If a private company ran the subway, we would soon find that late night service to far corners of the city would be cut almost immediately. This is because it is not cost effective to run busses to the city periphery during those unprofitable wee hours. However, for a modern city to operate and provide basic services for its population, that bus must run; a functioning, egalitarian public transportation system is in the public good. If certain essential services are left in the hands of the private sphere – or at least remain unregulated - the dogmatic pursuit of the bottom line would trump the more intangible value of public good.

Webster's New Millennium Dictionary of English defines public good as both “a good or service that is provided without profit for society collectively” and “the well-being of the general public.” (my emphasis) They are, quite literally, synonymous. Like the hypothetical private subway, if we left our television and radio waves, movie screens and bookstore shelves unregulated and open to domination by American cultural industries, we would soon find that what scant Canadian content currently available would all but disappear. Moreover, without government policy fostering domestic cultural industries, many Canadians currently employed in that field would have to change their line of work or move elsewhere.

In discussing the cultural industry, this paper will focus entirely on the field of popular culture – books, records, films and broadcasting. It is in these fields “that globalization has made its most pervasive attack on local cultural expression... It is also the area where the economic rewards are highest for the successful company, and where those companies are most likely to resort to trade law in order to maximize those rewards.” (Grant, 3)

It is interesting to note that many people use the word “ecosystem” to describe culture at large. In fitting with that analogy, a quote from renowned Canadian biologist David Suzuki is apt when transferred to the cultural industry.

Nature is in constant flux and diversity is key to survival. If change is inevitable but unpredictable then the best tactic for survival is to act in ways that retain the most diversity. Then, when circumstances do change, there will be a chance that a set of genes, a species or a society will be able to continue under the new conditions. Diversity confers resilience, adaptability, and the capacity for regeneration. (315)

It clearly follows that it is undeniably in the public good to foster and maintain a diversity of cultural voices. This is done by ensuring that there is a healthy balance of imported voices and domestic ones. Due to the proximity of the United States and the sheer and utter worldwide dominance of its cultural industry, this balance boils down to regulating foreign (mostly American) voices and nurturing both the funding and conditions for creation of Canadian cultural products.

Canada already has a complex 6 part “tool kit” of policies to address this disparity of voices in the cultural industry. They can be loosely referred to as public broadcasting, scheduling quotas, spending rules, national ownership, competition policy and subsidies. The tool kit has been quite successful in producing a number of renowned Canadian authors and musicians, but lackluster in fostering critically acclaimed Canadian television and film. This mixed success suggests that while the system is in place, the economic pump must be primed and the well of financing must be topped up with much more cash. In other words, the reason why we lack acclaimed films and television programs is not that our regulation is inadequate or counterproductive, rather that it is great at funneling money to creative projects and creating incentive for their production, there is just not enough money. Therefore, this paper will focus on the two areas where few if any projects have achieved the elusive popular culture goal of success both home and abroad – television and film.

In Canada, a regulatory agency now known as the Canadian Radio-television and Telecommunications Commission (or CRTC) was created in 1958 to impose “expectations of public service as requirements of private stations' newly minted licenses.” (181) “[the CRTC] sets content standards and monitors statutory caps on concentration and foreign ownership of media” (187) Over the years, this Commission has been able to pioneer and experiment with various regulations to ensure a diversity of voices in the interests of public good. However, a single fact has given the CRTC the ability to adjust its policies as the marketplace and technologies evolve. This is that the CRTC reviews every license regularly, often increasing spending and content quotas before granting renewals.

This ongoing process of regulation adjustment is entirely necessary in a field where the curious economics of the cultural industry are as apparent as they are in television. Conventional economic wisdom would have us believe that “if Canadian cultural products have merit, the market will reward them.” (8) However, in the cultural field, the bottom line trumps merit or recognition. “Less-popular imported programs can be more profitable than more-popular domestic ones.” (131) This is illustrated in the various temporal and geographical “windows” that television program distributors use to maximize their return in each market and delivery medium. This price discrimination is loosely determined by the size of the market (country or region) and whether the program is first-run or rerun.

