Application guidelines - Music Entrepreneur: Aid to Canadian Sound Recording Firms

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Objectives and expected results for the Canada Music Fund

The Canada Music Fund (CMF) aims to increase the creation of a diversity of Canadian music and its access for audiences everywhere, in Canada and in international markets.

Objectives and expected results for the Music Entrepreneur Component – Aid to Canadian Sound Recording Firms

The Music Entrepreneur Component aims to ensure that Canadian music entrepreneurs build a strong and competitive industry capable of contributing to the Canadian musical experience over the long term through a diverse range of Canadian choices.

In addition to supporting the production, promotion and marketing of Canadian sound recordings, the sub-component Aid to Canadian Sound Recording Firms also supports activities related to tours and concerts, music publishing and artist management.

Application deadline

December 18, 2018

Who can apply

Only Canadian sound recording firms that were recipients of the Aid to Canadian Sound Recording Firms sub-component in fiscal year 2018-2019 can apply to this component. At the time of the application, and through to the end of the term of any funding agreement with the CMF, your firm must:

  • be a Canadian-owned and -controlled firm;
  • have its headquarters based in Canada;
  • have a principal business that relates to the creation, publishing, production or marketing, including touring-related activities, of Canadian music;
  • have completed 3 years of continuous operations as a Canadian sound recording firm. (If you have completed between 3 to 5 years of continuous operations, you can choose whether to apply for the Aid to Canadian Sound Recording Firms sub-component or the New Musical Works component of the CMF);
  • be able to demonstrate its financial viability;
  • own Canadian copyright for the Canadian sound recordings it produces and releases, co-produces and releases or hold an exclusive license assigned by the Canadian copyright owner to release the Canadian sound recordings in the Canadian market;
  • have fulfilled all its contractual obligations with respect to artist royalty payments;
  • have revenues derived from the sale of sound recordings of less than $20 million annually or earnings before interest, taxes, depreciation and amortization (EBITDA) inferior to 15 per cent, for each of the three previous financial years;
  • be (and its affiliates) in good standing with the Crown as a result of agreements entered into with Canadian Heritage or any other government department.

You must immediately inform us of any change of ownership of your firm. We will review the change of ownership to determine whether the eligibility requirements continue to be met.

Recipients to the Aid to Canadian Sound Recording Firms sub-component are deemed ineligible for the CMF’s New Musical Works component. However, your firm may be eligible for funding under other programs administered by the Foundation Assisting Canadian Talent on Recordings (FACTOR) and la Fondation Musicaction (Musicaction).

Roster and New Releases

You must have an active roster of at least 4 Canadian artists (solo, group, or collective) on June 30th, 2018.

You must have released a minimum of 1 eligible Canadian sound recording (full-length albums) between July 1st, 2017 and June 30th, 2018. This requirement allows us to validate that the applicant remains active in the production and marketing of Canadian sound recordings. The information provided in your application for the 2018-2019 funding period demonstrated that the requirement to have released a minimum of 6 eligible Canadian sound recordings (full-length album) during the reference period (3 years) was met.

Eligibility

We are responsible for determining the eligibility of each applicant, its sound recordings and related expenses.

Eligible activities

Your activities must foster the development of Canadian artists, promote their music and expand their audience. Only revenues and expenses related to the activities listed below can be reported.

Activities related to production, promotion and marketing for eligible sound recordings

Production and promotion activities for sound recordings (titles) are eligible if the recordings meet the following requirements:

  • They are Canadian (see definition of eligible Canadian sound recording)
  • They are clearly and publicly attributed to an artist (solo performer, group or collective).
  • They meet legal deposit requirements.

Sound recordings of various formats and lengths are recognized by the program (e.g. singles, EP s=mini albums, full-length albums, downloads, streaming, vinyl records, CDs, DVDs, etc.). Recordings must be accompanied by a marketing plan.

Activities related to the following types of sound recordings are not eligible:

  • Sound recordings produced for fundraising, advertising or promotional campaigns
  • Sound recordings produced for educational purposes.

You must own Canadian copyright for the Canadian sound recordings you produce and release or co-produce and release or hold an exclusive license assigned by the Canadian copyright owner to release the Canadian sound recordings in the Canadian market.

