Bill C-32 (Historical)

Copyright Modernization Act

An Act to amend the Copyright Act

This enactment amends the Copyright Act to
(a) update the rights and protections of copyright owners to better address the challenges and opportunities of the Internet, so as to be in line with international standards;
(b) clarify Internet service providers’ liability and make the enabling of online copyright infringement itself an infringement of copyright;
(c) permit businesses, educators and libraries to make greater use of copyright material in digital form;
(d) allow educators and students to make greater use of copyright material;
(e) permit certain uses of copyright material by consumers;
(f) give photographers the same rights as other creators;
(g) ensure that it remains technologically neutral; and
(h) mandate its review by Parliament every five years.

[Ed Fast, Conservative, Abbotsford, BC]

I'd like to first of all address something that was raised by Ms. Lavallée. She didn't really give you an opportunity to comment extensively on that.

As you know, this bill moves us to legitimize more of what users do every day, whether it's time-shifting, format-shifting, mash-ups, and of course fair dealing, the education exemption. Ms. Lavallée—and I'm going to paraphrase her because I don't have the direct translation here—said that everyone agrees that it's a poor signal to send out if we expand fair dealing to include education.

There are some who have articulated that view here at committee. It has been a minority view, certainly not everyone. In fact, my impression is there has been overwhelming support for expanding fair dealing to reflect the realities of today's world—not only to reflect those realities but to ensure that Canadians have the ability to expand knowledge, to build on knowledge.

Perhaps you could comment. You spoke generally favourably of the educational exemption contained in Bill C-32. I'm assuming you do support it. Perhaps you could mention some of the benefits that we'll derive from fair dealing that includes an education exemption.

[David Fewer]

I have a quick comment on the user-generated content exception.

I don't have an issue with what you said. They all seem to be good responses to the phenomenon. The major point is that you don't want to have a situation where children at home are liable for copyright infringement because they're doing a version of a favourite song and uploading it to YouTube.

If we're going to look for a compensation mechanism, let us then look for one. But the worst system would be one that says it's an infringement and that our children are copyright infringers and liable for statutory damages for that activity.

This is a good thing. We should find a way to make it happen. Bill C-32 is one way to make it happen.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

First, I think you are referring to user-generated content, which means that, under Bill C-32, consumers would be able to use artistic works without permission from and without compensation to the author. I must tell you now that, in France, SACEM, which defends the rights of songwriters and music publishers, has negotiated royalties with YouTube. It's sort of the same system you were talking about earlier.

When radio started, authors complained that their works were being used without compensation, and then radio stations ended up paying royalties. Similarly, YouTube is agreeing to pay royalties to collectives that ask them to pay, and that's great. Of course, consumers will have access, but eventually someone will have to pay. When consumers listen to the radio, they don't pay, but the radio station does. So the system is the same. We cannot give works to consumers by telling them: “You can use them without anyone paying royalties”. The system must absolutely rely on principles, such as making things available to the public—that's how it is with radio and it may also be like that with YouTube—so that someone pays the creators.

I personally think that this might be more obvious in French than in English. In English, you talk about copyright, which means the “right to copy” whereas, in French, we talk about droit des auteurs, meaning “the right of authors”. People are very jealous of Quebec's copyright system. We have a star system that works really well. We love our artists and we encourage them. It is not just a star system, but it is also an ecosystem that works very well for consumers, creators and distributors.

You mentioned the education system. In his brief, I think Mr. McOrmond compared royalties and copyright in education to government subsidies.

In Quebec, the royalties paid to authors by the education system work very well. No one has complained so far. Not only does the Minister of Education not complain, but she is criticizing Bill C-32 for trying to exempt the education sector from paying copyright. Everyone in Quebec thinks that's the wrong signal to send to young people. Young people have to be aware when they use creative works. There is no access problem in Quebec and, I would suspect, in the rest of Canada, but there is a problem with respecting artists and their work. It is about compensating them. If we want to wake up and still have artists and a vibrant, interesting and rich culture, the least we can do is pay the people who are responsible for that creativity, meaning the artists.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

I'd like to begin by thanking both of the individuals who have come here today.

I'd like to start with Mr. Fewer.

First of all, I was certainly interested in hearing your views on the circumvention for non-infringing purposes of TPMs. That's a point of view that I share.

