Bill C-11 Committee on March 6th, 2012

[The Chair, NDP, Glenn Thibeault]

Good morning, everyone.

Welcome to the eighth meeting of the Legislative Committee on Bill C-11.

I'd like to welcome our witnesses this morning, and guests, and of course members.

Our witnesses this morning, for the first half, are the Canadian Music Publishers Association, Catharine Saxberg; AVLA Audio-Video Licensing Agency Inc., Victoria Shepherd and Sundeep Chauhan; and from the

Société professionnelle des auteurs et des compositeurs du Québec, we also have Mario Chenart and Jean-Christian Céré.

Each of you have been briefed by our clerk that you have 10 minutes for opening statements. As Mr. Chenart would know, I'm very strict with time, so if you can't get it within 10 minutes, I will ask you to hold the comments to questions and answers.

We'll start off with the Canadian Music Publishers Association, for 10 minutes.

[Catharine Saxberg, Executive Director, Canadian Music Publishers Association]

Good morning.

Thank you, again, for inviting me to appear.

I've had the pleasure of discussing copyright issues with many of you over the past years, and for those of you with whom I haven't spoken yet, I look forward to hearing your thoughts.

My apologies to those following the written translation of my remarks. I have made some small revisions as a result of some recent submissions.

I'm the executive director for the Canadian Music Publishers Association. CMPA has been around since 1949. We are based in Toronto, although we represent music publishers and their songwriter partners from across the country.

Music publishers help songwriters make a living from songwriting. If a song gets used in any way that it generates revenue anywhere in the world, the publisher helps track down that money, collects it, and sends it to the songwriter. A publisher also invests in songwriters throughout their career, helping them stay afloat between royalties, and offering support and expertise.

We believe that the skill, talent, and expertise required to write a hit song are precious things, and are best nurtured by protecting the ability to make a living doing it, so it is important to have strong, effective copyright legislation.

CMPA joined over 100 organizations that have signed on to the cultural industry statement, and we continue to endorse all the positions put forward in that document. We believe in the need to modernize Canada's Copyright Act and to be good global partners. Copyright worldwide is only as strong as its weakest link. We also believe that the government has fallen short of its goals on copyright with Bill C-11, but we understand that the government believes that the proposed legislation does meet its policy objectives, so it's time for us to try to contribute to a new discussion.

[The Chair, NDP, Glenn Thibeault]

A point of order?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

Could you maybe slow down just a little bit? Thanks.

[Catharine Saxberg]

Okay, sorry.

[The Chair, NDP, Glenn Thibeault]

It's because of the translators.

[Catharine Saxberg]

It's time for us to try to contribute to a new discussion. That is, can we make technical suggestions that will help to clarify or strengthen the government's stated intentions? We think so. We are proposing four main areas in which we believe the legislation can be strengthened with technical amendments.

The line between technical amendment and policy shift isn't always clear, so what we are trying to do today is add a positive, credible voice to this process, and we try to err on the side of caution and not creep into policy waters. I'm also pleased, if somewhat exhausted, to say that these positions represent many, many hours of debate within our organization.

Our four amendments relate to the broadcast mechanical tariff, ISP liability, secondary liability, and statutory damages.

Our first technical amendment is regarding the ephemeral recordings for radio broadcasters. When a song arrives at a radio station, a copy is made from the originating file to the radio station's hard drive. That copy is made under the right of reproduction for which creators and rights holders are compensated about $21 million annually. Our concern with Bill C-11 is that the elimination of subsection 30.9(6) of the act will cost music creators and rights holders millions by the de facto elimination of this revenue source. More than 47,000 individuals and companies receive cheques from this revenue stream annually from CMRRA alone—that's not counting SODRAC or the master owners or performers.

Under Bill C-11, the section that allows for this right would be repealed, thus allowing broadcasters to keep copies of their songs on their server for 30 days without payment, as long as the songs are deleted at the end of that 30-day period. In other words, the government wants to change the law to provide broadcasters with access to the songs for 30 days for free. If the broadcasters want to keep the songs after 30 days, then they would pay the existing tariff.

The problem is that as Bill C-11 is currently written, broadcasters believe they will be able to game the system by deleting a song file every 30 days, and then immediately restoring the exact same song file. In essence, broadcasters can easily comply with the 30-day destruction requirement by making those copies of copies.

