Bill C-32 (40th Parliament, 3rd Session) Committee on Feb. 3rd, 2011

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Yes, I know. Small, medium-size and large businesses agree on one point: to do better business, you have to find win-win situations. Everybody has to win; our supplier, our business, our consumer and our client have to win. Do you agree with me, Mr. Beatty? I know why you're very happy about Bill C-32. Despite your association's name, Mr. Wilson, we can see that Bill C-32 isn't very balanced.

I'll take a few minutes to explain to you why that is. More particularly, the creators of artistic content are the big losers. First, since the private copying system hasn't been modernized, they lose at least $13.8 million a year. As a result of the exception for education, they lose $40 million a year. I'm taking shortcuts because you seem to have a clear understanding of the bill. With the abolition of ephemeral recording, they lose at least $21 million a year. That's a minimum. I noticed that other amounts were also paid, but I didn't include them in my initial calculation. That totals $74 million a year.

There's the exception for YouTube, whose content is generated by users. In France, since there's no such exception, France's Société des auteurs-compositeurs français, SACEM, has managed to negotiate with Google for royalties to be paid. And even there, some money is being lost. It's at least $74 million annually that the creators, artists and crafts people are losing under Bill C-32. Do they consider that balanced? No. You know how to talk about money; you know very well they can't find that balanced. These aren't subsidies, but rather money that is being taken out of their pockets, money they normally used to receive.

In addition, yesterday, the Standing Committee on Canadian Heritage heard from the people responsible for the copyright bill at the Department of Industry and the Department of Canadian Heritage. I put the question to certain individuals around the table. I asked them what artists would gain with Bill C-32 and for them to name one bankable gain that they could make money with? There are indeed a few more rights, such as performers' rights, but that's not bankable. A power relationship is being established; the artists are happy, thank you very much, but that's not bankable.

So this is a bill that takes at least $74 million a year away from artists who earn an average of $23,000 a year and that gives them nothing more, no way to make more money. Creators can be viewed as suppliers. They're the ones who fill all the Internet sites of this world. The programming of 80% of radio stations is filled with music. When our suppliers no longer produce because we've slit their throats, what do we do? Will your radio stations want to go to the United States to get American music? When the clientele, Canadian and Quebec consumers, see that, how will they react? As for getting American music, let's go after American broadcasters. They'll change stations.

I want to outline this problem of lack of balance to you. I know you're very intelligent people. You know business, the value of money, and you know what it means to make a situation more profitable for everybody. So I'll let you speak.

[Jay Kerr-Wilson]

Thank you very much, Madam Lavallée. I'll answer in English, if that's okay, just so I can make myself better understood.

I would respond in a couple of ways. First of all, the act, as it exists now and as it would be amended by the bill, creates the same rules for everybody. So whether you're a large corporate rights holder or a small individual creator, the same rules apply to everybody. And the same holds true for Canadian creators and non-Canadian creators. We have an obligation to provide the same level of protection to everybody.

So when you talk about the lost revenue--and I'm not familiar with the figures you cited--certainly, I'm not aware of any money lost through a time-shifting exception, because right now people can use a VCR or a set-top box or a computer to record television shows, and there's no revenue associated with that. So I'm not sure the bill is going to cost anybody any money.

But I think a more fundamental point is that using the Copyright Act to try to sustain some minimum level of income for creators--which I think is a laudable goal and a good public policy objective--has some problems, because the bill applies to everybody. So if you create a measure hoping to provide some moderate level of income to Canadian artists, the way the provision will be applied, most of the revenue generated won't go to Canadians. It will go to large corporate American rights holders who have the bulk of the market in the U.S.

From our perspective, we should set ground rules in the Copyright Act that allow creators to market their creations and to benefit economically, and then on top of that, if we think Canadian artists--because we live in a smaller market and they have a much more difficult economic challenge--require additional support, then as a matter of public policy we should do that directly. We can't target support for Canadian artists through the Copyright Act, because most of the money will simply go to creators from other artists and to those who already get the most airplay, the most CD sales, and the most ticket sales.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Pardon me, but I simply want to make a minor correction. The legislation contains measures that strip artists of income they are currently receiving. Perhaps the easiest example for you to understand is the exclusion for ephemeral recordings. Radio stations pay at least $21 million a year for ephemeral recordings. The bill—if you wish, I'll cite the clause when you leave your chairs later—repeals the clause that allows them to recover $21 million. That's a lot of money for artists, as I said, but I also want to let the others respond. Mr. Beatty?