I would like to talk about a few other things that you didn't have a chance to talk about. You alluded to statutory damages, but I'd like to know what your opinion is of the statutory damages proposed in Bill C-32 as it is currently written.

[Russell McOrmond, As an Individual]

First, I offer my condolences to Gordon Brown.

If you have my brief, you actually have a partial transcript of what I'm about to say.

My name is Russell McOrmond. I'm the policy coordinator for CLUE, the Canadian Association for Open Source. I'm the co-coordinator of an organization called “Getting Open Source Logic INto Governments”. I'm the host for Digital Copyright Canada, which uses the domain name billc32.ca. I'm an independent software author and a technical consultant.

I coordinate a few petitions that have been tabled in Parliament. There's the petition for users' rights, which has had nearly 3,000 signatures tabled, and a petition for information technology property rights, which has had nearly 400 signatures tabled.

But I am here today as an individual. I do not envy you the job that is in front of you. Copyright is as complex as tax law and, as is the case in tax law, there can be both too little and too much. I have often said that copyright is to creativity as water is to humans: too little and you get dehydrated and die, too much and you drown and die.

A bill dedicated to the ratification of the 1996 WIPO treaties would have been complicated enough. The bill before you is an omnibus bill that includes many unrelated topics and it is unlikely you will have the time to adequately study the impacts of all of these topics.

Even though the bill has been passed at second reading, topics that are outside the bill have continued to be included in presentations and questions. I have created a set of frequently asked questions and answers at billc32.ca/FAQ. While I offer commentary and alternatives to many of the policy positions within the bill as well as topics outside the bill, today I must focus on my primary concern, which is information technology property rights. I have some props that I use. I've been doing this presentation for a few years.

I'm holding up four things. In one hand, I'm holding a DVD, which represents two things: some copyrighted content and the tangible medium it is stored on. These two things can have two different owners, and the rights of each should be respected. In my other hand, I hold some digital technology. It's my Google Nexus One phone, which represents hardware and software. Again, these can have two different owners: the copyright holder of the software and the owner of the information technology.

While you have been told that technical measures are entirely a matter of copyrighted content, real-world technology works quite differently. It is not possible to understand the impact of Bill C-32 in real-world scenarios without a better understanding of that technology.

On the content side, it is possible to encrypt content such that it can be accessed only if you have the right keys. I have here one example of an access control.

I discuss in my Bill C-32 FAQ how access is a novel concept in copyright, and how protecting access and access controls effectively creates an opt-out of the rest of the Copyright Act for those who make use of access controls. I also discuss how legal protection for access controls in copyright law can be abused to circumvent the traditional contours of contract, e-commerce, privacy, trade, and consumer protection and property law.

Content cannot itself make decisions such as whether it can be copied or how many times, or any of the other things that copyright holders might like to encode in their licence agreements. Content alone cannot make decisions any more than a paperback book is capable of reading itself out loud. Any decisions that are made are encoded in software that runs on computing hardware. What are often called “use controls” in the context of copyright are nearly always software running on computing hardware.

It is critical, therefore, to think not only about the interests of the copyright holders of content, but also about the interests of software authors and the owners of information technology.

I am a software author. Before copyright can offer me anything, I need to ensure that the owners of technology have the right to make their own software choices. If they are not able to make their own software choices, how can they possibly choose my software? This means that IT property rights, including the rights of owners to make their own software choices, are far more important to software authors than copyright.

Let's talk about some real-world technology examples. This DVD here has an access control applied to it--notice that I said “access control”--called “the DVD content scrambling system”. The keys for this type of digital lock are managed by the DVD Copy Control Association. It is important not to let the title of the organization confuse you into thinking that this is a copy-control or a use-control technical measure, as it is not. The DVD Copy Control Association is an association made up of major studios, major hardware manufacturers, and major software vendors. This organization negotiates what features will be allowed in hardware and software that will be given keys capable of unlocking the access control applied to the content. It is the contractual relationship between these major vendors--not copyright--that this access control is protecting.

If you are a competitor of the members of the DVD CCA, or for any reason cannot sign on to their contractual obligations, you will not receive the keys to encode your own content or decode content. It should be reviewed by the Competition Bureau to determine whether such contractual obligations should be allowed. Tying the ability to access content encoded with DVD CCA keys requiring a DVD CCA-approved access device seems like a textbook example of “tied selling” under section 77 of the Competition Act.