Broadcast rights are sold first and most expensively to American television stations for the first-run window. For expensive American drama, a one hour program that costs an average of $2 million to produce will be licensed for American broadcast for $1.4 million. The fee charged to a Canadian station for simulcast is a mere $50,000, while first run rights cost only $10,000 in Brazil . The goal for the American companies “is to achieve the highest price the market will bear that is below the cost to broadcasters of making or buying an equivalent program from domestic producers.” (129) For Canadian or Brazilian local television to create their own original television drama of comparable quality they would have to spend at least an additional $1.95 million over the cost of acquiring rights for audience tested American shows. It is not difficult to see why American shows can be found on television screens the world round.

When private broadcasters are left to prioritize their content scheduling and spending in order to maximize that economic bottom line, it is clear that domestic content and public good will fall by the wayside when facing a cost differential of $1.95 million. However, the CRTC has been successful (if not strong handed) in imposing and gradually increasing quotas as required devices in broadcaster's licenses. As a % of the previous years' revenue, expenditure requirements range from a low of 22% (CMT), to a high of 71% (Life). Scheduling quotas start at a low of 30% (Outdoor Life, StarTV), to a high of 100% (Weather, CTV Newsnet). (226-228) There is no reason to believe that this constantly evolving set of quotas is not doing its job; expenditure requirements ensure that scheduling quotas are not met with mere quantity over actual quality by broadcasters. However, in 1987, various broadcasters did persuade the CRTC to reduce, but not eliminate expenditure requirements. (226) Notice that at both the high and low ends, expenditure requirements are lower than scheduling requirements. This suggests that the system works to regulate cheaply imported American fare, while at the same time it is a lack of hard cash that prevents Canadian programming to compete with the sheer number and production values of imported competition. If increasing expenditure requirements is too much for domestic broadcasters to financially bear, maybe an alternate funding source, like the Canadian Television Fund, available to broadcasters as well as independent producers could, with additional resources, fill that funding gap.

Like television, the international film market is dominated by a few major American studios. However, unlike television and because the costs of producing, advertising and distributing thousands of prints of big budget films are so great, initial capital expenditure is rarely recovered even in the lucrative American market. But the Majors are incredibly well capitalized. Unlike an indie or start-up, they can release many films, hedging their bets on that elusive hit. They can spend lavishly on advertising for all those films, increasing their chance for a big opening weekend. Furthermore, they can afford to produce the thousands of prints necessary for a wide opening day. With large box office numbers, they can charge more in every release window – from licensing DVD rentals to network television broadcast. And finally, because of their deep pockets, they are “better placed to wait out he early loss-accruing years of a film's life cycle.” (94) “Sheer scale, in other words, allows the Majors to stay in the game – without going broke – until their dice get hot.” (84)

Unlike television broadcasters, film theater chains rarely (if ever) produce their own content. As a result, spending quotas would be useless if imposed upon them. Scheduling quotas would likewise be an unnecessarily heavy burden, given the lack of sheer numbers of domestic films and their profitability. The dominance of the American Majors seems so absolute, that an effective way to spur domestic film production would be to use that dominance against itself. France has seemed to do this quite effectively using two different measures. First, France prohibits television advertising of films. This lessons the effect of advertising on box office returns and “gives smaller movies a better chance at finding audiences without having to mount comparable massive ad campaigns.” (77) Second, and most important, the French collect a tax of 11 per cent on every cinema ticket sold in the country – including tickets to those pervasive American blockbusters - and funnels it into a fund for French film production. (298) This is the type of consistent, high level financing that the Canadian film industry is desperately in need of. Rather than an emphasis on tax breaks to encourage domestic film production, France uses a complex statistical system to reward filmmakers with a track record of success with additional funding. That the French system seems to be working is evidenced by the fact that “in 2001, France was the only EU country to achieve over 50 per cent cinema box office admissions for its own national films.” (233) This is a state of affairs that Canadians could only dream of (even if a large factor in that figure is due to language). Moreover, such a tax has a beautiful poetic justice to it whereby the greater the success of a film (especially a foreign Hollywood blockbuster), the more that is contributed to a domestic film fund. This film ticket tax is certainly worth consideration in Canada .

