Hello. I'd like to thank the committee for having us here today to speak about remuneration for artists and the important issue of recognizing and ensuring robust statutory and moral intellectual property rights for audiovisual performers in the Canadian Copyright Act.
My name is David Sparrow. I am a working actor. For almost 30 years, I have been a member of the gig economy, a precarious worker, and an artist. I have appeared in over 100 film and television roles and on stages across North America. That comparatively successful career does not necessarily make me a household name or financially stable. This is a tough business.
I am also the president of ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists, where I help to represent 25,000 professional audiovisual English-language performers across Canada, who work to give voice to a wide diversity of Canadians, to help define Canadian culture and to project our culture to the world.
The average Canadian unionized performer earns less than $11,000 per year through work in film, TV and other recorded media. They build their careers by working in a number of different media and earning small incomes from a number of different sources. Every one of these micropayments is important and helps to pay the bills between gigs.
It is unfortunate that Canada has famous celebrities of years gone by who worked under terms that didn't include intellectual property protection, so that today, in their senior years, they are living in poverty and in subsidized housing. ACTRA has taken steps to negotiate use provisions into our contracts to ensure performers are paid for their work throughout its use, but the fact remains that we need strong copyright provisions to underpin our rights as audiovisual performers.
I am here today to make the case for the Copyright Act to be extended to audiovisual performers. Residuals and royalties, payments for the use and exploitation of our work here at home and around the world, are the fair compensation all performers deserve.
By example, through our negotiated contracts, I personally receive between $4,000 and $8,000 per year in royalties from the over 100 projects that I spoke of earlier. Do the math. It's not a lot of money.
We need a made-in-Canada copyright solution that will give performers, their unions and collection societies the tools that they need to go after the remuneration they are owed. Strong copyright law guards against unauthorized use or misuse of an artist's work. There are international treaties that Canada can carefully implement to address these issues, but we can start by amending the Copyright Act to ensure Canadian audiovisual performers enjoy the same copyright protections that our audio performers already enjoy under the act.
ACTRA is certainly available and willing to help or consult further with the committee to arrive at strong language that will do no harm and will address these issues in the Canadian context.
I will now pass you over to Laurie McAllister, who is ACTRA's director of the Performers' Rights Society and the Recording Artists' Collecting Society, PRS/RACS, for more insights and detail. Laurie also serves on the board of SCAPR, an international coordinating body of 60 performers' collective management organizations from 43 countries, working to improve the exchange of data and performers' rights payments across borders.
Go ahead, Laurie.
The lack of economic and moral rights in Canada's Copyright Act means that audiovisual performers don't receive the legislated protection that others in the creative class receive, and it is out of step with international standards. In other countries around the world, audiovisual performers enjoy copyright protection, including the exclusive right to authorize the use of their performances, or an equitable remuneration right.
ACTRA, through its established collective bargaining process, negotiates use rights with producers for audiovisual performances. We are seeking the codification of those rights to underpin our bargaining efforts and provide a framework for future negotiations.
Establishing the right to receive royalties through contract or equitable remuneration is necessary to ensure that performers can earn a fair share of revenue generated from their exploitations. The need for a well-crafted statutory framework is critical, as digital distribution and consumption of content have dramatically risen, but the average income of performers has remained low. This value gap is evident in the fact that despite the production boom in Canada, the average annual earnings per performer in 2017 was, as David said, less than $11,000.
The codification of these rights is also critical to establish reciprocity with countries whose audiovisual performers already enjoy copyright protection and economic rights. ACTRA PRS negotiates agreements with CMOs in foreign territories for the financial benefit of the recording artists we represent through ACTRA RACS. By extending our existing audio performance rights to audiovisual, we could leverage our long-standing relationships with foreign CMOs to collect royalties for Canadian actors from foreign jurisdictions.
As with economic rights, there is no good reason for audiovisual performers to be denied moral rights. A performer's resume, image and reputation have a direct impact on their ability to earn a living. As such, we ask that audiovisual performers be granted moral rights in Canada. That includes the right to be identified as a performer in the performance and the right to object to any material distortion or modification of the performance that would be prejudicial to their reputation. This would have no impact on the normal course of editing and exploitation, and is a right currently afforded to sound recording artists.
For the sound recording artists we represent through ACTRA RACS, we echo requests that have been expressed here by other witnesses.
The first one is to repeal the $1.25-million exemption for commercial radio. Canada is the only country with such an exemption, and there is no reason that recording artists should continue to subsidize large, profitable media corporations that rely on the exploitation of an artist's work for profit.