Any time you hear the word “lock”, you must always ask who manages the keys. It is not the owner that is in control but the entity who manages the keys. In most real-world examples of technical measures, copyright holders do not control the keys to locked content. They are sometimes but not always given the choice about whether it is locked or not, but not much control beyond that. In the case of locks on hardware and software, the keys are specifically denied to the owners of the hardware. The purpose of the lock is to lock the owner out of what they own.

For no other type of property would this be considered. We would never legally protect non-owner locks to all guns in a country where many are uncomfortable with the mere registration of long guns. We would never legally protect non-owner locks on our homes, alleging it was necessary to protect the insurance industry from fraud. We would never legally protect non-owner locks on our cars, allegedly to ensure that automobiles could never be used as a getaway vehicle.

[David Fewer, Director, Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic]

Merci beaucoup.

CIPPIC is the Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic. We are a technology law clinic in the Faculty of Law, housed in the Centre for Law, Technology and Society at the University of Ottawa. Our mandate is to advocate for balance in policy- and law-making processes and to provide legal assistance to under-represented organizations and individuals on matters arising at the intersection of law and technology.

CIPPIC has participated in policy debates around copyright since our founding in 2003, with a view towards ensuring Canadian copyright law maintains a balance among the competing interests of authors, owners, distributors, consumers, downstream creators, and innovators.

Thank you very much for inviting me here.

In practice, our advocacy has involved us in representing consumer interests and also creator interests on various files. For example, some of our current work includes acting with the Documentary Organization of Canada, the documentary filmmakers, in assisting them in preparing guidelines for working with fair dealing. We work with Canadian independent authors on the Google books settlement, which is a large class action that involves authors all over the world and is taking place in the United States. We are working with the Songwriters Association of Canada in supporting their efforts to get compensated for unauthorized peer-to-peer file sharing.

These efforts have provided us with I think a nuanced view about copyright. I'm hoping that view informs your deliberations.

I'd like to begin by complimenting this government on Bill C-32. This bill demonstrates to me that the government was in fact listening to all Canadians during the copyright consultations of the summer of 2009. The bill represents what in my view is a real attempt to accommodate multiple perspectives on copyright. That's not something that can be said about every copyright bill that we've seen in recent history.

I will organize my brief comments around three principles and argue that where this bill succeeds, it vindicates these principles, and where it fails, it violates them.

First, copyright ought to reflect the reality of Canadians' everyday ordinary dealings with content. Bill C-32's time-shifting, backup, and private copying exceptions respect this principle. The bill has finally legalized the VCR, something that took a very long time to do. It also has legalized the iPod and other consumer technologies.

This principle is also consistent with Bill C-32's recognition that parody, satire, and educational fair dealings--“fair” dealings, dealings that are “fair”--ought not to infringe copyright, and that user-generated content is a celebration of creativity, not a threat to it.

Where the bill of course violates this principle is in its anti-circumvention provisions, the most controversial and, in our submission, unbalanced portions of the bill. As the provisions are drafted now, many, many legal activities would become illegal merely because one has to circumvent the digital lock to do it.

This has the perverse effect of locking many creators away from the content they need to create. Consider documentary filmmakers: how do they source content behind a digital lock? News organizations: what happens to the six o'clock news in the future when more and more content goes online, goes digital, and goes behind digital locks?

Why on earth are we making the lives of these creators and these organizations more difficult? CIPPIC advocates permitting circumvention for non-infringing purposes.

The second principle is that copyright enforcement ought to be directed at actors that destroy wealth and undermine creativity, not at children, not at downstream creators and innovators, and not at public institutions like libraries, schools, archives, and museums. In short, copyright litigation should never become a business model in Canada.

Mass litigation against consumers and small businesses is an abuse of our publicly funded judicial system. These are taxpayer resources we're talking about.

Our copyright legislation ought to provide incentives to engage consumers through innovation in the marketplace, not through litigation. Accordingly, CIPPIC supports Bill C-32's reforms on statutory damages, which seek to do just that.

These reforms could go further. I don't understand why we have statutory damages that include in their target public institutions like libraries, museums, or archives. These are organizations that operate in the public interest. They ought to be free of the coercive influence of statutory damages.

