Bill C-11 Committee on March 1st, 2012

[Phil McColeman, Conservative, Brant, ON]

Part of the discussion also has been around how much actually.... I take it that the $64 million is royalties that are going to the creators, but the $21 million that has gone up 483%, how much of that is staying in Canada versus going offshore? And also, can you relate to us how much, from your experience, is actually getting to the creators?

[Gary Maavara]

We had a very interesting exposition on that in the panel before us. The gentleman from ole kind of made the off-hand comment about where the money goes. He started by saying that he pays out 75% of the money he gets. The other way to look at it is to say he takes 25% right off the top.

When you look at the $21 million, and in terms of replacing the $21 million, $6 million is gone before the artists even get a whiff at it. Then 85% of that money goes somewhere else. The Canadian artist is getting $21 million, less the $6 million, less the 85%, and then that's going to somewhere else, and presumably there's a label or somebody else who is going to slice another piece of that. The artists end up with nothing, effectively.

[Phil McColeman, Conservative, Brant, ON]

Effectively, of the $21 million that has gone up this 483%, the reality, you're saying right now, is that the artists get almost zero of that.

[Gary Maavara]

Yes.

Going to the question of international, in the United States radio stations don't pay this. A Canadian artist is not going to get anything from the U.S. Effectively, Canadians are paying for something that people in other countries don't, so this notion about internationalism is just wrong. We don't get any money coming in. There is no cross-border trade in this, because there is no mechanical right in the U.S. and other countries. They're taxing us, and meanwhile there is no money coming back.

[Phil McColeman, Conservative, Brant, ON]

My last question is to Mr. Glick, because I believe I'll be out of time, but how does safe harbour support cloud computing?

[Jacob Glick]

The cloud computing model, as you probably know, is the movement of computing services and resources from the desktop or from a system of computers within a corporate network to the public Internet. If the operators of those services don't have the confidence that the materials they're storing on behalf of somebody else can be stored by them at the discretion of that somebody else without triggering liability, then they just won't do it.

In other words, you have to have a certain level of immunity as the operator of a service on behalf of the end client. The end clients should be liable for whatever they're doing and whatever they're storing, but ultimately cloud computing is only going to work as a system of computing if the people who are operating and investing in the services have the confidence that those services themselves aren't going to come under attack by virtue of what their customers are doing.

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. Glick and Mr. McColeman.

We're now moving on to Mr. Regan for five minutes.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair.

I would like to begin by addressing my questions to Ms. Drouin and Mr. Chenart.

The fact that artists' incomes are declining is a concern to me. On the other hand, representatives of industries associated with the Internet, radio and so on say they are not the source of the problem. According to them, it is consumers who are making different choices and using these artists' music without paying for it. They say it is not their responsibility, and they are neutral. Consumers do not want charges to be levied on iPods, for example. You are proposing an expansion of the private copying regime, but clearly the public's reaction to that is very negative.

Do you see an alternative, a way of ensuring that artists receive a fair income, but without expanding the regime and without involving iPads, computers, and so on?

[Mario Chenart]

I do not know where the information you are telling me, that consumers are not open to this, is coming from. When the government itself is campaigning against that position, that takes up a lot of air time, and of course it becomes difficult.

In terms of the money circulating, I could not resist the temptation of reminding our colleagues that there are in fact reciprocal payments. There is money that comes into Canada. Last year, SOCAN collected more royalties from outside Canada than it collected inside Canada. Those reciprocal payments therefore have a value. The tariffs are set by a separate arbitration board which evaluates them and assigns the value. It listens to the parties and takes into account whether a repertoire is represented or not. That is therefore all taken into account already in the values to be paid.

[Geoff Regan, Liberal, Halifax West, NS]

The problem is that I only have five minutes. Could you give me a brief answer, please?

[Solange Drouin]

In any event, we will come back to the right of reproduction, or at least I hope so.

[The Chair, NDP, Glenn Thibeault]

Yes. That's fine.

[Solange Drouin]

To come back to your question, it is clear that, to us, the best option was to uphold the expansion of the private copying regime. You say that people do not support that idea, but certainly if you ask someone to pay a fee they did not have to pay before, they are going to refuse to do it at first. We all want to get everything free of charge. Consumers would like not to pay for their electricity, or the gas tax. If we listened to them, there are a lot of taxes that would not be charged. In that case, there would be no more income tax, either.

You also talked about providers who say they do not benefit from illegal business done on the Internet. Piracy does not use 100 per cent of the bandwidth, granted, but the studies we have done show that about 40 per cent is used for entertainment and a large part of that 40 per cent is used for piracy.

