OTTAWA — CBC defends losing millions of dollars to set up a free music service even as it cancelled other programming and laid off staff.
Last February the state broadcaster launched CBC Music, an online music service that gives away for free what other existing private music services charge money for. While CBC doesn't charge users to listen to the latest Rihanna, Katy Perry or Aerosmith, the artists must be paid.
Now it is reported that CBC is expected to lose close to $6 million in its first year of operation and there is no break even point on the horizon.
"We have a very different business model than a for-profit company focused on the shareholder bottom line," CBC executive Chris Boyce told a Toronto newspaper.
Even if the state broadcaster was looking for profit it's doubtful they would be able to find any. Similar music services already exist and industry players say it is a tough market to make money in even while charging users for the service.
CBC is attempting to recover some costs through advertising but does not expect to ever make money.
"CBC Radio, whether delivered over the air or online has costs that are not recovered," CBC English vice-president Kirstine Stewart said via Twitter.
Stewart also denied that the 650 jobs cut earlier this year helped pay for the expensive service.
Stephen Taylor, with the National Citizen's Coalition, said CBC's decision to use tax dollars to compete with the private sector is troublesome.
"The oafish state media is trying to be all things to all people -- especially a competitive nuisance and private sector spoiler," Taylor told QMI Agency.
He also questioned a government entity like CBC getting involved in the fast moving world of high tech.
"The media and tech industries change at such a break-neck pace, while state-run efforts are always slow and unagile. A government sector online media company' is really a perfect contradiction of terms."