Arts Funding For Whom? Indie Labels Starve While Government Support Rewards Success

Arts Funding For Whom? Indie Labels Starve While Government Support Rewards Success
The Canadian music industry is fed from below by a team of dedicated, underpaid enthusiasts who stoke the fires of underground culture. But while the major labels hover like vultures to acquire artists at the first sign of success, money earmarked to support Canadian culture ignores these ground-breaking independent labels.

It's not a risk all of us are willing to take — to eschew the security of a regular paycheque in order to dedicate ourselves to our passions. While we moan about our 9 to 5 jobs in office buildings, restaurants or retail stores, a small group of people are boldly sacrificing themselves and their future careers to maintain the Canadian music underground and to feed their first love: music.

"When you add up all the indie labels — from Constellation to Mint to Sonic Unyon to Three Gut — you can name 20 labels that have consistently put out some of the best Canadian records released in the last ten years," says Phil Klygo, co-owner of Toronto's Teenage USA label. "But unfortunately, the [collective] weight of our sales is minuscule against even one or two of a major label's big sellers. We're developing the next wave of popular music but are being virtually ignored by the rest of the industry. I guess it just comes down to economics."

Small business ventures — in the form of new labels, management and publicity companies — are popping up every day, despite the fact that the climate for start-ups is particularly rough these days. The economics of the music industry are shrinking everywhere, creating hazards but also opportunities. While major labels decrease their rosters in order to focus on a few "sure" bets (as if there is such as thing), more and more independents are feeding on the talent that goes ignored. It is these bands — Hayden and Treble Charger in years gone by, the Dears and Hot Hot Heat more recently — that are developed as artists by the independent community, and then snapped up by the major labels.

Creatively, independent labels may be flourishing, but that doesn't necessarily mean they're making any money. Usually one- or two-person operations with almost no outside assistance (helping hands are typically strictly volunteer), small independent labels are run out of bedrooms and tiny offices for next to no financial return. Their owners scrape by on savings and menial jobs to continue putting out discs, all in hopes that at least a handful of music fans will appreciate their hard work. Make no mistake, there's a profit motive behind the work of these independent labels. None of these enthusiasts is without dreams of success, of respect, of cash flow and stardom-by-association. But for most of them, and quickly, those dreams dissipate into more attainable goals — breaking even financially and making a small difference, likely in that order.

There are consumers — many of whom make up the same music-obsessed community that spawns these labels — interested in the music these labels are working so hard to expose. As the mainstream maintains its route down well-trodden paths, music fans seek out cutting-edge artists that call independents home. Small labels continue to dictate the future of popular music, while the majors look to the little guys for something fresh to feed the masses. At any given point, the majors are handpicking the indie world's finest exports for mainstream consumption, forming a farm-team/major league relationship that often leaves the tiny indies high and dry.

The debate isn't if the talent is there or if there's an audience for it, but rather, how can a small company takes its successes — scouting talent, developing local and regional audiences, selling to their niche market — and capitalise on them instead of losing the artist to a bigger company. If major labels are constantly poaching indie successes, the potential for growth at the independent level is almost non-existent. The average indie label owner can hardly justify spending extra energy working on long-term business plans and productivity reports when resources are already stretched to the breaking point simply keeping the label afloat.

Indies must look to outside organisations for long-term funding. The most prominent source for assistance has long been the Foundation to Assist Canadian Talent On Records (FACTOR). Founded in 1982, FACTOR was fashioned by some of Canada's leading broadcasters as a way to bulk up Canadian talent in order to help fulfil the strict content rules that govern radio. (VideoFACT, a program that funds independent music videos, was also created to foster CanCon on music television.) FACTOR's mandate is to offer grants and loans that will allow bands to record albums, tour the country or properly market themselves. Since its inception, the program's annual budget has risen from a mere $200,000 to more than $7 million. Over the years, FACTOR has been a great help for countless indie bands, having initially accepted everyone from label-supported professional musicians to grassroots independent artists that showed promise. Lately though, some are growing weary of the new direction the organisation seems to be headed in.

As more and more commercially viable Canadian records are released each year, FACTOR has been rethinking its approach to distributing funds. Less about developing new Canadian talent, instead it works to further exploit the success of already established artists. It's an understandable position for the grant-giving body — in order to justify its existence to its governmental parent, it must be able to point to results. Success, to the mainstream, means radio play and name recognition, the standards to which FACTOR is held.

