Proposal to Create a Canadian Musicians’ Support Fund from a Streaming Levy
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1. Music is essential to our cultural identity and enriches Canadian lives. It is scientifically proven that music improves mental health and physical well-being. Because music significantly enhances life, Canadians value and enjoy music daily.
2. Most professional musicians can no longer earn a sustainable living wage from music creation and performances. This is because of diminished royalties caused by music streaming, and declining performance opportunities due to music venues’ economic struggles. Now, the COVID-19 crisis has caused sudden seemingly insurmountable hardship to an already struggling music community. On May 6th, B.C. Premier John Horgan announced that gatherings larger than 50 people will be prohibited for events until a COVID-19 vaccine is available for public inoculations. As a result, professional musicians have lost their tours and local gigs for at least a year; many live music venue owners are on the verge of bankruptcy; and the future looks daunting for young musicians who have aspirations for a career in music. As a veteran music teacher and working musician, I feel a deep responsibility to advocate for my music students’ career opportunities, and for the livelihoods of my professional musician peers.
3. For decades, live music venue operators have struggled economically in part due to soaring real estate leases. These economic challenges have also kept most musician performance wages below living wage standards. The current pandemic crisis has shut down performance venues causing predicted irrecoverable economic stress. Without significant ongoing government financial support, many venues owners say they will go out of business. The short-term CERB, CEWS, and CECRA are not enough financial support to ensure the recovery of live music venues and professional musicians. In response to the need of long-term financial support, 50 Canadian Senators signed and submitted a letter on April 20th requesting that our government implement an ongoing $2000/month living wage for all Canadians in need of financial support. This is a much-needed progressive proposal to support all Canadians’ ability to earn a sustainable living wage from a long-term plan that emphasizes the need to radically change the way we financially support our citizens.
4. However, our music industry also needs a financial support strategy that will rebuild our music economy. Without long-term financial support, and a recovery stimulus package to rebuild our live music scene, many live music venues and performing musicians will permanently go out of business. Our proposed Canadian Musicians’ Support Fund Levy (CMSFL) is a logical source of funding that is raised from the daily public consumption of music. The CMSFL is essential for the ongoing financial support needed to rebuild our music scene by creating stimulus funding for the presentation of live music performances that pay fair wages to musicians. The CMSFL will finally make it possible for musicians to earn a sustainable living income, so that they can viably create professional music.
5. Although demand for recorded music has never before been so accessible and in such high demand, revenue streams for creative artists and musicians have ironically plummeted to almost record lows. The average professional musician earns less than $17,000/year in gross total income from a variety of combined music revenue streams. This includes average streaming earnings amounting to less than $500/year at approximately half a cent per stream. Many artists have to split their gross earnings with co-writers, record labels, publishers, and agents; most artists get paid only 12% of their gross music profits. This gross income is well below the 2020 low-income cut-off of $25,920 for individuals in Canadian urban centres with 500,000+ populations.
6. For more than a decade, streaming corporations have dominated the primary medium through which music consumers listen to music, and how artists monetize their recordings. Regrettably, artists have to make their music available on all streaming platforms or risk not being heard at all. Despite streaming corporations being entirely dependent on the distribution of musicians’ recordings to earn profit, and regardless of numerous court challenges, streaming corporations continue to exploit artists with unfair royalty rates of an average half cent per stream. Streaming corporations have resisted paying fair royalty rates even though in 2019, Spotify reported a 29% profit increase at $7.44 billion.
7. Despite best efforts, our government has been unsuccessful in preventing the extreme devaluation of musicians’ creative content through streaming. This has created an unsustainable business model for creative and performing musicians. It takes almost 1,500 plays to earn a single dollar on YouTube. In order to equal a $10 album sale on most streaming platforms, an artist must on average generate 2000 half-cent royalty streams from online listeners who literally have instant access to millions of song titles. For the average artist, capturing ten million streams per year to generate an annual gross income of $50,000 is an impossible task, especially given that music consumers have instant unlimited access to millions of song selections. In contrast, prior to the availability of streaming, it was common for a recording artist to sell 5000 physical albums per year at $10 each to earn a gross annual income of $50,000. For creative artists this revenue loss is staggering and in order for musicians to recover, this exploitive profit share must be remedied. Therefore, the CMSFL is essential for professional artists to earn a sustainable living wage in order for them to be able to create and perform music with a standard of excellence.
8. Music consumers have for many years enjoyed extremely low monthly subscription rates for streaming services that give access to unlimited music content. Most streaming subscribers seem unaware that creators of the music they need and enjoy daily are being financially exploited by streaming corporations. It is necessary for music consumers to pay fair price for the music content that they consume in order for music creators to earn a sustainable living wage. Before the age of digital music, music consumers had to purchase almost all of their music in order to enjoy high quality recordings. Conservatively, the average music consumer would spend hundreds of dollars per year on a limited library of music, and they could only enjoy the music library they purchased. In the pre-streaming and file-sharing era, a consumer would pay an average price of 99 cents per song, or $9.99 per album. Currently, music consumers enjoy commercial free unlimited streaming of music for just $9.99/month or $14.99/month for a premium package that also allows the consumer to download unlimited music for up to six family owned personal digital devices. For approximately $120/year, music consumers can enjoy unlimited access to the creative works of thousands of recording artists, not fully realizing that streaming corporations, record labels, and agencies take the majority of recording profits leaving artists a sliver of the profit pie. As a result, high-quality professionally produced music has increasingly atrophied into a flood of low-budget ear-worm tunes because record labels want low risk homogenous releases instead of higher risk big budget productions that might create ground-breaking timeless music. Also, the collapse of Canada’s music scene has greatly diminished the development of live music acts and individual musicianship. Fewer youth are learning to play instruments, and instead, rely on samples and auto-tune to craft looped digital tunes designed for maximum familiarity and attention grabbing instead of inspired art. Without adequate financial support to properly develop new artists, the future of Canadian music is in crisis.
