Thank you, Madam Chair, and thank you for the invitation to present to the committee today.
My name is Stuart Johnston. I am the President of CIMA, the Canadian Independent Music Association, and with me is Chris Moncada of eOne Music, Last Gang Music, a CIMA board member and vice-chair of our government affairs committee.
CIMA is the national not-for-profit trade association representing the English-language, Canadian-owned and -controlled companies of the domestic music industry, including independent record labels, managers, publishers, distributors, artist entrepreneurs, recording studios, and the like, all small businesses.
Today you will hear us repeat recommendations that previous witnesses have given this committee. This is because there is a broad consensus within our industry on what needs to be done to improve the livelihood of our music creators. It's also important to know that creators must be defined as everyone in the music ecosystem of creating, recording, performing, and commercializing music. Creators are the artists, songwriters, and composers, and the companies that support them, such as labels, managers, and publishers. We urge the committee to review these consultations through this lens to ensure that all who create and commercialize intellectual property are properly supported and protected by Canadian law.
You've been told about the value gap, the difference between the value of our music and what is paid to our creators for the use of that music. Our four recommendations for amendments to the Copyright Act will go a long way toward closing that gap here in Canada.
First, remove the temporary $1.25-million radio royalty exemption. Since 1997 Canada's radio broadcasters have been exempted from paying statutory public performance royalties on the first $1.25 million of revenues. The federal government had amended the Copyright Act to provide this exemption to commercial radio stations in an era of low profits and uncertainty for the radio industry. Since then their profits have risen by 8,300%. This means creators have been subsidizing Canada's commercial radio industry to the tune of about $8 million a year. This exemption, unique in the world, was supposed to be temporary. I must point out that songwriters appropriately are not covered by this exemption; only performers and record labels are penalized under this system.
Second, amend the definition of sound recording in the Copyright Act to allow recorded music in TV and film to be eligible for public performance remuneration. The act does not consider recorded music as a sound recording when it's included in a soundtrack of TV or film. Because of this omission sound recordings are not entitled to royalties. For example when the movie Titanic is broadcast to the public the composer of the song My Heart Will Go On receives public royalties, but not the performer, Céline Dion. This omission is costing performers and makers approximately $45 million or more a year in loss of revenues.
Third, extend copyright term to life plus 70 years. We support SOCAN and CMPA and others in this request. Both the European Union and the United States provide copyright protection for a baseline term of life plus 70 years for authors of musical works, which includes publishers, songwriters, and composers. This will bring Canada in line with international intellectual property standards and trade agreements. It will also provide greater protection for Canadian creators of musical works, including songwriters, publishers, and composers.
Finally, renew support for music creators. We support the Canadian Private Copying Collective's recommendation for the creation of a four-year private copying compensation fund of $40 million annually. Music creators should receive fair compensation for private copies made of their music, and this fund is a good interim step until a more permanent solution can be found through legislative change. Ideally the Copyright Act needs to make private copying technologically neutral. Unfortunately, private copying is limited to media that are quickly becoming obsolete such as blank CDs.
Thank you very much. I now would ask Chris Moncada to say a few words.
My name is Chris Moncada. I am a resident of the Toronto—Danforth riding and the General Manager of Last Gang Records and eOne Music Canada.
Last Gang records is a 15-year old Canadian independent record label based in Toronto, representing both new and well established Canadian artists such as Metric, Stars, Death From Above, and many others. The current active roster is home to over 20 artists, most of whom are Canadian. We support and develop this roster across different lanes like radio promotion, consumer marketing, PR support, brand strategy, and retail distribution. The label, very simply, generates most of its revenue from the exploitation of the master recordings we have licensed from our artists. This includes the streaming of music on legitimate services, the sale of album and single downloads, the sale of CDs and vinyl records, and the synchronization of music to visual entertainment.
Our artist partners are paid a royalty or a percentage of net proceeds after their individual projects have recouped the agreed-upon costs that the label incurs to produce and market the projects. The biggest challenge to seeing our artist partners get paid is simply getting to this recouped position in this day and age. The rates paid out by streams are a fraction of those paid by CD, and the costs involved to market and promote the art have only risen since our industry has moved to a streaming consumption model. On top of that, the market is truly global now, and the costs to promote our artists in markets outside Canada are substantial.