Second, amend the definition of sound recording in section 2 of the act. Currently, performers and makers aren't compensated when sound recordings are used in film and TV, resulting in an estimated $55 million in lost revenue annually. In 44 countries around the world, including France, Germany, and the U.K., performers and makers receive royalties when sound recordings are used in film and TV.
Third, the private copying levy was intended to be technologically neutral but has been limited to blank CDs. We all know that copies of music are made on devices such as smart phones, meaning rights holders have not been compensated for billions of private copies made of their work. The impact has been devastating, with private copy revenues dropping from $38 million in 2004 to less than $3 million in 2016. We support the Canadian Private Copying Collective's proposal, which includes a long-term solution for copyright reform and an interim proposal for a four-year, $40-million-per-year fund to ensure that rights holders are compensated for copies of their work until a more permanent solution can be enacted.
While it's easier than ever to have your creative work seen and heard around the world, it's harder than ever to be properly compensated. Most actors and recording artists receive modest compensation for their time spent recording a work, which is exploited for profit for decades while artists continue to struggle.
We've heard it many times: The middle-class artist is disappearing. It's critical that our legislation ensures that performers are fairly compensated for the value they create. To that end, we ask the committee to consider the recommendations we have outlined here today, mindful of the rights and the need of performers to share in the economic benefit of the works they create.
Thank you, Madam Chair and honourable committee members. My name is Robert Malcomson. I'm senior vice-president of regulatory affairs at BCE. Thank you for your invitation to provide Bell's views on copyright reform that will help ensure artists and content creators are paid for the work they create.
Bell is Canada's largest communications company, employing 51,000 Canadians and investing $4 billion in advanced networks and media content last year. We're also a key supporter of Canada's cultural and democratic system, investing approximately $900 million per year in Canadian content and operating the largest networks of both local TV and local radio stations in the country.
As a content creator and major economic partner with Canada's creative community, we share an interest in protecting the economic model that supports our cultural industries. I look forward to sharing this perspective with you.
In our presentation today, we will focus on the impact of organized content theft. This issue is fundamental to the topic the committee is studying, because no matter what remuneration model you adopt, creators can never be fairly compensated if their work is being widely stolen.
There is an emerging consensus among creators, copyright owners, legitimate commercial users and intermediaries that large-scale and often commercially motivated piracy operations are a growing problem in Canada. Piracy sites now regularly reach up to 15.3% of Canadian households through widely available and easy-to-use illegal set-top boxes. This is up from effectively zero five years ago.
In addition, there were 2.5 billion visits to piracy sites to access stolen TV content last year, and one in every three Canadians obtained music illegally in 2016. Each of these measures has also grown significantly over time.
According to research conducted for ISED and Canadian Heritage, 26% of Canadians self-report as accessing pirated content online. TV piracy has an estimated economic impact in the range of $500 to $650 million annually.
In light of these concerning trends, we believe it is necessary to modernize the Copyright Act and related enforcement measures to meet the challenge posed by global Internet piracy.
To be clear, protecting creators in this way does not mean targeting individual Canadians who access copyright-infringing materials. Rather, it means addressing the operators of commercial-scale copyright-infringing services. It is these large infringing operations that harm the cultural industries, which employ more than 600,000 Canadians, account for approximately 3% of our GDP, and tell the uniquely Canadian stories that contribute to our shared cultural identity.
With all of this in mind, we have three recommendations.
First, modernize the existing criminal provisions in the Copyright Act. Criminal penalties for organized copyright crime are an effective deterrent that do not impact individual users or interfere with legitimate innovation.
The act already contains criminal provisions for content theft undertaken for commercial purposes, but they deal with illegal copying, while modern forms of content theft rely on streaming. These provisions should be made technologically neutral, so that they apply equally to all forms of commercial-scale content theft.
Second, increase public enforcement of copyright. In jurisdictions such as the U.K. and the United States, law enforcement and other public officials are actively involved in enforcement actions. We recommend that the government should create, and consider enshrining in the Copyright Act, an administrative enforcement office, and should direct the RCMP to prioritize digital piracy investigations.
Third and finally, directly empower either the CRTC or the courts to order intermediaries to contribute to remedying copyright infringements.
All players in the ecosystem have a role to play in promoting compliance with the rules that support the appropriate remuneration of creators. Early this year, FairPlay Canada, an unprecedented coalition of creators, broadcasters and other industry players, filed an application with the CRTC seeking to require Internet service providers to disable access to the most egregious piracy sites. Earlier this month, the CRTC recognized the harm being caused by piracy but determined it did not have the statutory jurisdiction to grant the coalition's application. This committee could recommend that the Telecommunications Act be updated to provide that jurisdiction to the CRTC.