We have never even considered, if there were to be a royalty or compensation to be paid, asking for 100 per cent of Internet service providers' revenue. That is not the kind of submission we make to the Copyright Board when we ask for a royalty from broadcasters. We are talking here about a percentage, not about these people's entire income. Obviously, if there were compensation, it would take into account the portion of the bandwidth that is used for that purpose. It is not 100 per cent, but it is nonetheless a significant percentage.

[Geoff Regan, Liberal, Halifax West, NS]

Merci.

Mr. Glick, what is your reaction on this question? How do we ensure that creators and artists get compensated?

[Jacob Glick]

I think it's a critical issue for the success of the overall legal framework that is represented by copyright. I think all of the evidence around the world suggests that providing a viable market for digital cultural products is the best way to combat piracy and to get artists paid.

For example, when Spotify, which is an online music service, entered the market in Sweden, rates of piracy decreased significantly. What I would say to members who are thinking about how we can provide a success for Canadian artists both in Canada and globally is that we have to encourage the proliferation of legitimate, licensed music services. We don't have enough of those in Canada, frankly. We don't have Spotify. We don't have Pandora. We need to have a copyright regime that makes it easy for those entities—

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. Glick and Mr. Regan. I know five minutes goes by very fast when you're having fun.

That ends the first round. Now we're moving on to the second round, for five minutes, starting with Mr. Moore.

[Rob Moore, Conservative, Fundy Royal, NB]

Thank you, Mr. Chair.

Mr. Glick, you mentioned earlier about this search that you offer to content providers, basically to search the Internet for where their content is being posted to look for potential copyright infractions. Is that what it is?

[Jacob Glick]

It's just on YouTube.

[Rob Moore, Conservative, Fundy Royal, NB]

Just on YouTube. I've often wondered about that. When you go on YouTube and it seems that every other thing says this has been flagged or this has been removed, is that through that search engine? This is not someone scrolling through YouTube and by happenstance finding something that's violating their copyright. Is this usually as a result of a search that would be undertaken?

[Jacob Glick]

It depends. When you see something that's been removed from YouTube, it might have been removed as a consequence of a rights holder flagging it through the content ID system, or because of a take-down notice that Google has received under the U.S. notice-and-take-down system and that we have taken down as a result.

The thing that is important to note is that for rights holders who participate in content ID, that is, who give us their corpus of content to scan against the corpus of YouTube content to determine when there are matches, the vast majority of the participants in that program choose to monetize works when they find them to their benefit—the benefit of the rights holder.

That's not surprising. That's a system we developed as a result of arrangements with all of the major studios and independents, separate and apart from the legal regime, which provides a win-win-win for all the players in the system. It takes a tremendous amount of investment by YouTube, in person-hours, R and D, and computing resources, to run this. But as a result of that monetization system, YouTube paid hundreds of millions of dollars to record companies just last year.

[Rob Moore, Conservative, Fundy Royal, NB]

Is the reason it's confined to YouTube because of the scale of YouTube, or is there an agreement there? There are other similar sites, right?

[Jacob Glick]

I couldn't speak to why other sites around the world haven't developed their own similar type of system. It is a massive undertaking, a very complex engineering problem, and it's very difficult to solve. We're lucky we have some of the best computer scientists in the world at YouTube.

I don't know if that answers your question.

[Rob Moore, Conservative, Fundy Royal, NB]

Yes.

With regard to notice and notice versus notice and take-down, could you comment on the distinction between those two?

[Jacob Glick]

Sure. We support the notice-and-notice regime in Canada. We think it provides the best possible balance between the rights of rights holders and artists who are looking to stop the infringement of their works online against the privacy and free speech interests of individuals who may be posting content.

Since the implementation of the U.S. Digital Millennium Copyright Act in the mid-1990s, there have been a host of all sorts of stories of improper take-downs that have been issued. The thing about a take-down is that it's essentially a lawyer's letter. It's a statutorily prescribed lawyer's letter—there are conditions you have to meet, but it's a lawyer's letter. You get the power of an injunction, which under law in normal circumstances is an exceptional legal remedy. So you get the power of an injunction on an allegation in the lawyer's letter.

That has proven to be problematic on a number of occasions. One that I will highlight for you is the 2008 presidential campaign. The McCain campaign had a number of videos taken down from YouTube as a result of DMCA notices that were filed. Once YouTube receives them, there's nothing YouTube can do about that. Legally, YouTube is obliged to take those down, and we did.

The McCain campaign complained to YouTube in a letter, saying, “This is free speech. This is fair use. I can't believe you took these down.” Nonetheless, the videos were down, and in a very short timeframe.

In an election, that provides a lot of opportunity for mischief and stifling of free expression.

[Rob Moore, Conservative, Fundy Royal, NB]

Thank you, Mr. Chair.