Canadian Heritage Committee on April 10th, 2014

[The Chair (Mr. Gordon Brown (Leeds—Grenville, CPC)), Conservative, Gord Brown]

Good morning, everyone. I call to order meeting 18 of the Standing Committee on Canadian Heritage.

We are continuing our study on the review of the Canadian music industry. We are honoured today in the first hour to have with us from the Société professionnelle des auteurs et des compositeurs du Québec, Pierre-Daniel Rheault, chief executive officer; from the Canadian Federation of Musicians, Mark Tetreault, director of symphonic services; and from Montreal through video conference, from the Guilde des musiciens et musiciennes du Québec, Luc Fortin.

We will start with Monsieur Rheault, for eight minutes. You have the floor.

[Pierre-Daniel Rheault, Chief Executive Officer, Société professionnelle des auteurs et des compositeurs du Québec]

Good afternoon, everybody. I would like to thank the committee for having us here today. If you don't mind I will switch to French, which is my mother tongue, and depending on how I felt when I woke up this morning, it might be a little shaky.

Songwriters or composers generally have no revenue for their work other than the fees collected for the reproduction and distribution of their works based on the traditional model—be it on disc, radio or television. With the poorly regulated advent of the digital economy, traditional royalties have dropped dramatically over the past few years.

However, the distribution of artists' work continues to increase. In light of this increased dissemination of works, coupled with a drop in revenue from traditional royalties, government support should definitely be much higher, given the clear lack of will to rectify this problem.

[The Chair, Conservative, Gord Brown]

Excuse me, sir, is it possible for you to slow down just a little bit?

[Pierre-Daniel Rheault]

Yes, but I will exceed my eight minutes.

[The Chair, Conservative, Gord Brown]

We'll be a little flexible for you. It's so that our translators can keep up with you.

Thank you.

[Pierre-Daniel Rheault]

Last year, MUSICACTION provided $400,000 in direct funding for all of French-speaking Canada. That money was used to compensate 380 songwriters. We can all count, and we understand perfectly well that average support of just over $1,000 a year per songwriter is far from being sufficient.

Let's imagine that elected members of Parliament had no base salary. Their main income would come from the reproduction of their parliamentarian work, and their reports would be published in a newspaper. A fee, as opposed to a tax, would be charged for their work and would go directly to them. Those fees would also exceptionally apply to any photocopiers used to disseminate private written material.

Now let's imagine that, one day, newspapers were supplanted by digital media that would quickly, gradually and thoroughly replace traditional newspapers, resulting in a sharp drop in publication revenue. The unthinkable would happen, and printed material would simply disappear.

Let's consider what would happen next. Those same members would vote to adopt legislation that would not apply the Copyright Act to those digital devices—which would replace photocopiers—thus eliminating the fees imposed on those devices. How many members would we have a few years after that debacle?

When the Canadian government refused to recognize modern media—smart phones, PDAs, USB keys and all other devices capable of reproducing thousands of works—and it also rejected the collection of fees, as prescribed by the legislation, for those new generation devices, it compromised all the hard-earned progress made over the years in terms of creators' fundamental rights.

The obvious technological evolution was unfortunately not taken into account. Even worse, it was ignored, and the consequences already are and will continue to be disastrous for creators who are bearing Canada's cultural diversity. If nothing is done soon to remedy the situation, the tremendous damage will be irreversible.

On a scale from 1 to 10, the government recognition and compensation for creators' work has gone from 6 to -2.

So here is our answer to the question asked by the committee. Government support for creators is clearly insufficient. When it comes to assistance for entrepreneurs, which is the second group in this first point, we welcome the government's renewed support and its willingness to invest significant amounts of money in the digital economy. This evolution will take over completely when it comes to the reproduction and distribution of works in a few years.

It should be pointed out that entrepreneurs' traditional income has decreased, despite the alarming increase in the distribution of the works produced. That drop in income is also carrying over to creators. Something must be done to restore significant value to our creators' works. We think a political will to remedy the situation is the first step in that process.

Regarding support for creators and entrepreneurs, we want to quickly highlight this growing and relatively new reality that is deserving of great vigilance today. That category should receive increased funding as soon as possible. The new generation of creators and entrepreneurs provide raw materials, and develop and invest in their own work. That's what we call an autoproducer.

