Evidence of meeting #6 for Bill C-11 (41st Parliament, 1st Session) in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was music.
A recording is available from Parliament.
Counsel, Regulatory Law, Bell, CHUM Radio
That's right, that they decide.
For example, it could be in a WAV file and our system may need it in an MP2 file. We have to make that conversion at each station.
Conservative
Dean Del Mastro Conservative Peterborough, ON
So the bottom line is that you're paying twice for the exact same product.
Conservative
Conservative
Dean Del Mastro Conservative Peterborough, ON
It would make sense to me that you pay once for the product and that the Copyright Board establish the value of that single payment. Is that what you're asking for?
Conservative
Dean Del Mastro Conservative Peterborough, ON
It makes a lot of sense to me.
Mr. McCarty, you talked about digital storage, and I want to speak about this for a minute. You said that digital locks have failed. But everything that underpins the cloud are technical protection measures. We can acknowledge, for example, that Netflix is a new way that people are consuming movies, and YouTube is a new way that people are consuming music.
My two nieces don't store anything. They're young, but if they want to watch Taylor Swift—and I've got to tell you, they watch a lot of Taylor Swift—they watch it on YouTube. They replay it and they replay it and they replay it. But they're not storing any of it. How will anything to do with “mechanical” impact on that when the next generation...?
Even me: I own hundreds of CDs, hundreds of DVDs, but I'm not buying any more of them. The reason I'm not buying any more of them is that I can access them very simply over the Internet, legally, and consume that product. I'm going to pay, as are, I imagine, most people in this room, in the not-too-distant future for access to digital libraries that will reward creators as part of the contract, but I won't have to store anything any more.
President, ole
Thank you.
I'm not sure whether that's a TPM question or not, but those are different uses of music that use different technologies that invoke different rights of ours. In a reproduction environment, it's using a reproduction right. In a streaming environment, it's using both reproduction and performance, but more performance than reproduction.
On the TPM side of it, I'm not against locks; I just think they've largely failed for music, and especially on the reproduction technology side.
President, ole
Right now, Firefox browser has a built-in StreamRipper. We have technology on our website to prevent people from ripping our streams of our music, including Taylor Swift, and kids get around it.
NDP
The Chair NDP Glenn Thibeault
Great. Thank you very much, Mr. McCarty and Mr. Del Mastro.
We will now go to Mr. Angus for five minutes.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Thank you.
This has been fascinating. I was at the Future of Music Coalition conference in Washington last year, and T Bone Burnett had a fascinating statement. He said that the value of recorded music dropped some 90% in a five-year period with the introduction of radio. The argument from radio back then was that they were giving them promotion. Until we monetized the stream of radio, the record industry was in a pretty deep hole. Out of the monetizing stream we created one of the greatest entertainment empires in North America and around the world.
Mr. McCarty, my colleagues seem to be hooked on the issue of the digital locks. You're saying that to have a market, we actually need to have a monetizing stream. It's not just about locking the content down. There has to be a monetizing stream so that what the artists are doing they are getting paid for. Is that where we need to be going?
President, ole
If I could, I'd like to segue into the broadcast mechanical for a second.
It has been said that it's double-dipping and paying twice. My neighbour, a guy named Chris, who works for one of the major broadcasters in Canada, has said that to me. He said, “I don't mind paying for music once. I just don't want to pay for it twice.” I said to him, “Chris, do you get a salary?” He said that yes, he gets a salary. I asked if he gets a bonus. Yes, if the company does well, he gets a bonus. I asked if he gets benefits. Yes, he does. I said, “Would you say you are being paid three times?” No, he wouldn't. He's saying that it all adds up to a fair compensation package.
The two different payment streams use two different rights. That's how we get paid. If people use our rights, we have a right to be paid. That's the only way to get paid. That's our entire business.
NDP
Charlie Angus NDP Timmins—James Bay, ON
I guess it is a question of fairness. We're not creating something new. This was adjudicated by the Copyright Board. The Copyright Board decided that this is a fair payment. My colleagues in the Conservative Party believe that it's all right to just erase a royalty payment, a royalty right that has been defined as something that is fair. They say that it's a tax.
I love radio. I love private radio. But I'm hearing them talking about double-dipping. I'm hearing this word “tax”, that copyright is somehow a tax on the consumer. My colleagues use that about the levy all the time. Now they are saying that this mechanical is a tax.
Mr. McCarty, I'm looking at the CRTC statistical financial summaries for radio. I'm looking at 1996, when their pre-tax profit margin was 1%. They were close to the bone. They came and they were crying about the hurt. I'm looking at 2009, when their pre-tax profit margin was 21.2%. They had gone from $8.2 million in pre-tax profit to $319 million in that period. What was it like in the music industry between 1996 and 2009?
President, ole
I think you could lay that curve out and put a mirror image going downward for the music industry.
NDP
Charlie Angus NDP Timmins—James Bay, ON
This is what we're talking about: What is fair? With the industry right now, we're seeing that they want to strike that $20 million. They want to strike the $30 million from the levy. That's an enormous hit to the bottom line.
I heard that it was only going to publishers. You're a publisher. How integral is the publishing system to actually maintaining the larger health of the music industry in this country?
President, ole
We're the R and D of the industry. When you say that it only goes to the publishers, approximately 75% of every dollar we collect goes on to the songwriter and the composer. We're a middleman, in that sense. It's a false impression to think that the money stops when we get it.
As for the idea that it leaves the country, that's how copyright works. It's a bilateral, international system. Most of our money comes from outside of Canada. If we stopped paying people who are from other countries, they would stop paying us, and the whole system would break down. Nickelback and Arcade Fire get most of their money from America, I'll bet. They should keep getting that money. The singer from Arcade Fire is American. Maybe we shouldn't pay him his Canadian royalties. It's just not a valid argument.
NDP
Charlie Angus NDP Timmins—James Bay, ON
Ms. Marrelli, on the issue of orphan rights, you've raised a really important point on the TPMs. Do you have language you could produce for us on making sure that we're not losing the great heritage or losing access to the heritage of photography in this country?
Special Advisor, Copyright, Canadian Council of Archives
I don't have any. We certainly can prepare something, if that's desirable.
Special Advisor, Copyright, Canadian Council of Archives
It's very important for us, obviously, because many materials now are coming into the archives that will be digitally locked, which will ensure the destruction of those materials over the long term. That certainly is going to be the case as we go long.
I can engage to prepare that language.