My name is Jason Kee. I'm public policy and government relations counsel at Google Canada.
We appreciate the opportunity to participate in your study of remuneration models for artists in creative industries.
As Google, our approach to remuneration and revenue is a partnership model. In this model, creators—such as publishers, artists, producers or app developers—create and supply the content while we provide distribution and monetization, including technical infrastructure, sales teams, transaction and payment systems, and business support, etc. We then share in the resulting revenue, with the majority of the revenue going to the creator every single time. Under this partnership model, we only earn revenue when our partners earn revenue, so it is in our interest to ensure that our partners are successful.
Google offers a wide variety of platforms for different types of creators. We offer publishers advertising platforms that allow them to monetize their content by hosting ads on their sites and apps, and share in that revenue.
Google Play, our online store, provides a massive global audience for developers and other content partners, with developers sharing in 70% or more of the revenue. Google Play Movies & TV offers shows or movies for rental or purchase, while Google Play Music offers unlimited ad-free access to over 40 million songs for a monthly fee, or through a more limited ad-supported tier. These are each fully licensed services that remit royalties to rights holders in accordance with licensing agreements and provide a significant source of revenue to our content partners.
Last is YouTube, Google's global online video platform. YouTube has over 1.9 billion monthly logged-in users, and over a billion hours of video are watched each and every day. At YouTube, our mission is to give everyone a voice and show them the world. This is the true power of YouTube—that with just a camera and an Internet connection, anyone of any age from any walk of life can participate, have a voice and build a global audience.
And they do. Over 400 hours of video content are uploaded to YouTube every single minute, making it one of the largest living collections of human culture ever assembled. These uploads represent virtually every imaginable type of video content, from home videos and user-generated content to high-end film and television content. Through platforms like ours, more people around the world are able to think of themselves as authors, artists and creators.
YouTube is also a “lean-in” interactive experience, where creators interact directly with a community of engaged and passionate fans who share and comment and contribute. This personal, direct connection that YouTube creators share with their fans makes them more authentic and relatable and distinguishes YouTube from other platforms.
Canada has a very large and vibrant YouTube creator community that producers high-quality and engaging content that is being enjoyed in high numbers, both domestically and globally. Canada is one of the top exporters of content on YouTube. Globally, on average, 50% of a creator's watchtime comes from outside their own country, but for Canadian creators, over 90% of watch time comes from outside of Canada. This is higher than any other country on the platform, and demonstrates that we actually produce very exportable content.
In the past year, Canadian channels have seen their watchtime grow 45%, and channels making six figures or more in revenue are up 24% over last year. Canadian success stories are numerous and many of these creators have grown sufficiently large and sophisticated to employ teams of business managers, researchers, camera operators, editors and others, effectively becoming small production studios.
Canada also has a large community of up-and-coming creators—YouTube's creative middle class—including a range of Quebec creators, who predominantly produce French-language content that performs very well in Quebec and French-language markets.
Canadian broadcasters and producers are increasingly partnering with YouTube and leveraging the platform to reach new international audiences. We partnered with the Canada Media Fund on Encore+, a YouTube channel featuring classic Canadian content that is no longer aired, such as The Littlest Hobo and Wayne and Shuster. We've provided live streaming services for major events, including the last Tragically Hip concert, The JUNO Awards,The Canadian Screen Awards, and APTN's Indigenous Day Live, among others, extending the reach of these Canadian moments. We work closely with these partners to help them maximize their opportunities on the platform.
Thank you for your presentation. It was very good, very smooth, and I think that's what your career is about, because you do it very well.
To me, the uneducated part of your audience listening to this, it's not something of my world in particular, as it is to many, but I understand the platform. I look at the sense of what you're talking about, and what we're interested in are Canadian performers. I see your model. If the partners do better, you do better, but our concern is how we make the Canadian partners do better.
I know you've been asked that already to some extent, and I heard your answer. I want you to go back to your recommendation. I know the transparency part, and you've set that over on somebody else's shoulders on the supply chain because it disappears for you.
