The media industry plays a vital role in Canada. Over the years, Canada has utilized media to showcase its cultural and social values to the world. At the same time, Canada lacks a strong established media institution that guides production of content. As a result, the country’s competitiveness in terms of media production lags behind that of other developed nations. For a country that has the status of a developed nation, having a less than satisfactory media industry works against economic, social, and political growth. From a commercial perspective, a strong media sector is necessary to promote faster and easier communication, increase company’s visibility, track competition, among other benefits. The stunted growth of the media sector in Canada presents the need to discuss the effects of market failure while also reviewing how the Broadcast Act and Massey Commission have contributed to the industry.
Concept of Market Failure
Ideally, a market provides the demand for goods and services. However, it is hypothetical to have a perfect market with equal number of buyers and sellers. In such a case, the entry or exit of a buyer or seller is insignificant since they represent a small fraction of the market ( Moriarty, 2020). Even with the impossibility of having a perfect market, a normal one is characterized with higher demand than supply of goods and services. Market failure is when a market does not perform as expected that is, it fails to provide the anticipated number of buyers and sellers ( Moriarty , 2020). The Canadian media industry is presumed to have a market failure such that Canadians demand less compared to what the sector is capable of producing (Heritage, 2017). Apart from Canada’s small size, the situation is attributed to the high consumption of foreign content.
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How Market Failure Affects the Media Industry in Canada
Market failure is an economic constraint that has had adverse effects on the Canadian media industry. Being a small country, Canada provides a limited market for the local media content which is often rich in cultural and social values (Heritage, 2017). Alternatively, Canadians prefer consuming foreign content which is presumed to be cheap and of high quality. For instance, American series are among the most watched shows in Canada (Heritage, 2017). In order to protect the indigenous media industry in Canada, government intervention in necessary. Given that Canadian media content is guided by cultural and social values, the industry is considered a public good and a national unity. Thus, requiring government’s intervention through implementation of policy goals aimed at benefiting both the public and private sector (Heritage, 2017). Among the measures taken include provision of subsidies and incentives to the media industry. That way, the domestic media sector is able to produce high quality content, hence, gaining competitive advantage against foreign industries (Heritage, 2017).
Broadcasting Act
Following the diminishing demand in domestic media content, the Canadian government needed to adopt policies that would revive its media industry. In any case, the creative industry represents the culture of Canada to the world that is, through music, films, and local programs (Heritage, 2017). Broadcasting Act is among the measures taken to mitigate the effects of market failure as well as building creative clusters in Canada. The act presented several policies including the declaration that broadcasting systems should, “encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values, and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view” (Government of Canada, 2020, p. 2). The act provides an avenue where the culture of Canada can be displayed in a way that is presentable and competitive with foreign countries. In turn, increasing the demand for local content.
Massey Commission
Radio broadcasting is an avenue utilized for several reasons. Apart from entertainment, the broadcast industry is used as an avenue for vibrant discussions concerning the country. According to the Massey Commission report, Canadian radio provides much more than entertainment, thus, it’s said to have impacted the media sector in a unique way (Heritage, 2017). Through radio broadcasting,
“ Canadian as a people have listened to news of their own country and of the world, have heard public topics discussed by national authorities, have listened to and have participated in discussions of Canadian problems, and have, through radio, been present at great national events” (“ Archived - Chapter xviii,” 2001, p. 280).
Given the role of radio broadcasting, it was necessary that the government controls the industry to ensure that the culture of Canada is upheld. Thus, the commission recommended that the government should continue controlling the industry through the broadcast corporation (“ Archived - Chapter xviii,” 2001 ). By doing so, the government is able to protect the still growing radio industry from foreign competition that may led to its termination.
Conclusion
The above discussion established that market failure affects the media industry in Canada. In turn, the government has implemented laws and policies that help mitigate the effects of market failure which is experienced when the demand in a market cannot meet the potential supply. Canada’s small size among other factors contribute to the market failure of the media industry. In response, the government has implemented policies to make the media industry more competitive, hence, increasing demand. Among the policies put in place are the Broadcast Act and measures under Massey Commission.
References
Archived - Chapter xviii, broadcasting - Report of the Royal Commission on national development in the arts, letters, and sciences . (2001, January 27). Retrieved from https://www.collectionscanada.gc.ca/massey/h5-440-e.html
Government of Canada. (2020). Broadcasting Act . Retrieved from Minister of Justice website: https://laws-lois.justice.gc.ca/
Heritage, C. (2017). Creative Canada policy framework. Retrieved from https://www.canada.ca/en/canadian-heritage/campaigns/creative-canada/framework.html
Moriarty, J. (2020). On the origin, content, and relevance of the market failures approach. Journal of Business Ethics , 165 (1), 113-124. https://doi.org/10.1007/s10551-019-04106-x
