Content industries must adjust to new paradigm, says Jumpwire president

OTTAWA—The House of Commons heritage committee got a lesson Thursday in how Canada can be a better “laboratory for the world” in the digital music and YouTube spaces. At a committee meeting Thursday about the music business in the digital age, Gavin McGarry, president of Jumpwire Media, told MPs the government should stop focusing on how to repair broken business models and embrace technological innovations like online video and file sharing applications. His appearance before the committee came just following testimony from music industry representatives, which focused on the possibility of surcharges applied to Internet service bills or digital media recorders to compensate artists. “The music business is in disarray, and anybody who comes in here is going to be upset. Their entire business model has collapsed and they’re trying to preserve it. I don’t blame them,” said McGarry, a Canadian whose company has offices in New York and Toronto and specializes in BitTorrent data tracking, cross media, and the implementation of apps, websites and gaming. Large companies have historically abused recording artists by leveraging barriers to entry and earning far more revenues than the musicians, he said. “Now it’s shifted. The paradigm has completely changed. It’s been disrupted and everyone’s running around like chickens with their heads cut off.” But he cautioned MPs on the committee to look forward, not backward, saying that while traditional music labels are suffering, independent musicians are monetizing today’s do-it-yourself opportunities. “There are all these indies that are now changing the way it’s done,” McGarry said. “They don’t need record labels. They don’t need the government. They don’t need anybody. They do it themselves. With the Internet and the advent of mobile, it’s a do-it-yourself, entrepreneurial world.” Google Inc.-owned YouTube pays creators of popular videos, or “youtubers,” through advertising revenue-sharing agreements. YouTube also has agreements with rights holders to pay royalties for videos using copyrighted music, and provides “click-to-buy” links from music videos to music for sale online. “How much money do you really need to make as an artist if you’re doing it yourself? If you make a couple hundred thousand dollars a year and you live out in Fergus, Ont., life is good,” McGarry said. He added that many young people are earning revenues from YouTube videos. He recently spoke at Ryerson University, where he told students they should each be making $1,000 per month on YouTube, he said. Duncan McKie, president and CEO of the Canadian Independent Music Association (CIMA), told the committee Thursday independent musicians are pursuing “360 strategies” that maximize opportunities in the online environment. He said the companies draw on all possible revenue streams from the music. “They are a publisher. They are a management company. They are a merchandise company. They are a record label. They’re one entertainment company. The artist becomes the brand,” he said. McKie said artists can become partners in the company, referring to Arts & Crafts, a successful independent company in Toronto that produces music from artists like Feist and Broken Social Scene. He also pointed to Donald K. Donald in Montreal, another successful “360 company” producing Canadian music with digital strategies. McGarry—who served as a jury member for the Canada Media Fund’s experimental stream this year—said Canada is a leader on online video viewing, but content providers remain determined to link digital video to traditional broadcasting. He said producers often tell him broadcasters want all the rights for various platforms but don’t want to pay for multiple rights. As a strategy, he advises producers to approach other companies to secure mobile, online and merchandising rights, and then talk to broadcasters about their value, he said. It puts the broadcasters in a position where they ask how much the rights are worth. McGarry told the committee funds like the CMF are important to support digital content production—particularly for new platforms like mobile and YouTube—but cautioned that Canadian content requirements should not be too onerous. “I think that we make some of the best content in the world. Some of it is for Canadians, all of it is by Canadians, but it doesn’t have to scream Canada,” said McGarry, who now lives in New York. He added that Canadian content, particularly its multicultural nature, is attractive outside its borders. “We’re absolutely a laboratory for the world, and I don’t think we’re exploiting it. If you guys can help that, that would be helpful.” McGarry said BitTorrent is popular in Canada because content is on-demand, free or next-to free, and people can download what they can’t get on television. Broadcasters, distributors, and regulators shouldn’t fear BitTorrent, he said, but should find a way to monetize it. McGarry said new revenue streams are also available through data mining, and that there’s a world of startup companies built by people under 30 who are monetizing the collection of free online data by selling demographic and psychographic profiles attached to brands. He pointed to publicly available data available through BitTorrent, Facebook and YouTube. “ look at the data and sell it back to the brands, saying, ‘Look, here’s what everyone is doing,’” he said. “People think, ‘Oh, data’s not worth anything, I can’t monetize it.’ Actually, you can. We do it all the time.” McGarry said Jumpwire built a $250,000 BitTorrent tracking machine that tracks every television show, movie, and music file shared on the service, and sells that information to content companies. Don Quarles, executive director of the Songwriters Association of Canada, also told the committee Friday he is working on a “business-to-business” arrangement to establish a collective licensing agreement between music groups and Internet service providers (ISPs). In an interview following the meeting, Quarles said he hopes to set up a pilot project involving a major label and an ISP. The licensing fee arrangement would allow customers to opt-out and would be established between the music groups and the ISPs, not through the Copyright Board. McGarry said he’s not opposed to the idea of a collective licensing charge to compensate artists, but said it’s better to give artists the tools and skills they need be successful under do-it-yourself models. sdoyle@thewirereport.ca

Content industries must adjust to new paradigm, says Jumpwire president

Broadcast | October 29, 2010

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