Although the CAB doesn't say so in its written submission, we know it is the broadcasters' intention to game the system. In fact, recently broadcasters have suggested that it's a nuisance to have to delete and recopy libraries every 30 days, and that they want the tariff removed completely, rather than pay it. This would be a policy shift contrary to the government's intention. In effect, some broadcasters are complaining that the government is making it hard for them to work around the government's proposed law.

The broadcasters have framed the payment for this use as an inappropriate subsidy of the music industry. We see it as a use of our rights, rights protected under widely held principles of private property in a way that allows broadcasters to operate more efficiently. We are happy to contribute to these efficiencies by licensing this valuable right, and we think it's reasonable to be compensated for assisting them in streamlining their operations.

If there's a subsidy in this discussion, it's the other way around. Allowing Bill C-11 to stand unfixed would force us to subsidize the broadcasters by involuntarily contributing our right of reproduction for no compensation. Although CMPA would prefer that the government not eliminate subsection 30.9(6), we understand the government would like to confer a 30-day exemption from paying for this right. We reviewed the written submissions by the broadcasters and the government's proposal, and this 30-day exemption seems to be consistent with what the broadcasters have requested in their written submissions.

We can accept this compromise if we can ensure the integrity of the 30-day limitation. If a song is going to be kept as part of a permanent library, it has value for the broadcaster, value for which we should be compensated.

In order to give effect to the government's stated intention and limit the exception to 30 days, we have proposed a technical amendment that would prevent broadcasters from making reproductions, which, while technically retained for only 30 days, would end up being a permanent library of music. In other words, it would stop the broadcasters from getting around the exemption by using delete and restore.

If the government's intention is to eliminate the BMT by leaving the barn door open on this 30-day exemption, Bill C-11 would be in violation of the Berne Convention, which says that a government cannot repeal a right that is currently being monetized. There's also some additional amending language in our written submission in regard to temporary reproductions for technological purposes.

Our second technical amendment relates to the role of ISPs in reducing online piracy. The government has stated that one of the goals of this bill is to reduce online piracy, and this is a good goal. However, there's a need to improve the provisions for ISP liability in Bill C-11 in order to ensure that they will in fact achieve this goal.

ISPs take an active role in shaping the Internet traffic that flows through their systems. In fact, ISPs are aware of and regularly monitor how much traffic they carry and what transmissions are used for unauthorized transfer of files. The problem that rights holders face is that many of these sites are outside Canadian jurisdiction and therefore cannot be shut down at source. An example of this kind of site would be Pirate Bay. In the U.K., the high court ruled two weeks ago that Pirate Bay is an infringing site and injunctions for ISPs to block access will soon follow.

The kinds of amendments we are proposing are similar to what's being used against Pirate Bay in the U.K. Provisions like this are proving effective in other territories also.

The CMPA again has proposed amending language that would create a positive obligation for service providers to prevent the use of their services to infringe copyright by offshore sites. Should that wording not be acceptable to the committee, we have proposed a more limited version of the amending language, which would permit injunctions only for the purpose of requiring service providers to block access to the services that are primarily intended or ordinarily used for enabling acts of copyright infringement.

There also has been much talk lately, both in Canada and in the U.S., about American SOPA and PIPA legislation. If I were you, I would be asking me how these proposals compare to the controversial American proposals. I have an answer that has been submitted as part of an addendum that addresses this question. To summarize, our legal review assures us that the amendments we are proposing are far narrower than SOPA and PIPA and that they are in keeping with Canadian due process, more so than the American proposals.

Our third proposed technical amendment is for secondary liability for copyright infringement. Bill C-11 proposes eliminating liability for most Internet intermediaries by balancing provisions that would target so-called online enablers. Unfortunately, these provisions are drafted narrowly and ambiguously. For example, the provision is limited to services that are designed primarily for infringement, creating a loophole for those services that may have been intended for innocuous purposes but are now primarily intended or ordinarily used for copyright infringement.

Furthermore, it's unclear if computer software that enables acts of copyright infringement is equivalent to providing a service. Many of the factors proposed to distinguish between legitimate and illegitimate service providers are very unclear and may need to be litigated extensively before their scope is clearly understood. Again we are proposing amending language to rectify this situation: we would like to see “designed primarily” changed to “primarily intended or ordinarily used”.

Our fourth and last proposed technical amendment relates to statutory damages. In an attempt to achieve proportionality in statutory damages in Bill C-11, the government has created significant obstacles to copyright enforcement. In proposed subsection 38.1(1), the government has created two ranges for awarding statutory damages. Commercial purposes damages, for example, range from $500 to $20,000.

