canadian content or not. 7 7711 MR. KING: One example would be 8 something like the intelligent refrigerator, you know, 9 with a built-in television screen connected to your 10 local supplier or range of suppliers of foods, et 11 cetera. 12 7712 Not only would it deliver advertising 13 to you, it would also allow you to order the kinds of 14 things that you want. The question is how far does 15 that distance ordering to? 16 7713 When you buy a refrigerator 17 manufactured in the U.S., does it come with an 18 interface to resources -- sorry -- American resources. 19 Say you buy it in the U.S., it comes with a data system 20 that says you are going to buy American product. 21 7714 Certainly those possibilities because 22 of the interconnection through the Internet become real 23 commercial opportunities. We would certainly want to 24 make sure that Canadian advertisers always have the 25 opportunity to advertise to Canadians through whatever StenoTran 1796 1 means were necessary. 2 7715 Imbedded technologies in appliances 3 will become a major source of connection to the 4 Internet for a variety of opportunities. That's 5 another issue that we face, although it's not a 6 directly Canadian content issue. We want to make sure 7 that the encouragement is there to ensure that 8 Canadians always have a presence on your refrigerator. 9 7716 COMMISSIONER McKENDRY: The thing 10 about our presence on television if webTV emerges, is 11 there a risk that television sets or the terminals that 12 we think of today as television sets will come with 13 imbedded technology from, say, the United States? 14 7717 MR. KING: It's certainly a 15 possibility. There are others as well. For example, if 16 you go to Tokyo, many cars have satellite positioning 17 systems so that when you drive down the highway, you 18 know exactly where you are. There is a dynamic map of 19 your location with information about not only where you 20 are but where the traffic jams are. 21 7718 That same technology, however, can 22 easily be connected to television and television 23 commercials. It's kind of an ubiquitous entry of 24 advertising into all kinds of parts of our environment. 25 It's a really important issue. That can come from StenoTran 1797 1 anywhere that can deliver by satellite. 2 7719 COMMISSIONER McKENDRY: Up until now 3 in the hearing we have heard from several parties that 4 we need to be thinking a bit about ensuring that 5 Canadians have access to the major portals and so on 6 that exist on the Internet. 7 7720 You are presenting us with another 8 potential situation that we need to contemplate, I 9 guess the downloading -- we should be worried about the 10 technology in one's homes where data may be imbedded 11 that requires the user to, say, go to the United States 12 for information and entertainment. 13 7721 How would Canadians deal with this 14 potential situation? How would one ensure that the 15 technology was neutral culturally or perhaps even had a 16 Canadian data in it? 17 7722 MR. LEVY: Could I not answer that 18 question directly but reflect upon the following that 19 just occurred to me. 20 7723 There might be a bias in that new 21 media or those things that come on television screens 22 and computer screens. I think what you are hearing is 23 that we see those as just an example of where new media 24 is going to be playing. 25 7724 If we can use the refrigerator as an StenoTran 1798 1 example only, our view of new media is far broader than 2 the tradition. Maybe your question that you asked 3 earlier about where is this going, I think what we are 4 saying is it's going everywhere, and try to remove 5 one's self from a traditional view of media, new media 6 at the present, and then you will have an idea of our 7 perspective on it. 8 7725 It also now ties into why we believe 9 the research part is necessary because in order for 10 Canadians to be able to move into the appliance new 11 media, it requires the research and development and it 12 will be content driven because the technology is there. 13 It will be how you use the technology. 14 7726 I didn't want to ignore your 15 question. I will pass on the technical part to my 16 colleague. 17 7727 MR. KING: I'm not sure I can answer 18 the technical questions, but I think all of us hold a 19 sentimental belief that our competitiveness will always 20 come back to our ability to produce attractive content. 21 People will buy what they want to see, what they want 22 to experience. 23 7728 We have to make sure that we have the 24 best design community, the best production community, 25 to answer whatever type of challenge comes forward. StenoTran 1799 1 That really is just a fundamental way of reinforcing 2 everything we have really said today which is we better 3 have the content side and the research and development 4 side to thoroughly inculturate it in what we do to 5 satay competitive, irrespective of the means of 6 distribution. 7 7729 MR. TUCKER: I think we also have the 8 opportunity of tremendous market potential we may not 9 even be aware of yet. 10 7730 When you think back say to 1950, 11 studios were terrified that television would -- they 12 viewed it as competition. As we have seen now with 13 hindsight through home video and television, suddenly 14 there were all kinds of ancillary markets. 15 7731 I think the same evolutionary process 16 will happen for traditional broadcasting and so on 17 through webTV and other outlets that are perhaps not 18 even considered yet. 19 7732 COMMISSIONER McKENDRY: Mr. Levy's 20 comments reminded me of your definition of new media in 21 your written comments. I will quote: 22 "New media describes any digital 23 media production that is 24 interactive and digitally 25 distributed." StenoTran 1800 1 7733 The first reaction when I read that 2 is you have committed kind of a bureaucratic sin here 3 because you have used one word where six or seven would 4 probably do. 5 7734 Any digital media production in that 6 definition is a very broad matter, following on the 7 point you made about the refrigerator. I think that's 8 important to emphasize to us. 9 7735 Just in terms of the definition in 10 new media and the problems of defining it and so on., 11 we had a submission from Mr. Pilon of Cyberflex 12 Interactive Media. I just wanted to get your reaction 13 to his comment about the problems inherent in defining 14 new media. 15 7736 I am going to quote from paragraph 16 3.6 of his submission. He says: 17 "In summary, it is not 18 beneficial or appropriate to 19 forge together distinct 20 communications technologies and 21 their industries through the 22 creation of a blanket 23 definition. Instead, each 24 technology and technique should 25 be studied and assessed StenoTran 1801 1 independently." 2 7737 We have had in the course of the 3 hearing a fair bit of discussion about the definition 4 of new media, what it is and what it isn't. 5 7738 I guess my question to you is do we 6 really need to definite it? Is Mr. Pilon right that we 7 should focus on the technologies and assess each one 8 independently? What's your reaction to that 9 perspective? 10 7739 MR. KING: I think you have to think 11 of new media as organic, you know. It's an evolving 12 system with a flexible boundary set. It will embrace 13 new technologies as they come along and other 14 technologies will fall by the wayside. 15 7740 What holds any kind of system 16 together? Well, it's the form of communication that 17 ties them all together. 18 7741 In the same analogy, the human body 19 loses cells every day, gains cells every day, gains 20 nutrition, et cetera. I think in a sense new media is 21 an evolving and rather organic framework. I don't 22 think it helps to talk about the individual parts when 23 dealing with the whole is the most important thing. 24 It's the integrity of that whole environment and 25 understanding how it changes, how its dynamics change StenoTran 1802 1 over time. 2 7742 It's that inter-relationship between 3 the technologies and the content. I don't think you -- 4 it's like the scientific paradigm. You can take all 5 the individual parts and you can deconstruct them to 6 the point where you know a lot about each individual 7 one, but it doesn't help you to understand the whole. 8 7743 Somehow we need that broad 9 perspective that understands the integrity of the whole 10 and its dynamic change over time. 11 7744 COMMISSIONER McKENDRY: So at a 12 minimum focusing on a particular technology, we would 13 be ignoring the important content element -- 14 7745 MR. KING: Absolutely. 15 7746 COMMISSIONER McKENDRY: -- which is 16 key to this organic view of digital media that you 17 have. 18 7747 MR. KING: Yes. 19 7748 COMMISSIONER McKENDRY: Let me just 20 clarify a couple of things in your written submission 21 to finish off. You say in paragraph 18, and I will 22 quote: 23 "The environment has taken the 24 next evolutionary step where 25 neither limits nor control can StenoTran 1803 1 be defined, much less enforced." 2 7749 I take it that you are referring 3 there to the traditional regulatory approach. I 4 assume, and I will put this forward to you for your 5 comments, that criminal law as we know it would 6 continue to apply, for example, laws on obscenity and 7 so on. 8 7750 I am assuming that you believe they 9 could continue to be enforced. If I'm wrong, please 10 comment on that. 11 7751 MR. TUCKER: Yes. We would support 12 that with the proviso that again through the technology 13 it's possible to do a certain degree now of 14 self-regulation. I mean V-Chip is one example. That 15 will increasingly -- I think in the future we will see 16 more and more of that kind of activity where parents or 17 whomever can select or deselect programming or whatever 18 information is coming into their home. 19 7752 Part of it again will be democratized 20 but there would be a broader role. I had also 21 mentioned earlier about some monopoly practices too 22 that might be considered for regulation as companies 23 develop and merge and so forth. There may be some need 24 there. 25 7753 I heard an interesting example StenoTran 1804 1 recently of America Online had accepted a large sum 2 from a particular private company to have exclusive 3 territory on their service. That might be something 4 for future consideration as well. 5 7754 COMMISSIONER McKENDRY: What would be 6 the problem with America Online striking that 7 arrangement with a particular supplier? I assume an 8 America Online subscriber could choose another 9 subscriber outside the AOL gated community if they 10 wanted to. 11 7755 MR. TUCKER: This is what I'm saying. 12 A lot of the -- any attempts at regulation at this 13 stage may be premature because we have to see how the 14 industry unfolds first. If there were a point where 15 these companies reach a certain critical mass, that may 16 be more problematic. 17 7756 COMMISSIONER McKENDRY: I guess that 18 leaves me your comment about the AOL arrangement with a 19 particular supplier. In the terrestrial world those 20 kinds of arrangements would be typical in grocery 21 stores or anywhere in the retail arena. 22 7757 Should we attempt, we being the 23 government I suppose or society collectively, should we 24 attempt to enforce different kinds of relationships 25 between suppliers and retailers in cyberspace than we StenoTran 1805 1 do in the terrestrial world? 2 7758 MR. TUCKER: I don't really feel the 3 principle of a change fundamentally there. We are 4 talking about technological evolution, but in terms of 5 ongoing business principles, we see many of the same 6 practices applying to new media as we have seen in 7 traditional media and in all areas of business 8 activity. There may be opportunity. I'm not saying 9 there necessarily is, but it's something to examine 10 down the road. 11 7759 COMMISSIONER McKENDRY: You mentioned 12 the risk of monopoly practices or monopoly 13 organizations emerging. Where would you see we are 14 most vulnerable in cyberspace to that happening? What 15 should we be on watch of in particular? 16 7760 MR. TUCKER: Well, the example I gave 17 is the one that sort of jumped out at me. It hadn't 18 actually occurred to me up until reading that. It 19 seemed that there might be some areas where, you know, 20 a particular provider gobbles up a very large range of 21 products and services and perhaps limits competition, 22 limits access. 23 7761 MR. LEVY: I could raise a question. 24 I'm not even sure I have an answer to it. It is one 25 that I think is worth considering. StenoTran 1806 1 7762 Imagine a very large provider or 2 portal and that individual or that company has a 3 variety of arrangements with a variety of other 4 companies. It provides its users search engines, but 5 when it searches, it doesn't search everything. It 6 searches particularly for those arrangements that it 7 has with other companies. 8 7763 Clearly, a sophisticated user can 9 leave that portal and go to another one and find a 10 broaderone, but a less sophisticated user is going to 11 be limited to the choices of that search engine that is 12 funded by those companies. 13 7764 That's a question that is at least 14 worth considering. 15 7765 COMMISSIONER McKENDRY: I suppose the 16 person using the search engine wouldn't necessarily 17 know that those arrangements have been struck. 18 7766 MR. LEVY: Yes. That's correct. 19 7767 COMMISSIONER McKENDRY: Thank you 20 very much for answering my questions. 21 7768 I don't know whether there is 22 anything else you would like to add based on the 23 discussion we have had. 24 7769 Thank you very much. We very much 25 appreciate you taking the time to come and meet with us StenoTran 1807 1 today. 2 7770 MR. LEVY: Thank you and thank you 3 for inviting us. 4 7771 THE CHAIRPERSON: Thank you, 5 Commissioner McKendry. 6 7772 I just have one question. You said 7 you didn't want to get into an engineering discussion, 8 but I presume in order to be able to do sort of the 9 interesting and innovative things that you foresee in 10 the future, the requirement for higher speed access to 11 the Internet would be essential if not critical. 12 7773 MR. KING: Yes, it would. 13 7774 THE CHAIRPERSON: As you may have 14 heard, we had some discussions last week about the ISPs 15 getting high. Do you have any comment on that whole 16 question about how we might create an environment that 17 might speed up the development of higher speed access 18 from a regulatory point of view? 19 7775 I appreciate that is not the 20 particular focus of your presentation here today or 21 your work in general. I was wondering whether you 22 might have a view on that. 23 7776 MR. LEVY: If I could try to be clear 24 on the question for a moment. This is higher speed 25 access to public schools, secondary schools, to the StenoTran 1808 1 home. If I have one word of advice as I am on 2 different sets of committees that are asking exactly 3 this question, it is somehow coordinated. 4 7777 It needs coordination at the 5 provincial level. It certainly needs coordination at 6 the federal level. I know the complexity of this task, 7 but the number of different groups that are asking 8 exactly this question, the number of groups that are 9 spending money or trying to advocate for money to pull 10 wire or to pull fibre for their particular needs is 11 quite overwhelming. 12 7778 There isn't evidence of the Canadian 13 strategic plan, if I can call it that. That said, I 14 would hate to be the one who had to get involved in 15 developing it. It needs coordination. I see so much 16 duplication possible and not strategic thinking of 17 where and what geographic areas that potential 18 investment would make best sense for the overall best 19 economic advantage to those communities. 20 7779 I can't think of anything other than 21 a national coordination strategy. 22 7780 THE CHAIRPERSON: I think counsel has 23 a question or two. 24 7781 MS PINSKY: Thank you, Mr. Chairman. 25 7782 I would just like to follow up on the StenoTran 1809 1 discussion you just had with Commissioner McKendry with 2 respect to the issue of the potential ability of 3 portals to limit access to sites as a potential 4 example. 5 7783 A number of parties in this 6 proceeding have suggested that the Commission actually 7 requires portals or ISPs who create content or other 8 types of content aggregators to give access to all 9 Canadian sites, to all Canadian content and to ensure 10 that Canadian sites are predominantly displayed on, for 11 example, the ISPs home page. 12 7784 I wonder if you could comment on that 13 proposal and specifically comment on your view of its 14 feasibility, the need for that type of measure and the 15 desirability about implementing that. 16 7785 MR. TUCKER: It sounds like an 17 encouraging idea. Whether it can be successfully 18 launched I guess is dependent on a number of factors, 19 including technology. It would certainly have merit. 20 We would certainly support investigating it, shall we 21 say. 22 7786 MR. LEVY: As a general statement as 23 opposed to that, I think when you consider the 24 potential of local calls anywhere in the world or the 25 1-800 number, requirements that you will put on StenoTran 1810 1 Canadian providers that encourage them to get out of 2 the requirements and, therefore, move a hundred miles 3 south are going to ultimately be to the disadvantage of 4 Canadians. 5 7787 I think one has to be very careful of 6 putting bars up for Canadians to jump over that are not 7 competitive. It isn't in any disagreement to what you 8 have said, but I would think that the other side of the 9 equation would have to be that they would want to do it 10 for economic reasons as opposed they have to do it for 11 regulatory reasons. Otherwise it's just one more 12 reason for them to get a 1-800 number south of the 13 border. 14 7788 MS PINSKY: Thank you very much. 15 7789 That's my only question. 16 7790 THE CHAIRPERSON: Thank you, counsel. 17 7791 Thank you very much, gentlemen. I 18 think for all of those that were worried that we might 19 spend our time trying to regulate the Internet, we can 20 probably spend our time over the next while trying to 21 figure out how an interactive refrigerator fits within 22 the definition of broadcasting. 23 7792 Thanks again. 24 7793 MR. LEVY: Thank you. 25 7794 THE CHAIRPERSON: Madam Secretary. StenoTran 1811 1 7795 MS BéNARD: Thank you, Mr. Chairman. 2 7796 The next presentation will be by the 3 Canadian Screen Training Centre. 4 PRESENTATION / PRÉSENTATION 5 7797 MR. CRAWLEY: Thank you. 6 7798 My name is Alexander Crawley. I am 7 the Executive Director of the Canadian Screen Training 8 Centre. We are a not-for-profit training organization 9 that offers professional development and training 10 opportunities for self-employed people basically on a 11 short term basis, always using professionals to teach 12 our classes. 13 7799 I would say we are not in the same 14 league as the previous intervenor in terms of the 15 volume of training we have been able to do, 16 specifically in the new media area. However, it is 17 something that interests us very greatly. 18 7800 We have begun to train in the new 19 media. We are an organization that has existed for 18 20 years training for film and television. Obviously, a 21 lot of the people who are involved in the film and 22 television industry are also looking at using the new 23 media, not only for the production of their traditional 24 forms but also as a means itself to communicating. 25 7801 We don't have too much to add to what StenoTran 1812 1 we said in our written submission to you, but we wanted 2 to make sure we were here in order to reiterate the 3 point that the Commission has a responsibility. 4 7802 The fundamental issue here in terms 5 of the new media is the cultural objectives of the 6 Broadcasting Act and where the new media is used to 7 deliver copyrighted material, basically material that 8 has been created by the individual expression of 9 creative artists. 10 7803 You must do whatever you can to 11 ensure that those materials are made available to 12 Canadians first of all and, secondly, are not stolen 13 from their creators. That seems to be the main issue. 14 7804 The salient point which I think the 15 Chair brought up just towards the end of the Sheridan 16 intervention is a sense of creating some kind of 17 incentive for Internet service providers to make their 18 contribution as they must. 19 1005 20 7805 I think you do have to hold on to 21 that idea. I'm not sure -- it is a very difficult one 22 obviously. No one wants to see everyone running across 23 the border. 24 7806 However, I think sometimes we 25 underestimate the desire of Canadian entrepreneurs to StenoTran 1813 1 be in their own country and offer services to their own 2 citizens. I think sometimes the global aspect of this 3 thing is over-emphasized. 4 7807 As my colleague from ACTRA pointed 5 out to me as we were chatting -- and I think this is 6 true and you will know better from your sources -- that 7 the internet and internet mass communications remain at 8 this point really more of a North American phenomenon 9 than truly a global phenomenon. 10 7808 I agree with what Mr. King said about 11 the tremendous opportunity for Canada as a very well- 12 developed, modern, multi-cultural nation to make great 13 strides in the future in terms of that cross-cultural 14 communications that Mr. King was talking about. 15 7809 However, I think the big challenge 16 right now is still, as it has been traditionally with 17 our broadcast media, to make sure that we are not 18 totally swamped by our neighbours and friends to the 19 south. 20 7810 So I don't want to take a lot of 21 time, because you have quite an impressive array here 22 today and I want to hear what they have to say, but I 23 really just wanted to reiterate the point on behalf of 24 the Canadian Screen Training Centre that the Commission 25 does strongly consider a form of regulation for the StenoTran 1814 1 internet for the new media and to create incentives for 2 that critical mass of research, develop and training 3 that is going to be necessary if we are going to 4 continue to stay ahead of the game in terms of new 5 media development. 6 7811 That is really all I have to say. 7 7812 THE CHAIRPERSON: Thank you, 8 Mr. Crawley. 9 7813 I will turn questioning over to 10 Commissioner Grauer. 11 7814 COMMISSIONER GRAUER: Thank you. 12 7815 I will try not to keep you too long, 13 Mr. Crawley. 14 7816 I am sure if you have been following 15 the hearings you would realize that we have not had a 16 lot of intervenors who are supporting intervention by 17 the Commission with respect to regulating the internet. 18 7817 So I guess what I would like to do 19 first is to see if you can -- clearly you are of the 20 view that this falls under the jurisdiction of the 21 Broadcasting Act. 22 7818 MR. CRAWLEY: I think inevitably the 23 challenge here is the materials that are developed, the 24 works that are created that are currently made 25 available to us through traditional broadcast media are StenoTran 1815 1 going to be made available to us as the pipeline opens, 2 as the system develops, by what we would now call the 3 internet I suppose, by those sorts of methods, through 4 computers as opposed to television. That is going to 5 happen. It is happening to a certain extent and it is 6 going to happen increasingly when the system develops. 7 7819 So inasmuch as internet service 8 providers are making those works available, they are 9 broadcasting, if they are making them available on a 10 commercial basis. 11 7820 Obviously it is not your jurisdiction 12 particularly as long as -- if e-commerce is working, 13 and as long as the rights are being paid, and so on. 14 7821 There is the fact that with our 15 recent and very welcome reform of the copyright laws 16 there was an admission on the part of the ministries 17 involved that they weren't really dealing with the 18 digital world yet. So that is something I think the 19 Commission can usefully do is to remind again the 20 government that they must get on with their so-called 21 Phase III copyright. It only takes 10 or 12 years 22 apparently to reform copyright. But they had sort of 23 promised that they would get on with that. 24 7822 I think we all need that for a level 25 of comfort in order to go ahead and create the works StenoTran 1816 1 that will be delivered and know that we won't lose our 2 rights, those of us who are involved in the business of 3 producing content. 4 7823 But, I mean, it is a terribly 5 difficult issue, the idea of whether you can regulate 6 the thing or not. I just think it is very important 7 that you hear the voice that says -- that counters the 8 sort of technological determinism of people saying "It 9 can't be done. Forget it. You know, you cannot create 10 an industry based on regulatory framework because these 11 technologies defy regulation." I don't believe that is 12 true. 13 7824 I think the combination of copyright, 14 the appropriate copyright and intellectual property 15 regime, and certainly e-commerce is going to be 16 regulated in the way that any kind of retail 17 transaction can and must be regulated, but there may be 18 an area there where -- well, it looks like there will 19 be an area where nobody really has jurisdiction except 20 potentially the Commission. 21 7825 In the sense of creating an incentive 22 for the internet service providers to make investments 23 in research development and content to present the 24 content, to make sure that there is access to Canadian 25 content on their home pages, et cetera. StenoTran 1817 1 7826 I am not sure what models you are 2 playing with, but the Canadian Screen Training Centre 3 would just like to urge you not to forebear completely. 4 I know that at the moment they are not licensed and 5 they are not under a licensing regime. Perhaps they 6 could come under an exemption regime or something. 7 7827 But I think that it is critical that 8 these people who are, you know, entrepreneurs and want 9 to make a good living, provide a service, also make an 10 investment in the content side of things one way or 11 another. I don't know how you are going to do that, 12 but I think they must make that investment somehow, 13 whether it is through an incentive of some kind or a 14 licensing regime. We wouldn't be adverse to seeing 15 some kind of licensing regime. 16 7828 I don't think it will drive everyone 17 south of the border. I think people want to live in 18 this country, make a living in this country and work 19 creatively in this country. I think it is overstated 20 that -- I know the national newspapers that we have 21 both seem to pick up on that as the salient point, but 22 I'm not sure that -- I think it is overstated. 23 7829 COMMISSIONER GRAUER: I don't know if 24 you were here last week, but I think one of the things 25 that we heard repeatedly is how much demand -- the StenoTran 1818 1 unique nature of the internet in particular in which 2 the consumers have an enormous amount of choice and 3 control over the information they receive. What they 4 are seeing, is it the demand on the part of Canadian 5 consumers is for Canadian information, and that in fact 6 that is driving the ISPs to provide their Canadian 7 consumers with Canadian choices? 8 7830 We heard this really quite 9 repeatedly, which was a very interesting aspect of all 10 of all of this, the way this is evolving, while it is 11 global medium it is very much people are looking for a 12 sense of community on the internet and that is very 13 much driving them to Canadian choices. 14 7831 I don't know if you had heard that. 15 And I guess at the end of the day what we all share is 16 a goal that in fact Canadians will have Canadian 17 choices and that Canadian sites and choices will be 18 reasonably easily available to Canadians. Is that fair 19 to say? And then it is a question of how we get there? 20 7832 MR. CRAWLEY: I think that is very 21 encouraging. I hadn't heard that actually. I wasn't 22 able to be here last week. I hope that is borne out by 23 the future -- in the future. 24 7833 I forget who it was, but someone said 25 "All culture is local", you know, really. I think that StenoTran 1819 1 is true. I think that the myth of the global market is 2 something that we have to be wary of in this particular 3 area. 4 7834 People -- sure, I want to be able to 5 go to an Australian site to learn about something where 6 that expertise exists, or Korean or whatever, but, as 7 Mr. King's remarks were suggesting, you still need to 8 be able to get that information in a way that you 9 recognize. 10 7835 There is no doubt in my mind that 11 there is a Canadian set of values and a framework and a 12 way of looking at things that is quite different, but I 13 am very encouraged by what you said. 14 7836 But I still believe, though, that the 15 Commission should keep the stick. 16 7837 COMMISSIONER GRAUER: How do you 17 think we might do that? 18 7838 MR. CRAWLEY: I don't know. I really 19 don't. 20 7839 COMMISSIONER GRAUER: I guess, as 21 someone said the other day, we will leave the hard work 22 to you. 23 7840 MR. CRAWLEY: Well, yes. 24 7841 I mean, you know, the major -- the 25 BDUs are making their contributions and so on, and they StenoTran 1820 1 certainly wouldn't be making them if the Commission 2 hadn't existed. I think ISPs have to -- you have to 3 look at a way to get those contributions. It may be, 4 you know, some kind of voluntary thing, I don't know. 5 7842 It is very complicated, because we 6 don't know who is going to thrive in the world of 7 internet service. Is it going to be the big players 8 who also have interests in the other industries, the 9 traditional media; or is it going to be the 10 independents who really specialize only in this? And, 11 you know -- it is very complicated. I don't envy you 12 that. 13 7843 I still think that you have to hold 14 open the possibility that you may have to license these 15 people, depending on how the development goes. But we 16 need a critical mass, a critical investment in content 17 in the interdisciplinary work that Robin was talking 18 about. 19 7844 Perhaps there is some way in which 20 research and development can be rewarded in this 21 particular field the way, you know, production of 22 content in traditional media has been rewarded. 23 7845 I really don't know, but I'm sure you 24 will figure it out. 25 7846 COMMISSIONER GRAUER: Well, perhaps I StenoTran 1821 1 could share with you the Interactive Multimedia Arts 2 and Technology Association of Ontario -- IMAT, I think 3 I have the names right -- have recommended to us that 4 what they require is what they call four pillars of 5 support. This is to encourage and stimulate the 6 development of the Canadian new media business, which 7 is very much on the content side as well as just these 8 emerging high tech business. 9 7847 Number one is: Support for research 10 and development for content development. 11 7848 Second is: Education and training 12 support. 13 7849 Third is: Support for marketing and 14 promotion, which is seen as critical in this area. 15 7850 The fourth is this major issue, which 16 is: Access to capital for investment in interactive 17 new media products and companies. 18 7851 Now, their approach is very much the 19 incentive approach. None of these are areas in which 20 we as the Commission can take an active role, but I 21 think they feel that we can make recommendations to 22 government in these areas and perhaps resonate with 23 someone there. 24 7852 Now Torstar, who was also here very 25 much along the same lines, had some very specific StenoTran 1822 1 recommendations: a refundable tax credit for employee 2 training; allowing research and development in Canadian 3 content to qualify for scientific research and 4 experimental development credit; and a tax credit for 5 capital expenditures. 6 7853 What I am really trying to get at 7 here is, I understand what you are saying, and if I -- 8 I think I understand what you are saying, which is we 9 need to do what we can to ensure there is a strong 10 Canadian presence and a vibrant Canadian industry here 11 to continue to produce the creators and the 12 infrastructure which will allow the creators to create 13 and have exposure. 14 7854 So I guess what I'm saying is, there 15 is the incentive route and there is the regulatory 16 route, and I think what we have had as a consensus so 17 far that perhaps the incentive route is what is 18 required at this particular time. I just -- 19 7855 MR. CRAWLEY: I think that is 20 probably -- that is probably right. I just don't want 21 to -- I just don't want to -- you know, I don't want -- 22 7856 COMMISSIONER GRAUER: You don't want 23 us to abandon the field. 24 7857 MR. CRAWLEY: -- anything that says 25 that we will never regulate this industry kind of StenoTran 1823 1 thing, you know, it is impossible. I mean, just I 2 would like to really see that myth disappear in a way. 3 7858 The tax incentives and all those 4 things, the Torstar recommendations, as you relate them 5 to me, sound reasonable. The only thing I have found 6 bells going off in my head was remembering how often 7 before these things have been abused, in a sense, maybe 8 not intentionally, but that the outcomes have been 9 disappointing. 10 7859 Maybe this is where -- although I 11 don't like to see a new funding body or a new -- you 12 know, the creation of a new bureaucracy just for the 13 sake of this task, but it may be necessary. But I 14 really think you need some real expertise. And we do 15 have some real expertise in this country. You have 16 had, you know, many of the people here I think, and 17 some of them are coming up and some of them have been 18 here already, that somewhere or other someone -- maybe 19 its the federal government in some way -- create some 20 kind of a body, I guess, that can assess these things. 21 7860 The difficulty always is that if 22 people have expertise in these areas they usually have 23 a vested interest, so the conflict stuff comes up. But 24 that can be dealt with I think. 