2 CASE STUDY: The Music Scene Ontario Magazine Background In 1996, Wah Keung Chan, a mathematics doctorial student with a history of initiating projects from a young age, began a small hobby that would evolve into an important contribution to the arts scene in Quebec, Canada and internationally. As a music lover and an aspiring opera singer, he created a twopage bilingual newsletter on vocal classical music (opera, choral and voice recitals) which he initially called La Scena Vocale, Italian for The Vocal Scene. Chan chose an Italian name for his newsletter to avoid adding to the Quebec linguistic tensions that followed the dramatic 1995 Quebec Referendum. The first issue had a one-page calendar of local music events and featured an article on the back page. In all, 300 manually-folded photocopies were distributed to music schools and concert venues throughout Montreal while an electronic version was sent by to thirty friends and posted on the internet through usenet groups. Feedback about the newsletter was very positive and it seemed that it addressed a real need. Over the next 8 months, the number of copies grew from 500 to 4000 copies per issue and each issue increased in size from 2 to 8 pages. In May 1997, the little newsletter blossomed into a real magazine at 16 pages, and it was renamed La Scena Musicale (LSM), Italian for The Music Scene, covering all of classical music, not just vocals, and including a comprehensive music events calendar, CD reviews, articles and interviews. La Scène Musicale was formed as a non-profit organization (gaining charitable status in 2002) with a mission to actively promote classical music through the publication of LSM as a bilingual music magazine. The organization s non-profit model was chosen for the Quebec market to enable La Scène Musicale to qualify for government grants and to attract much-needed volunteers. More importantly, from the very start, and unlike traditional newsstand arts magazines with very limited circulation, La Scène Musicale fulfilled its mission of making classical music more publicly accessible by adopting the innovative controlled (free) circulation distribution method, an approach which allowed LSM to reach a larger readership. In fact, LSM is the first Quebec arts magazine to be distributed in this way. La Scène Musicale built its LSM brand (many readers affectionately refer to the magazine as La Scena ) on relevant and cutting-edge editorial, including expert advice to singers on topics such as how to handle colds, introducing readers to rising Canadian stars such as tenor Ben Heppner and soprano Isabel Bayrakdarian, as well as featuring talented Quebec artists like soprano Lyne Fortin and conductor Jacques Lacombe. 1
3 The magazine started its second full year in September 1997 as a larger 24-page publication featuring Quebec conductor Bernard Labadie. Distribution increased by 286% from the inaugural issue published the previous year (7000 copies) to 20,000 copies in the second year. Since then the magazine continues to be published ten times a year with two issues combining two months - December/January and July/August. In subsequent years, La Scène Musicale s flagship magazine La Scena Musicale (LSM) has evolved into a hybrid glossy/newsprint 80-page magazine that is considered the most respected music magazine in Canada (with jazz and world music added to its coverage). At one time, LSM s circulation was as high as 42,000 copies per issue, and it continued to take an international perspective with features on world-renowned artists such as Oliver Jones, Charles Dutoit, Yo-Yo Ma, Lang Lang, Renée Fleming, and Placido Domingo. Through its award-winning website, scena.org, LSM has become one of the most prestigious online music magazines in the world. Currently, the site attracts an average of 7000 visitors a day and includes a blog for classical music enthusiasts. The Business Model From the outset, LSM was conceived as a bridge to connect musicians, music groups and music lovers ( consumers ). It caters to musicians, music experts and music novices alike. Surveys conducted through the years show that the average reader of the magazine is highly-educated (92% are college-educated or higher), affluent, and of above-average age (median age of 49 versus the Canadian average of 43 - see Appendix 1: Readership Profile). During its second year of publication La Scène Musicale began printing LSM on newsprint using a more cost-effective process. Later, in 2000, LSM introduced its first colour cover (4 pages in total considering both sides of the front and back pages). The number of colour glossy pages gradually increased, fluctuating between 16 and 32 pages (note that magazine sections normally come in increments of 16 pages) depending on the issue. Three years ago, La Scène Musicale decided to improve the quality of its end-product. By reducing the number of copies per issue from 42,000 to 25,000 it was able to invest more money into more colour pages per issue. Upgrading the overall quality of the magazine would help attract more lucrative advertising. Presently, LSM advertising rates are $1,300 for full-page black and white ads, and $2300 for full-page colour ads. 2
