Good afternoon, everybody. Welcome to meeting 121 of the Standing Committee on Industry, Science and Technology as we continue our study on the legislative review of the Copyright Act.
Today we have with us, from the International Alliance of Theatrical Stage Employees, John Lewis, International Vice-President and Director of Canadian Affairs. We have, from Artisti, Annie Morin, General Manager, and Sophie Prégent, Vice-President. From the Directors Guild of Canada, we have Tim Southam, President, National Office, and Dave Forget, Director of Policy, National Office.
We thought that our time was limited because of the votes in the House, but we're not, so you'll each have up to seven minutes for your presentation. Then we'll go into questions. We're going to start with Mr. Lewis.
You have have up to seven minutes.
Thank you, and I appreciate this opportunity to speak with you this afternoon.
The IATSE is one of the oldest and largest trade unions representing workers in Canada's entertainment industry. We were formed in 1893 and presently represent 22,000 workers in Canada and 140,000 in North America. We are the technicians and artists who work on big-budget foreign productions such as Star Trek: Discovery in Toronto and Deadpool in Vancouver, but we also work on Canadian productions like Cardinal in Sudbury, and Maudie, which was shot in Newfoundland.
I am certain many witnesses who will be appearing before you will speak to the importance of the cultural industries establishing and nurturing our national identity and how a modem copyright legislative regime promotes creativity and innovation.
I am here, however, to talk about jobs. Effective copyright legislation is a vitally important tool to protect the economic interests of Canadian consumers, creators, producers, broadcasters, and workers. Canadian film and television production is now an $8 billion industry that creates 171,000 full-time equivalent jobs. Digital theft has a direct impact on our industry.
For our members, there is no job security. We are the workers behind the camera—the grips and hair stylists, the set decorators and camera operators—who depend on a healthy industry for their employment. IATSE members receive no residual payments once a production has wrapped. Their incomes depend solely on what is shooting each day, because once your show wraps, so does your paycheque.
Why is strong copyright protection important to the IA? Because when producers—who are our employers—are hit with financial losses due to piracy, there is less money in the pot for future projects and therefore fewer job opportunities for our members. Piracy is not a victimless crime.
Streaming services have overtaken peer-to-peer platforms like BitTorrent and now account for up to 85% of all piracy. In 2016, there were 1.88 billion visits to piracy sites by Canadians. An estimated 375 million pirated movies and TV shows were downloaded using BitTorrent in Canada in 2016 alone.
The latest method for viewing illegal content is the fully-loaded media player. The most popular of these is the Kodi set-top box. These players come preloaded with applications that provide users with access to licensed content, but there are add-ons available that allow users to access unlicensed content. Almost one in 10 Canadian homes now has a Kodi box. Of these, 70.9% are using a piracy add-on.
Here is a specific example of the impact of piracy. Letterkenny is the second-most pirated TV show in Canada. The show is one of thousands available to watch legally through a subscription to CraveTV at a nominal cost of $7.99 a month. It has been downloaded illegally more than one million times. Estimates are that these downloads have resulted in up to 350,000 fewer subscriptions to CraveTV, which has a monthly value of up to $2.8 million.
In 2012 the Copyright Modernization Act was passed with its mandated review of the legislation every five years. There have been some positive outcomes from its implementation. For example, the Federal Court of Appeal affirmed a trial court interlocutory injunction in March of 2017 against retailers of set-top boxes such as the Kodi box. Another example is the 2015 injunction obtained by the Motion Picture Association of America against the Canadian programmers of Popcorn Time, a website that allowed for the dissemination of free online content.
There are still many areas in which the current legislation falls short. The rapidly evolving digital landscape has highlighted serious weaknesses with the current act. On January 2, 2015, the notice and notice system came into force, which was intended to be an educational tool for end-users. Education is good, but there is no evidence that the notice and notice has contributed to any significant change in consumer behaviour. There are no consequences for the consumer and no substantive incentives for internet service providers to purge their services of illegal material. There are also insufficient incentives for ISPs to respect the notice and notice system, because any failure on their part to forward notices from rights holders has no impact on their exposure to copyright infringement liability.