Co-production: Co-production revenues must be reported in keeping with the distribution set out in the co-production agreement.

Activities related to tours, concerts and concerts promotion

Activities related to tours, concerts and concerts promotion (including musical showcases) of eligible Canadian artists in Canada and abroad. They are eligible provided that they are central to the career development of an eligible Canadian artist and must meet the following requirements:

  • Must feature a Canadian artist.
  • The artist must have released in the last 2 years, or plan to release within six months of the performance, a Canadian album or a minimum of 6 Canadian titles

Exception for “repertoire”:

  • A concert featuring mainly classical music, traditional jazz, world music or traditional music should feature a Canadian artist who has marketed 6 titles in the last two years.

The following activities are not eligible:

  • Activities involving tours, concerts and concerts promotion (including musical showcases) that are not directly related to the career development of a specific artist. These activities include musicals, retrospective shows and tribute shows.
  • Booking and distribution activities (festivals, programs). However, a producer acting as a distributor only for a few tour and concert dates may include these revenues.

Activities involving the publishing of eligible musical works

Eligible activities are those that involve the publishing and sub-publishing of eligible Canadian musical works provided that they are central to the career development of an eligible Canadian artist.

Publishing activities related to commissioned works for the audiovisual sector and other activities aimed at creating works for soundtracks or background music are not eligible.

Funding will preferably be given to projects that aim to develop the career of artists and promote their works across multiple platforms. The revenues calculation will, however, take into account all publishing revenues of eligible Canadian works.

All of the works must be registered with a collective rights management company.

Eligible management activities

Eligible activities must support the career development of Canadian artists. These may be related to eligible activities in sound recordings, tours and concerts as well as music publishing or be more directly related with the development of artists, such as training, creative assistance activities, etc.

Eligible business development activities

Business development activities such as identifying new eligible artists and developing the market for Canadian artists are eligible.

Ineligible activities

Please note that any activity related to the production and promotion of Canadian musical works that, in our opinion, contain or promote any of the following is deemed ineligible:

  • material that is hate propaganda, obscene or child pornography, or any other illegal material, as defined in the Criminal Code;
  • pornography or other material having significant sexual content unless it can be demonstrated that there is an overriding educational or other similar purpose;
  • material that contains excessive or gratuitous violence;
  • material that is denigrating to an identifiable group; or
  • any other similarly offensive material.

Eligible expenses

Eligible expenses are those related to Canadian artists for eligible activities. Only cash expenses undertaken between April 1, 2019 and March 31, 2020 will be funded. The eligible expenses may include:

Sound recording expenses

  • Salaries and benefits
  • Artist, musician and backing vocals fees
  • Arrangers
  • Artistic director
  • Music Producer
  • Executive Producer (associate producer)
  • Studio charges
  • Mastering
  • Cover art
  • Manufacturing expenses
  • Participation expenses (co-production with producers or artists)
  • Equipment rental
  • Travel expenses (transportation and accommodation) (according to the rates permitted for government business travel)
  • Professional fees

Touring/concerts and concerts promotion expenses

  • Salaries and benefits
  • Artist, musician and technician fees
  • Equipment rentals
  • Booking agent fees
  • Travel expenses (transportation and accommodation) (according to the rates permitted for government business travel)
  • Pre-production expenses (rehearsals, staging, lighting design, etc.) – a maximum of 15% of eligible expenses for touring and performing can be allocated to pre-production.
  • Professional fees

Musical works publishing expenses

  • Salaries and benefits
  • Music placement activities expenses (song plugging)
  • Coordination fees (i.e. subcontracted coordination (management))
  • Professional fees

Artists’ development expenses

(These expenses may relate to the activities mentioned above as well as to management activities)

  • Salaries and benefits
  • Premiums, bonuses or any other forms of non-recoupable advances
  • Honoraria
  • Promotional material (posters)
  • Media—advertising and press
  • Printing of not-for-sale promotional recordings
  • Stylists
  • Press photos
  • Translation fees (website, promotion, contracts)
  • Artist showcases
  • Trade shows (fairs) and professional days
  • Workshops and training (e.g. writing workshop or co-writing session)
  • Rental of creative space
  • Rental of creative activity–related equipment
  • Production of audiovisual music content for the web other than music videos (sessions, video lyrics, live performance recordings, studio recording clips)
  • Other web- and social media–related artist expenses (e.g. designing and updating artist website, producing multimedia content, etc.)
  • Professional fees