Similarly, CIPPIC endorses Bill C-32's efforts to give rights holders the tools to discipline bad actors who seek to profit through active promotion of piracy. Such laws are technologically neutral and do not confuse digital infrastructure with the promotion of piracy.

Third, copyright ought to recognize the full range of creators and innovators that participate in Canada's cultural and economic life, and CIPPIC is supportive of Bill C-32's recognition of this reality.

Consider the ISP liability and search location liability provisions. The bill's treatment of these entities, for example, recognizes the value of content-neutral technology to Canadians and so provides incentives for continued investment in innovation.

The bill also offers particular expansions of creator rights that serve the public interest. For example, CIPPIC supports Bill C-32's creation of moral rights to performers.

Similarly, CIPPIC is supportive of much of the treatment given photographers under the legislation, but not all of it. One area in particular that we have a great concern around is the elimination of the commissioned photograph rule. This is a provision that hasn't received a great deal of attention before this committee, and I think it deserves some attention.

Right now, the law is that we all enjoy copyright in the photographs we commission. These are our wedding photos, our baby photos, our graduation photos, and our anniversary photos, these kinds of things. That accords with our reasonable expectations. We've hired the photographer. We've created the occasion for which the photographs are taken. Our expectation is that we'll own the photographs, and that includes the copyright in the photographs.

Under Bill C-32, unfortunately, this rule is reversed. Now, a consumer who wants to own copyright will have to negotiate for it, but unfortunately, most consumers just aren't sophisticated enough. They don't know that copyright is an issue. Their legitimate expectation, their reasonable expectation, is violated.

They don't know that it's an issue they now have to bargain for, so they won't bargain for it, and then mischief will arise. This is the single most privacy-invasive, anti-consumer portion of the bill and is one that CIPPIC would like to see addressed.

[Paul Larche]

Several rights holders have emerged over the last 10 or 11 years that keep adding to what was already being paid. You're right, the output has always been the same. As I said before, I was paying 3.2%, and now I'm paying just under 9% in various rights. Various collectives have come forward and have gone to the Copyright Board and have argued that they should be getting more money from the broadcasters, just as our colleagues are over here, and those fees have passed.

This particular one--the one we're talking about today that is in the copyright bill, Bill C-32, which we wholeheartedly believe in and think should pass--was recognizing an unfairness that wasn't there before.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I thought Mr. Rafferty was on the right track here.

Gentlemen, thank you for being here. I think you've have articulated what millions of consumers across Canada know, and that is when they buy a CD, and pay money for it, they should be entitled to transfer that to their iPod, their iPad, their desktop through Apple TV, or any other medium they are using for personal use, BlackBerrys or whatever. They understand that when they have paid for it once, they shouldn't repeatedly have to pay for it again, when they transfer it.

Somehow my Liberal, NDP, and Bloc friends don't get that. They want to impose on your industry a different standard...that our consumers understand. This act actually goes that extra step and says to consumers, “You know what you've been doing in the past anyways? You understand what's involved. We're going to actually make that legal so you can transfer from one medium to another, provided it is for your personal use.”

Now, you were present when Mr. McTeague made a statement that I will try to quote exactly. He said there was “nothing for creators” in Bill C-32. I was here on Tuesday, two days ago. We had the Canadian recording industry represented here. They told us to please pass the bill, because it creates new protections for creators. They asked to please get this passed as quickly as possible.

They went further when Mr. Angus from the NDP tried to provoke them into making a big deal out of the removal of ephemeral rights, making sure there wasn't a duplication of payments to broadcasters. The representatives from the recording industry said, listen, our house is burning down. The solution is not ephemeral rights. There is a much bigger picture to it. They said that what is in the bill right now goes a long way to establishing more robust protection for creators.

There is a suggestion here that somehow creators are losing revenue. Yet some of the evidence we've heard is that most of the money that comes from reproduction payments doesn't go to the creators at all. Most of it goes to other parties. Can you comment?

[Paul Larche]

Yes.

Private broadcasters are pleased with Bill C-32, and we're hopeful that this committee will work together to pass it.

I thank you for the opportunity.

[Ross Davies, Vice-President, Programming and Operations, Haliburton Broadcasting Group Inc.]