Digitalization has had a monumental impact on our business. In a relatively short period of time, it has changed how our artists make their records, how we distribute them, how we market them, and how we promote them. It has redefined our relationship with the retail sector. However, what has not changed is that the path an artist embarks on to earn a living in his or her business starts with the creation of new master recordings, many of which are funded and promoted by labels. The tours, the streaming playlists, the terrestrial radio play, the press and blog interest, the TV and film placement opportunities all come after new art is created and promoted.
By making the appropriate changes to the copyright system—which my colleague, Stuart, has mentioned—the government will be supporting the companies that are the launching pad for our Canadian talent to make a truly global impact.
Thank you, Madam Chair.
Thank you, committee members.
We come before you today on behalf of SODRAC, an organization engaged in the collective management of copyright and reproduction rights for its member authors, composers, music publishers, and creators of artistic works. In so doing, we facilitate the use of our repertoire of works on all distribution platforms so that the work of our members is fairly remunerated.
We are appearing before you today as part of your study on remuneration models because we want to present an overview of the impact of digital technology and to propose some options for restoring balance in the value chain so that creators are more fairly remunerated.
I would like to present our findings concerning the economic lives of our members.
Considering the new digital business models and the modernization of the Copyright Act in 2012, we, as a collective representing creators, want to address the following points.
In section one, we want to present our findings concerning all market stakeholders.
First, there is the consumer. We have shifted from an ownership mode to a digital access mode in which the local, national, and international music repertoire is both legally and illegally accessible with a single click. Since consumers pay their Internet service providers for access to content or purchase individual subscriptions, they believe they pay enough for cultural, musical, and audiovisual products.
Second, there is the user. The current environment favours digital operators. Given the new digital business models, we are witnessing the emergence of new intermediaries. Some of those intermediaries use music as a loss leader, whereas others enjoy exceptions, which creates a value gap among digital works.
Lastly, there is the creator. In itself, digital technology benefits creators because it expands and democratizes the means of distribution, which used to be limited. Digital technology helps diversify creativity and reach audiences that otherwise would never have been accessible. It also helps completely transform the formats in which music is consumed.
However, the most significant finding concerning creators is their inability to obtain fair remuneration for the use of their works. The most prolific creators always find a way to do so, but that's not the case of the vast majority of creators, the equivalent of the middle class, who used to live from their creations before the advent of digital technology. For them, the imbalance that digital technology causes in the value of works is constantly increasing.
In section two, we want to outline the factors that have an economic impact on creators.
The most crucially important factor is, of course, the Copyright Act. Since 2012, however, that act has contained more exceptions than any other similar act elsewhere in the world. Those exceptions are wide-ranging and concern, for example, the private copying system and user-generated content. There are also exceptions for certain digital intermediaries.
Recent judgments of the Supreme Court of Canada have also conferred a new right on users.
Mandatory national French-language content quotas are also lacking in the digital space.
Lastly, although the Copyright Board of Canada plays an essential role, there is a value gap in its decisions on digital uses of works, and that has a negative economic impact on creators relative to the situation of other countries for the same uses.
That brings us to the final point we want to raise, and I'm going to let Me Lavallée tell you about it.
In fact, we're talking here about the need for a copyright act that benefits authors. Ultimately, in our view, the method used to remunerate creators affords the opportunity for that creator to follow the economic life of his or her work, no matter how it is used. This principle is supported by three pillars: access to the work, authorization of the holder, and value based on multiple uses and reuses.
Let's consider those three points.
Access is not a major problem area because the digitization of works, particularly musical and audiovisual works, is now commonplace. Works are universally accessible. Digital warehouse initiatives would meet needs for access to authorized copies intrinsically containing universal metadata.
Authorization should not cause problems either since, on large scales and in high volumes, the system whereby collectives such as ours grant general or one-time licences works quite well and proceeds via an exchange of metadata. However, the many exceptions provided for in the Copyright Act nullify the authorization process. We will therefore be addressing the Standing Committee on Industry, Science and Technology on the idea of reducing the number of exceptions.