25 7861 Because I don't think people should StenoTran 1824 1 be getting tax breaks to teach their employees how to 2 keystroke or use a mouse. I think we are at a stage 3 where it should be more sophisticated than that. 4 7862 In terms specifically of content 5 development and research, promotion certainly is 6 something that I think is going to be hugely necessary. 7 I was fascinated, yesterday there was a line of 8 questioning with one of your intervenors of how do you 9 promote new media materials, and I guess my choice 10 would be you use old media to promote the new media, 11 and I think that is what eventually will work. 12 7863 But it is probably accurate, I mean 13 that assessment that incentive is the way to go unless 14 it doesn't work. The trouble is, you know, how long do 15 we wait, and are we buried by content from elsewhere, 16 you know, before we sort of pull out the bigger stick. 17 7864 But the new media development, I 18 think that there has been some discussion too, and at 19 the risk of sending shock waves through the traditional 20 media providers, there may be a way to reward new media 21 development, research by people who currently have 22 certain responsibilities they have to meet. In the old 23 media they have those incentives -- or regulatory 24 things that may be able to give them a break or 25 something for an investment, a meaningful investment in StenoTran 1825 1 this particular area. 2 7865 I mean, some of your licensees are 3 already doing this, big telcos and so on have put some 4 money in this area. I think it could be better focused 5 in some cases. Certainly the danger of competition, we 6 were talking about the danger of monopoly. Favouritism 7 has to be looked for every -- there is lots of work for 8 you to do. 9 7866 COMMISSIONER GRAUER: I was going to 10 say, we have had some recommendations and, in fact, we 11 allow broadcaster investments in new media area to 12 perhaps qualify for the Canadian content expenditures, 13 and also suggestions that new media projects could 14 access the funds. I wonder if you could give me any 15 comments on that? 16 7867 MR. CRAWLEY: Well, everybody wants 17 into those funds I know. We believe that some of those 18 funds should be available for educational and training 19 staff. 20 7868 I'm not sure that we don't need to 21 create a new critical mass of resources for this. You 22 were talking about the access to capital and I know 23 from new media developers this is always the problem. 24 People say, "Well, how can I" -- you know, there is no 25 collateral. Maybe the Federal Business Development StenoTran 1826 1 Bank has to look at this in a different way, maybe some 2 of the major banks have to look at it in a different 3 way. 4 7869 In principal, from the Canadian 5 Screen Training Centre perspective, we have no 6 objection to opening up the Canadian television fund to 7 include new media. There is a fund that has been 8 created at Telefilm, I know they were here talking 9 about it yesterday. They may be a logical dispenser of 10 these resources. 11 7870 The big challenge, I think, is to 12 create the will to put the resources in place, and I 13 think that working out how to dispense them is doable. 14 How do you -- short of forcing investment, how do you 15 create that incentive? I don't know. 16 7871 COMMISSIONER GRAUER: One of the 17 other things that came up last week on a number of 18 occasions was the need for us to create and foster a 19 climate of innovation, how important that was going to 20 be with respect to the creation of content that is 21 going to resonate not just with Canadians but I think 22 that we feel that perhaps there is an appetite for 23 outside Canada. 24 7872 I would be interested to know whether 25 you think that that exists now, and what you think are StenoTran 1827 1 things that we might either recommend or do to 2 encourage that? 3 7873 MR. CRAWLEY: You mean whether the 4 appetite for innovation exists, or the climate? 5 7874 COMMISSIONER GRAUER: No, a climate. 6 A climate of innovation. 7 7875 MR. CRAWLEY: It is certainly there 8 in the creative community, I think. 9 7876 Again I think the previous intervenor 10 was referring to it, the difficulty is in the biases of 11 the bodies that are set up to fund innovative work or 12 research, and so on, the granting bodies and so on. 13 Because this is still so new and it really is 14 interdisciplinary. 15 7877 I would say that research and 16 training have to be concurrent in a sense. I mean, 17 that is where the innovation comes from, when you take 18 people who have mastered a certain set of skills having 19 to do with maybe a traditional medium and introduce 20 them to the new tools without losing -- you know, how 21 do they contribute to the creative process without 22 losing their own language in order to -- I mean, we see 23 them in the television, film and television world, no 24 one -- hardly anyone cuts films any more, it is all 25 non-linear, and that is -- you know, I have talked to StenoTran 1828 1 people in that field, editors who say, "Well, you know, 2 I really don't think I can do as good a job at this. I 3 think I was better when I was working with raw film", 4 for whatever reasons. 5 7878 That sort of conflict will be there, 6 and those sorts of hurdles are there. The key is 7 getting people from the different disciplines involved, 8 the engineers and the creative people. 9 7879 I haven't seen much that is really 10 compelling yet from this world, and that is partly 11 because of the delivery system I think. 12 7880 An example of one academic that I 13 know who I think has done some of the most exciting 14 database work in terms of new media, multimedia, 15 computerized, and this fellow couldn't get -- he 16 couldn't get tenure either as an art historian or a 17 technologist, because neither of those disciplines at 18 the university he was at would fully embrace him. They 19 said, "No, no, you are not really an engineer, you are 20 an art historian." The art history people said, "No, 21 no, that is not good academic work, you are just 22 working with these new machines." I mean, it is that 23 sort of barrier that I think we need to -- it's a new 24 way of thinking. 25 7881 Maybe what the Sheridan people were StenoTran 1829 1 talking about this morning is the way to go, is to try 2 to create some locus for that interdisciplinary work 3 that has to happen. You have to take the most 4 talented, young innovators who have no idea who daVinci 5 was, and you have to take the people who understand the 6 traditional media and say "Oh, I see how this can" -- 7 and you have to take a risk there. You have to put 8 those people together and not know what the outcome is 9 going to be every time. That takes up, obviously, some 10 resources, some serious resources. 11 7882 COMMISSIONER GRAUER: I mean there is 12 no question that one word that has sort of been a 13 constant through this is "partnerships", and one of the 14 things that struck me is whenever you hear talk of new 15 media on the internet partnerships are always there 16 somehow in the discussion, and it is interesting to 17 know whether we are talking about the same kinds of 18 partnerships that have existed in the old media world 19 or whether these are new manifestations of partnering. 20 I certainly haven't figured it out. I don't know if 21 you have any thoughts. 22 7883 MR. CRAWLEY: Not really, no. I mean 23 there are some new players I think, especially in this 24 world of course. It is technologists who are new to 25 some of the -- well, it is the traditional system that StenoTran 1830 1 the Commission and its forbearers have really played 2 the vital role in building. 3 7884 I guess the main point, I come back 4 to my original point, which is that that is still the 5 fundamental with this, is the cultural objectives and 6 whether -- you know, we get down to splitting hairs, 7 whether it called broadcasting or not. I'm sure that 8 some of the other intervenors today will address that 9 as well, because they have very specific ties to the 10 existing regime, and economic ones as well. 11 7885 There will be new partners, and 12 people will make and lose fortunes. We know that. I 13 mean, that is not really a problem. The problem is 14 whether we will have the critical mass of resources 15 available to this development. 16 7886 You know, I mean we have heard so 17 much hype about this for decades now about where we are 18 going with all this, and sensible people usually admit 19 they don't know. 20 7887 But I'm sure that in a decade or so 21 no one will conceive of a work of artistic expression 22 or entertainment in one medium any more. Well, some 23 will, I mean purists. But I think if people are 24 involved in the economics of getting their message out 25 or telling their story, they are always going to look StenoTran 1831 1 at more than one way of delivering it, and that is what 2 this thing is all about really. 3 7888 People will not even conceive of 4 something as simply a movie any more, it will be 5 different kinds of programming, it will have its 6 interactive side, it will have its lineal side, and so 7 on and so forth. So how do we get there? Investment I 8 guess. 9 7889 COMMISSIONER GRAUER: I just have one 10 last question. 11 7890 What are you hearing from your 12 students and your former students that are out there 13 working in this environment? I mean how are they 14 faring? What are their experiences? 15 7891 MR. CRAWLEY: Particularly in the new 16 media area it is early days for us in this, we have 17 only been doing it for about three years, but we have 18 had people who are respected in this field come and 19 instruct for us, and so on, and we will have more in 20 the future. 21 7892 People are really excited about this, 22 but I think there is a frustration because the delivery 23 system is really not developed yet in that sense. It 24 will be a while before -- so a lot of the work that is 25 being done from the people that have been working with StenoTran 1832 1 us is basically in-house advertising, you know, CD-ROMs 2 to promote a particular thing. 3 7893 It is not -- people are excited about 4 it, but they don't know exactly what their careers are 5 going to be, unless they are already developed, unless 6 they are developers already. 7 7894 We are not particularly -- we are 8 probably interesting people, our function of the 9 Canadian Screen Training Centre because we specialize 10 in short-term professional development, it is giving 11 people some basic information so that they know where 12 to go next in that sense. It is not as profound as the 13 work that is going on at Sheridan or at the Canadian 14 Film Centre, it is not long-term, 18-months or 15 something, you know, where you really come with a set 16 of skills. 17 7895 But there is certainly a huge 18 interest in this. But I think people really are still 19 confused by the moving target. We are waiting for you 20 to clarify everything for us. 21 7896 COMMISSIONER GRAUER: I think if 22 there is anything we have heard consistently through 23 this it is that nobody knows quite where it is going. 24 7897 Anyway, I thank you very much. I 25 don't know if you have anything to add that I didn't StenoTran 1833 1 cover. 2 7898 MR. CRAWLEY: No. Actually, I am 3 coming back later on in the week with the Canadian 4 Conference of the Arts. If I think of anything I will 5 put it in then. 6 7899 Thank you. 7 7900 THE CHAIRPERSON: Thank you, 8 Commissioner Grauer. 9 7901 Mr. Crawley, just a comment on one 10 point you made, and I may have heard this different 11 than you meant it. 12 7902 You said at one point "I don't know 13 what models you are playing with". Again, to try to 14 relieve some of the concerns and fears of people who 15 may think that we have some particular model in mind, 16 we don't have any models we are playing with. We are 17 very much trying to learn about this. 18 7903 I think this picks up on the last 19 exchange you just had with Commissioner Grauer of us 20 trying to understand this and where it fits with our 21 legislative mandate, and trying to understand it better 22 in the sense of what positive things one could do to 23 help encourage the growth of this industry. But we 24 don't have a particular agenda or models in mind that 25 we are playing around with. We are very much trying to StenoTran 1834 1 learn from this exercise as to what this is all about. 2 7904 MR. CRAWLEY: If I could respond, I 3 would say that you shouldn't ignore the models that you 4 developed in telephony and broadcasting. So in that 5 sense -- I guess that is what I was referring to. 6 7905 THE CHAIRPERSON: Okay. 7 7906 MR. CRAWLEY: I mean, so I shouldn't 8 have said I don't know, because I mean I certainly 9 don't them intimately, but I know of their existence. 10 I think the principles that you have applied in both 11 telephony and broadcasting are going to be very useful 12 for you in dealing with this issue. 13 7907 THE CHAIRPERSON: Thanks again. 14 7908 We will see you later in the 15 proceeding. 16 7909 All right. I think this is probably 17 a good point to take our morning break, and will 18 reconvene at 10 to 11:00. 19 --- Short recess at / Courte suspension à 1035 20 --- Upon resuming at / Reprise à 1054 21 7910 THE CHAIRPERSON: We will return to 22 our proceeding now. 23 7911 Madam Secretary, the next party. 24 7912 MS BéNARD: Thank you, Mr. Chairman. 25 7913 The next presentation will be by the StenoTran 1835 1 Canadian Independent Record Production Association. 2 PRESENTATION / PRÉSENTATION 3 7914 THE CHAIRPERSON: Good morning. 4 7915 MR. CHATER: Good morning, Mr. 5 Chairman. 6 7916 My name is Brian Chater, President of 7 CIRPA, the Canadian Independent Record Production 8 Association. With me, as an expert on the subject of 9 new media, I have brought David Basskin who you will 10 know in another life as President of CMRRA. You could 11 I guess to a rhetorical side say we are the dynamic duo 12 or terrible twins. Take your pick. 13 7917 CIRPA views this hearing as extremely 14 important for the future of both Canadian culture and 15 infrastructure although as we said in our filing, at 16 this time there are probably more questions than 17 answers. 18 7918 The Commission will have noted our 19 comments in the original filing and this presentation 20 is more of a brief overview of the issues as we see 21 them, combined with some comments on how others have 22 seen them in the filings and appearances. 23 7919 First, if I might quote form an 24 article on prognostication in Forbes ASAP, the first 25 three rules of prognostication are that: StenoTran 1836 1 "We tend to overestimate change 2 in the short term, we tend to 3 underestimate change in the long 4 term and the more specific a 5 prediction, the less likely it 6 is to be correct." 7 7920 Having set out the parameters as it 8 were, we will address the issues of access, the 9 definition of new media, the issue of copyright and 10 rights in general, funding of new media content and 11 what constitutes broadcasting on the net. All of this 12 in about eight minutes. 13 7921 CIRPA is of the view that all of 14 these issues are important in the context of this 15 review and should be addressed both individually and as 16 a whole so as to ensure that a useful policy framework 17 will emerge from this process and any ensuing 18 processes. 19 7922 First, the content issue. CIRPA 20 agrees with many intervenors that the development is of 21 vital importance. Given the difficulties in financing 22 faced by the industry, the Commission should give 23 serious consideration to the institution of funds to 24 aid production either from private or public sources or 25 to lobbying government for the institution of tax StenoTran 1837 1 credit regimes. 2 7923 CIRPA disagrees with several 3 submissions that have stated that there is plenty of 4 Canadian content and, by implication, that there will 5 continue to be in the future. CIRPA has difficulty 6 with this point of view unless proper content funding 7 mechanisms are in place. 8 7924 CIRPA's perspective on this issue is 9 shared by several intervenors, notably CFTPA, DGC, IMAT 10 and DMCG, for example. IMAT also raises the issue in 11 the context of local ISPs who wish to differentiate 12 themselves by providing different, i.e. local, content 13 from the major providers, either Canadian or foreign 14 owned. Indeed, IMAT specifically points to the fact 15 that Rogers @home includes mostly American material. 16 7925 The content issue flows into the 17 access issue as independent content providers face 18 heavy competition from established players in the old 19 media who start with tremendous advantages in the 20 production of new media, namely access to funding and a 21 wide range of content that they already own that can be 22 repackaged into new media applications. 23 7926 In this regard, CIRPA supports the 24 position of those intervenors such as the CFTPA and its 25 view that groups such as broadcasters already have been StenoTran 1838 1 granted a tremendous competitive advantage through 2 their licences and that they should not be able to 3 access any new sources of funding for content 4 providers. 5 7927 As the DMCG comments, those with the 6 most access to money will get the most customers. 7 CIRPA agrees and views it as vital in this new 8 environment that this fact be clearly understood by the 9 Commission. 10 7928 To concluded this issue, CIRPA would 11 just reiterate its views of those groups already cited 12 and the view of CITO that the issue of predatory 13 competition is one of considerable concern. 14 7929 CIRPA also feels that the position of 15 IMAT that it doesn't want regulations and feels that 16 its members will be fully able to compete against 17 broadcasters and other well-funded content producers 18 will prove a trifle unrealistic in the real works, a 19 view that is shared incidentally by the CFTPA. 20 7930 The issue of rights is, of course, a 21 critical one and one that is close to CIRPA's heart. 22 We are pleased to see the Commission addressing the 23 issue of rights in a hearing discussing content and 24 distribution. 25 7931 Not only will payment for use of StenoTran 1839 1 property be vital in tomorrow's world, but also CIRPA 2 feels that the Commission, as far as it is able, should 3 ensure that rights payments are easily collected by 4 owners. 5 7932 This is of particular concern in view 6 of what has often occurred in the past between users 7 and creators. Indeed, in this regard the Commission 8 may wish to examine other jurisdictions where licences 9 specifically address the matter of rights payments. 10 7933 As far as what constitutes 11 broadcasting on the net, CIRPA is of the view that if 12 an entity is licensed by the Commission, its activities 13 on the net are a direct result of its licence and 14 should be characterized as a broadcast. However, this 15 should be through a separate licence and not as an 16 add-on to the current one. 17 7934 Similarly, broadcast-like activities 18 that are on the net but not owned by a broadcaster 19 should also be considered as broadcasting and licensed 20 as such. In other words, if it walks like a duck and 21 quacks like a duck, then it must be a duck. 22 7935 Finally, what is the definition of 23 new media? This is an extremely interesting question 24 to which there are many potential answers. 25 7936 As we stated in our written StenoTran 1840 1 submission, CIRPA is of the view that while the 2 Internet can be called new media, it can also be called 3 old media, or a combination of both. Similarly, 4 digital radio and TV are not, in CIRPA's view, new 5 media in the real sense. They are just add-on versions 6 of current media that are essentially based on a 7 pre-existing content and structure. 8 7937 Hopefully in the short time available 9 to us we have been able to give you a brief overview of 10 CIRPA's concerns regarding the whole new media issue, 11 but obviously it is a subject we could elucidate upon 12 for hours rather than the short time taken in this 13 presentation. 14 7938 We thank you for your time. We look 15 forward to your questions and hope that we can clarify 16 our positions. 17 7939 Thank you, Mr. Chairman. 18 7940 THE CHAIRPERSON: Thank you, Mr. 19 Chater. 20 7941 I will turn from one Chair to 21 another. Madam Bertrand. 22 7942 THE CHAIRPERSON OF THE COMMISSION: 23 Good morning, gentlemen. 24 7943 MR. CHATER: Good morning. 25 7944 THE CHAIRPERSON OF THE COMMISSION: StenoTran 1841 1 Thank you very much for this presentation and your 2 participation in this proceeding. I saw, Mr. Chater, 3 that you were very present during the proceedings 4 because we have seen you quite a few days. 5 7945 MR. CHATER: Yes. 6 7946 THE CHAIRPERSON OF THE COMMISSION: I 7 was surprised that you took only eight minutes. I 8 thought you would take a song to talk to us about your 9 positions. 10 7947 MR. CHATER: I was just trying to be 11 polite. 12 7948 THE CHAIRPERSON OF THE COMMISSION: 13 Let me go first in terms of understanding where you 14 come from. Do you have any experience at all with the 15 new universe that we are talking about? Have your 16 members been involved at all in this new world? Do you 17 have any kind of history to give us in terms of what 18 has been your experience as producers? 19 7949 THE CHAIRPERSON: Maybe I could 20 answer this briefly and then turn it over to Mr. 21 Basskin. 22 7950 Basically, yes, our members are 23 involved in "the new media". Often your package is 24 part of that new media. Quite often you as a producer 25 will be looking to expand your universe with people StenoTran 1842 1 like IMAT, for example, which produced the immediate 2 technology, and work with them separately as an 3 individual company or as a group to produce new media. 4 7951 The problem we have generally found 5 with new media is the revenue sources are very, very 6 slim at the moment. There are very few serious revenue 7 sources you can access. Therefore you are spending, as 8 I guess people have already said, a great deal of money 9 in this area on various things with very little return. 10 7952 With our members being the poor 11 rather than richer in nature, that is a continuing 12 problem. 13 7953 There is a considerable interest in 14 this. People have been involved and are getting into 15 it. It is still very much a what will work, what won't 16 work. Every avenue is like, we have to try this but we 17 are not sure it will work. 18 7954 Perhaps Mr. Basskin would like to add 19 something. 20 7955 MR. BASSKIN: Thank you. 21 7956 Good morning. 22 7957 THE CHAIRPERSON OF THE COMMISSION: 23 Good morning. 24 7958 MR. BASSKIN: My organization, which 25 works closely on a lot of issues with CIRPA, is the StenoTran 1843 1 Canadian Musical Reproduction Rights Agency, which is 2 owned by the Canadian Music Publishers Association. We 3 share a lot of views in common with CIRPA. 4 7959 Songwriters and music publishers, 5 publishers being the owners of the copyrighted music, 6 have a pretty constant need to want to exploit the 7 value of the music that they control, to make money 8 from it and to ensure that, of course, it isn't taken 9 without compensation. 10 7960 Observing the growth of new media and 11 the Internet over the past few years has been at times 12 an alarming exercise. We field a tremendous number of 13 questions from people who, it's our impression, want to 14 do the right thing, want to license music, want to make 15 sure they pay for it, but the lack of industry 16 standards makes it pretty much of an ad hoc process. 17 7961 The question of new media is actually 18 quite important here. I don't see any opportunity for 19 the Commission to be involved in the production of 20 multimedia productions on CD-ROM. That would seem to 21 be outside of the Commission's jurisdiction. 22 7962 From the perspective of producers we 23 talked to, they don't seem to make a distinction in 24 their own minds between productions that might end up 25 on CD-ROM, productions that might end up on a Web site StenoTran 1844 1 or the two that might be woven together. 2 7963 Things at this point seem to be 3 roughly in the manner of instead of air conditioning a 4 house, you buy one air conditioner per room. A lot of 5 custom made solutions are being found for problems as 6 they develop. 7 7964 Many people have told you in this 8 hearing that this is the world's fastest moving of 9 moving targets. I don't think it's possible for me 10 anyway to give you an across-the-board answer. We have 11 seen a lot of projects come to us. A lot of people 12 have sought permission to use songs. It's very much a 13 matter of the publishers trying to assess on a case by 14 case basis what it's worth and whether the rights are 15 going to be protected. 16 7965 The largest single fear that all of 17 us have in getting involved in the use of music on the 18 Internet is the danger that music can simply be 19 stripped out of the sites, taken and used in 20 environments it was never intended for in the first 21 place, or just Web sites or Internet presences that 22 take music without concern in the first place. 23 7966 There's a lot fear in the music 24 world, particularly among those who own music 25 copyrights, that it's an environment which is StenoTran 1845 1 controllable or not, currently not controlled, and one 2 in which infringement of copyright by unauthorized 3 takings of music from various sources, including CDs, 4 make it a pirate's haven at this point. 5 7967 Rights and protection of copyright 6 are pretty well at the core of all or our concerns on 7 the Internet as it now stands. 8 7968 THE CHAIRPERSON OF THE COMMISSION: 9 The different issues that you are raising, either in 10 your written brief or this morning, some seem to be 11 much more like the concerns that we will have with the 12 emergence of a new world until we find a way of taming 13 it, not meaning the regulator but us as consumers and 14 providers of content, where the issue right is long 15 lasting and will always be at the core, given that 16 content is so important. 17 7969 Do you see it that way as well? 18 7970 MR. BASSKIN: As someone once said, 19 what's the future like? I don't know, the future's not 20 here yet. 21 7971 The trouble is the future -- it's 22 very hard to discuss or understand new technologies, 23 except in terms of what we know today. You can't talk 24 about a new technology when you haven't got the 25 vocabulary of that new technology, which is one of the StenoTran 1846 1 things that makes the definition of new media so 2 conceptually difficult to achieve. It's not a new 3 observation. 4 7972 A writer named Tony Schwartz wrote a 5 book 20 years called "Media, the Second God", in which 6 he was trying to outline the differences between 7 televisions, not radio with pictures. These are 8 analogies you have heard many times, I'm sure. 9 7973 The Internet and the Web environment, 10 the networked environment, whatever it's going to be 11 called in the future, is changing so fast that it's 12 defying our abilities to come up with business models 13 and conceptual models and, I'm sure, regulatory models. 14 7974 If you were to have held this hearing 15 two years ago, probably the word on everybody's lips 16 would have been push technologies, pointcast and the 17 like, things that would push content to the user. 18 7975 There was a very interesting piece in 19 the New Yorker about three or four weeks ago about how 20 Murdoch was about to push $450 million U.S. into it and 21 then the deal fell apart. Today pointcast is worth a 22 fraction of that because the moment passed. 23 7976 You heard this morning and all 24 through the other discussions about portals, portal 25 being the current word of the moment. StenoTran 1847 1 7977 There's a column that appears in 2 "Wired Magazine" where they have the ten wired and the 3 ten tired concepts of the moment with the trends that 4 are rising and falling. It seems silly to try and 5 construct a regulatory model based on what looks like a 6 popularity contest. 7 7978 In a way, you have little more to go 8 on than that. I have a feeling that using portals as 9 methods to control access or content are as illusory as 10 anything else we have seen. 11 7979 It baffles me to try to say how the 12 questions you posed in your Notice of Motion -- now I'm 13 thinking legally. Your Notice of Call for Comments. 14 Are we suing somebody here? Let's sue somebody. It 15 always makes me feel better. 16 7980 As I read the submissions and 17 listened to some of the hearings, this almost seems 18 like the world's most astonishing ongoing seminar in 19 media conceptual issues. If we could all agree on what 20 the Internet is, we would be half way to figuring out 21 what the CRTC should or shouldn't do. The trouble is 22 the Internet won't do us the favour of sitting still. 23 7981 A piece in yesterday's "Wall Street 24 Journal" talked about the world of banner ads. It's 25 interesting how all these places I am pointing to are StenoTran 1848 1 print media, but nevertheless I'm sure it was on their 2 Web site. (Laughter) Now, now. We can learn from 3 them I'm sure. 4 7982 The phenomenon of banner ads and 5 click-through advertising was seen as just a few months 6 ago a joke or an imposition on people's times. Why go 7 to a Web site if you are going to get eight or ten 8 little banners in a row? 9 7983 Now they are discovering that 10 advertisers are actually willing to pay significant 11 dollars for these. The piece was on the front of 12 yesterday's "Wall Street Journal". It was a profile of 13 a fellow who goes out there and sells ads for an 14 organization called Double-Click Network. 15 7984 All of a sudden he is discovering 16 that advertisers to his astonishment are starting to 17 pay very serious dollars to be on a selection of sites, 18 even to the point of let's say you are on a page for 19 Yahoo and you are looking up music. Gee, there's a 20 banner ad about music. If you were looking up fishing 21 rods, there would be an ad for fishing rods. This, of 22 course, is not accidental. 23 7985 That kind of fine tuning has been 24 there for a while. What's coming now is the capability 25 of network advertisers to be able to spot the user's StenoTran 1849 1 locale right down to his area code or even postal code 2 and to start customizing the media for that. 3 7986 This perhaps would be a dream for the 4 world of print ads or broadcast advertisers or people 5 who buy ad space on cable, but the business model 6 itself just keeps on evolving. 7 7987 The terms mass customization, 8 democratization of access to the medium, were 9 theoretical terms a few years ago. They are working 10 business realities today. 11 7988 My great fear in the Commission's 12 undertaking here, which is at times scary and at times 13 fascinating, is that by the time your decision is made, 14 will you have to hold another new hearing? Will this 15 hearing have to go on more or less indefinitely as the 16 target keeps on moving? 17 7989 That's not a pleasant prospect, 18 particularly for a body that is legislatively mandated 19 to make decisions. 20 7990 I am probably 18 miles away from your 21 question now, aren't I? 22 7991 MR. CHATER: It was a very brief 23 summation. 24 7992 THE CHAIRPERSON OF THE COMMISSION: I 25 find that fascinating. Maybe it's because of the use StenoTran 1850 1 of the second language for me applied to a world that I 2 am not familiar with, but somehow the way you were 3 intervening contradicts a bit or at least nuances the 4 kind of position that I thought I was reading from 5 CIRPA. No? 6 7993 MR. CHATER: We are wide open on 7 this. The realities, as I say, I think I was being 8 devious enough to say the other options. In general, 9 we would say, as I said, particularly in view of 10 broadcast-like activities on the net, they to me or to 11 CIRPA are clearly a regulatory exercise or should be. 12 7994 The problem in my view is that in 13 fact it is not clearly one thing or the other. It can 14 be a one day distribution network and one day a 15 quasi-broadcast network. It can be three or four 16 different things. At any given point it is in fact the 17 cyberworld version of a retail store, a broadcaster, 18 you know, and three or four different other things too. 19 7995 You can't nail down what it is. 20 Probably you will be less able to do so in the future. 21 However, that being said, it has considerable 22 ramifications for changing the way that people act and 23 do business and react to content. 24 7996 We are in essence always content 25 providers. We provide content for the various means of StenoTran 1851 1 distribution, whether it be a CD, a tape, a digital 2 download system, it doesn't matter to us. Our concern 3 is we have grave concerns with the rights issue. 4 7997 As you may know, the MP3 machine, the 5 new machines, they can download off the net, strip 6 stuff right up, put it on there and you can play on a 7 chip an hour of hour music, whether it be the owner, 8 the artist or the publisher and the writer, it doesn't 9 matter. It's doable today and more and more so and 10 becoming a reaL problem. 11 7998 That being said, it is almost an 12 international problem. You can't just address it in 13 Canada. We feel that the regulatory process should not 14 be abandoned in the field of what's being done. 15 7999 THE CHAIRPERSON OF THE COMMISSION: 16 That is where I see the nuance. The interesting 17 comment of your colleague, when you appreciate that 18 environment and recognizing with you like many 19 intervenors in this hearing of the transforming of this 20 new reality every day almost, how can you say that 21 regulation would still be a tool? 22 8000 I would like to reconcile that in my 23 mind. What are the practical or concrete ideas you 24 have about it? 25 8001 MR. BASSKIN: If I could echo a point StenoTran 1852 1 made by Brian in CIRPA's submission, those who 2 presently have broadcasting licences own something of 3 perhaps not incalculable value, but of very, very great 4 value in the marketplace. 