Bill C-11 Committee on March 6th, 2012

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

Right. They were making the case, particularly the smaller radio stations, that they'll have trouble surviving if we make some changes on the other side. Again, we have to provide a balance in this bill.

I want to switch over to some of the international stuff. This legislation will bring us in line with the WIPO Internet treaties. Can you talk about how WIPO will affect Canadian musicians?

[Victoria Shepherd]

Well, I would like to address that specifically in terms of....

I'm here to talk about this 30-day potential loophole, so I can't speak with any level of expertise about the WIPO treaty and how that will affect the passage of the bill. What I can tell you is that in terms of the ephemeral exception, the government made it very clear that it was to be a 30-day temporary exception. We're asking today for a fix to make sure that the temporary doesn't become permanent.

[The Chair, NDP, Glenn Thibeault]

Thank you, Ms. Shepherd, Mr. Chauhan, and Mr. Armstrong.

We'll now move to Mr. Angus for five minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Thank you for your excellent presentation.

It's been really interesting watching these hearings unfold, because we really see the Conservative game plan, which is to intervene and expropriate the rights of artists by creating this loophole.

We just saw my colleague complaining that the value of the mechanical royalties has gone up, when he hasn't put up any historical profile. In 1996, radio was in it tough, with a 1% profit rate. They were looking for help. They were looking for subsidies. The government decided to subsidize them on the backs of artists. But the industry was okay then.

And then, in the following 15 years, digital was great for radio. They got to get rid of all the staff who used to rack the records, all the people who used to have the CDs. So now their profits are massive. Year by year, their profits are going up.

This gets adjudicated at the Copyright Board, so the Copyright Board decides what's the value. We see this interventionist government here; they decide they're going to step into the breach. They're going to blame the artists, who.... You know, the industry has been bleeding for years. They're going to stop a payment that has already been adjudicated. But they legally can't do it.

Ms. Saxberg, we talked about the Berne Convention. You can't repeal a right internationally that's been monetized. Isn't that similar to expropriating a right that a business person has?

[Catharine Saxberg]

It is correct to say that under the Berne Convention you cannot take back a right that is currently being monetized. That's one of the things we're concerned about—the lack of clarity around the broadcast mechanical. In fact, what we would be doing is creating a de facto elimination of the right. That's of concern to us from a financial point of view, and we are also concerned about meeting our obligations under WIPO.

[Charlie Angus, NDP, Timmins—James Bay, ON]

I think it's clear what's happening. We wondered about the 30-day exemption, whether it was a loophole they'd try to drive a vehicle through. Now we see that they're going to drive a fleet of trucks through it. Radio station after radio station has said, “Hell no, I'm not paying that; I'm just going to make copies every 29 days.”

Then they came in and complained that this loophole the government created was a hassle. They didn't have to pay; they were just going to do this every 29 days and circumvent their obligation to pay. It's something that has been adjudicated under the Copyright Board, and they're crying on the shoulders of the Conservative Party saying, “Hey, do us a favour. Why don't you just erase that right altogether?”

Were you shocked when you heard the radio stations—big corporations—come in and say that they were not paying that mechanical, that they were just going to push the reset button every 29 days so they didn't have to pay it? You talked about gaming the system—it seems that it's a deliberate attempt to rip people off.

[Catharine Saxberg]

That's what it looks like. When we started looking at Bill C-11 and its predecessor, Bill C-32, we could see that there was a potential for this loophole, and we raised our concerns at that point. Upon reviewing the broadcasters' submissions, it looks like the broadcasters were—in writing anyway—saying that the 30-day exemption was what they wanted. We kept saying that, despite what they were saying in writing, we thought their true intention was to create a back-door loophole.

I was surprised a couple of weeks ago to see a broadcaster from Edmonton at a town hall meeting—held by a Conservative MP, actually—say that he didn't like this so-called “tax” on the transfer of CDs and that he was glad to see it was being repealed. It was going to be a big nuisance for him to have to make all of these copies. It was the first time that I had seen a broadcaster say out loud that this was what their intention was going to be: they were going to hit “control and delete” every 30 days.

Last week, after hearing testimony that this was in fact a problem, it seems that we've fallen down a rabbit hole. There has been a real shift in the broadcasters' game plan, which is contrary to what they asked for on Bill C-32 and is contrary to the intention of the government.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We hear the Conservatives talk about the right of payment—the copyright—as “tax”. To hear them tell it, the poor companies are being forced to double dip. We're talking about $20 million in artists' royalties. They're saying it's going offshore when it's actually going to publishers. It's part of an international obligation, an international agreement. This is how the industry works.

What do you think about the possibility that the Conservatives don't understand it? Do you think that this attempt to create a copyright as a tax is misrepresenting what it really is?

[Catharine Saxberg]

It's certainly a misrepresentation to represent royalties as taxes, because taxes go to governments and royalties go to creators.

[Charlie Angus, NDP, Timmins—James Bay, ON]

It's creators who benefit.

[Catharine Saxberg]

This nomenclature has existed through the entire discussion on copyright over the past couple of years, and it's both misleading and harmful.

[The Chair, NDP, Glenn Thibeault]

Thank you, Ms. Saxberg and Mr. Angus.

We're now moving to Mr. McColeman.

[Phil McColeman, Conservative, Brant, ON]

Thank you, witnesses, for being here today.

Mr. Chauhan, you mentioned the mechanical rights. I think we're talking about the $21 million payment to creators for those rights. You said that it's tied to a percentage of advertising revenue that the broadcasters receive as payment. That explains why the amount has increased substantially over the years.

Is that correct?

[Sundeep Chauhan]

Yes. According to the tariff, the rate is set as a percentage of advertising revenue. That is correct.

[Phil McColeman, Conservative, Brant, ON]

Now, we just had an ideological rant across the table about us and the way we think. We're supposed to be trying to pit creators against broadcasters, against consumers. I take offence at that. This is not a partisan issue. Rather, it's about trying to get the rights balanced. Instead, we get lambasted.

Let's try to speak some realities here. If it were tied to advertising income—and if the greedy broadcasters were making millions of dollars as has been described—would you not be benefiting from that?

[The Chair, NDP, Glenn Thibeault]

We have a point of order.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Yes.

When he refers to greedy broadcasters, those are his words. I don't think it's fair that he should use—

[The Chair, NDP, Glenn Thibeault]

That's more of a debate, Mr. Angus.

We have a point of order over here. Mr. Lake.

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

Mr. Angus used the words “deliberate attempt to rip people off”. I want to clarify—

[The Chair, NDP, Glenn Thibeault]

You know what, guys? We have clause-by-clause next week.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That is not a point of order.

[The Chair, NDP, Glenn Thibeault]

Neither were points of order.

Thank you very much. Please keep moving forward, Mr. McColeman.

[Phil McColeman, Conservative, Brant, ON]

I will.

I'll rephrase it. I apologize for using that word he took exception to. It was the deliberate—whatever it was—ripping people off. That's what it was. The broadcasters are ripping people off.

Are the creators not benefiting from an increased revenue if it is happening at a broadcast station?

[Sundeep Chauhan]

Yes. The exploitation and use of intellectual property plays a part in terms of generating increased revenues, allowing stations to better target the musical audience they want to reach, and to realize operational efficiencies to increase revenues as well. That benefit then gets passed on and is shared as well by the creators of copyright—

[Phil McColeman, Conservative, Brant, ON]

Shared with the creators. So the relationship right now is interdependent on each other. The more successful the broadcaster is, the more successful the creators are. Is that correct?