In addition, a new provision could be added to the Copyright Act that would apply more broadly to intermediaries such as ISPs, web hosts, domain name registrars, search engines, payments processors, and advertising networks.
In practice, this would mean adding a section to the Copyright Act that allows a court to issue an order directly to, for example, a web host to take down an egregious piracy site, a search engine to de-list it, a payment processor to stop collecting money for it, or a registrar to revoke its domain.
While financial liability for these intermediaries is not appropriate, they can and should be expected to take these reasonable steps to contribute to protecting the integrity of copyright, which is essential to all remuneration models for creators.
Thank you for the opportunity to present our views. We look forward to any questions you may have.
Thank you, Madam Chair and members of the committee. My name is Pam Dinsmore. I am vice-president for regulatory cable at Rogers Communications Inc. I am here with my colleague Kristina Milbourn, director of copyright and broadband at Rogers. We appreciate the opportunity to share our views with you today.
Rogers is a diversified Canadian communications and media company offering wireless high-speed Internet, cable television, and radio and television broadcasting. We support a copyright act that takes a balanced approach to the interests of rights holders, users, and intermediaries, thereby optimizing the growth of digital services and investments in innovation and content. As a member of both the Canadian Association of Broadcasters—the CAB—and the Business Coalition for Balanced Copyright, we also support their comments in this review.
While both the INDU committee and the heritage committee are dealing with Copyright Act reform, we understand that this committee's focus is on increasing remuneration to artists, creators, and rights holders for the use of their creative works.
Fair compensation for creators is key to ensuring the continued health of the Canadian media landscape, and we believe we are doing our part to ensure that creators are paid for their work. For example, in our capacity as a broadcaster, a BDU, and an ISP, Rogers contributes to the compensation of artists in the following ways.
We spend $900 million annually on the production of Canadian programming; and each year we remit copyright royalties for the music in specialty and TV everywhere streaming services, as well as approximately $25 million annually in copyright payments to compensate creators whose programming is retransmitted in the distant signals we distribute.
The importance of these contributions and royalty payments cannot be overstated. There is, however, leakage in the system. As we stated before the INDU committee, we have watched the rise of the streaming of stolen content on preloaded set-top boxes with deepening concern.
In our view, the proliferation of unlawful IPTV streaming services and preloaded set-top boxes is inextricably linked with decreased remuneration for creators. For instance, it has been estimated that streaming piracy is resulting in approximately $500 million of lost subscriber revenue to the Canadian television industry. This means that for creators, on this $500 million of lost BDU revenue, zero copyright royalties are being paid to rights holders for programming in distant signals, zero contributions are being made to the Canada Media Fund, and zero programming contributions are being made for Canadian productions.
That Canadians are increasingly and often unwittingly consuming stolen content online is borne out by recent studies. For example, Sanvine, a Canadian company that conducts network analytics, reported that in 2017 roughly 15% of Canadian households were streaming stolen content using preloaded set-top boxes. These boxes access an IP address that provides the stream. While illegal downloading remains a major problem for rights holders, illegal streaming has become the primary vehicle by which thieves make the stolen content available.
We have taken action to address this growing problem using the existing remedies under the Copyright Act, but these remedies are insufficient. We therefore propose the following changes to the act.
First, the act should make it a criminal violation for a commercial operation to profit from the theft and making available of rights holders' exclusive and copyrighted content on streaming services. In our experience, the existing civil prohibitions are not strong enough to deter this type of content theft.
Second, the act should allow rights holders to apply to a court for injunctive relief against any intermediary that forms part of the online infrastructure that is distributing stolen content, including ISPs, domain name registrars, search engines, web hosting services, and content delivery networks.
For example, a rights holder should be able to quickly obtain an order from a court to require an ISP to disable access to stolen content available on preloaded set-top boxes without concern that the operation of section 36 of the Telecommunications Act might impede this effort. Currently, the existing judicial process available to rights holders is too time-consuming, too expensive, and too multi-faceted to be effective, in a world in which stolen content can be shared around the world with the click of a mouse before a court has an opportunity to provide relief against copyright infringement.
The Fair Play coalition of which Rogers is a part explicitly requested that the CRTC create an agency for the expedient adjudication of online piracy disputes. In denying the Fair Play application, the commission specifically pointed to the Copyright Act review as the right venue for considering this issue.
In our view, it is now incumbent on this committee to seriously consider that request of rights holders in order to preserve the healthy operation of the Canadian broadcasting system.
