Bill C-11 Committee on Feb. 28th, 2012
A recording is available from Parliament.
On the agenda
- Bill Skolnik Chief Executive Officer, Canadian Federation of Musicians
- Don Conway President, Pineridge Broadcasting
- Ian MacKay President, Re:Sound Music Licensing Company
- Aline Côté President, Les Éditions Berger, Association nationale des éditeurs de livres
- Jean Bouchard Vice-President and General Manager, Groupe Modulo, Association nationale des éditeurs de livres
- Cynthia Andrew Policy Analyst, Ontario Public School Boards Association, Canadian School Boards Association
- Michèle Clarke Director, Government Relations and Policy Research, Public Affairs, Association of Canadian Community Colleges
- Claude Brulé Dean, Algonquin College, Association of Canadian Community Colleges
The Chair Glenn Thibeault
Good morning, ladies and gentlemen and members of the committee.
Welcome, witnesses, to the fourth meeting of the legislative committee on Bill C-11. We'll get right to introductions.
From the Canadian Federation of Musicians, we have Bill Skolnik and Warren Sheffer. Welcome.
From Pineridge Broadcasting, we have Don Conway.
From Re:Sound Music Licensing Company, we have Ian MacKay and Matthew Fortier, director of communications.
Each of you has been informed that you have 10 minutes maximum for opening presentations. That's the total for each organization. After 10 minutes I will unfortunately have to cut you off. Hopefully, we can get that done within 10 minutes.
With that, I'll hand it over to Mr. Skolnik.
Bill Skolnik Chief Executive Officer, Canadian Federation of Musicians
Thanks very much, and thank you for having the Canadian Federation of Musicians.
I am Bill Skolnik, and I am a musician. I've worked in theatre, television, and radio in different studios for a long time. I did a lot of writing for Sesame Street, so I may have affected some of you sitting here. I am now the chief executive officer of the Canadian Federation of Musicians.
Joining me today is Warren Sheffer, who is our counsel and a lawyer with Hebb & Sheffer.
CFM has represented musicians in Canada for more than 100 years, and many of our 17,000 members are international stars and household names, but the majority are not. I got elected to serve the 17,000 folks in the organization, but there are also a number of non-members, according to the Canadian Artists and Producers Professional Relations Tribunal, CAPPRT, which I speak for on federal matters. So I'm not just speaking on behalf of the folks who pay my salary; I'm speaking on behalf of anybody who picks up an instrument and gets paid for it.
Musicians are self-employed business owners and often earn less than $20,000 a year. While they make some of their wages from performing and hitting the road, a significant portion of their income comes from recordings and the rights to past performances and work. You may not realize it, but when you go to the Sanderson Centre for the Performing Arts, the National Arts Centre, or Centre In The Square, those players you see accompanying featured performers are not with those featured performers from city to city. They are hired by a music director, and they operate as independent business people.
Some of you may know these folks. I know most of them, and I'm going to give you names of some from smaller places so you can acquaint yourselves with them. From Sudbury, we have Christian Robertson, Victor Sawa, and Yoko Hirota. The three Gray boys, John, Charlie, and Phil, are originally from Truro and now live in Toronto. I think John lives in Vancouver. He wrote Billy Bishop Goes to War. They're from a small town in Nova Scotia. From Kitchener, there is Frank Leahy, a well-known player, and Wendell Ferguson, one of the funniest guys in Canada. I also want to mention Doug Perry and Paul Mitchell. From Peterborough, we have the Cherney brothers, who don't live in Peterborough anymore, but their father was a well-known appliance dealer, Washboard Hank. If anybody has ever seen Washboard Hank play, you know who I mean. These are our members. These are the people I'm talking about.
The Leahy family is well known, from Lakefield. Frank DeFelice, Garry Munn, and Rusty James are from Brantford. You may know these folks. From Sackville, there is Ray Legere. I'm just giving you these names because these are people who bought houses, raised their children. They don't necessarily live in the big cities—some of them do—but most are from the small towns. This is who I'm talking about. These are the small business people I'm referring to.