Let's talk about the government funding allocation method. I will only make a quick comment on that. Huge amounts of money will be made available to the major industry players. However, entrepreneurs are increasingly demanding that creators not only give up their publishing rights, but also act as autoproducers of their projects. That means those creators—who are often songwriters, composers and singers—invest instead of entrepreneurs or jointly with them while giving up the rights to their works, including neighbouring rights. Based on that new reality, we are certain that government support to entrepreneurs must be accompanied by increased compensation for creators.

Providing support for companies is a positive thing. We welcome that. However, that support must absolutely be tied to fair compensation for creators.

Right now, the expression “achieving objectives through support” certainly applies more to entrepreneurs than to creators. When it comes to industry or entrepreneurs, the money governments are providing is still key to achieving results. When I say results, I mean the production of discs and shows. Once again, the money creators end up receiving is shockingly and dramatically insufficient.

If the objective is for creators to earn from their work an average of $1,000 a year—an amount directly related to government support—we should come back to our example of a member who is working independently and, ironically, we could say that the objective has been achieved. There is some bitterness in my tone here.

In closing, the government must recognize that stakeholders in the digital economy such as manufacturers or distributors do not all contribute equitably, legally and sustainably to creators' standard of living.

One of the initiatives the industry should consider without delay in order to counter the devastating effect of illegal music distribution is the production and release of a multimedia information package for children aged 6 to 12 years.

The new legal models for digital music are far from establishing value that is sufficient and fair in the eyes of creators. Music's value must be recognized and accepted by everyone in support of creators, so that they can be properly compensated for their work. Fees applied to any digital media used for reproduction purposes would constitute considerable progress.

We need the government to take into account the value added music brings to technology industries. This wealth must be shared more equitably to protect Canada's cultural diversity in the field of song, and the government should significantly increase compensation for creators.

Thank you for listening.

[The Chair, Conservative, Gord Brown]

Thank you, Mr. Rheault.

Mr. Tetreault, you have the floor for eight minutes.

[Mark Tetreault, Director of Symphonic Services, Canadian Federation of Musicians]

Good morning. My name is Mark Tetreault. I am the director of Symphonic Services for the Canadian Federation of Musicians.

As well, I've been the principal tuba in the Toronto Symphony Orchestra since 1986.

Thank you for the opportunity to speak to you today. I had the good fortune of being in Ottawa and performing last night at the National Arts Centre with the Toronto Symphony Orchestra.

The Canadian Federation of Musicians, the CFM, is the professional association for musicians in Canada. The CFM is recognized under the federal Status of the Artist Act as the sole bargaining representative on behalf of all musicians and musical performers in Canada.

The CFM is part of a binational association. We are the Canadian division of the American Federation of Musicians of the United States and Canada. The CFM office is located in Toronto and has 25 local chapters coast to coast across Canada and a membership of over 17,000 musicians. Our organization ensures that artists are paid not only for live performances but also for broadcast and digital media. We provide access to an excellent multi-employer pension plan for musicians.

I'm here today to address some issues of global concern to the CFM and then to discuss my sector of the music industry in particular.

The CFM fully supports the testimony of the ACTRA Recording Artists' Collecting Society, which asked the standing committee to recommend modernizing the private copying regime, improving broadcast royalty distribution procedures, and reintroducing income averaging for artists under Canadian tax law.

By strengthening the copyright laws across all media platforms, we will make great strides in ensuring that Canadian artists continue to be fairly paid for the use of their music and can ensure a standard of living for themselves and their families.

The CFM feels strongly that it can make unique and valuable contributions to the important consultations and discussions around copyright and royalty issues. The CFM asks that members of Parliament urge the government to sign and ratify the World Intellectual Property Organization's Beijing Treaty on Audiovisual Performances. The Beijing treaty outlines global standards recognizing the right of audiovisual performers to be fairly compensated for their creative contributions.

The recognition of performers' moral rights is equally critical. As performers, our public image is at the heart of who we are. Thanks to the Beijing treaty, performers will finally have the ability to protect their images and performances from being used in ways that they would never choose or agree to.