As FACTOR changes its focus, and its willingness to support unknown up-and-comers, the cards are stacked against the most dedicated of independents, even before the application process begins. FACTOR offers most major labels and large independents "Direct Board Approval," allowing them to bypass the significant and complicated application process that others face. Larger, already successful acts like Swollen Members or Treble Charger (both recent grant recipients) are given this shortcut while smaller, indie bands continue to struggle through FACTOR's elaborate paperwork.

"It's all about sales," says Jeremy Strachan of Toronto-based math rock trio Rocket's Red Glare, who were recently turned down for a touring grant. "I was told that the activity of the album, in relation to its newness, is the deciding factor. That creates a problem for the independent band that sells most of its records at shows on tour. We don't have a strong, even identifiable, market presence or impact, as defined by sales and shipping figures, nor do most bands that tour the way we do."

With little to no label support and a sound that's not likely to be a hit at radio, RRG rely almost exclusively on touring to push units — touring that has to date been underwritten entirely by the band members' personal savings. The band had hoped that this tour — the third of its kind for the group in the past 18 months — would be at least partially funded by an outside source, since the costs involved have left all three members almost completely broke. The Catch 22 is almost too perfect: without the sales figures, the band doesn't qualify for the touring grant, but without the tour, the band struggles to sell records, and to top it all off, the sales success they would have on the road wouldn't count, since those sales don't come through a quantifiable retail entity. Strachan is quick to point out that he will not apply again and that the band is unlikely to tour any time soon due to the sheer financial massacre they've experienced thus far.

There are a few alternatives to FACTOR that are less oriented toward sales figures, but they tend towards more "specialised" music that more easily falls into the purview of "art" (as opposed to rock or hip-hop, which is apparently "entertainment"). Canada Council for the Arts, Ontario Arts Council and other regional arts organisations all offer grants and loans to jazz, folk, classical and Celtic musicians as a crutch for musical styles that aren't supported by the industry. Grants that are essentially out of reach for the average garage band.

But the biggest disadvantage for all of these programs is that they are almost entirely project-based. Grants are given to fund individual recording sessions or specific (and carefully outlined) touring plans — they are not given for label improvements or to shore up infrastructure. In other words, FACTOR may help your label buy a fish; they will not help you buy a fishing pole or pay for fishing lessons.

Unless you have the coveted Direct Board Approval, a small label or band must go through the application process each and every time they embark upon a new project. Many feel it's a real gamble to invest time in that much daunting paperwork when they're already sceptical about who these organisations are looking to serve. Instead, many choose to focus their efforts on selling records and marketing themselves better instead of dedicating time to an increasingly futile application process.

Canadian Heritage To the Rescue?

Hope for assistance in building stronger small label infrastructure came recently from Canadian Heritage (the government body focused on culture in Canada), which created a funding vehicle called the Music Entrepreneur Program. On paper, it seems the perfect opportunity for these micro-labels. MEP's mandate is to give the label a substantial amount of money to fund basic business advancement, allowing them to hire staff, write business plans and gain a leg up in this competitive industry. Many small labels have built strong regional and national reputations for the quality of their releases — MEP could provide the tools need to spread that reach further. Finally, an organisation with the sole purpose of guiding independent labels to the success they deserve.

"To put it in a nutshell," says MEP's Director Shelley Stein-Sacks, "the idea behind MEP is to identify companies that are in need of having support that will allow them to grow in terms of structure. It might just be a matter of upgrading their personnel or it might be a full overhaul. You get to a point where, in order to survive, companies have to look at better structures to deal with the way they'll position themselves in the future."

The organisation has already given out close to $1 million of its reported $23 million budget, instituting a first phase focused on helping companies create a five-year business plan. The second phase, which closed the door to applicants as of September 30, provides support for implementation of plans created in the first phase.

But, like anything else that seems like the "perfect" solution, it's all too good to be true. MEP was tailored from the outset to aid those already making money in the industry. Of the 39 labels that applied for the grant, 26 were accepted, including the likes of huge independents like Aquarius Records and DKD Spectacle. All of the applicants accepted already do quite well for themselves, with catalogues that include releases from internationally recognised artists like Sum 41, DJ Tiesto and Diana Krall.

Small independents need not even consider applying. Telefilm (the body that governs MEP) has set cut-off points that very few can possibly reach. Level 1 requires that the label has sold a staggering 100,000 Canadian content records over the course of three years, has been in business for at least five years and has a minimum of five employees working at the label. The second level is a little more forgiving, requiring that the label has sold 25,000 CanCon records, has had three years in business and maintains three staff members.