Musicians can only make a living if there are robust copyright laws that allow them to negotiate and exploit their rights in the marketplace through collective bargaining and collective licensing. Diminished rights mean diminished income.
We support the government's effort to modernize the Copyright Act by implementing provisions of the WIPO Internet Treaties. In particular, we welcome the establishment of moral rights for performers. That's really vital to us.
We acknowledge the government's desire to address the fact that people are enjoying music in a digital format anywhere and anytime; however, just because digital technology has made it easy for works to be reproduced, it doesn't mean that it should be free. Technological advancements cannot be a rationale for depriving creators and performers of their right to be rewarded for the reproduction and use of their work.
Music has value. This work is the product of creative labour and it still has value. Unfortunately, in too many places this bill removes the value.
The Canadian Conference of the Arts has put together a package of 20 technical amendments to Bill C-11. CFM is one of the 68 cultural organizations that helped put those together, and we fully endorse each of those amendments. I want to stress how remarkable an achievement it is to get these diverse organizations to agree on this package.
Today I want to speak specifically to four amendments that would go a long way towards protecting the intellectual property and income of musicians.
Number one, put a fence around the widespread exceptions to copyrights and neighbouring rights introduced in the bill by including explicit language from the Berne three-step test.
The Berne three-step test, as found in the Agreement on Trade Related Aspects of Intellectual Property Rights, TRIPS, to which Canada adheres, provides that:
Members shall confine limitations and exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights-holder.
We want users to be able to access and enjoy our members' work, whether for personal enjoyment or education, but not at the expense of the musicians who seek to make a living from the use of their works and performances. Make this provision explicitly in the act and it will get the government and the courts on the same page.
Second is user-generated content. This is an example of where the three-step test would be helpful by putting fences around exemptions. The UGC or mashup provision is a remarkable departure from the objective of the Copyright Act to confer exclusive rights on creators and performers. We understand what the intent is here: to allow families to post videos of their kids dancing to pop music without breaking the law. That's reasonable, but the wording in the bill goes too far for us. It would remove the ability of creators to license or have any say in what happens to their work. YouTube is the big winner here, at the expense of creators.
We recommend the exception be removed altogether, or at a minimum amend it so that moral rights are properly protected. We need to leave the door open for collectors to enter into agreements with businesses like YouTube so that performers can get paid, as is the case in other countries.
I can tell you from my perspective that a lot of our members are as much concerned about control of what their works are as they are about the payment. Both are important, but control is a big aspect with respect to moral rights. They need to have some teeth behind those.
Third is statutory damages. Bill C-11 proposes to drastically reduce statutory damages for infringement, that is for non-commercial purposes, to between $100 and $5,000. This is not an adequate deterrent. We also see no need to make a new distinction between commercial and non-commercial infringement. Such a distinction conveys the wrong message that so-called non-commercial infringement is not at all harmful to creators and performers. For example, I can take a CD, make 100 copies of it, and give it to everyone I know for Christmas. I'm not making money off it, but that's potentially 100 copies of the CD the artists aren't going to sell.
It only makes it harder and less worthwhile for small business people with limited resources to pursue damages for infringement. We understand what the government intends with this change, but it's not necessary. We have seen no cases in Canada where individuals have been forced to pay exorbitant awards for copyright infringement.
Even more puzzling is the bill's proposal to exempt those who enable acts of copyright infringement on the Internet from statutory damages. Statutory damage awards must be a proportionate deterrent and must be applicable to mass infringers like peer-to-peer sites that makes tons of money off the backs of hard-working artists.
Fourth, and finally, is private copying. CFM members earned more than $4 million from private copying in the past 10 years. Unfortunately, Bill C-11 will allow that critical source of income to dry up by not extending the private copying regime to new technologies. The revenue stream needs to be replaced—and I emphasize replaced—to recognize that long-standing principle that copies have value, and that exclusive rights-holders are to be compensated when copies are made.
