• The development of a Bonus System aimed at encouraging airplay of emerging music artists.
• To provide diversity and preserve the integrity of formats for stations programming “oldies”, reduce Cancon levels to 25% from 35% for musical selections released prior to 1985.
• Consolidation of Canadian Talent Development funding into commercial funds in the English and French-language markets, which will fully leverage and extend radio’s role as a promoter of Canadian music talent.
• Stricter guidelines on market entry by all forms of licensed radio and the development of a Market Entry Test to help prevent over-licensing.
• The creation of a reporting template that radio stations can use to annually assess their progress in advancing cultural diversity.
• A flexible approach to Digital Radio Broadcasting (DRB) regulation in order to encourage its development in the marketplace.

• Private radio in Canada can no longer be regulated by the assumptions that worked in the past to drive and create rules that no longer apply in an open market.
• Private radio is facing new competition for listeners and for revenues from new unregulated audio services and consumer technologies.
• Direct competition includes:
• Internet radio
• digital radio
• satellite radio
• cell phone radio
• iPods
• peer-to-peer file sharing
• podcasting
• Advertiser-supported musical services.
• Canadian consumers have greater access to new technologies than ever before, and are creating their own audio listening content.
• New consumer technologies represent a competitive, unregulated, parallel system of new delivery platforms for audio content.
• A new policy framework for commercial radio must be adaptable to new and changing realities of the radio industry.

• The radio industry is clearly cyclical and subject to business downturns.
• Copyright fees paid by private radio stations in Canada have more than tripled in the last 10 years – from $22 million in 1995 to $70 million in 2005.
• Unregulated audio services are likely to have two impacts on private radio, a reduction in the radio audience and a drop in radio revenues.
• Revenue losses in Canadian private radio could reach up to $39 million by 2010, with larger losses in subsequent years.
• Without regulatory reform, the long-term economic outlook for private radio in Canada is uncertain.

• The success of Canadian artists can no longer be measured by record sales alone; artist exposure has become the essential ingredient for success in the music industry.
• Despite the economic uncertainty facing the industry, private radio has committed to maintaining the current content quotas (35% CANCON / 65% French Vocal Music).
• In order to increase diversity of airplay and reduce "artist burn" station playlists need to include more emerging Canadian artists.
• To offset the risk of playing unfamiliar artists and alienating listeners a Bonus System should be developed to encourage the airplay of new music by emerging Canadian artists.

French Vocal Music:

• A value of 150% for French Vocal Music in Quebec would be assigned to a “new work” interpreted by an “emerging artist.”
• To implement this incentive, the following definitions would apply:
  • New selection: A French-language musical selection by an emerging artist will be considered a new work eligible for points (value=150%) during the first 12 months following its listing on the Hit Parade.
  • Emerging artist: a singer will be considered an emerging artist during the first four years (48 months) following listing of his or her first release on the Hit Parade.

Canadian Content:

• The proposed Bonus System would include the following incentives:
• In English-language Canada, radio stations would receive a credit for the airplay of music from ‘Emerging Canadian Artists,’ while songs would still qualify as Canadian when meeting two out of four MAPL (Music, Artist, Production, Lyrics) categories, and additional 25% credit would be applied to the airplay of an Emerging Canadian Artist.
• A musical selection by an emerging artist will be considered a new work eligible for credit in Quebec and English-language Canada during the first 12 months following its listing on the Hit Parade or Top 40 in spins on BDS or Mediabase all format charts or become gold certified for the first time.
• A Canadian artist would be considered an Emerging Canadian Artist up until 12 months from the date they reach the Top 40 in spins on BDS or Mediabase all format charts or become gold certified for the first time.
• The notion of artist includes duos, trios and groups under an established identity. If an artist in a duo, trio or group launches a solo career they will be considered an emerging artist for the first four years following their listing on the Hit Parade or Top 40.
• The advantage of this type of incentive is that it would allow each network or individual station to make personal choices without forcing them into a common mould. Each station could explore on its own, proposing a specific proportion of new music and emerging artists, taking into account the station’s musical format, target audience and the availability of recordings in a given genre.

• Since the coming into effect of the CRTC policy in 1999, private radio has committed over $168M to new Canadian Talent Development (CTD) initiatives with over $100M going to funding agencies - FACTOR, MusicAction, Radio StarMaker Fund, Fonds Radiostar.
• To ensure the on-going effectiveness and supply of radio-playable music for the bonus system, the CAB proposes to consolidate its CTD funding into its commercial funds in the English and French-language markets, Radio Starmaker Fund and Fonds Radiostar.
• Specifically, the CAB proposes that all contributions from the CAB CTD Plan that are currently allocated to funding agencies would be directed to Radio Starmaker or Fonds RadioStar. Remaining contributions that are targeted by individual stations to local music initiatives, such as music education or other supports, would remain intact.
• The CAB also proposes that funds flowing from the significant benefits policy (3% to Radio Starmaker/Fonds RadioStar, 2% to FACTOR/Music Action and 1% discretionary) be repurposed such that 5% of funds would be directed to commercial funds and 1% would remain discretionary.
• A consolidated fund in the English and French-language market will be effective in leveraging and expanding the promotional role of radio, promoting the careers of Canadian artists and focusing its programs on key elements such as domestic and international touring and other marketing activities.

• An abundance of radio licenses issued in recent years, particularly in small markets, has lead to crowding and has spread revenues too thinly and hurt diversity of voice in private radio.
• Between 1999 and 2004 the number of FM stations licensed has increased by more than 50%, from 237 in 1999 to 357 in 2004. English language stations licensed have increased by more that 60%, from 172 in 1999 to 274 stations in 2004.
• The CAB is asking the CRTC to impose stricter guidelines on market entry by all forms of regulated radio, and proposes a Market Entry Test that would include the following provisions:
• The CRTC should release aggregate data on small, medium and large markets on an annual basis in order to provide the industry with current and meaningful data on individual radio market health.
• Where small market tests of profitability can be problematic for reasons of confidentiality, the CRTC and the private radio industry should work together to determine a market entry testing procedure suitable for small markets.
• Profitability trends through measures of Profit Before Interest and Taxes (PBIT) should be identified within individual markets. While measures of profitability covered five-year periods under the original Radio Market Policy, the new Market Entry Test should track profitability over a three-year period.
• The CRTC should carry out the required work to provide the commercial radio industry with profitability measures in medium and large markets for the 2002-2005 period as soon as possible and provide this aggregate data to the private radio industry.
• Following the issuing of a license or licenses in any given market, there should be a formalized three-year pause in licensing in that market.

• Private radio is very proud of its activities and initiatives respecting diversity, and our plan recognizes the inherent business advantages supported by a diverse industry.
• The CAB believes that developing additional diversity initiatives will facilitate radio’s efforts at competing with new and unregulated services in the marketplace.
• Radio broadcasters have developed a set of best practices aimed at advancing diversity in their programming and within their stations.
• The CAB has developed a reporting template for radio stations to annually assess their progress in advancing diversity within their station.

• Fragmentation of the market caused by new portable delivery systems; and new and unregulated services offering digital conveniences, choice and quality demonstrate that analog commercial radio service requires a long term strategy for a transition to Digitial Radio Broadcasting (DRB).
• It is the CAB’s position that the CRTC should abandon the concept of DRB as ‘replacement technology’ and adopt a flexible and complimentary content regulatory model.