Go back to the first part of your recommendation. Can you go through that again?
In many instances, it's about creators, musicians and artists finding ways to take advantage of the opportunities provided by this range of platforms. Again, the power of having access to an audience of 1.9 billion logged-in users is tremendous. It means you have access to global audiences and you can build sustainable businesses by scaling that and finding ways to monetize that audience.
However, it requires a very different approach from the one artists may historically have taken. It requires what I will call more of a creative entrepreneurial approach: basically, it's not just a matter of creating, writing and performing the music, but about actually engaging in the wide range of business activities that are required to create almost a personal brand that you leverage into revenue opportunities.
As a result, artists and creators who have been able to do that and wear all the hats—who are also our marketers, business managers and so forth—have been able to achieve tremendous success on the platform. They have been able, as I said, to secure sponsorship and brand deals that can result in very lucrative contracts, doing product integration and so forth.
That is the principal way in which artists will find success, because it's how they also diversify. Like any investor, you want to diversify your revenue streams to make sure that if one changes, you're still all right. That is the way most creators are going to be successful on the Internet.
Since you've been working for Google for five years, that means you started in 2012. In 2012, the advertising revenue for Google was established to have been about $40 billion in the States, and now it's more than double. Business has been very good, obviously.
As my colleague said, you've given a very smooth presentation. It obviously is your job. You were working for another company before, doing the same work, and I understand the value of this. It's important that all parties talk.
Non-professionals of lobbying came here to talk not to the consumer committee, not to the industry committee, but to the heritage committee, crying, saying they can't make a living anymore because the model has changed. Some others came to say it's terrible, that because the big companies' contracts are so bad, they don't get money. Yes, but the issue is not between the artists, the labels, and the broadcasters; it's because of the new guys in the system, which is you, and all the web giants.
The presentation you did is, of course, enthusiastic. Everyone is flabbergasted by how powerful and dynamic and positive you are. To tell the truth, I've even noticed that Google is one of the most-loved brands on both the Republican side and the Democratic side. You're in a very nice position.
The reality, though, is that artists come to us. David Bussières came to us with a lot of paperwork. He is an interesting artist because he is both a creator and is also self-administering his stuff. He has charts about all this stuff, and he just made this comparison.
David Bussières told us that he had received $153.04, which means 0.5¢ per play, for 60,000 watches of his video on YouTube. On radio, he receives $2.89 per spin.
How do you explain such a difference? You're going to tell me it's a different model, but the reality is that people are shifting towards your model. How do you explain that everybody is angry? The only thing I'll say to anyone about this is, “Well, follow the money.” Where is the money? I know it's in California, but it all came into your own pockets—not you, but Alphabet.
You're a great man. I've met you many times. There's no way to say that you're not convincing and that you're not there to protect this technological growth that's outstanding and that we use every day. I'm the first one to be on Google, all the time. However, how do you explain that there's such a discrepancy between your saying, “We do all we can, it's amazing, rah, rah, rah”, and people who come here and just cry, saying they can't afford to make a living as creators?
This comes to a simple reality check. Of course I was there at the time when Galaxie came to ask for licences to play the stuff we were producing at the label. I said, “Well, if your product is going to keep people from buying records because your service is so great, I'm going to ask more from you than the normal rate I ask for radio.” I understand that.
The fact is that accountancy checks for artists and for artistry and for all those associated will say, “Well, man, we are losing ground.” Some will say, “Well, you know, record labels....”The question is not there; just follow the money.
When we had these broadcaster exceptions 20 years ago, to give them a break with their first $1.5 million of sales in their small radio markets, why did we do that? We did that because they were having a hard time and the artists said, “Okay, we'll give them a break.” It's an ecosystem, and they were having a hard time. Now the radio broadcasters are claiming that they are not having a hard time anymore, so they want this provision to stop. It's understandable. It's within the family, because it's things that we regulate, things that we agree on. When we see what's going on in Europe with what has just been said with the European Parliament, for example, imposing on you guys to make equitable deals with the artists, it evokes the same reality in Europe that artists are starving.