The simple reality is that copyright owners would be deprived of any effective response to non-commercial infringement, as the cost of collecting damages would so exceed the maximum recovery that no rights holders would be able to afford to enforce their rights. In addition, the meaning of “non-commercial” is unclear, with three different phrases being used to describe acts that are seen as worthy of reduced penalities or exemption from liability. The terms “own private use”, “private purposes”, and “non-commercial use” are similar in many instances and overlap in others, which is sure to lead to confusion and, consequently, to costly and unnecessary litigation.

In conclusion, as promised, the focus of my submission today has been on technical amendments that we believe will strengthen the bill within the confines of the government's policy choices. My members feel strongly, however, that I should go on record to say that our viewpoints on user-generated content, fair dealing, and private copying differ from the government's. They recognize, however, that these constitute policy differences and are therefore of lesser interest to the committee.

I shall do my best to answer any questions you might have.

Thank you.

[The Chair, NDP, Glenn Thibeault]

Thank you, Ms. Saxberg.

We're now moving on to the AVLA Audio-Video Licensing Agency Inc.

[Victoria Shepherd, Executive Director, AVLA Audio-Video Licensing Agency Inc.]

Thank you for the opportunity to appear before you today.

My name is Victoria Shepherd. I am here on behalf of the AVLA Audio-Video Licensing Agency, which represents over 1,000 members, including major and independent record companies and many independent artists, representing the vast majority of music played on radio stations in Canada.

I would like to express our enthusiastic support for this initiative to modernize Canada's copyright laws.

Creators and copyright owners need a clear legal framework that protects their work in today's digital marketplace. We applaud the government's effort to create new rules that will enable our members to sell and license their creative work.

I am here today to draw your attention to two issues regarding Bill C-11: first, a potential loophole in proposed amendments to the ephemeral recording exception; and second, recent requests by broadcasters for a major policy change on the ephemeral reproduction right.

In both cases, the end result would be contrary to the government's stated intention to provide a 30-day temporary exemption and could effectively annul the copying right.

Let me give you some background. For decades, radio stations played vinyl records and then CDs. Today, using digital technology, music is copied directly to hard drives. Radio stations have gained significant cost savings and higher profits thanks to the automation and operating efficiencies made possible by the right to make reproductions of sound recordings.

The point is that these rights have economic value. This is why broadcasters are required under the Copyright Act to compensate rights holders. It is also the basis for Copyright Board decisions in 2003 and then again in 2010. The board is an impartial, independent agency created by Parliament, which exhaustively considered expert testimony and the arguments of all stakeholders. It determined the fair and appropriate compensation to rights holders for the efficiencies broadcasters gain from utilizing the reproduction right.

No one during those hearings disputed that copies made by broadcasters have value.

The Copyright Board, in its 2003 decision, found that:

Copying music to a hard drive optimizes the use of these new [broadcasting] techniques, thus entitling rights holders to a fair share of the efficiencies arising from this reproduction.

The 2010 decision found that using the reproduction right “allow[s] stations to increase their efficiency and profitability”.

Commercial radio in Canada has grown steadily and significantly more profitable in the past decade, reflecting, in good part, the increasing importance of the reproduction right to broadcasters. Let's keep in mind that we're talking about the key business input used by commercial radio: music.

Music, more than anything else, is what radio business is all about. Over 80% of commercial radio programming is music. The Copyright Board has confirmed that reproduction rights are distinct from other rights associated with broadcasters' use of music, namely, the right to play the music.

These are separate rights that are separately owned by composers, performers, and record labels, and apply to separate and distinct activities. No one has been asked to pay twice, as the broadcasters argue. The foundation of copyright law is that the owner of a right be compensated by those who use the right.

Last week you heard testimony about the so-called layering of rights. The Copyright Board heard this argument and rejected it.

In its 2010 decision, the Copyright Board considered all commercial radio tariffs in a single, consolidated hearing at the broadcasters' request. They determined what broadcasters must pay for different uses of music and the rights connected to those uses. It found that the effective payment for all uses—equal to 5.7% of revenues—is fair, equitable, and well within their means. Within this total amount, the board set the rates under each tariff.

In Bill C-11, the government has proposed a 30-day exemption to the ephemeral recording exception. In short, Bill C-11 says that broadcasters should not have to pay for temporary copies of music. While the proposed 30-day exemption was unwelcome news to our members, we respect the government's right to set the policy.