Good afternoon. My name is Ross Davies. I'm the vice-president of programming and operations for Haliburton Broadcasting Group Inc., based in Toronto, Ontario.

I'd like to thank you for inviting us to speak here today.

I am a life-long broadcaster. Having followed in the footsteps of my late father, I grew up in this business. During my career I've held key programming positions in Canadian radio. Like most people in broadcasting, I started at the ground floor, working in various tasks in the programming area, which included on-air announcing, music programming, and program management.

I spent over 20 years at CHUM Limited. I was fortunate to ultimately advance to the position of vice-president of programming for CHUM Group Radio, responsible for all its radio stations across the country.

I am the former vice-president of programming for Astral Media Radio GP, and I spent two years in the satellite radio business helping to launch XM Satellite Radio in Canada, in 2005.

I've also operated my own broadcast consulting firm representing a number of clients in Canada, including Standard Radio, Maritime Broadcasting, and Haliburton Broadcasting.

I am the past president of the Ontario Association of Broadcasters. I was the inaugural chair of the Radio Starmaker Fund and the former first vice-president of the Canadian Academy of Recording Arts and Sciences, CARAS. I still remain a member of MusiCounts, the music education committee for CARAS, and I once again sit on the board of directors for the OAB.

My position with Haliburton Broadcasting has brought me full circle in the radio business. After many years in the corporate office, I have returned to true grassroots radio, spending my days hand in hand with the people in our company, making our radio stations compelling, entertaining, and relevant to each of the communities we serve in Ontario. It has been a remarkable experience for me to once again see first-hand how vital local radio is in this country.

Haliburton has 18 radio stations, located in communities throughout north, central, and southern Ontario, reaching thousands of listeners each day.

Each year, for the past five years, our company has produced a new CD featuring up-and-coming local artists from our listening area. Virtually all of these artists are without a record deal. Our Moose Trax CD features 10 to 12 local artists and their songs. Not only do we promote the availability of this CD to the public for purchase, we also feature the songs on all of our stations, providing exposure throughout Ontario.

As my colleagues have said to you today, we support Bill C-32. Copyright reform is necessary and urgent, and we urge this committee to pass this bill.

Local radio is the strongest marketing tool for Canadian artists and music. This role needs to be recognized by government and the Canadian music industry.

Local radio is one of the most important and influential media today as it relates to local and community matters.

We understand paying to broadcast the music, but it's not fair to pay five times for the same thing. The cost of copyright has gone up 500% since 2001. This is endangering our business. In fact in some of our smallest radio markets, the reproduction tariff obligation represents the difference between being able to keep our stations on the air or not.

The bottom line: local radio matters to Canadians. It needs to be supported, and we need the broadcaster exception to stay in Bill C-32.

I'm going to leave you with some examples of direct contributions that broadcasters make within their own communities to local events and initiatives supporting the music industry, nurturing community interest in musical artists.

Here are some of the many music industry initiatives the CAB radio station members have supported this last year: the Winnipeg Jazz Festival; Kitchener-Waterloo Oktoberfest concert series; the City of Pembroke music festival; the Waterloo Region District School Board, for purchase of new instruments and sheet music; the Mariposa Folk Festival; RNC Media-Antenne 6 bursary program, to support students from the journalism program of Collège de Jonquière; the Western Canadian Music Awards; Les Rencontres de I' ADISQ; North by Northeast; MusiCounts, the music education program from CARAS; and FanFest at Canadian Music Week.

Private radio makes a real and substantial contribution to Canadian artists. The broadcaster exception in Bill C-32 will ensure that we can continue to do so.

Thank you.

[Guy Banville, Radio Consultant, As an Individual]

Good afternoon. My name is Guy Banville. For 37 years, my career has focused essentially on my role as a program director at radio stations in Quebec and France. Whether in the dance music format of the 1980s, the RockDétente format that I created with an amazing team in Quebec in 1990, the national program of the 190 radio stations in the Europe2 network in France, or the Quebec radio stations of the RNC Media group in recent years, I realize that the design of all these radio offerings to date has been indissociable from the development of Quebec artists.

I know that you've heard a lot about Quebec artists, but perhaps a little less about Quebec broadcasters. So I thank you for giving us the opportunity to appear before you today to add the voice of Quebec broadcasters to the discussion.

