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Halifax’s Ian McKinnon, centre, founded the label and management company Groundswell Music in 1991 to support the needs of his band Rawlins Cross. (Jacques Boissinot/The Canadian Press)
Halifax’s Ian McKinnon, centre, founded the label and management company Groundswell Music in 1991 to support the needs of his band Rawlins Cross. (Jacques Boissinot/The Canadian Press)

Global Commerce Insider

Exporting ‘necessary for survival:’ Canadian musicians Add to ...

The global audience Canadian musicians have gleaned from the Internet has come with a caveat: more than ever, they have to compete with the rest of the world for attention, too. That doesn’t come cheap.

For artists without the support of major-label infrastructure, getting their music in ears abroad – through tours, promotion, and business meetings, for instance – can cost up to twice as much as doing so domestically. While global music endeavours have long been known as costly, the Canadian Independent Music Association (CIMA), an English-language trade organization representing small and medium businesses, has just published a report that examines just how costly exporting music can be.

“Exporting” is a funny word when it comes to music, given how flattened the playing field has become. To listeners these days, services like YouTube, Spotify and Apple Music have no borders; songs are indiscriminately pumped into our ears regardless of their country of origin. There is still a cost in getting those songs out there – and to convince listeners everywhere that this is the music they should be listening to and the artist they should see live.

The CIMA report, called Music in Motion, suggests that this is top-of-mind for small and medium-sized Canadian music companies: six out of 10 reported that export activities are “necessary for survival.”

“We’re automatically on a global platform, so our market is global. It’s not just domestic deals – it’s global deals or nothing,” says Stuart Johnston, CIMA’s president, in an interview.

According to Statistics Canada, as of 2013, foreign-controlled music businesses – which include Canadian wings of major labels Universal, Sony and Warner – accounted for 78 per cent of the country’s music sales, but less than a tenth of those sales are by Canadian artists. Canadian-controlled businesses, on the other hand, represented 22 per cent of total recording industry sales, 61 per cent of which came from Canadian artists.

Prepared by Toronto consultancy Nordicity, the CIMA report surveyed 99 small and medium Canadian music companies, including labels, publishers, producers and recording studios. It examined the prevalence and cost of a number of “export activities” for music, including tours, showcases, promotion, sales, business meetings, licensing, sales, distribution and streaming.

The study was an attempt to quantify the trends CIMA and its members see on the ground every day and produce numbers to help Canadian companies form out-of-country strategies.

Among the participating companies, streaming music was the most common activity, followed by sales and distribution of music – that is, getting the music into listeners’ ears. Business meetings, meanwhile, came next, outperforming even tours – and were rated by companies as the “most successful” type of export activity. “This is the kind of business where you need to be in market, in person, meet people and establish relationships,” Mr. Johnston says.

While most out-of-Canada activities cost more than at home, foreign tours – both for performances and press – top the list, costing twice as much. But because Canada is a relatively small touring market, it remains a vital investment for music companies.

“It’s really touring acts that help us survive, move music, sell records and do everything we need to do as a company,” says Tim Potocic, co-founder of Sonic Unyon Records in Hamilton and a director at CIMA. “We invest heavily in it. We always have,” he continues, despite the fact that “it is extremely costly.”

When it came to which artists got the most resources, companies spent about 45 per cent of export dollars on breakthrough artists – those at a “tipping point” of international exposure – with major radio play, digital buzz, media coverage or award wins. This, the report suggests, is an average of 21 times more than non-breakthrough artists, revealing the importance of leveraging opportunities.

CIMA itself operates like an “export office” for Canadian music, Mr. Johnston says, organizing about 20 missions a year to various countries and bringing member companies along, trying to “facilitate opportunities where Canadian businesses can meet foreign business representatives in order to further their careers, and invest in the careers of Canadian artists.”

The report also points to the growing importance of collecting data to target future markets for an artist. Analyzing social media for trends – like where fans are located – tops the list, followed by success of similar artists, the company’s distribution partners, and data from streaming services, which also help hone in on where an artist might be most popular.

Halifax’s Ian McKinnon, who founded the label and management company Groundswell Music in 1991 to support the needs of his band Rawlins Cross, says data has been crucial for making decisions for his roster of bands, including the Stanfields and Like A Motorcycle. Streaming data, he says, “allows us to be very scientific in terms of our growth in [foreign] markets.”

Since its early days with Rawlins Cross, getting music internationally has been a major priority for Groundswell. Partnering with companies in Europe – particularly Germany – has been hugely beneficial for its artists, Mr. McKinnon says. This includes bringing representatives from European companies back to Nova Scotia to showcase even more talent. “We’ve identified markets where there’s great potential – where people support live music, and come out and spend money,” he says.

Sonic Unyon uses data from its distributors and social media to help plot tours for their roster, which includes roots musician Terra Lightfoot. “Why would we spend time in places where people haven’t bothered to purchase or stream your record?” Mr. Potocic asks. “We try to develop the best plan … so you’re not wasting funds, or the time of the artist.”

The CIMA report says Canada’s independent music companies on average generate a 48-per-cent overall profit margin on export activities, though Mr. Johnston cautions that this is an average of all activities, including ones where a few hundred dollars is generated off small upfront costs. Still, he says, “it shows why exporting is so important – but it takes a lot of time and a lot of resources to capitalize on it.”

A recurring theme in the report, and broadly among Canadian music trade groups, is the need for more funding to make things happen. Public funding through resources like the Canada Music Fund supported 38 per cent of the export expenditures calculated in the report, which calls it a “key source of revenue – and profit.”

The report suggests fears of “limited and shrinking” public funding for music, but Mr. Johnston says he hopes the federal and provincial governments will grow their cultural and music funding for the long term.

For SMEs working in the music business, he says, that’s crucial. “Access to capital and cash flow are two major issues for our small businesses, and they’re aggravated because our banks tend not to provide the kind of loans that other small businesses enjoy, because the product is rather ephemeral,” he says. “It’s difficult to obtain the financing other sectors get.”

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