[Perrin Beatty]

Thank you, Ms. Lavallée.

Let me simply set a context for you. First of all, I can hear the passion in your voice when you talk about artists. It's a passion I share as the former Minister of Communications for Canada responsible for Canadian culture

and as former president of the CBC.

For me, it's absolutely fundamental, and as Minister of National Revenue, I was responsible for bringing in the status of the artist bill, which was designed to help provide protections and income for artists.

Copyright protection is one of the tools--it's not the only tool--the government has at its disposal to provide for better incomes and better support for creators. This is why we support the legislation. Artists themselves will benefit from having better copyright protection. Businesses will, and others will as well.

There are other tools in addition to that, as you're looking at the income of artists--support that may be available for the artistic community, which government also has at its disposal--and you should look across the board at all those measures.

Of concern to us, though, as we look specifically at copyright, and where we believe that both artists themselves and the businesses that are involved with them will benefit, is that we not lose this best chance that we've had to modernize our legislation and move ahead.

I've read the committee's transcripts, and the one area in which there's agreement is that the status quo is unacceptable. We have to make improvements. We need to strike a balance, to find some sort of fair middle ground. We think a conscientious attempt was made to do that. We're making proposals for ways to improve it beyond that. But we think that can be done.

Mr. Webster might want to comment specifically--

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

I'd like to use the last 10 seconds of time allotted to me, Mr. Beatty.

Only 10 seconds, right?

[The Chair, Conservative, Gord Brown]

We're going to have to move on.

Mr. Angus, you have seven minutes.

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

Thank you, long-suffering Chair. Have I told you lately what a good job you do?

Thank you, gentlemen. This is fascinating. I'm glad to have you here.

What we always hear is that this is about balance. Everyone who comes to us says, “Listen to me because I've got the balance. The other guys are unbalanced.”

There's something I've noticed. I've found two interesting perspectives on copyright. Mr. Webster, you tell us it's about stopping people from stealing your sofa, that it's a property right. Copyright isn't a property right. Copyright is a construct of Parliament going all the way back to Queen Anne's Law, which was designed as a public good. And the good was to remunerate the artists and to decide the limits on that remuneration. It's not like you own a house and you pass that house on to your kids.

Mr. Wilson, you're describing copyright as a laudable goal for Canadian artists. But it's not the Canada Council. I don't care if Bono is going to make a lot more money on Canadian radio than is Sarah Harmer. Copyright is fundamentally about ensuring that artists get paid. Otherwise, there is no business model.

You say we shouldn't worry about updating the levy. But we have some $41 million directly in musicians' royalties that would be lost, from the mechanical royalties that are going to be tossed out if we don't update the levy in some form of digital format. That's a serious amount of money, and that's not counting the other areas where artists are going to lose.

Don't you think there is some obligation, if we're going to talk about copyright, to recognize that it's actually about people getting paid for their work?

[Jay Kerr-Wilson]

Yes, Mr. Angus, I agree. And I'm glad you asked the question because I think it also will address Madam Lavallée's question. When she was talking about time shifting, I misunderstood and thought it was about the recording of television programs. I think she was talking about the ephemeral as well.

I have a couple of points to make in response to your question. I'll try to make them quickly.

First, 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. And if amended, they can't rely on that exception to do it. They need to have some other mechanism to have long-term copies. This is simply short-term copying.

But I absolutely agree with you. The fundamental purpose of the Copyright Act is to provide rights holders with the protections they need so that they can derive revenue from their creations and see a return on their investment.

Going back to Queen Anne, that revenue was through agreements, through contracts, going out to the market and making deals with publishers. And when we finally got to the recording industry, it was about making deals with the recording industry. And then consumers would place the value they wanted on the works.

When we talk about the levy, the problem is that there's a large disconnect between what the levy would be used for and what the levy would be collected on. The days of the single-use digital music player are gone. Everything is a multi-use device. People want their phones, their Internet access, their music players, and their cameras all in a single device. So how do you charge a levy for music on a device that may never see a song embedded in it, such as mine, which can take music but doesn't.

The other problem I have with it is that the coalition wants to see artists succeed in a new digital economy.

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

Which coalition? Are you talking about their coalition or our coalition?

[Jay Kerr-Wilson]

Sorry, our coalition.