The first choice is to make the bill technology neutral by extending the current private copying regime to digital audio recorders that are designed, manufactured, and advertised for the purpose of copying music. But if the government chooses not to take that route, part 8 of the Copyright Act should be supplemented by another restitutive mechanism. What I'm saying here is that there is a principle involved that's already been established: that copies have value and that people seem to have a right to make some money from that.
We're not intending to say extend the technology if that's not palatable. We believe there are other methods. We have examples of other methods of getting remuneration to artists for the extended use of their copies, the storage, and the duplication. So it's the principle that we're arguing and the ability to keep that principle going and keep money going. You know, a musician would get statements. As I say, they're business people, and they can't go into the bank and say, “Well, I have six, seven months of contracts coming up, I've got tours coming up.” They say, “What if you get hit by a car? What if that happens?”
But they can go with those statements that they get from Re:Sound and Canadian Private Copying and they can go with other things that show their income and regardless of what happens to them get money. And they don't need much. The average guy maybe gets $2,000 or $3,000 from private copying in a year, but that can get him studio time, it can get him sidemen to play with. This is an important aspect of their income. It's been there for—what?—20 years, and it's now being removed. It's being removed because of technology, not because anybody here believes they shouldn't get it.
The Chair Glenn Thibeault
Thank you, Mr. Skolnik.
Chief Executive Officer, Canadian Federation of Musicians
Is that 10 minutes?
The Chair Glenn Thibeault
It's over 10 minutes.
Chief Executive Officer, Canadian Federation of Musicians
Okay. Thank you.
The Chair Glenn Thibeault
Now I'll go to you, Mr. Conway.
Don Conway President, Pineridge Broadcasting
Thank you, sir.
Good morning. My name is Don Conway. I'm the president and the majority owner of Pineridge Broadcasting. We're a small private broadcaster serving Cobourg, Port Hope, Northumberland County, Peterborough, and the Kawarthas in Ontario. Thank you for inviting us to appear before you.
I hope that by the time we part you'll have an understanding of small-market radio, the part we play in the everyday life and economy of our communities, and the financial stresses we live with each day in order to do it.
Due to the tight timelines, my comments to you will be limited to my oral presentation, but I'd be pleased to follow up with any written submission, if you require it.
I was born in Chute-à-Blondeau and raised on a farm at Alexandria. I sold my first calf to buy a transistor radio so that I could listen to music on the Cornwall station and the stations in Montreal to hear the play-by-play of les Canadiens and les Expos.
I started in radio in 1974 as a sales rep in Brockville. In 1983 the owner purchased a little, bankrupt AM radio station in Cobourg and asked me to go and run it for him. It was called CHUC, but on the street it was better known as “up-chuck radio”.
President, Pineridge Broadcasting
It took many years and a lot of work to turn it around.
I'm going to skip the details of how we got to today, other than that I purchased the company in 1991. Suffice it to say that what we did to grow our little company out of bankruptcy in 1983 is not much different from the way we operate the company today. It takes hard work, a dedicated staff, fiscal patience, and a strong community involvement.
Local radio reflects retail. When retail is down, as in this past year, then radio revenues are down. That means cutting expenses and staff. In small markets, there are not a lot of staff to begin with; we live very close to the profit-loss line. Add in the extra expenses this past year for new and retroactive copyright tariffs and there was no profit.
Our small main office is in Hamilton Township. We are one of the largest employers, with about 25 staff for our two stations there. Our new Peterborough studios have about 15 staff.
We desperately need more staff, but with the state of the marketplace we can't afford to add. Yet when I have to figure out how much to pay in copyright fees for each of our stations, we are classed as bigger than a typical medium-sized station.
I can tell you that we are small and that the “small” classification should be closer to $2 million than to $1.25 million.
Before I get to talking about copyright, I'd like to spend just a minute to explain how a small-market radio station survives.
We build loyalty. Not only do we daily talk about the community and promote the activities of community groups, but the staff become personally involved in the community. We talk on air about what matters. If it is snowing, we talk about what school buses are cancelled; if council voted to limit garbage to two bags, we put the mayor on; if the 401 is shut down, we tell the best detour to use and give a toll-free number to call to update us.
