Bill C-11 Committee on March 1st, 2012

[Tanya Woods]

The Copyright Board establishes the royalties. They've established that the rate will grow, and it has grown, and it has tripled. As far as we know, the repertoires haven't actually changed in size at all. I don't feel qualified to speak about your repertoires. Our understanding is that the board sets the rates, and the way they've established the rates, they've tripled.

[Phil McColeman, Conservative, Brant, ON]

It's without rationale, that they're just going to elevate, no matter what the cost of producing the product is.

[Tanya Woods]

They certainly use a complex rationale to set their fees and tariffs at the Copyright Board. Not being from the Copyright Board, I'd like not to comment in any more detail, but I can certainly look into that and get back to you.

[Phil McColeman, Conservative, Brant, ON]

I'd like to know the answer to that.

[Tanya Woods]

Sure.

[Phil McColeman, Conservative, Brant, ON]

It makes sense from a business model point of view that the cost would have had to go up exponentially for the people who are providing it, or someone in the distribution chain has extra costs that need to be recovered. There's got to be some rationale there.

I will move on to Ms. Marrelli. You responded to Mr. Regan, who typically, as a Liberal, will try to make this a partisan thing. You said absolutely “not ready for prime time” . Previous to that you had stated that the orphan rights perhaps should be a totally separate issue, a totally separate bill. We have heard so many people come here and say we need copyright, and not now--we needed it yesterday. This has to happen for our country to benefit from the economic benefits. Yet it's not ready for prime time. Can you explain further?

[Nancy Marrelli]

We need the bill. We worked with the departments of heritage and industry dealing with this issue. I've spent many hours with department officials going over this issue. We've prepared briefs and we've done a lot of work with this, but it did not appear in the bill. That's what I meant when I said it's not ready for prime time.

[The Chair, NDP, Glenn Thibeault]

Thank you, Ms. Marrelli.

Mr. McColeman, your time has expired.

We are now moving on to Monsieur Nantel.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Thank you, Mr. Chair.

I would like to point out that we are talking about culture here. I would also point out that even the late Steve Jobs observed that over 90 per cent of the material on the devices he and his team had so brilliantly developed, as a general rule, was illegal. We also know that what the music industry is currently experiencing will be replicated elsewhere and that it is only a matter of the volume of data for the video industry to experience it as well.

I would like to ask Mr. Gray a brief question. Is there a clear advantage to radio stations in broadcasting what listeners want to hear, for example, to broadcast stocked music that is totally owned by the radio station? In that case, the choice is to broadcast music because it is what listeners want to hear. It is music that they like.

Very briefly, what do you recommend to replace that loss? That is what we are talking about. There are creators who are losing money under Bill C-11 and we are being told no, the industry no longer wants to pay the $20 million in broadcast mechanical royalties for ephemeral recordings. What do you recommend to your preferred content providers?

[Richard Gray]

My first response will deal with the initial part of your question. That was related to the provision of music that people want to hear. If we're not playing the kind of music that people want to hear on radio, they're going to go and find it somewhere else. In effect, what is a very strong business in Canada—as I mentioned, ours employs 723 people across the country—will first of all shrink and ultimately disappear.

With respect to the second component of your question, I think it was related to artist support. I think what has been absent from the discussion so far today has been what we do in terms of support to artists above and beyond the $64 million I referenced earlier in terms of royalty payments and the $50 million that we as an industry pay in Canadian content development. On top of all that, radio stations across this country are playing 35% Canadian music. We also heavily promote Canadian artists through a number of on-air involvements and initiatives. I mentioned in my presentation that we at Bell Media have what's called the Bell Media radio emerging artists initiative. What that program involves is that our program directors from across the country submit songs by emerging Canadian artists and then vote. They select an artist once a month who gets airplay across our entire catalogue of radio stations.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

If I may, Mr. Gray,

I understand what you are telling us and that you are obviously a partner in all this. However, what I was asking you was specifically this. Regarding the $20 million that the industry no longer wants to pay, where do you think it will recover that money?

[Richard Gray]

I'm suggesting that the $21 million is an inappropriate fee for us to be charged because it's a duplicate fee.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Right. So where are you suggesting they recover that money?

[Richard Gray]

Where is it going to be recovered? That's not a question for me to answer.

