Thank you very much.
Thank you for inviting me to speak today.
I'm just going to start right in and I promise that my presentation is not going to be too long.
My name is Caroline Rioux. I am the president of the Canadian Musical Reproduction Rights Agency or CMRRA for short.
CMRRA acts as an agent for more than 6,000 music publishers and self-published songwriters. Together they represent more than 80,000 music publishing catalogues and millions of songs, which comprise a vast majority of the musical works commercially used and available in Canada.
Our role is to license the reproduction rights. We offer licences for the reproduction of works in a variety of circumstances. From inception, CMRRA has issued what we call mechanical licences for the reproduction of songs on physical products, such as CDs and LPs. Today, we also issue licences for the reproductions made by broadcasters and online music services.
The manner in which content is distributed and consumed has changed dramatically in recent years, both in the run-up to the 2012 amendments to the Copyright Act and a great deal more since then. Streaming services, such as Spotify and Apple Music, have emerged and we're witnessing a rapid decline in the download market.
In addition to this changing marketplace, certain exceptions that were introduced in 2012 have led to a 30% reduction in reproduction royalties from radio broadcasters. The private copying levy, too, has all but disappeared, even though the act of making private copies continues to exist on a massive scale, thanks to smart phones and digital storage devices.
As a result of this evisceration, the largest source of royalties we collect now comes from the streaming services. I'd like to take a moment to discuss that, in particular, because that too has been subject to rate reductions and unfair bargaining positions. We need your help to fix that.
Monsieur Pierre Nantel just last Tuesday made a comment that publishers are making bizarre deals with streaming services for small royalty rates. I think it's important to address this and to say that those very low rates exist at least in part because they've been based upon decisions made by the Copyright Board of Canada.
I should clarify for you that the last online tariff that was certified set us back considerably. Our streaming rates under this tariff, to my knowledge, are now the lowest in the world and well below market rates. We went from receiving 5.18% to less than 1.5% of a service's revenue. In addition, a key provision of the tariff sets out the minimum fee payable by online music services. That minimum fee is $100 per year, irrespective of the number of streams or volume offered by a music service.
The board reasoned that anyone who offered a compelling music service to consumers would naturally attract significant ad revenues, which would, in turn, generate sufficient royalties for rights holders. However, our experience has been that some of these services are happy to generate next to nothing in ad revenues, as the promotional value of a free service is much greater to them than the revenue from selling ads.
Under this tariff, major services could be paying much less than the 0.003¢ per stream, as stated by Monsieur Nantel in his remarks last week. We've seen proposed rates as little as one-quarter of one-thousandth of a cent per stream when we deal with those services.
Worse still, many of the services we've engaged with that operate an ad-supported platform have taken the position that royalties are not payable in Canada as a result of the hosting services exception introduced in 2012. This leaves us with protracted negotiations and a rate that ultimately doesn't reflect the fair value of the right. The only available alternative is litigation, which is costly, lengthy and uncertain. What's more, the only remedy available in instances of unpaid royalties are the royalties themselves. The expense of bringing a case is unjustifiable if the royalties ultimately recovered merely serve to pay the legal fees.
On the other hand, the risks for the services are low if their ultimate liability is really no greater than what they would have owed in the first place. Some collectives can claim statutory damages, but that option is not available to CMRRA, in relation to their reproduction right licensed under a tariff.
Finally, when these services are operated from outside Canada, and there are many of them, there aren't sufficient tools to enforce copyright. The ISPs are ideally placed in this fight by removing access to infringing services, but are understandably reluctant to take any position on the content they provide access to. This leaves us without any tools to meaningfully enforce against such services.
You heard last week from Michael Paris of the Movie Theatre Association of Canada, who made the point that there is no right without a remedy and on that, I agree with him.
Among the recommendations we're making on reform of the Copyright Act are several proposals we feel would assist in ensuring that the online use of music is fairly compensated.
First, we request that the Governor in Council make regulations requiring the Copyright Board to protect a minimum per use value for the copying of musical work.
Second, we request amendment of the hosting services exception to provide that it does not apply to any hosting service that actively plays a role in the delivery or presentation of musical works.
Third, we request amendment of the act to allow for all collectives to claim statutory damages for non-payment.
Fourth, we request amendment of the Copyright Act to authorize a court to grant injunctive orders requiring ISPs and hosting services to block access to infringing websites or prevent them from showing up in search results without the risk of liability to the ISP.
In addition, we urge you to limit the scope of certain exceptions to copyright, in particular, the backup copies exception which unfairly and significantly reduces the royalties paid to rights holders by commercial radio stations.
Of course, we support the extension of the private copying regime to include smart phones and tablets.