How can you explain, for example, that the YouTube revenues for artists vary so much? We have changes, and if I am not mistaken, it's an average of not 7/1,000 of a cent, but 7/10,000 of a cent per play. I understand the situation, but still it varies for a million plays from $250 to $4,000. How can this vary so much? How can it be possible for non-super-big corporations to follow this? How can it switch from $250 to $4,000 per million spins or listens? How can it change like that?
That's a complicated question. Copyright infringement occurs when someone infringes one of the exclusive rights that are given under the act, which includes the right of reproduction, the right of communication to the public, etc.
Whether or not something constitutes an infringement depends on the specific circumstances, and that's what makes copyright very complicated to manage. Even if there's an instance of someone making a copy—someone has appropriated someone else's work and, say, includes it in a video—there are also very legitimate reasons that they're permitted to do so, because there are various limitations and exceptions that exist under copyright, such as fair dealing, for example, that permit limited uses of the work, and there are also a number of specifically enumerated exceptions that exist under the act.
Then even if, on its face, it's a copyright infringement, whether or not it falls under the exceptions is very much subject to the context. That can make copyright very challenging to adjudicate.
A case in point is content ID. It is again an extremely powerful copyright management tool. It is very good at detecting copies of a work that has been uploaded and given to us as a reference file, and then applying automatically a policy the rights holder has selected—block, monetize, or track.
It doesn't do that in a terribly nuanced way. The rights holder tells us how they want to set this up. They can set it up on a territory-by-territory basis. They can set it up so that you can use five seconds of the work, but you can't use 30 seconds, but it can't determine whether or not an exception applies.
I think you've hit the nail on the head. That's often the approach that we see with successful creators who are able to properly leverage the platforms and turn them into significant businesses over time.
Again, it's that creative entrepreneurial approach whereby you're leveraging the platform. Yes, the platform provides you some revenue, but it's actually being able to build the global audience, to leverage that into doing things like live events, doing things like brands and sponsorship deals, doing things like book deals, doing things like merchandising. In that way you can achieve a successful, sustainable business.
These are repeatedly the examples that we see. If you want an example, How To Cake It is a successful channel, one of the most successful cooking channels on YouTube. It was on TV, but they cancelled it, and they shifted over to YouTube. They had a very comprehensive e-commerce strategy: they produced weekly videos, but they also had a merchandising strategy, an e-commerce strategy, that they executed and then were basically receiving millions of subscribers within the course of six months. That's because they fully leveraged and understood the power of the platform and turned that into appropriate revenue streams.
The fundamental thing is to have creative entrepreneurs of the type you spoke to and the type I speak about and find ways to have them engaged with other artists who are having more challenging times on the platform, to see where there are opportunities for them to build out, as well as to take advantage of additional features that we're basically introducing in the platform to help them get additional revenue streams.
Thank you for refreshing me.
In many respects, again because of our approach here, we very much view many of these challenges fundamentally as a business challenge. It has to do with the nature of markets, the nature of what users are willing to pay, what they are willing to tolerate. How can we encourage them to funnel more money into the industry and into the ecosystem so we have a sustainable ecosystem, because again we have a partnership model that means we're a success depending on their success.
In that instance, we don't necessarily view a legislative response as the initial wage responses, because that's a very unwieldy and blunt instrument that could have many unintended consequences, which is largely what generates our concerns with respect to what has been proposed in the European Union.
I think that in looking at it from a policy perspective, finding ways that are not legislative to encourage the parties to come together, one of the core roles I see government can play outside legislation is one as facilitator. You are the honest broker who can bring parties together to have discussions to work things out and figure out the best approach going forward. In many respects I think that is a logical place.