Governments worldwide are coming to the realization that there must be regulation for online platforms. Considerable attention has been placed recently on privacy concerns with respect to online platforms, both in the United States and Canada, but there has also been discussion and legislative action aimed at regulating responsible behaviour on the Internet and placing obligations on online platforms. The Internet is no longer the Wild West. Governments are coming to realize that regulation and greater oversight are necessary.
There is no single solution that will solve this many-faceted issue, but the IA offers one for your consideration. We are one of the 25 organizations behind FairPlay Canada, which includes unions, broadcasters, production companies, and other stakeholders.
FairPlay Canada has filed an application with the CRTC to help protect content creators. We propose a system similar to one used in countries like the U.K., Australia, and France, which would empower the CRTC to identify and remove the ability of illegal piracy websites to reach Canadians. Under our proposal, the CRTC would create an independent, not-for-profit organization called the independent piracy review agency, or IPRA, which would make recommendations to the CRTC on which sites should be blocked.
Any interested parties could make an application regarding a site, and the application would be served on the website and the ISPs. IPRA would then make a recommendation to the CRTC on whether to add the site to the list of blatant piracy sites. It would only recommend adding a website to the list if the evidence presented established that it was blatantly, overwhelmingly, or structurally engaged in piracy. The CRTC would be responsible for making the final determination. The CRTC decision would also be subject to oversight by the Federal Court of Appeal. Once a site was on the list, the ISPs would be required to block any Canadian user from accessing that site, which could be located anywhere around the world.
I want to make clear that this proposal in no way infringes on net neutrality. Both the IA and FairPlay support open access to all legal content on the Internet. However, net neutrality protects only the flow of legal content and is not impacted by this proposal. Again, we're talking exclusively about blatant piracy sites, not sites where piracy might exist. We mean a site like The Pirate Bay, which exists primarily to share copyrighted materials, and not, for example, YouTube, where the majority of content is original and posted by the creator.
It is time for Canada to look at more innovative solutions to piracy. The creative industries need support to ensure that the livelihoods of tens of thousands of talented Canadians are protected.
Our third recommendation is to treat performances incorporated into music videos as musical performances, not as cinematographic performances.
Currently, once a performer authorizes the incorporation of their performance into a cinematographic work, including a video, they give up their copyright.
For example, a performer whose performance is captured on video and is also audio-recorded may only exercise copyright or receive equitable remuneration when their sound performance is dissociated from the video. Yet a music video is a song with images. I don’t know anyone who watches a YouTube music video of a song on mute. That person is “watching” the song.
In such a case, depriving the artist of their rights is absurd. The international community recognized this in 2012, when it adopted the Beijing Treaty on Audiovisual Performances.
It is therefore imperative that Canada ratify that treaty and extend the exclusive and moral rights for performers in the sound recording industry to all performers.
However—and this is our fourth request—the definition of “sound recording” must also be changed so that songs used in movies or TV shows are also covered by equitable remuneration.
The definition of “sound recording” is problematic since it excludes soundtracks of cinematographic works broadcast at the same time as the film. In addition to being discriminatory, this deprives performers of significant revenues, since authors enjoy equivalent royalties in similar circumstances.
Fifth, it is necessary to find ways to compensate performers for the use of their performances on the Internet.
Quebec artists are well aware that the revenues from the streaming of their works are ridiculously low, even for their most popular songs.
First, revenues for non-interactive and semi-interactive webcasting are generated from a tariff set by the Copyright Board of Canada. The rate is almost 11 times lower than the one in effect in the United States.
Second, revenues for on-demand webcasts, such as Spotify or Apple Music, for example, are subject to contracts between artists and producers requiring the recovery of production costs before royalties are paid to the artists. Given the small sums generated by album sales and on-demand webcasting, performers are too often deprived of royalties from this commercial exploitation.
Our recommendation has two components.
First, guidelines should be incorporated into the act so that the tariffs of the Copyright Board of Canada align with those that apply to our neighbours to the south. Streaming should have the same value, whether in Canada or the United States. Guidelines should also be provided for the Copyright Board of Canada to respect agreements between users and collectives.