Last year, at the Bill C-32 committee hearings, the broadcasters supported the 30-day exemption. The representative of the Business Coalition for Balanced Copyright, appearing on behalf of the Canadian Association of Broadcasters said, and I quote:

On the question of the ephemeral exception and the ability of radio stations to make copies, as the provisions now stand, the lifespan of those copies is 30 days. If radio stations want to make persistent copies of music to use as part of their operations, they can't now rely on the exception to do it.... This is simply short-term copying.

What we are most concerned about today is that the broadcasters appear to have much more in mind than a 30-day exemption. Last week you heard testimony that pointed to a potential loophole. Broadcasters apparently believe that Bill C-11, as drafted, allows radio stations to circumvent the proposed 30-day exemption by copying their music catalogue from one server to another every 30 days. Temporary copies will become permanent.

The original intent of the amendment is summarized on the Industry Canada website, and I quote:

With the adoption of new technologies, broadcasters today make temporary copies of the music they play on the air.... Recognizing the temporary and specific nature of these copies, the Bill removes the requirement to pay for any copies retained for less than 30 days.

Now some broadcasters are going even further. They want to change the original intent so that the legislation removes the requirement to pay for any copies at all. The government has specifically stated that only technical changes will be made at this stage. Broadcasters are asking for a full-scale policy change that is a complete departure from the government's stated intent.

Temporary does not mean permanent. This applies equally to broadcasters' latest request for a policy change and to the potential loophole in the bill as currently worded. Both could have the same result—making the temporary permanent.

All stakeholders should be concerned that, as drafted, this bill will create legal uncertainty. To avoid this outcome, and to support the government's stated policy intention of a temporary exemption, the potential loophole must be closed. To that end, we propose a straightforward technical amendment that will align the provision with the government's intent. We will submit our proposal to the clerk. We must get this right. Please ensure that 30 days means 30 days and that temporary does not mean permanent.

We think the Government of Canada got its priorities right when it said in the very first line of Bill C-11:

the Copyright Act is an important marketplace framework law and cultural policy instrument that, through clear, predictable and fair rules, supports creativity and innovation

We understand that this is a complex issue. We support the government in its effort to modernize the regulatory framework. We applaud the government's objectives to provide “clear, predictable and fair rules”. We believe our proposed amendment strengthens the legislation's ability to meet Bill C-11's stated objectives.

Thank you.

[The Chair, NDP, Glenn Thibeault]

Thank you, Ms. Shepherd.

We now move to the Société professionnelle des auteurs et des compositeurs du Québec.

[Mario Chenart, President of the Board, Société professionnelle des auteurs et des compositeurs du Québec]

Thank you, Mr. Chair.

Distinguished committee members, SPACQ thanks you for this invitation to take part in the work of updating the Copyright Act.

My name is Mario Chenart. I am a singer-songwriter and president of the board of SPACQ, the professional association that has represented the interests of Quebec and French-Canadian songwriters for more than 30 years. With me is Jean-Christian Céré, who is a lawyer and SPACQ's general manager.

I have been a songwriter since 1983, a career that has enabled me to criss-cross Canada from coast to coast. I have been active all over the francophonie; I have written for television and theatre and I have directed a number of gala events across the country.

[Jean-Christian Céré, General Manager, Société professionnelle des auteurs et des compositeurs du Québec]

SPACQ was founded in 1981 from a desire by artists to be able to practice their craft in dignity and prosperity and to find solutions to the challenges they faced in the management of reproduction rights, in modernizing copyright and in the status of the artist.

In matters of cultural policies and new technologies, SPACQ makes sure that those artists occupy a place of dignity in the great living legacy chain. Convinced as we are that we must act as one on these issues, SPACQ plays an active role in groups such as CAMI, the Canadian Conference of the Arts and the Coalition for Cultural Diversity. Our recommendations on the updating of the act coincide with the positions taken by all those groups. You can find a list of them attached to our brief.

[Mario Chenart]

We share the objective that you have set for yourselves, that of modernizing the Copyright Act. Though our humble submission certainly comes from the heart, it also comes from sober consideration.

Royalty payments are a source of independent income for creative artists. Like the values that the government espouses, we see them as a right, based on respect for private property and the simple principle of user pay, whether the user is an individual consumer, a business or an institution.