We do not subscribe to a costly national news service. Most days, each of our newscasts is 100% local. We are part of the disaster plan for the various municipalities. When the two water pumps went down recently in the town of Port Hope and an emergency was declared, the town coordinator called me at home to set up airing messages to residents.
Local emphasis extends throughout our programming. The Community Booster Club twice an hour promotes community events at no charge. We put community groups on air to discuss their event. This is not just a casual relationship. Their success helps build loyalty to our brand and ultimately helps build a better community.
For example, the Northumberland United Way supports 16 member agencies. We promote the United Way itself and each of its member agencies, and each fall we air a weekly update with the campaign chair.
The Canadian Blood Service.... Since my leukemia marrow transplant in 1987, we do live broadcasts every month from the blood donor clinic.
Our stations were instrumental in the success of the first annual anti-bullying awareness event sponsored by the Northumberland Youth Advisory Council. Through an on-air campaign and interviews with those involved, we brought county-wide awareness to the issue of bullying.
Relay For Life is the Canadian Cancer Society's largest fundraiser in Northumberland County. Our stations have sponsored this event every year, and in 2011 alone the event raised over $270,000.
There are many community initiatives that our stations support financially and through on-air campaigns. I could give you a list of community groups that we've worked with in the past year, but in the interests of your time, I'll not read them here.
All our staff walk the talk. We are all directly involved in many community groups. I myself am past chair of the United Way campaign, the United Way board, the Hospital Foundation board, the Waterfront Festival, and the Cobourg Rotary Foundation Committee, amongst others.
In addition to many charitable organizations, Northumberland has a large arts and music community, and our stations make their time available to help promote their activities. For example, Summerhouse, a local rock band: our station was the key supporter of the release of their debut CD, and they are interviewed and perform on air regularly. Zack Werner and his band Haymaker: our station hosted studio live performances and interviews with Haymaker during the release of their debut album and subsequent fundraising efforts with the ALS Society of Canada. For Blue Sky Revival, our concerts to raise environmental awareness featuring an all-Canadian line-up of established musicians and emerging artists, we provided an on-air campaign as well as on-site support with organizational assistance and an emcee.
We have developed a great relationship with people in the music industry over the years. They understand that our stations want performers to be successful and that we will do what we can to promote those artists.
Community extends to our high schools and our community colleges. Each semester we provide co-op training for three to four students from the four high schools. Each spring we also provide co-op training to students taking various radio courses at Loyalist College in Belleville and others. Our staff sit on various advisory boards at Loyalist College.
Pineridge Broadcasting is not some big corporation with a head office in a lofty office tower. We don't have vice-presidents. We don't have unlimited funds for staff. We are community folk not afraid to get our hands dirty. We want to be a good promoter. We would like to do even more in our communities. We want to be a good employer. We'd like to hire more staff. We believe in supporting the artists who make the songs that allow us to put a product on the street. But we believe in fair play, and I don't think being forced to pay multiple times for the same thing is fair.
In the past we received music from the record labels on 45s, and then, even up to four years ago, on CD. We've always had the music from the labels and we've never had to pay for it. It doesn't make sense that because they now force us to download digital tracks we have to pay for them. In each of our stations the music is downloaded to the very same computer that then plays it back over the airwaves. The only other time a clip might be copied is to create a promotional ad to tell listeners about the artist.
If anything has changed in the 39 years I've been in radio, it is that we have reduced to almost nil any need to copy music. I told you of our shortages of staff. Is it fair play, then, that you would pass a bill that requires our company to reassign one of our very busy staff members to erase and re-record every piece of music in our library every 30 days? You're just adding prohibitive costs to our operations. Let's say I have 3,000 songs in our musical library and let's say they average three and a half minutes. That's 10,500 minutes. When re-recording the music, we'll have to do it in real time, which would take, let's say, 175 hours. If a person works a solid seven hours each day, they're going to take 25 days to re-record that library and they're going to have to do it every month.
I'm asking you to remove the requirement that music be deleted every 30 days. The resources required to do that are just beyond the scope of possibility for a small operation like ours. Simply put, the 30-day limit doesn't make sense, nor does the fact that we should be paying any reproduction tariff.