In addition to these proposed amendments addressing illegal streaming, we have two further suggestions that, if implemented, would benefit creators.
First, amend subsection 19(3) of the Copyright Act to create a more advantageous royalty split between artists and record labels. More specifically, change the 50-50 split to a 75-25 split, for example, in favour of artists. This was a suggestion made to the INDU committee last month by noted copyright lawyer Jay Kerr-Wilson, who underscored that such an amendment, if implemented, would result in the immediate enrichment of creators without threatening the radio industry.
Second, augment the resources of the Copyright Board to increase the expediency with which it releases its decisions. Last year, within the context of the Copyright Board consultation, the BCBC introduced a number of suggestions to improve the operation of the board. We would direct this committee to that document in order to ensure that Canada's rate-setting body continues to keep pace with the rapid progression of technology so that creators can receive remunerative payments within a reasonable amount of time.
These are our brief comments. We would be pleased to answer any questions you may have. Thank you very much.
Ms. Dinsmore, you can see what a logical mind my colleague Mr. Shields has when he asked you how you could suggest that someone else forego some of their profits while your company is unwilling to do so. You know how much I respect you for your expertise and professionalism, but I think some of our witnesses are getting lost at times.
This is an era with less money in the system, or rather the ecosystem, as the Honourable Mélanie Joly, 's predecessor, said. She was right. Things have not been going that well for about 10 years, but before that we worked together very well. For 50 years, creators developed the content that you broadcast, which gave you an audience, and money flowed back to the creators. The formula worked well. Now, on the other hand, you agree that publishers and record companies are perhaps taking a bit too much. For their part, artists are complaining that radio stations are raking in huge profits and want them to forego the exemption from paying royalties on the first $1.25 million in advertising revenues. We are now fighting amongst ourselves.
I will speak in English to make sure that we understand each other.
We're having a family discussion here and we're blaming everyone: “You shouldn't do that” and “I did this for you 20 years ago” and “Why do you still do that?” and “You keep all the money and the creators are dying.”
All that is nice. It's a family supper and we can discuss it, but the reality is that the money is leaving the country. The reality is that we are not in charge, not in control anymore. It is good business for telecoms, although not for the media side.
I understand when you say that you buy productions. You're talking about Bell Media probably losing money, and I'm sorry for Sandie Rinaldo. I'm sorry for everyone in the news business, but you guys, you wireless guys, you Internet mobile appliance suppliers, you are contributing to the invasion. You are the passers of all this new system coming out.
I see here both of your presentations, and I appreciate the fact that they're translated. The one that was submitted to the CRTC was all in English, I remember. It was 11 pages on such a broad topic. That was not very generous from BCE.
You are saying now that Bell would like to help protect the economic component that supports our cultural industries.
In 1995, the Canadian Radio-television and Telecommunications Commission, the CRTC, created the Cable Production Fund, a funding initiative designed to facilitate the production and broadcast of high-quality Canadian television programs in under-represented categories in peak viewing periods.
Wasn't the idea behind the Canada Media Fund—a perfect example—and of quotas to ensure that cable distributors help fund the creation of Canadian content to be broadcast on our screens? It seems you are abandoning that principle now. Is that true?
I'll make a little side comment. At the end of the day, it's the consumers who decide what they want to watch. Unfortunately, there's the piracy end of things. That's a really big challenge, and I assume that the dollar value is significant. That's being led through the networks.
However, the networks are doing fine. Myself, I consume a lot of data, and my children, and everything else. We pay our data fee, which sometimes I think is high, but I'm willing to pay it because I want to watch what I want to watch.
There are some challenges there too with infrastructure. I understand there's a lot of investment on the telecommunications side. A lot of the time the urban centres subsidize the rural areas, because they don't have enough customer base. I understand the business side of that.
How can we deal with the piracy? They're very ahead on the technological side. If you put up roadblocks, they'll go around them. Are we going to win the war against piracy, or are we going to have to learn how to live with it?
Can I get a comment from the networks?
Thank you, Madam Chair.
Thank you for inviting Spotify to contribute to this committee's study. My name is Darren Schmidt. I am senior counsel at Spotify responsible for content licensing in Canada, and globally. I have been working on music industry issues for 17 years. Before joining Spotify, I worked at a major music company, often touching on issues related to Canada.
I'm delighted today to be able to talk to you about Spotify, particularly the benefits of our service to recording artists and songwriters as well as their fans, and also, as we've been requested to do by this committee, to explain generally the various ways we pay royalties to rights holders, recording artists and musicians.
First let me introduce the company.
