[acc-cca-l] The CMCR Project’s 2018 Growth and Upheaval in the Network Media Economy in Canada

[Daniel Paré]

Forwarded on behalf of Professor Dwayne Winseck


The CMCR Project’s 2018 Growth andUpheaval in the Network Media Economy in Canada

Dear All

This morning we released the first of two reports in our annual series on the state of the telecommunications, internet and media industries in Canada. The report has gone through a very large overhaul this year to take better account of the role and scale of the global internet companies in Canada and questions of digital platform regulation. The following gives a few more details.

I hope you find this and the next one to come this time next week of use.

cheers
Dwayne


The CMCR Project’s 2018 Growth and Upheaval in the Network Media Economy in Canada

December 10, 2019

Today, the Canadian Media Concentration Research Project released the first of its two-part annual series on the state of the telecommunications, internet and media industries in Canada. A downloadable PDF of the report can be found here<http://www.cmcrp.org/the-growth-of-the-network-media-economy-in-canada-1984-2018>, with the scope of its coverage and a summary of its key findings outlined in the Executive Summary at the front of the report.

Here's a snapshot of what we cover:

[image.png]
The report covers twenty different sectors of the telecommunications, internet and media industries over a timespan of nearly three-and-a-half decades. It offers a wealth of data, analysis and insights into, for example, the state of mobile wireless and internet access markets and use in Canada and in international comparison to other Organization for Economic Cooperation and Development and European Union countries. The report also brims with data and analysis of the fast evolving stature and place of Google, Facebook, Amazon, Apple and Netflix within Canada, including in relation to their respective revenues, market shares as well as their scale and scope relative to major Canadian players like Bell, Rogers, Telus, Shaw, Quebecor, the CBC and other key actors.

The report also covers the melt down of several advertising-supported media sectors--broadcast tv and radio, newspapers and magazines—which, as we show in detail, collectively lost $4.4 billion over the last decade, and with thousands of full-time journalist jobs cut in the last five years alone. At the same time, however, we also show that the locus of the network media economy in Canada has shifted further and further away from advertising-supported content media industries to those that are based on “connectivity” and “bandwidth” as well as subscription fees and direct payments, for example, mobile wireless and internet access services and an expanding range of audiovisual ‘screen media’, from pay TV services to subscriber-based online video, music and gaming services. Indeed, as the report shows, the explosive growth of online video and music subscription and download services, online gaming apps, downloads and in-game purchases, and app stores (i.e. Google Play and Apple's App Store) has not only contributed to the rapid growth of the network media economy but to much upheaval that has all of the actors in these industries, regulators and policy-makers, scholars, journalists and other observers alike scrambling to make sense of their significance and implications.

Lastly, this report sets the stage for the second report in our annual series to be released next week that will examine whether or not each of the sectors outlined above, and the network media economy as a whole, has become more or less concentrated over time. Both reports also engage extensively with the state of telecommunications and broadcasting policy as well as the fast-emerging prospects for digital platform regulation.


Contact:

Dwayne Winseck, Project Director
Carleton University, Ottawa, Ontario.
Phone: 613-520-2600 x 7525; email: Dwayne.winseck at carleton.ca<mailto:Dwayne.winseck at carleton.ca>

Additional headlines of this report include:

·    The network media economy has more than quadrupled in size, from $19.4 billion in 1984 to $86 billion last year, and continues to grow at a quick pace overall.
·    mobile wireless and internet access services continue to grow briskly, with revenues rising to an estimated $28.1 billion and $11.9 billion, respectively, last year; while cable, IPTV and satellite TV continued to slide to $8.4 billion—a decline from all-time highs of $8.9 billion a half-decade ago. Wireline revenues (e.g. revenues from “plain old telephone service”) continued their long-term fall to $12.3 billion in 2018.

·     the adoption and use of wireline internet access is high in Canada relative to other OECD countries, but speeds are mediocre, prices high, data usages below the OECD average, and data caps still extensively used and set at low levels whereas in most countries that are comparable to Canada they are rare and the cost of exceeding them not as punishingly expensive.

·     mobile wireless (i.e. the mobile internet) adoption in Canada ranks very poorly against other OECD countries. For example, Canada ranks a lowly 31st out of 37 OECD countries in terms of adoption—a drop in rank compared to other countries over the previous year; it also does not fare well in terms of mobile data use, either, ranking 30th out of 36 OECD countries surveyed with an average of 2.5 GB of mobile data usage per subscriber per month—about half the OECD average and far below, for example, Finland (19.4 GB), Austria (16.4 GB), Denmark (7.6 GB), France (5.6 GB) and the US (5.4 GB).

·     over one-quarter of households in the lowest income quintile do not subscribe to a mobile wireless service. By contrast, mobile wireless service is nearly universal for the most well-off households.

·     the cost of media devices is plunging but the cost of communication services like broadband internet access and cable TV (including IPTV) continue to rise briskly relative to the consumer price index while the price of mobile phone services have declined modestly since 2015.