Also, as I said, there are the issues with respect to transparency, mostly so individual artists can have full visibility into where the revenues flow from, which in many cases they don't necessarily know. All they know is the cheques they receive at the end of the month.
This is my first time sitting on the heritage committee. I'm usually at the health committee. In my three years there we've been talking about rare diseases and anti-microbial resistance and diabetes and concussions, so being here today and listening to your presentations is a breath of fresh air.
It's kind of ironic, because my family is very much into music promotion in Calgary. We have a television program, Stampede City Sessions. I don't know if you've heard of that or not. They're throughout the Pacific northwest and Memphis and Nashville in Tennessee. When we produce a show, we bring in local talent to play at our performing arts centre. Local talent, international talent, Canadian talent from throughout Canada—we bring them in and we showcase their talent. We're quite proud that we're helping these young individuals and bands do well.
From getting to know some of the artists, I know they absolutely love YouTube. That's how they market their talents. Without your services, without the Spotlight channel that you mentioned, and Creator on the Rise and all these different programs, they would certainly struggle, more so than they do now. I think of someone like Justin Bieber. He started out on YouTube, did he not? Was that not where he was discovered?
Madam Chair, vice-chairs, members, clerk and committee staff, thanks for the opportunity to appear before you today as part of your study on remuneration models for artists in the creative industries in the context of copyright.
My name is Frank Schiller. I'm here as a Canadian adviser to Border Broadcasters, Inc., a not-for-profit copyright collective representing 26 local over-the-air American television stations, including ABC, CBS, NBC, and Fox affiliates located along the Canada-U.S border from coast to coast.
As part of your study, I hope to inform and seek your committee's support on three fronts.
First, I hope to share with you a better understanding on how the current Canadian retransmission and copyright regimes are fundamentally unfair, not only for U.S. border stations, but also for Canadian viewers and broadcasters alike.
Second, I urge your committee to support and recommend retransmission consent as a new Canadian remuneration model available for local over-the-air broadcasters, including U.S. border stations, as a means to provide badly needed new commercial revenues to create industries.
Finally, I encourage the committee to recommend the necessary legislative changes to the Copyright Act to facilitate the implementation of these new remuneration models and to ensure fairness and nondiscriminatory treatment moving forward.
Local and distant signals and programming from U.S. border stations form part of Canada's regulated pay-TV services. Signals from these stations are appropriated, packaged in channel bundles, and sold to Canadian cable and satellite TV subscribers in every market across Canada. It's the Government of Canada that enables these U.S. stations to be listed and licensed for authorized Canadian distribution. What's remarkable is that this happens without notice to, consultation with, or consent from the U.S. station owners in the process. These Canadian practices are discriminatory and fundamentally unfair against U.S. stations. Consequently, the owners of these stations retransmitted in Canada experience demonstrable economic injury and harm under copyright, advertising, and consent for remuneration opportunities.
Canada has been importing U.S. television signals and programming for over 50 years. Initially, these practices and policies were intended to provide a direct subsidy to the then fledgling Canadian cable and satellite industries. It was a simple business model: Take for free from U.S. television stations and sell to Canadian pay-TV subscribers.
As technology changed from cable to satellite and then digital, the number of U.S. stations listed for retransmission in Canada exponentially increased from an original set of three U.S. channels to now multiple sets of what are known as the U.S. “4+1s”, plus superstations and more. The average Canadian TV subscriber is likely now to receive between eight to 15 over-the-air U.S. stations in their channel packages.
It was not until the early 1990s that U.S. stations even became eligible to receive copyright remuneration for their programs on distant signals retransmitted in Canada. This followed from efforts under the Canada-United States Free Trade Agreement to provide compensation consistent with the 1976 U.S. Copyright Act.
After 30 years of administration, U.S. TV stations are still waiting for non-discriminatory treatment in Canada. Canada does not require reporting, auditing or notification provisions when Canadian distributors are licensed to package and sell listed American channels to Canadian TV subscribers. As a result, U.S. stations cannot reasonably determine where and when their digital broadcast signals and programming are sold to Canadians.