In addition, if the government wishes to stimulate the creation of wealth, why would it want to whittle away the sources of independent income for a sector that is going through a difficult time? For a flame to stay alight, you need a little air. Royalties are the oxygen our medium needs. Let us not make the mistake of taking our creative people for granted. Times being as they are, their concerns are critical. I myself have been a songwriter for almost 30 years. Since I started, our reality has changed considerably. With creative works becoming more and more virtual and online transactions becoming more and more frequent, the music and audiovisual industry is being shaken to its core. Amid all that shaking, songwriters are having to accumulate many many micro-royalties in order to make a living.

In that situation…

every penny counts.

So the law is silent about the revenues associated with private copying, with ephemeral recordings, with education, the revenues associated with the use of our music on the Internet, and that must be properly valued—as was done with peer-to-peer exchanges. All those revenues are our daily bread.

Clearly, people have never consumed so much music. It is consumed in cloud form, on iPods, on phones, on the radio, on television. It is everywhere. Consumers are ready to pay to receive it in the way they want.

Why not uphold and strengthen collective administration in this new ecosystem? Why abandon the private copy regime that allows people to copy their music while providing those who created it with compensation?

Since 1997, the regime has resulted in $30 million in revenue for rights holders. In a context where the business model is eroding, that amount makes a considerable difference. Though the ways in which our music is accessed and consumed may change, the principles remain and the challenge of applying them in the digital world rests on our shoulders.

[Jean-Christian Céré]

So we understand the government's initiative in wanting to accommodate consumers and providing them with the possibility of reproducing protected works for non-commercial purposes, the so-called “YouTube exception”. As it stands, Bill C-11 would make Canada the first country in the world where companies like YouTube would have the right to help themselves to and profit from protected works with no obligation to compensate the creators.

We also think that the exception would adversely affect their moral rights. As a result, we ask you to limit the scope of the exception and to let collective administration take care of issuing licences for that kind of use.

The Canadian government must also show leadership and courage by helping to stop the huge amount of lost income caused by illegal online transactions. As France has done by passing its Hadopi law, Canada must send a strong message that content cannot be illegally traded with complete impunity. Figures from the industry in France are going back up now. The government's action is bearing fruit. The French solution has the virtue of declaring loud and clear that copyright is a cornerstone of culture and that it must be valued and protected.

As to the notice-and-notice regime proposed by Bill C-11, this does nothing to dissuade persistent offenders. They will not put a stop to their illegal activities, knowing that they will incur no sanction from ISPs. The regime puts the responsibility for reporting and tracking down violators onto the shoulders of the rights holders. Rights holders have neither the ability nor the resources to police the Web. But ISPs, who are the main beneficiaries of this shift in values, have very significant resources with which they can combat piracy, educate consumers and compensate the music industry. So the balance that the government is seeking between the rights of artists and the needs of the users is still a long way off. Our brief proposes ways to measure and improve the effectiveness of the proposed regime.

[Mario Chenart]

The bill also include exceptions for education. That makes it impossible for me to refrain from asking the question: what favour are we doing for our educational institutions by removing the value from intellectual property? Do we ask a plumber or a computer expert to work for free when they are working for a school? So why do we ask an artist to do so?

International treaties to which Canada is a signatory stipulate that, if exceptions to exclusive rights are allowed, they must be “special cases which do not conflict with a normal exploitation of the work and do not prejudice the interests of the rights holder”. In order to comply with that condition, the exceptions are generally accompanied by fair compensation. That is the case everywhere, but it will not be the case in Canada. So why the exceptions when agreements between management companies and educational institutions already exist? Those agreements were negotiated in good faith and they work, as Quebec's minister of culture, communications and the status of women recently indicated. So SPACQ supports SODRAC's proposed amendments. They clearly restrict the application of exceptions in the same way as they are addressed in the international treaties.

We are testifying today as Canadians, but also as citizens of the world. The companies that collectively administer our rights do so in reciprocity with sister companies around the world. The international treaties are the instruments by which our foreign partners are assured that their repertoires will be as well represented here as ours are there.

If it is true that works of art are the soul of a nation, our Leonard Cohens, Joni Mitchells, Gilles Vigneaults and Arcade Fires are spreading the Canadian soul to shine around the world in their work. They were recently to be found at the Grammy Awards, at the Oscars, at the Césars and at Cannes, as our composers also write music for the cinema. Those nominations underline the excellence of our artists and our expertise. Their work is universal and resonates all around the world. Work that travels like that is not a truck that drives the economy by burning our oil to carry its load of plastic. It is the soul of a people, its thoughts and its vision travelling through time to meet the world.