Marketing and promotion expenses

  • Salaries and benefits
  • Release expenses
  • Promotional tour
  • Posters and graphic design
  • Media—advertising and press
  • General promotional expenses (e.g. radio tracking)
  • Music video production
  • Distribution expenses
  • Costs related to platforms and computer tools. These expenses are eligible only when they are directly related to the development of Canadian artists, audience development and promotion (purchasing and processing metadata, social media, etc.)
  • Travel expenses (transportation and accommodation) (according to the rates permitted for government business travel
  • Professional fees

Business development expenses

  • Salaries and benefits
  • Expenses related to finding new artists / new contracts (including travel costs - transportation and accommodation)
  • Market development related expenses (including travel cost - transportation and accommodation) (according to the rates permitted for government business travel)
  • Professional fees

Administrative expenses

  • Salaries and benefits
  • Business website
  • E-commerce website
  • Data and asset management software and tools
  • Subscriptions (data base, Soundscan, Broadcast Data Systems (BDS), Buzzangle, etc.)
  • Subcontractor
  • Conferences and training
  • Business representation
  • Other Professional fees

Administrative expenses cannot exceed 15% of the contribution amount

Capital Expenses

  • Up to a maximum of 10% of the contribution may be used for capital expenditures related to the eligible activities. Eligible capital expenditures must be directly related to the development of Canadian artists, promotion and audience development. Expenses such as the purchase of buildings, vehicles, IT equipment, catalogs, etc. are not eligible.

Ineligible expenses

Expenses cannot be used:

  • to pay recoverable advances (e.g. that the recoverable portion funded by the government should not be refundable by the artist)
  • for concert presentation (festival production, programming series, etc.)
  • for merchandising
  • for writing grant applications services
  • for capital expenditures not directly related to the development of Canadian artists , promotion of their music and expand their audience (buildings, vehicles, etc.)
  • for expenses paid for in cash
  • for the acquisition of catalogues
  • for exchange of services
  • for audit, legal (for example, during a legal dispute) and infringement costs
  • to pay recoverable taxes and similar charges
  • to pay interest on late payments
  • to pay suppliers’ administration fees
  • to pay hospitality expenses
  • to pay meal allowances (per diems)
  • Dividends, bonuses and other extraordinary compensation for company shareholders or owners.

Expenses incurred before receiving written confirmation of your funding approval are your responsibility. Only expenses incurred during the term of the agreement will be considered as eligible expenses.

Limits of government assistance

To ensure the success of your project, we encourage you to have other funding sources. This may include contributions from your firm, the private sector or other levels of government.

The maximum contribution that an applicant can receive annually from the Aid to Canadian Sound Recording Firms sub-component is $550,000 and cannot exceed 50 per cent of the total eligible expenses.

The total financial assistance received from the Aid to Canadian Sound Recording Firms sub-component and other levels of government (federal, provincial, territorial and municipal), including tax credits, cannot exceed 50 per cent of the total eligible expenditures per fiscal year.

You must repay the contribution received from the Aid to Canadian Sound Recording Firms sub-component if it is equal to or greater than $100,000 and your earnings before interest, taxes, depreciation and amortization’s (EBITDA) margin—excluding funding received from the Aid to Canadian Sound Recording Firms sub-component —is more than 15 per cent for your firm’s financial year in which the contribution was received as well as its two previous years.

Members of an affiliated group will be subject separately to the maximum contribution of $550,000. However, the total contribution amount that members of an affiliated group could receive from the CMF’s New Musical Works and Music Entrepreneur components cannot exceed $800,000 annually.

How to apply

Read these Application Guidelines in their entirety before completing your application.

You will receive the application form electronically.

As mentioned under the “What’s New” headline, transition measures are integrated in order to move away from a funding model based on unit sales to a funding model based on revenues and investments.

The application form includes new tabs which will allow the collection of information related to your revenues (those for the most recently completed fiscal year) as well as your activities plan for the year to be funded including, a planned investment budget. The tab which provides the sales of sound recordings does not have to be completed or updated (it is provided for information purposes only).