Canada accepts inaccurate and incomplete data for Canadian viewership of retransmitted American stations, and this also causes economic injury to U.S. station owners.
For example, in 2010, TV viewing measures changed in Canada with a significant under-representation of U.S. border stations. At the same time, Canada changed distant signal regulations. The immediate impact was the significant under-reporting of Canadian viewership of U.S. stations. Consequently, copyright allocations to U.S. border stations were retroactively reduced by 64%. Border Broadcasters, Inc. received an unfair liability of over $8 million moving forward.
It's in the public interest and supported by sound public policy for the immediate remission of these unfair copyright liabilities retroactively adjusted against Border Broadcasters, Inc. It's also notable that local stations receive no copyright remuneration on local signal retransmissions in Canada, and this can be easily addressed with a small change to the Copyright Act.
There are many other examples of unfairness for U.S. stations under Canada's regime, including over the introduction of HD services. The bottom line is that Canada's copyright system is not providing for non-discriminatory treatment of U.S. stations. There's something fundamentally wrong with the Canadian listing process that allows the Government of Canada to decide what broadcast signals can be carried, without input or consent, even in cases where the signals are not available off air in Canada.
The unfairness is only compounded given that Canadian cable and satellite operators willfully alter U.S. signals by covering commercials, stripping out materials such as closed captioning, or inserting advertisements overtop of the retransmissions. Canada does not require an international trade agreement to reform its procedures here and remedy an inherently flawed and unfair process.
In 1992, the U.S. Congress established a retransmission consent regime for U.S. stations. Local stations can negotiate compensation for the retransmission of their signals by cable and other pay-TV distributors. These retransmission consent fees are now vital sources of revenue for local stations, which rely on the income to invest in modern digital broadcasting infrastructure, to deliver expanded local news offerings and to have emergency alert systems.
New commercial revenues from consent rights in Canada's listing and licensing processes, in addition to non-discriminatory copyright remuneration, will also benefit local Canadian stations and TV viewers. Canadian broadcasting will benefit from new commercial revenues that will offset the growing losses year over year for Canada's private conventional broadcasters, which now stands at more than $700 million in losses over the last five years. In contrast, the U.S. experience confirms that local TV stations are profitable. Recent studies also highlight that in most small and medium-sized markets, it's the local television stations that are the primary creators and generators of local news online.
Now, with the digital transition complete, in addition to high-definition multicasting, U.S. stations are getting set for the interaction of a new digital broadcast standard, ATSC 3.0. This includes next-generation digital delivery services to both fixed and mobile receivers, seamlessly combining over-the-air and broadband delivery.
Under Canada's current unfair regime, Canadian TV subscribers are paying the price with higher TV fees, reduced local news offerings, diminished digital services and an inferior TV experience. Canadians pay for the price of costly duplicate American programming in their TV channel bundles whether they watch the duplicate programming or not. It is Canada's copyright and retransmission regimes that provide the economic incentive for the oversupply of U.S. services by Canadian distributors to Canadian subscribers. At the same time, Canada's local broadcasting infrastructure is not being converted from analogue to digital in all markets. Consequently, the availability of free HDTV off-air reception is being reduced for some Canadians.
Finally, the cost of these recommendations, including new remuneration models and fair copyright, on Canadian pay-TV subscribers is likely to be negligible to positive, with a reduction in pay-TV fees possible depending on channel bundling and implementation.
Local TV brings us together. Cross-border television reflects our common values, our shared communities of interest and our programming diversity. Local U.S. border stations have a distinguished legacy of strengthening and deepening the relationship between Canada and the United States. By addressing the fundamental unfairness that underlies Canada's retransmission and copyright regimes and embracing retransmission consent, your committee will deliver new remuneration opportunities for creative industries, including local news, and this will benefit local viewers, communities, creators and broadcasters on both sides of the border.
Good afternoon. My name is Catherine Jones, and I'm the Executive Director of Connect Music Licensing.