What all this suggests is that Canada requires increased finances for domestic cultural production within the already existing framework of regulation and subsidies. Three boards already exist to grant funds for television and film production in Canada : CTF (the Canadian Television Fund), Telefilm Canada and NFB (the National Film Board). This chronic underfunding is self admitted: “… in 2003, [the CTF] blamed limited resources for its inability to finance more than half the proposals before it.” (305-306) Clearly then, a new source of funding needs to be created. While a European-style annual television licensing fee would be nearly impossible to impose now, given the fact that all functional televisions in the country would have to be surveyed and the staunch resistance that would be put up by consumers and industry representatives alike; something similar could be the saving grace Canadians are looking for. An audio-visual technology levy may be the answer. Instead of charging an annual fee to have a television in your home, a one-time tax on all audio-visual playback devices would create a huge new pool of finances for our granting bodies. This tax could be paid by the consumer at the time of purchase, or absorbed by the retailer, if they felt that sales would drop in response to the new tax. This tax would be applied to all playback devices and not to any recording devices – in effect saving the aspiring creative professional from any additional financial burden. It would solely be for consumers of popular culture. In specific, the tax would be applied to televisions, projectors, stereos and speakers, ipods and computers with speakers (presumably, computers without speakers wouldn't be used for audio-visual playback, but external speakers for a computer would be subject to the tax). Exempt would be cameras and video cameras, microphones and other audio recording equipment. Given our insatiable hunger for new electronic gadgets and the planned obsolescence built into their design, this new tax would be a lucrative source of funds for domestic cultural voices, to say the least. Also, like the movie ticket tax, this audio-visual levy would be applied across the board, without favouring domestic goods over imported ones. As such, foreign electronics manufacturers, like their foreign Major studio counterparts, could not resort to international trade law to rebuke the tax because no national preference is given. No free trade agreements will be violated.

The international cultural market “is built on the remarkable fact that [the dominant] US distributors will make money no matter how low the price they charge for a particular program [outside of the US ].” (131) It is that fact, and other curious economic realities of the culture industry that require governments to interfere in the sector with regulation of foreign fare and subsidies and other incentives to bolster domestic production. It is their responsibility to do so, in order to protect and foster the public good. Left to the laissez-faire open market and without that public intervention, cultural industries in countries outside the US – especially English speaking ones – would be completely overrun and we, the cultural consumers, would be left to a steady diet of homogenous, re-packaged American fare. So uneven is this playing field that even domestic popularity of a particular cultural good isn't enough to guarantee its financial success in competition with similar imported programs. “In the peculiar market of popular culture, the most popular offering is often not the most profitable one.” (17)

As a result, despite living in a world where there are more methods and media than ever to express diverse and specific voices, fewer voices are being heard. The vast majority of cultural voices being heard originate within the established multi-national corporations that dominate the industry. As David Suzuki reminds us, “Diversity confers resilience, adaptability, and the capacity for regeneration.” (315) When applied to the cultural sphere, we realize that nothing less than our national identity is at stake here. In order to ensure our collective Canadian voice continues to thrive, our government has imposed a six-pronged approach to both stem the image flood from the South and assist our own cultural voices to be heard. However, like many things Canadian, despite the success of our system, cold, hard capital is severely lacking. Two new sources of funding may ameliorate this problem: a movie ticket tax and an audio-visual equipment levy. Without fundamentally altering the market, and without violating any international trade agreements we've already signed, these measures can produce the consistent, high-level financing necessary for the success of our domestic cultural subsidies.

In his famous pamphlet “The 10 Commandments of Television”, Moses Znaimer writes, “as television expands, the demand for local programming increases.” When further broadened to speak to the cultural industry as a whole, one could confidently say that as cultural media and technology expands, the demand for local content increases. Which raises the question: what kind of economic system have we enshrined as near capital “T” truth, when companies make more money by ignoring consumer demand than by fulfilling it?

Sources Cited

Webster's New Millennium™ Dictionary of English, Lexico Publishing Group, 2003-2005.

Grant, Peter S. and Chris Wood, Blockbusters and Trade Wars, Popular Culture in a Globalized World. Douglas & McIntyre, Vancouver, 2004.

Znaimer, Moses, The 10 Commandments of Televison.