We'll be making a much more detailed submission available to the committee, but in the meantime, I welcome your questions.
Good morning, Madam Chair, and thank you for having us at committee today.
My name is Allan Reid. I am the president and CEO of the Canadian Academy of Recording Arts and Sciences. With me is Jackie Dean, our chief operating officer.
CARAS is probably better known as the home of the Juno awards, which is obviously our national award show that happens every year; as well as MusiCounts, Canada's music education charity, and also as the home of the Canadian Music Hall of Fame.
Our main focus is to develop, showcase and promote Canadian artists and their music. This year's Juno awards will be held in London, Ontario, and we'll be including a week-long celebration of Canadian talent culminating in the Juno awards broadcast.
While the Juno awards is CARAS' most highly profiled award show and our main offering, the organization also works hard to support emerging Canadian talent through robust 365 days a year programming that seeks to assist artists in every stage of their development.
I often say that we're more than just an awards show. CARAS' mandate has evolved over the last few years into four key pillars: to educate through our charity, MusiCounts; to develop artists through the Allan Slaight Juno master class; to celebrate Canadian artists through the Juno awards and our 365 days a year programming; and also to honour our icons through the Canadian Music Hall of Fame.
We are with artists from birth to myth, as we like to say, and that is the continuum we want to support. Part of that support is to advocate to ensure the proper infrastructure is in place to further build the Canadian music ecosystem, which can be enhanced through a number of changes to the Copyright Act in order to strengthen the ability of musicians to make a living.
You've had an opportunity to hear first-hand from some great Canadian artists at this committee: Andrew Morrison from the Jerry Cans, who actually graced the Juno stage this year in Vancouver; Damhnait Doyle; Miranda Mulholland; and the host of the Junos, from Ottawa, Bryan Adams. They all tell a very similar story about how change is needed to amend the legislation, which will change not only the lives of artists, but the entire music system.
I've seen the struggles that musicians face, having built my career in the Canadian music industry. I was the head of A and R, artists and repertoire, for Universal Music, for 30 years. I was also the general manager for MapleMusic, one of Canada's top independent labels. I've had the good fortune to work with artists like Jann Arden, Sam Roberts, Sarah Harmer, and the Tragically Hip. On a personal note, I'm actually married to an artist as well, a very talented singer-songwriter named Kim Stockwood, from Newfoundland. So, the artist experience is something I see and live with on a daily basis.
It's important to note that at CARAS we have a very unique situation. We are not a label, we are not songwriters, and we are not music publishers. We don't benefit in any financial way from the changes that would be made, but we are the end result of the changes that will be made and what happens in the music industry. We want to make sure that all music creators have a chance to succeed and be showcased on the Juno stage.
The music sector is aligned like never before on these initiatives that need to be undertaken on the Copyright Act to improve the lives of our creators. Our colleagues at Music Canada have done an outstanding presentation on the value gap, the difference between the value of the artists' music and what they are paid as creators for the use of that music. It's a gap that has been widening over the last few years and we need changes to the Copyright Act to ensure that artists receive full value for their works.
What changes do we see in this sector? I'll pass it over to my colleague Jackie Dean to outline those for you.
Thank you very much for having us here today.
I have been in the Canadian music industry for about 16 years. I'm a CPA by profession, so we all know how my brain works. I knew nothing about the industry when I first started, and I have grown to be a very passionate advocate for the power of music and what it means for the culture of Canada.
I started in the industry when it was on a decline, and I have seen the ability for an artist to join the middle class dwindle down. I've been involved in economic impact studies that have clearly shown the value gap, as well as the erosion of our industry. I know that some of the members around this table are new to the committee and were not here when many of our colleagues in the music sector appeared here before the summer recess. It may not surprise you to hear that we are very supportive of their recommendations.
We have four of them.
First, we call on the committee to to remove the $1.25-million radio royalty exemption. For two decades, commercial radio stations have been exempt from paying proper royalties on the first $1.25 million in advertising revenues. Much of this has changed in the business model of revenue, and this temporary exemption has done its job and should now be removed.
Second, the definition of a sound recording needs to be amended in the Copyright Act to allow performers and record labels to receive royalties for the use of their works in television and film soundtracks. As it stands currently, the composer of the work will receive compensation, but the performer won't. This substantial oversight is costing artists over $45 million a year in lost revenue and needs to be corrected.
Third, we need to extend the term of copyright for musical works to match our international partners. This has been a constant request not only from individual artists, but organizations such as CIMA, CMPA and SOCAN. Under our current laws, protection of musical works extends for the duration of the author's life plus 50 years. Almost all of our major trading partners, including those in the European Union and the United States, have terms of life plus 70 years for authors of musical works, which includes all music publishers, songwriters and composers. Not only would this bring Canada in line with its international trading partners, it would also ensure there is a robust compensation to allow these creators and their families to continue to receive monetary value for their works.
