TORONTO – "It wasn’t so long ago that we lived in a society dominated by broadcast mass media operating with analog technology," reminisced Canadian Association of Broadcasters CEO Glenn O’Farrell in a speech on Thursday.
A veteran of the broadcast world (O’Farrell launched CanWest Global’s Quebec properties), O’Farrell and the association is struggling with the new media world. "(W)hile mass media is still a powerful force, the universe is becoming more and more populated by narrowly targeted digital media offerings," he told those gathered at the Broadcast Executives Society lunch at the Four Seasons Hotel. "In fact, we are now seeing references to markets defined as “the audience of one” which I prefer to call ‘Me Media’."
In the face of all this, what’s to become of Canadian media, O’Farrell asked.
O’Farrell referenced this year’s CRTC Radio Policy Review hearing as well as the upcoming TV Policy Review hearing as evidence the rules of the game must change. While the existing model "has proven to be flexible enough to evolve with incremental changes in technology… the sheer magnitude of recent fundamental change, as opposed to incremental technological change, has shifted the paradigm in ways that could not and were not foreseen," he said.
"What we now face are unprecedented challenges to the ‘old order’. These changes will test our ability to ensure that the goals of Canadian cultural policy remain achievable in a new, asymmetrical universe, in which a regulated broadcasting system co-habits with a parallel, unregulated world – the world of broadband and IPTV.
"Everybody understands this is happening, and is unfolding as we speak," he added.
O’Farrell referenced MySpace (the largest social networking site in the world) and YouTube (the top site for video content) and their zillions of users as evidence that people want content no matter where it comes from, whenever they want, wherever they want – and to be able to manipulate it however they see fit.
This doesn’t fit with Canadian cultural policy. " So what does Canadian public policy do when the living room of the Wayne and Schuster era explodes into multiple platforms and distribution channels? Downstairs, Mom and Dad might still be watching a great mass media product but Jessica, their 15-year-old daughter, is upstairs on her mobile device communicating with somebody named ‘Lucy in LA’ who she found on YouTube," said O’Farrell.
"’Me Media’ have colonized an unregulated parallel universe, where, beyond the reach of government policy and the CRTC, they are stealing growth and competitive advantage from conventional, regulated mass media by the hour," he added. "Meanwhile, Canadian broadcasters are required to observe static regulatory obligations, conceived when all media were mass media, and ‘Me Media’ was a postcard."
Quoting recent research done for the CAB, O’Farrell said in Canada, 11% of the Anglophone population and 7% of Francophones downloaded a video in the past month. And, 25% of Canadian Internet users aged 12-29 have downloaded a full-length movie or TV show, compared to 16% of U.S. Internet users of same age group.
Three percent of mobile phones were video-capable in 2005 – but 90% will be video-enabled by 2008, O’Farrell added.
"Meanwhile, as eyeballs migrate to the unregulated, parallel universe, advertisers are racing to meet them there. This is splitting the value chain, and in consequence, posing a serious challenge to Canadian cultural policy," he explained.
Price Waterhouse is projecting growth of just 1.9%, in Canadian TV advertising to the end of the decade while at the same time, they expect Internet advertising to grow at 18.8% over that period. Online advertising within the U.S. increased from US$9.6 billion in 2004 to US$12 billion in 2005. In March 2006, US advertisers bought 185 billion display ads on the Internet, double the amount in the same month the previous year. And while the Internet accounts for 14% of all media use, it still accounts for only 4.3% of all ad spending. A correction – upwards – is inevitable, said O’Farrell.
Canadian broadcasters are working on things, however, he noted – pointing to CanWest’s recent launch of bbTV: BlackBerry TV and the CTV Broadband Network, among others.
Copyrights remain a vital issue as well, added O’Farrell. "(W)e need access to the necessary rights," he said. "There are a number of views about who should hold which rights in the unregulated media space. As broadcasters, we maintain that if content is to be leveraged across new platforms, these rights should not be unduly parceled off, or sold to multiple parties in the same territory. It simply makes no sense to compete with our program suppliers for audiences in the same market, with the same program.
"Some might suggest we have the elements of a nearly perfect storm: as costs rise, as earnings slow, and regulation remains inflexible and removed from the ways in which people are consuming content, broadcasters are playing with one hand tied behind their backs," said O’Farrell. "Although change may eventually render the broadcasting landscape unrecognizable, existing policy requires that regulators continue to make their decisions based on yesterday’s framework. Furthermore, the CRTC bases its decisions on broadcasters’ productivity curves over the previous seven years, but past performance is no longer an accurate indicator of future success.
"The old economics of broadcasting in which a restricted number of players served large audiences in an appointment-based model is being turned on its head… Yesterday’s regulatory expectations were built on assumptions that the broadcasting system would yield large audiences for a limited number of players. Tomorrow’s, must be based on the reverse. Yet even the most recent CRTC pronouncements continue to operate, at least in part, on yesterday’s assumptions. If the going-forward objective is putting Canadian content in front of Canadians, then our policy apparatus must be sharply re-oriented."
What to do then? Eliminating the broadcasting and telecom regulatory silos would be a start, said O’Farrell. Canadians could watch the World Cup of Soccer on their cell phones this summer – a dandy illustration that the silos, from a consumer point of view, don’t exist at all.
"IPTV providers are licensed on the assumption that they are simply cable companies with newer pipes. Yet already we hear calls for regulators to get out of the way and let IPTV ‘maximize its potential’ – in other words, to reflect a borderless IP environment. How long before regulated IPTV providers morph into unregulated content providers?" asked O’Farrell.
"The first priority must be to develop a holistic view of the system… You can’t make changes to one part of the system without affecting all the others.
"Next, we have to recognize that once audiences are blown up into fragments, (and) it’s going to be a challenge to re-aggregate them," he said, "The changes we are witnessing are fundamental and irreversible. But while they may be disruptive, there is no need to throw our hands up in resignation and forfeit the achievements of the last many decades."
Local broadcasters can be those re-aggregators, O’Farrell added. "Local broadcasters provide a focal point for communities, and the homes and offices and yes, mobile devices into which they reach are brought together by that very commonality of experience like beads on a necklace. If you ask Canadian audiences, they will tell you as much. But the distractions of the parallel broadband world have made local broadcasters among the most vulnerable links in the chain of Canadian communities. We face the very real risk that the broadcasting system we take for granted may falter due to lack of proper policy attention today."
So can Canadian media find a place in this new muddled universe? Of course, but, "Canadian entrepreneurs and Canadian companies must be encouraged to grow and multiply media streams featuring Canadian content; Government policy must continue to recognize that given the size of our domestic market, a ‘pure’ market forces driven policy will not enable the growth of Canadian media," said O’Farrell.