I'm used to saying that record producers are gardeners, that artists are flowers and that radio stations are perfume makers. We like the flowers we select, and we offer them to our listeners, who sometimes, even very often, go out and buy the perfume. We pay a portion of our incomes to the gardeners.

With its contribution to the development of Canadian content and its copyright royalties, radio takes part in the artistic development of Quebec artists. Its contribution is not always quantified, such as when it broadcasts promotional interviews or sponsors shows and festivals. In Quebec, 65% of what we broadcast is francophone music, mostly Quebec music. That gives you an idea of the enormous presence of Quebec artists on our airwaves.

Today, Quebec radio is facing major challenges, and those challenges are the same for large and small radio stations alike. I'm going to name two.

First, Quebec radio must invest extensively in technological tools in order to prepare for the migration of content to the new digital platforms. It also has to deploy considerable resources and money to develop radio hosting talent because we believe the future of radio depends on the human voice. After all, that's what differentiates us from other music platforms.

However, radio personalities, that is to say radio hosts, who we think are also artists, have to develop unprecedented technological adjustment ability. In addition to communicating well on air, they must, for example, be agile in their use of social media and digital archives. In view of these challenges, we fear there will be a significant increase in our production costs. That's part of our situation. In view of the fact that the number of radio services based in Quebec is higher than the number of Quebec operators, any increase in copyright royalties would result in a net outflow of money from Quebec to international recipients. I understood what was stated earlier.

Quebec broadcasters, both big and small, support Bill C-32. We believe this bill represents a serious step toward the adoption of a sensible copyright system in the Internet and digital technology era. The current Copyright Act is obsolete and impractical in the digital economy. From the broadcasters' standpoint, it creates a climate of uncertainty at a time when we are improving our services. It also creates numerous royalty levels for what is essentially a single activity, music broadcasting.

In many industries, users of copyright-protected works are required to make copies, given the various digital technologies currently in use. Copies made by broadcasters are simply an incidental factor in the process of broadcasting music. Including an exemption for reproductions made by broadcasters acknowledges their incidental and technical nature.

The amendments being proposed by broadcasters are consistent with the general aim of Bill C-32 to limit royalties relating to a number of technical processes, such as the provision enabling consumers to record programs for later listening or viewing, which is essentially an exception to the broadcaster's right to fix its signal.

Broadcasters support an approach based on the principles for the adoption of exemptions for incidental reproductions. Broadcasters support Bill C-32. Quebec broadcasters support Bill C-32.

I'm going to ask Mr. Ross Davies to continue.

[The Acting Chair, Conservative, Maxime Bernier]

Good afternoon. Welcome to our guests. We'll now continue our meeting on Bill C-32.

Today we're pleased to have the radio consultant, Mr. Guy Banville, testifying as an individual, and Mr. Paul Larche, president of Larche Communication Inc. Thank you for being with us. We also have Mr. Ross Davies, vice-president for programming and operations at Haliburton Broadcasting Group Inc. Thank you for being with us.

Every participant will have five minutes to make a presentation. Then committee members will be able to ask questions.

I will give the floor to Mr. Banville for five minutes.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Thank you very much, Mr. Chairman.

Welcome to you all. I'm pleased to welcome you here this morning.

First of all, I want to tell you that I read your briefs in full, particularly yours, Ms. Courtemanche, from the Canadian Association of Broadcasters.

I read it carefully and analyzed it. I saw that you said it was essential that Bill C-32 be adopted. The Bloc québécois also believes that passing a bill designed to modernize the Copyright Act is essential, after 15 or 16 years of an old model that no longer corresponds to today's habits and which is not suited to the Internet or the digital universe. We have to change that act as soon as possible, but the bill must nevertheless be balanced. You say it's essential to pass it. I entirely agree with you.

You say the radio stations and broadcasters generally are enriching agents in our society. You're entirely right. You're important for the Canadian and Quebec economies. You have an immensely important role in the star system of Quebec and no doubt of Canada, which I know less, and I apologize for that. You are brilliant business people who are successful. Revenue of $6.58 billion isn't nothing. We congratulate you on your profits of $1.5 billion.