Spotify is a Swedish company created in Stockholm in 2006. Our service launched for the first time in 2008 and was made available in Canada in 2014.
Our mission was and remains to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and by giving billions of fans the opportunity to enjoy and be inspired by these creators.
Spotify is now available in 65 markets. We have more than 180 million active users on our service every month, and 83 million paying subscribers. Through August 2018, we've paid over 10 billion euros back to rights holders around the world.
Spotify is heavily invested in the Canadian music industry and supports the creators of music, whether they be songwriters, composers, recording artists or performers. Spotify has given Canadian artists great exposure via our playlists. Some of Canada's most popular weekly playlists on Spotify are Hot Hits Canada, with a half of a million followers, and New Music Friday Canada, with a quarter of a million followers. In fact, even released a playlist on Spotify himself.
More than 10,000 unique Canadian artists have been promoted through Spotify's editorial and algorithmic programming in the past month alone.
In 2017, we partnered with the Canadian government to celebrate Canada's 150th birthday. Influential Canadians created and shared their own Spotify playlists of top Canadian artists and tracks. This fall, we're planning to launch a campaign specifically targeted at growing our francophone hip hop audience.
Artists' revenues are rising because the music industry as a whole is growing again, after a terrible run in the early 2000s. Canada, like many markets, entered a steep decline in revenues as piracy sites like Napster took off. Broadly speaking, recorded music revenues nearly halved since their peak in the late nineties, and Canada was no different
However, things have changed, much for the better. Not only is the global music industry back to growth, but so is music in Canada, and 2017 was the first year that revenue from music streaming services like Spotify accounted for over half of the overall music market. This is a remarkable achievement, given that revenue from this segment was negligible just five years ago; and Spotify has been a big part of that comeback story.
With that introduction out of the way, as we've been asked to do, I want to turn now to providing some detail for this committee about how Spotify licenses its music and how those licences result in payments to rights holders and creators.
By its nature, Spotify's service is one that relies on licences from rights holders in order to get content on our service. As I believe the committee is aware, music has two separate copyrights associated with it: one for the song or musical composition, and a separate copyright for the sound recording itself. The copyrights to the songs are typically held by music publishers—we will be hearing from one today—while the sound recordings are typically owned by record labels. To make things more confusing, the music publishers and record labels, particularly the larger ones, are often owned by the same overall holding companies and sometimes share ultimate management.
Spotify obtains licences from both sides of this divide. For the sound recordings, we obtain global rights from the three major record companies—Universal, Sony and Warner—as well as Merlin, which represents the rights of many independent record labels. Spotify also has direct licences with hundreds of smaller and medium-sized record labels around the world, as well as with some recording artists directly, to the extent that they control the right to their own music.
On the music publishing side—that is, for the songs underlying the sound recordings—the world is much more fragmented. This fragmentation has two primary causes.
First, unlike the world of sound recordings, it is relatively common for a musical composition to be owned by several different entities.
Consider the track In My Feelings, by Canadian artist Drake. The copyright for that sound recording is controlled by a single record label, but the musical composition underlying that track has 16 different credited songwriters, along with five different music publishers, each controlling a different percentage of those rights. Here we have an example of per-work ownership fragmentation.
Second, depending on the territory, different kind of entities or royalty collection societies will control different kinds of composition rights. Canada is an excellent example of that. In Canada, Spotify has a licence with SOCAN, but that licence is limited to the public performance rights of the compositions played on our service in Canada. However, the reproduction right, sometimes called the mechanical right, for those same compositions for which Spotify also obtains a licence comes from other entities—primarily CSI, along with others—so Spotify pays SOCAN, CSI and others, and those entities in turn are responsible for distributing those royalties to their rights holders, those being the songwriters and music publishers.
I should note here that I'm leaving a lot out, primarily about how in Canada, unlike in some other territories, there is no blanket mechanical licence, which would be very helpful in ensuring that all songwriters are appropriately paid.
There are a lot of changes forthcoming in the market as well. For example, SODRAC, which controls primarily Francophone mechanical rights, was recently purchased by SOCAN, which until recently focused only on performance rights. All of this may substantially change the licensing landscape in the near future.
In summary, Spotify was a late entrant into Canada due to our determination to respect copyright and seek licences rather than rely on copyright safe harbours. Since launching in 2014, our story, and that of Canadian music, has been one of success. Today, millions of Canadians are choosing not to pirate music but to access legal music and pay for it.
This encapsulates the origins of Spotify. We believed that if we built a legal and superior alternative to stealing, artists and songwriters could now thrive. That work has begun, and we still have a long way to grow.