The biggest challenge is to assign value based on multiple uses. Digital operators currently benefit from broader rights than those of the creators themselves, who are the ones who provide the raw material for those distribution platforms. How have we managed to migrate from an author protection system to a user protection system? Why are creators prevented from enjoying the potential economic impact of the use of their works, either as a result of exceptions under the act or because the responsibility of operators is unclear and because that constantly requires them to go to court to assert their rights?
This result is quite the opposite of what Parliament should wish for the cultural industry as a whole. Consequently, the departments of Industry and Canadian Heritage should join forces to review the Copyright Act and transform it into a tool to defend and promote rights holders.
We invite you to consider the following potential solutions, which we firmly believe acknowledge today's evolving digital market and the state of copyright in the 21st century.
First, it must be acknowledged that content transmitted by a digital service provider is subject to a proprietary right that belongs to others. Authorities must take further action along these lines and acknowledge that certain Internet players, in particular Internet access providers, Facebook and YouTube, to name only a few, still deny all responsibility. In the new digital economy, however, they should ensure that creators are properly remunerated. Their contribution is therefore necessary.
The result of an enormous sector that distributes the music of creators but, in return, pays only a very small portion of revenues is a "value transfer" or "value gap". These two common expressions describe the transfer of the value inherent in creative works to the platforms that host and monetize them but that pay little or nothing in the way of royalties to those who have invested time and money in the creation of those works.
Second, the expropriation of creators' works must be prevented by reducing access to those works unless compensation is paid. The many exceptions contained in the present act have constantly been a recurring subject of complaints by rights holders. The parliamentary review that you are conducting must help improve the economic situation of creators. The way to do so is to reduce the number of exceptions under the act that result in no remuneration or inadequate remuneration.
Lastly, we must encourage the distribution of paid works through licences granted by copyright collectives.
In addition to maintaining greater defensive power for our members in order to assert their rights, we are developing a strong position on users. The strength of that position, however, will depend on what the Copyright Act enables us to do.
I believe our allotted speaking time is almost up.
When you talk about today's social networks, you have to understand that a concept called user-generated content has been introduced into Canada's Copyright Act. Some intermediaries, social media in particular, are subject to exceptions under the act. That's one of the things we would like to change in it.
You asked what the impact of digital technology was on responsibility. We manage copyright, but there are many types of copyright. Mr. Johnston discussed public performance rights. We more particularly manage music reproduction rights. Since people traditionally had CD readers, CD and phonogram rights were granted, as well as synchronization rights. In short, there's a full range of reproduction rights.
Before the advent of digital technology, francophone creators—whom we mainly represent—and other Canadian creators could receive national remuneration in accordance with the directives and policies the government had established.
Here's an example. You need only compare digital revenues with those generated by the traditional media. As a result of the contracts we've entered into with users, I can't give you specific numbers, but I can tell you, generally speaking, what we've observed: the distribution of a work on a digital platform will generate 50% less revenue for its author than distribution of that same work via a traditional medium such as radio.
Digital definitely has its strong points. We can't go back in time, and we have to look to the future, but we have to re-establish a balance in this area.
There are so many answers to that. There are so many nuances to that broad question. We were encouraged by the CRTC report last week. We know the Broadcasting Act is going to be reviewed over the next year, and the CRTC report is hopefully going to form the basis of that review or at least feed into that review. I think that CRTC report had a lot of very positive recommendations along the lines of what you were just discussing, with regard to ISPs and levelling the playing field. That will go a long way.
The fact that we're here today reviewing the Copyright Act and looking at ways to improve the Copyright Act to hopefully keep on top of the modernization of the digital world we're living in is, I think, very positive, as is looking at removing the exemptions and examining the exemptions that we're all talking about—the radio exemption, the sound recording definition, and whatnot. All of these pieces will feed into the system and strengthen the foundation for our creators.