Canadian orchestras are a vital and important part of Canadian communities, large and small, in every corner of the country. They are economic drivers, creating jobs. Canadian orchestras spent over $175 million in 2012-13, with over 70% of these expenditures going directly to people in wages and fees. They are the artistic anchors of their communities, creating and enriching opportunities for civic celebration and recognition, from sporting events to Remembrance Day ceremonies. They are valued cultural partners, working with other organizations and institutions, and are an important part of our educational infrastructure. Orchestras are effective Canadian ambassadors to the world.

Symphony musicians are a unique workforce. The symphony musician is a highly trained skilled professional. The intensity of concentration is extreme, and the expense in training is comparable to educations in law, medicine, or business. Symphony musicians provide and maintain their own very expensive instruments. We are one of the very few industries where the worker is required to provide such expensive tools.

Symphony musicians are elite endurance athletes who often suffer injuries during their career. We rarely have extended medical benefits as part of our jobs and thus often have the burden of paying for physiotherapy, dental work, and prescription medications.

Unfortunately, symphony musicians in Canada are generally low-wage workers. Most are forced out of necessity to be cultural entrepreneurs. Canadian symphony musicians supplement their income by work as music teachers, performers in other classical ensembles, players in the recording industry, performers in other genres, artists in other disciplines, and as workers in other industries—such as union reps.

Some symphony musicians are forced to collect EI during the off-season. Recent changes to EI payments to seasonal workers have a serious negative impact on these musicians. The CFM would like to see these changes re-examined with respect to symphony musicians.

The cutbacks to the CBC have had a very negative effect on the symphonic industry. Far fewer of our concerts are recorded or broadcast. Having a strong national broadcaster meant significant income to musicians. It also meant that we could share our talents with all Canadians, no matter how remote their location, as well as across the border into the northern U.S.

Symphony musicians have been, effectively, frozen out of broadcast royalty payments, because we do not neatly fit the requirements to claim payments. There is a large pool of money, which consists of royalties for broadcasts of our recordings, which we cannot access because of the awkward and complicated system set up by the Copyright Board. We find this quite frustrating.

Canadian symphony orchestras are active in education. Performances are done for students in our venues and in the schools. One of the most successful new ideas in music education is El Sistema, an orchestral youth training initiative firmly rooted in two core ideas: that music is for everyone regardless of income and background; and that quality music education provides a head start in life and a model of community harmony. Orchestras from New Brunswick to Vancouver have established El Sistema programs, which provide daily after-school coaching and rehearsing, often to disadvantaged youth, leading to exciting performances and a sense of pride and accomplishment.

The range of outreach and educational activities by Canadian orchestras is quite remarkable. In the materials I am leaving with you, there is an article I wrote for our association's newspaper, the International Musician, that goes into more detail about these activities.

Canadian orchestras are recognized for their artistic excellence around the world, proudly displaying Canadian cultural achievement. We are ambassadors, showing some of the best of Canadian culture. I, myself, have been privileged to travel to many places around the world with the TSO. Our orchestra has partnered with business leaders looking to expand their markets or bring investment to Canada. These leaders travel with the orchestra and bring prospective clients to our concerts to show off the excellence of Canadian artists and to demonstrate that Canadians care about things that are important to the quality of life.

As l mentioned earlier, last night l was performing at the National Arts Centre. Being in that building reminds me of the celebrations in 1967 and the enthusiasm Canadians showed towards our arts and culture. In 2017 we will have our 150th anniversary. I believe this would be an excellent time to have cultural events across the country, reinvigorating our well-earned pride in Canadian arts. Orchestras could play an important leadership role in such events.

Thank you, once again, for this opportunity to speak to you. I look forward to answering your questions.

[The Chair, Conservative, Gord Brown]

Thank you very much.

Our next witness comes by video conference from Montreal.

Mr. Fortin, go ahead for eight minutes.

[Luc Fortin, President, Guilde des musiciens et musiciennes du Québec]

Good morning.

I want to thank the committee for having me here today. I also want to say hello to my colleagues from the Canadian Federation of Musicians and the SPACQ.

I am the President of the Guilde des musiciens et musiciennes du Québec—Quebec musicians guild—which partners with the Canadian Federation of Musicians. We also have the exclusive accreditation to represent musicians in Quebec under the provincial legislation on the status of the artist. Our association has 3,300 regular members and close to 500 members by permission.

I will basically talk about the modernization or reform of copyright in the digital era, and about funding allocation procedures to better support our musicians.