Second, it is necessary to introduce a right to remuneration for the digital use of performances such as the one advocated by the European group, Fair Internet for Performers. In addition, that tariff should be subject to mandatory collective management. Better still, equitable remuneration, which is paid half to the performers and half to the producers of sound recordings, should also apply to webcasting on demand, as is the case for radio.
Finally, our last recommendation is very simple: abolish the exemption that allows broadcasters to evade the obligation of paying fair compensation royalties on the first $1.25 million of their annual advertising revenues. Adopted in 1997, this exemption does not apply to authors and was intended to be transitional. Twenty years later, the abolition of this discriminatory measure is urgent.
With me is Dave Forget, Director of Policy.
We appreciate the committee's invitation to present the DGC's work with the Directors Rights Collective of Canada, particularly as this work reflects a core principle of the DGC, which is that Canadian directors and screenwriters should be recognized in law as co-authors of the audiovisual work.
The DGC is a national labour organization representing key creative and logistical professionals in the film, television and digital media industries. Today, we have approximately 5,000 members covering all areas of direction, production, editing and visual design.
In 1998, the Directors Guild of Canada founded the Directors Rights Collective of Canada (DRCC), a collecting society that administers foreign royalty payments from copyright legislation in other jurisdictions and distributes those earnings to all Canadian directors, from all genres. In 2017, the DRCC paid out $796,000 in foreign royalties to its membership of 1,349 Canadian directors.
Directors are entitled to these royalties under national copyright legislation and monetization systems outside of Canada, primarily in Europe, but increasingly elsewhere where copyright laws identify audiovisual directors as the authors of their work and require payments in much the same way as SOCAN requires payments for composers and songwriters in Canada.
Here in Canada, while the current Copyright Act leaves the authorial status of so-called cinematographic work ambiguous, both the text and subsequent legal rulings give overwhelming support to the proposition that the screenwriter and the director are co-authors of the work.
Section 11.1 of the act distinguishes between audiovisual content with “dramatic character” and content without dramatic character, giving a normal term of copyright, which is the life of the author plus 50 years, only to those works where “the arrangement or acting form or the combination of incidents represented give the work a dramatic character”.
A writer, of course, creates a “combination of incidents” known as a plot or a script. A director then directs the acting and conceives and arranges all of the various creative elements that will ultimately appear on screen, creating the staging, camera frames, camera movements, conceiving the settings and selecting locations, determining the tone and interaction of performers, arranging the final sequence of images in the edit and determining the sound design and musical score.
Section 11.1, for all intents and purposes, gives a job description for screenwriters and directors. If authorship in audiovisual media means creating an original work and giving it dramatic character, as the act defines it, then it only stands to reason that the author is the originator and creator who provides that dramatic character.
The term of the copyright itself, set as the life of the author plus 50 years, constitutes further evidence that the author must be an individual and a physical person, someone who can be credited with authorship and natural ownership of moral rights, not a corporation or other legal entity. This interpretation of the act is supported by all existing Canadian case law and Quebec jurisprudence under the Civil Code.
The act also explicitly distinguishes between the author and the maker of a work. While the maker designation is mostly used in relation to sound recordings, it is also defined for audiovisual works, and nowhere in the act is first ownership of copyright or moral rights ever assigned to the maker of an audiovisual work. This further establishes that ownership of copyright and moral rights must belong solely to the originating author and that the author must be a physical person giving the work its original dramatic character.
This is not only the existing interpretation of the courts, but it is effectively already the policy embedded in the agreements and contracts in our industry. Businesses require certainty, and no producer, studio, broadcaster or distributor would ever invest in a project without knowing they had secured the rights necessary to exploit it. This is why screenwriters and directors already routinely sign over their exploitation and moral rights and are already compensated with fees for their talent and for future use of their creation.
The change we're advocating today would cause no disruption to the status quo in our industry, no change to the way business is typically done, but it would acknowledge our moral rights as individuals and creators and make clear for the discussion of any future platform that those rights must continue to be respected.
Members of the committee, I thank you for your time.
We'd be pleased to answer your questions.
Yes, the industry knows them. In many countries, they've already identified those sites and they have been shut down.