·     Total advertising spending has declined in “real dollar” terms on a per capita basis, relative to the media economy, and in relation to the gross domestic income of Canada, for most of the past decade. This relative decline of advertising revenue over the last decade wiped out between $765 million and $1.1 billion in such revenue—a loss of roughly 5 to 10 percent of total advertising revenue over a decade.
·     TV advertising spending also peaked at $112 per capita in 2011 but fell to $82.80 last year in real dollar terms. Subscriber fees now account for nearly two-thirds of revenue for all television services, i.e. broadcast, pay and specialty, and online video services.
·     As a result of the long-term, downward pressure on advertising revenue, several media sectors that depend primarily on advertising are in crisis, e.g. broadcast TV, radio, newspapers and magazines. Collectively, these media sectors have lost $4.4 billion in revenue, eight broadcast television stations have gone dark and numerous daily newspapers have either been closed or pared back their publishing schedules since 2008. Over the last five years, 2,800 full-time journalist jobs have been eliminated. For these media sectors, and the critically important functions that they support—namely professional and local journalism—these are dark days indeed.
·     Newspapers are in turmoil with revenue plunging from a high of $4.7 billion in 2008 to $2.3 billion last year. This sector is truly in crisis but the causes are much deeper and more complex than assumed by those who simply blame Google, Facebook and the Internet for this state of affairs. After rising steadily over the long run from 1987 until 2013, the number of full-time journalists has dropped by over twenty percent in the last 5 years, falling from 13,000 in 2013 to 10,200 last year. As the number of full-time journalists shrinks, the void is being filled by a vast expansion in the ranks of public relations, advertising and marketing professionals.

·     On more optimistic note, Canadians consult a wide-range of “old” and “new” as well as “domestic” and “foreign” news sources online: e.g. the CBC, Postmedia, Torstar, CTV, Globe and Mail, Huffington Post, CNN, the New York Times, Washington Post, The Guardian, the BBC, Yahoo!-ABC, etc. However, none of the “digital native” Canadian news organizations such as the National Observer or The Tyee appear on the list of the top 50 internet news sites visited by Canadians.

·     While overall advertising revenue stagnates (in real dollar terms), or is creeping upwards very slowly in nominal terms, internet advertising continued to soar last year to an estimated $7.7 billion—up from $6.8 billion over the previous year.

·     Internet advertising, however, continues to become more concentrated, with Google and Facebook accounting for 77.2% of the online advertising market in 2018—an modest rise over the previous year but a rise all the same based on the “digital duopoly” taking well-over four-fifths of the year-over-year increase in internet advertising revenue.

·     The real centre of the media economy is subscriber fees. They outstripped advertising revenue by a ratio of more than 5:1 in 2018. The “pay-per media” (e.g. mobile phones, internet access, pay and specialty TV and over-the-internet video, gaming and music subscription and download services) are vastly more significant in terms of sheer economic size than advertising-based media (e.g. broadcast TV, internet advertising, newspapers) when assessed across the whole network media economy.

·     revenues for online video, music, gaming and app stores—i.e. digital audiovisual media services (AVMS)—have seen explosive growth in the last five years, soaring from $1.4 billion in 2014 to nearly $4 billion last year. Add in internet advertising, and the digital AVMS sectors constituted a $11.7 billion pillar of the network media economy in 2018, or 14% of all revenue—double what it was in 2014. Revenue for the digital AVMS sectors will likely surpass those of their non-digital counterparts (i.e. broadcast TV, radio, newspapers, magazines, etc.) in the next eighteen months.
·     The rapid growth of online advertising and digital AVMS has seen major global actors like Google, Amazon, Facebook, Apple and Microsoft (the so-called GAFAM group of internet giants) as well as Netflix move more deeply into the media landscape in Canada than ever before. Communication and media companies in Canada are face intensifying competition with these global internet giants in AVMS services as a result. Combined, they had a total of $7.7 billion in revenue last year. That said, it is important not to exaggerate the influence of the GAFAM group of digital platforms and Netflix because their combined market share adds up to about 9% of all revenue for the network media economy.

·     The “big 5” communication and media companies in Canada, in contrast, account for nearly three-quarters of all revenue across the network media economy: Bell, Rogers, Telus, Shaw (Corus) and Quebecor.

·     The telcos own all the major commercial TV services in Canada. This arrangement stands in contrast to those in the US, UK and most of Europe, which helps explain why broadcast TV and Canadian internet streaming options have fared poorly in Canada relative to those countries.

·     While broadcast TV in Canada is in dire straits, it is important to ask why conditions are especially bad in Canada relative to other countries where, while not necessarily thriving, broadcast TV is surviving.

·     Overall, the TV marketplace in Canada has and is thriving with fundamentally new pay TV sectors added to it over time, including the rapid growth of over-the-internet video services. Based on CMCR data, total TV revenues had soared to over $8.7 billion in 2018 or to an unbelievable $11.3 billion if the CRTC’s figures for download, subscription and ad-based video-on-demand (AVOD) services are used (this report is very skeptical of the magnitude of value the Commission assigns to these services).