5 8002 Traditional broadcast regulation is 6 based on scarcity of spectrum and the net seems to pose 7 what to some people is an insoluble problem because the 8 medium doesn't appear to be scarce. 9 8003 There is a very serious connection 10 between old media and new media and it's this. It 11 seems to me it would be a very long time between 12 anybody who presently holds a broadcasting licence will 13 abandon it in favour of a presence on the Web, and not 14 just because of inertia, not just because the station 15 is there and the people are working. 16 8004 A very wise smart-alec remark goes 17 that God could create the world in seven days because 18 he didn't have an installed base to worry about. I 19 think there's a great truth in there. 20 8005 Radio stations, television stations, 21 those with the existing broadcasting licences can now 22 serve the entire Canadian population and will be able 23 to serve the Canadian population. Even if our toasters 24 are hooked up to the Internet, radio is not going to go 25 away. StenoTran 1853 1 8006 No new medium has ever completely 2 displaced a previous medium. The old media have 3 sometimes changed. The radio of the pre-television era 4 was utterly different than today. But they are not 5 going to go away. 6 8007 Radio and television are still going 7 to be -- even if their worlds of audience reach are 8 diminished, there are still going to be extremely 9 valuable and useful ways for advertisers to reach large 10 audiences. 11 8008 Even in America where cable has 12 driven down the traditional major network viewing share 13 to a fraction -- well, to a much smaller portion of 14 what it once was, it is still the only national buy 15 available. 16 8009 These people who own broadcasting 17 stations are going to continue to have an asset of 18 great value. To the extent, in my view, that they are 19 using these government CRTC licensed frequencies as the 20 springboard for the development of other broadcasting 21 activities, I certainly believe that the other 22 activities taking place on the Web should carry similar 23 or same obligations that they bear on the broadcast 24 world. 25 8010 In other words, they are going to StenoTran 1854 1 have a tremendous advantage of cash flow, of expertise, 2 of marketing knowledge, of reaching the public. As a 3 consequence of running those broadcasting stations, 4 they are getting a headstart in the race to become 5 successful in the new media. 6 8011 I am not saying tie lead weights to 7 their feet. I'm not saying deliberately hobble them, 8 but let's recognize the advantage they have got by 9 virtue of a licence and recognize that it carries 10 continuing obligations when they are present in new 11 media, particularly when it comes to questions like 12 accessing funds which presently are not available to 13 broadcasters. 14 8012 Broadcasters have a tremendous 15 headstart already. Let's leave the way clear for other 16 people to get on board without ensuring that the same 17 three or four ownership groups or combination of 18 ownership groups in public broadcasting that dominate 19 the scene today are going to continue to be the sole 20 proprietors. 21 8013 Media function best, creativity 22 functions best in a plurality of voices, when there is 23 a larger number of voices saying more things that are 24 opportunities for our culture, better opportunities for 25 export. StenoTran 1855 1 8014 This is just a view being expressed, 2 but I don't think that we should be providing that much 3 of an additional advantage for those with broadcasting 4 licences today unless perhaps they are willing to 5 abandon them and throw themselves head first into the 6 web with every startup on the market. 7 8015 THE CHAIRPERSON OF THE COMMISSION: 8 Is that referring to the idea of taking some money from 9 the fund, for example in television, and allowing it to 10 be used in new media, some request that has been made 11 in that respect, or are you thinking of other measures? 12 8016 MR. CHATER: Any particular measure 13 that might be considered being instituted, whether it 14 be taking from one fund, institute a new fund, putting 15 in the refundable tax credits, anything that might help 16 the development of the new media, wherever the funding 17 came from, we would consider that this should at least 18 be looked at very seriously. Players already involved 19 should not have access to that fund. 20 8017 THE CHAIRPERSON OF THE COMMISSION: 21 Any money, for example MusicAction, that could be 22 directed to that kind of an initiative for you is not 23 something that should be encouraged. If activity 24 should be taking place there, it should be with other 25 money derived from the existing or the conventional StenoTran 1856 1 broadcasting. 2 8018 MR. CHATER: In general it supports 3 the independent sector in a variety of ways. By 4 definition at the moment, it doesn't include "major 5 players" of any shape or size. Therefore, obviously we 6 would look at this the same way. 7 8019 We will be, I am sure, be considering 8 new electronic activities, digital. As the world 9 evolves, we have to evolve with it. What there will be 10 until we get there, to quote Mark Twain, prediction is 11 always difficult, especially if they are about the 12 future. 13 8020 We are trying to get to this point, 14 but obviously any sort of fund that would have a 15 component that would involve "new media". 16 8021 THE CHAIRPERSON OF THE COMMISSION: 17 When you look at the new universe, whether it's add on 18 or the same, especially in radio, it seems if there is 19 one phenomenon that is already there, it is radio on 20 the net. I don't know how many, but there is really a 21 long list. 22 8022 MR. CHATER: Yes. 23 8023 THE CHAIRPERSON OF THE COMMISSION: 24 Do you see regulation being imposed on radio on the net 25 given that if you don't own a radio on the net within StenoTran 1857 1 Canada, how can you compete with those that are owned 2 by others. 3 8024 Given that it's not licensed in other 4 countries, why would we consider a regulation in that 5 new environment? I can't understand why you say there 6 should be a derivation from the existing broadcasting 7 to that new world. 8 8025 How do you see the new players in 9 Canada getting measures imposed on them that would be 10 different from those they are competing with that have 11 totally different approaches? 12 8026 MR. CHATER: To be blunt, I'm 13 surprised to hear language from the Chair of the CRTC 14 saying Canadian content is being imposed people, but 15 never mind. We will let that one go. 16 8027 However, it is like the realities. I 17 am thinking one could turn this argument upside down 18 and say the Canadian radio stations who differentiate 19 themselves by playing more Canadian content will 20 therefore be a different presence on the web to every 21 other station. Why would they play one more version of 22 Rod Stewart or Spice Girls? You can hear that all over 23 the world. 24 8028 Again, my personal view, and this is 25 going back to the old media, in fact in old media there StenoTran 1858 1 are radio stations around the world -- all you have to 2 do is buy a shortwave radio. You can hear stations 3 from everywhere. Nobody does. This again is not 4 inertia. It is ease of access. 5 8029 Frankly, the radio on the Internet is 6 to most radio stations in Canada and anywhere else just 7 an add-on, just a thing they put there. Somebody said 8 a few days ago without being defensive and covering 9 every angle to make sure they weren't caught offside. 10 8030 My personal view is I don't think 11 radio on the Internet will ever be a major player. 12 It's very difficult to put a computer in your car or in 13 the kitchen. It's very hard. I am being a bit 14 facetious, but I think shortwave radio gives you the 15 analogy. Shortwave radio, a very small proportion of 16 the population listen to that. 17 8031 Most people listen to local radio, 18 local things. I really couldn't care less, frankly, if 19 it's raining in Melbourne. I want to know if it's 20 raining in Toronto or Montreal or wherever. 21 8032 MR. BASSKIN: Internet radio 22 stations, yes. Virtually every radio station now has 23 or probably shortly will have a replay going on on the 24 net. 25 8033 I think I heard Perrin Beatty give a StenoTran 1859 1 speech the other day in which he said there's currently 2 7,000 hours of programming on the CBC site that can be 3 accessed at its Web site which I think is obviously 4 wonderful from a public service component and I think a 5 real fulfilment of the CBC's mandate in terms of 6 reaching people. 7 8034 Internet radio I think is tied more 8 closely to the bandwidth question than anything else. 9 Right now if you have a really good connection, you can 10 hear sound quality that is at best half way between an 11 AM and a FM radio, depending on what kind of speakers 12 you have hooked up to your computer. 13 8035 I don't think that's going to stay 14 still. I think as Internet bandwidth increases and 15 becomes cheaper, and I am sure there will be 16 improvements in the compression technology that will 17 make it more feasible, I think there is likely to be a 18 better chance for Internet radio stations that exist 19 just on the Internet alone to flourish. 20 8036 I would be the first to recognize 21 there are severe problems in saying how you go about 22 regulating them when anybody with a laptop computer and 23 a CD player could be on the Web. There's no practical 24 way you could find or catch all those people. 25 8037 It seems to me there may be other StenoTran 1860 1 ways of recognizing and rewarding those who make their 2 Internet radio presence more prominently Canadian. 3 Some of these may be beyond the jurisdiction of the 4 CRTC. Some of these might be tax incentives. Some of 5 these might be funding incentives. Some of these might 6 be incentives at some level of policy that are tied to 7 rewards in other areas 8 8038 In other words, it doesn't have to be 9 a matter of a top down approach of saying thou shalt 10 have 35 per cent Canadian content because thou art a 11 radio station. If the practicalities of the medium make 12 it impossible to reach a particular Web site or there 13 are other good policy reasons for deciding that's not 14 going to be the way the Internet will work, it may be 15 possible to consider another method, tied to other 16 forms of production. 17 8039 Canada's policy recognizes that the 18 production and the promotion and the dissemination of 19 materials in our cultural sector, created by Canadians, 20 telling Canadian stories is ipso facto a good thing. 21 8040 There are a variety of ways of 22 getting at that good thing. Just because it may be 23 impossible in practical terms to regulate a Web site 24 radio station that only exists on a Web site doesn't 25 mean we can't find another way of encouraging people to StenoTran 1861 1 create sites like that that are Canadian. 2 8041 One thing I think is absolutely true. 3 If you impose too heavy a burden, you will drive people 4 into havens where they don't have those obligations. 5 One of the great dangers in the world of copyright is 6 the creation of what some people have called copyright 7 havens, sites that are blessed with an abundant great 8 big fat Internet pipe and no copyright laws or no 9 copyright enforcement. 10 8042 The potential for such sites to 11 develop is very, very real. This is an issue of great 12 concern to the entire copyright and rights world today. 13 If we can help you devise a system with you and with 14 the other ministries and branches of government that 15 can reward instead of punish, to encourage instead of 16 bar, we might find a creative way to respond to this 17 unprecedented challenge to regulation. 18 8043 THE CHAIRPERSON OF THE COMMISSION: I 19 suppose you heard about an intervention last week where 20 a company from Toronto was involved in online games, a 21 very flourishing company. Their rights had been stolen 22 from Russia. They were getting copies. They don't 23 have much appeal in terms of what they can do to 24 recuperate what is theirs. 25 8044 What about music? I suppose a lot is StenoTran 1862 1 going on at the international level in terms of finding 2 ways. If you want to take full advantage of what that 3 world is promising, it has to be global. 4 8045 What kind of initiatives are you 5 aware of that you are confident might mesh with the 6 ideas you are putting forward that have been put 7 forward by many others in tax incentives and 8 reinforcement programs. 9 1125 10 8046 MR. BASSKIN: Two of the most 11 important issues on the plate right now are the 12 treaties that were negotiated at the World Intellectual 13 Property Organization, or WIPO or OMPI, as the French 14 acronym is. 15 8047 The WIPO Copyright Treaty, and the 16 WIPO Performances and Phonograms Treaty has been signed 17 by Canada, among the many nations who have signed it. 18 We have not yet passed legislation on the subject. 19 Clearly this is parliament's jurisdiction, but one of 20 the key initiatives in the treaties -- two of the key 21 initiatives that would be of value to us, because so 22 much of what goes on in music is the result of the 23 handling of recorded music, is the need for Canada to 24 have laws to make it illegal to own or produce or 25 distribute devices intended to get around copy StenoTran 1863 1 protection. This is sometimes called the anti- 2 circumvention provision. 3 8048 This is something that would be of 4 great assistance in our law to give us some teeth to 5 deal with people who use or develop or distribute 6 technologies, whether on the web or otherwise, that 7 would get around forms of copy protection. 8 8049 The second issue is the need to have 9 a law that addresses work identification or 10 thumbprinting or watermarking of works. 11 8050 It is a tremendous challenge. We 12 have the better part of two decades worth of compact 13 disks out there full of every song in the world with no 14 form of copy protection and no form of work 15 identification. Clearly that medium was never designed 16 with the internet in mind and represents an immense 17 challenge today. 18 8051 With little effort -- I'm sure you 19 have seen demonstrations where you can download songs 20 from the web that have been literally ripped off of 21 CDs. Not for nothing is the software used to take 22 songs off CDs called "CD Rippers". That is the term 23 they are called. With a CD Ripper and a little program 24 to convert the resulting file into a freestanding 25 program and a CD burner, and a blank CDR, you can be StenoTran 1864 1 out there turning your home computer into a little CD 2 factory. 3 8052 These issues are not the CRTC's. 4 8053 THE CHAIRPERSON OF THE COMMISSION: 5 No. 6 8054 MR. BASSKIN: They are perhaps the 7 police's, the RCMP, they are perhaps -- certainly for 8 parliament, Ministry of Heritage, Ministry of Industry, 9 but they are very, very closely allied -- they are 10 inextricably allied with what is going on on the 11 internet. 12 8055 I don't know, short of having a 13 corporation called "Internet Canada Limited" like the 14 "China Internet Services Corporation", or what is going 15 to happen, from what I understand in places like Saudi 16 Arabia that will truly monitor everything that is 17 accessed, I don't think that is practically possible, I 18 don't think it is conversant with our national 19 traditions. It is just not on the table. 20 8056 Short of that, the difficulty in 21 establishing a bright line between a broadcast-type 22 activity and a non-broadcast activity, and an 23 e-commerce activity and, if you will, an e-theft 24 activity, makes this an exceptionally difficult problem 25 to address. StenoTran 1865 1 8057 Last month in Ottawa, just across the 2 river, there was the OECD ministerial meeting on 3 electronic commerce. I had the opportunity to take 4 part in the minister's ad hoc planning group for that, 5 and although the sessions went on and on there was no 6 discussion of intellectual property. 7 8058 As a matter of fact, what was 8 frightening when we got to the hearing was there were 9 supposed to be four topics that were dealt with in the 10 session: privacy; consumer protection; the 11 authenticity of transactions, in other words are you 12 really dealing with that gaming site in Canada or is 13 this a Russian who has masked himself with the same 14 material but the money is going to him, or whatever; 15 and the fourth one being taxation. 16 8059 Somehow, I guess if you want to make 17 a federal senior official or politician wake up in a 18 cold sweat in the middle of the night the easiest way 19 to do it is to suggest that his entire tax base is 20 going to vanish down the internet. This is something 21 that gets their attention. 22 8060 In fact, the keynote speaker at the 23 conference was Lou Gershner(ph), the CEO of IBM, whose 24 message essentially was: Industry has built the 25 internet, industry will continue to develop the StenoTran 1866 1 internet, we will look out for the issues you care 2 about. There is a place for government, don't worry 3 about that. Let us do it the way we want to do it and 4 we will make sure you get your taxes. 5 8061 And speaker after speaker continued 6 to present that point of view. That is a very powerful 7 argument, that these are the issues that don't lend 8 themselves really to the heavy-handed regulation but 9 don't worry, we will still make sure you get your sales 10 taxes. 11 8062 I was disappointed in the entire 12 event, because the issues of protection of the public 13 interest, and protection of copyright holders interests 14 seemed to slip by the wayside. 15 8063 The need to incorporate protection of 16 creators, or creativity -- you have heard many times in 17 this hearing that it is the talent, it is the 18 creativity that really drives this -- has to be at the 19 centre of the Commission's agenda, as it has to be at 20 the centre of government's. 21 8064 Yes, it is important to protect 22 access to funds. Yes, it is important to protect 23 consumer protection, authenticity of transactions. 24 Yes, taxation has to be protected as a revenue stream 25 for government or government will just find another way StenoTran 1867 1 to take it out of us I guess. 2 8065 But the real issue, in my view, that 3 has to rank as high on the agenda as any other issue is 4 the protection of creativity, the protection of 5 creators, the protections of works, whether they are 6 musical works, dramatic works, artistic works, literary 7 works, recordings, cinematic graphic works, the whole 8 catalogue. 9 8066 And I recognize this has not 10 traditionally be the CRTC's area of focus, yet it is 11 so, as I said, inextricably tied to the development of 12 the net and the development of new media that you can 13 no longer draw a line between these two issues. 14 8067 Just as it has always been our 15 view -- one that hasn't necessarily been accepted so 16 readily by the CRTC -- that the Commission should 17 consider the behaviour of its broadcast licensees with 18 regard to the use of copyrighted works just as it 19 considers other issues in granting licences for 20 broadcast, in other words, don't renew licences to 21 people who don't respect copyright, to put it bluntly. 22 That has never really been the Commission's perception 23 of its role. It hasn't been that high on the agenda. 24 8068 But in our view copyright has to be 25 this high on the agenda, because nobody turns on a web StenoTran 1868 1 browser just to see a blank screen. Nobody turns on 2 their computer just to see a "C" prompt. They are 3 turning on their computer for content. 4 8069 There is a book out right now -- the 5 author's name escapes me, I can supply it to the 6 Commission, a fellow from MIT -- talking about the 7 development of information appliances, and I commend 8 this book to you very, very highly. I'm embarrassed I 9 can't remember the author's name right now. 10 8070 But in the book -- this is a fellow 11 who was involved at Apple, he was at MIT for years, he 12 has been involved in very high level computer stuff, 13 and his view is that computers are far too complicated. 14 The all-purpose laptop or desktop box that does 15 everything is far too complicated. The industry must 16 drive itself towards the creation of information 17 appliances, just as the television is an information 18 appliance. 19 8071 The telephone. No one knows how a 20 telephone system works, except perhaps a handful of 21 people in the telephone company, but everyone knows how 22 to use a telephone which is really what counts. 23 8072 As soon as we go from the more 24 complex personal computer era to the information 25 appliance era tied to a great big fat pipeline, whether StenoTran 1869 1 it is ADSL or cable modem or satellite or some other 2 new media yet to be created, all the problems that you 3 have described in your Notice of Hearing, all of the 4 issues that have been touched upon as potential future 5 developments in the interventions you have heard will 6 all come bursting forward like a garden of very ugly 7 flowers, and we have to be ready to do some mowing. 8 How is that for an analogy. Very evocative. 9 8073 COMMISSIONER GRAUER: Very colourful. 10 8074 THE CHAIRPERSON OF THE COMMISSION: 11 Yes, to say the least. 12 8075 Let's come back to the question of 13 access. You talk like IMAT about the problem of the 14 portals and the aggregators and you give as an example 15 the example of at home. How do you see the Commission 16 being able to help in that issue? What would be your 17 ideas on how that can be prevented and how the 18 gatekeeping effect is not there. What would be the 19 ways, the tools, the ideas you have in order to prevent 20 this from happening? 21 8076 MR. CHATER: This is certain to be 22 more of a push technology than a pull. There are many 23 less gatekeepers on the internet. It is almost non- 24 gatekeeper. There is a wide range of places you can 25 get on and get off as compared to traditional StenoTran 1870 1 broadcasting. 2 8077 My sense would be, as I said earlier, 3 that most of the activities on the net are probably not 4 broadcasting, or are different active e-commerce, or 5 whatever the different things. We are concerned with 6 the sort of quasi-broadcasting area. 7 8078 Again, as we said in our 8 presentation, as IMAT has said and others have said, 9 this is, I think, more a function of funding to ensure 10 that the product is available. 11 8079 Some of the comments, I think America 12 Online said that there is plenty of content and there 13 is plenty of stuff available. Yes, there is; and no, 14 there isn't. There is plenty available, but there is 15 not a great deal compared to what is available every 16 day, is being added every day from around the world. 17 8080 I think the trick is to somehow get 18 the providers, or get the access providers to -- I 19 think as Mr. Crawley said before, this is really more 20 of a local issue than a global issue because people 21 like local content. It is to get them to do it. 22 8081 I think as David has said, maybe the 23 correct way in the future is not necessarily "Thou 24 shalt not", but it will be to your interest to do this, 25 this and this. That, I think, is the trick -- and StenoTran 1871 1 there are plenty of access points -- is to get them to 2 commit to, if you like, giving them shelf space, giving 3 them -- 4 8082 I just did a particular piece of work 5 for somebody in Nova Scotia, and one of the points that 6 came up time and time again -- this is the Nova Scotia 7 music industry -- was to do with the fact that 8 production wasn't that difficult -- I say that 9 jokingly -- the hard part was making sure people bought 10 it. That is the marketing part. And this is exactly 11 the same analogy. 12 8083 THE CHAIRPERSON OF THE COMMISSION: 13 The same thing. 14 8084 You wanted to -- 15 8085 MR. BASSKIN: I don't want to 16 interrupt you. 17 8086 THE CHAIRPERSON OF THE COMMISSION: 18 No, that's all right. I just thought that you wanted 19 to add something on that. 20 8087 MR. BASSKIN: I do. The question of 21 access, Brian mentioned the question of incentive 22 rather than the "Thou shalt not", the prohibitory 23 regulation. 24 8088 I'm concerned when people talk about 25 portals. As I said earlier, it is today's buzzword. StenoTran 1872 1 8089 Everybody has a home page when they 2 turn on their browser. The argument that portals are 3 of extreme importance in a way depends on the 4 assumption that people don't know how to change their 5 home page. In fact, neither is it difficult nor is it 6 something that -- many of the portals if you go to them 7 today have a button on the page that says "Make this 8 your home page", click it and the site itself will 9 rewrite your preferences file to change what your home 10 page is. It is not that difficult. 11 8090 I think the development of home pages 12 is less important, the development of portals is less 13 important than the question of how can those who want 14 to be on the net get access. And perhaps one issue -- 15 I don't know if you have had a chance to talk about 16 this in detail -- is the question of how much it costs 17 to get internet access or how much it costs people to 18 get hosting for their site, access to their site. It 19 is an extremely competitive market certainly. 20 8091 But again, as an incentive or a 21 method of support for Canadian -- for sites with 22 intensive Canadian content or Canadian-themed sites, 23 again another form of incentive that might be 24 considered might be either a different tax treatment or 25 a different level of funding or funding vehicle to StenoTran 1873 1 provide those who want to put sites onto the net with 2 incentive, or to make it worth the while of internet 3 service providers like U-net and PSI Net and those 4 companies, to host Canadian sites. What I am 5 suggesting here is that incentives might also be a tool 6 to encourage the carriage of sites. 7 8092 Certainly the internet lowers the 8 barrier for reaching the public. The obscure record 9 label with five releases, or the songwriter with a very 10 small catalogue can be just as present as anybody else, 11 providing he is there, providing he has bandwidth. 12 This is one of those issues that is going to develop 13 very, very quickly. 14 8093 I would suggest that the whole portal 15 question is going to look entirely different inside of 16 12 months, and I don't think it is nearly as important 17 as those who have been talking about have made it out 18 to be. What counts is to have your presence on the web 19 and to develop ways that I suspect can only be 20 developed through marketing and creativity to alert 21 people to the existence of your web. 22 8094 This is where cross-promotion of our 23 media counts. This is certainly where one of the 24 advantages that broadcasters have can be brought back 25 into the picture. When you have a broadcaster StenoTran 1874 1 constantly saying "Go to our web site. Check out our 2 web site" -- CBC, they must refer to their web site 3 20 times an hour, which is great. But what you are 4 doing is you are seeing other people have derived 5 advantage from a scarce resource, namely a broadcasting 6 licence. In that context we should find other ways to 7 extend incentives and support to those who need an 8 additional boost to get themselves up above the level 9 of visibility that people with broadcasting stations 10 have today. 11 8095 It doesn't look like it is difficult 12 to get onto the internet from the user's perspective. 13 Everybody and his brother out there is selling access, 14 and that is going to be a very competitive market. I'm 15 concerned, though, about the ability of those who want 16 to provide content to get an affordable shop to do 17 business within the mall, and that is where I think the 18 Commission may have role. 19 8096 THE CHAIRPERSON OF THE COMMISSION: 20 In terms of incentive. But you are mentioning too in 21 passing that one of the important things is to acquire 22 visibility and the marketing capacity of those sites 23 will be very important as well I hear you say. 24 8097 MR. BASSKIN: Yes. 25 8098 THE CHAIRPERSON OF THE COMMISSION: StenoTran 1875 1 What would be your ideas on how we could help in that 2 sense in terms of, you know, contributing -- there was 3 the idea that the CBC has put forward to create like a 4 super Canadian site and there is also the Association 5 of Specialty -- what is the name of the -- SPTV who has 6 proposed the same thing, to have the site of the sites. 7 8099 MR. BASSKIN: And indeed, nothing 8 stops anyone from creating such a site today. But just 9 as radio stations support music by announcing the name 10 of the artist after they have played the artist -- 11 8100 MR. CHATER: Well, sometimes. 12 8101 MR. BASSKIN: Sometimes, that's 13 right. "When you play it, say it", is the slogan they 14 used for a while. 15 8102 Well, it helps. It helps. And just 16 as -- interestingly enough, the broadcasters themselves 17 in their endless tub-thumping for digital radio has 18 said one of the advantages of digital radio is there 19 can be a readout on the radio to tell you the name of 20 the song you are listening to. Similarly, broadcasters 21 could be encouraged to promote the web sites of the 22 artists who they have put up. I mean, admittedly it is 23 a lot of "www.com.edu., et cetera, but certainly the 24 development of digital radio could be an opportunity to 25 provide links to the artist directly from the radio StenoTran 1876 1 station leveraging off their very high profile in terms 2 of reaching the public. 3 8103 THE CHAIRPERSON OF THE COMMISSION: 4 So that is the kind of incentive -- 5 8104 MR. BASSKIN: Yes, cross-promotion, 6 voluntary or encouraged cross-promotion of Canadian 7 artists by broadcasters could be a good tool there was 8 well. 9 8105 THE CHAIRPERSON OF THE COMMISSION: 10 The last question is about, you said -- and on this you 11 agree with the CAB -- that there will not be total 12 migration from the old broadcasting world to the new 13 media world, but there will be some add-ons and some 14 complementarity. But you say that it would be 15 important -- and certainly you disagree with the idea 16 that because there will be some add-ons and some more 17 activity that we should deregulate at this point the 18 universe of the old broadcasting, or the conventional 19 broadcasting. 20 8106 But I would like to know, there was 21 an interesting intervention on Friday from Telus -- I 22 don't know if you -- 23 8107 MR. BASSKIN: Yes. 24 8108 THE CHAIRPERSON OF THE COMMISSION: 25 -- where they suggested to the Commission that we would StenoTran 1877 1 be at the forefront and next year starting a proceeding 2 and looking at the possibility of starting to see if it 3 wouldn't be already time to change the regulation in 4 broadcasting because something is happening there with 5 the new media and the internet that would require, you 6 know, a less stringent approach and a different 7 approach. 8 8109 The broadcasters also have said that 9 there is already some shift in the advertising that can 10 be seen from the conventional broadcasting universe to 11 the new media. What is your view on this? 12 8110 But mainly you are saying to monitor. 13 What would be, for you, the indicators where you would 14 see that it is not strictly an add-on of an activity 15 that is strictly like a plus in terms of marketing with 16 the conventional world broadcasters are in? Where 17 would you see that it is a sign that we should be 18 particularly curious about or concerned about? 19 8111 MR. CHATER: Well, to go back to the 20 start, CIRPA found the CAB's discussion paper or 21 recommendations interesting. I think at one point they 22 were saying less regulation, at another point more 23 regulation. In other words, not in my backyard, but we 24 love it anyway if you give us all those benefits. I 25 mean, it's -- well, why would they not say it. I guess StenoTran 1878 1 I would if I were a broadcaster. 2 8112 But the reality is that I think you 3 can't have your cake and eat it too. You cannot say 4 deregulate one and then retain the other, and then 5 alternatively say, well, because you are not going to 6 deregulate this, therefore, by definition you must 7 deregulate everything else. 8 8113 To go back to media that have been 9 around for a long time, book sales were, in fact I 10 think, up this year by 4 or 5 per cent. Well, you 11 know, there are only so many hours a day, there are 12 only so many things you can do, yet book sales are up. 13 Therefore people are not watching television, they are 14 not watching the net, they are not -- whatever they are 15 not doing, and maybe they are and they are not 16 sleeping, who knows. 17 8114 But the reality is -- again to jump 18 around a bit to some of your questions -- I think the 19 broadcasters said, well, we are losing advertising. 20 Well, they have been saying that since about 1922 they 21 have been losing advertising. The reality is I think 22 that you can say it was anecdotal. I think they did 23 say it was anecdotal, they hadn't actually got any 24 evidence. They just thought it was. Well, that's 25 good. I can say I think Christmas will come later, and StenoTran 1879 1 in fact I know it will. 2 8115 But the reality I think in all these 3 areas, I think you had a comment from Torstar on 4 Thursday saying that in fact they had suffered 5 substantially in auto car sales because of things like 6 Auto Trader which somebody found a better way to do it. 7 Well, these things happen. That is called free 8 enterprise. 9 8116 THE CHAIRPERSON OF THE COMMISSION: 10 No, but still, you know, I get your point there. 11 8117 But what for you would be elements 12 where you, even as a partner in that radio venture, 13 would start, you know, in terms of their decrease. 14 Would it be the decrease in listening? Would it be the 15 advertising revenue raising radio on the net? What 16 would be elements that would kind of trigger some 17 concern on your part, being a partner of the radio 18 industry, to say something is happening here that we 19 had not entirely foreseen? 