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

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Okay.

Is it your feeling that we need to create a balance here? I am from northern Ontario, where more people probably rely on radio, and there are fewer radio stations than elsewhere in the country or in large urban centres. In many communities, radio is an important and integral part of the community.

Mr. Davies mentioned a number of things that his corporation is involved in, and I would suggest to you that all radio companies do essentially the same thing right across the country.

We've seen the ebb and flow of profits and the problems and difficulties radio stations face. Yearly, biannually, every 10 years, they come and go. People get bought out, stations get sold--that sort of thing. I'm thinking particularly of rural areas that really depend on radio. If there were an exception made and you could save, in terms of revenues, another 1% or 2% or 3%, do you think that would create more stability in the radio market across the country?

[Ross Davies]

Mr. Rafferty, thank you for your question.

I'm glad to hear that you're from northern Ontario and understand some of the realities of what broadcasting is, and living in those sorts of communities.

Absolutely, and let me see if I can give you a tangible example. Haliburton Broadcasting has a radio station in Timmins, and it has its challenges. We have a technical challenge with our transmitter. We need to spend more money to increase the radiated power coming out of that transmitter. That's a hard cost to us. We don't have a live body on the afternoon show. Our competitors do. That's our problem. We recognize that, but we have to fight to do that. Right now the margins are so tight there that we can't afford to do that.

We are talking real dollars here, and to answer your question, that kind of exemption from this right, which is a duplication of all these other tariffs we'll be paying, absolutely will have an effect on our service in those communities. That is without a doubt.

We just were lucky enough to receive a licence for a new operation in Barry's Bay, Ontario. This is a radio market that has never had a radio station. We're going to go in there. We're not going to make a lot of money. We're going to try to do the best we can, but we're going to be in there, putting some bodies in there, creating jobs, and creating a connection to the community, providing all the things that radio does best: community service, fundraising for the charities, and we're going to reach out to the artists in that community and promote them. That is a hard cost to us.

Now, the other thing is that we're going to be playing music. So guess what happens? The music industry is going to get some more money because we have this new undertaking in Barry's Bay. But that's the reality of small-market radio.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

I would say you know the technology just as well as Mr. Larche. That's a nice look at what small-market radio stations mean in this country.

I am trying to get a handle on how this works. It seems to me we are talking about a middleman here. We're talking about someone who is possibly making some money because...and they're not really earning it.

You know, coming from Ontario, I think that here we have a situation where we get our electric bill--

[The Acting Chair, Conservative, Maxime Bernier]

Thank you.

[John Rafferty, NDP, Thunder Bay—Rainy River, ON]

Oh, is my time up? I'm sorry.

You see, my days in talk radio....

[The Acting Chair, Conservative, Maxime Bernier]

Merci beaucoup.

Mr. Fast, you have the floor.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Chair.

I thought Mr. Rafferty was on the right track here.

Gentlemen, thank you for being here. I think you've have articulated what millions of consumers across Canada know, and that is when they buy a CD, and pay money for it, they should be entitled to transfer that to their iPod, their iPad, their desktop through Apple TV, or any other medium they are using for personal use, BlackBerrys or whatever. They understand that when they have paid for it once, they shouldn't repeatedly have to pay for it again, when they transfer it.

Somehow my Liberal, NDP, and Bloc friends don't get that. They want to impose on your industry a different standard...that our consumers understand. This act actually goes that extra step and says to consumers, “You know what you've been doing in the past anyways? You understand what's involved. We're going to actually make that legal so you can transfer from one medium to another, provided it is for your personal use.”

Now, you were present when Mr. McTeague made a statement that I will try to quote exactly. He said there was “nothing for creators” in Bill C-32. I was here on Tuesday, two days ago. We had the Canadian recording industry represented here. They told us to please pass the bill, because it creates new protections for creators. They asked to please get this passed as quickly as possible.

They went further when Mr. Angus from the NDP tried to provoke them into making a big deal out of the removal of ephemeral rights, making sure there wasn't a duplication of payments to broadcasters. The representatives from the recording industry said, listen, our house is burning down. The solution is not ephemeral rights. There is a much bigger picture to it. They said that what is in the bill right now goes a long way to establishing more robust protection for creators.

There is a suggestion here that somehow creators are losing revenue. Yet some of the evidence we've heard is that most of the money that comes from reproduction payments doesn't go to the creators at all. Most of it goes to other parties. Can you comment?

[Ross Davies]

Thank you for your question.