Finally, it's time that we bring support for creators into the 20th century. The private copying regime, which brings much-needed compensation directly into the hands of creators for copies of their music that are made, now applies only to media that are either out of date or obsolete, such as the blank CD or, until recently, the cassette tape. The regime needs to be made technologically neutral to keep up with the changes in how Canadians are making copies of their music today. This important source of income for over 100,000 music creators will soon be gone if the changes are not enacted soon.
I know for certain that these four changes will have a significant impact on our music sector, based on the work that I've done in the industry and what I have seen happen. It will ensure that we have a vibrant Canadian culture of music that we can continue to celebrate on the stage at the Juno awards each and every year across this country.
As a proud Canadian having belief in everything that we do as world leaders, I say that Canada can do better here, and Canada needs to do better here.
Thank you for your time. I look forward to your questions.
Good afternoon. Thanks to the committee for hearing us today.
We know that the committee has a genuine interest in providing livelihoods to Canadian creators. The spirit of our submission is to caution that in an industry characterized by market consolidation and an imbalance of power between artists and the big business of labels, proposals for legislation that do not address this imbalance may in the long term worsen the conditions for those at the bottom. Artists are not always the rights holders, and legislation from rights holders does not inherently help artists.
Our submission comes from a research team that includes me, an assistant professor of music at the University of Alberta; Brianne Selman, scholarly communications and copyright librarian at the University of Winnipeg, who will take questions afterwards; Dr. Andrew deWaard, Ph.D. in cinema and media studies at UCLA; and, two research assistants, Dan Colussi and William Northlich.
As mentioned, we're working on a SSHRC-funded insight grant project titled, “The Cultural Capital project: Digital stewardship and sustainable monetization for Canadian independent musicians”. We're looking at issues of fair payment for creators, as well as ways to encourage new and creative artistic production. We aim to represent here today everyday users and smaller-scale creators and hope to provide a diversity of position.
Everyone, of course, comes before this committee to argue in what they might perceive to be their own self-interest. As great as the achievements are of any of the media industries you have heard from so far, their success is based on the creativity of artists who are themselves users of creative goods. Copyright creates and maintains monopolies by creating exclusive rights that can only be exploited by the rights holder, but from its inception, copyright law has always also included limits to those monopolies in order to achieve a balance with the interests of the general public and to provide access to the public good of culture and knowledge.
Copyright has been effective at building assets for powerful oligopolies. Canadian musicians and users are at the mercy of non-Canadian media and tech companies. Universal, Sony, and Warner control roughly 86% of the North American recording and publishing market. Live Nation and AEG monopolize the live concert and ticketing business, while iHeartMedia and Cumulus have acquired the majority of terrestrial radio stations. SiriusXM dictates the satellite radio market and, as you might know, just recently purchased Pandora. Apple, Google, Amazon, Netflix and Spotify have come to dominate the digital streaming media sector.
There is stunning inequality among musicians, and it's getting worse. The top 1% of artists account for 77% of all recorded music income, while the 10 top-selling tracks command 82% more of the market than they did a decade ago and are played almost twice as much on top 40 radio. It is more winner take all in the music industries than ever before, and we need to ensure that the middle class of creators have the means to earn a living.
Massive profits are being made in the media landscape, little of which makes its way to artists and performers. A recent Citigroup report found that the U.S. music industry generated $43 billion last year but artists received only 12%. Much artist revenue has to be sustained by aggressive touring, an option only open to a few, and one that is difficult given Canada's vast geographical area. This market consolidation, combined with vertical integration where tour promoters are owned by radio stations, which are owned by owned by record labels, makes it harder for both creators and users to be exposed to diverse, vibrant and remunerated cultural goods.
We wonder, then, what other artist protection provisions might exist and be of benefit to Canadian creators.
Like the EU, which is pushing back against the American tech oligopoly with fines and legislation, it is worth considering antitrust solutions that challenge this market domination or, at the very least, maintain space for new entrants into the market. We support recommendations that aim to enable creators to have more control over their creations and their profits.
We recognize that the many industry representatives are in favour of a copyright term extension from the author's life plus 50 years to a term of life plus 70 years. We support efforts to make the lives of working musicians more financially viable; however, we caution against having this term extension dominate the narrative of this review. We would encourage a careful consideration of rights reversions as a way to mitigate the ill effects of extension.