You must meet all eligibility requirements and submit a complete application package to be considered for funding. Any incomplete application will be rejected. A complete application package includes the following supporting documents:

  • The application form (including the activities plan);
  • Financial statements for your most recently completed financial year. The most recent completed financial year must end on or after June 30, 2017. You are required to submit audited financial statements if your contribution in 2018-2019 exceeded $250,000. If your contribution was equal to or less than $250,000, you are required to submit, at a minimum, a review engagement report;
  • A business plan submitted in accordance with the guidelines set out in the application form;
  • Receipts from Library and Archives Canada for a “Legal deposit” for each eligible Canadian sound recording.
  • A list of eligible Canadian sound recordings released between July 1st 2017 and June 30, 2018. You must provide a copy of all these eligible albums;
  • A letter from the chairperson or proprietor of your firm authorizing the submission of the application.

Applicants must also ensure that the firm’s incorporation documents (Letters Patent, Special Rules and Resolutions, Conflict of Interest Policy or Guidelines, shareholder agreement) already provided are current.

Application process

  • Complete, sign and date the application form.
  • Attach all required supporting documents.

Email submissions

You must submit your application package electronically, at the following email address: PCH.fmcmusique-cmfmusic.PCH@canada.ca

The embedded “sent” date must be no later than 11:59 p.m. local time on the date of the application deadline for your application to be considered eligible.

Mail or in person submissions

You can mail, courier or hand deliver your complete application package to the following address:

Canada Music Fund

Music Entrepreneur Component – Aid to Canadian Sound Recording Firms

25 Eddy Street

Gatineau, Quebec

K1A 0M5

Your application must be postmarked or hand-delivered no later than the published deadline to be considered.

How applications are evaluated

Each application is reviewed and assessed against the evaluation criteria described below. Your firm’s financial viability will be assessed based on the documents provided with your application. Information related to your revenues and planned investments will be used to calculate your contribution. For 2019-2020, your contribution will not be reduced by more than 20 % of the contribution amount you received in 2018-2019.

Applicants that meet all eligibility criteria will receive a minimum contribution of $200,000.

If you have failed to submit a final report for a previously funded project, this failure will be considered in the evaluation of your new application and could result in its rejection.

Evaluation criteria

Your applications will be evaluated using the following elements:

Contributions of Canadian sound recording companies will be determined both on the ability of firms to reach audiences (assessed based on the applicant's revenue) and their efforts to develop artists' careers, to promote and develop audiences (based on an assessment of the business plan, including planned investments). The contributions are determined in two steps:

  • Ranking: an amount will be determined according to the revenues of each eligible entrepreneur compared with the revenues of all applicants.
  • Business Plan: An assessment of each applicant's business plan will allow the amount determined during the ranking to be weighted. The business plan will be assessed according to the following elements:
    • Applicability of the proposed activities to the objectives of the sub-component
    • Relevance and scope of the proposed activities
    • Feasibility (team, experience, partnership, feasibility regarding planned expenses, risk, etc.)
    • Expected results

It should be noted that the funds are awarded competitively between eligible applicants and depending on the budget available for the component.

Innovation and risk taking

The CMF encourages innovative business practices in the industry. As such, in addition to conducting an assessment of past revenues, the Department will conduct an assessment of the entrepreneurs’ activities plans, including their planned budget for the coming year.

In order to recognize the risk created by the implementation of innovative initiatives with high potential, but which would not necessarily generate a high return in the short term, a maximum of up to 10% of the total budget of the sub-component Aid to Canadian Sound Recording Firms could be used to support such initiatives. The use of these funds will be flexible for initiatives aiming to fully participate in the development of Canadian artists' careers, promotion and audience development.

The funding allocated to innovation and risk-taking activities is ad hoc and aims to experience new promising business practices that could potentially be adopted.

Application processing time

Please refer to the Service standards for Canadian Heritage funding programs or contact the program.

We will acknowledge receipt of your application within two weeks of receiving your application.

Funding decisions

Please note that decisions regarding eligibility and funding amounts are final.

How funding is provided

Funding is provided in the form of a contribution.

