Thank you for inviting us to appear before this committee to talk about this important piece of legislation.
I am here as chair of the Canadian Association of Broadcasters, an association that represents over 600 private radio stations across the country. We also represent the vast majority of television services in Canada. I am also vice-president, government relations, of Corus Entertainment Inc., one of Canada's leading media companies and Canadian content producers.
Copyright reform is necessary and urgent. Private broadcasters support Bill C-32. We believe this bill demonstrates a great effort on the part of the government to arrive at a balanced solution that provides something for everyone. We strongly support passage of this important piece of legislation.
Bill C-32 contains important clarifications of the broadcast incidental reproduction provision that recognize the unfair and unsustainable burden borne by broadcasters. We'd like to take this opportunity to explain to you why it is essential that this provision remain in the bill.
The proposed amendments to section 30.9 of the Copyright Act provide broadcasters with the right to operate their businesses in the digital economy without unfair and irrational duplication of their copyright liability. Some of you may remember that this exception was introduced in 1997 in the last Bill C-32. The very same collectives that have appeared before this committee appeared then and told the heritage committee:
Music publishers recognize that such copying [meaning radio's transfers of format] is integral to the operation of radio stations, and also realize that any publisher foolish enough to demand payment for such copying would likely find himself frozen out of the station's playlist in short order.
On this basis, an amendment to the ephemeral exception provision that effectively nullified the exception for broadcasters was introduced. Starting in 2001, the same collective who told the heritage committee it would be foolish to seek payment for incidental reproductions took advantage of the new statutory framework and sought and was granted a tariff payable by radio.
Today, radio is still paying that tariff to the music publishers, but at a higher rate. And radio is also paying two additional reproduction tariffs: one to the multibillion-dollar foreign record companies; and one of a much smaller amount, less than $200,000, to actual performers. This brings the total liability for something that all parties agreed should never be compensated to $21 million a year. We have heard many incorrect statements relating to the $21 million that the reproduction right is currently worth, but one truth is unequivocal: broadcasters make no money from the act of reproducing music content for the purposes of facilitating the broadcast of music.
We've heard members of this committee say that the $21 million would be carved out of income of artists. That is simply not accurate. We'd now like to explain to you how that $21 million actually breaks down.
It is important to understand how this $21 million is filtered through a complex collective licensing system that deducts large amounts for the overhead and legal costs of the collective society administering the tariff and for distribution to foreign record labels and publishing houses, before any of it ends up with the artists themselves.
Of the total $21 million, approximately $10 million goes to the multibillion-dollar foreign record labels. An estimated $1.1 million is deducted for overhead and administrative costs for the five collectives involved. Approximately $6.4 million goes to foreign rights holders, which leaves $3.5 million to be shared among the publishing houses, which are not necessarily Canadian, and the artists. We've provided the breakdown of this amount in our brief.
While the record companies and the publishing houses will tell you that the broadcaster exemption takes money away from artists, the truth is that it will take money away from multibillion-dollar foreign companies. In fact, the broadcaster exemption will make it possible to keep the money in the hands of 100% Canadian companies that invest substantially in their communities and in Canadian artists.
We want to emphasize that broadcasters are not opposed to paying for the communication right.
Private broadcasters were very pleased to see the inclusion of amendments to section 30.9 in Bill C-32. We were further pleased by the government's explanation that the intention of this amendment was to ensure that radio broadcasters would no longer be required to compensate copyright owners for making reproductions in the context of their operations. However, we believe the current drafting may not fully reflect the intent to provide a full exception to the reproduction right liability.
Our suggested amendments are highly technical in nature and designed to promote technological neutrality, minimize confusion, and ensure consistency with the rest of the provision as well as the Copyright Act as a whole. We will undertake to provide our proposed amendments to the entire committee.
The broadcaster exception is necessary. It will bring Canada in line with our international trading partners. Canada is one of a small minority of industrialized countries that still does not have a broadcaster exception. It will recognize the truly technical nature of the in-station reproductions.
Thank you for the opportunity to appear before you today.
I'll now leave my friends from Astral and Newcap to explain how broadcasters contribute to their local communities and help Canadian artists.
