Private radio pull-out could sink FACTOR

A 20-year-old funding agency that helps Canadian musicians with recording costs could disappear as a consequence of the CRTC’s Commercial Radio Policy review. The executive in charge of Canadian Heritage’s Canada Music Fund, the largest source of funding for the Foundation to Assist Canadian Talent On Records (FACTOR), says that if a request by broadcasters to divert their contributions from FACTOR is granted, his department will have to review its commitment to the agency. "If the CRTC says, ‘OK, you can withdraw’ and the broadcasters do withdraw…that would be a problem," says Pierre Lalonde, director of sound recording policy and programs. "Is it the most efficient means of delivering the money if the broadcasters pull out? That’s the issue....We would have to re-evaluate it." FACTOR is already well aware of the situation. President Heather Ostertag says that at a board meeting late last month "it was indicated...if radio pulls Heritage may pull as well….It could be the end of FACTOR." Out of FACTOR’s $12.5 million annual budget this year, 65% is derived from the Canada Music Fund; the rest comes courtesy of private radio’s mandated Canadian Talent Development contributions. FACTOR and its Quebec analog Musicaction get their public funding thanks to their role as joint administrators of two of the Canada Music Fund’s seven initiatives: the New Musical Works Component, which assists emerging artists in the production and promotion of recordings, and the Collective Initiatives Component, which provides funding for trade shows, conferences and other events aimed at promoting Canadian recording artists. Ironically, FACTOR was founded in 1982 by several private radio firms, including CHUM Ltd., Rogers Communications Inc. (then Rogers Broadcasting Ltd.), and Moffat Communications Ltd. (which was acquired by Shaw Communications Inc. in 2000). "FACTOR is something that a lot of money has been invested in by both the government and Canada’s private radio broadcasters," Ostertag says. "Private radio broadcasters started this – they were the ones that brought the government to the table in the first place." Thanks to FACTOR, Ostertag says, Canada’s independent recording artists "have been able to create their own small labels, continue to own their copyrights, and have the opportunity to do something not only nationally but internationally, and a lot of that’s going to get taken away if there is no FACTOR." "Take a look at Nickelback," she says, referring to the multiple Juno award-winning band. "They did a recording...and they took it to radio, and radio said ‘You need to change this, this and this,’ and they wanted remixes and everything. So, came knocking on FACTOR’s door and a mere $5,000 later, the rest is history. It works." However, some broadcasters believe FACTOR can survive without funding from private radio. "They still get a lot of money from the government," says Gary Slaight, president and CEO of Standard Broadcasting Corp. Ltd., whose firm was one of the earliest partners of FACTOR’s, merging its talent development fund with the agency in 1985. "We think it’s more than enough to serve the function that we think they should be serving." The Canadian Association of Broadcasters recently commissioned PricewaterhouseCoopers to perform a cost-benefit analysis of both FACTOR and Musicaction, a report the accounting firm delivered last month and that the CAB submitted as part of its comments on the Commercial Radio Policy review. In the document, PwC noted that the administrative overhead at FACTOR weighed against the contributions from all sources averaged 10.8% for the years 2000 to 2005; the agency is allowed to use 12.5% of federal funds for administrative expenses, less for funds originating from private radio. "It’s unfortunate that the PwC report has chosen to report on our full administration , but, in some cases, as little as 17% of our activity for a year," she says, a fact that could make the ratio of expenses-to-funding distributions appear skewed. And, Ostertag adds, "the CAB has actually indicated that are not in agreement with the PwC report." However, in an earlier interview with Canadian Communications Reports, CAB chairman Glenn O’Farrell said he had concerns about the commercial viability of some of the projects funded through FACTOR, and thus their usefulness to the for-profit radio industry. While he said government funding for emerging artists with limited commercial appeal is an "absolutely appropriate" cultural policy decision, he added that "private radio is in the business of commercial music for commercial audiences, and that’s why we feel it’s preferable to focus on Starmaker Fund and Fonds Radio Star as commercial music funding agencies for private radio Canadian Talent Development contributions." Curiously, the heightened scrutiny of FACTOR comes at a time when Canadian recording acts perhaps have the highest international profile they’ve ever had. Nickelback, for instance, made history last year by becoming the first Canadian recording act in 30 years to have a single debut at the number one position on the US charts. Lalonde points to another Heritage program, Trade Routes, which has proved a successful marketing vehicle for Canadian performers looking to break into foreign markets. FACTOR also faces competition from its biggest source of funding: in 2003, Heritage announced the launch of the Music Entrepreneurship Program , an initiative administered in-house at Heritage and which Lalonde says is targeted at "the very top tier of Canadian musical entrepreneurs." While Ostertag admits that some previous FACTOR clients have defected in favour of seeking MEP funding, the number is small. "There are only nine or 10 labels that have been applying to FACTOR in varying degrees that are leaving – that still leaves us with over 70 ," she says. But, Lalonde admits, even the overall level of the federal government’s commitment to the Canada Music Fund is uncertain. "The funding for the next five years was approved in the last budget, but of course if the new government decides to realign its priorities they could shift the funding from music to something else," he says. "There’s no indication thus far that these funds would be affected, but of course there are no guarantees. Even if it were the same government there would be no guarantees." For her part, Ostertag would like to see all FACTOR’s constituents come together to discuss the agency’s future and hear each other’s concerns. "You know, if you’re in a marriage and you’re not happy, you can decide it’s over or it’s not over or whatever," she says. "Does everybody always understand why? Not necessarily." Percentage share of radio audience by format, Fall 2004FormatPercentageAdult contemporary24.6Album-oriented rock5.6Canadian Broadcasting Corporation11.1Contemporary8.5Country10.0Dance0.6Easy Listening2.3Golden-oldies/rock15.3Middle-of-the-road3.1Other4.6Sports0.8Talk10.6U.S. Stations3.1Sources: Statistics Canada Radio Listening Data Bank Fall 2004; Statistics Cananda Radio Listening: data tables, July 2005.

Private radio pull-out could sink FACTOR

News | 04/21/2006 4:00 am EDT

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