I'm lucky to have worked in the music industry for 25 years, at a record label, at a broadcaster and now at Connect. I've witnessed first-hand the seismic shift that has occurred since the dawn of the digital age. In my early days at Universal Music Canada, I remember when we first got email—first internal, then external. It was the beginning of a series of changes that would fundamentally alter the way musicians and record labels are paid for their work and investment. As a result of these changes and the effect on the industry, I have been through five major restructurings, and I made it through four.
At Connect, we represent more than 2,700 rights holders of sound recordings in Canada. Our membership spans the breadth of the Canadian music industry, ranging from single self-produced and self-released DIY artist-entrepeneurs to Canada's largest record labels, with Canada's leading independent labels in between.
Our mission on behalf of our members is to return maximum value when their sound recordings are used commercially by others. This includes distributing royalties for public performances or recordings, negotiating licence agreements with commercial music users, and collecting licence fees from those who make reproductions of our members' sound recordings. Our licensees include services like Stingray, background music suppliers, radio and television broadcasters, online music services like iHeartRadio, and many more.
To elaborate on the seismic shift I referenced earlier, new technologies have changed the ways music is accessed, consumed, reported and paid for by music users. Just like so many of our members, Connect has adapted in order to unlock the greatest value for our members as the ways we listen to and interact with the music have evolved.
Two years ago, Connect completed a drastic overhaul of our operations with our partners at Re:Sound, which slashed our administrative costs by 28%, putting $1.2 million annually in additional royalties into the hands of Connect members. As part of this overhaul, we identified and eliminated duplicative processes and implemented a simpler, more direct way to connect the identifiers our members provide about the recordings directly with the data Re:Sound receives from commercial music users. This generates more revenue for our members, expediting and increasing their paycheques when their music is used.
We are a lean and nimble music licensing company, committed to international best practices, and we've done what we can to get more of every dollar that we collect into the pockets of music creators within our current copyright framework. The reality for our members is that within that framework, there exists a massive gap between the value of their music and what is returned to them by the music users who commercially use and profit from their music.
This disparity is known as the value gap, a term you've all become very familiar with during this study of remuneration models for artists and creative industries. The value gap is not the result of a failure by the music industry or the artist to adapt; it is the result of misapplied and outdated copyright legislation that has not kept pace with technological change.
To give you an idea of the scale of harm of the value gap, between 1999 and 2013, global music revenues decreased by approximately 70% in real terms. In Canada, between 1997 and 2015, music revenue fell to just one-fifth of what it would have been if it had kept pace with inflation and real GDP growth. Industry is only now, in the last three years, seeing a modest return of growth.
Andrew Morrison of The Jerry Cans and artist and label owner Miranda Mulholland, both members of Connect, appeared before this committee and offered a first-hand glimpse into their economic realities. It is becoming increasingly difficult for them to rely on the value of their recorded music for financial stability. They worry that the middle-class musician is disappearing.
There are, however, changes to the Copyright Act that this committee could recommend that would immediately improve the music ecosystem for Connect members.
The first would be to remove the $1.25-million radio royalty exemption. Since 1997, commercial radio stations have only been required to pay $100 in performance royalties on their first $1.25 million in advertising revenue. This two-decades-old exemption is outdated, inequitable and, in 2018, wholly unjustified. I understand that this recommendation has received a fair bit of attention at this committee, so I'd like to provide some clarification.
We heard the concerns expressed by community radio stations during last week's hearing. To be clear, what has been proposed by music industry groups and artists would have no effect on community radio stations. Community radio stations are not covered by the $1.25-million exemption. They are, in fact, separately exempted entirely from royalties, other than the nominal payment. We support retention of the community radio station exemption, which requires a total of $100 in royalties to be paid by such stations annually to record labels and performers. That said, Canada's largest vertically integrated media corporations—commercial enterprises that benefit from the exemption for each radio station that they own—no longer need to be subsidized by musicians and record labels.