Thank you for letting us contribute to this committee's study. We look forward to engaging with you.
I'm happy to answer your questions.
Thank you very much, Madam Chair and honourable members, for this opportunity.
I am the president, founder and owner of Casablanca Media Publishing and Red Brick Songs, a leading Canadian-owned independent music publisher for 17 years based in Toronto, Ontario.
When I co-founded Casablanca in 2001 with my late business partner, Ed Glinert, we started with very little. Now, 17 years later, we have seven Canadian employees, and I'm proud to say that our organization is over 70% female. We control over 700,000 music publishing copyrights in Canada, 30,000 in the U.S. and 4,000 worldwide.
Some of the well-known songs that we are privileged to represent include Imagine, by John Lennon, What a Wonderful World, My Way, Despacito, Start Me Up, by the Rolling Stones, and even the theme to the The Simpsons. We represent almost every genre of music, including current hits and songs that have been recorded over the decades. We also represent brand new songs by Canadian songwriters that have yet to be recorded.
That is who we are, but, as my family always asks me, how do we actually make any money? Well, we do a number of things.
First of all, we administer or sub-publish music publishing copyrights, largely in Canada but also internationally, for other music publishers and for songwriters who control their publishing. This represents the majority of our revenue. In most cases, we don't own the copyright.
On a typical day, our team liaises with rights organizations like SOCAN and CMRRA, chases unpaid royalties, tracks income, processes monies we've received, talks to our foreign reps in the U.K. about an upcoming tour, or pitches songs to a music supervisor in Toronto or L.A. to be licensed in film or TV.
Second, we invest in the creation of new music-publishing copyrights, which we co-own with songwriters. As you can imagine, this is the riskier part of our business model. This is where we attempt to build a house in the air, if you will use that analogy, by bringing the best builders together, financing their training and their materials, guiding their designs and then hoping that someone will ultimately want to pay something to rent that house, because there is no land value on day one and maybe not even on day 1,000.
As music publishers, we both develop new songwriters and sign songwriters at more advanced stages in their careers. We become their personal cheerleaders, pseudo-managers and long-time business partners.
As an example, we signed the 22-year-old Tom Probizanski from Thunder Bay, Ontario, which allowed him to move to Toronto. We then paid for him to go to L.A. and Denmark to co-write, and we set up his co-writing sessions. We also arranged and financed his trip to Banff to speak on a panel and introduce him to the Banff World Media Festival audience. When he later released his latest EP under the name of Zanski, we paid for his blog and playlisting promotion so that he was featured in Clash magazine and EARMILK and various Spotify playlists.
For another songwriter, Dan Davidson, from Edmonton, Alberta, we've arranged co-writes in China and financed radio promotion, which led to a top 10 Canadian country radio hit.
For Jeen O'Brien, from Stratford, Ontario, we guided her and helped her secure J-Pop releases in Japan, as well as various placements in TV and ads for Capri Sun and Google.
Even with older well-known songs like Skinnamarink, which was made famous by beloved children's entertainers Sharon, Lois & Bram, we have continued to promote and extend the economic life of this song by securing a Bose ad in 2016 that aired worldwide and a book publishing deal with Penguin Random House to release a picture book in 2019.
We make these investments of money, connections, time and knowledge because we believe in our songwriters, we love what we do, and we hope that the combination of our connections and knowledge and their talent will equal success, financial or otherwise, but so often it doesn't, and the one radio hit pays for other developing songwriters. Likewise, the sub-publishing and administration side of our business pays for our investments in Canadian songwriters.
This is a risky business. It takes decades to build. As I said earlier with the house analogy, there is no land value for a song if the house is a teardown. You can invest in a songwriter and walk away with nothing.
This is why the music publishing business is a true business partnership with songwriters. One cannot succeed without the other. There is always a team behind a hit song, and the team is behind the scenes. A hit song is what allows publishers to keep investing in songwriters and building Canadian talent to export worldwide. Unfortunately, for both songwriters and publishers the amount of money being generated in the music publishing industry today is fractions of cents. One million streams might generate an average of, say, $300 in publishing royalties for a songwriter, and that's if the song has only one writer.
The transition from physical product to a digital world has been very difficult for songwriters and music publishers. Too often we found our music being used on a platform, and that platform profiting without compensating songwriters and publishers. We survived only because we had other revenue streams, such as royalties from radio stations and private copying royalties. Changes to the Copyright Act in 2012 created new exemptions that decreased the amount of these royalties just when we needed them the most.