Folks in the music industry know how important radio airplay is. That's why they've always worked with us to get performers on the air. We know how important music is. That's why we pay our core copyright fees for broadcasting; that's why we promote the artists. It's a fair balance.
To conclude, we're a small private broadcaster trying to make our communities better. We're trying to be good corporate citizens, we're trying to be good employers, and we're trying to grow our business. We promote the music and the artists we play. We pay the copyright royalties. But ever-increasing tariff payments are threatening our ability to do all of these things.
Thank you for the opportunity to appear before you today. I'm happy to answer any questions you have.
The Chair Glenn Thibeault
Thank you, Mr. Conway. Congratulations. You are under 10 minutes.
We'll hand it over now to Mr. MacKay.
Ian MacKay President, Re:Sound Music Licensing Company
Re:Sound is the not-for-profit collective dedicated to obtaining fair compensation for artists and record companies for their performance and communication rights. We represent the royalty rights of more than 12,000 musicians, including featured and session musicians and record companies. The money we collect is split 50-50 between the performers and the labels.
We appreciate that many of you have had your fill of copyright discussions, so I can assure you we would not waste the committee's time if our proposals did not align with the economic and job creation goals behind Bill C-11 and if they were not properly in order.
Re:Sound has tabled three straightforward proposed changes to Bill C-11.
One of these is highly technical, so in the interest of time I invite members to consult the background document and proposed amendment language we've given to the clerk. On this amendment I'd only state that it is a very simple language omission in the Copyright Act related to ministerial statements on reciprocity.
The other two amendments I believe warrant some more discussion at committee as they mean more money for more people. The first amendment would bring needed clarity and would allow Re:Sound to get millions of dollars out of a trust account and into the hands of musicians and businesses.
The second amendment addresses the serious market distortion in the current Copyright Act that dates back to the 1990s. Fixing this would inject millions of dollars a year into Canada's creative sector at no cost to taxpayers or consumers.
The first amendment is what we call the orphan amendment. What are orphans in the copyright context? They're eligible rights-holders, musicians, or labels who have not yet signed up with us at a particular point in time. They may not have signed up because they don't know about their rights or they may not have made a recording or existed as a band at the time a particular tariff was set.
The concept of orphans is not unique to us. They also exist in the context of reproduction rights, retransmission rights, private copying, and others. The difference is that in all of those other cases there are clear and expressed provisions in the Copyright Act that set out clear rules and obligations with respect to orphans. We are alone in not having these kinds of rules and this kind of clarity and can only think this was an oversight at the time of drafting.
Without any rules in the Copyright Act to clear up what obligations we have to these orphans, we may need to hold some funds indefinitely. To correct this problem, we simply seek an amendment—it's two lines long—that would give us the same clarity regarding obligations to orphans that all these other collectives have.
In short, this amendment would provide clarity on the entitlement of orphans to be paid, empower the Copyright Board of Canada to establish clear rules around limitation periods, and, crucially, it would allow Re:Sound to pay out millions of dollars in royalties that we've been forced to hold indefinitely due to the lack of clear rules under the Copyright Act.
Our job at Re:Sound is to collect and distribute money, not to collect and hold money in a trust fund. We're a flow-through organization and we need clear, transparent rules in order to do our job. If you can make this technical change to the act, we'll get money—that's money that's already been collected—out the door and into the hands of the rights-holders.
The other amendment I will talk about today is the elimination of the $1.25 million exemption for commercial radio in section 68 of the Copyright Act. The last time the Copyright Act was reviewed in the mid-1990s, Canada was in the middle of a deep recession and the future of commercial radio was uncertain. In 1995, for example, the entire Canadian radio industry—that's the entire industry—posted a total profit of only $3.6 million. So the government of the day enacted a “Special and transitional royalty rates” section of the act. Under this section, performance royalties to musicians and labels were phased in over time and each commercial radio station was only required to pay $100 on their first $1.25 million in advertisement revenues. This was and remains the only such subsidy in the Copyright Act and the only subsidy of its kind in the world.