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

I thought you were going to go after the socialist and separatist Bloc coalition. Whenever we talk about levies, my guys get all excited. I'm seeing them just gyrating.

[Jay Kerr-Wilson]

We may need to rebrand.

But we have submitted to the committee a copy of the licence that online music services such as iTunes are required to pay to authors and publishers in order to make copies. And we've highlighted on the first page of the levy the part that says, “(1) This tariff”, which is a payment to rights holders from online music services, “entitles an online music service and its...distributors (c) to authorize consumers in Canada to further reproduce the musical work for their own private use”.

When consumers buy songs for iTunes, they're already paying for the right to move them onto their iPod. So the levy would actually require those consumers to pay twice, once when they buy the device and then again when they pay to use it.

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

We're not going to get too much into this, but if you look at the Copyright Board decision, contrary to what my colleagues over there say, it doesn't get applied to cars. It doesn't get applied to cellphones. It has to be very specific in terms of the playing device, and the revenue we're looking at is $35 million. That's a shortfall. I have to go back to artists in my region, or across Canada, and say, we're giving you a copyright bill and we're telling you to lump it. Live off iTunes.

I have songs on iTunes, and I can tell you that doesn't cover one-fiftieth of what's being copied out there. So we have to find a copy mechanism.

I have to move on, because I want to speak with you, Mr. Beatty. I'm glad you read what I said in the House on WIPO. I might have said that it was written when the fax machine was cutting-edge technology. I think that was my full quote. I'm worried that when we talk about WIPO we are applying elements to WIPO that are not necessarily there, for example, the technological protection measures in the original WIPO treaty. And if you look at WIPO-consistent countries, in recent analysis we looked at many of our WIPO competitors and they have exceptions on technological protection measures, because under article 10 in the WIPO Copyright Treaty it says that it is “possible to carry forward and appropriately extend into the digital environment limitations and exceptions in their national laws which have been considered acceptable”.

For example, if we give someone the right of parody and satire in a non-digital world and that exists in a digital world, do you not believe it's possible--I know it's difficult and it might be problematic for some--that we can establish a made-in-Canada law, in terms of technological protection measures, that allows us in Parliament to set the exemptions so that we are still WIPO-compliant, so we are still very much with that treaty of 1996?

[Perrin Beatty]

Thanks, Mr. Angus.

I'm not a lawyer, and I'll spare you my legal opinion. As a result, I'll turn to Mr. Webster.

The only thing I will say, based on your previous question and notwithstanding the fact that I was here a long time ago, is that Queen Anne had actually passed along before my day. It was a bit before my day, so I didn't have a chance to discuss it with her, but Lee is no doubt up to speed on all of that. I'll turn to him.

[Lee Webster]

Thank you.

You touched on a number of topics, but I think the bill is WIPO-compliant as it is. Certainly we can craft exemptions to it if we wish to do it. The question is whether we wish to do it and whether it's appropriate in the circumstances.

I don't want to get into an argument with you over whether my sofa is akin to a copyright, but copyright is an intellectual property right, and the reasons we have an intellectual property right are twofold. One, it is to reward creative efforts, and two, it is to stimulate creation. We're sitting here. The chamber represents not just big business but also little business, but copyright goes back to the authors and the creators. The reason we have copyright is to reward creativity.

We talked about striking a balance. That's fine. The balance we have to work at is how much reward to give to the creators and authors, and that's why we're all here today and that's why the legislation needs to be updated.

One thing we should not have is any misconception that copyright is just something to enrich the pockets of big business. It goes back to authors and creators. That's the fundamental foundation to the right.

How far does the right go? We now have an opportunity to make changes, to look at this to see what's appropriate in the digital age.

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

The question is...because I think we all agree. We want to make sure that if you invest a serious amount of money into a product it's not going to be bootlegged and stripped apart. The question is if there are specific exemptions that are guaranteed under Canadian law.

You say let the market decide. I don't see how you can decide legislation and say you have rights, but some corporate piece of software is going to deny specific rights that you should be able to access. For example, carrying satire--

[The Chair, Conservative, Gord Brown]

I'm sorry, Mr. Angus, that's going to have to be it.

[Lee Webster]

Part of the problem with this is unintended consequences. I was practising law back in 1997 when we went through the last round of amendments, and there was a lot of talk focused on dual cassette decks, basically. My dual cassette deck went out in the garbage about a month ago. We didn't think in those days of Napster or iPod or anything at all like that, so to try to craft exceptions for--

[The Chair, Conservative, Gord Brown]

Okay, we're going to have to wrap it up and move on to Mr. Del Mastro. I'm sorry, we're well over this round.