20 8118 MR. CHATER: It is very hard to say, 21 again going back to predicting the future. I don't see 22 it in the short term. 23 8119 Also, I think that argument is a bit 24 dependent upon there is only "X" amount of advertising, 25 there will never be any more. If you had said that StenoTran 1880 1 when people were in the old days of print in 1900, they 2 said, well, you could never invent radio or television 3 or anything else, there won't be any more advertising 4 ever. 5 8120 I mean, there are plenty of 6 advertisers who can be accessed through the net, or as 7 you see now on cable. As different forms of 8 advertising come up this is not to say current 9 advertisers, or indeed new advertisers, will not come 10 forward and say, "Gee, that is great idea, I can" -- as 11 David said, "I can get right at those people that sell 12 my fishing lines", or whatever it is. I cannot do that 13 on most channels." Even on the specialty channel, I 14 mean the Golf Channel or the Auto Channel you can do 15 that specifically more, but you can still tighten it 16 even more which the net will do for you. I think it 17 will increase advertising more than decrease it. 18 8121 I mean, this analogy of there is only 19 so much pie, there will never be any more ever, I mean 20 if that were the case we wouldn't be sitting here, we 21 would still be driving around with horses and buggies. 22 I mean, that is the reality of this. 23 8122 I think this is a bit of a canard 24 this argument. I mean it has yet to be proven and keep 25 being proven. All of a sudden cable is making all StenoTran 1881 1 sorts of money, as is television, as is specialty 2 television, as is radio, as are magazines, as are 3 newspapers, most of which didn't exist 50 years ago. 4 So where did all this money come from, out of the sky? 5 No, it didn't. It came from advertisers. 6 8123 THE CHAIRPERSON OF THE COMMISSION: 7 Thank you. 8 8124 MR. BASSKIN: If I could just add 9 briefly to that. 10 8125 I have to think about the fact that 11 17 years ago to the day I was sitting here beside 12 Murray Chercover(ph) and John Coleman(ph) at a hearing 13 on CRTC's regulation of Canadian content. The paint 14 was different, but sometimes I think that little has 15 changed because the fundamental questions don't change 16 that much. 17 8126 Broadcasters have been crying poor 18 mouth for a very long time. I know, I used to write 19 those speeches. And sometimes it's true. The patterns 20 of earnings ebb and flow. Broadcasters are in 21 competition with every other medium for advertising. 22 8127 If you ask: What would I look for as 23 an indication of substantial change, I would look to 24 see if the way the broadcasters are selling themselves 25 to the advertising market begins to incorporate StenoTran 1882 1 meaningful reference to web sites; that if broadcasters 2 are starting add-on web sites they argue it should not 3 be regulated in the same manner as things that are a 4 direct duplication of what they have on the air, I 5 would say: Do you have a separate rate card? How much 6 of your bottom line is this really contributing? How 7 much has it actually changed what you do with that 8 broadcast frequency? 9 8128 The CRTC's regulation of radio 10 includes a great many things: entry to the market, 11 departure from the market, ownership changes, Canadian 12 content regulation, a host of issues that have been 13 developed after a long and very careful policy 14 exercise, very recently the revision of Canadian 15 content for radio. 16 8129 The system as it is now has been 17 evolved after a tremendous amount of effort. I think 18 it is, quite frankly, farfetched at this point to 19 suggest that the growth of the internet today and its 20 profitability, which is pretty much nil, and its 21 success in the advertising market, which is nascent at 22 best right now, has had enough of an impact to warrant 23 even reopening the question of Canadian content. 24 8130 We are aware that there are those who 25 are going to try to make the argument, if they are not StenoTran 1883 1 making it already, that the definition of Canadian 2 content should change, or that the Commission's newly 3 published regulations on Canadian content should be 4 reconsidered or reopened. Our view is that those 5 aren't broke, they don't need fixing, the Commission 6 made to the right decisions, and we will be writing to 7 you to that effect. 8 8131 But above all I think it is grossly 9 premature at this point to suggest that the development 10 of the internet to date mandates any change in the 11 content regulation of broadcast radio. Radio stations 12 still trade a high multiple over earnings. They are 13 still a highly desirable asset in the marketplace, and 14 I don't know of any broadcaster who would voluntarily 15 walk away from one today simply because the internet 16 promises growth. 17 8132 I think they are all smart to look at 18 the internet as a good add-on, as a good cross- 19 promotion, as a good business activity to be involved 20 in, but I would look to see is it truly existing as a 21 separate business in their world to see whether or not 22 the Commission should really change its approach to 23 regulating broadcast in the context of the internet. 24 8133 MR. CHATER: One other point. You 25 may have noticed yesterday in the paper that there was StenoTran 1884 1 a giant sell-off in internet stocks in the U.S. 2 yesterday. They dropped -- I have forgotten -- 25 per 3 cent in a day. I mean, because there is nothing 4 underneath it. There are no earnings. 5 8134 I mean, the reality of every internet 6 stock from Amazon to CD Now, which I am familiar with, 7 there are no earnings. They are losing money -- going 8 that way -- and they will make money maybe in five 9 years. This is the classic, if you like, South Sea 10 Bubble. I mean, we are just investing in this stuff 11 and hopefully down the road it will bring great 12 returns, but right now there are no returns. There is 13 no base of earnings because there are no earnings. 14 8135 THE CHAIRPERSON OF THE COMMISSION: 15 Well, thank you very much, gentlemen. 16 8136 MR. BASSKIN: Thank you. 17 8137 MR. CHATER: Thank you. 18 8138 THE CHAIRPERSON OF THE COMMISSION: 19 It has been very interesting, and thank you for your 20 participating. 21 8139 THE CHAIRPERSON: Don't go away. 22 8140 COMMISSIONER GRAUER: I am not quite 23 sure I fully understood with respect to Chair 24 Bertrand's question of the impact on traditional media 25 of the new media and what we might be looking at as StenoTran 1885 1 this world evolves. 2 8141 The one thing I was really interested 3 in was presumably your role as partners with the radio 4 industry in terms of promoting Canadian talent, and 5 should we be looking at hours tuned. I mean, should 6 these be things that we are looking at in terms of a 7 concern for Canadian expression, as well as advertising 8 and some of the other things which I think you did 9 touch on as a responsible regulator? 10 8142 MR. CHATER: I think the answer to 11 that in the short term would be yes. I mean, I don't 12 see any substantive changes in hours tuned at the 13 moment. Even if there were, maybe it would be going 14 somewhere else, there would be other reasons for it. 15 8143 I mean, I take to take a bit of issue 16 again -- I'm going to take issues about the word 17 "partners". We provide product to the radio stations 18 which is used to make money. That is not my definition 19 of "partnership". So I have a real concern with that 20 word. It is bandied around by radio stations a lot, 21 and broadcasters, but we don't really consider 22 ourselves partners, we consider ourselves content 23 providers to radio for payment, thank you very much, 24 and you can do with it what you will. 25 8144 COMMISSIONER GRAUER: Okay. That is StenoTran 1886 1 helpful in fact, because I guess the question is 2 whether or not then this is -- what I am really trying 3 to get at is: How important is the role of radio in 4 your business, which is Canadian creators and their 5 exposure to the Canadian public. That is really what 6 I'm getting at. 7 8145 MR. CHATER: Yes, okay. 8 8146 COMMISSIONER GRAUER: That is my 9 goal. 10 8147 MR. CHATER: Let me come back to 11 that. I have just written a long piece about that, so 12 I can at least say that I have researched that only 13 last week or two weeks ago. 14 8148 The answer to that is, yes, radio is 15 important, much less so than it was previously, not 16 only because of the other media like video, like print, 17 like other marketing campaigns, like television for 18 example, television advertising campaigns as opposed 19 to, you know, the music channels. 20 8149 Also the fact of the way radio has 21 evolved. When I was young -- only two years ago -- it 22 used to be all top 40 AM radio. Now there is no -- 23 top 40 is slowly coming back on FM, but it used to be 24 in Canada the reality was you got 15 stations -- I'm 25 exaggerating slightly -- 15 stations across the StenoTran 1887 1 country, played the record, charted the record, it was 2 a hit, that was it, bang. I mean, that option is long 3 gone. 4 8150 The marketing costs in the record 5 business have doubled in the last 6 or 7 years for a 6 specific release. They continue to go up. I mean they 7 will probably not go down because you have videos, you 8 have internet, you have everything to do. 9 8151 The reality is that radio, while it 10 certainly is important, is no longer nearly as 11 important as it was, particularly given the formats of 12 radio and the fact that many formats are not there, by 13 their own admission, to sell records. They are there 14 to sell time. That is fair enough. 15 8152 But, you know, for example, many 16 radio stations would not sell records. Their listeners 17 would not be in the record-buying group, and it would 18 use music on radio that would be the substitute, if you 19 like, of buying records, they use it on radio. That is 20 what they do. And obviously it is our job to ensure 21 that appropriate payment is made for that through 22 rights societies or whatever it may be. But in many 23 cases -- whereas before radio was a key player, and 24 still is in many instances but much less so than it 25 used to be. StenoTran 1888 1 8153 COMMISSIONER GRAUER: Thank you. I 2 appreciate that. 3 8154 THE CHAIRPERSON: I have a specific 4 question I would like to pose to you. Have you had an 5 opportunity to read the CHUM submission? 6 8155 MR. CHATER: No, I haven't. 7 8156 THE CHAIRPERSON: Well, let me read 8 to you one section. I am not sure whether you are the 9 best folks to put this to or whether it would be more 10 appropriate to go to CRIA or SOCAN so they can consider 11 this and respond as appropriate when they appear. 12 8157 On page 11 of their Phase II 13 submission CHUM were noting the issue -- and this gets 14 to the point about rights issues, particularly as it 15 relates to new media. So this is paragraph 3 on 16 page 11 if you want to refer to it later perhaps and 17 look at it in context, but I will try to put it in 18 context. I will quote here: 19 "To illustrate the degree to 20 which Canadian web site 21 operators are prejudiced by 22 these intellectual property 23 licensing policies ..." 24 (As read) 25 And that being of the recording industry: StenoTran 1889 1 "... we cite the example of the 2 popular Canadian performer 3 Alanis Morissette. 4 Ms Morissette's new album was 5 released in November 1998 and 6 she appeared in an exclusive 7 broadcast on MuchMusic on 8 Sunday, November 1, 1998. 9 Unfortunately, due to the 10 restrictive policies of the 11 recording industry City 12 Interactive was not permitted to 13 feature clips of Ms Morissette's 14 videos on the MuchMusic Canadian 15 web site. By contrast, MTV 16 Network has devoted considerable 17 resources on its web site to 18 Ms Morissette, including video 19 clips and live performances 20 found at http://www ..." 21 (As read) 22 8158 Whatever. 23 8159 MR. CHATER: Yes. 24 8160 THE CHAIRPERSON: I wonder if you 25 might comment on that. StenoTran 1890 1 8161 MR. CHATER: Actually, I have views 2 on it, but this I think is much more a question for 3 CRIA or SOCAN because they are the people involved. I 4 would hate to tread on their turf. I mean, I could 5 give you general views. 6 8162 The answer is that there are 7 obviously reasons for this, whatever they may be, and 8 I'm sure probably you could ask CRIA and SOCAN to 9 elucidate on this matter. 10 1155 11 8163 Often it has been my finding. For 12 example, if I digress slightly, the Oakville Beaver. 13 They were not able to show the local Santa Claus parade 14 on cable because those nasty copyright people want to 15 get paid. It basically said we couldn't show it 16 because rights users owners would not allow us to show 17 this, which is again a canard. It was an excuse. 18 8164 They didn't want to pay anything for 19 this. I can't comment on the CHUM alliance, that sort 20 of thing, but that would be my comment in general terms 21 on a lot of these issues. There's a lot more behind 22 that isn't said than is said. 23 8165 MR. BASSKIN: If I could respond in 24 particular. Brian is absolutely right. There may be 25 issues related to industry, entire industry policies StenoTran 1891 1 that are evolving about the use of things like video 2 clips on the Web. It's not my place to speak for 3 CRIA's members and SOCAN will obviously be addressing 4 you shortly. 5 8166 The CHUM organization is an 6 interesting example. They use a great deal of music, 7 not just on MuchMusic and there are other stations, but 8 also in their programming generally. 9 8167 While over the years we have wrestled 10 with them on a variety of occasions when it comes to 11 licensing the music used in their programs, by and 12 large when they can't put the cost on to somebody else, 13 they are not averse to paying for it, which is what it 14 really comes down to. 15 8168 This is an organization, after all, 16 when somebody appears on a CHUM, City or Bravo! or Much 17 production that they produce in the studio, they hand 18 the performer a form that says you sign this or you 19 don't get on. The form says if you own any music, you 20 are giving up the reproduction right licence, the 21 synchronization licence, which my organization engages 22 in for many publishers. You give us the 23 synchronization licence for free in consideration of 24 being allowed to appear on our show. 25 8169 That's life. They also say if you StenoTran 1892 1 perform a song which you don't own, which somebody else 2 owns, you, Mr. or Ms Performer, will go and obtain the 3 licence at your cost for us for our benefit, but we end 4 up owning the copyright in the show. We can exploit 5 the song according to the licence you get at our 6 expense and if you don't want to pay for the licence, 7 you don't perform the song. 8 8170 This is a complete inversion of the 9 usual custom in the film and television production 10 industry where the producer goes and obtains the 11 clearances of the songs rather than saying to the 12 performer "If you want to perform White Christmas, you 13 are going to have to contact the Irving Berlin office 14 and get us a licence made out to us, but you pay for 15 it". 16 8171 It's sort of like saying to somebody 17 "I'm hiring you to be my secretary, but you have to buy 18 me a Selectric typewriter or Word Processor on the way 19 in". CHUM has a pretty dedicated commitment, as seen 20 in it's business practices, to putting the cost of 21 music clearance on to other people as often as 22 possible. 23 8172 I'm quite certain that what they are 24 referring to there in their submission, which I will 25 take the trouble to read and respond to you on, I would StenoTran 1893 1 strongly suspect that what they are saying is we 2 couldn't get this for free, somebody wanted to be paid 3 for the use of their works so we couldn't do it. 4 8173 Well, that's not a could or couldn't. 5 That's a will or won't. No one is stopping them from 6 paying for what they use, but if they think that having 7 to pay for what they use bars them from doing it, I 8 guess that's their world view. 9 8174 I would suggest that statement like 10 that need a closer examination of the underlying 11 business practices before they can be taken at face 12 value. 13 8175 THE CHAIRPERSON: I take your point 14 on that. I guess what's behind my curiosity with 15 respect to this issue here is not so much strictly 16 speaking the business practices of CHUM or any other 17 radio broadcaster, more to the point of whether or not 18 we have created an environment in Canada which might 19 disadvantage Canadian artists to be on outlets, 20 whatever they are, Web sites in Canada as opposed to 21 foreign markets. 22 8176 In fact, we may disadvantage those 23 artists from being exposed to the audience at home as 24 opposed to some other markets. 25 8177 MR. BASSKIN: It may be that a StenoTran 1894 1 business decision by a rights holder to insist on 2 payment results in a form of disadvantage to him. It 3 may well be that a decision to say I want to get paid 4 for what I want to do means you lose out to somebody 5 who will work for nothing. That's a larger business 6 question, but I'm not sure that is a result of the 7 regulatory practices of the Commission. 8 8178 THE CHAIRPERSON: I don't know 9 either. As I said, I just wanted to know whether you 10 could comment on that. 11 8179 MR. CHATER: In one of my other lives 12 I am presently a publisher. I am negotiating with 13 regard to a film. The question is how far will they go 14 before I push them over the edge and they will say "Too 15 bad, Brian, we are going to use somebody else's". 16 8180 That's obviously a business decision, 17 I mean how far can I push them, how much money can I 18 get. Obviously they would like it for free, I would 19 like to get $50,000. The in-between is the difference. 20 8181 If you own the rights, you are always 21 negotiating "advantage/disadvantage". What is my best 22 position given I will get "X"? Is the return two "X" 23 or half "X"? This is a business decision. 24 8182 I should not be precluded. You 25 should be able to take the decision. If you're wrong, StenoTran 1895 1 you're wrong, you made a mistake. You guessed wrong. 2 You said they won't in fact use that product. 3 8183 THE CHAIRPERSON: As you suggested, 4 maybe CRIA or SOCAN -- 5 8184 MR. CHATER: We have given you the 6 philosophical line. 7 8185 THE CHAIRPERSON: I think counsel has 8 a question. 9 8186 MS PINSKY: Thank you, Mr. Chairman. 10 8187 In your submission this morning, you 11 indicated that broadcast-like activities that are on 12 the net but are not owned by a broadcaster should also 13 be considered as broadcasting and licensed as such. 14 8188 Could you describe the type of 15 activities that you would consider broadcast-like? Are 16 you referring only to streaming audio and video? 17 8189 MR. CHATER: There is a site called 18 Virtually Canadian which is in fact a quasi-radio 19 station and they advertise themselves as a radio 20 station. It's sites like that that are delivering in 21 effect the same product in a different form as radio 22 would essentially. 23 8190 Streaming, that would be an issue we 24 would look at further but it is the delivery system. 25 In simple terms, it was even more of a delivery system StenoTran 1896 1 akin to a record store. You are delivering music, for 2 a fee one would hope, in a sort of retail environment. 3 It's not quite the same as broadcasting. 4 8191 MS PINSKY: With respect to licensed 5 entities, you said that if an entity is licensed by the 6 Commission, its activities on the net are a direct 7 result of its licence and should be characterized as a 8 broadcast and they should be addressed through a 9 separate licence and not as an add-on. 10 8192 Is it only through those 11 broadcast-like activities where a separate licence, 12 according to your submission, should be issued? 13 8193 MR. CHATER: It's always a bit hard 14 to say what's a broadcast-like activity. Again, it 15 would clearly be inappropriate to regulate commerce 16 activities. As I said in some discussion earlier, the 17 net is not just one thing. It's about three or four 18 things. It's not one or the other. It's a combination 19 of different things and you form inside the space. 20 8194 We would lean towards broadcast-like 21 activities and maybe a further definition of what that 22 exactly means, but things like radio, television, 23 whatever, that were producing the same type of result 24 as if they were a regular broadcaster. 25 8195 MS PINSKY: Finally, you indicated StenoTran 1897 1 that digital radio and television are not, in your 2 view, new media in a real sense. They are just ad-on 3 versions, these are your words, of current media that 4 are essentially based on a pre-existing content and 5 structure. 6 8196 MR. CHATER: Yes. 7 8197 MS PINSKY: I would just like to 8 clarify the distinction that you are making between 9 digital radio, TV and new media. Is it your view that 10 it's simply because these services are distributed on 11 traditional infrastructure that they wouldn't involve 12 new media, regardless of the functionalities or the 13 characteristics of these services? 14 8198 MR. CHATER: Getting back to the 15 definition of new media, this is where we get into real 16 trouble, as a lot of people have said. 17 8199 If I can give you an analogy. I think 18 I used the analogy earlier somewhere else, to me 19 digital radio is the next version of FM which was in 20 turn a version of AM. AM is not nearly as good quality 21 as FM. Digital is better than FM, but they are all 22 still radio. They are all still doing the same thing. 23 8200 Television, the same thing. Black 24 and white television was the first thing. It became 25 coloured television then comes digital delivery StenoTran 1898 1 television. Then it becomes digital television or high 2 definition television, whatever you like. 3 8201 In other words, what's still on there 4 is the programming. What's still on the CBC is the 5 same programming. We deliver it through a nine inch 6 black and white TV or a 73 inch digital TV, it's still 7 programming. It's still TV programming. 8 8202 MS PINSKY: Just to follow up. What 9 I was trying to get to was if that programming, if the 10 nature of that changes and becomes more interactive in 11 nature and more similar to that which we currently find 12 or are expected to find on the Internet, would it still 13 be your view that that type of programming because it's 14 delivered on traditional infrastructure would not be 15 new media? 16 8203 MR. BASSKIN: Well, I think that 17 anything that uses terrestrial waves is inherently 18 using a scarce resource and the allocation of a scarce 19 resource is the prime justification for broadcast 20 regulation, as I have already understood it. 21 8204 Even if you can divide the existing 22 band into a larger number of sub-band or substations, 23 there is still going to be competition for the 24 opportunity to exclusively occupy one of those 25 frequencies. As long as there is going to be that kind StenoTran 1899 1 of competition, somebody has to decide and I think the 2 Commission's role is very clear in that regard. 3 8205 As Brian said, digital radio and 4 digital TV are seen not only by theorists but by the 5 broadcasting industry itself as simply an extension of 6 their current activities. 7 8206 One of the policy decisions regarding 8 licensing of digital radio I believe is that all 9 existing radio stations would be grandfathered in for a 10 spot on digital radio, if and when it ever becomes a 11 commercial reality. 12 8207 I have no doubt that the Commission 13 will continue to take a role in granting licences. It 14 seems to me that the existing infrastructure needs no 15 change simply because the method of transmission has 16 gone from analog on FM to digital, but if it's going to 17 be an interactive medium taking place on the Web, there 18 may be some need for different treatment, as we have 19 suggested earlier, by means of incentive rather than by 20 prescription. 21 8208 MS PINSKY: Thank you very much. 22 8209 Those are all my questions. 23 8210 THE CHAIRPERSON: Thank you Counsel 24 Pinsky. 25 8211 Thank you very much, gentlemen. StenoTran 1900 1 8212 MR. CHATER: Thank you. 2 8213 THE CHAIRPERSON: We appreciate you 3 coming here today. 4 8214 We will take our lunch break now. 5 Because we have a little business of some other 6 activities of the Commission to conduct, we will 7 reconvene at two o'clock. 8 --- Recess at / Suspension à 1230 9 --- Upon resuming at / Reprise à 1400 10 8215 THE CHAIRPERSON: Good afternoon, 11 ladies and gentlemen. 12 8216 We will return to our proceeding now. 13 8217 Madam Secretary. 14 8218 MS BéNARD: Thank you, Mr. Chairman. 15 8219 The next presentation will be the 16 Canadian Recording Industry Association. 17 PRESENTATION / PRÉSENTATION 18 8220 MR. ROBERTSON: Thank you, Mr. 19 Chairman, Madam Chair, Commissioners. 20 8221 My name is Brian Robertson and I am 21 the President of the Canadian Recording Industry 22 Association. I am joined by Ken Thompson, the 23 Vice-President and General Counsel of CRIA. 24 8222 Let me say on behalf of the 25 association and its members that we thank you for the StenoTran 1901 1 opportunity of joining you at these hearings today. 2 8223 The Canadian Recording Industry 3 Association is a not-for-profit corporation founded in 4 1964 whose members comprise the Canadian corporations 5 of the multinational record companies, the leading 6 Canadian owned independent record companies and all of 7 the manufacturers of compact discs and tapes. In all, 8 they are representative of 95 per cent of all 9 prerecorded music manufactured and sold in Canada. 10 8224 First of all I would like to 11 congratulate the Commission on its initiative to 12 convene these hearings. You recognized at an early 13 state the realities of the new communications 14 environment and you have been willing to act decisively 15 in creating a broad and comprehensive forum for 16 discussion. 17 8225 I think it goes without saying that 18 we are all humbled by the pace of change in the 19 communications field. We have embraced the term new 20 media and under its umbrella we are having to adjust, 21 it seems daily, to the tidal wave of technological 22 change that washes over us. 23 8226 Nowhere has this influence been more 24 evident than in the recording industry. We create, 25 manufacture and distribute a remarkable product that is StenoTran 1902 1 enjoyed in virtually every household in the civilized 2 world and yet that very same product is the most easily 3 stolen and illegally exploited in the world. 4 8227 The new media, therefore, provides us 5 with the most optimistic and yet the darkest side of 6 our business. 7 8228 The focus of these hearings in part 8 is the influence of the new media on the regulation of 9 the traditional broadcast undertakings as well as 10 endeavouring to determine if any of the new media 11 services constitute broadcasting or telecommunication 12 services. 13 8229 From our perspective today, looking 14 at the influence of new media on our industry, we are 15 endeavouring to find a balance between the services 16 that are, firstly, a legitimate extension of 17 broadcasting; secondly, dedicated programming for the 18 new media; thirdly, electronic opportunities through 19 legal commercial transactions and, fourthly, grappling 20 with the illegal transactions that are already draining 21 an estimated $1 billion U.S. from our industry. 22 8230 The Internet is the medium on which 23 electronic commerce is currently conducted. More than 24 100 million people are using it worldwide today and 25 this is expected to escalate to 325 million in 2002. StenoTran 1903 1 8231 In many respects it offers unique 2 opportunities for our prerecorded music products to 3 reach wider markets and conversely for the general 4 public to have access to virtually an unlimited 5 selection of sound recordings. It could indeed be the 6 virtual record store. 7 8232 This scenario would be somewhat more 8 fulfilling were it not for the fact that from our 9 industry's perspective, the Internet currently 10 resembles a somewhat lawless society in which thousands 11 of sound recordings are illegally posted and an 12 estimated three million tracks are downloaded daily, 13 resulting in an estimated retail sales loss of $1 14 billion U.S. annually. 15 8233 A recent "Time" magazine reported 16 that with a cable modem, you could download the entire 17 Encyclopedia Britannica in less than 30 minutes and a 18 music CD in a mere three minutes. 19 8234 We raise these issues at this time 20 because it is important to reinforce that there are 21 currently many new media services that are clearly not 22 broadcasting in substance. 23 8235 The Internet, as we know, is used as 24 a substitute for terrestrial broadcasting. This is 25 witnessed by the number of simulcasters and webcasters StenoTran 1904 1 that are currently occupying Web sites that are 2 available to anyone around the globe with access to a 3 personal computer, sound card and speakers. 4 8236 According to the MIT List of Radio 5 Stations on the Internet, there are currently 81 radio 6 stations in Canada and 852 in the United States whose 7 broadcasts are available as rebroadcasts or simulcasts. 8 8237 An analysis of the current provisions 9 in the Broadcasting Act that define the process of 10 broadcasting does so, in our opinion, in such a broad 11 manner as to extend the Commission's jurisdiction over 12 transactions involving the delivery of non-material 13 products such as sound recordings. 14 8238 The definition of broadcasting, which 15 is exceedingly wide in scope, encompasses virtually all 16 transmissions so that in effect all transmissions of 17 recorded music on the Internet could be cast as within 18 the definition of broadcasting under the Broadcasting 19 Act. 20 8239 We do not, of course, consider that 21 many of the services involving recorded music on the 22 Internet are by intent and purpose a broadcasting of 23 recorded music. 24 8240 We submit that the Commission should 25 and must recommend to the government that the StenoTran 1905 1 provisions of the Broadcasting Act be reviewed and that 2 the definition of broadcasting in the Act be redefined 3 so as not to encroach upon the commercial marketplace 4 of transactions in electronic commerce. 5 8241 Further, in support we wish to draw 6 the Commission's attention to the two most recently 7 concluded international agreements, which you heard a 8 little bit about this morning, to which Canada is now a 9 signatory. 10 8242 These agreements, made at Geneva in 11 1996, map out the necessary legal principles which we 12 submit must be universally applied in respect of the 13 electronic transmission of works in which copyright 14 subsists and of sound recordings and performers' 15 performances in which copyright subsists. 16 8243 The treaties, referred to as the WIPO 17 Copyright Treaty and the WIPO Performances and 18 Phonograms Treaty, introduce a new right. This new 19 right, which stands alone as an exclusive right of 20 producers of sound recordings, is known as the right of 21 making available. 22 8244 In Article 14 of the WIPO 23 Performances and Phonograpms Treaty, that right is 24 provided as follows: 25 "Producers of phonograms shall StenoTran 1906 1 enjoy the exclusive right of 2 authorizing the making available 3 to the public of their 4 phonograms by wire or wireless 5 means in such a way that members 6 of the public may access them 7 from a place and at a time 8 individually chosen by them." 9 8245 It is our submission that the new 10 right of making available contemplates a non-physical 11 or non-material alternative to the sale of sound 12 recordings. 13 8246 The CRTC currently does not regulate 14 the sale of recorded music on physical carriers. We 15 submit that the jurisdiction of the CRTC clearly should 16 not expand to encompass those transactions of making 17 available sound recordings. 18 8247 As we referenced earlier, the 19 recording industry on a global scale is experiencing 20 infringement of copyright via electronic transmissions 21 of non-physical copies of recorded music in a 22 compressed form known as MP3 or M Peg 3. 23 8248 This new form of piracy is directly 24 related to the inability of copyright owners under the 25 current legislation to exercise their rights in respect StenoTran 1907 1 of new media available through electronic commerce and 2 other means. 3 8249 The recording industry in Canada, 4 which is the primary entity responsible for creating, 5 preserving and disseminating artistic expressions of 6 musical works, cannot continue to thrive in an 7 environment which is hostile to the investment and 8 development of online services for the transmission of 9 recorded music. 10 8250 In conclusion, we would reiterate 11 that in this review process the Commission should 12 clearly define the regulatory areas and just as clearly 13 recognize the separate marketplace of electronic 14 commerce. 15 8251 For the former, that might be defined 16 as extensions of the existing broadcasting framework, 17 we would offer our endorsement of the need to maintain 18 fair and balanced policies that continue to encourage 19 the development of Canadian cultural works in keeping 20 with the sovereignty and cultural identifies of the 21 Broadcasting Act. 22 8252 On the latter issue, we would 23 continue to urge our government to move forward without 24 delay to sign legislation that will implement the 25 provisions of the WIPO treaties. These treaties make StenoTran 1908 1 it absolutely clear that copyright holders have sole 2 control over the interactive transmission of their 3 works through new media services. 4 8253 That concludes our presentation. 5 8254 Thank you. 6 8255 THE CHAIRPERSON: Thank you, Mr. 7 Robertson. I will turn the questioning to Commissioner 8 Wilson. 9 8256 COMMISSIONER WILSON: Good afternoon, 10 gentlemen. 