Recently, Bryan Adams argued for rights reversions with the ability of creators to reclaim ownership of creations 25 years after they have been given away. This suggestion is one that does offer some balance to the historically imbalanced relationship between artists and labels, where creators are often pressured to sign away their rights for life.
Term extensions do not hold up to scrutiny in cultural economic theory. Most of the commercial value of a sound recording is extracted in the first 10 years, so 70 years after death provides no real additional incentive. Furthermore, it prevents a more vital public sphere to the benefit of major record labels, who get to further exploit an artist's work after their death. Indeed, studies show that older works in the public domain enjoy greater commercialization than similar titles with restricted rights.
Key to creators being able to exercise these rights and others already granted by the Copyright Act is the clarification that these rights cannot be contracted away. Record labels, publishers and platforms should not be able to add contractual stipulations that override things like creators' moral rights or a hypothetical reversion right.
We agree that public funding is and always has been crucial for independent Canadian creators, but we are extremely wary of this burden falling on users in the form of a smart phone tax. The variety of uses for these devices are numerous, and the vast majority of these uses will be for necessary connectivity, not piracy-related activities at all.
Copyright reform should not place unnecessary limits on user and artist freedom in an effort to remedy the financial issues that have come from an imbalance of power in the media industries. Instead, we encourage efforts to provide artists with higher payout rates via streaming and online music services. We caution against the technological optimism shown in the recent EU copyright changes that encourage the enforcement of copyright law by technological algorithm, which is an incredibly blunt instrument to apply to the general public. The additional costs of overly aggressive regimes of copyright enforcement provide ever greater barriers and costs for new entrants into the market.
The recent example of Sony trying to require takedown of all recordings of Bach is a good one for showing how expanding notice and notice into a regime where companies can unilaterally request takedown of content could have a significant harmful effect on the public. Small creators would unfairly feel the burden of this blunt style of regulation. When it comes to designing a balanced copyright system, there is no need to use a hammer when we can cut like a knife.
We wish to end by restating that a concentration of power creates power imbalances that require solutions that extend beyond those that benefit the rights holder.
We sincerely thank the committee for taking the time to hear us today.
I can certainly start. I was thinking about that myself in my hotel room yesterday.
When I started at CMRRA many, many years ago—I've been there for 27 years—we were in the CD marketplace at that point. When folks released these products in the marketplace without licences, without having put in songs on those products and they hadn't obtained the necessary licences or paid royalties, I had remedies at the time. I could call the pressing company, the distributor, the retailer, and effectively tell those folks that they were pressing or manufacturing infringing goods and it's not in anybody's interest. Those individuals, those companies, would be equally as liable for copyright infringement as the person marketing the product.
That got us very quick results. The pressers would say, “That's it, I'm not pressing; I need to see copies of your licences before I continue to press.” Or, the distributor or the retailer would say they were pulling it off the shelf. We got very quick results because there were remedies. There were remedies across the distribution channels.
Those remedies today in the digital age don't exist. The principles of copyright in terms of the bundle of rights haven't necessarily changed, but it's much harder to apply it now because of the exemptions—the hosting exemption, for instance. When companies take the position that they have no liability and it's not their problem, it becomes very hard to get to the source of the problem.
The other comment I could make, without taking too much time, is that as we've gone through this transition, the industry, for a moment in time I think, was trying to focus on the consumer as the bad guy in accessing this content that was infringing. There was a sense from everyone that they needed to put some protections in place to make sure that as a consumer...you know, everybody is not a thief because they've downloaded a song from the Internet for free or what have you.
Where we're now going, and these are the changes that we've seen in the EU recently and in other parts of the world, and this is what we're advocating for as well, is that we need a way to stop the tap from reaching the consumer in the first place. We need those folks who have the control over the content to co-operate with us, and to have the tools so that there's no ramification for them if they do turn off the tap.
I will continue on a more serious note.
I will speak to Ms. Rioux.
I also am new to this committee. I have an engineering background.
When you said that remedies in the digital age no longer exist, I liked it and I didn't like it.
It would seem that we are witnessing a major transformation of your industry. The big fish seem to be doing well, but the industry as a whole seems to be penalized. In 2012, our Conservative government introduced numerous amendments to the Copyright Act. Clearly, since then, there have been changes, even an upheaval, and the Liberal government is expected to show leadership. At this time, I get the impression that they are trying to buy time. It is aggravating, because our artists need to be given the necessary tools to adapt to current changes in technology.
You said that the problem had to be addressed at the source.
You said that we need to “stop the tap”.
I agree with you entirely.
So, there is an elephant in the room, and the best way to eat it is one bite at a time.