I found it very interesting that two days ago, I think, or three days ago, when the music industry was up here, one of the artists they had—I think her name was Davies, actually, no relation to me—was not even aware of the mechanical right reproduction, that they were going to get some money. She didn't even know anything about it. It's not going down to those artists. What little there is in that is not even getting to them.

I'll remind you of another story I had with one of the big record guys. About a month ago, in Toronto, I ran into him and I was talking to him, and I said, what do you think about this? He said they really want the mechanical right reproduction. I said, well, wait a minute, here, we're supposed to be on the same side; do you know what it is? And he didn't know what it was.

I understand his motive: because the house is burning, get that. So actually, passing this bill was going to help these guys, and so the artists and the creators are getting paid for this thing, but they're not even.... This mechanical right reproduction, as like Mr. Larche said, is a cash grab. We're already paying the creators.

I note what Ms. Lavallée said about the creators. We totally agree that the creators should be paid. We are paying them already. We just object to the music industry going back two and three times. It's double-dipping here, ladies and gentlemen.

[Ed Fast, Conservative, Abbotsford, BC]

Who do the reproduction payments go to? Are they not collected by collectives that then have their own administrative cost? They spin it off to the international conglomerates. Really, our artists aren't receiving much, if any, of these--

[Paul Larche]

Of the $21 million in that reproduction cost, $16 million of it goes to foreign record labels and foreign right holders. There's an overhead cost of over $1 million. Really, what stays here in Canada is about $3.5 million.

I know that what the honourable members are talking about here is trying to make sure that artists, particularly a lot of artists in their local communities in Canada, and in their markets, are being supported to get them going.

Well, the trickle-down to that artist is.... This isn't the right thing to do it. And as I said earlier, two wrongs don't make a right.

[Ross Davies]

Mr. Fast, we share the concerns of the record industry and the artists. Obviously, with our music-intensive radio stations, we need them, and we are paying them, as we said. But let's not also forget, we're paying over $50 million every year directly to the Canadian artists, the creators—$50 million every year. I don't believe any other country in the world has legislation that requires broadcasters to support their local cultural community like we have in Canada.

But you know what? That's what it is. We're doing it. We will continue to do it. That money is not going away, ladies and gentlemen. That money is staying.

[Ed Fast, Conservative, Abbotsford, BC]

Let's go back to 2001, when you first started making these payments. How many collectives were in place at that time?

[Ross Davies]

I stand to be corrected, but I believe there were two at that time.

[Ed Fast, Conservative, Abbotsford, BC]

How many are there now?

[Ross Davies]

Five.

[Ed Fast, Conservative, Abbotsford, BC]

Five collectives. And in the future, you can assume there will be more and more coming to the table to essentially—I hate to use the word—“gouge” the industry for very little value, if any, for creators.

Am I correct in characterizing it that way?

[Paul Larche]

I can answer that.

As an owner-operator, I can tell you that when I bought the first radio station I owned, as I said, in 1975, we were paying 3.2% to SOCAN. It was one collective at the time. This past year, I paid just under 9% to all the various collectives. I've just about tripled in rights payments to the various collectives that have been added on and on.

[The Acting Chair, Conservative, Maxime Bernier]

Merci. Thank you very much.

I will give the floor to Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Thank you very much.

Mr. Davies, you talked about the administrative costs of the copyright collectives. Do you have a document that you can submit to show those costs? Do you have any supporting figures?

[Ross Davies]

I don't have it here, Mr. Rodriguez.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

Could you table it?

[Ross Davies]

I'm happy to have our people table it with you.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

You also said that most of the $16 million goes to foreign record and publishing companies. First of all, since Canadian and Quebec artists also belong to those companies, some of the money stays here. So that's a somewhat simplistic proposition. Then I would put the ball back in your court by saying that you're the ones who play that music.

You decide to play that music. If the money is going out of the country, it's because you decide to play the music of American artists or those from other countries. I would say that if you played more Canadian stuff, there would be more money here. Isn't that a fact?

[Ross Davies]

I can't deny that this would happen. I think you see that in Quebec, with the 65% French vocal content that radio stations have in Quebec. Even though they may only be legislated to play 35% Canadian content, quite often the reality is that they're playing way more Canadian content in Quebec because of the 65% French vocal content.

[Pablo Rodriguez, Liberal, Honoré-Mercier, QC]

That does represent a lot of money.

Mr. Banville, I'm going to ask you a question, but I don't have a lot of time and the Chairman is strict.

You said you're like a perfume maker. So you need a lot of flowers, content. But those are things you have to pay for. You have to pay for those people so that they can continue growing flowers; otherwise they'll die.