11 8257 MR. ROBERTSON: Good afternoon. 12 8258 MR. THOMPSON: Good afternoon. 13 8259 COMMISSIONER WILSON: I would like to 14 begin by asking you for some clarification of some of 15 your oral comments. I just want to get some more 16 information, mostly about the treaties that you 17 referred to. 18 8260 I will ask you some questions of 19 clarification relating to your written submission and 20 then I would like to explore what your primary argument 21 is with respect to primary sources, secondary sourcing 22 of recordings as the basis for taking the Commission 23 has no jurisdiction over your members' works. 24 8261 I have to tell you that my background 25 is in television. The music that we used at the StenoTran 1909 1 channel that I was with was public domain or, as your 2 lawyer used to irreverently refer to it, and I hope 3 this doesn't offend anybody, music by guys who have 4 been dead for 50 years. 5 8262 The area of rights is one that 6 presents a lot of challenges for me. I would like to 7 tell you right from the beginning if some of my 8 questions seem a little bit basic, then part of this 9 process is for us to gain a better understanding of how 10 this works and especially with respect to new media 11 which is a new environment. 12 8263 I wonder if you could just begin by 13 telling me -- first of all, how many members does your 14 organization have? 15 8264 MR. ROBERTSON: Thirty. 16 8265 COMMISSIONER WILSON: Thirty. Okay. 17 The treaties that you are referring to, the WIPO 18 treaties on copyright and performers and phonograms. 19 On page 5 you say: 20 "These agreements made at Geneva 21 in 1996 map out the necessary 22 legal principles which we submit 23 must be universally applied in 24 respect of the electronic 25 transmission of works in which StenoTran 1910 1 copyright subsists." 2 8266 Did either of those treaties 3 specifically contemplate the transmission of sound 4 recordings on the Internet? 5 8267 MR. ROBERTSON: I am going to ask Mr. 6 Thompson to respond to that. He was very much involved 7 in international negotiations and also with having 8 Canada endorse the treaty. I will let him respond. 9 8268 MR. THOMPSON: Thanks, Brian. 10 8269 Yes, they do. In fact, I have one of 11 the treaties with me here or a copy of it. This is the 12 Performances and Phonograms Treaty which is directly 13 focused on the rights of producers of sound recordings 14 and performers. 15 8270 As Brian had mentioned in his 16 comments this afternoon, Article 14 creates a new 17 right, a right called making available, which is an 18 exclusive right. In a very simple sense, it means the 19 right to say no and the right to say yes. 20 8271 Under previous amendments to the 21 Copyright Act, most specifically Bill C-32, there were 22 rights added for performers and producers of sound 23 recordings on what is usually called neighbouring 24 rights. These are mere rights of remuneration which 25 doesn't allow the owner of copyright to actually have a StenoTran 1911 1 choice as to whether or not a user may use something. 2 It is only a right for remuneration. 3 8272 In contrast, these new treaties 4 create something new that allows copyright owners, not 5 only performers and producers of phonograms but other 6 copyright owners, the security of knowing they have a 7 legal framework in which they can conduct commerce in a 8 non-physical environment such as the Internet or 9 electronic commerce as it is generally called. 10 8273 COMMISSIONER WILSON: When those 11 treaty discussions were taking place -- I don't know 12 how much work you have done in that area. If you don't 13 know the answers to my questions, just don't worry 14 about it. 15 8274 Did they discuss specifically the 16 notion -- quite apart from the notion because you make 17 that point in your submission that this is a 18 transaction that takes place over the Internet. It's 19 the making available of a sound recording in a 20 non-physical form. 21 8275 Was that discussed during those 22 treaty discussions? 23 8276 MR. THOMPSON: Most certainly. In 24 fact, it was quite a lengthy consultation process here 25 in Canada that preceded those treaties. StenoTran 1912 1 8277 Internationally there were a 2 considerable number of meetings which were referred to 3 as meetings of experts, primarily held outside of 4 Canada in which the Canadian delegation was present 5 primarily from Industry and Heritage Canada. 6 8278 There was also a process that 7 operated through the Stockholm group in which Canada 8 has a prime interest and has participated which is a 9 group of governments that sets policies and discusses 10 in the broad sense for principles for protection of 11 copyright, specifically with a future outlook. 12 8279 Even though as a non-governmental 13 organization, because we are not directly involved in 14 that, we are certainly aware of what is happening 15 there. In fact, this treaty or these two treaties have 16 been ratified in the United States for all intents and 17 purposes. 18 8280 In the passage of the Digital 19 Millennium Copyright Act quite recently, and in fact 20 this probably carries on a little more than what you 21 are asking for in your question -- 22 8281 COMMISSIONER WILSON: By all means. 23 8282 MR. THOMPSON: In fact you may see in 24 the upcoming year a broader approach to commerce on the 25 Internet, specifically from those copyright industries StenoTran 1913 1 such as film and sound recording. 2 8283 In fact, if that answers your 3 question, there was quite a considerable amount of 4 discussion and consultation. This was not a quick 5 process. It was quite lengthy. And of course the 6 Internet and electronic commerce has moved much faster 7 than this process ever did. 8 8284 The application is far ahead of the 9 legal framework that has been attempted to be put 10 together through these two treaties. 11 8285 COMMISSIONER WILSON: I don't know if 12 you are aware of whether or not during those 13 discussions there was any discussion about whether or 14 not the transmission of sound recordings over the 15 Internet constituted broadcasting versus a commercial 16 transaction. 17 8286 MR. THOMPSON: To answer that I am 18 going to return to the treaty again. There is a 19 portion of it -- if you are actually interested in it, 20 the treaty is available on the Internet at Web site 21 www.wipo.org/eng/index.htm. 22 8287 If you turn to Article 15, it 23 reiterates those previous rights which we called 24 neighbouring rights. It's a right of remuneration for 25 broadcasting and communication to the public. That's StenoTran 1914 1 the heading. 2 8288 I won't read the whole article for 3 you, but the intent of that article is in fact to 4 restate what had previously been the general 5 international framework for rights of communication, 6 public performance and broadcasting in what was called 7 the Rome convention, which stems from the early 1960s 8 and to which Canada recently became a signatory, I 9 believe in the summer of -- I believe it was this 10 summer, 1998, July 4 -- June 4 or 22, one of those two 11 dates. 12 8289 We did that by filing our Bill C-32 13 amendments, our amended Copyright Act, with the United 14 Nations, as is required under the provisions of the 15 Rome Convention. That's Article 15. That's a right of 16 remuneration. It specifically is directed towards a 17 broadcasting use whereas the right of making available 18 is something new and something broader in scope. It is 19 an exclusive right as opposed to a right of 20 remuneration. 21 8290 COMMISSIONER WILSON: How many 22 signatories are there to the two treaties? 23 8291 MR. THOMPSON: Over 30. 24 1420 25 8292 COMMISSIONER WILSON: Over 30. How StenoTran 1915 1 many other countries have ratified the treaties? 2 8293 MR. THOMPSON: The United States is 3 in position to ratify; the European Union is also in a 4 position to ratify, and that will take in the States of 5 the Union, plus there is a separate designation for the 6 European Union itself, which will obtain a vote because 7 it is a single economic community. Japan, of course, 8 is in a position to ratify, or soon will be. 9 8294 The only States which have actually 10 ratified the treaties, which means that they have 11 implemented them in their own domestic legislation, are 12 Indonesia, which has only implemented one of the two 13 treaties, and Muldova. 14 8295 But despite that, this is only a year 15 old, it is quite amazing that 30 countries actually 16 signed the treaty before December -- before January 1, 17 1997. So in fact in legal terms, international legal 18 terms, it is moving very quickly. 19 8296 COMMISSIONER WILSON: Okay. Thank 20 you. 21 8297 I would like to go now to your 22 written submission. 23 8298 On page 3 of your submission you 24 state that of particular concern to CRIA is: 25 "... the use of its member's StenoTran 1916 1 sound recordings in new media 2 applications such as interactive 3 streaming audio services." 4 (As read) 5 8299 Further on you talk about the 6 hundreds of services that offer sound recordings, and 7 in your oral comments talk about grappling with illegal 8 transactions that are already draining $1 billion U.S. 9 a year from your industry. 10 8300 Are your members receiving royalties 11 for music, their music that is transmitted over the 12 internet? 13 8301 MR. ROBERTSON: No, we are not. 14 There is no collective licensing of any recorded music 15 or any video that features recorded music on the 16 internet currently at all. 17 8302 So any sound recordings by our 18 members that are posted, and there are many thousands, 19 is all illegal. 20 8303 COMMISSIONER WILSON: Is anybody 21 receiving any royalty payments that you are aware of -- 22 8304 MR. ROBERTSON: No. 23 8305 COMMISSIONER WILSON: -- from audio 24 streaming? 25 8306 MR. ROBERTSON: No. StenoTran 1917 1 8307 COMMISSIONER WILSON: Okay. On 2 page 3 of your submission you stated that: 3 "Although the Commission has in 4 the past disavowed any 5 jurisdiction in respect of 6 copyright, CRIA wishes to remind 7 the Commission that the sole 8 legal basis on which the 9 recording industry relies to 10 protect its sound recordings, 11 which are its most important 12 commercial assets, are the legal 13 rights it is entitled to under 14 copyright law." (As read) 15 8308 Now, I'm curious about this 16 statement, just maybe because of the phraseology, 17 because the first part of the sentence says: 18 "Although the Commission has in 19 the past disavowed any 20 jurisdiction ..." 21 8309 It sounds like you are going to say 22 maybe there was a spot for you, and then you turn 23 around and say: Although you have disavowed any 24 jurisdiction. You are right, you have no jurisdiction. 25 8310 So I am just trying to get at what StenoTran 1918 1 you mean by that statement. 2 8311 MR. THOMPSON: Well, it has always 3 been our position, I think, that the Commission should 4 take into consideration matters of copyright, 5 specifically because, for lack of a better word, the 6 content or the substance of most broadcasting, and now 7 transmissions by a new media. Well, by new media, 8 whatever that, whatever you want to call it. 9 8312 COMMISSIONER WILSON: What do you 10 mean by "take into consideration"? 11 8313 MR. ROBERTSON: Well, the fact 12 that -- 13 8314 COMMISSIONER WILSON: In some way 14 other than the way that the copyright law now 15 functions? 16 8315 MR. THOMPSON: Well, the fact that 17 the content or the substance of those transmissions is 18 protected by a law, and if there is no observance of 19 that protection the Commission should take that into 20 consideration in making its determinations with respect 21 to licensing and policy concerning transmissions and 22 broadcasting, essentially the matters of which it has 23 jurisdiction. 24 8316 COMMISSIONER WILSON: Okay. I think 25 I understand what you mean by that. StenoTran 1919 1 8317 MR. THOMPSON: If you want a 2 historical reference, we were last here during the pay 3 audio hearings. These are the ones that dealt with 4 digital transmissions over cable. 5 8318 COMMISSIONER WILSON: Right. 6 8319 MR. THOMPSON: And we raised the 7 issue then, which was prior to Bill C-32, that there 8 were no broadcasting rights and that in effect pay 9 audio was going to displace sales of sound recordings 10 to a certain extent. 11 8320 Now, while that never transpired, 12 because there just doesn't seem to be a market for pay 13 audio, it was nonetheless the position that we took. 14 And we were somewhat -- well, I guess historically we 15 were put in -- I won't say we were told by the 16 Commission, but it was gently suggested that copyright 17 was not an issue with respect to those hearings. 18 8321 COMMISSIONER WILSON: Okay. On 19 page 9 of your written submission you talk about the 20 notion of the transactional services, which is the 21 downloading of sound recordings from the internet, and 22 you equate this to the distribution and sale of a 23 physical product. 24 8322 When people are downloading -- and 25 maybe you have already this question. But when StenoTran 1920 1 consumers or end users are downloading sound recordings 2 from the internet, are they paying for those? 3 8323 MR. ROBERTSON: Mostly not. As I 4 said earlier, there were no sound recordings owned by 5 our members that are legally -- 6 8324 COMMISSIONER WILSON: Available. 7 8325 MR. ROBERTSON: -- available, with 8 the exception of some samples that may be there on 9 various legal web sites. 10 8326 But from a commercial point of view, 11 there is nothing there that is legally -- that can be 12 legally downloaded. There are a number of independent 13 recordings by independent producers that are posted 14 there, mostly for marketing and promotional purposes, 15 that are downloaded mostly without charge, without any 16 cost at all. 17 8327 But our members have been extremely 18 cautious about, as I said, what we view as a total 19 lawless society with almost no regulation or ability to 20 control it. Extremely cautious about legally putting 21 any of their product there. All of the recordings that 22 are there now, with the exception of the independents, 23 are all illegally posted. 24 8328 I can tell you that our Association 25 is sending out an average of about 20 cease and desist StenoTran 1921 1 letters a week to illegal web sites in Canada alone 2 that are illegally posting commercial sound recordings. 3 8329 So it is a major problem worldwide, 4 but just as important here. The proliferation of 5 illegal web sites in the world, the two largest areas, 6 one is the United States and one is Canada. 7 8330 COMMISSIONER WILSON: The reason I'm 8 asking about whether or not your members are receiving 9 royalties or whether or not the consumers or end users 10 are paying for these sound recordings as they download 11 them on a transactional basis is to try to understand 12 whether or not there is any sort of consumer behaviour 13 or market behaviour that underlies your sort of 14 theoretical approach based on the WIPO treaties. That, 15 you know, there are these two rights, one of making 16 available and one of communication, and that your 17 members works fall under the first right, the right of 18 making available. But in fact there is -- I mean, no 19 one is paying for any of this, so none of those rights 20 are being observed. 21 8331 MR. ROBERTSON: No, not at all. 22 8332 COMMISSIONER WILSON: In the context 23 of the internet. 24 8333 MR. ROBERTSON: The importance of the 25 WIPO treaties is to legally -- is to put a legal StenoTran 1922 1 framework in place that would allow the industry to 2 develop a watermarking system whereby sound recordings 3 have a digitally encoded message which identifies the 4 recordings and also, to some degree hopefully, has an 5 anti-copying device. 6 8334 So I think that will follow the 7 ratification of these WIPO treaties, that in fact all 8 current and future recordings will have watermarks in 9 them so that the copyright owners would be identified. 10 The whole ownership will be there, plus there will be, 11 in some form, an anti-copying device which will help 12 protect the wide-spreading copying that is going on 13 now, which is out of control virtually. 14 8335 MR. THOMPSON: The treaties 15 themselves, as Brian has said, are just a framework, 16 legal principles on which we can hang our own domestic 17 law. 18 8336 As David Basskin pointed out this 19 morning, there were two matters which he raised that 20 the treaties address and which are necessary for 21 copyright owners to comfortably do business on the 22 internet and, as Brian said, one of them is an 23 encryption type. That falls under provisions in these 24 treaties that discuss legal principles around copyright 25 management. StenoTran 1923 1 8337 The other aspect is the anti- 2 circumvention that David Basskin spoke of this morning, 3 and that is essentially providing some kind of legal 4 framework and enforcement of devices that keep people 5 from making copies, or keep them from stepping outside 6 of the electronic -- legitimate, legal, lawful 7 electronic stream of commerce, which is likely going to 8 develop quite quickly as soon as there is a legal 9 framework so that we can all feel comfortable, we can 10 work within in. 11 8338 It's like everything else. You can't 12 sell your house without working within the legal 13 framework of land titles and land transfers. It's not 14 much different really in terms of copyright. We want 15 to be able to sell our products and to market them in a 16 vast new and promising media, but we can't do it unless 17 there is some assurance and some comfort that we can 18 conduct business on somewhat of a level playing field. 19 As Brian says, right now it is lawless. 20 8339 COMMISSIONER WILSON: And you need 21 those laws? 22 8340 MR. THOMPSON: Definitely we need to 23 address those issues, and we definitely need those laws 24 in place. 25 8341 COMMISSIONER WILSON: But you don't StenoTran 1924 1 need any regulation by the CRTC. 2 8342 MR. THOMPSON: We didn't say that 3 exactly. 4 8343 MR. ROBERTSON: No, I think we are 5 talking -- 6 8344 COMMISSIONER WILSON: Because I 7 think -- well, there are two spots. One page 4 you 8 say: 9 "CRIA wishes to impress upon the 10 Commission that any perceived 11 regulation of new media in which 12 sound recordings are embodied 13 and which would impact on the 14 exercise of these rights and 15 copyright will in turn impact 16 the development of the recording 17 industry." (As read) 18 8345 And then on page 12 you say: 19 "It is therefore important that 20 the Commission recognize that 21 the Canadian sound recording 22 industry's participation as a 23 supplier of content in the 24 future new media is dependent 25 upon the CRTC's role in respect StenoTran 1925 1 of any possible regulatory 2 measures for new media." 3 (As read) 4 8346 MR. ROBERTSON: I guess to some 5 degree -- on our oral presentation we identified the 6 four areas that are important. One is the legitimate 7 extension of broadcasting -- which is on page 2, I 8 think, of the oral presentation -- the legitimate 9 extension of broadcasting. Second, the dedicated 10 programming for the new media. And then we get into 11 electronic commerce, which is the commercial 12 transactions. 13 8347 These are the areas that we don't 14 believe, obviously, the Commission should be involved 15 in because they will essentially, in the future, be 16 replacing the -- or not replacing, but supplementing 17 the existing retail environment that we have. 18 8348 COMMISSIONER WILSON: What do you 19 consider a legitimate extension of broadcasting? 20 8349 MR. THOMPSON: Well, for example, the 21 digital audio broadcasts, which are essentially -- this 22 is a concrete example -- are poised to be commercially 23 exploited. I'm sure you have heard from the Canadian 24 Association of Broadcasters about digital audio 25 broadcasting. It is essentially going to replace AM StenoTran 1926 1 and FM radio and provide better quality signal. That 2 would be an extension of traditional broadcasting. 3 8350 Webcasting, as Brian mentioned in his 4 comments, which is essentially radio programming 5 dedicated for the internet, may be an extension of 6 broadcasting in that it is transmitted using a 7 streaming technology which notionally has no ability to 8 be downloaded. 9 8351 Secondly, it is programming that has 10 been developed by the person who is sending it out. It 11 is being pushed out from a webcaster. 12 8352 In other words, in contrast, an 13 interactive site which allows you to connect to a 14 database provided by somebody so that you can choose 15 individual sound recordings that you want to listen to 16 at a place and time that you want to listen to them is 17 probably not an extension of broadcasting in that it is 18 more -- it is very similar to you going to the shelf in 19 your house and choosing CDs that you are going to put 20 on your CD player or, even further, you going down to 21 the rental movie shop and picking movies that you want 22 to watch. 23 8353 It is a little more sophisticated 24 than that. In fact, you could take it further and say 25 this is just like going to HMV and picking a record off StenoTran 1927 1 the shelf and paying for it, except I'm not getting 2 that little piece of plastic and the fancy paper that 3 goes with it. That is maybe the downside. 4 8354 COMMISSIONER WILSON: And also they 5 don't have records any more. 6 8355 MR. THOMPSON: The upside could be 7 that you would have much -- 8 8356 COMMISSIONER WILSON: It will be all 9 cassettes and CDs. 10 8357 MR. THOMPSON: You would have a much 11 larger choice electronically. 12 8358 COMMISSIONER WILSON: Yes. 13 8359 MR. THOMPSON: And of course the 14 recording industry would certainly like to service that 15 market but, once again, they have to feel comfortable 16 that they can do business in an electronic world. 17 8360 COMMISSIONER WILSON: The previous 18 intervenors had a comment in their oral remarks, they 19 said that CIRPA feels that the Commission, as far as it 20 is able, should ensure that rights payments are easily 21 collected by owners. So in terms of the whole issue of 22 copyright, they see a role for the Commission. How do 23 you react to that? 24 8361 MR. THOMPSON: Well, once again, I 25 think David Basskin is actually the person who StenoTran 1928 1 mentioned it, and he said: Should there be a place for 2 the Commission to essentially censure those who have 3 licences to broadcast if they don't pay copyright, if 4 they don't pay for the use of the rights, if they don't 5 observe that there is a legal obligation for clearance. 6 I think that was his point. Of course, we would 7 obviously endorse that. 8 8362 Whether or not you feel that is 9 within your jurisdiction, it probably goes back to that 10 earlier question about whether or not -- which you 11 asked, whether or not copyright is a consideration for 12 the Commission to make. 13 8363 I think that was the context it was 14 made. 15 8364 COMMISSIONER WILSON: Okay. Thank 16 you. 17 8365 Those are my questions, Mr. Chair. 18 8366 THE CHAIRPERSON: Thank you, 19 Commissioner Wilson. 20 8367 I'm sorry. I should be used to this 21 by now. 22 8368 Thank you, Commissioner Wilson. 23 8369 Just a quick question. You 24 mentioned, Mr. Robertson, in answer to one of the 25 questions, that electronic -- you referenced StenoTran 1929 1 broadcasting over the internet and then drew the 2 distinction between that and electronic commerce. I 3 believe you said electronic commerce, which obviously 4 the Commission should be involved in. If that is what 5 you said. 6 8370 MR. ROBERTSON: Should not be 7 involved in. 8 8371 We were trying to make the separation 9 between broadcasting and electronic commerce, which is 10 the commercial transaction of sound recording. 11 8372 THE CHAIRPERSON: Which you meant 12 should not be involved in. 13 8373 MR. ROBERTSON: Yes. 14 8374 THE CHAIRPERSON: Okay. I'm sorry, I 15 misunderstood. 16 8375 MR. ROBERTSON: Yes. Yes. 17 8376 THE CHAIRPERSON: This is why I 18 wanted to clarify it with you. 19 8377 Did you have a comment on the issue I 20 raised this morning with Mr. -- 21 8378 MR. ROBERTSON: Oh, yes, I can. Sure. 22 8379 THE CHAIRPERSON: I thought you 23 might. 24 8380 MR. ROBERTSON: To reiterate, I think 25 it was the comment by CHUM that they could not obtain StenoTran 1930 1 the licensing for the music video for Alanis Morissette 2 in Canada, while in the United States allegedly they 3 could. 4 8381 I can tell you quite clearly, because 5 both Ken and I are involved on the international 6 committees that deal with internet licensing, there is 7 no collective licensing at all being done on music 8 videos internationally, and so, therefore, when Alanis 9 Morissette was here about three or four weeks ago and 10 CHUM were doing a live and interactive program for 11 MuchMusic and some of their other stations, they could 12 not obviously get the use -- to use music videos on 13 their web site. 14 8382 He mentioned the States. I don't 15 know quite exactly what the position is there, but as 16 David Basskin said, there was no -- CHUM made no 17 mention of monetary consideration here, of actually 18 paying license fees for the use of this product. 19 8383 Now, it's possible that in the States 20 there was some monetary consideration by MTV given to, 21 not necessarily the record company but maybe Alanis 22 Morissette's management or her directly that allowed 23 them, on some restricted basis, to use the video. It 24 is possible. 25 8384 I don't even know whether in fact it StenoTran 1931 1 was used in full. I know there has been some uses 2 granted of only 30 seconds, of just samples, and it is 3 to my knowledge that the full length videos have not 4 been licensed at all, other than the possible exception 5 of that limited use that may have been done for MTV, if 6 it happened. 7 8385 I mean, it is just alleged. Whether 8 it happened -- I don't know whether it happened or not, 9 but I certainly know that in Canada the position is 10 that there is no licensing of any music video product 11 at all being done on the internet. 12 8386 THE CHAIRPERSON: And it is your 13 understanding it would be the same situation in the 14 States, or you guess it would be the same? 15 8387 MR. ROBERTSON: Well, we certainly 16 know it is a policy worldwide, because Ken and I sit on 17 the committees worldwide, and there is -- I mean, (a) 18 there was the licensing to start with; (b), the second, 19 is the whole monetary consideration. 20 8388 Perhaps there was a negotiation about 21 compensation and it was never resolved. We don't know. 22 Maybe it was resolved directly in the States with MTV 23 possibly. But, as I say, collectively there is no 24 collective licensing at all happening. 25 8389 THE CHAIRPERSON: Okay. All right. StenoTran 1932 1 8390 Thank you for that clarification. 2 8391 MR. ROBERTSON: Not at all. 3 8392 THE CHAIRPERSON: Thank you for your 4 presence here today. 5 8393 MR. ROBERTSON: Good. Thank you. 6 8394 THE CHAIRPERSON: Madam Secretary. 7 8395 MS BÉNARD: Thank you, Mr. Chairman. 8 8396 The next presentation will be by the 9 Alliance of Canadian Cinema, Television and Radio 10 Artists. 11 PRESENTATION / PRÉSENTATION 12 8397 MR. BISHOPRIC: Thank you, 13 Mr. Colville and Commissioners. 14 8398 My name is Thor Bishopric. I am Vice 15 President of the ACTRA's Performers Guild, and Chair of 16 ACTRA's New Technologies Committee. With me today is 17 Garry Neil, ACTRA's Policy Advisor. 18 8399 I am a Canadian actor based in 19 Montreal. I work in all areas of ACTRA's jurisdiction, 20 including new media. My voice can be heard on several 21 CD-ROMs and on internet worldwide web sites, usually 22 associated with some of the excellent children's 23 television programs we produce in Canada. 24 8400 Among my 11,000 ACTRA colleagues 25 there are many who work in productions available via StenoTran 1933 1 the new digital technologies or created specifically 2 for new media formats. Traditional recorded media 3 producers now regularly use the internet to promote 4 their material. Some are beginning to add value to 5 their programs, making them interactive and seeking 6 distribution as CD-ROMs or through high speed networks. 7 8401 The CBC is now producing material 8 specifically for their internet site, and ACTA members 9 across the country are called upon to perform directly 10 in the productions of the emerging new media 11 developers. 12 8402 All of the categories which ACTRA 13 represents, from actors, singers and dancers, through 14 hosts and announcers, to stunt performers and 15 co-ordinators, have been called upon to work in the new 16 media. So ACTRA has a vital stake in these hearings, 17 which are convened at a critical time. We are pleased 18 to be with you today to review our concerns. 19 8403 ACTRA members and other creative 20 artists are anxious to continue to work in the new 21 media. It is another outlet for our creativity and a 22 source of additional remuneration, both for the 23 opportunities for existing product made possible by the 24 new distribution technologies, and for the original 25 work we perform. But here is where we confront the StenoTran 1934 1 first challenge of new media for Canadian performers. 2 8404 New media producers are sometimes 3 unaware of the role which professional associations and 4 guilds, such as ACTRA, play in the production process. 5 As a result, the products created by some of these 6 developers fail to achieve the high quality found in 7 Canada's television, film, radio and sound recording 8 sectors. 9 8405 For ACTRA and colleague 10 organizations, there is, first of all, the challenge of 11 ensuring that our jurisdiction and collective 12 agreements are respected. 13 8406 The process of digitization, which is 14 at the heart of new media, reduces all components of 15 the production to the same 1's and 0's. This raises 16 the possibility of unauthorized copying or manipulation 17 of the recorded performance, and its use in ways not 18 intended by the producers, where artists are not 19 compensated. 20 8407 In order both to ensure that 21 producers and developers can have access to the wealth 22 of talent this country has to offer, and to ensure that 23 artists are properly compensated when their work is 24 made available, ACTRA has proposed the creation of a 25 joint public/private sector agency. The agency would StenoTran 1935 1 be a clearinghouse for the rights needed to produce new 2 media material and a monitoring agency to ensure that 3 the necessary rights payments are made to performers 4 and other creators whose material is involved. ACTRA 5 believes the CRTC should join with us in urging the 6 creation of such an agency. 7 8408 The other fundamental part of 8 ensuring that performers are not exploited in the new 9 media is to amend Canada's Copyright Act to expand the 10 very narrow performers rights which currently exist and 11 provide a comprehensive right in audiovisual 12 performances to be owned by the performer. ACTRA hopes 13 the CRTC will comment on the need for such a change in 14 its report. 15 8409 But ACTRA is concerned about new 16 media from more than just a narrow self-interest. Our 17 members believe that for cultural reasons Canadians 18 must have access to high quality Canadian choices in 19 every field, including information, entertainment and 20 news programming delivered to them in every conceivable 21 format. To achieve this fundamental and legitimate 22 public policy objective requires the institution of 23 appropriate regulations and policies. The history of 24 Canada's broadcasting system surely demonstrates this 25 need. StenoTran 1936 1 8410 In ACTRA's view: 2 8411 When an audiovisual program is 3 distributed to members of the public, either at a set 4 time or at a time individually chosen by them, there 5 exists a broadcast which can and should be regulated by 6 the Commission; and 7 8412 When a private audio communication is 8 transmitted among a defined, controlled and limited 9 audience, the carrier of that communication can and 10 should be regulated under the Telecommunications Act. 11 8413 So you can count ACTRA squarely among 12 those appearing before you who favour the regulation of 13 new media distribution services, including internet 14 service providers -- ISPs. 15 8414 ACTRA recognizes that the nature of 16 the regulation to be imposed will and should be 17 different. We know for example that ISPs also transmit 18 alphanumeric text which is excluded from the 19 definitions of the Broadcasting Act. We also know that 20 it is impossible to regulate Canadian content within 21 the system in the same way that the CRTC has done for 22 broadcasting services. 23 8415 But we favour the adoption of 24 regulations which, at a minimum, require that 25 distributors contribute to the creation of a StenoTran 1937 1 development fund to be made available to producers of 2 Canadian digital media content. 3 8416 ACTRA also believes it is critical to 4 begin an examination of the next generation of 5 navigation systems which will be used to help consumers 6 select material from among the almost limitless 7 selections offered to them. Surely it is not too much 8 to ask that in the design and implementation of such 9 systems a priority place be provided to Canadian 10 choices, not in a "Canadian" ghetto, but as one of many 11 in whatever category is being searched. ACTRA would 12 welcome a targeted discussion of this issue among 13 content providers, distributors of digital material 14 through the internet and other high speed networks, and 15 the developers of the hardware and software which make 16 such distribution possible. 17 8417 These are indeed exciting times in 18 our industries. As technology continues to develop, 19 there will be a greater and greater demand for digital 20 creative content of all kinds. Canada is well- 21 positioned to help provide this content and thus ensure 22 there is diversity in the system, not only for 23 Canadians but for audiences around the world. 