A contribution is a conditional payment issued to your firm for a specific purpose, as outlined in a funding agreement. The funding agreement is signed by your firm and by us and specifies the terms and conditions to receive payment. At the end of the funding period, you must submit a final report to certify the use of funds.

Funding conditions

You will be required to submit a final report for all government assistance provided.

If your contribution is $250,000 or more, you are required to submit audited financial statements.

Additional conditions may apply and will be included in your funding agreement.

Workplace well-being

The Government of Canada is committed to promoting healthy workplaces where harassment, abuse and discrimination are not tolerated. Organizations that receive funding from Canadian Heritage must take measures conducive to creating a workplace free from harassment, abuse and discrimination.

Official languages requirements

We are committed to taking positive measures to enhance the vitality of official language minority communities and to promote the use of English and French in Canadian society. If you receive funding, you agree to comply with the official languages requirements set out in your application and in your funding agreement.

Acknowledgement of financial assistance

If you receive funding, you must publically acknowledge, in English and in French, the financial support received from the Government of Canada in all communications materials and promotional activities related to the funding agreement, such as advertisements, promotional materials, and programs, public announcements, speeches, websites, social media, etc. Additional requirements may be included in your funding agreement.

For additional information, please refer to our Guide on the public acknowledgement of financial support.

Access to information requests

The Minister is subject to the Access to Information Act and the Privacy Act. The information submitted in your application may be disclosed in accordance with these Acts. It is understood that confidential information and / or any personal information related to the funding to which the recipient, its employees or agents will have access will be administered in accordance with these Acts.

Disclosure of information

By submitting your funding application, you authorize us to disclose any information submitted with this application within the Government of Canada or to outside entities for the following purposes:

  • to reach a decision;
  • to evaluate the results of the project; and
  • to support transparency, accountability and citizen engagement.

Audits of recipients and evaluation of the Program

We reserve the right to audit your accounts and records to ensure compliance with the terms and conditions of your funding agreement. We also conduct periodic Program evaluations, during which you may be required to present documentation.

You must keep any records, documents, or other information that may be required to perform an audit or an evaluation for five years. Demonstrated failure to maintain such records may result in the repayment of amounts previously received.

Contact us

For further information, please contact us:

Department of Canadian Heritage

Canada Music Fund

Music Entrepreneur Component – Aid to Canadian Sound Recording Firms

25 Eddy Street

Gatineau, Quebec

K1A 0M5

Email

PCH.fmcmusique-cmfmusic.PCH@canada.ca

Telephone

819-997-0055

1-866-811-0055 (toll-free)

TTY

1-888-997-3123 (toll-free)

Agents are available to answer your questions Monday to Friday, 8:30 a.m. to 5:00 p.m. (EST).

Glossary

Affiliated group

A group of companies in which the same person, group of persons, or entity holds the majority of shares with full voting rights or has control in fact of these companies.

Audited financial statements

A complete set of financial statements, including a statement of financial position; a statement of operations; and a statement of changes in financial position. Audited financial statements must be made by a chartered accountant independent of the organization. The chartered accountant must conduct audit activities in accordance with generally accepted standards.

Canadian

A citizen within the meaning of the Citizenship Act;

A permanent resident of Canada within the meaning of the Immigration and Refugee Protection Act.

Canadian artist

A citizen within the meaning of the Citizenship Act or a permanent resident of Canada within the meaning of the Immigration and Refugee Protection Act;

A group or a musical collective is considered Canadian if at least 50 % of its members including the lead singer, are Canadians.

In the case of an orchestra featuring no principal artist, the orchestra must be based in Canada.

Canadian-owned and controlled firm

A firm:

  • that is a sole proprietorship, partnership, cooperative or corporation established under the laws of Canada or a province;
  • whose activities are based primarily in Canada;
  • whose firm’s headquarters is based in Canada;
  • whose chairperson or presiding officer and more than half of whose directors and other similar officers are Canadian;
  • if a corporation with share capital, of which Canadians beneficially own or control, other than by way of shares held only as security, directly or indirectly, in the aggregate at least 50 per cent plus 1 of all the issued and outstanding votes;
  • if a corporation without share capital, of which Canadians beneficially own or control, directly or indirectly, interests representing in monetary value at least 50 per cent plus 1 of the total value of the assets;
  • if a partnership, trust or joint venture, of which a Canadian or Canadian corporation or any combination of the two, beneficially own or control, directly or indirectly, interests representing in value at least 50 per cent plus 1 of the total value of the assets of the partnership, trust or joint venture, as the case may be, and of which the Chairperson or other presiding officers and more than half of the directors or other similar officers are Canadian.