The second change would be to amend the definition of “sound recording” in the Copyright Act. The current definition of a sound recording excludes performers and record labels from receiving public performance royalties when the recordings are broadcast in film and television soundtracks.
Miranda Mulholland summarized this problem succinctly when she appeared before this committee with her Republic of Doyle example. Even though her fiddle-playing features in almost every episode of the show, and despite this program being syndicated in multiple global markets, she only received a one-time, union-negotiated fee for each studio session.
Contrast this with the experience of screen composer Ari Posner, representing the Screen Composers Guild of Canada, who told the committee last week that he could not survive on his upfront fees alone and that he relies on the royalties he receives from the public performance of his compositions to pay his bills and support his family.
Our recommendation is simply that performers and record labels be afforded the same rights as composers and publishers when their work in film and television is broadcast or performed.
Number three, we also recommend the creation of a private copying fund. This will ensure that recording rights holders and performers, as well as composers and publishers, are fairly compensated for non-commercial reproductions of their recordings, without creating an extra cost for the consumer.
I teach licensing and copyright at Humber College in Toronto. The introduction I give to my students about Canadian copyright law is that any song you hear on the radio, on a streaming service, on vinyl, or on a CD has two separate and distinct copyrights that make up the whole.
One of them is for the composition for the lyrics and the notes in the song; the other one is for the sound recording, or the song, which covers whoever creates it and the musicians who perform on it. In almost all uses of music, the two rights are treated equally—in downloads and streams, for example—but in film and television, and with the radio royalty exemption, they are not. The effect of these provisions is that my members are subsidizing massive media companies that are syphoning value away from their music.
On behalf of Connect's members, I ask that you give careful consideration to these recommendations to close the value gap in Canada.
Thank you, Madam Chair.
Thank you, members of the committee.
My name is Mathieu Dagonas, and I am Executive Director for the Documentary Organization of Canada.
DOC is the collective voice of independent documentary filmmakers across Canada, a national non-profit arts organization representing over 800 directors, producers and craftspeople from all provinces and regions of the country working in the documentary genre.
DOC advocates on behalf of its members to foster an environment conducive to documentary production and strives to strengthen the sector within the broader film and television production industry. In so doing, DOC seeks to ensure that viewers in Canada and abroad have access to high quality, original programs reflective of current Canadian events, lives and values.
By the way, 25 years ago we were also the founders of the biggest documentary festival in Canada, Hot Docs, and POV magazine, the largest magazine in Canada on the documentary community.
Canadians can be proud of the broadcasting system that has been built over the past 80 years. It has encouraged and sustained successful public and private broadcasters. It has supported the creation of a respected production industry. Most importantly, it has reflected Canadian values and told Canadian stories to audiences throughout Canada and around the world.
However, the system badly needs updating, as you all recognize during this important process that is now under way. In DOC's view, the key policy declarations set out in section 3 of the Broadcasting Act remain valid. For this committee, the policy requirement that:
||each element of the Canadian broadcasting system shall contribute in an appropriate manner to the creation and presentation of Canadian programming.
is particularly relevant.
The policies designed by government and the CRTC to ensure the creation of quality Canadian programming have also worked well.
In the digital age, however, there is a key missing piece, which I am sure you've heard much about. As audiences increasingly turn to the new digital streaming services, we have no policies in place to ensure that these services, both foreign and Canadian, contribute appropriately to the creation of quality Canadian programming.
In the old analogue days, the CRTC ensured an indirect contribution from U.S. border stations and specialty networks through its simultaneous substitution rules, and foreign specialty services helped drive subscriptions to Canadian cable and satellite distributors that are required to offer a preponderance of Canadian channels.
Digital streaming services, however, are currently exempt from regulation and make no contributions to the Canadian system. The CRTC's 1999 exemption order for Internet-based broadcasting services was based upon its conclusion that licensing such services would not contribute in a material manner—believe it or not—to the objectives of the act. What may have been true then is clearly not true today.