The digital boom has revolutionized the music industry. Music is accessible from anywhere on a broad variety of portable devices connected to wireless networks, most often at no charge to users. On YouTube, for instance, people can listen to anything for free, and musicians or right holders don't receive any compensation.

Unfortunately, music industry frameworks in Canada are not adapted to the rapid evolution of the digital era. The first victims are musicians, artists and creators.

If producers are complaining about a drop in their revenue following this digital revolution, you can easily imagine the devastating impact of that drop on artists themselves, who often receive only a tiny fraction of phonogram and album sales.

We at the Quebec musicians guild are regularly faced with our members' unfortunate socio-economic situation. We estimate that one-fifth of our 3,300 members can truly live from their music consistently. We are including education as a source of revenue.

One of the reasons behind the decline in revenue was Bill C-32. Unfortunately, that legislation prematurely put an end to the private copying levy. Today, private copying is done by more Canadians than ever before. Musical works are being copied to USB keys, the SIM cards of smart phones, iPads, iPods, and so on, without any money going to collectives. This is a gross injustice, and the Canadian government must set things right. A royalty paid to artists is not a tax, and Canadians are fully aware of that.

In addition, Internet service providers must absolutely contribute because they have a substantial revenue stream from Internet subscriptions and bandwidth sales, which are in part attributed to Canadians' amazing appetite for downloading and streaming musical works. However, the works broadcast on the Internet bring almost nothing to creators.

It's not normal for songs heard thousands of times, especially on YouTube, to make no money. That platform enables people to listen to pretty much any musical work for free. Internet users often post songs online without consulting the authors or associating the video with them. People make their own montage using images. The Copyright Act should absolutely be modernized, so that everyone can receive their fair share.

Let's now talk about funding allocation. Producers receive assistance for operations and projects related to their business activities. Musicians do not receive that type of assistance, except in the case of specific short-term creation projects or the setting-up of certain short-term shows. Most of the funding goes to private production companies. Consequently, we have to work several jobs and live very precariously. That often forces musical artists to give up on their career fairly early. We depend on production companies and are often at the end of the compensation chain.

Many assistance programs are available for production companies, but that unfortunately does not enable our artists live from their art. Musicians are always paid at the end.

Subsidized companies do have enough money to hire employees, accountants, press agents, communications officers, and so on.

We think that the government must absolutely take into consideration the fact that artists also have to make enough money to focus on their art. Grant allocation policies should take that into account. I invite you to watch the excellent documentary series called Arrière-scène. The series was produced by Franco-Ontarian television station TFO and directed by Nicolas Boucher, a former guild member turned film producer. The documentary looks at the daily lives of Canadian musicians who tell the camera about the difficulties they have faced in their jobs and their frustration with the inequitable sharing of industry revenue.

For example, after revenue sharing, an album sold for $10 on iTunes may bring 75¢ to the group of artists and creators involved in its making. You will understands that, with sales splitting, hardly at any revenue can be made through that type of sharing without additional fees being applied to Internet broadcasting.

As for the funding of company projects, all album projects should ensure regular earnings over the length of the undertaking. The policy whereby an artist starts receiving royalties only once production costs have been covered is unacceptable. Royalties should be paid as soon as the first album has been sold, and the subsidies provided should take that into account. I also don't think that waiting until all production costs have been covered is a good way to pay providers. Therefore, musicians should not be subject to that policy.

Artists' associations have also established minimum standards of pay, and the collective agreements that are negotiated guarantee a social safety net for artists and protection in case of litigation. Those contracts should absolutely be submitted in company usage reports to the organizations that subsidize them.

How can it be ensured that artists and musicians have been paid properly if there is no oversight in that area? The best form of oversight is the submission of contracts approved by artists' associations. This is a key point that should absolutely be dealt with.

Thank you for your attention.

[The Chair, Conservative, Gord Brown]

Thank.

Ms. Mathyssen, you had a question.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Yes, thank you, monsieur le président.

I wonder if it might be possible for the analysts to produce an interim report of the testimony that we've had so far because I've been looking back at some of my notes and it's a massive amount of information. I thought, perhaps, if we could have an interim report before we go away for the two weeks, it might make it more manageable at the end.

[The Chair, Conservative, Gord Brown]

We'll talk to the analysts and we'll get back to you later on.

