Bill C-32 (40th Parliament, 3rd Session) Committee on Feb. 17th, 2011

[Wendy Noss]

Again, I don't know to what you are referring, so I can't comment, but what I can tell you is that notice and takedown or a standard that prevents you from having a safe harbour if you have actual constructive knowledge is used to deal with hosted content. A graduated response and a notice program is to deal with getting people to change their behaviour who are operating in a BitTorrent--

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

I understand that. What I'm trying to find out is this. There were 5,000 lawsuits sent arbitrarily to IP addresses over The Hurt Locker downloads. That was followed by 20,000 lawsuits for five films, followed by 30,000 lawsuits. This has all happened in the last year in the United States, so they would be member agencies.

I'm just wondering if this is the kind of proposal you would support in Canada, or are you content with what you are suggesting concerning the other issues on holding the safe harbours to account?

[Wendy Noss]

The Hurt Locker was distributed by one of Mr. East's members. Maybe he can talk to you about the damage that was done, compared to the market for The Hurt Locker.

[Ted East]

The Hurt Locker is an example of a film.... We don't have exact percentages yet, and maybe the Ipsos study is going to reveal those numbers, but our members have believed for some time that the damage due to piracy is more than 10%. It is maybe 20% of the film's total revenues. There is no way to accurately know that. In the case of The Hurt Locker, the film had been on the market for a long time because of the type of distribution pattern that it followed, so people are aware of its being in theatres for months and months, and a significant percentage of people are now watching it illegally.

[The Chair, Conservative, Gord Brown]

Thank you.

We will move to Mr. Del Mastro for seven minutes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much.

Thank you to the witnesses for appearing today.

What you've outlined today is really important. What we're talking about is an epidemic. This is a theft epidemic, with $965 million evaporating into thin air and the loss of 12,000 jobs that we would otherwise have in this country. I can't believe that this place isn't being shaken to its foundations or that we're not addressing it. We are going through a process. We're punting the ball down the field. Maybe we'll get consideration of the bill by Thanksgiving. I don't know, maybe. At the current pace, I'm not optimistic. Who knows?

What you are outlining is a sense of urgency. I think that's what you're trying to convey to members here today. Is it accurate to say that from your industry's perspective, there is a sense of urgency that we act? Mr. Angus said it's a golden age for Canadian cinema, but this golden age can turn into iron pyrites pretty quickly, right before our eyes, if we don't act to protect the investments being made and to protect the jobs, whether they are the jobs of actors or all of the support industry jobs and all of the spinoff jobs.

You are telling us that if we don't act, this industry is in peril. Is that correct?

[David Reckziegel]

You brought up a very good point because, of course, the Ipsos study is looking behind and not looking forward. You used the word “epidemic”. This is what's happening. We are in a digital world and we're going faster and faster into a digital world. That is how people have chosen to watch their content, so this problem is going to be increasing exponentially if we don't do something about it immediately.

There are great services out there currently on iTunes and on Netflix, which just launched in Canada this fall. They are allowing people to watch their content the way they want and in a legal fashion. They're paying for it. I can tell you that when we put almost a million dollars into a movie like Incendies or several million dollars into Barney's Version, we're looking to those revenue streams in order to make those decisions, and if I see that in the future in this digital world, which is my future revenues, it's all going to be done through pirating, we will not make those investments and those movies will not get made.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much. That is a very powerful statement. I hope that resounds within the walls of this place and people understand what it is that we are really dealing with here.

Ms. Noss, you outlined a number of changes you'd like to see, amendments to the bill, to deal with the difference between the intent of the bill or the intended actions of the bill and what some of the outcomes of the bill may be if it's actually challenged in court or through the processes.

I imagine you put those in your presentation. We've heard a few technical amendments as well from the recording industry and some others that they would like to see made to tighten up the portions of the bill that relate to enabling infringement. Have you itemized those for the committee for consideration?

[Wendy Noss]

Yes.

To answer your last question first, we'll be submitting a written brief to the committee. We wanted to take your questions today and hear what you'd like to hear more about, and then do so.

In terms of your comments, it is important to appreciate that you have Canadian distributors and American distributors, labour in the form of actors, and IATSE, which represents the 16,000 people working as electricians and grips. You had the Canadian producers' association appear before you not too long ago. All of us--domestic and foreign, producers and distributors, labour, and those who make the films--are saying the same thing to you: this is important to this industry.

We need to have clear rules so that Canada is no longer a haven for people to operate these services.

[Dean Del Mastro, Conservative, Peterborough, ON]

This is almost a nonsensical debate I've heard at this committee, whereby we're really just concerned about getting money to creators. It's as if that needs to be the 100% focus of the committee.

Ultimately, there's an ecosystem in this entire industry. Every industry that relies on copyright protection has an ecosystem, and a big part of that ecosystem is a healthy industry that provides the jobs and the opportunities for the creators, for the actors, and for the workers and labourers who support it, who then support all the other industries and economies and all the spinoff jobs related to a film being made in a community. They are immense and they touch on so many other economies, but at the heart of that ecosystem is most certainly an industry. That industry works on economics, and the economics of that are return on investment. If you can't be assured of a return on investment, you're not going to make the investment in the first place.