Fast forward to the last few years and radio has been thriving and posting record profits in every market, in every language, and in every region of the country. In fact, between 2006 and 2010, the Canadian radio market experienced the second-largest absolute increase in revenue in the world behind only China. It grew by $330 million. This growth story is great news, and I want to be clear that we want to see the continued success for commercial radio in Canada.
However, because the Copyright Act has not been reviewed since 1997, neither has the $1.25 million subsidy been reviewed to reflect the huge and growing profits of the Canadian radio industry. All the while, musicians and labels, including hundreds of Canadian independent labels and musicians, are not receiving fair market compensation for the content they provide. This subsidy reduces the royalties earned by musicians and labels by about one-third, or $8 million a year. The bulk of this subsidy goes to a handful of large radio groups—not small radio groups but the large radio groups. This is a serious market distortion that benefits a very profitable industry at the expense of those who create the content that drives that industry.
Once again, I would state that we love radio and we recognize the tremendous work that many stations do in their communities, but please remember, commercial radio is a for-profit venture. That's why it's called commercial radio, and the business model is simple. Stations play music because music draws listeners. Listeners attract advertisers. In fact, 13% of all advertising dollars spent in Canada are spent on commercial radio. That's the highest proportion in the world.
Simply put, music drives commercial radio. It helps with the station branding and it helps target and retain certain demographics. Our proposed amendment allows the musicians and businesses who invest in and create the products that radio puts on the air to get properly compensated.
Remember, this is a legislated subsidy, so radio stations do not have any option but to be subsidized. To their credit, broadcasters acknowledge the importance of paying for music. In fact, the chair of the Canadian Association of Broadcasters stated to the precursor of this very committee that, and I quote, “We want to emphasize that broadcasters are not opposed to paying for the communication right.” That is, they are not opposed to the paying of royalties to musicians and labels that Re:Sound collects.
As far back as 2005, the Copyright Board weighed in on this subsidy and stated, and again I'm quoting here:
Even the smallest of stations would be able to pay the tariff. Allowing large, profitable broadcasters to escape payment of the full Re:Sound tariff on any part of their revenues constitutes at best a thinly veiled subsidy and is seemingly based on no financial or economic rationale.
So radio acknowledges that they think it's important to pay for the communication right, and even the Copyright Board, the expert regulatory body that is tasked with reviewing all economic data before it sets fair rates, has stated that every station can afford to pay the full royalty rate.
This amendment would have no impact on any other part of the Copyright Act and would ensure that $8 million a year is injected into the Canadian creative sector at absolutely no cost to taxpayers or consumers.
Re:Sound is very supportive of the goals behind Bill C-11, particularly to generate economic activity and jobs in the creative sectors. We believe the two amendments we have detailed today align very closely with those goals, and we would be happy to take any questions.
The Chair Glenn Thibeault
Thank you, Mr. MacKay.
We will now start our first round of questioning for five minutes. First up is Mr. Braid.
Peter Braid Kitchener—Waterloo, ON
Thank you very much, Mr. Chair. Good morning. Thank you very much to all of our witnesses for appearing this morning and for your presentations.
Mr. Conway, I'll start with you. You explained in your presentation that you believe that radio stations shouldn't have to pay for the same digital piece of music multiple times. Could you explain to the committee approximately how many times today a radio station pays for the same piece of music, and then what would be different under Bill C-11 down the road?
President, Pineridge Broadcasting
First, we're charged with reproducing music, and as I stated in my presentation, it is the record labels that have set up the server. They moved from CDs about four years ago to a secure server. In fact, they set me up when they did.
Let me take you through it. They have a server. The server knows your typing speed or how you type something in, so only you can download something. I don't know why they did me. I guess it was just to show me how to do it. I have one particular individual who would go to the server for that station, get the music, download the music to that computer, and then it gets played back on that computer through our system on air. So there are no multiple copies of the music that is downloaded. Yet that apparently is what we're paying for in the various tariffs, and I just don't think that's right.