·     Netflix had an estimated year-over-year average of 7.3 million subscribers and $1 billion in Canadian revenue in 2018. At year’s end, about 54% of all Canadian households subscribed to Netflix. It is now the fourth largest TV service operator in Canada, and nearly twice the size of Quebecor’s TV operations (not including cable).

·     Cable “cord-cutting” is real but still modest. Total subscribers fell from 11.5 million in 2012 to 10.8 million last year. Accounting for population growth, 76% of all households subscribed to a cable television service last year–down from an all-time high of 85.6% in 2011.

·     Telus, Bell and SaskTel had 2.8 million IPTV subscribers between them at the end of 2018 and accounted for just over a quarter of all cable TV subscribers and revenues. Competition between the telcos’ and cable companies’ video distribution platforms has intensified in recent years.

·     Fibre-based broadband infrastructure is under-developed by international standards, with penetration levels of roughly half the OECD average. Canada ranked 25th out of 37 OECD countries in 2017 in terms of fibre-to-the-doorstep—the internet infrastructure of the 21st Century.

·     The impact of cord-cutting, Netflix, Google, on the “broadcasting system” is real, but exaggerated. While many try to equate Netflix and other online audiovisual media services with broadcasting, the correct reference is to video-on-demand services, which have traditionally been treated with a much lighter regulatory hand than their linear counterparts. Casting the growth of online audiovisual services as a threat to the “broadcasting system” biases how they are framed and compromises how we might draw more potentially useful lessons from the European Union’s Audiovisual Media Services Directive (2016)).

·     Appeals to policy makers and the CRTC to adopt an “internet levy” and to require that ISPs and mobile operators selectively use data caps and zero-rating to promote Canadian content should be treated with great skepticism in light of these realities, principles of common carriage and the already very high cost and low levels of internet data usage in Canada.



About the CMCRP

The Canadian Media Concentration Research Project<http://www.cmcrp.org/> is directed by Professor Dwayne Winseck, School of Journalism and Communication, Carleton University. The project is funded by the Social Sciences and Humanities Research Council and aims to develop a comprehensive, systematic and long-term analysis of the media, internet and telecom industries in Canada to better inform public and policy-related discussions about these issues.

Professor Winseck can be reached at either dwayne.winseck at carleton.ca<mailto:dwayne_winseck at carleton.ca> or 613 769-7587 (mobile).

Open Access to CMCR Project Data

CMCR Project data can be freely downloaded and used under Creative Commons licensing arrangements for non-commercial purposes with proper attribution and in accordance with the ShareAlike principles set out in the International License 4.0. Explicit, written permission is required for any other use that does not follow these principles. Our data sets are available for download here<http://www.cmcrp.org/canadian-media-concentration-research-project-dataset-2018/>. They are also available through the Dataverse, a publicly-accessible repository of scholarly works created and maintained by a consortium of Canadian universities. All works and datasets deposited in Dataverse are given a permanent DOI, so as to not be lost when a website becomes no longer available—a form of “dead media”.

Acknowledgements

Special thanks to Ben Klass and Han Xiaofei, both doctoral students in the Ph.D. program at the School of Journalism and Communication, Carleton University, and Lianrui Jia, a Ph.D student in the York Ryerson Joint Graduate Program in Communication and Culture. They helped enormously with the data collection and preparation of this report. Sabrina Wilkinson, a graduate of the MA Program at the School of Journalism and Communication at Carleton University and currently a Ph.D. candidate at Goldsmiths University in the United Kingdom, also offered valuable contributions to the sections on the news media. Agnes Malkinson, another Ph.D. candidate in the Media and Communication program at Carleton University, is responsible for the look and feel of the reports, does all the visuals, and keeps the project’s database in good working order.

Professor, School of Journalism and Communication and
Director of the Canadian Media Concentration Research Project,
Carleton University, Ottawa, Canada
Phone: 613 520-2600 x.7525
Mobile: 613 769-7587
Follow me on Twitter: @mediamorphis
Visit my blogs: www.cmcrp.org<http://www.cmcmp.org/>; https://dwmw.wordpress.com/

Daniel J. Paré, Ph.D.,
Associate Professor / Professeur agrégé
Department of Communication<http://arts.uottawa.ca/communication/en>,
School of Information Studies (ÉSIS)<http://www.sis.uottawa.ca/>, and
Institute for Science, Society and Policy (ISSP)<https://issp.uottawa.ca/>

Graduate Program Co-ordinator, ISSP<https://issp.uottawa.ca/en/education/master>
University of Ottawa / Université d’Ottawa
55 Laurier Ave East, Rm 10154, Ottawa, ON, K1N 6N5, Canada
Tel: (613) 562-5800 ext/poste: 2052
Fax: (613) 562-5854
Twitter: @DJ_Pare
Director (Arts), Tri-Faculty Graduate E-Business Techologies (EBT) Program







-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://mailman.ucalgary.ca/pipermail/acc-cca-l/attachments/20191210/2da15b5a/attachment.html>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: image.png
Type: image/png
Size: 61132 bytes
Desc: image.png
URL: <https://mailman.ucalgary.ca/pipermail/acc-cca-l/attachments/20191210/2da15b5a/attachment.png>