Mr. Del Mastro, for seven minutes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much, Mr. Chairman.

And thank you to the witnesses for appearing today.

Frankly, it's a contrasting testimony to what we had the other day. It's somewhat refreshing.

With respect to the numbers, Mr. Kerr-Wilson, I'm not surprised you're not familiar with some of the numbers that are being thrown around today. For future committee hearings, I'm going to have the chair bring in the big wheel off the Wheel of Fortune. We'll just spin it, and whenever it stops, we'll suggest that that could possibly be a number that might be impacted by the bill, because I have no idea where these numbers are coming from. Even when we asked folks to quantify it, it was very difficult for them to actually quantify where the numbers came from. So I'm assuming it's a big wheel that you spin.

Anyhow, Mr. Beatty, you made a fantastic comment when you said “Let's not let the perfect be the enemy of the good.” I can't agree more. Based on the consultations that we've had across the country, we've met with members, frankly, of the Chamber of Commerce, big and small. There was a comment made the other day that this bill seeks to protect big copyright holders but does nothing for small copyright holders, does nothing for small business. In fact, we get bogged down a lot talking about artists on this committee, but what we're really talking about is creators—creators of all different forms of intellectual property. Some of it is music, some of it is art, some of it is photographs, in fact, which are now protected in this bill. Some of it is software that's created--gaming software, software for computers and business. These are all the types of things that are protected in this bill--creators big and small. It's a good bill.

I've seen your amendments, by the way. They are largely technical amendments that involve making sure that the intent of the bill and the actual function of the bill, in law, is in line. I think I would describe them largely as technical amendments that you're suggesting.

So if we're not going to let the perfect be the enemy of the good, you and your association, I'm assuming, must be here representing big and small and creators of all forms. Is that accurate?

[Perrin Beatty]

Yes, we are. In our network we have 192,000 businesses. The vast majority of them are small and medium-sized businesses, and both larger businesses and smaller ones will benefit from this legislation.

Just going back to your question, the only pitch that I would make is, yes, we are recommending changes. I hope the government will be flexible on those. There's a lot of heat that's generated by the debate, and you can see it in the parliamentary committee; you can see it in public comments that get made. But I was struck when I was reviewing the evidence by the degree of consensus there is in terms of what the goals are that people on all sides are trying to achieve. I think if there's sufficient goodwill, we can have a situation that is infinitely better than where we find ourselves today, where I cannot find anyone who says that what we have today is acceptable.

[Dean Del Mastro, Conservative, Peterborough, ON]

Yes, I agree. I think, frankly, the government's willingness to work this bill through the process is evidenced by the fact that we're here at a legislative committee specifically set up for this copyright bill and to work this thing through. We're frustrated, on our side, because we feel that the bill is simply being punted down the field and we don't have the focus we would like to see to have this bill accelerated and dealt with.

How important is it to the Chamber of Commerce, sir?

In fact, Mr. Kerr-Wilson, how important is it to the group formerly known as the Balanced Coalition for Balanced Copyright? How important is it that we get this, that we deal with it, that we deal with it promptly, and that this bill becomes law as soon as we can possibly do that? How important is timeliness?

[Jay Kerr-Wilson]

Certainly, on behalf of the BCBC members, we think it's absolutely fundamental that the rules have to be established that create the framework for all Canadians to move forward into the digital economy, whether it's creators, distributors, or consumers. We encourage Parliament to work together, the parties to work together, to get the bill passed this time.

We would agree with Mr. Beatty's comments that we can't let the perfect be the enemy of the good, especially when we have regular review mechanisms built in. We can fine-tune and we can correct, but we need to take that first step and give the marketplace the tools it needs to develop.

[Dean Del Mastro, Conservative, Peterborough, ON]

Is timeliness an issue for your members, Mr. Beatty?

[Perrin Beatty]

It sure is. And we've been waiting a long time. It goes back to my day when we were talking about this. The technology has changed dramatically since the time when I was Minister of Communications. Various ministers have attempted to modernize our intellectual property regime. It needs to be done now desperately, and we can't just push it off or else everybody loses—everybody loses. The Canadian economy loses jobs, prosperity. Artists, other creators lose. This is the best opportunity we've had for a long time to modernize the regime, and we need to do it.