24 8418 The members of ACTRA are prepared to 25 do our part in achieving the objectives, and we believe StenoTran 1938 1 our producers are prepared as well. We are here 2 looking to you to develop and implement the necessary 3 policies and regulations which will create the 4 environment in which such activity can flourish. 5 8419 Thank you. 6 8420 THE CHAIRPERSON: Thank you, 7 Mr. Bishopric. 8 8421 I will turn the questioning to 9 Commissioner Pennefather. 10 8422 COMMISSIONER PENNEFATHER: Good 11 afternoon. Thank you for joining us and contributing 12 to our discussions. 13 8423 I would like to expand on just a few 14 points. 15 1450 16 8424 I won't have too many questions 17 because I think your written presentation today does 18 take us straight through some of the main components of 19 your written presentation very well. 20 8425 The first piece that I would like 21 talk to you about, get some elaboration on, is what 22 this new media is for you and your members. What are 23 we talking about? 24 8426 I grant that you have described some 25 of the activities, CD-ROM, Web site, voice over, StenoTran 1939 1 various other productions that you may be involved in. 2 In your paper you described three basic areas: the 3 enhancement of existing media, new composition and 4 others. 5 8427 Could you just elaborate a little 6 more on what we are talking about when we are talking 7 about new media content? 8 8428 MR. NEIL: Thank you very much. 9 8429 In a way, Thor and I were discussing 10 this at lunch time in hearing some of the other 11 intervenors. 12 8430 We might be getting hung up a little 13 too much on trying to define new media. A personal 14 observation, I don't think it's that difficult in fact 15 to define it if you truly want to do it because the key 16 element that draws it all together is at some point you 17 need a computer to transmit to retranslate for you the 18 ones and zeros back into a form that you can 19 comprehend. 20 8431 The key is that a computer must be 21 processing the information at some point, whether we 22 are talking as earlier today about a refrigerator that 23 is smart and can order the stuff from the stores for 24 you or whether we are talking about high definition 25 television. The key is the existence of that computer StenoTran 1940 1 which processes the information. 2 8432 The critical issue surely for the 3 Commission, indeed as it is for ACTRA, is what is the 4 content? What is the cultural objective as it relates 5 to that content and how can we ensure that the cultural 6 objectives are met, regardless of the form in which the 7 production is finally being put together or the 8 distribution technology being utilized to transmit it 9 from point "A" to the end consumer, whoever that might 10 be. 11 8433 It seems to me that we can get hung 12 up perhaps a little bit too much on trying to define 13 new media when rather what we should be looking at is 14 what is the content that is being produced, being 15 created or being distributed to us and which of that 16 content should be falling within existing and 17 appropriate regulatory mechanisms or new regulatory 18 mechanisms and which is clearly outside of that. 19 8434 COMMISSIONER PENNEFATHER: I think 20 that basically was my point. You have labelled this 21 new media as digital production, but it is digital 22 production of a program about something. We are 23 basically saying the same. 24 8435 I was wanting you to expand on what 25 this content is. It's not so much from a definition StenoTran 1941 1 point of view but really to get a better understanding 2 of why you see this as you call it a new form of 3 expression for artists, new outlets for artists. 4 8436 I was just interested in having a 5 little more than legal definitions. 6 8437 MR. NEIL: It's a new method for 7 telling stories presumably. I again personally believe 8 that is one of the steps we have not yet taken, to move 9 beyond a traditional linear story telling approach with 10 a beginning, a middle and some kind of resolution at 11 the end to truly take advantage of the new technology 12 and all the opportunities that it would provide to us. 13 8438 It seems to me that all we have done 14 to this point is to tell stories in a slightly 15 different way and perhaps add a few different paths to 16 get to the same conclusion or perhaps to have two 17 different conclusions from which you can choose. 18 We view that as interactive. 19 8439 The real exciting opportunity, it 20 seems to me, for creative artists is to begin to look 21 at story telling in a totally different way. In the 22 final analysis, much of what we are concerned about is 23 the telling of the stories. 24 8440 COMMISSIONER PENNEFATHER: Is the 25 interactive component also a fundamental element of StenoTran 1942 1 what we are talking about as a new creative? 2 8441 MR. NEIL: Yes. 3 8442 COMMISSIONER PENNEFATHER: So you are 4 close to the definition, excuse the word, that Sheridan 5 College discussed with us this morning. 6 8443 On the delivery side then, is it also 7 a digitally distributed product that we are talking 8 about? 9 8444 MR. NEIL: Yes. 10 8445 COMMISSIONER PENNEFATHER: Does that 11 always involve the Internet? 12 8446 MR. NEIL: No. 13 8447 COMMISSIONER PENNEFATHER: What other 14 forms of distribution, digital distribution, would we 15 include in our discussion? 16 8448 MR. NEIL: Well, the Internet is only 17 one way that computer networks themselves are organized 18 collectively. Right? There can be other ways that you 19 could foresee computer networks being joined together, 20 even if you are just looking at that part of the world. 21 8449 It's not just the Internet. For 22 example, it is any forms of computer networks that have 23 some kind of public access, an open access to them. 24 8450 We are now getting into digital 25 television technologies which will allow for an StenoTran 1943 1 interactivity. Digital cable distribution which will 2 allow for an interactivity. That indeed is where 3 interactivity is key. 4 8451 Any form of communication 5 distribution that will allow for that interactivity, 6 allow the consumer to go back through the same system 7 to, for example, order up a specific program or choose 8 to select a certain text or whatever. 9 8452 COMMISSIONER PENNEFATHER: With that 10 in mind, on page 10 of your submission, your written 11 submission, you call for a public commitment. So that 12 we are clear on what's driving you towards your 13 conclusions regarding not only what we have got when we 14 are talking about new media, what opportunities we 15 have, but what challenges we have and the future of 16 regulation amongst other points. 17 8453 What is this public commitment you 18 are referring to and what are the components of that 19 public commitment? 20 8454 MR. NEIL: Where are you specifically 21 in our brief? 22 8455 COMMISSIONER PENNEFATHER: Page 10 of 23 your written submission -- I'm sorry, page 3, paragraph 24 10. 25 8456 MR. NEIL: I think we are talking StenoTran 1944 1 here about something that is more narrow, but the 2 public commitment in general obviously is a whole set 3 of policies and programs and regulations and so forth. 4 8457 We refer within our own brief to 5 things like the Copyright Act. We need to have some 6 changes and amendments to the Copyright Act, as SERPO 7 was referring to as well. We need to have many more of 8 those to really allow for the necessary right payments 9 to be made to the rightsholders. We need to have 10 various policies of other kinds. 11 8458 Here we are talking much more 12 specifically about how are we going to fund high 13 quality Canadian alternatives in the new media formats. 14 There are already some public commitments. 15 8459 A couple of provinces, both Quebec 16 and Ontario, have tax credits for production of digital 17 media content. I would hope that the federal 18 government would look at establishing similar kinds of 19 tax credits using perhaps as a model the Film and 20 Television Tax Credits it already has implemented. 21 8460 There may be opportunities for public 22 support for public and private sector agencies that 23 would be involved in helping to develop product for the 24 new technologies, so Internet service providers in our 25 view should be making financial contributions to such a StenoTran 1945 1 fund and they could perhaps be matched. 2 8461 There's a whole range of commitments 3 that I think would be useful in this area. 4 8462 COMMISSIONER PENNEFATHER: I think 5 the suggestion has been made that broadcasters as well 6 could apply some of their Canadian programming 7 expenditure commitment to new media. Do you have a 8 position on that? 9 8463 MR. NEIL: It would depend in part on 10 the context in which that kind of regulation would be 11 promulgated. If it is within the existing regulatory 12 framework that requires that they spend a certain 13 amount of money on Canadian material and program, a 14 certain number of hours of Canadian content in their 15 system, if it's within the existing regulatory 16 requirement it would be quite different or may be a 17 different response than if it were in a perhaps revised 18 and increased requirement for broadcasters to make a 19 contribution. 20 8464 Clearly, if there were additional 21 requirements on broadcasters that resulted from your 22 earlier television hearings, then it might be easier to 23 say that broadcasters can move into this area as well 24 and allocate certain of their expenses in these fields 25 against their Canadian content obligations. StenoTran 1946 1 8465 On the other side, as we look to the 2 future, clearly broadcasters will be more and more 3 involved in new media developments, whether it's a 4 repositioning of their own material that they may have 5 an interest in or in fact production of new materials. 6 8466 In the long term, the answer to your 7 question is yes, obviously they will be players -- I 8 hope they are going to be players in the game and to 9 the extent that they are, then spending that they make 10 on Canadian content material should count. 11 8467 I hope that is enough of an answer, 12 that I am not waffling too much. In the long term, 13 they will hopefully be players in the game and, 14 therefore, expenditures would count. 15 8468 COMMISSIONER PENNEFATHER: Let's jump 16 then to your thoughts on new media itself and 17 regulation. As Commissioner Grauer said earlier to 18 another intervenor, you are one of the few I think who 19 has come to us and said holus-bolus we should apply the 20 maximum of our powers under both acts to this whole 21 area, to the new media environment in general. 22 8469 Could you clarify why you are taking 23 this position? I think even today you have heard other 24 intervenors not so ready to apply regulation to this 25 environment or at a minimum to separate out new media StenoTran 1947 1 services. 2 8470 Could you tell us what the basis is 3 for your opinion in this regard. Why do you feel we 4 should include new media under the Broadcasting and 5 Telecommunications Act? 6 8471 MR. NEIL: I have been quite 7 surprised at the reluctance of other parties to come 8 before you and say that you should be applying your 9 regulatory powers. 10 8472 It seems to me that where you have to 11 start is an assumption that you can and ought to and 12 have a responsibility to regulate where the content 13 being delivered is analogous to the content that is 14 being delivered by the broadcasting system. 15 8473 If there have to be exemptions, 16 exclusions and changes to that, so be it. Let's talk 17 about what those are. I believe quite firmly and I 18 think ACTRA takes the position very firmly that you 19 have an opportunity here and that if you don't seize 20 the opportunity now and begin with an assumption that 21 you will be regulating in important ways that you will 22 not again have that same opportunity. 23 8474 If the system continues to develop in 24 the way that it is, if the Internet continues to 25 develop in the way that it is, totally unregulated, StenoTran 1948 1 then as time passes it will be more and more difficult 2 for you to have any influence at all in developments. 3 8475 I think you have a critical 4 opportunity right now. You should seize it. You 5 should establish the necessary regulatory framework. 6 Then if there are people who make the argument that you 7 have gone beyond your jurisdiction, so be it, let's 8 have that fight at this point rather than ten years 9 from now when it will be too late. 10 8476 COMMISSIONER PENNEFATHER: Could you 11 go a little more into that specifically. We have a 12 number of opinions that say applying regulations as 13 they have been applied to the broadcasting environment 14 is not possible, semi-possible for some intervenors. 15 8477 Sheridan College noted to us this 16 morning that new media is without borders or boundaries 17 and the next evolutionary step where neither limits nor 18 control can be defined, much less enforced. 19 8478 Others have been very clear that the 20 global nature of the new media renders regulation, if 21 not impossible, not effective for the purposes that you 22 have mentioned, that the sheer number of Web sites 23 renders this impossible. 24 8479 I think there's another component 25 that is very interesting in that. Who exactly are we StenoTran 1949 1 regulating if in fact the Internet is an instrument of 2 communication by individual citizens across this 3 country? 4 8480 How do you see, practically speaking, 5 where is the basis for regulation? How do we deal with 6 those various opinions that paint a very different 7 environment in which regulation may or may not work, 8 but also may not work to the benefit of those who are 9 developing Internet and using it? 10 8481 MR. NEIL: There's a number of 11 components to your question. First of all, I think the 12 point of contact at the moment gives you every right to 13 have some involvement in the process. The point of 14 contact for most people with the Internet is a 15 telephone wire. It comes into the home. It may be the 16 cable wire that comes into the home in the very near 17 future. 18 8482 That provides a point at which I 19 think the Commission can quite properly have some 20 degree of involvement. 21 8483 Who you would be regulating. It 22 seems to me in the first instance the Internet service 23 providers would be subject to some degree of regulation 24 when the nature of what they are distributing to us 25 equivalent to broadcasting under the Broadcasting Act. StenoTran 1950 1 8484 I think that's where your powers over 2 at least a part of what the Internet service providers 3 would flow. 4 8485 I don't accept the argument that to 5 apply regulation at this time in Canada would in any 6 way inhibit our ability to grow and develop and 7 continue aggressively to create and distribute new 8 media materials. 9 8486 I don't accept that argument. It's 10 the same argument that is heard in the broadcasting 11 system every time the CRTC considers a whole new range 12 of regulatory approaches. I rejected those arguments 13 then when I was working for ACTRA before. I reject 14 those arguments now. 15 8487 I think it just becomes another 16 element in the system that people have to deal with and 17 they will deal with. I think you will continue to have 18 creative people producing very creative content in 19 Canada, even if you have a regulatory system that is in 20 place. 21 8488 COMMISSIONER PENNEFATHER: One of the 22 things you just mentioned is the whole dial-up 23 component here. You have put a focus on the ISP as the 24 provider of access to that content. 25 8489 What do you say to those who say StenoTran 1951 1 well, if you go ahead with regulation on one basis or 2 another, not only would you put a real damper on 3 development of the industry, but they will simply 4 relocate because of the nature of the technology that 5 we are talking about, that basically any such 6 regulation will drive the Canadian industry out of the 7 country? 8 8490 MR. NEIL: I don't accept that 9 argument. I think if you suggest that the Internet 10 service providers ought to be allocating a certain 11 amount of revenues which they generate from the process 12 of distributing what are essentially broadcast programs 13 to the households that that is going to drive Internet 14 service providers away. 15 8491 There would be, at least in the short 16 term, the added technical problem for them that one of 17 the keys to Internet access in North America and the 18 reason that we are so far ahead of other parts of the 19 world in the degree of Internet connectivity we have is 20 the fact that we are basing it on a local telephone 21 call which in Canada is not a metered call. It doesn't 22 matter whether you have that access for two minutes or 23 27 minutes. 24 8492 In Europe they don't have such a 25 system. They have a system for local telephone calls StenoTran 1952 1 that you pay by the length of time that you use the 2 connection. What you find is there is much lower 3 penetration of the Internet in markets in Europe. 4 8493 I think that kind of regulation on 5 Internet service providers would only be another one of 6 the elements of any number that they will have to 7 confront in doing business wherever they want to do 8 business. At least in the short term, we have the 9 distinct advantage that -- they would not want a system 10 that would require a long distance telephone call to 11 connect to the Internet because that would be much, 12 much more costly for the individual consumer. 13 8494 There would be a certain advantage to 14 them staying in Canada and providing the services 15 locally. 16 8495 COMMISSIONER PENNEFATHER: You are 17 quite clear then that with an original goal, which I 18 asked you about in the beginning, to ensure Canadian 19 content is available to Canadians, that a form of 20 regulation, the Broadcasting Act, the 21 Telecommunications Act as they now stand are 22 appropriate. 23 8496 You also raised the important point 24 of marketing or knowing what's there and making sure 25 that Canadians have access to the content which our StenoTran 1953 1 performers are providing to us. 2 8497 You describe a notion of a priority 3 place provided to Canadian choices, not in a Canadian 4 ghetto, but as one of many and whatever categories 5 being searched. You talk about a target discussion on 6 this issue. 7 8498 Leading up to that, can you tell me a 8 little bit more about what you mean and how this would 9 be done? Even technically, how would you -- we have 10 heard a lot about this and various ways of going about 11 it. A super Canadian site, a way of attracting 12 attention to just Canadian sites. How would you do 13 this? 14 8499 MR. NEIL: Unfortunately no, I can't, 15 because I am far from an expert in these areas. 16 8500 I will tell you where for me this 17 issue first came up. It is a matter that the CRTC has 18 very direct control over. That's in the last round of 19 licensing of English language specialty services where 20 you had several applications for video-on-demand 21 licences. In fact, you have licensed video-on-demand 22 services -- true video-on-demand services are not yet 23 up and running because we don't have the digital cable 24 technology. 25 8501 It occurred to me that would have StenoTran 1954 1 been precisely the time or an opportunity for the 2 Commission to have insisted on seeing how consumers 3 were going to be presented with their options. 4 8502 I would like to have seen more CRTC 5 questioning at that time of the applicants. You may 6 get an opportunity when they get up and running, when 7 they come back to seek a licence. 8 8503 What I want to see happen is a 9 situation in which if I am a consumer sitting there and 10 I say "Okay, well I now want to watch a movie and I 11 kind of like these kinds of movies" -- well, the 12 computer will already know what kind I like to see. 13 Then it will give me several choices from recent 14 releases. 15 8504 I think the objective is to make sure 16 that as I am navigating my way through to the final 17 choice that at least one of the options, some of the 18 options, that I am being given should be Canadian 19 options, not because in the final analysis I am going 20 to be led to conclude that that is the one I am going 21 to choose. I can't be forced to do that. But they 22 should be there. 23 8505 If I am asking for action films and 24 it's listing ten, surely we should have a system in 25 which two or three of those being listed are Canadian. StenoTran 1955 1 Then I will begin to narrow them down. It will give me 2 five of which one will be Canadian so at least before I 3 make my choice I have Canadian alternatives presented 4 to me. 5 8506 I think there was an opportunity in 6 the vide-on-demand perhaps to have begun this 7 discussion because I don't know if you are looking at 8 the Internet and the Internet search engines. I don't 9 know how we are going to be able to have an influence 10 there beyond perhaps trying to have some sort of 11 incentive system that would provide some practical 12 incentive for someone who would have a navigation 13 system where you would have some kind of priority, out 14 of your 37,000 hits when you get your first screen of 15 25 hits, you know, four or five of them are going to be 16 Canadian choices. 17 8507 I'm not sure how you do it in that 18 environment which is why I think what we need is to 19 have some sort of specific and targeted discussion on 20 that whole question of the navigation system. 21 8508 COMMISSIONER PENNEFATHER: I think I 22 understand what you are saying. There are those who 23 would say that the other point to be raised is that 24 marketing promotion of various Web sites and products 25 is equally important. In fact, because of the nature StenoTran 1956 1 of the web itself, you or I as a user will be able to 2 find all of these sites if they are marketed and have 3 the funds to be marketed so that perhaps the energy 4 should be placed more on funding mechanisms or 5 incentives that support the product itself, the 6 positioning on the Web site. 7 8509 I think people from the Alliance were 8 here yesterday explaining that as well, that there may 9 be a difficulty in putting so much emphasis on the 10 gateway which also assumes that there can be some 11 control of what's going on. 12 8510 MR. NEIL: Yes. I have some 13 speculation I have shared with a number of colleagues 14 in the last few days. 15 8511 I am a regular user of the net and 16 have been for a number of years, primarily for research 17 purposes. I find I don't use the search engines any 18 more because they simply provide me too many junk 19 sites, useless information. It takes me too long. 20 8512 In fact, the way I navigate around 21 now is to assume web addresses because I am working in 22 a certain specified field and I will assume that the 23 organization or that the information that I want will 24 be on somebody's Web site. I just sort of randomly now 25 type in web addresses until I find one that's close and StenoTran 1957 1 then navigate from there. 2 8513 I find the navigation systems 3 absolutely useless. Typing in words and key phrases 4 just gets too many useless sites coming back. 5 8514 I personally think that we will see 6 another generation of navigation systems for the 7 Internet, in a certain sense probably more akin to what 8 broadcasters do. Somebody will add value to them and 9 begin to provide you with a narrower set of choices and 10 filter them in some way for us. Right? I think we 11 could easily see that kind of development. There would 12 be a really good market there for somebody developing 13 such a system. 14 8515 It's probably really in that kind of 15 development that we would see an opportunity to provide 16 some incentives to ensure that there are Canadian sites 17 among the possibilities, but that's purely my own -- 18 8516 COMMISSIONER PENNEFATHER: The last 19 area I wanted to get into was really key. Of course, 20 there was quite a bit of discussion about it today. 21 That is the whole copyright area. 22 8517 Could you explain a little more why 23 you are opposing a public/private agency to look into 24 copyright issues for pre-existing works or current 25 works? What's that going to do? I think Mr. Robertson StenoTran 1958 1 described a pretty difficult situation where there is 2 no collection of royalties right now for material on 3 the Internet. 4 8518 What's this agency going to do to 5 help that? 6 8519 MR. BISHOPRIC: Currently ACTRA is 7 involved with five other organizations. We have 8 established what we call the NRCC, Neighbouring Rights 9 Collective of Canada, which has as its intention the 10 future collection of neighbouring rights, tariffs which 11 will be payable for neighbouring rights which will flow 12 to performers in our case and the other members of the 13 collective. 14 8520 These sorts of tariffs are collected 15 in areas where -- well, the neighbouring rights pick up 16 where our collective agreements let off. Our 17 collective agreements currently mandate that any 18 production which is done in new media may not be 19 exploited until such time as the producer comes and 20 negotiates use in those new media. 21 8521 However, we are sort of pointing to 22 the model of the NRCC and collection under copyright as 23 a potential direction to go in order to ensure that 24 remuneration is made to performers. 25 8522 MR. NEIL: Where we start is the StenoTran 1959 1 collective agreements which do in fact cover a 2 substantial degree of production that is either 3 presently occurring for CD-ROM particularly or some 4 through the net or potentially could cover an awful lot 5 more of that, although the collective agreement 6 language is a little bit in question right now, actors 7 in negotiation with the independent producers. 8 8523 One of the issues on the table is 9 this whole field and how it is to be regulated. 10 8524 What ACTRA also requires clearly is 11 amendments to the Copyright Act to provide additional 12 copyright protection to performers. While other 13 rightsholders like the record producers which in fact 14 now have a pretty fair degree with the implementation 15 of the WPPT that the last intervenor spoke about, they 16 would have a pretty good degree of protection. 17 8525 Performers don't yet have the same 18 degree of protection in law so we need copyright 19 amendments to ensure that we have that protection in 20 law. 21 8526 In the final analysis, it occurs to 22 us that is still not going to be sufficient. We have 23 already had this said to us by new media developers, 24 that it is really difficult for them to do their jobs 25 because they have to go to a whole range of different StenoTran 1960 1 rightsholders to try to get clearance to put together 2 material. 3 8527 It's much more complicated for them 4 than for other producers, even traditional audio/visual 5 producers because they have rights from a whole variety 6 of different fields, including publishing and sound 7 recording and film and television and so on. 8 8528 On the one hand there is that problem 9 of clearance, particularly for new media developers. 10 On the other hand, all of the rightsholders that we 11 know share our problem, which is how do you monitor and 12 how do you enforce your rights when the material is 13 available digitally. 14 8529 That's where our idea comes from that 15 what we really would like to see develop in the end is 16 some kind of agency that would be involved in this 17 field. It could be on the one hand a grouping together 18 of a number of different collectives, copyright 19 collectives that exist, as well as other organizations 20 who may have rights that arise not from copyright but 21 from collective bargaining or contract law. 22 8530 To group us all together so that we 23 could act as both on the one hand as a clearinghouse 24 for new media developers, so they would have easy 25 access to the people they would need to negotiate with StenoTran 1961 1 to acquire the rights for material, that would also 2 open up the possibility on the other side to have joint 3 monitoring of developments. 4 8531 That will probably require 5 technological developments that would allow the 6 encrypting of the ownership information on all of the 7 information that is being distributed. You could have 8 technology itself address the issue of who is using 9 what and who owns the material, the intellectual 10 property on what is being distributed. 11 8532 That's a pretty big undertaking for 12 to get there. It seems to us that the only way you are 13 going to be able to achieve that kind of development 14 would be if government is involved as well to try to 15 bring the parties together, bring all those groups 16 together to kickstart it so you could develop it. 17 8533 COMMISSIONER PENNEFATHER: I have one 18 last question. It is back to you, the performer. 19 8534 Is new media an opportunity for 20 artists in this country? Is it important for the 21 future of performers? 22 8535 MR. BISHOPRIC: Absolutely. I 23 believe it is. I am one of the performers who has been 24 fortunate, and I have been working in this area almost 25 from the very beginning, involved in a variety of StenoTran 1962 1 projects which have found their way into new media, 2 some which have been produced expressly for new media 3 in some sense or another. 4 8536 I also work as a writer. I am a 5 member of the Writers' Guild of Canada. I am involved 6 in developing a variety of projects. This is an area 7 where I see a great deal of opportunity to create 8 material, as Gary has outlined, which is specifically 9 targeted for this area, real content in this area which 10 we have not seen yet. 11 1520 12 8537 Canadian artists I think generally 13 are very well positioned to exploit this new media, 14 this new opportunity, perhaps more so than other 15 artists in other countries just because we have such a 16 well-established system. 17 8538 And it is our belief that some 18 regulation in this area would help the artists of 19 Canada to get a foothold and to tell our stories and to 20 really have a presence on the international worldwide 21 web. 22 8539 COMMISSIONER PENNEFATHER: Just to be 23 clear, do you think it is regulation or do you think it 24 is the incentive programs or the results of frameworks 25 which assure contributions and funding to production StenoTran 1963 1 itself, and to marketing your productions. Isn't that 2 the result that you are looking for? 3 8540 MR. BISHOPRIC: I think it sounds 4 like a combination of all of those. 5 8541 We believe that regulation is a key 6 component, it is something which we believe the CRTC 7 has been very successful with in the past which has led 8 to the promotion and funding of Canadian content in a 9 very meaningful way. And so we are not looking solely 10 to new funding sources. We are looking for a 11 comprehensive package which we believe will see us 12 through in the long term, ensure the development of a 13 real Canadian presence in this area. 14 8542 COMMISSIONER PENNEFATHER: Thank you 15 very much. 16 8543 Thank you. 17 8544 THE CHAIRPERSON: Thank you. 18 8545 I thought Commissioner Pennefather's 19 last question was going to be whether you were worried 20 about the creation of virtual actors. 21 8546 MR. BISHOPRIC: And we are. 22 8547 THE CHAIRPERSON: I think Counsel 23 Moore may have a question or two. 24 8548 MS MOORE: Thank you, Mr. Chairman. 25 8549 Could you please elaborate on what StenoTran 1964 1 type of internet services in your view are analogous to 2 broadcasting? 3 8550 MR. NEIL: I guess those that are 4 providing access to what would be considered to be 5 programming. 6 8551 Now, it is how long is a piece of 7 string, right? Where does it begin and where does it 8 end. 9 8552 You know, certainly there are -- 10 there is certainly a lot of material that is now on the 11 internet which has the look and feel of programming, 12 and looks like a television program. And it is being 13 delivered in a different way, but when you see it on 14 your computer screen with your appropriate speakers it 15 could easily be a television program. Some of it, in 16 fact, in the past, has been. 17 8553 Now, there is not a lot of material 18 like that that is there yet because of the limitations 19 of the connection that one has between one's own 20 computer and these other computers. It still requires 21 an awful lot of storage space to try to, for example, 22 electronically digitally put up a movie. But that 23 really is only a short-term situation. I think you 24 will see more and more that you can have longer formed 25 programs, things that look and feel much more like StenoTran 1965 1 television programs. 2 8554 So how we define those, I'm not sure. 3 I'm not sure. But it is what I think all the other 4 intervenors today have been talking about that, well, 5 this is just the added value to the broadcasting 6 system. 7 8555 MS MOORE: In your view, with those 8 types of services, if there was some degree of 9 interactivity, would you still consider them to be 10 analogous to programming in broadcasting? 11 8556 MR. NEIL: Absolutely. Absolutely, 12 because the interactivity can be as simple as -- I 13 mean, the CBC. This is the CBC's second go-round at 14 involvement on the internet. 15 8557 In fact, about six or seven years ago 16 the CBC has a web site up that was offering excerpts 17 from programs, radio programs. They had quite a number 18 of programs on their web site. They didn't have the 19 rights to most of the programming there, but they had 20 them there. 21 8558 But the interactivity in that case 22 was very simple, it was: Do you want to listen to the 23 one minute and 23 second interview that Arthur Black 24 had with, you know, this particular person or that 25 person, and then you could download it to your own StenoTran 1966 1 computer and then listen to the interview. 2 8559 So that kind of, you know, material 3 is there. The interactivity in that case can be as 4 simple as finding your way through that and then 5 selecting a particular segment of a program or a whole 6 program to download and listen to. 7 8560 MS MOORE: Thank you. 8 8561 Those are my questions, Mr. Chairman. 