The Proposed Solution
1. In order for original music creatives and performing musicians, as well as live music venues to operate with a sustainable revenue stream generating a living wage, a new government fund needs to be created to top up musician annual earnings, and provide financial incentives for live music venues to create performance opportunities that pay musicians well. This Canadian Musicians’ Support Fund (CMSF) will also become an additional source for grants to fund new creative works. As well, this fund will support Canadian music education to develop young musicians who will grow our national music culture and provide music services, essential in our citizens’ daily lives.
2. The Canadian Musicians’ Support Fund is a proposed 2-billion-dollar fund that will be created through a government implemented 5% per month levy on all Canadian home internet and mobile data subscriptions. The CMSFL will be applied through a new music tax code similar to the 1999 CPCC levy. Internet providers and streaming corporations are in no danger of losing paid subscribers even if subscription rates are increased with this proposed $4 per month CMSFL. 91% of Canadians 15 years of age or older use the internet. Spotify alone has over 124 million paid subscribers globally and is steadily growing. All other streaming corporations such as Apple Music, Amazon, Pandora, and YouTube, just to name a few, are also steadily growing. In 2018, Spotify reported that in the first six months of that year, Canadian Spotify subscribers had consumed the equivalent of over 27 million ten song albums. With a well-planned educational campaign that explains the need to financially support musicians, most Canadians will accept the CMSFL.
3. Applying the CMSFL to all Canadian internet and mobile data subscriptions would be the most efficient and affordable method to levy all streaming users as it requires only one monthly levy on internet access instead of collecting levies for several individual streaming services. Since 89% of 14.1 million Canadian households have broadband internet services, and all internet users stream music in one form or another, it is fair to place the CMSFL on all internet users to financially support the creation of the music they currently enjoy daily at minimal or no extra cost. As well, the number of Canadian smartphone users stood at 31.38 million in 2020 and is expected to grow to about 33 million by 2024. With combined home and mobile internet subscriptions totalling more than 43 million, the monthly CMSFL rate could be set at an affordable 5% per month and still generate approximately $2.1 billion for the CMSF. The CMSFL rate is comparable to present day CPCC rates. Because musicians should not have to pay into their own support fund, all SOCAN and Music Industry Association Members will be exempt from this levy by verifying their Membership Number during the subscription process. In order for a professional musician or creative to quality for the CMSFL, an artist must be a member of the CMC and provide evidence of professional music industry qualifications and/or experience as detailed in the application process.
4. This proposed $2.1 billion/year CMSF will help financially support the approximately 35,000 professional musicians identified by The Canada Council for the Arts and 150,000 SOCAN Members. The CMSF will also provide financial incentives to venues to create well-paid music performance opportunities; fund more creative grants, and help fund public music education through MusiCounts. This fund could provide an average financial support of up to $30,000 to each musician in need, as indicated by their annual income tax return. Any professional musician that falls short of an annual living wage, will receive a federal living wage subsidy. After musician living wage subsidies are paid out, the CMSF will still have more than a $1 billion available to fund performance incentives, creative grants, and public music education. Based on the most accurate current number of all Canadian household internet and mobile data subscribers, the monthly CMSFL rate might need to be reduced or raised to meet funding needs. The goal is for the CMSFL to be a self-perpetuating 2-billion-dollar/year fund that grows from a fair user-pay levy on music consumers who enjoy great value for unlimited music.
5. Similar to some EU tax laws, specifically in Ireland and Germany, all music/artist related income will be tax exempt as further financial compensation for our government’s unsuccessful best efforts to protect musicians’ creative content from streaming exploitation that has resulted in our music economy’s devastating devaluation.
6. A strategic PR campaign will be used to form a coalition of musicians across Canada to promote, through selected representatives, a public information platform that educates the public regarding the need to pay the CMSFL for music streaming. Once financial recovery for the general public has begun to take effect, our PR campaign led by Canadian legacy musicians will be launched to gain public support for the CMSFL so that musicians and music venues can continue to provide essential music services to the public. Currently, this proposal has been shared with local Ministers of the B.C. Provincial and Federal Governments; and executives from Music Industry Associations, as well as leaders in our professional music community.
7. Original music creatives and performing artists provide a scientifically proven essential service to the daily health needs of our society that promotes social bonding and improves mental health. Streaming is a convenient unlimited platform that gives people instant access to all the benefits of music at a comparatively affordable price even with a 5% per month CMSFL increase. Original music creatives and performers deserve to earn a sustainable living wage to afford them the continued ability to create brilliant recorded and live music that has become an essential part of every Canadian citizen’s daily living needs.
Thank you for your consideration.
CMC Executive Director
Last Updated: May 13, 2020