"We don't qualify for either tier," says Tim Potocic, co-owner of Sonic Unyon Records, "And those numbers were even higher originally. Even guys like Bernie Finklestein from True North records couldn't qualify. He's got Bruce Cockburn for god's sakes!"
Potocic and company have accomplished a substantial amount over their near decade-long existence, starting off national success stories like Treble Charger and Hayden, all the while operating a strong distribution wing that handles a large number of lucrative indie clients. Though Sonic Unyon is considered to be one of the biggest labels of its kind, Potocic says Sonic Unyon (as a label separate from the distribution company) didn't have the sales figures or proper documents to apply this time around.

Truth is, the majority of the companies that could really benefit from a program like MEP are not even close to meeting the qualifications put forth. Three Gut, Grenadine, Mint, Endearing, Stomp — recognisable independent forces that could very well take their reputation even further given the means to do so — all find themselves way below MEP's radar.

One Big Union For Labels

"The smaller independents weren't considered and there's a reason for that — MEP is part of a much bigger picture. The reason for MEP is to try to kick-start or develop some of the more key players to help them survive so they can become more successful," says Brian Chater bluntly. "MEP's mandate is to help structure major to mid-level independents. Both our organisation and MEP are interested in these smaller independents but we're not focusing our efforts on them right now."

Chater is the President of the Canadian Independent Record Producers Association (CIRPA), one of the groups responsible for lobbying the government to set up programs like MEP. As a sort of union for members of the Canadian music community, CIRPA is supposed to provide a strong voice for label-heads, record producers, and musicians within the independent industry. While some people swear by the organisation, many small label owners feel that the cost of membership is too much to justify the amount of attention they'd receive. CIRPA's most influential members seem to be major label affiliates, making for yet another place where small indies don't get their say. The guidelines for MEP were set up in direct response to what CIRPA's core members needed, which is why these micro-independents were ignored. Without a force like CIRPA prepared to back them up, these labels don't have much clout in the decisions put forth by their supposed peers.
Alex Megeles of Grenadine Records (Blurtonia, Shy Child) and Matt Collyer of Stomp Records (Subb, the Planet Smashers) met with MEP's Director during the early stages of the program to find out more information, hoping to get some of their concerns properly addressed. Megeles feels that CIRPA is not representative of what his label stands for but can't deny the need for such organisations.

"After we met with Shelley Stein-Sacks, he said he'd definitely be open to comments from other music industry bodies but that it just wasn't feasible to take into consideration each individual request for changes to the program," Megeles says. "The problems, as far as labels like us are concerned, is that we're not represented by organisations like CIRPA and there isn't an indie alternative." Collyer adds, "Basically, he said that the next time this happens we'll get ignored again unless we do something about it. The ball is really in our court. A bunch of labels have started to talk to one another about it, we just need to get things together and at least write a letter that collectively portrays our thoughts."
The group that Collyer refers to started after Richard Switzer from Sound King Records (Bionic, DJ Serious) grew tired of trying to get through to Telefilm on his own. Aided by an online discussion list set up by Ryan Mills at AntiAntenna Recordings (White Star Line, Gaffer), labels from all across the country began toying with the idea of starting a lobby group that tailors to companies of their size. Joining Collyer, Megeles and Switzer in their discussions were labels like Three Gut (Constantines, Royal City), Endearing (Julie Doiron, Paper Moon), Teenage USA (Mean Red Spiders, Elevator), Matlock (Holding Pattern, Weights & Measures), G7 Welcoming Committee (Weakerthans, Warsawpack) and Shipbuilding (the Dears) as well as indie distributors like No and Scratch.

It could have been the start of a new organisation, aimed specifically at helping people just like themselves. But discussions on how to lobby the program soured as it became more and more apparent MEP was not interested in hearing from a rogue group like this. The program had already defined its mandate and was by no means about to adjust their ways because a few "hobby labels" were talking about change. This union of labels has all but fizzled, attributed mostly to the lack of a strong central organiser. While all parties involved are interested in the same cause, none have the time or motivation to step forward as the group's real leader. CIRPA isn't necessarily the answer for everyone, but some think their expertise could still come in handy.

"If there are ten labels with the same ideals working towards something, that's going to have a lot more clout," confirms Three Gut Records co-owner Lisa Moran, "but CIRPA is already taken seriously. They also probably understand the issues more than we do and could apply that knowledge much better. At least, we could have someone from CIRPA come and talk to all of us and explain what they do. We could tell them our concerns and they could mediate things and maybe sum up what we're trying to do here."