[Pierre Nantel, NDP, Longueuil—Pierre-Boucher, QC]

Perfect.

I will now address Mr. McCarty.

You apparently have a different perspective on this subject. The mechanical royalty that is paid for an ephemeral copy is something that has been paid for a long time. We are talking about a form of collective system.

What is your position on this?

[Michael McCarty]

The impact on the collective system will be serious. The revenues from the other sources are declining as it is, so combined it will really undermine the collective system.

The collective licensing system is actually extremely helpful and invaluable to the licensees because it's one-stop shopping, so to speak. It's a very efficient system.

In terms of what the broadcast system does for the Canadian music industry, it apparently is intended to be instead of paying royalties. All exposure, all grant systems, all specialty programs that help identify Canadian artists are really welcome, but they're not a substitute for paying royalties.

If I had to make a choice, I'd take royalties rather than grants.

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. McCarty and Mr. Nantel.

Mr. Moore.

[Rob Moore, Conservative, Fundy Royal, NB]

Thank you, Mr. Chair.

Mr. Gray, we had testimony this week from another radio station. There was some effort to explain the way in which you pay for the music you play over the radio. There was some discussion over this 30-day issue.

I wonder if you can walk us through, from the point that a new song comes out—something that people have heard about and want to listen to—and how it gets over the air on your local station.

Number one, we want to recognize right off the bat the importance of local radio in our communities, the work you do, the Canadian content you provide, and the help you give to artists who are starting out to get their work well known in the communities.

Walk us through how that happens and how it could be improved.

[Richard Gray]

Let me start with a historical perspective. The way it used to work was that record labels would bring us disks, and we would store a number of disks in libraries. Copies of those disks would go into our studios and into our broadcast booths. Disks became CDs and were delivered the same way.

But now there's a very different delivery system. It's a digital delivery system called DMDS. The record labels have given us access to their music system. We select the cuts that are appropriate for our particular format of a radio station. We download those. We make a copy of that music that then is appropriate for playback on our stations and is complementary with, is in line with, a number of different systems that are in place to drive the engine that is a radio station.

A radio station is a little more sophisticated now than it used to be, in that it's not just one announcer sitting in a booth with two turntables and a microphone and a commercial card deck. It's much more elaborate. It's much more computer-based. It's much more sophisticated.

I hope that answers your question to some degree.

You also asked about the 30-day exemption and what that process would involve for us as broadcasters. To replace the entirety of our music libraries every 30 days would be hugely onerous and massively time-consuming. Even the smallest of music libraries have about 3,000 songs in them. So if you were to download these at a rate of 15 songs an hour, and assuming nothing went wrong with any of the recordings, it would still take 200 hours a month or 20 very long business days to complete the task at every radio station across the country.

I think the other key consideration in this component that perhaps has been missed in the discussions and the presentations to date is that radio is a very different industry from others. Since we broadcast 24 hours a day, seven days a week, 365 days a year, it's not possible for us to shut down to retool. This purge and duplication process that we're being asked to do every 30 days to gain this exemption would have to go on while we continued to broadcast, complicating the process a great deal further.

[Rob Moore, Conservative, Fundy Royal, NB]

Thank you, Mr. Gray.

Not that we want to punish success in any way, but Mr. Angus mentioned an increase in the profit margins of radio stations. Do you have any comments on that? I know you're the one here representing radio stations and you get to speak to it.

[Richard Gray]

Absolutely, and I'm glad you did ask that question, because 2009 was a very long time ago. Yes, in 2009 the radio industry in Canada was a very healthy one, but I can tell you it's not nearly as healthy today. Since about last June, our business has been down upwards of 15% in almost every market across the country.

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. Gray.

[Richard Gray]

Things have changed.

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. Gray and Mr. Moore.

Up next is Mr. Cash for five minutes.

[Andrew Cash, NDP, Davenport, ON]

Thank you, Mr. Chair.

Thank you all for being here. It's been an extremely interesting discussion, one that's really close to home for me.

I think it's important to underline the long process it takes to get a song on the radio. It's a process that Mr. McCarty knows very well, because, as you say, your function is really R and D. That's a long process. You have to invest a lot of time and a lot of money into a lot of songwriters who don't necessarily write that song that ends up on Mr. Gray's radio station. It takes a lot of work. It's a lot of investment and it's a lot of risk, right?