We do not lack the means here to make sure that our artists have the air that is vital for keeping the flame alight, healthy and bright. But do we have the will? What will it cost us? A little courage, a little vision? The creators are pinning their hopes on you. Show business and everything associated with it employs a lot of people, from creation to production, in the studios and in manufacturing, distribution, transportation, in retail or online sales, on radio and television. It is a huge machine set up to send the soul of Canada to the greatest possible number of people. Or is it just a pretext to print plastic, to put trucks on the road, to stack warehouses or to sell high-speed subscriptions? Is that what is driving all this upheaval?

We are at a crossroads. The decisions we make today will determine the fate of creative people for several years, for many years, if the frequency with which the legislation is reviewed is anything to go by. Distinguished committee members, we are counting on you to do what is necessary with this bill so that it respects the creators, serves the needs of the public and complies exactly with our international treaties. Putting the Berne Convention's three-step test right in the text of the bill itself would be a simple way to achieve that goal.

[The Chair, NDP, Glenn Thibeault]

Thank you, Mr. Chenart and Mr. Céré.

We will now go to the first round of questioning for five minutes. Starting us off will be Mr. Armstrong.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you, Mr. Chair.

Thank you all for your presentations. There's not much time, so I'll try to go quickly. I'll start with Ms. Shepherd.

You discussed how the radio stations will not have to pay twice or charge you more. They've explained that to us. But artists do get remuneration from radio stations in other ways. Can you talk about ways that the radio stations reimburse artists?

[Victoria Shepherd]

What I can speak to is in the context of our ephemeral right and the performance tariff. I imagine that's what you're asking me about.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Right.

[Victoria Shepherd]

Artists benefit from what we call a neighbouring right, which is the communication of the works over the air, so the performance, by radio stations. That's one way—for the activity of performing the music.

There's a second activity that the Copyright Board has deemed has its own value. That is the act of copying the music so it can go over the airwaves.

In the case of AVLA, we represent over 1,000 members, many of whom are actually self-produced artists. They are artists who own their own masters. If you are looking at someone like Randy Bachman, Hawksley Workman, or Metric, they get reimbursed as artists by virtue of the ephemeral right as well.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Right.

We heard last week that the public performance royalty over the last ten years has gone up by 63%. Is that accurate?

[Victoria Shepherd]

Mr. Chauhan...?

[Sundeep Chauhan, Legal Counsel, AVLA Audio-Video Licensing Agency Inc.]

Yes.

In terms of the numbers, the rates have gone up over the last decade. That's been discussed in front of this panel before, but I could take you back a bit to the history of how that happened.

The reason for the increase goes back to the middle of the last decade, when the Copyright Board found that the rights that broadcasters were paying for were what they called “historically undervalued”. So there was an adjustment in the rate at that time.

As you've heard previously in testimony, prior to 2003 the reproduction royalties obviously weren't paid at all. We've seen in the last decade the utilization of the separate and distinct reproduction right that was noted by the Copyright Board and has its own distinct value. We've also seen what I guess you would call a “market correction” for the historical undervaluation of the performance right as well.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Right.

There's also ephemeral rights, which we heard have gone up by 483%. At the same time, the radio broadcasters have only seen a 41% increase in profits.

Where is this going to stop? Obviously you can't continue forever this type of profit and loss, compared to the radio stations.

Am I on the right track there?

[Sundeep Chauhan]

I'm not sure about those numbers and where the 483% comes from. When you go to the Copyright Board, a tariff is set, and that tariff is set for a set period of time. For example, the reproduction royalty was heard recently, in 2010, and that was the first time it had been heard since 2003—seven years prior.

In terms of the rates, when the Copyright Board sets rates, you have predictability and certainty as to what the rate is going to be for a set period of time. What the Copyright Board does is it undertakes an analysis of the particular industry that will be subject to the tariff and determines what is the most appropriate rate base for this particular industry.

In the case of the broadcast mechanical, what was discussed at the Copyright Board by all the parties was that a percentage of advertising revenue would be the most appropriate way to do the royalty calculation. In some cases, it's the square footage of an arena, and in some cases it's a flat rate. So that was determined as a percentage of the share of revenues.

What you have is a situation whereby when the industry is more successful in its use of intellectual property, the creators are rewarded equally as well. The numbers should go lockstep together.

I'm not sure how the number calculation was done, but I'm sure this honourable committee can do the research and dig the numbers right down to the level where you can see where that figure is coming from.