You say you represent 600 radio stations and 10,500 employees, to whom you pay $612 million. You're enjoying good success, and we're proud of that. We encourage you to continue. You're having major success and, no doubt, minor failures, like all the major industrial sectors.

We could discuss the principle of the $21 million you're asking not to pay. We could do that. I have arguments, whereas you say it goes to foreign multibillionaires. It should not be forgotten that there is reciprocity. Other countries pay royalties to our artists. You say the small radio stations bear an incredible burden. We know they have to complete a form every month and send five cheques. I don't want to go back over each of those arguments, but I want to talk to you about the principle of Bill C-32 which is unbalanced.

Your approach, your testimony and your brief are the perfect illustration of that. There are others, of course, but what you're saying about this is one of the best examples we can cite. You pay $21 million in royalties for what's called ephemeral recording and you don't want to pay for that. That's not in Bill C-32, and you're quite pleased about that. That $21 million amount inflates your profits, which are already respectable, and you want to take that money away from the artists, the crafts people and the people who will be making other cultural productions and artistic creations. That makes no sense. You're one of the examples, but we could cite others, for the $126 million that's taken away from artists.

I'd like you, Ms. Courtemanche, and anyone who wants to speak, to talk to me about the principle of this bill which is unbalanced in favour of the industry and against artists, as you've just demonstrated.

[Mike Keller, Vice-President, Industry Affairs, Newcap Radio Inc.]

Thank you, Brad.

My name is Mike Keller. I'm vice-president of industry affairs at Newcap Broadcasting. I've been working in the broadcasting industry, in both television and radio, for my entire career, starting in 1971, at MCTV in northern Ontario, then at Baton Broadcasting, CHUM, and now Newcap Broadcasting.

I'm currently on the board of directors of the Canadian Association of Broadcasters, and I've held positions on the boards of the Bureau of Broadcast Measurement, the Television Bureau of Canada, and the Radio Marketing Bureau.

Newcap is an Atlantic Canada success story. It now has the second largest complement of radio stations in Canada--75--serving 56 communities, from large cities, such as Ottawa, Edmonton, and Calgary, to tiny villages, such as Springdale, Newfoundland, and Blairmore, Alberta. Over 800 employees come to work at Newcap each day and make their communities better places to live. We are the largest radio operator in Atlantic Canada and the Maritimes.

As has been noted, I'm going to further illustrate the depth of contribution that Canadian broadcasters make to the music community in Canada. Broadcasters provide publicity and direct cash investments for musicians. This is done across the industry through such programs as the Big Money Shot in our Ottawa station, Live 88.5, which invests $500,000 worth of grants in Ottawa area artists every year. Through this program, Newcap Radio has already added 10 artists in full rotation and 100 artists in feature spins on its radio stations, putting unsigned Canadian artists on air alongside the world's most popular musicians.

We also have a program called Rock Star, in Calgary, that provides $500,000 in direct funding to local artists to help them tap into financial and management resources to bring their musical aspirations to the next level and beyond. The unique financial coaching, mentoring, networking, and on-air resources of these Newcap stations have enabled local musicians to realize their dreams of launching successful careers as Canadian recording artists.

Newcap is there every step of the way, from song writing to recording, album production, performance coaching, touring, marketing, and ultimately cross-Canada airplay, both in full rotation and as feature spins that put these unsigned artists next to the world's best recording artists.

Over a 10-year period, Newcap alone has contributed over $30 million in contributions to CCD, $5.7 million to FACTOR, $8.5 million to Starmaker, and another $16 million to local artists and initiatives.

In just the last year, private broadcasters as a whole contributed $51 million to CCD through programs like FACTOR, MusicAction, and the Radio Starmaker Fund. On top of these investments in local communities and artists, private radio broadcasters are also paying $64 million, which is growing every year, in copyright royalties to authors, composers, publishers, performers, and makers of sound recordings for broadcast. This copyright payment will not be affected by Bill C-32.

It has been said that granting the broadcaster an exception will mean that broadcasters will get a free ride. We think that contributing over $115 million to artists in a single year is hardly a free ride. We believe that we are doing an exceptional job in our support of Canadian artists. In reality, broadcasters are an essential catalyst for the success of artists. The broadcasting industry must remain healthy in order to continue to provide this tremendous level of support for Canadian artists.