4 Overall, a major portion of LSM s revenues is derived from advertising. Web advertising has increased in recent years, but similar to subscription and donation revenues it accounts for only a small percentage of the magazine s revenues. Youth employment grants is another small source of funds, and to date, LSM has not been eligible for government funding, partly because it continues to use the controlled (free) circulation method of distribution. The first advertisers in LSM were concert presenters (regular season presenters who do promotions from September to May, and summer festival advertisers who buy ads for June, July and August). After two years, advertising from the CD industry came onboard. With the addition of the annual Higher Education Guide to its November issue, LSM expanded its advertising base to the education sector. The music and arts sectors remain the bulk of LSM s advertising business but because these sectors typically have tight budgets, heavy advertising discounts are offered to these organizations. In September 2006, La Scène Musicale extended its mission of promoting music to include the arts in general so as to reach a larger audience and to broaden its advertising scope. Traditionally published ten times a year as a stand-alone music magazine, La Scena Musicale (LSM) now expands into a larger magazine called La SCENA for four out of its ten issues (i.e., LSM becomes La SCENA in April, June, September, December/January). La SCENA, the arts magazine, not only covers dance, theatre, film and the visual arts but it also incorporates the LSM magazine inside as its music component. Whenever it publishes La SCENA, La Scène Musicale adopts a more high-end perfectly bound format (not stapled, similar to paperback book binding). With its remaining six issues, when LSM exists as a stand-alone music magazine and is therefore not part of La SCENA, it is presented in a simpler saddle-stitched (stapled) format. The Quebec Music and Arts Market The Canadian CD/music DVD industry is estimated to be over $200 million for In recent years the sales of CDs and music DVDs have been declining (according to the Canadian Record Industry Association, the industry saw as much as a 35% sales decline during the first quarter of $69 million from $106 million in the same period in 2006). 1 Increased online downloading of music and music videos account for much of the progressive deterioration of hardcopy sales. Despite this, Quebec continues to be viewed as an interesting market. Even though the province represents only about 24% of the Canadian population, it has higher CD sales per capita (according to some industry experts as much as 35% of classical music CDs are sold in Quebec) than in other markets in the country. 1 Greg Quill, CD music sales plummet, Today s Toronto Star, December 7, 2008 (http://www.thestar.com/entertainment/article/207826) 3
5 Another reason why the Quebec music and arts scene is doing better than other markets is that the Quebec government continues to spend more on the arts per capita than other provinces leading to a thriving festival scene during the summer season. Nevertheless, being largely dependent on music and arts advertising revenues, La Scène Musicale s success could be adversely affected by the negative trend in the CD/music DVD industry. For the past few years, La Scène Musicale has taken the initiative to develop sales from other sectors. Efforts to expand LSM s sales to retail and national clients (non-arts advertisers) have been hampered by its limited sales staff. Another challenge in securing the business of national advertisers is the lack of membership in the Print Measurement Bureau (a non-profit organization which collects useful statistics on print media readership for its member organizations). Membership in the PMB would enable LSM to track statistics on its readership base and on the Canadian publishing industry, a powerful sales tool to help persuade potential national advertisers to buy ad space in the magazine. PMB fees, however, are costly (about $12,000 per year) and are currently beyond LSM s budget. National Presence Canada s magazine business is a $2.1 billion industry (2006) with advertising spending on magazines increasing significantly (92%) in the past 13 years. 2 Like many Quebec-based organizations seeking to reach the next level, La Scène Musicale realizes that it must secure business outside the province, but finding advertisers in English Canada and internationally, requires a strong national presence. In 1999, the organization attempted to expand LSM s distribution to Toronto, but that proved financially premature especially in light of local competition (from The Whole Note, an established Toronto competitor). More importantly, it became evident that the bilingual nature of the magazine was a turnoff for English Canada; many readers mistook LSM s Italian name as French, and ignored the magazine. Chan concluded that to gain better access to the rest of Canada, a new and all-english product was needed. In 2002, an all-english magazine targeted to Ontario and Western Canada, called The Music Scene (TMS) was introduced. It has been published with irregular frequency, varying between twice and four times a year (see Table 1: The Music Scene Publication History). TMS follows the same standards of excellence established for La Scène Musicale s flagship bilingual magazine, La Scena Musicale (LSM), and has featured musicians such as Measha Brueggergosman, Isabel Bayrakdarian, Cecilia Bartoli, Sumi Jo, Valeri Gergiev, Richard Bradshaw and Tafelmusik. 2 TCI Management Consultants, A Strategic Study of the Magazine Industry in Ontario: Final Report for the Ontario Media Development Corporation Magazine Industry Advisory Committee (Ontario, Canada, September 30, 2008), 3. 4