Going to the question you're talking about, with regard to the deals with the digital service providers, the Spotifys and whatnot, those are in part market rights, particularly the fully interactive services like Spotify. They are negotiated via labels. Fortunately for the independent community in Canada and around the world, we have a body called Merlin. Merlin is based in Amsterdam, London, and New York. They represent 20,000 independent labels around the world, and they negotiate with 20 digital services like Deezer, Spotify, and YouTube, so we have someone in our corner, the independents, who has a very strong voice. We represent 12% of the digital market through Merlin.
There are things happening, and there are organizations out there that are working very diligently, but for the purposes of today, there are many things we can change within the market in Canada through the recommendations that we and others who have appeared before you are making.
I can add to that, Stuart, if you want.
Mr. Stuart Johnston: Please.
Mr. Chris Moncada: Just to put an exclamation point on Stuart's comments, the model, as we see it now, is that the industry has several Canadian players at a certain level from an independent label perspective. The health of those labels is what I think we're talking about here. The independent sector historically will do artist-friendly deals that will keep artists under contract for a short period of time. What we see happening time and time again is that artist X will sign a deal with independent label A, B, or C in Quebec or in Canada, and it either goes well or it doesn't. If it goes very well, then more times than not that artist is essentially taken out of that Canadian independent label with a large advance offer by an American company or a U.K. label. They then continue their career outside of Canada from an IP perspective.
So that's what Canada is losing: the IP. When we talk about how well Canadian music is doing, it's Drake, it's Bieber, it's Mendes. Those are Canadian passport holders, but they have American contracts. They are not contributing to the Canadian IP pool.
That said, Mr. Hogg, I think what we're trying to get at here, and maybe this is a good kind of common theme for you, is that if we can have more Canadian labels rise up from just that lower level to a more middle level, where that second contract that the artist needs can be funded and exported properly by a Canadian company, the IP stays here. The Canadian company grows and the artist maybe continues their business here rather than having to go somewhere else to do it.
All of what my colleagues here are examining will drive our bottom line and help us do that.
With your permission, I'd like to add a partial answer.
In our minds, the principle underlying all these objectives is to establish a Copyright Act that clearly defines the creator's right, that clearly defines the ins and outs of what rightly falls to the creator. Once that's established, the rest will flow from it.
Earlier Mr. Nantel discussed compensatory measures that you would like to see implemented. However, we don't need compensatory measures if artists are compensated based on the fair value of their rights and if all that can be negotiated at the bargaining table. Leverage is needed to bring the players to the bargaining table. That lever is the act. An authorization must be obtained, and the negotiation is completely undermined if there's the slightest doubt that the authorization can be obtained. Consider a situation in which the person states at the start of the negotiations:
“I'm not even sure if I need to pay you. I may do so out of political reasons, but.... Well, let's talk.”
At that point, you immediately know that the value has fallen by half.
They give you the sense that you have no choice.
In my opinion and that of the Society for Reproduction Rights of Authors, Composers and Publishers in Canada, authors and creators should have the freedom to negotiate an agreement respecting their works in the conditions they wish and not be prevented from negotiating such an agreement because they are subject to an exception provided for in this act.
I wanted to ask you a few questions, Mr. Johnston, because through the questions posed to you by Mr. Van Loan, you were sort of put into the issue of cultural protections and trade. The impression that was left with the committee was that this was somehow a leverage piece, or that the Canadian government was not doing what it needed to do with regard to cultural protection in terms of trade.
I want to ask you for your comments on the fact that in the CPTPP, the agreement that was renegotiated after the exit of the United States, our government ensured that the cultural exemption continued to exist, and extended it, for the first time ever in Canadian trade history, to digital content and web content, allowing us to regulate in this area.
was very clear that the fact that it wasn't on the table in the first go-round was what prevented the from signing on to the agreement in the first go-round. We doubled down on that and ensured that it was protected, for the first time.
How does that impact the exact issues you're talking about with regard to supporting Canadian artists in terms of their remuneration in the digital world?
Generally speaking, if you're talking across the board about all sectors, I would agree with you. The two challenges my members have right across the board, whether they're English or French, are cash flow and access to capital. We're not selling furniture. We're selling an intangible product. It's very difficult to get traditional business loans from the bank to continue with capital.