9 8562 THE CHAIRPERSON: Thank you, Counsel 10 Moore. 11 8563 Thank you very much, gentlemen. We 12 appreciate your participation this afternoon. 13 8564 We will take a short five minute 14 break and reconvene at 3:30 to hear our last presenter, 15 SOCAN. 16 --- Short recess at / Courte suspension à 1525 17 --- Upon resuming at / Reprise à 1535 18 8565 THE CHAIRPERSON: Madam Secretary. 19 8566 MS BÉNARD: Thank you, Mr. Chairman. 20 8567 The next presentation will be by the 21 Society of Composers, Authors and Music Publishers of 22 Canada / la Société canadienne des auteurs, 23 compositeurs et éditeurs de musique. 24 PRÉSENTATION / PRESENTATION 25 8568 M. VALIQUETTE: Monsieur le StenoTran 1967 1 Président, Mesdames et Messieurs les Commissaires, 2 bonjour. 3 8569 Mon nom est Gilles Valiquette. Je 4 suis auteur-compositeur et président de la Socan, la 5 Société canadienne des auteurs, compositeurs et 6 éditeurs de musique. Je suis accompagné aujourd'hui du 7 chef du contentieux de la Socan, Me Paul Spurgeon. Je 8 suis également avec un autre membre de notre société, 9 M. Paul Hoffert, qui est président de la guilde des 10 compositeurs canadiens de musique de films, c'est-à- 11 dire l'Association nationale des compositeurs de 12 musique pour le cinéma et la télévision. 13 8570 La Socan est une association 14 canadienne sans but lucratif qui représente les 15 compositeurs, paroliers, auteurs-compositeurs et 16 éditeurs d'oeuvres musicales au Canada et à l'échelle 17 mondiale. Au nom de ses membres canadiens actifs, qui 18 sont au nombre de plus de 18 000, et en celui des 19 membres de ses sociétés internationales affiliées, la 20 Socan administre les droits d'exécution liés aux 21 paroles et à la musique. 22 8571 Le droit d'exécution est un droit 23 d'auteur qui accorde au propriétaire de l'oeuvre 24 musicale le droit exclusif d'exécuter ou de diffuser 25 son oeuvre, ou d'autoriser ces actes en contrepartie de StenoTran 1968 1 redevances. C'est important de comprendre ici qu'on ne 2 parle pas de la reproduction sur disque mais bien de 3 l'exécution publique d'une oeuvre musicale. On peut 4 dire, en termes pratiques, que le droit d'auteur, dans 5 ce sens, c'est le salaire du créateur. 6 8572 La Socan s'intéresse au plus haut 7 point aux nouveaux médias. Comme vous le savez sans 8 doute, nous avons déjà déposé un projet de tarif 9 Internet à la Commission du droit d'auteur afin de 10 s'assurer que nos membres pourront toucher des 11 redevances lorsque leurs oeuvres musicales feront 12 l'objet d'exécution sur Internet. 13 8573 Étant nous-mêmes des créateurs de 14 contenu canadien, nous sommes extrêmement intéressés 15 par ce qui se passe dans les domaines de la Loi sur la 16 radiodiffusion et des dispositions du CRTC en matière 17 de contenu canadien. De plus, nous sommes fort 18 préoccupés quant à l'impact culturel de ces domaines. 19 8574 Étant donné que les oeuvres musicales 20 de nos membres font l'objet d'utilisations de plus en 21 plus nombreuses sur Internet, nous croyons que votre 22 examen des nouveaux médias a été organisé en temps très 23 opportun et nous vous remercions de nous fournir la 24 présente occasion de vous faire part de nos idées sur 25 cette question importante. StenoTran 1969 1 8575 Nous n'aurons le temps aujourd'hui 2 que de rappeler les points saillants des deux mémoires 3 déjà déposés devant le Conseil. Nous présumons, bien 4 entendu, que vous tiendrez compte de la totalité des 5 recommandations de ces deux mémoires dans le cadre de 6 votre examen. 7 8576 Nous nous contenterons pour le moment 8 de souligner les deux points suivants: Premièrement, 9 Paul Spurgeon abordera la question de savoir si le 10 Conseil devrait réglementer l'Internet. Deuxièmement, 11 Paul Hoffert discutera de la façon dont le Conseil 12 devrait appliquer les exigences relatives à la 13 production et à la présentation de contenu canadien au 14 moment où nous nous préparons à aborder le nouveau 15 millénaire. 16 8577 Permettez-moi, avant de terminer 17 cette introduction, d'établir tout de suite une 18 distinction importante, celle entre média et contenu, 19 afin d'éviter toute confusion possible durant le reste 20 de notre plaidoyer. 21 8578 Quand on parle de média, on veut dire 22 les moyens par lesquels un contenu est communiqué. 23 Nous croyons donc que la présente enquête sur les 24 nouveaux médias doit être focalisée sur les nouveaux 25 moyens par lesquels les oeuvres musicales de nos StenoTran 1970 1 membres et autres contenus sont présentement 2 communiqués, y compris les médias de transmission 3 numérique comme l'Internet et les services intranets 4 tels le modem transmis par câble, l'ADSL et America 5 Online. 6 8579 Au nom de mes confrères créateurs, 7 l'idée primordiale que j'aimerais souligner aujourd'hui 8 est la suivante: Le fait que les médias ont évolué ne 9 veut pas dire que le Conseil doive automatiquement 10 laisser tomber ces dispositions relatives au contenu, 11 qui, elles aussi, ont bien évolué avec le temps. 12 8580 J'aimerais maintenant céder la parole 13 à Me Paul Spurgeon, qui apportera d'autres arguments en 14 faveur de la réglementation des nouveaux médias par le 15 Conseil. 16 8581 MR. SPURGEON: Thank you, Gilles. 17 8582 As you know, new media are already 18 broadcasting music and other content to Canadians, 19 however, many do not consider themselves bound by the 20 Broadcasting Act's requirement that each broadcasting 21 undertaking shall make maximum use of Canadian creative 22 and other resources in the creation and the 23 presentation of programming. 24 8583 SOCAN is concerned that the current 25 lack of regulation of new media is diluting the StenoTran 1971 1 Commission's effectiveness and creating, in effect, two 2 classes of broadcasters, those who are subject to 3 parliament's policies, and those who are not. 4 8584 We believe that when new media 5 communicate our members musical works or other programs 6 to the public they are subject to the Broadcasting Act, 7 and the Commission should apply its licensing 8 requirements and regulations. 9 8585 For example, Rogers Communications is 10 now using its cable to provide internet and intranet 11 access and programming to Canadians through its new 12 service Rogers At Home. At the present time the 13 Commission licenses Rogers Cable, and other cable 14 operators, when they communicate programming to the 15 public, as does SOCAN in respect of the music content 16 they communicate, through our Tariff 17. 17 8586 When Rogers At Home communicates 18 programming there is no reason why it should not also 19 be subject to parliament's laws and regulations. Some 20 however would argue that the Commission has no role 21 regarding the new media because the internet does not 22 respect traditional national boundaries or 23 jurisdictions. SOCAN disagrees. 24 8587 In particular, we do not agree that 25 parliament or the Commission should abdicate its StenoTran 1972 1 responsibilities when confronted by the challenges of 2 new technology. SOCAN for almost 70 years has had 3 experience in meeting technological and jurisdictional 4 challenges because music has always been an 5 international and new high tech enterprise that knows 6 no national boundaries. 7 8588 In response to these challenges SOCAN 8 has worked with performing rights societies around the 9 world to develop a system comprised of several 10 components, including Canadian law, international 11 treaties and a network of arrangements between national 12 and international organizations. 13 8589 When Industry Minister John Manley 14 hosted the recent OECD electronic commerce meeting that 15 was referred to earlier today, he and his colleagues 16 did not conclude that the current lack of regulation 17 meant that it is impossible to tax the internet. 18 Instead they agreed to work together creatively to 19 adapt current policy instruments to new realities. 20 8590 In a similar vein, when confronted 21 with cable and satellite technological developments in 22 the past, this Commission did not conclude that its 23 role was outmoded. Instead, your policies were adapted 24 to ensure they remain relevant to Canadians. 25 8591 The fact that you may not have all StenoTran 1973 1 the answers today does not mean that there are no 2 answers. We therefore urge you to continue to regulate 3 content when it is broadcast to the public, no matter 4 what the means of communication may be. 5 8592 Thank you. 6 8593 We will now conclude with some 7 remarks from Paul Hoffert on the need for new media 8 Canadian content production and exhibition 9 requirements. 10 8594 Thank you. 11 8595 MR. HOFFERT: Thank you, Paul. 12 8596 Mr. Chairman, I would like to respond 13 to some questions the Commission raised in the public 14 notice regarding Canadian content. In particular I 15 would like to focus on the following two questions. 16 8597 First: How do we promote the 17 development and production of Canadian content? 18 8598 And, second: How do we ensure that 19 Canadian content has access to the new media? 20 8599 The Commission currently has several 21 policies that promote the development and production of 22 Canadian content. For example, radio and television 23 broadcasters make financial contributions to the 24 production of Canadian content when they broadcast 25 programming to Canadians over the air or by cable. StenoTran 1974 1 8600 We believe that when new media 2 generate advertising revenues by transmitting programs 3 to Canadians, they too should contribute to Canadian 4 content production funds. These contributions will 5 promote the development of Canadian content, which in 6 turn will attract Canadian audiences, generate revenues 7 and further the development of the new media and other 8 industries. 9 8601 We recognize that it will be 10 necessary to define what is required to be considered 11 Canadian for funding and support purposes. As is the 12 case with the current television production support 13 programs, criteria must be developed that promote 14 Canadian cultural and industrial objectives. These 15 criteria should reflect the fact that the role of music 16 in new media is at least as important as it is in 17 traditional broadcasting. 18 8602 However, it is not sufficient to 19 merely promote the production of Canadian content. And 20 I guess this brings us to my second point, we must also 21 promote the exhibition of Canadian content and ensure 22 it has shelf space that is located where Canadians can 23 access it. 24 8603 SOCAN therefore believes that both 25 the distribution channels and the growing numbers of StenoTran 1975 1 content aggregators must allocate some of their shelf 2 space to Canadian content. The best way to ensure that 3 this shelf space exists is to apply Canadian content 4 exhibition requirements to new media like the internet. 5 8604 In the past Canadian content rules 6 have been an effective policy instrument, and we 7 believe they have an important role to play in the 8 future as well. For example, the Commission has just 9 announced a new commercial radio policy which contains 10 a renewed commitment to Canadian content. SOCAN shares 11 this commitment and we urge you to pursue it in your 12 new media review. 13 8605 The bottom line is that Canadians 14 must continue to have the right and the ability to 15 choose to hear and see the creative works of our fellow 16 citizens. 17 8606 On behalf of SOCAN's members, thank 18 you again for this opportunity to express our views, 19 and we look forward to continuing to work with you in 20 this important review. 21 8607 We will now be pleased to respond to 22 any questions that you have. 23 8608 LE PRÉSIDENT: Merci, 24 Monsieur Valiquette, Mr. Spurgeon and Mr. Hoffert. 25 8609 I will turn to Commissioner StenoTran 1976 1 Pennefather. 2 8610 COMMISSIONER PENNEFATHER: Good 3 afternoon. Monsieur Valiquette, merci pour la 4 présentation. 5 8611 Thank you, gentlemen. 6 8612 If I miss any points you have raised 7 this afternoon, please bring them back as we go through 8 our discussion, but I would like to start -- and it is 9 no surprise to you, I'm sure -- to take a step back and 10 just look again at what we are talking about. 11 8613 Accepting your point in this 12 afternoon's presentation and your written submission 13 that we are dealing with the means -- you would prefer 14 to focus on the means by which a product, namely in 15 this case music, is communicated, if I am -- I am 16 quoting directly from your submission here. 17 8614 That means, if you agree, you 18 mentioned the internet certainly as one of the, if not 19 the, major means which we are talking about. Can you 20 describe to us how this means, the medium called the 21 internet, has impacted on your members? What does it 22 mean for them in terms of opportunities and challenges? 23 8615 Just so we speak about the reality of 24 being a music composer in this new media world, before 25 we get into regulation and all the other details? Just StenoTran 1977 1 could you clarify for us exactly for you what this 2 internet is all about? I was going to ask for your 3 definition of "new media", but I would prefer, since 4 you asked us to distinguish between content, we take 5 the "content" as the "music", we take "new media" as 6 the "internet", how is the internet impacting on the 7 lives of composers in this country? 8 8616 M. VALIQUETTE: Si vous me permettez, 9 je répondrai en français. 10 8617 CONSEILLÈRE PENNEFATHER: Oui, ça va. 11 Certainement. 12 8618 M. VALIQUETTE: Premièrement, 13 j'aimerais bien distinguer le fait qu'écrire une pièce 14 de musique est bien différent que de l'interpréter. 15 Chez nous, au Québec, par exemple, quelqu'un comme Luc 16 Plamondon est un auteur. Luc ne chante pas. Vous ne 17 voulez pas l'entendre chanter. D'un autre côté vous 18 avez Céline Dion, qui chante mais qui n'écrit pas ses 19 propres chansons. 20 8619 Alors lorsqu'on écrit une chanson, 21 par exemple, ça peut nous prendre quelques heures mais 22 ça peut aussi nous prendre quelques mois. Quand on 23 termine une chanson, nous ne sommes pas payés pour 24 l'acte que nous venons de faire. 25 8620 C'est un petit peu différent de ce StenoTran 1978 1 qui se passe ailleurs dans la société parce que, si 2 j'engage un électricien ou un serrurier, en quelque 3 part je dois le payer au moment où il va travailler, 4 quand il vient, le nombre d'heures qu'il travaillera. 5 8621 L'entente qu'on a avec la société 6 canadienne, c'est qu'on sera rémunérés au moment où nos 7 pièces seront exécutées. Alors la route est longue 8 pour en arriver jusque là parce que, quand vous avez 9 votre pièce, il faut trouver un bon interprète. 10 Ensuite de ça, est-ce que cet interprète-là va amener 11 ça dans son spectacle, sur ses disques? Ensuite de ça, 12 est-ce qu'on va la mettre en marché, en faire la 13 promotion? Et, ensuite de ça, est-ce que les radios ou 14 d'autres diffuseurs vont faire jouer cette pièce-là? 15 Maintenant, quand ça, ça arrive, après avoir passé 16 toute ces étapes-là, quand ce moment-là arrive, là, 17 nous avons le droit d'être rémunérés. 18 8622 Alors nous sommes rémunérés dans des 19 places évidentes, comme la radio, la télévision, le 20 spectacle, mais aussi si notre musique joue dans un 21 ascenseur, quand on fait l'épicerie, si on l'entend sur 22 un répondeur; ce sont différentes façons d'exécuter nos 23 oeuvres. 24 8623 Alors dans toute cette histoire de 25 nouveaux médias là, peut-être que notre approche est un StenoTran 1979 1 petit peu simpliste, mais pour nous ce n'est qu'une 2 autre façon de faire entendre nos oeuvres. Et, à ce 3 moment-là, quand on apprécie nos oeuvres, nous trouvons 4 que c'est logique d'être compensés pour ça. 5 8624 Alors ce n'est pas parce qu'on a des 6 nouveaux médias qu'il faudrait laisser tomber cette 7 entente que nous avons parce que force est d'avouer que 8 jusqu'ici ça a bien fonctionné dans notre société. 9 8625 CONSEILLÈRE PENNEFATHER: Je 10 comprends très bien. Je suis l'argument. 11 8626 La question alors est la suivante: 12 Étant donné qu'on parle du médium Internet, qui -- 13 j'espère que j'ai bien raison -- n'est pas du théâtre, 14 n'est pas une live performance, n'est pas la radio ni 15 la télévision, c'est quelque chose de nouveau, comme on 16 avait dit, quelle sorte de défis spécifiques l'Internet 17 amène à la discussion que vous venez de déposer sur 18 l'importance d'avoir rémunération pour la présentation 19 de l'oeuvre musicale? Est-ce que le fait, par exemple, 20 que c'est un médium global, est-ce que le fait que 21 c'est un médium par lequel moi, comme citoyenne, j'ai 22 accès directement à votre présentation musicale... est- 23 ce qu'il y a des aspects spécifiques de l'Internet qui 24 rendent la discussion différente, par exemple, de quand 25 on parle de la performance à la télévision? À titre StenoTran 1980 1 d'exemple, l'interactivité. 2 1555 3 8627 M. VALIQUETTE: Je pense que le 4 domaine le plus interactif que vous pouvez rencontrer, 5 c'est un spectacle. Alors, pour nous, ce n'est qu'une 6 autre façon de le faire. 7 8628 Pour répondre à votre question, non, 8 c'est simple dans le sens qu'en quelque part nos 9 oeuvres sont entendues sur ce nouveau médium là. 10 Effectivement, parfois on va emprunter des oeuvres qui 11 ont été peut-être pensées pour un autre domaine, mais 12 d'autres fois on va nous demander de créer des oeuvres 13 spécifiquement pour ce domaine-là. 14 8629 En fin de ligne, le résultat est le 15 même. Nous attendons notre rémunération au moment où 16 elle est exécutée, au moment où on l'entend. 17 8630 COMMISSIONER PENNEFATHER: Now that I 18 have got Mr. Hoffert plugged into translation, I am 19 going to -- I will go back and forth. 20 8631 Is just that -- and if I repeat 21 myself, I am sorry, Monsieur Valiquette -- for example 22 you and I have had discussions about this new medium of 23 communication called the Internet as something very 24 different, and what I am concerned to have clear is, I 25 understand the principle that you have put on the StenoTran 1981 1 table, namely that the musical work remains a musical 2 work by whatever means it is communicated, it does not 3 change the principle of remuneration, but I am 4 wondering, the fact that this delivery system is the 5 Internet, with all its particular characteristics, what 6 really does that do to our ability to in fact render 7 that remuneration? Does it change the relationship 8 between the citizen consumer of that performance -- 9 does it add any particular challenges? 10 8632 The reason I am asking that is we 11 have had many different descriptions of new media -- 12 and when I use "new media" here, Internet, means of 13 delivery -- and amongst those is interactivity, that 14 is, a one-to-one relationship between product and user, 15 that is global in its nature, that is a massive number 16 of Web sites. 17 8633 When we come later to how we should 18 address your principle, I am just interested in your 19 experience and expertise on putting the Internet into 20 this whole world of music and performance. 21 8634 MR. HOFFERT: I think that's four 22 questions -- 23 8635 COMMISSIONER PENNEFATHER: Probably. 24 8636 MR. HOFFERT: -- and I will try to 25 get to them in order. StenoTran 1982 1 8637 COMMISSIONER PENNEFATHER: Backwards. 2 8638 MR. HOFFERT: Firstly, in terms of 3 how different is the medium, let's discuss what a 4 medium is and what perhaps the new media are. 5 8639 From our perspective, and from my 6 personal perspective of spending the last nine years at 7 a university research centre looking into the 8 intersection of culture and technology on digital 9 networks, the new media is normally taken to be digital 10 media which has a capability of some interactivity, but 11 more specifically digital networks and CD-ROM type 12 things. 13 8640 For the purposes of our discussion 14 now, unless we wish to widen it, our comments are with 15 respect to digital networks. 16 8641 Secondly, what does it mean to have a 17 new medium which is a digital network as the method of 18 delivering my message, if you will, or the content, if 19 you will, of music? The answer is that every medium 20 that's used presents his own context and its own need 21 for being dealt with. When Socan licenses the use of 22 music in broadcast television, it uses a very different 23 context and a very different formula than when it 24 licenses the use of music in a cinema, and a very 25 different context and a very different formula than StenoTran 1983 1 when it licenses the use of music in an elevator or an 2 airplane. To that extent, it would be Socan's 3 submission that the digital media are just another one 4 on the list, if you will, that requires its own 5 particular context. 6 8642 I hope the Commissioners will go with 7 me for a moment, if I take a moment to -- I will choose 8 my words carefully -- perhaps either correct some what 9 I would consider misunderstandings or to clarify some 10 of the submissions that I have read and heard over the 11 past week or so with respect to in fact what are the 12 new media or what is the Internet. 13 8643 The most commercially important 14 portion, where all the growth is occurring, is not 15 necessarily what one calls the Internet today. For 16 example, there was a merger announced last week between 17 America Online, which had a valuation in the 18 marketplace of, I don't know, $4 or $5 billion -- and 19 perhaps it is not clear that America Online is not on 20 the Internet. 21 8644 We have heard a lot about -- and we 22 know many of us have the new cable modem services, 23 Rogers, Saw, Cogeco @Home. Those services are not on 24 the Internet. 25 8645 The telephone services which are StenoTran 1984 1 being rolled out across Canada -- I believe in Ottawa 2 you have had them for about six months now; not to 3 belabour any acronyms, but I think in general they are 4 called ADSL; it is a kind of a service -- is not on the 5 Internet. One cannot find the content, the programming 6 that we speak about on those kinds of services, which 7 have been the largest growth section of the Internet, 8 on the Internet. The term we use is "intranets". The 9 two words sound very similar. 10 8646 The reason I make this distinction 11 before I go on any further is you ask what is the 12 Internet and what are digital media, and I think it is 13 very important that all of the comments that have been 14 made about the Internet being a wild west kind of land 15 without the possibility of regulation, none of those 16 kind of comments relate to intranets. The reason that 17 intranets, which are private what we called fire-walled 18 or cordoned-off networks, are so popular is because, 19 unlike the Internet, they are ultimately controllable, 20 regulatable and friendly to commerce. 21 8647 What happened historically is that 22 the Internet which we normally speak of, which has many 23 wonderful attributes -- and I won't go into the 24 historic origins of the Internet; I am sure you are all 25 familiar with them -- changed significantly when the StenoTran 1985 1 Internet began to permit commercial transactions to 2 take place and when governments decided that they would 3 not become involved and let the free market take its 4 course. At that point the initial purpose of the 5 Internet, which was a combination of a military secure 6 communications network and a way for researchers to 7 communicate with each other, changed dramatically. It 8 also became much more popular. 9 8648 But the thrust of the development of 10 what has been the Internet at that point branched into 11 two quite different branches, one of which remains true 12 today to the interest of researchers and those who 13 believe that information should be essentially free, 14 and those who are trying to conduct some kind of 15 commercial transactions. As it turns out, it is the 16 second branch that is the part of the Internet perhaps 17 that the CRTC would be most interested in because 18 almost all of the activity that we speak about that has 19 to do with broadcasting or broadcast-like services tend 20 to be involved in moving pictures, sound, music and 21 things that generally have been considered commercially 22 valuable and are being treated as such. 23 8649 So, on the one hand, we have a 24 resource -- and here, if you don't mind, I will go back 25 and make what I hope isn't a big leap to not try to be StenoTran 1986 1 a lawyer and say whether the definition of 2 "broadcasting" applies to the Internet, because my 3 colleague, who is a lawyer, will be happy to speak to 4 that issue in terms of whether it is. 5 8650 The principles behind whether 6 broadcasting should be regulated had a lot to do with 7 whether a resource was scarce and whether it was 8 important to have shelf space and a prominent place for 9 your cultural expression. And the argument that the 10 Internet is an infinite resource and is not scarce, 11 number one, doesn't apply to intranets -- which have 12 incredibly scarce resource that looks a lot like 13 channels on television, where essentially the people 14 who put these things together aggregate content and 15 sell advertising and then they schedule the content and 16 change it every day, which one could argue sounds a lot 17 like broadcasting -- and it doesn't pertain very much 18 to the commercial portion of the Internet; this year, 19 the buzzword you have heard a lot of is "portals", and 20 if you think of what a portal does is, people who have 21 portals accumulate content, sell advertising and 22 schedule the content and change it every day, but they 23 certainly control what could feel a lot like 24 programming. 25 8651 So I guess the thrust of our StenoTran 1987 1 submission is not that the CRTC should, say, regulate 2 the Internet, which is something that's very confusing, 3 in a big box it might not fit, but just as if I send 4 you a letter through the postal system it is not 5 regulated but if I send you an offer to buy something 6 that contains fraudulent information it might come 7 under the legal system of Canada's jurisdiction, in the 8 same way the Internet is not one homogeneous thing, and 9 e-mail is a very different thing than aggregating 10 programming and offering it. 11 8652 Again, it is a long-winded answer -- 12 I am an academic -- but my suggestion is that in fact 13 those who have been saying, if it quacks like a duck 14 and looks like a duck, I am sort of in agreement with 15 that. 16 8653 To come to your third question, which 17 is what does it mean to me as a musician -- because I 18 am a musician and I compose music -- it is hard for me 19 to understand why, when a Lighthouse song plays on a 20 radio station, if I was a co-author of that particular 21 song, I am able to get some payment for it, but if I 22 listen to the same song on an Internet radio station, 23 which sounds, feels identical to being delivered over 24 the radio, somehow it shouldn't be regulated, the 25 Canadian content rules should be different or I should StenoTran 1988 1 be paid at a different rate. 2 8654 This concept of having two classes of 3 organizations doing very similar things in some cases 4 is a regime that I don't think will last. Either the 5 CRTC has to get out of regulating broadcasting, which 6 is one possible answer, or, if you are going to 7 regulate it, I do think you have to look at certainly 8 those parts of the new media that look and feel a lot 9 like broadcasting and in some cases a little like 10 broadcasting and make sure that you are not just 11 getting a part of the activity, because whether the 12 Internet will supplant or supersede the other activity, 13 certainly broadcasting as we know it will likely go 14 down somewhat and the Internet is certainly going up. 15 8655 I will just finish this part of the 16 answer by giving the Commission an example of what is 17 coming down the pipe commercially -- I think you have 18 licensed it, but certainly the new set-top boxes 19 deliver television channels through a set-top box over 20 Internet protocols through a system called 21 "multicasting". On those new set-top boxes, which I 22 have seen demonstrated in Canada by some of the 23 suppliers who will be I believe making them available 24 in this coming year, you can have a channel that's a 25 television station, that's CTV or CBC or Global or one StenoTran 1989 1 of those things, and then you can have another channel 2 that's an Internet Web site. 3 8656 So, when I ask myself the question is 4 there room for regulation under the Broadcast Act of 5 some of these activities, I wonder how your Commission 6 is going to deal with this fact of intersection of 7 broadcasting in the traditional sense and the Internet, 8 which is just about on us. 9 8657 That would be my reply. 10 8658 COMMISSIONER PENNEFATHER: Did you 11 want to jump right in, Mr. Spurgeon? 12 8659 MR. SPURGEON: If I could add and put 13 a legal gloss on it, we have always believed the 14 Copyright Act and, to a large extent, the Broadcasting 15 Act and many other laws now are technology neutral. 16 The government in fact has made a public policy 17 statement to try to move towards ensuring that the laws 18 they enact are technology neutral so that technology 19 doesn't end up making existing laws anachronistic. 20 8660 We believe that the Internet -- let's 21 put it in context. Sure it is new, but they are doing 22 the same things; people still want to listen to music, 23 people still want to watch television shows. Perhaps 24 we are not at pure convergence yet, but people still 25 want to do those same, same things. StenoTran 1990 1 8661 I guess, to reiterate what Brian 2 Chater said and what Paul said, it walks like a duck, 3 it quacks like a duck, it looks like a duck, you should 4 assert your jurisdiction over that duck and regulate 5 that duck because it is in fact the same duck as the 6 one you were regulating before. 7 8662 I think you asked the last panel 8 about what kinds of services are broadcast like. There 9 are a number of them out there now that, for all 10 intents and purposes, are radio stations. But even if 11 they are not, there are other activities that are in 12 effect, in our view, caught by the Broadcasting Act and 13 the definitions which, in my view at least, are very 14 broadly drafted and have allowed that flexibility to 15 allow this Commission to ensure that in fact you do 16 assert your jurisdiction and can assert your 17 jurisdiction over those activities. If you don't, 18 then, as Mr. Neil stated in the last panel, you run the 19 risk of being redundant in many ways. 20 8663 This is very important I think that 21 Canada has this ability to maintain jurisdiction over 22 these kinds of activities. 23 8664 COMMISSIONER PENNEFATHER: I want to 24 continue and just clarify, and maybe the lawyers will 25 have some other clarification. StenoTran 1991 1 8665 It just occurred to me, though -- and 2 this is just a little lightness in the whole thing -- 3 we have referred to the duck constantly in this 4 discussion. I think Mr. Neil used the goose, brought 5 the goose in this picture. 6 8666 This is Canada. Why don't we talk 7 about a loon, for goodness sake. 8 8667 MR. SPURGEON: About a what? 9 8668 COMMISSIONER PENNEFATHER: A loon. 10 8669 MR. SPURGEON: A loon? 11 8670 COMMISSIONER PENNEFATHER: Yes. 12 After all --- 13 8671 MR. SPURGEON: Or a Canada goose 14 perhaps. 15 8672 COMMISSIONER PENNEFATHER: All right. 16 8673 Let me go back, then, to the 17 discussion, just to be sure we are clear. I had 18 written the question in this way: What types of new 19 media services do you consider to be broadcasting? So 20 I guess you were telling us that, within all that we 21 have been discussing, whether it is the Internet or the 22 intranet, which, if I am correct, are entities which, 23 in your words, Mr. Hoffert, are closer to what is 24 broadcasting-like services than perhaps other services 25 on the Internet, some of which are commercial, some of StenoTran 1992 1 which are more in the realm of e-mail or voice or 2 communication. 3 8674 Could you help us with, again, what 4 are the broadcast-like services that you feel are out 5 there, brought to us by the new media delivery system 6 that resemble broadcasting specifically? You mentioned 7 I think radio. 8 8675 MR. SPURGEON: Rogers @Home, for 9 example, these kinds of -- and I didn't say this. This 10 is actually in the second submission of the CCTA. They 11 state, on page 4 of the downloaded version: 12 "The fusion of content and 13 services [and by that I assume 14 they mean the service that they 15 provide] will become more common 16 as digital media are 17 personalized to meet the 18 requirements of particular 19 consumers [i.e. their 20 subscribers, I am assuming]." 21 8676 That would go for Internet people who 22 don't subscribe to Rogers but who subscribe to 23 Sympatico on the telephone line, whatever. 24 "Today's portals or gateways on 25 the Internet represent the StenoTran 1993 1 beginning of this trend." 2 8677 COMMISSIONER PENNEFATHER: What do 3 you think that means? 4 8678 MR. SPURGEON: I think what they are 5 saying there is -- and this is what we predicted back 6 in 1995 when we filed a tariff as against these kinds 7 of services. We predicted that there is going to be a 8 consolidation in the industry and what will happen is 9 the industry will consolidate -- even as Netscape and 10 AOL are, and now we are seeing the cable systems and 11 perhaps some of the smaller Internet access providers 12 will consolidate and join forces and provide, as it 13 says here in this excerpt: 14 "Today's portals or gateways on 15 the Internet represent the 16 beginning of this trend. 17 Entertainment content, news, 18 weather information, stock 19 quotes, email, and Web page 20 hosting are all being combined 21 to provide personalized service 22 to each visitor." 