[Irene Mathyssen, NDP, London—Fanshawe, ON]

Thank you. I appreciate that.

That's very kind.

[The Chair, Conservative, Gord Brown]

Thank you.

We will now go to the questions and Mr. Weston will have the floor for seven minutes. As always, when we have some of our panellists by video conference, I ask that you not forget our panellist who is with us through video conference. Thank you.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you very much, Mr. Chair.

Mark Tetreault, thank you for being here, as well as Pierre-Daniel, and also Monsieur Fortin.

Your description of musicians as elite athletes reminded me of a failed romance that I was involved in as a law student. My friend was a renowned cellist, who studied and taught at Juilliard, and I remember her parents grilled me on various concerts, which intimidated me to the point that I realized I was in the wrong area.

Anyway, thank you all for being with us.

I have three questions.

The first has to do with the role of technologies and fees. The second is related to education. As for the third question, I will ask each of you to give us ideas to improve legislation that applies to Canada's creators.

With regard to the first question, we have heard a great deal about changes in the technology world. Mr. Rheault, you are very passionate when it comes to sharing with creators. It seems to me that most of the issues are not related to fees, but rather to today's technologies. What can we do when it comes to this? We are limited in what we can do as legislators because the technologies are changing.

Here is my second question, which concerns education. What can we do with today's children and young people who are using the new technologies? Do you have any ideas when it comes to that?

Mr. Rheault, you can go first.

[Pierre-Daniel Rheault]

I will talk about an issue I went over quickly in my presentation—education.

Last weekend, I was told about how young children aged 12 to 15 months behave with an iPad.

They get the thing. I mean, after five minutes they know what to do. As an extension of that, when they're in front of a real book they try to turn the page by just surfing on the page.

That's Pavlovian conditioning.

They really get the point.

What I want to comment on, too, is that this technology hides the felon, if I can say that.

The technology hides the violation of rights. It's so impersonal. When something is downloaded, no one sees the victim.

There is no blood.

That causes a huge problem. People who know me know that I am very optimistic, but I don't think this problem can be resolved proactively. Legislative provisions will truly have to be adapted to these technologies, as was the case in 1920, when the first Copyright Act was adopted. Obviously, this backed us into a corner because people were seeing

recording as the acétate. They never saw what was coming. It's obvious.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Sorry to interrupt you, but I want to give Mr. Fortin an opportunity to answer.

[Luc Fortin]

I completely agree with Mr. Rheault.

Today's young people make up the future audience—12, 13 or 14-year-old music consumers. For them, there are no more CDs or cassettes. All they know is streaming or private copying on portable devices. Streaming is increasingly becoming the only option, with YouTube and iTunes being the main media involved. For these youngsters, music no longer has any value. It's something they can get for free or for a very small amount of money. Since their parents often pay for it, music has even less value for them.

They buy one song for 99¢. In addition, they don't buy many albums because they cherry pick. They choose one or two songs from the album they like, and the rest may not sell. Even the idea of an album is starting to disappear.

One of the ways to avoid such an outcome is to rebuild the value of music by bringing artists closer to the general public. In Quebec, we have realized that young people were much more embarrassed to copy the music of a local artist they knew and saw on television regularly than the music of foreign artist, since that makes it more personal.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

I have to interrupt you. I am surprised that the issue has more to do with education than with legislation.

Monsieur Tetreault, do you have something to add on this?

[Mark Tetreault]

I agree that the problem is largely with education in that our youth are not taught the value of intellectual property because of the ease of copying and transferring this material. They seem to have the belief that we create a product and then we're done with it, that we aren't expecting any revenues for royalties. So if somehow the youth were educated as to how artists are paid, the royalty aspects of it, and that the free distribution of intellectual property is taking money out of the pockets and food off the table of artists.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

So if you each had one idea for us, what would it be?

Mr. Fortin, you can answer. You have 20 seconds.

[Luc Fortin]

I think we absolutely need to go back to the concept of private copying in a broad sense, so that any media that makes it possible to copy a musical work would be subject to a royalty regime. By “royalty”, I mean money that goes to artists. It's not a tax. In addition, Internet service providers should do their part, like radio or television stations.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

Mr. Tetreault, did you want to add anything?

[Mark Tetreault]

I would hope that the government would support educational initiatives that give youth a proper understanding of how artists are compensated through the royalties.