Thank you for the opportunity to appear before you today. We are happy to answer any questions you might have.

[Sylvie Courtemanche, Chair, Canadian Association of Broadcasters]

Thank you for inviting us to appear before this committee to talk about this important piece of legislation.

I am here as chair of the Canadian Association of Broadcasters, an association that represents over 600 private radio stations across the country. We also represent the vast majority of television services in Canada. I am also vice-president, government relations, of Corus Entertainment Inc., one of Canada's leading media companies and Canadian content producers.

Copyright reform is necessary and urgent. Private broadcasters support Bill C-32. We believe this bill demonstrates a great effort on the part of the government to arrive at a balanced solution that provides something for everyone. We strongly support passage of this important piece of legislation.

Bill C-32 contains important clarifications of the broadcast incidental reproduction provision that recognize the unfair and unsustainable burden borne by broadcasters. We'd like to take this opportunity to explain to you why it is essential that this provision remain in the bill.

The proposed amendments to section 30.9 of the Copyright Act provide broadcasters with the right to operate their businesses in the digital economy without unfair and irrational duplication of their copyright liability. Some of you may remember that this exception was introduced in 1997 in the last Bill C-32. The very same collectives that have appeared before this committee appeared then and told the heritage committee:

Music publishers recognize that such copying [meaning radio's transfers of format] is integral to the operation of radio stations, and also realize that any publisher foolish enough to demand payment for such copying would likely find himself frozen out of the station's playlist in short order.

On this basis, an amendment to the ephemeral exception provision that effectively nullified the exception for broadcasters was introduced. Starting in 2001, the same collective who told the heritage committee it would be foolish to seek payment for incidental reproductions took advantage of the new statutory framework and sought and was granted a tariff payable by radio.

Today, radio is still paying that tariff to the music publishers, but at a higher rate. And radio is also paying two additional reproduction tariffs: one to the multibillion-dollar foreign record companies; and one of a much smaller amount, less than $200,000, to actual performers. This brings the total liability for something that all parties agreed should never be compensated to $21 million a year. We have heard many incorrect statements relating to the $21 million that the reproduction right is currently worth, but one truth is unequivocal: broadcasters make no money from the act of reproducing music content for the purposes of facilitating the broadcast of music.

We've heard members of this committee say that the $21 million would be carved out of income of artists. That is simply not accurate. We'd now like to explain to you how that $21 million actually breaks down.

It is important to understand how this $21 million is filtered through a complex collective licensing system that deducts large amounts for the overhead and legal costs of the collective society administering the tariff and for distribution to foreign record labels and publishing houses, before any of it ends up with the artists themselves.

Of the total $21 million, approximately $10 million goes to the multibillion-dollar foreign record labels. An estimated $1.1 million is deducted for overhead and administrative costs for the five collectives involved. Approximately $6.4 million goes to foreign rights holders, which leaves $3.5 million to be shared among the publishing houses, which are not necessarily Canadian, and the artists. We've provided the breakdown of this amount in our brief.

While the record companies and the publishing houses will tell you that the broadcaster exemption takes money away from artists, the truth is that it will take money away from multibillion-dollar foreign companies. In fact, the broadcaster exemption will make it possible to keep the money in the hands of 100% Canadian companies that invest substantially in their communities and in Canadian artists.

We want to emphasize that broadcasters are not opposed to paying for the communication right.

Private broadcasters were very pleased to see the inclusion of amendments to section 30.9 in Bill C-32. We were further pleased by the government's explanation that the intention of this amendment was to ensure that radio broadcasters would no longer be required to compensate copyright owners for making reproductions in the context of their operations. However, we believe the current drafting may not fully reflect the intent to provide a full exception to the reproduction right liability.

Our suggested amendments are highly technical in nature and designed to promote technological neutrality, minimize confusion, and ensure consistency with the rest of the provision as well as the Copyright Act as a whole. We will undertake to provide our proposed amendments to the entire committee.

The broadcaster exception is necessary. It will bring Canada in line with our international trading partners. Canada is one of a small minority of industrialized countries that still does not have a broadcaster exception. It will recognize the truly technical nature of the in-station reproductions.

Thank you for the opportunity to appear before you today.

I'll now leave my friends from Astral and Newcap to explain how broadcasters contribute to their local communities and help Canadian artists.