That's why a program such as the Canada music fund is so important. It provides the seed capital my members can leverage in the marketplace. They can then invest in artists' careers. They can discover, develop, market, commercialize, and export.
When we're talking small businesses, yes, get rid of the red tape and streamline the processes as much as possible, but we need legislation such as the Copyright Act to help protect our products here and around the world. We need programs like the Canada music fund to provide those seed dollars that are then leveraged by the industry and invested in the artists. We need a strong Broadcasting Act that recognizes some of the themes the CRTC brought forward in its report last week.
Government has a place in our industry, and I think it is a very strong partner in our industry, because, as Chris said, we are a global product. As soon as you put your music online, you're a global product. Because our market is so small in Canada, we need to be in markets around the world and we need to be able to chase those pockets of international markets where our artists are finding success. That costs time, money, and investment, so we need government to be a partner.
Good morning, Madam Chair and members of the committee. I'm Jason Klein, Vice-President of Legal and Business Affairs with ole. Thank you for inviting us here today.
As a leading Canadian music publisher, record label, and rights management company, music and copyright are at ole's core. With the rapid shift to digital content consumption, it is essential that Canada address the challenges that threaten our creators' ability to earn a living and make cultural business a risky proposition for investors. Changes to our Copyright Act are needed to ensure that music creators and companies like ole that support them can continue to thrive in the digital world. Since the committee has already heard from our friends at the Canadian Music Publishers Association, I trust you are familiar with the important role of music publishers, which is often either overlooked or misunderstood. If you are not, I would be happy to address any questions you have following these remarks.
For now, I simply ask that, in considering remuneration models, we be careful not to lose sight of the importance of songs, songwriters, and the publishers who invest in them. Like the creators we support, publishers operate largely behind the scenes. The involvement of record companies is far more visible, given the celebrity of recording artists and consumer-facing promotion of records, but it is important not to undervalue the fundamental contribution of the songwriters and the investment of time, money, and expertise that publishers make in them long before a hit song is written, recorded, released, and becomes part of our cultural fabric.
Ole is Canada's largest independent music publisher and one of the world's foremost rights management companies. We are proudly Canadian-owned and operated, employing close to 100 people at our Toronto head office and around the same number across six offices in Nashville, New York, Los Angeles, and London. Ole was founded in 2004 by Canadians Robert Ott and Tim Laing, with backing from the Ontario Teachers' Pension Plan. Fourteen years later, with over $550 million U.S. invested in music copyrights, we remain a 100% Canadian company that competes globally in a business dominated by foreign multinationals. In fact, ole ranked 8th in Billboard's ranking of top music publishers for the first quarter of 2018.
Our catalogue includes over 55,000 songs, including works by Canadian legends like Rush, Lighthouse, and Stompin' Tom Connors, and international hit makers like Timbaland, Rami Yacoub, and Liz Rose. These songs have been recorded by Beyoncé, Justin Timberlake, Taylor Swift, and many other top international recording artists.
Our 60,000-plus hours of film and TV music include catalogues from leading Canadian producers and distributors like Bell Media, Corus, DHX, eOne, the National Film Board, and major Hollywood studios like Sony Pictures, MGM, and Miramax.
Ole's activities also extend well beyond traditional music publishing. Our industry-leading production music businesses—Jingle Punks, 5 Alarm Music, Cavendish Music, and MusicBox—offer custom composition services and over 750,000 library tracks for use in film and TV productions, and our Compact Media division in London is a world leader in audiovisual secondary rights administration, representing more than 700 film and TV producers and distributors around the globe.
We also operate a robust record label group, including the legendary Canadian rock label, Anthem Records, home of Rush, Big Wreck, and The Tea Party, and our latest signing, a band called Stuck on Planet Earth.
Ole's substantial investment in music copyrights has a significant ripple effect through Canada's creative ecosystem. Our acquisition of major foreign catalogues like MGM and Sony Pictures has resulted in millions of dollars being redirected to Canada annually. That funds the continued development of new songwriting talent and further acquisitions of domestic and foreign catalogues, and through our investment in music and secondary rights of Canadian producers, we contribute to the financing of new Canadian film and TV production.
