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

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

No, I'm telling you that you're giving us a specious argument. You're coming here and warning us about big, bad multinationals when that's part of your business. That's why you pay them. End of story. So don't come and ask us to protect you from paying multinationals.

But I have to move on, because I didn't hear an answer to Mr. McTeague's question about the cost. I was looking at your brief, and I did check it with the Copyright Board, which adjudicates the tariffs. Let's break down the tariff costs for a small station: average gross income of $120,000, total royalties $4,646; but if we take the mechanical royalty, it's about $720 a year.

If you are going broke paying a mechanical of $720 a year, I think that station would go under anyway, don't you?

[Sylvie Courtemanche]

It's cumulative, and it's not the only tariff payment that we're paying.

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

No, but you're paying a total royalty payment adjudicated by the Copyright Board of $4,646 a year. That's total royalty payment for a small radio station. Your costs to CSI are $365, AVLA and SOPROQ $334, and then for an artist mechanical it's $7. That's about $720.

So I'm just saying to you that, if you're crying poor with that, I'd be shutting that station down anyway.

[Gabriel Van Loon, Lawyer, Canadian Association of Broadcasters]

That's not the answer, and with respect, you're cherry-picking the numbers. There are stations in the middle. There are a lot of stations that have revenue slightly higher than that, that would be paying a lot more in reproduction right royalties.

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

Yes, so for a typical medium-sized radio station—$1,100,000 market—their total royalty payments would be $44,542. But if you break down the mechanical royalty, that's $9,200 on a station that's doing $1,100,000 a year.

[Sylvie Courtemanche]

Perhaps Brad could talk about the cost of operating a radio station at $1,100,000 in terms of employees and all the infrastructure. And don't forget, we're having to try to modernize; we have to go into a digital environment.

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

I know what the costs are, but I look at what you made last year, and you're in the...above and beyond costs, $1.5 billion. Last year, which was probably the worst year in memory, you were at 18% profit; in 2008 you were at 21%.

I'm just saying that this isn't going to break you.

[Sylvie Courtemanche]

You're penalizing success, and you're not looking at the principle. We think that the more successful we are, the more we pay on our royalty payments when it comes to the communication right.

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

I totally support success. I just wanted to get to the numbers, and those numbers were there.

I guess the other question I have is in bringing us in line with our international partners. I looked into that. Many of our partners set much higher tariff rates for play.

I look at the United States, which would be our number one trading partner. It doesn't have the broadcast mechanical, but broadcasters are legally allowed only a temporary copy of a transmission program. That's the entire show. There are no exceptions for reproduction of individual musical works, and they don't allow the broadcasters to build a library of musical works.

In the U.K. and Netherlands, they pay for both the communication right and the reproduction right.

In Germany, Spain, and Mexico, the exception allows broadcasters to make only one reproduction for the purpose of a single broadcast.

So is it really fair to say the situation in Canada, with that $700 that you're going to pay on top of that, which allows you a lot of flexibility...that it doesn't exist in many of our competing markets?

[Sylvie Courtemanche]

First of all, to reiterate what Gabriel said earlier, you're cherry-picking some pretty small numbers. As to copyright liability, when you look at what's happening in the U.S., it's about 2.4%. It's a marginal rate. Our marginal rate is 5.7%.

You know, if you want to start comparing, that's the difference, okay?

Now, if you want to compare....

Sorry?

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

[Inaudible—Editor]...in the U.S., whereas here you are. You're given a fair amount of flexibility. That's just what I'm saying, that it's not as if we have this onerous copyright regime. With the mechanical, you've been given a fair amount of latitude, whereas that doesn't seem to exist in some of our competing countries.

[The Acting Chair, Conservative, Maxime Bernier]

Merci, Mr. Angus.

Now I will give the floor to Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman.

Thank you to the witnesses.

I guess I'd start by saying that now you see what we have to deal with, so welcome.

I do sympathize a great deal with the Recording Industry Association's position. They're an industry that has been decimated, frankly, by the fact that we haven't been able to put protections in place that would re-establish the marketplace for music. I think they have seen about three-quarters of a billion dollars of their total revenues wiped out, and they're looking at the ephemeral rights and saying this is really important to them because their industry has gone from well in excess of $1 billion to $400 million, and they're hurting. I don't question for a minute that the Recording Industry Association is hurting and that comes back on artists.

The government's position on this, and I think this is an item of consistency on our part, is that we don't think you should have to keep paying for the same rights over and over again. That's been our position. There has been a lot of debate on this committee about some kind of digital copying levy, or an iPod tax as we have referred to it. What we've said is that if you buy the music, you should be able to put it onto a format that you want to listen to it on.

What you're saying is this: we have no problem in paying for music--we pay $65 million a year for music--but why can't we get the music in a format that we can actually play it in and why are we paying again to be able to play the music in the format in which we use it?

