CRTC, radio find same wavelength

by GRANT ROBERTSON, Globe and Mail

Canada's biggest radio networks, fearing their audiences are being splintered by new technology such as iPods and Internet broadcasts, won a key concession from federal regulators yesterday.

Stations that play pop music, classic rock and other mainstream formats won't have to add more domestic music to their play lists, a move they argued would handcuff them against unregulated competitors.

The Canadian Radio-television and Telecommunications Commission wanted to increase the domestic content quotas of Canada's pop music stations to 40 per cent. However the federal regulator backed off, saying it would keep that level at 35 per cent.

The decision was part of a CRTC review of the radio sector. The broadcasters had argued for that quota to be lowered. In a trade-off of sorts, the commission said that while it would keep the quotas the same for mainstream stations, the industry must contribute more money toward developing Canadian artists.

Under a new structure that links funding of artists to revenue, the industry will pay an extra $4-million a year toward Canadian content development, based on last year's revenue figures.

“This is a win for most commercial radio,” said Kaan Yigit, an industry observer with Solutions Research Group, a media consultancy in Toronto.

The ruling was part of a long-awaited review of the radio industry conducted by the CRTC, where industry players squared off over the links between Canadian music quotas and the industry's ability to draw audiences — particularly younger listeners.

“Such an increase [to 40 per cent] would not be appropriate at a time when the commercial radio industry must respond to the challenge of competing with new, unregulated sources of programming,” the regulator said in its ruling.

The Canadian Association of Broadcasters said it was pleased the quota wasn't increased, but the regulator's decision does little to address the plight of radio as the industry attempts to prevent audiences from fragmenting. “We feel it falls short of fully embracing the realities of this new landscape,” said Glenn O'Farrell, president of the association.

Funding of Canadian content development will now be based on a radio station's revenues, rather than on the size of the market in which it operates. While this should ease the burden on small stations in large markets, it would also give artists access to more revenue from bigger, more profitable stations.

Under the new system, small stations will pay a flat fee of up to $1,000 depending on their revenue, while larger stations will pay that amount plus 0.5 per cent of their annual revenue over $1.25-million.

The Society of Composers, Authors and Music Publishers of Canada (SOCAN), the group that licenses Canadian musical performances, said the industry is profitable enough that the quota should have been increased. Canada's commercial FM stations collectively pulled in a record $1.03-billion in revenue last year, with pretax profits of $247-million.

“Our view is that the FM radio industry is very healthy and increasing the level from 35 per cent to as high as 51 would have been no hardship to the industry,” said Paul Spurgeon, legal counsel for SOCAN.

However, the amount of domestic content played on stations that operate under jazz, blues and concert music formats will increase, the CRTC said.

Those stations were required to play just 10-per-cent Canadian content because the industry argued there wasn't enough material to fill the same domestic content requirements of pop music stations. Jazz and blues formats will now be required to fill 20 per cent of their play list with domestic music, while concert music stations must play 25 per cent.

Spoken word, such as news broadcasts or documentaries, is also included in the quotas. Radio stations have warned boosting the requirements would force jazz station to constantly play artists like Canada's Diana Krall. However, Mr. Spurgeon said it will create a market for more artists to emerge.

article originally published at http://www.theglobeandmail.com/servlet/story/RTGAM.20061215.wxr-radio16/BNStory/....

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