Of course, as we continue to transition to a fully streaming world, the importance of royalties from radio stations and private copying cannot be overstated. It's not only about diminishing revenue for music publishers; it's also about increased costs. Besides the sheer volume of data publishers now have to process, the costs of identifying unpaid uses are significant. Claiming works on YouTube, for instance, is a full-time job and a great example of a service downloading its operational costs onto songwriters and publishers.
Meanwhile, creators are relying on publishers to collect this income and to reinvest this income in their careers. The Canadian economy is relying on small and medium-sized businesses like mine to provide full-time, stable jobs, but to survive in the music business today, independent music publishers like me need to be able to earn a reasonable return on our investment in creativity. The 2012 amendments to the Copyright Act have not made that easier. In fact, they have made that harder than ever, which makes your work here today that much more critical. The review of the act is an important opportunity for Canada to address the expanding value gap and to get things right for songwriters and publishers.
To do that, Parliament can take a few simple steps.
First, it can revisit the immunity afforded to ISPs, hosting services and other Internet intermediaries, who continue to profit from the use of music without paying their fair share to rights holders. Intermediaries should be required to act quickly and block access to sites that facilitate infringement by others. When an intermediary is a content provider and profits from the use of music directly or indirectly, the creators and owners of that music should profit too.
Then, it can amend the new and expanded copyright exemptions that have led to a dramatic reduction in royalties from radio and private copying over the last five years.
Finally, it can introduce clear processes and rate-setting standards for the Copyright Board of Canada. The board's unpredictable decisions have led to royalty rates for music streaming that are a fraction of the comparable rates in the U.S. and elsewhere.
I would like to take this opportunity to thank the government for agreeing to term extension in the USCMA. It benefits companies like mine and the songwriters we invest in, and we look forward to seeing this implemented as soon as possible.
Thank you again for the opportunity to appear.
Thank you, Madam Chair and members of the committee.
Thank you for inviting us to contribute to your study on copyright. My name is Oliver Jaakkola and I am senior vice-president and general counsel of SiriusXM Canada, Canada's only satellite radio broadcaster. We are a CRTC-licensed broadcaster with over 2.5 million subscribers in Canada.
We assume you have some familiarity with our service, but as we are short on time, I have attached additional pertinent information, as appendix A, to a handout of our speaking notes that I have distributed in both French and English, including a summary of our expenditures on copyright and Canadian content development.
Incidentally, I will mention that we have paid copyright royalties in excess of $175 million to creators, makers and performers. In addition to that, we have paid cumulatively and in an ongoing capacity $110 million to music education, sponsorship of Canadian artists, and cultural infrastructure through Canadian content development. We are also committed to paying tangible benefits in the amount of $28.7 million over seven years to a number of CRTC-mandated funds, including those that would promote the development of Canadian artists and their participation in the broadcasting system.
Satellite radio is an expensive technology, but one of great value in a country with the vast open spaces of Canada. For us to continue to provide a competitive service with a North America-wide distribution platform for Canadian artists and creators, Parliament must promote an ecosystem that encourages dissemination technology such as ours.
Our submissions are focused on two themes.
The first is that the copyright system needs to be a level playing field. Everyone who provides access to content in the digital environment should play by consistent rules, particularly as they reap value from that content.
The second theme is that this committee should consider creative ways to make the collective system more efficient and more responsive. This allows artists to profit from their content, and it allows providers of music and other content to know what their licensing costs will be.
What does a level playing field for music services in the digital environment look like? We say it involves three elements.
First, it means that organizations that are providing music to Canadians should be treated in a fair and consistent way. Sirius XM offers music to Canadians, and it pays a royalty for that music determined through the Copyright Board process. The problem is that we have competitors in the music space who offer music in vast quantities but who are able to take advantage of certain mechanisms in the Copyright Act. This has been described as the value gap problem. It applies, in particular, to services that allow users to upload content for the world to consume en masse and for free.
These services reap considerable ad revenues. We support the call of many parties who have asked this committee to take a hard look at the hosting shelter under the Copyright Act; in particular, the committee should ask itself whether it distorts the competitive environment to have sections of the act favour some services and not others. Reports submitted to this committee indicate that services in the position of Sirius XM may be paying as much as 20 times the royalties of user-uploaded services.
Second, there should be care to avoid double-counting of royalties. Sirius XM is aware that there is a call for extending the private copying levy to storage media on devices, but if the levy is extended, care should be taken that it does not apply to memory in dedicated devices when the music service is already paying the tariff for such copies. Otherwise, a service will pay twice for the very same activity, a situation the Supreme Court decried in the ESA case in 2012.