Mr. Roy, you said something that I think is 100% true. People think anything they find on the Internet must be free and it must be okay. If they found it for free, it should be free, and I hear that prevailing view even from some members around this place.

If there's one thing I hope this bill achieves--and maybe you can comment on this--it will outline what is right and what is simply wrong.

[Patrick Roy]

I believe you have to make a clear ruling on this and to know what is acceptable and what isn't. That's not currently the case. However, this also requires subsequent measures so that citizens understand the consequences of their actions if they choose to opt for what is unacceptable, what is illegal.

As we said at the outset, we support the goal pursued by Bill C-32, but this requires changes so that everything is very clear for the public and so that we get decisive results. This has to result in an effective new act that will quickly change matters in Canada.

[Dean Del Mastro, Conservative, Peterborough, ON]

You mentioned a couple of very successful films. Certainly there was some celebration of that; the heritage committee passed a motion complimenting Mr. Reckziegel for Barney's Version, for example. We're very proud of it as Canadians.

If we meet the world standard, if we come up to our commitments under copyright, in your view, are we going to see more? Does that enable you to create more films like Barney's Version in the future?

As well, talk about the opportunity. I really like talking about what we can accomplish if we as a Parliament can come together and update this. What does our future look like?

[The Chair, Conservative, Gord Brown]

You have only about 15 seconds, please.

[David Reckziegel]

There are a couple of points there. One, of course, is that if we can reverse this trend, it will provide more revenue streams back to companies such as Entertainment One and Alliance, and because we're Canadian-based, we tend to reinvest that revenue back into Canada.

Of course, if we don't have the best practices of what's happening around the world, we're also international companies. We operate in multiple territories, and if the framework in Canada is not conducive to our making money, we will invest that money elsewhere.

If we want to continue to do more films like Barney's Version, we're not here looking for subsidies; we're looking to protect our revenue streams so that we can reinvest that money into the next Barney's Version or Incendies or Splice or whatever.

Thank you.

[The Chair, Conservative, Gord Brown]

Thank you.

We're going to move to the second round of questioning. Each member will have five minutes.

Go ahead, Mr. Simms.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Thank you, Chair. It's good to see everyone.

In your submission, the CAFDE also opposes the educational exemptions mentioned in section 29. On the heritage committee, I've received a lot of input on clause 29. It's very contentious for a lot of people.

Can you tell me about the changes that need to be made to protect the legitimate business rights of producers and distributors? Can you flesh out what the education exemptions will mean? I'm not looking for specific numbers unless you have them, which would be great, but maybe you could flesh out how difficult this could be for your industry.

[Ted East]

The bill, as drafted, as we understand it, would give the educational institutions an exemption for feature films. I'm just going to speak about feature films, because I know other aspects of the industry are upset about this for similar reasons.

For feature films it would mean that schools would no longer have to pay an educational licence to show films in schools. Our member companies have subdistribution deals with two companies, Audio Ciné Films and Criterion Pictures, which are very active in promoting Canadian films in schools. It's not just selling them the movies, but also providing educational materials on their Internet site, and written material. We have also been in discussion with them and a not-for-profit company called Reel Canada, whose mandate is to promote Canadian films in Canadian schools and to do more innovative things online.

If this bill passes as it's written, if I understand the implications, these two companies, Audio Ciné Films and Criterion Pictures, will be out of business, and any efforts that we're making to enhance the online experience for schools for Canadians films is dead in the water.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Would it be safe to say that you've done quite a bit to provide the content to these schools for educational purposes?

[Ted East]

These two companies do, yes.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

It's not at great profit to you, obviously, but....

[Ted East]

It's not at great profit. I would say the educational revenue for these distributors is not that significant, but it's more than that. You have two companies that have specialized in this, that represent the films of our member companies, and they have done great work in promoting Canadian films in schools.

[Patrick Roy]

Allow me to add that these companies play an essential role by encouraging people to watch Canadian films in the schools. We're not just talking about films as a whole, but specifically Canadian films. In Quebec as well, we're making a specific effort for Quebec films to be seen in the schools. I believe that, if the law is enforced as such, there is a risk that people will essentially watch American films in the schools. So there will be less revenue for Canadian films, and that will also constitute a cultural loss. I really believe we have to encourage more Canadian students to discover Canadian culture. Cinema is a very good way to discover a very interesting part of Canadian culture.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Go ahead.

[David Reckziegel]

I was just going to add that the revenue stream is not large for us, but it's a very important thing.

I think these two companies in question do a tremendous job in sales and marketing of Canadian film, Quebec film, and also films other than American films, frankly, from around the world. If they're not there, it's definitely going to end up being American films that are picked up. There's a lot of effort required, and in terms of educating our children about our heritage, it's very important that this continue.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

One of the arguments they would probably make to you is that since this doesn't represent a large portion of your revenue stream, why would this cause you any great difficulty?