Our continued success in rights management also turns on our ability to effectively match, conform, and process the copious amounts of data that result from the growth of digital platforms around the world. Effective data management is essential to achieving revenue completeness and delivering accurate reporting and remuneration to our songwriters, artists, and other rights holders. To that end, we've invested millions of dollars developing proprietary software called Conductor, an end-to-end rights management and data processing solution that far exceeds the capabilities of available third party solutions.
Ole's business relies on Canadian and international copyright laws to protect the value of creative works, but the rapid shift to digital poses real challenges to our business and our continued ability to return value to creators. As you know, broadcast and cable TV are quickly giving way to over-the-top video-streaming platforms, and paid music download stores are largely being replaced by subscription, and even worse, ad-supported streaming services.
The result is twofold: a significant increase in music access and consumption; and a significant decrease in the remuneration, if any, that is paid to the creators and those who invest in it. This trend needs to be checked, or the consequences for creators and those who support them will be dire.
It is becoming increasingly difficult to justify serious investment in music without real potential for returns. Gaps in Canada's copyright laws are reducing or even eliminating existing revenue streams while impairing the development of new ones. The result is a growing value gap that requires urgent attention.
Commercial enterprises that operate digital services should not be allowed to continue to profit from the exploitation of music without returning fair value to those who create and invest in it. For Canadian music to survive and companies like ole to continue to invest heavily in cultural assets, this value gap has to be addressed.
Through this review, we urge the government to establish a framework that ensures that those who create and invest in music receive their fair share of the economic benefits, and that recognizes the responsibilities of new delivery services and the value music brings to their businesses.
We support several specific recommendations already presented to the committee by the Canadian Music Publishers Association, Music Canada, and others, namely: addressing gaps in the protection and unintended consequences of the 2012 amendments, including exceptions that have relieved commercial users from the obligation to pay for commercially valuable uses of music; addressing the value gap by ensuring that network services that benefit directly or indirectly from the exploitation of music cannot avoid payment or responsibility by hiding behind safe-harbour protection; extending the term of copyright to life plus 70 to align with the majority of our major trading partners; encouraging continued investment in classic catalogues and extending the period in which works continue to generate revenue that could be reinvested in the creation and acquisition of new works; ensuring that the private copying levy is made technology neutral to cover tablets, smart phones, and other digital devices ordinarily used to store music; and finally, ensuring that the Copyright Board is adequately equipped to render timely decisions with due regard to the value of music to commercial users—and we appreciate the efforts already under way in this regard. These steps would go a long way to restoring much-needed balance to our copyright system.
In conclusion, ole takes great pride in its significant contribution to Canadian music and cultural communities to date, and we look forward to a bright future. We call on our government to solidify Canada's reputation as a leader in the protection of creative content and cultural business, and to help position Canadian music and companies like ole to thrive in the digital world.
Thank you again for inviting us here today and for hearing our concerns.
Thank you, Madam Chair.
My name is Geneviève Côté, and I am Chief Affairs Officer at SOCAN. My colleague Gilles Daigle is SOCAN's General Counsel.
SOCAN is the society that manages public performance rights for authors, composers, and music publishers. We currently have 150,000 members, and we also represent the global repertoire of music works in Canada. We thank you for this opportunity to speak to you.
No one will be surprised to learn that SOCAN has been pleading for many years for Canada to establish robust copyright statutes to permit fair and equitable remuneration for creators. The Copyright Act has always been and always will be the cornerstone of the entire Canadian creative sector.
Where do we stand on all the technological changes we are currently experiencing? The way creators are remunerated has vastly changed in recent years. Copyright royalties have always been an essential part of our creators' remuneration, and that is more than ever the case today.
As regards SOCAN and its performance royalties for the use of musical works, it is true that we are collecting record royalties. That is attributable in part—and I do mean "in part"—to the increase in revenues from online streaming. However, that does not mean that creators and their publishers are making more money.
When we published our results this year, we pointed out that the vast majority of our members who had received royalties for the ongoing distribution of their music in 2017 had received, on average, only $38.72 for their work.