6 Originally, TMS had a 42,000-copy distribution per issue and was distributed as a controlled (free) circulation magazine in Ontario and in Western Canada. Three years ago, TMS was divided into two separate regional editions (TMS Ontario and TMS West) with each edition having 25,000 copies per issue. Advertising support in Western Canada proved disappointing and TMS West has, for the time being, been discontinued. TMS Ontario continues to be published twice a year and is distributed throughout Toronto and Ottawa. TABLE 1: The Music Scene (TMS) Publication History Year Issues Avg. Copies/Issue Distribution ,000 Ontario, Western Canada ,000 Ontario, Western Canada ,000 Ontario, Western Canada ,000 Ontario, Western Canada ,000 Ontario, music schools across Canada ,000 Ontario, music schools across Canada ,000 Ontario, music schools across Canada In Toronto and in Southern Ontario, The Music Scene (TMS) faces existing competition at various levels: The Whole Note 13 year-old Toronto-based English magazine on classical, choral, jazz, world and theatre music, and opera 30,000 copies per issue and published 10 times a year printed on newsprint with colour matte cover controlled (free) distribution in Southern Ontario, mainly in Toronto like TMS, there is an online downloadable version of the magazine Its advantage over TMS is its publication frequency, local presence and focus in Toronto, advertiser loyalty and the inclusion of a free events calendar. On the other hand, TMS has a relatively higher quality presentation (more professional layout, graphics and writing), and produces more interesting editorial content with national and international focus. Opera Canada 50 year-old Toronto-based English magazine dedicated to opera 5,000 copies per issue and published 5 times a year printed entirely on colour matte paper and provides a calendar of global opera performances. available by subscription and at select newsstands no online downloadable version of the magazine is available introduced the Opera Canada Awards which is better known as The Rubies (in 2000) as a major fund-raising event for the magazine Opera Canada and TMS have comparable editorial quality but TMS has 5 times more copies per issue, making it more attractive to advertisers. Opus 30-year old Toronto-based English classical music magazine 4,000 copies per issue and published 4 times a year printed entirely on colour matte paper available by subscription and at select newsstands no online downloadable version of the magazine is available NOTE: According to industry sources, Opus has recently ceased publication. 5
7 Other classical music magazines from outside Canada such as Opera Magazine, Gramophone, and BBC Music Magazine are available by subscription and/or at select newsstands. The Future of The Music Scene Ontario Wah Keung Chan is faced with the question of what to do with TMS Ontario. Despite existing competition, Chan sees increasing potential in Ontario. Under the McGinty government, Ontario has increased funding to the arts and to publishing sectors through the Ontario Arts Council (OAC) and through the Ontario Media Development Corporation (OMDC). Furthermore, the OAC has changed its funding eligibility criteria so that controlled (free) circulation magazines are now eligible to apply. Toronto particularly boasts a thriving arts scene supported by recent infrastructure investments including new facilities for the Art Gallery of Ontario, the Royal Ontario Museum, the Four Seasons Performing Arts Centre, and the renovated Royal Conservatory of Music. With all this support, Toronto enjoys the enviable reputation as Canada s cultural capital. As Chan ponders the future development of TMS Ontario, many ideas come to mind. According to industry experts, most consumer magazines in Canada will exist in print form despite the digital culture. 3 Since it helps fill the need for music education in Ontario one idea would be to focus the magazine mainly to musicians and music students and to this end, target education and instrument advertisers. Another strategy could be to distribute the magazine door-to-door by mail in more affluent neighbourhoods (in the Greater Toronto Area), a method used by many magazines, in TMS s case, to increase subscriptions, and to widen the scope of non-arts advertisers (e.g., restaurants, car dealerships, etc.) TMS Ontario could also follow the combined La Scena Musicale/La SCENA strategy by expanding its coverage to the other arts, a direction which would require the magazine to offer more and diversified content as well as add to production costs due to an increase in the number of pages per issue. Even with more administrative support in the past few years, Chan still runs a very lean organization and relies heavily on a small but dedicated army of volunteers. He continues to oversee every aspect of the organization, La Scène Musicale, out of his Montreal office keeping busy with editorial, sales and marketing. As the founder, editor and publisher of three notable magazines, La Scena Musicale (LSM), La SCENA, and The Music Scene (TMS) as well as the online magazine, scena.org, his passion for music and the arts drives his organization s ongoing mission to make classical music and the arts more readily available to the public. 3 TCI 15 6
8 With a shoestring budget and no operating grants from the government, Chan must constantly come up with creative means to promote his magazines. His annual promotional budget of $75,000 largely comes from exchanges (barters) with radio, television and arts groups. Chan firmly believes that culture is not a privilege for the wealthy few but a right for every Canadian. Having been the front man of the organization for 13 years, Chan knows well the challenges of trying to effectively allocate La Scène Musicale s limited resources in order to continue being of service to the Canadian public. As noted musicologist Jean-Jacques Nattiez once remarked, If La Scena Musicale did not exist, it would have to be invented. Chan realizes that he must focus more of his time to leveraging his innovation and industry experience toward secure additional business development and fundraising opportunities beyond the province of Quebec. Building the The Music Scene Ontario brand may be part of the solution. This original case was prepared for the 2009 BDC Vanier College Case Competition by L. I. Liganor BSc, MBA. Some of the facts and figures have been modified to maintain confidentiality. The author would like to thank Wah Keung Chan for his cooperation and generosity in the preparation of this case. 7
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