I will begin with the proposal put forward by Mr. Adams. Mr. Fauteux and Ms. Selman alluded to it, and I would like to know your opinion. Mr. Adams proposed that royalties be recovered 25 years after the agreement is signed by the artist, instead of 25 years after the artist's death.
If possible, I would like to know the Juno team's opinion on this, and your own, Ms. Rioux. Are you in favour of the proposal that royalties should be paid to the artist after 25 years?
Thank you, Madam Chair.
Thank you everyone for being here this morning.
There are about 20 minutes left in this meeting. It is important to keep in mind that we do not have a lot of time left. I will therefore ask a very short question of Mr. Fauteux and Ms. Selman.
Last week, we received, among other people, Mr. Bussières from the Regroupement des artisans de la musique. He gave us a document listing the organization's 29 recommendations. The first 11 are part of axis 1 and are measures to be applied immediately to address the situation. Axes 2 and 3 contain more long-term recommendations, to rebuild the system, with the creators at the centre of it.
You see things from the creator's perspective and you are right to do so. That is the very source, in the same way that water is the source of all carbonated drinks.
Could this mysterious agreement between all worldwide music publishing companies be seen as an injustice, which is what I was alluding to, Ms. Rioux, by which each stream on a continuous publishing platform pays fractions of a cent per item?
Could you answer me in one minute, please?
Okay. Thank you very much.
I'm asking you the question because I think that we shall not be defocused on the idea here.
Ms. Rioux, you spoke earlier about this exact question that I have asked. We are abused, particularly in Quebec, by having neighbouring rights applied to performers and producers. In a somewhat similar manner, in some countries at this time, where the neighbouring right has been accepted, but where the corresponding laws have not yet been passed, money is accumulating. There are places where there is still no structure for redistribution of those funds, so they build up. Why is that done? It is because it is felt that it is fair and right for creators, performers and producers to receive their fair share. That is exactly what needs to be discussed.
I recognize what my colleague Mr. Blainey mentioned about the matter of the temporary, but somewhat grotesque, exemption granted to broadcasters to give them a break that they needed at the time. Now, they probably do not need it anymore at all, given the audience shares held by radio stations that are owned by large groups. We must remember the figures. Clearly, there are a lot of small, independent stations, but as for percentages, they do not need a break. That said, we are not here to argue.
Mr. Reid, I know the extent of your career. You were with A & M Records. I believe, at the time, Bryan Adams was doing his second major album when he signed a contract with you. You have seen it snow in Canada. I was with Sony Music at the time when you were with A & M Records. You then went to Maple Music, where you picked up many artists who the large American record producers operating in Canada seemed to increasingly ignore. I congratulate you for that. I believe that you contributed to the interesting success of some artists who may have fit less in the American model.
In the audiovisual world, it is easy to reassure ourselves by saying that everything is fine and that producers like Xavier Dolan or Denis Villeneuve are proof that our television industry is going well. However, we cannot see the success of Drake or Justin Bieber as rock-solid achievements that show that the Canadian music industry is doing really well. In fact, we need to protect our Canadian market and you are the best example. Do you agree?
Thank you, Madam Chair.
Thank you, everybody, for being here.
To Mr. Reid's point, not only is it one of the most important things, but in some respects, what artists do for this country is the most important thing.
MIT did a really interesting analysis. Of all the media that we have ever produced of everything we've ever done as a country, and how we are seen in the eyes of the rest of the world in terms of all of our famous politicians, all of our famous generals and all of our famous scientists, the top 10 list is artists. In the eyes of the world, Canada is art, and Canadians are artists.
That tells you whose corner I'm in when I sit at this committee. I was the parliamentary secretary at the committee at the beginning of the mandate, and now I'm here as a member with a voice. I'm going to use it.
I would like to say to my colleague Mr. Blainey that we are not trying to buy time. We are doing good work by taking the time we need to obtain a good revision of the Copyright Act.
It's a new time and a new era for this industry. With streaming, it sounds to me like we went from the wonder of the web to the tyranny of the technology.
I did some math. For an artist to make $2,400 a month, which is minimum wage in Alberta right now at $15 an hour, on YouTube it takes 16.5 million hits. On Spotify it takes 9.8 million hits each month to make $2,400. That doesn't make sense.
I'm a business person. I want to know where the money is going to come from. We have to get money into the pockets of artists so they can keep producing. That's what we need. Ecosystems need things. They need nutrients. They need sun. They need water. They need oxygen. Pick whichever one of those makes money for you as an artist. Clearly they need more.
I want to ask a question of each of you. Do we make the pie bigger or are we simply talking about cutting the pie differently, and if so, what does that look like? You have a minute each.
Brianne, we'll go first to you.