Our members rely on various uses of their creative works. However, for some of those uses, the revenues they previously enjoyed as a result of other media have virtually disappeared. Royalty revenues from new uses do not compensate for the overall revenues previously generated.
The fact nevertheless remains that the contribution of copyright to a constantly changing digital environment is, now more than ever, becoming one of the pillars of creators' remuneration.
As The Honourable Mélanie Joly said in her speech on Creative Canada,
||Investing in our creators also means ensuring they are fairly compensated, and can protect and make the most of their intellectual property.
SOCAN is one of the signatories to the brief filed by the Canadian Music Policy Coalition. We support all the recommendations contained in that document. Today, we want to emphasize three aspects of the Copyright Act.
The first aspect is the extension of copyright protection, which we have already discussed this morning, from 50 to 70 years after the author's death. We want to take this opportunity to thank Mr. Van Loan for recently introducing the private member's bill that he discussed earlier.
With its current term of protection, Canada is a poor player on the international stage. Our main trading partners, including the United States and all members of the European Union, long ago extended protection to 70 years after the author's death. In Mexico, that protection even runs to 100 years after the author's death. Our creators here are clearly less protected than those abroad. The international standard extending protection to 50 years following the author's death was adopted in 1886. Governments at the time wanted two generations following the author's death to enjoy protection of the work. As we may all agree, life expectancy has sharply increased since the 19th century. Our major trading partners have clearly understood this.
So I will ask you the question directly: does Canada want to remain in the same category as North Korea and Afghanistan in this area? We hope not. Let's take this opportunity to show leadership on this issue and restore Canada to its proper place on the international stage.
Some commentators—very few, to our knowledge—will tell you that increased copyright protection will be provided to the detriment of consumers. However, there is no evidence that consumers would be put at a disadvantage by an extension of copyright protection.
Now I will turn over the floor to my colleague Gilles Daigle.
Good morning, ladies and gentlemen.
A second aspect that the committee should examine is the loophole created by subsection 32.2(3) of the Copyright Act, which provides for an exception for so-called charitable organizations that use music "in furtherance of a religious, educational or charitable object." Let's be clear: we at SOCAN do not intend to penalize activities that are charitable in the true meaning of that term but would like instead to restrict organizations that circumvent the act and attempt to avoid paying what they owe.
Allow me to explain. Certain organizations, theatres, and festivals that have multi-million-dollar budgets currently assert that they are charities within the meaning of the Income Tax Act. Since they have that status for tax purposes, they claim they are not subject to the Copyright Act by virtue of section 32.2. Although the Montreal International Jazz Festival pays SOCAN royalties in accordance with the applicable tariffs, many others, even though they make extensive use of musical works, refuse to pay those royalties, relying on the exemption for charitable organizations.
To close these loopholes, we propose two changes. First, It should be specified that the exception under the subsection in question applies only where the music is used without any intent of monetary gain. That's already the case for the preceding exception, which applies to agricultural and industrial fairs. It should also be stated that charitable status under the Income Tax Act is not in itself sufficient to allow the exception. Consequently, the act should provide that a proper benefit concert may qualify for the exception, whereas an event in which the principal activity is to present truly commercial concerts may not.
The third aspect is the private copying royalty. The private copying system was established to offset lost revenue due to the emergence of certain media, cassettes in particular and, subsequently, blank compact discs. As you may imagine, the sums previously collected and distributed to creators evaporated, and only a few crumbs remained. The present system must be reviewed and should include a technology-neutral element so that new digital media, which are now the standard for music listening purposes, are incorporated. Here we are talking mainly about tablets and smart phones. Together with the music industry, which is united on this point, we also advocate the establishment of a transition fund of $40 million a year over five years to support significant use of our creators' musical works.
In addition to these three main aspects, we support the request by certain groups that the exception under which commercial radio stations pay no royalties in respect of sound recordings and performers on the first $1.25 million of revenue be repealed. We believe this is an injustice that must be corrected. It was intended as a transitional measure but has become permanent for no reason. The same is true of the change made to the definition of sound recording: we believe this isolated exception is obsolete and unfounded.