Canada is falling behind. I'm sure you're going to hear this from a number of witnesses in terms of copyright. We're not leading the charge, that's for sure.
What we're looking to do with the FairPlay application is really just to match what a lot of our western European countries are doing, where the cultural industries are vibrant and they saw a need to protect them. We looked at notice and notice, and, quite frankly, it was ineffectual, so we need some teeth.
The industry knows who the players are and this is a quick, efficient, and not costly way of addressing it, because some of the other initiatives that have been looked at.... For a copyright holder to try to enforce their rights, it's time-consuming and lengthy. This is a process that we think would allow for due process but get a quick result.
Actually, as a collective, we try as much as possible to ensure that the royalties collected for the use of performers' work do not decrease over time. Unfortunately, many exceptions were introduced in the Copyright Act when it was modernized in 2012, and that certainly makes things difficult. We are seeing a significant drop in royalties.
I was talking about private copying, for example. At the height of private copying, the royalties were over 50% of the Canadian royalties Artisti could distribute to artists. Last year, only 7% of Canada's royalties came from private copying.
We see that the act has not kept pace and that it would be appropriate to modernize it further so that it can be extended to devices.
I could talk about a lot of other exceptions that have been introduced in the act.
Unfortunately, this unfavourably draws the attention of foreign countries to Canada. As recently as May 2017, the Association littéraire et artistique internationale (ALAI) made a recommendation or expressed a desire to the Canadian government to limit free exceptions. In fact, if exceptions are introduced in the act, they should at least come with compensation.
In Canada, first, if you are clicking on a video, a specific video, you are doing it “on demand”.
When it's done on demand, in principle, it should be covered by the contract between the artist and the producer.
That said, often, if you request a video, and then stop asking for videos, YouTube suggests videos to you and suggests other songs by the same artist, or another song by a different artist. At that point it's no longer what is known as on-demand service, but rather semi-interactive or non-interactive webcasting, depending on the term you use. You haven't asked for anything, but a content is suggested to you. Personally, I can't tell you whether there is compensation every time, in those cases.
There are two ways you can think about the FairPlay Canada proposal to the CRTC.
I speak to directors who find their work showing up on these platforms. Obviously, in many cases, they show up without licence. Directors are not in a position and don't have the wherewithal to be spending the time and investing the resources that would be necessary to track and then try to follow the legal avenues to have the content removed. It pops up in other places. It's a challenge, and our organization is part of the FairPlay coalition too. One of the virtues of the approach is to go to the source.
Often, the source of the content—where it's being streamed from—is located outside Canada. It's hard to reach it through the traditional legal structure that we have now. As a result, blocking those sources from entering our jurisdiction is a simple solution. We would say, in effect, that whatever happens outside of Canada will happen, because these streaming sources will probably continue to exist, and other jurisdictions will have to deal with them. Some have protocols that are very similar to what FairPlay already has in place—in places like the U.K., Portugal, and Italy—and these have been working.
What's being suggested is essentially blocking those sources from coming in, because asking the creators to be in the business of tracking this down on a piecemeal basis is a herculean task, and just not effective. So the suggestion is a very practical one, which is to say that when a site is overwhelmingly and blatantly engaged in trafficking content that it does not have the right to exploit and make available, it should be blocked.
Thank you, Mr. Chair, and thank you, everybody, for taking the time to be here today.
I do want to go back to you, Mr. Lewis. You made some interesting comments earlier about the FairPlay proposal, which has attracted a great deal of concern from those who want to preserve net neutrality. You did mention that you support net neutrality, which is good to hear. However, I do want to get to the bottom of some of your comments.
Currently, as you indicated, the FairPlay proposal is asking that a board of industry players be created, who would ask the CRTC to demand that ISPs block websites they deem to be perpetuating piracy. The chief concern with this proposal is that there would be no court involvement before the site would be taken down. In response to this concern, you said—and other FairPlay representatives have said—that complainants could appeal to the Federal Court of Appeal after the site has been pulled.
Why not address these genuine concerns head-on and change the proposal to bring in court oversight before the offending sites are taken down?