Third, this committee should take care to avoid any recommendations that might disturb the Supreme Court of Canada's technological neutrality findings in the CBC v. SODRAC case in 2015. In that case, the Supreme Court examined the copyright balance and properly recognized that services that disseminate content to Canadians make meaningful contributions through the risks they take and investments they make.
Satellite radio is a perfect example of these contributions: before the first song is broadcast, multiple satellites have been launched into space at great expense and must be maintained with care and at significant cost. Sirius XM also subsidizes the costs of its receivers installed in new vehicles and the costs of after-market radios sold to consumers. Without this investment, users in many rural and remote areas would have far less access to news, ideas and music. A level playing field requires these kinds of investments to be properly recognized in coming to a fair and equitable copyright rate.
Our second theme is that copyright royalties can be set far more fairly and efficiently. This idea was raised in the ESA case I mentioned a moment ago, wherein the Supreme Court properly recognized that Parliament's purpose in creating collective societies was to “efficiently manage and administer different copyrights under the Act”.
At paragraph 11, the Supreme Court quoted a passage suggesting the following:
||When a single economic activity implicates more than one type of right and each type [of right] is administered by a separate collective, the multiplicity of licences required can lead to inefficiency. . . .
In its decision, the Supreme Court suggests that when single-user licensing becomes fragmented, the resulting inefficiencies cause everyone, including the copyright owners, to suffer as a result.
Unfortunately, Sirius XM has had to live through that inefficiency repeatedly. We provide a satellite radio service and an adjunct online service using primarily satellite radio content. It's a simple offering, yet the tariff system requires Sirius XM to deal with numerous different tariffs with multiple collectives, each involving fragments of rights. Simulcasts online? That's one tariff. Allowing a user to pause a simulcast? Sorry, that's a completely different tariff.
Now consider that rights are further divided among multiple collectives, each of which is entitled to file inconsistent tariff proposals. The result for a user is many different proceedings as well as tremendous inefficiencies, costs and uncertainty. Tariff proceedings drag on for many years and result in retroactive payments. There has to be a simpler solution.
Leading scholars like Daniel Gervais have raised the idea of a one-stop shop licensing system. The basic idea is to bring all collectives together into a “multiple blanket” licence, or single tariff, so that all rights for a given service can be cleared quickly and fairly.
If you look at the history of copyright, you see that it used to be that performing rights societies and reproduction rights societies licensed completely different activities—one an opera, the other a vinyl record. Back then it made sense that different societies would clear rights separately, but in this era, almost every digital dissemination involves a composer, a performer and a maker, and a performance and a reproduction.
Is there a way to achieve a single clearance mechanism for all these uses? What can Parliament do to streamline the system fairly and efficiently? Perhaps this could be done through an omnibus licence application initiated by a given user, as suggested by the Supreme Court of Canada in the CBC and SODRAC case. Sirius XM suggests that this committee explore all potential opportunities to make rights clearance simpler for creators and users alike. This won't be easy, but it would be a tremendous legacy of this study.
Subject to any questions, these are my submissions.
I am now old enough to say that I've lived through the digital revolution. When I was at university, we had the old Mac Classic microcomputers. They had a monochrome screen. It was not pre-Internet, but pretty darn close.
We've gone through the wonder of the web. Now we're in an era called the “tyranny of the technology”, and it's putting a lot of our artists at risk.
Let me be clear: I want all of your businesses to succeed. Before I got into Parliament, I was in business. I love business. I love those you employ and all the economic benefits, but I also love the arts. I love musicians. I love performance and visual artists. We have to create an ecosystem where we can survive.
My concern is that artists and their work are becoming a utility and that the technological aggregators are literally becoming, or positioning to be, the robber barons of the 21st century. We'll see what happens when cannabis is legal later this week, but as we're talking about technology right now, you are positioning yourselves to take advantage of really good creators, and I'm not sure they're getting paid.
Mr. Schmidt, I'll start with you. I am a Spotify customer, although you may shut off my feed after today's questions. Let's hope not. Look, you made a general statement that there's more money for artists. I believe that. I'm not sure, but I think there's more money in the music industry. I think we've plugged some holes on piracy.
Here's my question. I did some math with YouTube and another aggregator of music, and to make $2,400 a month, which is the minimum wage here—an Alberta wage is $15 an hour—it would take 16.5 million hits on one streaming site and it would take 9.8 million hits on another streaming site for one artist to make $2,400 in one month. That's 180 million hits just to make a living wage for the year.
My question to you is this: How do artists get paid per hit on Spotify today in Canada?