The officials at MEP say that they will be re-evaluating the program when the initial two-year trial is over with, but are reluctant to let on whether the micro-independents are really in the running for the money. FACTOR president Heather Ostertag even goes as far as to say that her organisation "depends on the industry to advise of what needs changing."

There are a few possible solutions — whether it's starting a union for labels or altering existing bodies to better suit their needs — but a revolution won't come on its own. Formal meetings, appointed roles, proper documents; all of these things would do a great service to the group, if only there were time to orchestrate it all.

But once again, we're caught in the cycle. If a label can't find the time to run their business, how will they be able to hold up their end of the bargain in a union like this? Assume for a second that one of these label owners did have the resources to spearhead a group like this, would it be possible for all those involved to take on their share of the responsibilities? Sadly enough, it probably wouldn't happen.
It brings the vicious circle of small businesses in a shrinking economic environment back around. The dialogue between labels is a key start, to be sure — but what clout will such a rogue union really be able to wield? A dramatic increase in sales figures for an individual label that might stem from a break-out hit — the industry equivalent of winning the lottery — may well change the fates of one label or another discussed here. But that won't change the fundamental lack of attention and respect that's given to an underground economy that's more about fostering artistic vision than market-driven profitability. It is exactly these endeavours that government-supported arts grants are supposed to support. But those organisations are being held, not to a standard different from the commercial industry, but by the exact same standard: sales numbers, visibility, profitability. As long as those are the criteria, the indie labels can organise all they want. It won't matter if it's FACTOR or the MEP or Edge radio making the decision — the end result, in record stores, on mainstream radio, and in sales figures will be the same. The very standards that music fans hold dear — innovation, artistic vision, originality, dedication, talent — don't mesh with the crunched numbers of the business world. This is why the government steps in — why programs like FACTOR and MEP were created in the first place. To do things differently. To put a different set of priorities ahead of the bottom line. Not to do them just the same way.

Canada's Funding Kicks Ass

"There's shitloads of money available to indie labels and independent companies in this country," says Sonic Unyon's Tim Potocic. "It's ridiculous how much. It almost makes me feel bad that there are so many ways to get free money. It's almost criminal. American bands and labels think we've got it made in the shade."

As one of the head honchos of Sonic Unyon, an established indie distributor that deals with a whole whack of American labels, Potocic hears about it all the time. "They have nothing. I mean, there's some money available to Americans too but it's all small business loans. They can't believe we have music industry specific funding."

Jon Soloman, the one-man staff at My Pal God Records in Princeton, New Jersey, has put out a staggering 52 records over the last five years and says that "past releases fund future releases." Saddle Creek's Jason Kulbel says his Nebraska-run label's catalogue is also close to the 50-release mark but assures that his success has had absolutely nothing to do with outside funding. If these programs do exist in the U.S., he says that nobody's waving any red flags at labels like his. "You can get grants for certain music-related things [like opening non-profit music venues] but there aren't many available and they're not widely known about. They almost seem like a myth most of the time. The process of getting them is often too ridiculous or obscure to even consider it an option."

But many consider the funding to be far less crucial to our American counterparts, with the chances of success generally weighing in their favour. Remember, these programs mainly exist to help Canadian musicians keep up with the dominant cultural force to the South. "Considering the economic advantages of living in the U.S. — whether it be cost of living, a larger network of big cities to tour or move around in or lower tax rates — I consider it fair redress," says Toronto-based promoter/musician Jonny Bunce. "In that sense, it is something that I'm grateful to see exist, despite whatever complaints I might have about the way the current system works."

Where To Start Finding Funds

While many smaller, more private institutions offer grants and loans to artists, these are some of, but certainly not all of, the most widely utilised.


Arguably the most popular source for funding in Canada offers a wide range of grant and loan programs for making demos, touring, recording albums, marketing and much more. FACTOR is also home to VideoFACT, a program that helps fund independent videos, allowing you the quality needed to compete for airtime.



There are numerous grants offered by Arts Councils across the country. Among the most recognised are the Canada Council for the Arts and the Ontario Arts Council. These grants are usually geared towards artists performing "specialised" styles of music, including jazz, classical and other, more avant-garde compositions.



The Manitoba Audio Recording Industry Association is much like a provincial version of FACTOR, aimed at promoting Manitoba's music community. If you are not a resident of Manitoba, you are ineligible.



Starmaker is a fairly new initiative founded by the Canadian Association of Broadcasters. Headed by Brian Heatherman, the fund is generally given out to more mainstream artists with other forms of support.