I used to work at the Ontario Labour Relations Board—again, a quasi-judicial tribunal—the decisions of which would be in effect.... There was the ability for any party to bring a judicial review or application to the courts to review that, but the decision would be in effect. It's our tradition that those decisions are in effect pending a judicial review. An offending party could seek an injunction to stay the decision of the CRTC, pending a review by the Federal Court of Appeal. There is already built into the system, then, the ability for someone, if so aggrieved, to bring that kind of motion to stay the effect of the CRTC determination, pending an appeal at the Federal Court of Appeal. Once again, it's timing in all of this.
We're a North American organization, and in the United States we have taken on the current administration with our concerns about net neutrality, and we're spending considerable resources fighting that fight. We take it very seriously. I know that any time you talk about any type of blocking, my own members, particularly younger members, get very nervous and concerned about it.
Again, I look at other jurisdictions.... And here I would note that I was wrong: it's 40 countries and not 30 countries that have enacted similar legislation elsewhere. Sometimes they bring in a judicial component earlier in the process, but there is the same type of methodology. There is an ability, anyway, to seek to stay a decision pending a review by the court of appeal.
Netflix engages in three kinds of business, or two, really. One is as a rebroadcaster of existing works. It will do deals with whoever the rights holders are for existing movies and series.
In terms of original work, which is, as you say, the $8 billion a year that it's planning to spend worldwide, that's almost the same.... I would say that's exactly the same contracting process as any form of contracting that happens now in the linear universe, which is to say that they either hire a producer who then engages people like me and everyone else—writers, etc.—to provide their services, or they act as a studio and remain a full owner of the show and produce it themselves.
Of course, there's a raging debate internally in all of those organizations as to whether they want to be studios or merely broadcasters, which is an interesting term to use for an SVOD service. They are acting exactly as broadcasters in terms of contracting and getting the work produced.
Forgive me, I'm a little bit sick, but I'll try to get my questions out.
Mr. Lewis, I'm curious about your comment. Your solution, which FairPlay Canada has asked for, is to block these websites from Canadians. I'm aware there's technology available that allows you to block your IP address, a VPN blocker, and to say that your signal is coming from the United States, for example. I know a number of people use that to get American Netflix in Canada.
What is your comment on that? Is there a way to solve that runaround, which would undermine your comment?
I'd like to mention two exceptions that were included in the law in 2012 and that complicate the situation enormously when it comes to consumers' choices.
In 1997, a private copy regime was adopted to allow consumers to reproduce music in the privacy of their homes. This was already being done quite commonly. Everyone has probably made or owned a recording of various songs they listened to in their cars on their way to the cottage or elsewhere. In 1997, the government determined that people would from then on be allowed to make such recordings for their own personal use, but that creators would be paid a royalty for every blank audio recording medium that was sold.
Unfortunately, the court decided that blank audio recording media did not include digital audio devices. That is why that royalty only applies now to blank CDs, a medium that is used less and less, it must be said.
In 2012, an exception was included in the Copyright Act to make it possible to copy music using devices that were not already covered under the private copy regime. In other words, it became legal to make copies on your iPod, if there are still any around, or using your iPhone. However, as opposed to what was done quite judiciously in 1997, when the decision was made to compensate creators for copies of their work, no compensation was provided for in 2012. That is unfortunate.
An exception was also included in the act for cases where people record a program in order to watch it later. There again, unfortunately, no payment was included in the act to compensate creators for this use of their work.
Ephemeral recordings made by broadcasters for their broadcast activities were also included. As I explained...
We are talking a great deal about the music sector. I am the president of the Union des artistes. In Quebec, we've managed to compensate for certain rights through our collective agreements. The Union des artistes manages 55 collective agreements in all sectors. This, of course, involves music, but also hosts, singers, and dancers. Through our collective agreements, we have managed to protect ourselves. The music sector is an exception. In fact, I would say that it is the example that should be avoided.
Over time, in Quebec, we have managed to protect ourselves to some degree thanks to the Status of the Artist Act. We have what are known as residual rights. In fact, we are paid for a day's work, a bit like plumbers. For the rest, we receive a percentage of the fee that was negotiated at the outset. For instance, we agree that the residual rights will be equivalent to 30%, 40%, 50% or 80% of the negotiated fee. So we are in another system that protects the artists, insofar as we remain within that framework.