DOC is pleased that the CRTC, in its recent report to the government, recognizes this situation. I won't read the entire quote, but I'll take a slice of it. The CRTC states:
||... if legislative change is to take place, it should clearly and explicitly make any video or audio services offered in Canada and/or drawing revenue from Canadians subject to the legislation and incorporate them into the broadcasting system. This should apply to traditional and new services, whether Canadian or non-Canadian. Further, any new or revised legislation should be founded on the principle of ensuring that Canadians continue to have access to high quality audio and video content and that is made by and for Canadians, as well as the best content from around the world, regardless of the platform, device or technology they wish to use. This principle is, in essence, similar to many of the current Broadcasting Act objectives, updated to better reflect the future of content distribution in Canada.
This is the greatest challenge for policy-makers today, and I don't envy your position. It is also the policy with the greatest potential benefit to Canadian producers and the one that most directly bears on the work of the committee.
If an appropriate contribution from digital streaming services can be achieved and a fair copyright framework is in place, Canadian documentary producers will be able to negotiate fair remuneration for their programs using the existing mix of private investment, tax policies, licence fees and public-private funding agencies.
We see other avenues as well to ensuring fair artist remuneration. To put it simply, it's growing the pie. I know it's slightly outside of the scope here, but these avenues include: an investment into Telefilm Canada of $50 million, supported and brought forward by the CMPA a few weeks ago; a topic the minister knows well, a return of the CIFVF, something DOC is committed to working with committee members on, and a relaunch of this fund that was abruptly cancelled in 2009 to help francophone, rural and indigenous stories get made and seen, which they often are not; and fair pay for equal work, to ensure the system prevents broadcasters from paying a fraction for work placed on digital platforms that would otherwise pay a living wage if commissioned for TV, for example.
Finally, and more closely related to the scope of the committee's work today, the Canadian Copyright Act allows for the use of material from copyright-protected work—literature, musical scores and audiovisual works—for specified purposes without permission from or payment to the copyright owner. These purposes include research, private study, education, parody, satire, criticism, review, or news reporting.
In fact, we're users and we're rights holders. This rule, called the “fair dealing exception”, is often utilized by documentary filmmakers and is necessary to represent reality more completely and truthfully within our work. While its practical applications aren't perfect, we believe this provision must remain intact beyond this review.
Thank you for your attention. I will happily answer any questions you have.
That's a good question.
Again, we are users and rights holders in that scenario, so fair dealing in particular affects our work. In terms of fair dealing, documentary filmmakers are able to take content from copyrighted material and use it within their work.
What happens, practically speaking, is that once they go to the insurance companies and speak to their lawyers, they still have to pay a number of fees to purchase the copyrighted material, because the exemption isn't necessarily well understood by the landscape. That affects, obviously, our bottom line.
In both of those scenarios, our filmmakers want to be able to use that exemption to create truthful and meaningful stories and not have to pay the fees that they are often charged even today, despite the exemption existing. It could be 20% to 30% of their entire project budget, which can range from $20,000 to $1 million for a documentary.
Mr. Schiller, I am pretty surprised that American border stations' view fits within the context of the study on copyright.
I honestly did not expect that. I was somewhat aware of this type of endorsed pirating. I thought it was an issue that would rather be covered in the Canadian Broadcasting Act. Explain to me what the issue entails? Why is it being covered in the study on copyright?
To simplify things, let's say that I have some sort of a cable package and I am offered something. I have a subscription to ABC, CBS and whatever other U.S. network.
I grew up watching WPTZ Plattsburgh. I remember Channel 8 very well. That came from the cable company. So we got the American signal from border stations.
If I have understood what you are telling me, the signal is transmitted to us under the pretext that it was available locally with an antenna. So we could pick up that signal for TVA, Radio-Canada, CBC and, in the Montreal region, CTV. That is what made the picking up of the signal legitimate.
How is this situation related to copyright?