Isn't that your argument?

[Sylvie Courtemanche]

That's exactly what our argument is. It doesn't make sense to us. If the government has decided that it doesn't make sense to have an iPod tax, agreed. If the government has decided that....

You know, we have television stations. We have a signal right. But people have decided that they like PVRs and they want to be able to time-delay. Well, we're not coming to the government and saying, “Wait a minute, that's an infringement of our copyright.” We say, “You know what? That makes sense. If somebody wants to time-delay our programming, I'm not going to give consumers a hard time. This makes sense.”

We just think this makes sense. And I agree with you, let's face the facts; the music industry--we're not the cause of it. It's peer-to-peer sharing, and this bill deals with that. We're not going to save the Canadian music industry with $21 million.

We have an analogy for this.

Do you want to go ahead and give your analogy?

[Gabriel Van Loon]

You can look at the Canadian music industry as a ship that has taken on water and is sinking. Our broadcast ephemeral is like a little bucket. If you think you can save a sinking ship with a little bucket, you're fooling yourself. It's a very small amount. It makes a big difference for our industry; it makes very little difference for the music industry.

[Dean Del Mastro, Conservative, Peterborough, ON]

Obviously what I would say to that is that, first of all...and I appreciate that broadcasters, especially broadcasters that are across many different formats, like Corus, which is in television broadcasting and so forth, have in fact looked at the bill and said, “You know what? We're not crazy about PVRs, but at the same time, we think the bill is balanced. We've given up something. On balance, it's good for the country.” I appreciate your position on that.

As you said, $21 million isn't going to save the recording industry. Is it going to save some small radio stations? Is that really...? You've started a campaign to save local radio. Is it your position that the escalation of fees that you are paying is putting small and medium-sized radio stations in this country at risk?

[Sylvie Courtemanche]

Yes, because it's cumulative; over the last ten years it has just mushroomed. As I said, it's not keeping pace with our revenues, and our activity of broadcasting has not changed.

Brad, did you want to make a comment on that?

[Brad Phillips]

Sure, a number of comments, but I'll try to limit it to a few.

First of all, as far as the record companies are concerned, it strikes me as absurd that when they were having those billion-dollar-plus profits, they were doing that through the record airplay that we were providing. We didn't come to them at that point and ask for a portion of those profits.

Now that their profits are slumping and they have a problem, we're sympathetic to those problems, but it feels as though we're being asked to bail them out, which doesn't seem fair.

[Sylvie Courtemanche]

It's almost like social engineering here. It seems that on the bill they're trying to do some social engineering: when industry is in trouble, we'll take another industry to pay that.

That's not the purpose of the Copyright Act, to do social engineering.

[Dean Del Mastro, Conservative, Peterborough, ON]

No, and in fact it's not really how you build a perfect competition economy, either.

You're saying that small and medium-sized radio stations are at threat. I know that people working at your radio stations don't make a lot of money. It's a small-margin business. That's the truth of the radio business. Thank goodness people want to hear themselves on the radio, or you guys would be in real trouble.

What would be the impact on small and medium-sized communities if you closed these stations? I know that in my community one of the first things charities do, one of the first things I do when I need to get a message out is go to local radio and they push it out.

By the way, it's not as simple as saying that if you played more Canadian artists, the money would stay in Canada. People have options today. They have satellite radio. If you're not playing the music they want to hear, they'll listen to it somewhere else. So that's not a realistic--

[Sylvie Courtemanche]

I agree, it's not a realistic model; to start telling us that we don't know how to play for our audiences is just wrong. Yes, we do play...and you know what? It makes a huge impact. People want their local news. They want local reflection. We are a terrific community contributor through both our PSAs and our charities. We're legendary: Haiti, whatever, it doesn't matter; if somebody is in trouble, if a mother is having a problem getting her child to some clinic, the radio--

[Dean Del Mastro, Conservative, Peterborough, ON]

School bus cancellations.

[Sylvie Courtemanche]

Whatever; but the next thing you know, you have $50,000. The community is going, “Oh, my God, she needs a liver transplant, and she needs some money.” This happens every day on local radio.

If local radio stations close, the tap will shut off entirely. They will get no communication rights. They will get no reproduction rights. They will get nothing. They will lose all the exposure. The community will lose its best local reflection.

I think it's important that local radio be seen as the contributor it is. It should be recognized in a balanced act, which we think the copyright reform act does.

[Brad Phillips]

It's hard to listen to this discussion about fairness and balance, and talk about what happens in reality inside a radio station. Radio stations are like any other business. We have more than one computer. On what we're really talking about here, the music director's computer intakes the song from the record company. To get it ready to play on the air we have to put it over to another computer. Then we play it on the air. That process is $21 million to our business. You can talk about efficiencies all you want, but how is that fair and balanced?

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much.

I'll now give the floor to Mr. Rodriguez.