Of course, the environment or the market tends to completely change the way in which artists are remunerated, and flat rate fees are increasingly being asked for for digital media. Do you understand what I mean? That is completely different.
Really, the question is where to begin. We're in an era where there's an abundance of choice and a diversity of content. There's never been a better time to be a viewer; there's so much there to pick from. It's triggered a lot of investment in the creation of content. In many ways, it's been a terrific tonic for the industry, because we're seeing a lot of activity.
Canada has benefited from that. Our members work on shows—and we've mentioned a couple—Lost in Space, Star Trek, but also The Shape of Water, and the list goes on—but they also work on Canadian programming.
There's been a real boom in production activity. That's been good, but the counterpart to that is that there's a lot more content coming over. This is a positive thing, but it's made for a much more competitive environment. As an example, we see the strengths of the work the government has been doing. That was demonstrated in the report and recommendations of the CRTC that to be competitive internationally, and to build on those strengths of having a deep pool of talent, a great infrastructure, the financial capacity, and the experience to be competitive internationally, we need to continue to have a robust system that strengthens the Canadian content side of it.
I'll let everyone get in because that's a great question.
I'll begin with exactly one of the reasons that we're here today. The act is ambiguous with regard to how “author” is defined. It states “author” but doesn't identify who the author is.
The case that we've made, I believe, today is that screenwriters and directors are authors. The reason I bring this up is that one of the ways the act can be strengthened is to give clarity to that question. As you've probably heard already, many of the things that we do—the waiving of moral rights, the assignment of exploitation rights to producers and distributors, and so on—to ensure that we are very motivated to see the full exploitation of the content that our members create, for obvious reasons.... It's for financial reasons, and we want to see that. We think that is positive.
Strengthening that by having that clarified in the Copyright Act is a modest change that would bring clarity. What would that do? Tim and others have mentioned the extent to which new players on the SVOD side have been making investments. When you ask Crave, Netflix, and others what they are making, they say—in the jargon they use—that they're making a TV show. When our members are in Vancouver at a sound stage, whether it's one show or another....
As we go forward, as there are more disruption in the marketplace, as newer business models come up, we need to have those collective agreements. Madame Prégent made an excellent argument, and this is very much the experience of DGC. Those collective agreements are the vehicles for codifying those sets of rights and that transaction. But a strengthened Copyright Act would give us the tools to ensure that as new platforms come on—I'm finally coming to the punchline, forgive me—when these new technologies, new models emerge, it would compel that conversation with authors, writers, and directors, and those who are commissioning and financing the content, who are orchestrating the construction of the project over the rights and the fair compensation.
Dave, you mentioned The Shape of Water. A guy from the Sault, Paul Austerberry, won an Academy Award—I know him quite well—and David Fremlin from the design team shared it. These are very good friends of mine, and I know how important the creative economy is, especially in film and television production.
In this conversation that we had about copyright, in your presentation it was assigned to the author at 50 years. We're also exploring how we deal with copyright as it relates to Canada's indigenous people. One of the issues we're finding, and on which I'm doing my research, is that we know that we need to ask for permission, but a lot of times that production, that piece of work, doesn't belong to an individual. It belongs to a first nation or a clan or a piece of it.
Do you have any ideas or thoughts on how copyright changes could help Canada's indigenous artists, and how we might enhance that and have more creative artistry in the indigenous world?
I have just a few questions with respect to the business model and, of course, with that, establishing sustainable pathways.
Mr. Southam, you mentioned the fact that financial benefits can be accrued over time, and injected into the overall business model. But I want to concentrate on the Copyright Act and the mechanisms that all of you had mentioned earlier with respect to the Copyright Act. I am trying to walk away with some tangibles so we can make some recommendations at the end of the process.
I've heard mechanisms mentioned with respect to new technologies and how we can capture a lot of the pirate sites. With that second point, is an independent organization to monitor the pirate sites engaged in this kind of activity?
Instead of a separate entity, would a sub-entity of the CRTC suffice?