If at any time one or more persons that are not Canadian have any direct or indirect influence through a trust, an agreement, an arrangement or otherwise that, if exercised, would result in control in fact of the firm, the firm is deemed not to be Canadian-owned and-controlled.

Employee

Full- and part-time paid staff working directly for the firm. Owners are considered employees unless they have no active role in the firm. Independent contractors are not considered employees.

Eligible Canadian sound recording

To meet Canadian content requirements, any recording of an individual title (i.e. a song) or a collection of titles (i.e. an EP or an album), must meet the following requirements:

  • Be performed by a Canadian artist.
  • Have at least 50% of the music and lyrics written by Canadians.

A collection of titles must have at least 50% of its individual titles meet the Canadian content requirements for it to be considered Canadian.

Exception for “repertoire”:

  • The music and lyrics criterion does not apply to the repertoire of classical music, traditional jazz, world music or traditional music. The sound recording must, however, be performed by Canadian artists.

Eligible Canadian musical works

To meet Canadian content requirements, at least 50% of a musical work (i.e. music and lyrics or music only in case of an instrumental work) must have been written by Canadians.

Final report

A final report must be submitted at the end of your project based on the requirements in the funding agreement. Your final report needs to provide the results of the activities you have undertaken for the duration of your project and include a final report of actual revenues and expenses.

Financial statements

A complete set of financial statements, including a balance sheet, a statement of operations, and a cashflow statement. Financial statements may be audited or unaudited.

Free Goods

Free goods are units of sound recordings that are sold at retail but reported as “free of charge” in distributor reports. Firms do not derive any revenue from the sale of these units.

Full-length album

A full-length album has a minimum of 10 tracks, or at least 30 minutes of recorded music.

Funding agreement

A signed agreement between a recipient and the Department of Canadian Heritage. The agreement sets out the purpose of the contribution, the expected outcomes, the duration of the agreement, the reporting requirements, the public acknowledgement of the funding, the financial and/or non-financial conditions attached to the contribution, as well as the consequences of failing to adhere to these conditions.

Key management personnel

Key management personnel includes the chairperson, directors and senior employees who have financial decision-making power over the firm.

Legal deposit

Legal deposit is the means by which a comprehensive national collection is gathered together as a record of the nation’s published heritage and development. Recipients are required, in compliance with the Legal deposit provisions of the Library and Archives of Canada Act, to send a copy of the sound recordings they produce to Library and Archives Canada.

Library and Archives Canada staff would be pleased to provide more detailed information, or answer any questions you may have.

Legal Deposit

Library and Archives Canada

395 Wellington Street

Ottawa ON

Canada K1A 0N4

Telephone: 819-997-9565

Toll free (Canada): 1-866-578-7777 (Select 1+7+1)

Toll free (TTY): 1-866-299-1699

Fax: 819-997-7019

Email: BAC.Depotlegal-LegalDeposit.LAC@canada.ca (Physical or Analogue Legal Deposit)

Email: BAC.Depotlegalnumerique-DigitalLegalDeposit.LAC@canada.ca (Digital Legal Deposit)

Email: bac.archivesweb-webarchives.LAC@canada.ca (Web Harvesting)

Roster

A roster is the sound recording firm’s list of artists (solo, group or collective) under contract on the last day of the reference period.

Traditional jazz/blues music

Jazz and blues works that were copyrighted prior 1955.

Unit

A unit is a full-length-equivalent sound recording. For comparative purposes:

Format Unit value
1 full-length album (CD) 1 unit
1 full-length album download 1 unit
1 full-length album – other (vinyl, SACD , DVD-A ) 2 units
1 DVD video 2 units
1 single – streaming 0.0006667 unit (0.0007) (or 1,500 streams = 1 unit)
1 single - download 0.1 unit
1 single – CD, vinyl or other physical 0.1 unit
1 Extended Play (EP) (download or CD, vinyl or other physical) 0.5 unit
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