We take this opportunity to underscore the government's efforts with respect to the Copyright Board of Canada. More particularly, the government has begun to reform the organization and invest additional funding in it. We hope to see a reduction in the observed time it takes for the board to render its decisions.
Ladies and gentlemen, it has taken 15 years for the Copyright Act to be amended for the digital era. During that time, enormous changes have occurred in the way we consume music. From 1997 to 2012, smart phones became omnipresent, streaming and downloading surpassed sales of physical copies, and new services afforded consumers finger-tip access to the global musical repertoire. The purpose of the amendments made in 2012 was to recognize the changes in the digital landscape, but additional efforts must be made to bring the act into the modern era and guarantee a fair balance between users' rights and those of creators.
Let's not wait another 15 years before making further significant amendments.
Certainly. I'll turn to the Conductor question first. Conductor is a software solution that we've developed for internal purposes over the past five or six years. It does everything from ingesting the deals that we use when we enter into a new agreement with a writer or we purchase a catalogue.... All that information goes into Conductor. All of the works that are part of that deal are populated into that software. It takes care of ensuring that the works are properly registered around the world and with all the various societies, including SOCAN and its counterparts.
Most importantly, it pulls in the data that we receive from hundreds of different service providers, collective societies, and rights management agencies around the world. As you can imagine, that data doesn't always perfectly align. In fact, I would say it mostly doesn't. Our software works to conform that data, so that we can properly match it and ensure that we're not sitting with massive pending lists of unmatched royalties. It essentially ensures that we're distributing royalties accurately to our rights holders and that we're not missing anything.
That's the essence of what that software does. It sort of takes everything from the deal side all the way through to the user side and pulls all that data into one place. It does it very effectively. That's something we've developed over the past several years and it's been very helpful. Obviously, as part of the move to digital, the challenge we face is in data and ensuring that the data can be processed effectively, that royalties don't get missed, and that the reporting we receive is complete and accurate.
As for the move to digital, and the challenges, and what the committee and the government can do for us.... It goes back to the recommendations that we've all made. It's to ensure that, at the end of the day, we have the leverage we need, as creators and investors in creative output, to negotiate fair value for our rights. Essentially, that means revisiting some of the exceptions that were introduced in 2012.
Even the charity exception that Mr. Daigle mentioned is an example of how there's a slippery slope when you introduce user rights in the form of exemptions, where they're open to interpretation. They can be misinterpreted or applied in a way that doesn't necessarily reflect the original intention. I think that's what needs to be done here with the exceptions that we've identified, to ensure that we have the leverage that we need as rights holders to negotiate fair value for the use of our property.
Thank you very much, Madam Chair.
Thanks to the three witnesses for their presentations.
Mr. Klein, I'll speak in English. It will be simpler for you.
You spoke about Liz Rose. If I'm not mistaken, Liz Rose was a co-writer on many songs with Taylor Swift early in her career. I think she came up with a solo album one day.
Can you tell me, for example, the numbers since you co-published.... You published Liz Rose's stuff, the big international hits and her artisan work as well.
What are the differences? When you're a very big player, you can still make good money if you have a good song. However, I brought to this committee the example of Pharrell Williams, who with Happy, made one-twentieth of what Elton John made with Goodbye Yellow Brick Road, for example.
What is the comparison that you can see with your own published songwriters?
Yes, you're getting ahead of me. There will be 200 artists and 11 days of events and festivities. There: consider it advertised.
SOCAN is a partner in that festival and takes part in every edition. You even award the Prix de la chanson SOCAN.
I hope the festival pays the applicable royalties, but I know nothing about that. Whatever the case may be, thank you for taking part in the festival.
Our committee is examining remuneration models that are more modern and better meet the needs of Canadian artists.
Mr. Daigle and Mrs. Côté, you made three major recommendations that definitely merit further attention from us.
Have remuneration models evolved elsewhere in the world? Have those models already been modernized? I know you're asking that protection be extended to 70 years after the author's death instead of 50 years. In some countries, protection even extends to 100 years after the author's death. Tell us about other models that have been examined, other studies that have been done, or other measures that have been taken or are being developed in other countries.
Mr. Klein can then answer the question as well.