23 8679 Delivered to a subscriber for a 24 monthly fee with advertising -- to me, it really looks 25 like broadcasting, read large and maybe even read small StenoTran 1994 1 in the sense of its component parts, but certainly it 2 has a feel to it that resembles an activity that you 3 are currently licensing under, as I indicated earlier, 4 one of your many licence approval processes either for 5 broadcasting or for cable, for satellite, for 6 SMAT-Vs (ph.), for MPP, multipoint systems. That's the 7 conclusion we came to several years ago and it seems to 8 be developing that way. That's why we filed a tariff; 9 that was the most practical approach -- and I could 10 refer back to Gilles Valiquette -- of ensuring 11 remuneration comes in for this use of music when it is 12 enjoyed by the subscriber to the service. 13 1615 14 8680 COMMISSIONER PENNEFATHER: Getting 15 back, then, to that world you were talking about, how 16 practically do you regulate Canadian content, for 17 example, on the Internet or intranet? 18 8681 MR. HOFFERT: I will take a stab at 19 that. 20 8682 In searching for an answer to that 21 question, which I am sure is of absolute central 22 interest to the CRTC, I think it is instructive to look 23 at the existing mechanisms of supporting Canadian 24 content and regulating, looking at them and seeing if 25 there is a way to map them into the new media. StenoTran 1995 1 Perhaps, for clarity, I will deal with three potential 2 methods -- these are not methods that we are suggesting 3 to the CRTC are the best or the only methods, but I 4 found it quite easy to do that. 5 8683 We support Canadian content with 6 public support, with private support and with tax 7 incentives. Looking at them one at a time, perhaps 8 backwards this time, if one looks at the tax incentive 9 our income tax recent amendment Bill C-58 -- and I will 10 read to you from it section 19.1, which says: 11 "Limitation re advertising 12 expenses on broadcasting 13 undertakings. 14 Subject to subsection 2, in 15 computing income no deduction 16 shall be made in respect of an 17 otherwise deductible outlayer 18 expenditure of a taxpayer made 19 or incurred after a certain 20 date, directed primarily to a 21 market in Canada and broadcast 22 by a foreign broadcasting 23 undertaking." (As read) 24 8684 And "foreign broadcasting 25 undertaking" is defined a little bit later. It means: StenoTran 1996 1 "a network operation or a 2 broadcasting transmitting 3 undertaking outside of Canada or 4 on a ship or an aircraft not 5 registered in Canada" (As read) 6 8685 So, without proposing anything new 7 necessarily, one could say that by my definition the 8 important economic activity that I would like to 9 capture as a creator of content, because that's where I 10 might make some money, those activities certainly 11 currently are being driven on the Internet and intranet 12 side of it by advertising, whether it is a portal or 13 this or that. Those are the real ones. 14 8686 I personally have no great interest 15 in trying to regulate a grandmother at one end of the 16 country playing or singing happy birthday to a 17 grandchild at another end of the country. But if you 18 said that Canadian advertisers, who are gaining 19 benefits by getting the eyeballs of Canadians to these 20 sites -- and the same language is being used for these 21 activities as broadcasting exactly -- if they could 22 only get income tax benefit when they advertised on a 23 site that was in compliance with some Cancon 24 regulation, that would be one way to have an 25 encouragement based on the tax rule. StenoTran 1997 1 8687 I think it would be quite easy for 2 the CRTC to put up a Web site of those Web sites or 3 those intranets that were in compliance with Cancon, so 4 advertisers would know where they could get a tax 5 write-off on. That's one thing that comes to mind 6 looking at an existing regulation and how it might be 7 mapped into the new system. 8 8688 If you look at private support, we 9 have a history of in the music business FACTOR, in the 10 television and film business the Cable Fund, where the 11 private sector has been contributing funds to help 12 create more quality and a larger quantity of Canadian 13 programming. There it is my view that the most logical 14 place to apply this encouragement is at the Internet 15 access provider because they look a lot like the cable 16 provider who is contributing to the Cable Fund. 17 8689 So, just as the cable provider is 18 asked to take a percentage of their monthly access 19 rental income and put it into a fund, I don't see any 20 reason why it would be so difficult to apply that at 21 the IAP level, and I don't believe you would have a 22 problem with what everybody always says, "We are just 23 going to move our site to Timbuktu, and then where do 24 you go", because the person who has a wire into your 25 home or even a satellite aimed at your home, there are StenoTran 1998 1 very few of these entities and they can't go anywhere. 2 They can't get that wire into your home in Timbuktu 3 unless you live in Timbuktu. 4 8690 So there is a potential mechanism 5 that you could involve the private sector support. 6 8691 In the public sector there is 7 primarily the issue of shelf space, what I call shelf 8 space, and Canadian content regulation. Just for a 9 minute, without saying exactly what the potential point 10 system or something of that nature might be, there is 11 Telefilm Canada that was created that is part of the 12 CRTC regulatory system, and either Telefilm or some new 13 organization could be used for the new media. 14 8692 Just last week I was looking for a 15 book review -- I have a book out, and somebody said 16 there was a bad review in Eye Magazine, so I said, I 17 want to see that. So I went on the search engine that 18 comes through my Internet supplier and I put in the key 19 words "Toronto" and "Eye Magazine". I got a page that 20 said, okay, this is all of the media in Toronto. I had 21 a list of the newspapers, radio stations, television 22 stations, all that kind of stuff. I said, "This is 23 great". 24 8693 I went down and I looked for Eye 25 Magazine. Not there. What's wrong? I found Now StenoTran 1999 1 Magazine, which is a competitor to Eye Magazine. I 2 looked at the radio stations and there are only six 3 radio stations listed. There is more than that in 4 Toronto. Then I realized that the only stations, 5 newspapers and other companies that were on this portal 6 to Toronto were those that bought ads on this 7 particular site. 8 8694 I got a deeper meaning at that moment 9 of what "shelf space" really means and how important it 10 is because, if I was looking for a magazine in Toronto 11 I would have only seen those magazines that had a 12 particular relationship. 13 8695 If you look at the history of media 14 penetration throughout the world, certainly in North 15 America, you see that one of the reasons that we have a 16 CRTC in Canada is that the big bucks are south of the 17 border, and if the differentiating issue for finding 18 stuff is ability to pay or take advertising, and if 19 there isn't some sort of other countervailing process 20 involved, that Canadian material could easily get lost. 21 I have given you an example where there are two 22 Canadian publications and one got bumped, but it could 23 easily be if taken to the next step. 24 8696 So those are three mechanisms that 25 come to mind that I don't think are very different than StenoTran 2000 1 what the CRTC does today that you could conceivably 2 move into the new media. 3 8697 COMMISSIONER PENNEFATHER: Thank you 4 for those. Some do apply, but it is still not entirely 5 clear to me what specific Cancon regulations -- what 6 would be the ones that we would monitor and how would 7 we implement compliance to those regulations. 8 8698 MR. HOFFERT: Perhaps I will just 9 give you a brief answer and pass the question to some 10 of my colleagues, but it is my feeling that the key 11 decision that the CRTC has to make is, should you 12 regulate and is it possible to regulate. And, if you 13 decide that you should regulate and that it is possible 14 to regulate, it is my feeling that the specifics of 15 regulating, which are very context sensitive, one site 16 that lists 15 choices the regulation might take the 17 form of make sure you got the first five things. On a 18 search engine, which we have heard some interesting 19 comments that I share, you could go search for a couple 20 of key words and you get 25,000 hits. The key thing 21 is, what are the first five on the page. Usually 22 people don't go to the last page and look at those 23 hits. 24 8699 There are all sorts of means that are 25 not very difficult by which Canadian content could be StenoTran 2001 1 given a fair chance to compete in those markets, but 2 you have to look at the context of the individual Web 3 activity, and I would say that probably over the years 4 that's going to change as well and, just as you do in 5 other media, the CRTC would have to react to the 6 realities. 7 8700 Again, this year, it is portals. It 8 is pretty easy to figure out what you can do with 9 portals. Portals, their No. 1 page is the most 10 valuable page, what is going to be on that. How many 11 clicks do you have to go to the next one? 12 8701 All you have to do if you want to 13 find out what the mechanism is is look at the economic 14 activity. My proposal to you is that this is the 15 easiest way for the CRTC to figure out these 16 complicated things -- find out where they charge the 17 most advertising dollars; that's likely going to be the 18 most economically important, where most of the eyeballs 19 are, and then just make the decision that's appropriate 20 for that. 21 8702 COMMISSIONER PENNEFATHER: Did you 22 want to add to that? 23 8703 MR. SPURGEON: Some of the 24 broadcasters probably already are complying if they are 25 playing in effect their broadcasts, which hopefully StenoTran 2002 1 comply with the Canadian content regulations. Those 2 that aren't previously radio broadcast but are 3 Internet-only radio stations, then they should, in our 4 view, be subject to the same rules. 5 8704 You asked how could you ensure that 6 that is done. Well, if you tune on to let's say the 7 CHUM Web site, you will hear the music that CHUM would 8 play and you would assume that it would be the same as 9 what CHUM would be playing if you were listening to 10 hertzian waves or if it were on cable or whatever. 11 Likewise, when you click on to a site that is only on 12 the Internet, it would be hopefully subject to the same 13 rules. 14 8705 COMMISSIONER PENNEFATHER: So, 15 assuming for a moment that we decide that certain new 16 media services, Internet services, are broadcasting, 17 and therefore the Broadcasting Act applies, what kind 18 of regulation would assure shelf space for Canadian 19 product, considering the technology we are talking 20 about? How do you go about lining up Canadian sites? 21 Do you have a site on which there is a list of other 22 Canadian sites and then you -- 23 8706 MR. SPURGEON: That might be an 24 approach. I think if it is like an existing means, if 25 we go back to that word, an existing media, if it is StenoTran 2003 1 like that, then it should be treated like that, as it 2 is now. If it is something brand new -- I know you 3 handled the digital radio approval in a kind of 4 different way than say other radio, but you did create 5 a system because it was a new kind of service and you 6 created some new rules for that, as you did for other 7 things like cable. 8 8707 If something like that already 9 exists, then, really, I think it is incumbent on you to 10 follow the same rules that you apply to those existing 11 services. If it is something new, then, you will have 12 to decide whether you want to apply the same rules that 13 you apply to the other services, the old services, or 14 come up with something new. 15 8708 I hate to keep going on with that 16 duck business, but if it is like that it should be 17 treated the same in our view and you should assert the 18 jurisdiction you have. If you are wrong -- we don't 19 believe you are wrong if you do that. If you are 20 wrong, of course, people will challenge the application 21 of the section, and if it is wrong, either the courts 22 will uphold you or they won't. Then it is up to the 23 parties to go to Parliament to have the rules changed. 24 But we believe you have the jurisdiction and you should 25 assert it, if in fact it is the duck. StenoTran 2004 1 8709 M. VALIQUETTE: Si vous me permettez, 2 au-delà de ça, je crois que, évidemment, nous ne sommes 3 pas des spécialistes; alors on n'a peut-être pas des 4 solutions définies, comme peut-être vous souhaiteriez 5 avoir, mais j'aimerais mentionner le fait que souvent 6 au Canada, dans ces domaines, nous avons été quelque 7 peu réactifs. Certaines personnes ont peur des 8 changements, mais nous, les créateurs, nous voyons ça 9 comme des opportunités. 10 8710 Alors nous encourageons beaucoup 11 votre Conseil à sauter sur l'occasion de créer un 12 modèle qui sera bénéfique mais aussi qui sera un 13 exemple à travers le monde pour la relation qu'une 14 société peut avoir entre les artistes d'un côté, le 15 domaine des arts, et de l'autre côté l'auditoire, qui a 16 besoin de retrouver des oeuvres où cette société-là 17 peut se voir comme un miroir et surtout s'afficher. 18 C'est une réalité, ça, qui est essentielle à la survie 19 d'un pays comme le Canada. 20 8711 Évidemment, nous n'avons pas toutes 21 les solutions, mais j'aimerais juste souligner le fait 22 que les créateurs vous encouragent à ne pas rater 23 l'occasion. 24 8712 CONSEILLÈRE PENNEFATHER: Merci, 25 Monsieur Valiquette. StenoTran 2005 1 8713 Ceci m'amène à une dernière question, 2 qui est un peu plus large dans ce contexte. En effet, 3 ça touche à un point très important que vous avez 4 soulevé quand on parle de l'Internet comme d'un média 5 qui peut nous faire valoir et nous rendre l'accès à 6 notre culture nationale. 7 8714 What I am interested in having a last 8 discussion on is how you see the impact of the Internet 9 and new media on national cultures. One of the 10 intervenors we had here referred to this as a mass 11 medium and one which could become a global culture, 12 create a global culture, its own culture, and perhaps 13 begin to bring various cultures together. Others, on 14 the other hand, from a very practical point of view, 15 have talked about the importance of the Internet and 16 the business of the Internet being improved, if you 17 will, by its ability to bring local cultures closer to 18 those who use it. 19 8715 Do you have any comments on this 20 whole aspect of the impact of the Internet on our own 21 identity and those of other nations? 22 1630 23 8716 MR. SPURGEON: I think both those 24 things are right. My view is that, like anything, it 25 has dangerous opportunities, it presents both. StenoTran 2006 1 8717 This is a great opportunity for 2 Canada to show that it is distinct from other cultures, 3 other countries in the culture that it puts out -- its 4 books, its music, its plays, its television shows, its 5 movies. We have noticed in the last few years that our 6 music is becoming more and more popular; as technology 7 develops and the tentacles of distribution get better, 8 our music is becoming more important around the world. 9 We know that. How do we know it? Because we are 10 getting more money from other countries; it is flowing 11 into Canada from other countries, the use of our 12 members' music in foreign lands. We think that this 13 will hopefully improve even more as these networks 14 improve. 15 8718 That's why it is important, as Gilles 16 said, and I think it was said earlier by the ACTRA 17 panel, we have to ensure that our culture is maintained 18 and that there are mechanisms that sustain it, and we 19 just don't throw in the towel and in effect allow -- 20 give up, I guess is the best way to put it. We have to 21 ensure that we keep this jurisdiction over what we do 22 to make sure that Canadians hear it, which will then 23 allow other Canadian creative people to create product 24 or create works that will then be exported around the 25 world. StenoTran 2007 1 8719 So, yes, it does provide 2 opportunities, and I think it will get better for 3 Canadians. It will present some dangers, I guess, but 4 hopefully we will deal with them. 5 8720 M. VALIQUETTE: Au-delà des 6 opportunités, si le CRTC organise un cadre comme nous 7 souhaitons que vous le fassiez, ce que vous lancerez, 8 c'est également un défi. Nous avons dans notre 9 communauté canadienne des gens qui sont extrêmement 10 créatifs, et là-dedans je n'inclus pas seulement les 11 créateurs; il faut être créatif pour être un bon 12 diffuseur, il faut être créatif pour, je ne sais pas, 13 être un gérant d'artiste. En quelque part, quand on 14 fixe un cadre qui va mettre en évidence les talents de 15 chez nous, vous les encouragez à s'afficher, et c'est 16 tout un pays qui s'affiche comme ça. On dit souvent 17 qu'on reconnaît un pays par sa culture. 18 8721 Alors, encore une fois, il ne faut 19 pas passer à côté de cette réalité qui dit qu'il y a 20 toujours eu un lien étroit entre les nouvelles 21 technologies et les arts. Par exemple, je ne crois pas 22 que le rock'n roll aurait existé si ce n'était pas de 23 la guitare électrique. Aujourd'hui on a le new age 24 suite au synthétiseur. Vous donnez un autre outil aux 25 gens créatifs de chez nous et vous aurez ce que StenoTran 2008 1 certains appellent ça une oeuvre d'art, d'autres 2 appellent ça un produit, mais vous aurez quelque chose 3 qui sera canadien et dont nous serons tous fiers. 4 8722 COMMISSIONER PENNEFATHER: I realize 5 that. I think that what one is balancing -- and 6 perhaps you would want to comment -- is the importance 7 of encouragement, a word I heard you use earlier, not 8 regulation but encouragement, of promotion of Canadian 9 culture on the Internet and access to that work. But, 10 at the same time, you mentioned that this is an 11 opportunity for greater exposure and transactions, 12 presentations around the world than perhaps we have had 13 before. 14 8723 I guess the concern on some parts is 15 that regulations or other activities may be barriers, 16 in fact, and limit those opportunities for Canadians 17 working within new media or Canadians taking a current 18 work and using the new media to promote or present that 19 work. 20 8724 It is that balance that I would like 21 you to comment on, in this new media world, if it is 22 more or less important that we be very careful than it 23 has been in the past. 24 8725 MR. SPURGEON: If you could give me 25 an example of what you mean by that, where it would be StenoTran 2009 1 a barrier, for example, to say an artist or a creative 2 person in Canada -- if they are not getting paid, of 3 course, that's a barrier, but that's why Socan has 4 filed a tariff against Internet access providers who 5 are located in Canada to ensure that creators are 6 compensated when their works are exploited in Canada -- 7 not just Canadians, but everyone from around the world. 8 8726 Obviously, we have to ensure that 9 this new medium is -- when you say "regulated" -- I 10 don't use the word "support". A legal colleague of 11 mine wrote a paper for the government called, 12 "Cyberspace is not a No-Law Land". I thought that was 13 a good title because it accurately summed up the notion 14 that cyberspace is not a no-law land in terms of 15 copyright, obviously, in our view, nor defamation law, 16 nor hate law, hate crime law, nor obscenity law, nor, 17 in our view, broadcast regulation law. The list goes 18 on. There is a litany of the laws that it is not a no- 19 law land of. It is important to keep that in mind. 20 8727 So I don't think the barriers are any 21 more than they are posed for anything else, for any 22 other law. So we have to look at it in that context. 23 Obviously we have to put some thinking into the 24 problem, but certainly we are moving towards many 25 solutions, as was explained earlier, about copyright StenoTran 2010 1 management issues and anti-copyright circumvention 2 issues on the copyright side, and I am sure we have 3 solutions on obscenity and defamation, things like 4 that. 5 8728 Obviously, there are, as I say, 6 dangers, but we are working on the problems. 7 8729 MR. HOFFERT: Some fine lines travel 8 well and some don't, and some fine content travels well 9 and some travels less well. I don't think you could 10 get a single answer to that. 11 8730 The larger issue is how do you 12 balance the localization with globalization. Some 13 academics use the tem nowadays "glocalization", which 14 isn't actually a misspelled word. 15 8731 It looks like the best evidence we 16 have is that people want to have access to everything 17 in the world, but actually what they want is just a few 18 things whose names they recognize and which are more 19 local to them. The small amount of research evidence 20 that exists with wired communities -- there is one in 21 France that has been run by Microsoft for a few years 22 and actually one in Canada that I have been privileged 23 to direct for about four years in Newmarket, Ontario. 24 Both of these communities have been given very high 25 bandwidth -- as a matter of fact, part of the services StenoTran 2011 1 we give our Canadian community are under an exemption 2 of the CRTC for research, like video telephones, 3 entertainment on demand, all this kind of stuff. 4 8732 It is interesting that -- the 5 research is starting to become publicly available over 6 the last six months -- there is almost the same sort of 7 results, which is that the people value the local stuff 8 more than anything else. In our community the first 9 thing that they wanted was a list of everybody's e-mail 10 address in their community. We asked permission, 11 everybody said, "Okay, you can do that." Then they 12 made a list. 13 8733 The first message was, "We are having 14 a barbecue next Friday; we will do the dogs, everybody 15 bring the drinks", and all the neighbours got to meet 16 each other. So, instead of cocooning and sitting in 17 front of the terminals, as others might have suggested, 18 what we found in Canada and what Microsoft found in 19 France was that people who are connected with the new 20 media tend to use it more like the telephone, which is 21 different essentially from broadcasting in that it is a 22 target marketing or target messaging which has the 23 potential for being much more a disseminator of local 24 culture, one might say. 25 8734 COMMISSIONER PENNEFATHER: Thank you. StenoTran 2012 1 I think that you have hit just the point that I was 2 looking for, is that important line between the concept 3 of communication among people and our discussion about 4 a broadcasting activity within all that world on which 5 we see the need to apply some regulation or support, or 6 all of the above, and we wouldn't want one to interfere 7 with the other or be seen to. 8 8735 Thank you very much. Thank you for 9 this conversation. 10 8736 THE CHAIRPERSON: Thank you. 11 8737 Counsel Pinsky. 12 8738 MS PINSKY: Thank you, Mr. Chairman. 13 8739 First, if I could, I would like just 14 to clarify for the record precisely what new media 15 services you are calling broadcasting. Perhaps, for 16 the sake of convenience, if I could just paraphrase 17 what I understand your position to be and if you could 18 just clarify whether that's the case, you have 19 basically said that if music is being communicated, 20 regardless of the technology, then it is broadcasting. 21 8740 Is it your position, then, if music 22 is transmitted to an end user, regardless of the degree 23 to which the end user can interact with the content or 24 regardless of the degree to which the end user can 25 control what he or she receives, that the transmission StenoTran 2013 1 of that content is broadcasting? 2 8741 MR. SPURGEON: Yes, from the point of 3 view of Socan's Tariff 22 -- indeed, for that matter, 4 it is Tariff 1, Tariff 2, all its so-called 5 broadcasting tariffs -- or the tariffs that are 6 founded, under the Copyright Act, under the heading 7 3(1)(f), which states that we have a right to 8 communicate to the public by telecommunication, our 9 view is that we have the right to license entities that 10 are communicating to the public, and those entities 11 would be anyone from an IAP that you subscribe to, that 12 you can access a Web site that has music, or a content 13 aggregator, America Online, Compuserve, all these kinds 14 of entities. These entities are all communicating to 15 the public. 16 8742 The IAP is not, in our view, a common 17 carrier, they are providing a service. The common 18 carrier, of course, is the telephone line, but if they 19 are doing what we consider to be an act that is an act 20 that only we control, which is the act of communicating 21 the work to the public, then it is caught and, in our 22 view, you want to call it broadcast for the purposes of 23 the legislation. 24 8743 Under the Copyright Act, the old 25 right that we had was the right to communicate by radio StenoTran 2014 1 communication. Of course, that was deemed to be 2 inadequate by Parliament and they changed it to be all 3 inclusive. Now it means any transmission of signs, 4 signals, writing, images or sounds or intelligence of 5 any nature by wire, radio, visual, optical or other 6 electromagnetic system. So that really includes 7 everything under the Copyright Act. 8 1645 9 8744 Now, if we look at the definitions in 10 the Broadcasting Act, they are very similar and they 11 cover, if you look at the definition of "broadcasting", 12 any transmission of programs; other means of 13 telecommunications has the same kind of wording: any 14 wire, cable, radio, optical or other electromagnetic 15 system, or any similar technical system. So it has 16 kind of caught that same technology neutral language in 17 it. 18 8745 Obviously, Socan has no interest in 19 licensing e-mail or, as Paul Hoffert referred to, if 20 someone sings Happy Birthday over the telephone. We 21 don't do that now and we wouldn't do that under any 22 kind of regime. We are only looking at entities that 23 are communicating to the public. I will give you an 24 example. Pay-per-view is a good example where, sure, 25 there is a performance in someone's home, that's a StenoTran 2015 1 private performance, but it is a communication 2 nevertheless to the public, which is caught by the 3 definition of the Copyright Act. 4 8746 Now, perhaps under the Broadcasting 5 Act there might be people who would argue that some of 6 these transmissions aren't broadcasting, but, in our 7 view, they are wide enough to catch I would say most 8 Internet transmissions, which, in our view, are similar 9 to broadcasting. 10 8747 MS PINSKY: First, just to be clear, 11 obviously, when you ask the Commission to regulate 12 these services and to extend its mandate, clearly we 13 are talking about the definition of "broadcasting" 14 under the Broadcasting Act -- 15 8748 MR. SPURGEON: That's correct. 16 8749 MS PINSKY: -- and the definition of 17 the Copyright Act is a separate issue. 18 8750 MR. SPURGEON: That's right. That's 19 quite correct. 20 8751 I didn't say "extend the mandate". I 21 don't think a mandate need be extended; I think it is a 22 mandate. 23 8752 MS PINSKY: Include within its 24 jurisdiction. 25 8753 MR. SPURGEON: Yes, that's right. StenoTran 2016 1 8754 MS PINSKY: Okay. That's the content 2 that you would consider to be broadcasting. 3 8755 Then, of course, what you need to do 4 for the purpose of the Broadcasting Act to the 5 Commission's jurisdiction is identify the broadcasting 6 undertaking. 7 8756 MR. SPURGEON: That's correct. 8 8757 MS PINSKY: So if we could just sort 9 of go through that, you have referred specifically to 10 the Internet access providers and portals, et cetera. 11 I understand your submission is you would be focusing 12 on those as the broadcasting undertakings. 13 8758 MR. SPURGEON: Uh-huh. 14 8759 MS PINSKY: First, just to clarify 15 that, with respect to Internet service providers, would 16 you be referring only to those which create their own 17 content or would you include within that category ISPs 18 that merely provide access to the Internet and don't 19 also create or keep their own content? 20 8760 MR. SPURGEON: I think certainly the 21 description I gave you that was found in the second 22 submission of the CCTA would be caught. As to the 23 first, I think it too would be caught by the 24 Broadcasting Act definition in the sense that you would 25 have to look at, again, what the business is doing. If StenoTran 2017 1 the activity is like the activity that you are 2 currently licensing, our submission is that you must 3 make the decision to assert your jurisdiction. 4 8761 I don't know whether I can look at 5 any examples, but certainly the example of Rogers @Home 6 or AOL or any content aggregator or -- I don't know 7 whether Paul could give me some more examples of the 8 kinds of things. 9 8762 MR. HOFFERT: Sympatico would be an 10 example of not an Internet -- of an Internet. Canoe. 11 8763 MS PINSKY: If we take any of those 12 examples, and presumably we are only talking about 13 those services which would fall within the context of 14 broadcasting, many parties have argued on the record 15 that, even in the case of these types of undertakings, 16 the primary purpose of these undertakings is not 17 broadcasting and that, when you look at the types of 18 services, in fact only a very small amount of the 19 services they are distributing do involve broadcasting, 20 and they would argue that, as a result, those 21 undertakings couldn't be called "broadcasting 22 undertakings". 23 8764 How would you respond to that type of 24 argument? 25 8765 MR. SPURGEON: If you say "a small StenoTran 2018 1 percentage", it is like saying, well, if a broadcaster 2 is only broadcasting some of the time, then it is not a 3 broadcaster. I couldn't agree to that. If they are 4 doing something that is like broadcasting, then they 5 are broadcasting. 6 8766 I really can't add anything more to 7 that. 8 8767 MS PINSKY: Okay. Then, just to pick 9 up on something like broadcasting, you argued that ISPs 10 are not common carriers. If we take those ISPs that 11 aren't involved in content aggregation or creating 12 their own content but mainly provide access, the wire 13 to the end user, some have argued that those types of 14 undertakings are indeed carriers, and the term has been 15 used that they are gateways as opposed to gatekeepers. 16 What is the activity of that type of ISP that you would 17 consider to involve the activities of a broadcasting 18 undertaking? 19 8768 MR. SPURGEON: Again, I have to keep 20 the Copyright Act separate from the Broadcasting Act. 21 8769 From the Copyright Act, in our view, 22 there is clear liability on their part for what they 23 are doing. In terms of broadcasting, I haven't really 24 looked at issue. I haven't really considered it, but I 25 would assume that, based again on a wide definition, StenoTran 2019 1 they probably would be caught. 2 8770 You see, the way we looked at this 3 from the copyright point of view was, it was both a 4 practical and a realistic approach to licensing. These 5 are bodies that carry on business in Canada and they 6 are not common carriers, in our view. As I say, they 7 are providing a service beyond that of a mere pipe. 8 8771 They don't say that, we say that. 9 They obviously say they are a pipe. Well, they are not 10 the pipe. The pipe is the telephone line. They are 11 doing something else. The thing they are doing is 12 providing a service which we consider to be licensable. 13 They are engaging in an activity which attracts 14 liability, and I believe it does as well under the 15 Broadcasting Act, but I think we would have to look at, 16 again, the activity because we again are saying that, 17 if they are doing what broadcasters are doing, then 18 they should be subject to those same rules. 19 8772 MS PINSKY: Finally, a point of 20 clarification of terminology in terms of your use of 21 the term "intranet". 22 8773 As I understood the context in which 23 you were using that term, do I take it you were 24 referring to sort of the AOLs or the type of situation 25 where there is restricted access to content? Content StenoTran 2020 1 is accessible only to subscribers? 2 8774 MR. HOFFERT: Yes. One of the 3 technical terms sometimes used is a semi-permeable fire 4 wall which allows the owner of the intranet to control 5 traffic in and out of the intranet to and from the 6 Internet. Basically, if you have to pay to get access 7 to the content, that's one simple measure that's not 8 technical. So I can't go on the Internet and get 9 content that's on AOL without paying AOL a content fee, 10 and the same would be true with the Rogers @Home 11 network and the ADSLs, et cetera. 12 8775 You can't get to the stuff that they 13 have unless you sign on with them, and that's a pretty 14 simple way to understand it as opposed to something 15 that anyone can get anywhere in the world on the 16 Internet. 17 8776 MS PINSKY: Okay. You were just 18 referring to in terms of access to content as opposed 19 to perhaps a more technical interpretation in terms of 20 the network structure. 21 8777 MR. HOFFERT: Both. An intranet is a 22 network that uses Internet protocol but is fire-walled. 23 8778 MS PINSKY: Thank you very much. 24 Those are my questions. 25 8779 THE CHAIRPERSON: Thank you, counsel. StenoTran 2021 1 8780 Thank you very much gentlemen. I 2 guess, as you can tell, we are struggling with whether 3 or not this is a virtual duck that isn't really a duck 4 at all or whether it really is a duck. 5 8781 Thanks again. 6 8782 MR. SPURGEON: Thank you. 7 8783 MR. HOFFERT: Sometimes if it walks 8 and quacks like a duck it is Groucho Marx. 9 8784 THE CHAIRPERSON: That concludes our 10 proceeding for today. We will resume tomorrow morning 11 at nine o'clock. 12 --- Whereupon the hearing adjourned at 1655, 13 to resume on Wednesday, December 2, 1998 14 at 0900 / L'audience est ajournée à 1655, 15 pour reprendre le mercredi 2 décembre 1998 16 à 0900 17 18 19 21 22 23 24 25 StenoTran
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