Free, tax-payer funded CBC Music losing millions on content acquisition, says report

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Issue Date: 
Oct 12 2012 - 12:35pm

From Issue:

According to a report, the Canadian Broadcasting Corp.'s (CBC) new streaming music service CBC Music is losing millions of dollars because of the cost of content, and lack of advertiser support.

In an article in today's Toronto Globe and Mail, the paper predicts the service, launched in February, will lose millions annually "as the high cost of content surpasses the advertising revenue the service earns."

[Find our prior CBC Music coverage here.]

CBC offers users, who pay nothing, 40 channels of streamed music, with much of the CBC's vast collection of archived music available on-demand, plus written content and videos.

While wildly popular with listeners (7.8 million visits to the site since launch, 17.6 million hours of music streamed), advertisers have been less enthusiastic. CBC expects only $750,000 in 2012 ad revenue, for a service that will cost $6 million in royalties, production, and launch expenses this year.

Those operating similar commercial operations have complained that it's unfair to compete with a service that is free to use and funded by taxpayers. Moreover, organizations like SOCAN (which represents music composers and publishers) say the volume of music CBC Music uses should make them ineligible for the "flat rate" royalty (granted to non-commerical operators) they're allowed to pay. Commerical services pay a "per-song" royalty.

"Other companies operating in the space estimate it costs about $6 a customer to run an online service, once copyright fees, infrastructure and marketing costs are considered," the paper noted.

Commercial competitors to CBC Music in Canada include Galaxie (owned by Stingray Digital and most known for its streaming music channels on pay television systems), U.S.-based on-demand streamer Rdio, satellite radio SiriusXM Canada, and U.S.-based Internet radio and on-demand service Slacker.

Read more in The Globe and Mail here

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