Thank you.
Thank you for having me here today.
My name is Paul Larche. I'm the owner and president of Larche Communications. I've been working in the radio industry since 1975, starting in Timmins, Ontario. I was also a part-time musician early in my career and owned a recording studio. I purchased my first radio station in 1995, CICZ-FM in Midland, Ontario. My company now currently operates four radio stations in the province of Ontario, employing 65 employees.
In my 36 years in the radio business, I have witnessed first-hand a lot of changes, many brought on by the advances in technology and the new digital world. When I started we played most of our music on turntables using good old vinyl 45s. But what hasn't changed is our primary mandate, which is super-serving our local communities.
Our companies are vital to the fabric of the communities, through hundreds of year-round fundraising activities for local charities, coverage and promotion of local events and stories, and the dedication of countless hours and energy required to bring people together for a common cause. We don't just broadcast music to our communities; we are an integral part of them. In the past five years, my stations have raised over $750,000 for worthwhile charities in our communities, something we're very proud of.
As you've already heard from my colleagues, copyright is one of the biggest issues facing radio broadcasters. I'd like to explain to you, from a technical perspective, what actually happens at a radio station to get music on air. Maybe this will help you understand the process and why this reproduction right payment makes absolutely no sense.
At its core, the practice of getting music on air is fairly simple. The music industry asks us to air music and sends us a copy. To be clear, there was never any payment exchanged for this part of the process. They need the promotion that comes with the airplay, and we need the music to play on air. It's always been a great exchange.
When the Copyright Act was reformed last time in 1997, things started to change. Music was being delivered on CDs, and radio stations were using technology that required transferring the music into computer servers for playback. Unfortunately, this simple upload was now identified as a “copyright event”, and despite the fact that radio stations made no additional money from the procedure, this purely technical process at the time was valued at $5 million per year by the Copyright Board.
These days, no one uses CDs anymore. Instead of sending promotional representatives to our stations and pressing the music to CDs and putting them in CD cases, the record companies now just use a digital delivery service to send us individual tracks. They are still pushing the music, and they are still asking us to play it on air. Now, instead of uploading a CD, our music programmers simply accept the invitation from the record label and the song often automatically uploads into our systems. As of last June, this process has now been valued at $21 million by the Copyright Board.
That's right: our stations are now making three different copyright payments, for a total value of $21 million across the industry, to simply accept an invitation from the music industry to play their song. As I'm sure you can imagine, I have a hard time rationalizing the cash grab.
I have an even harder time processing the relative cost of these copyright payments to things like my employee salaries and benefits, technological upgrades to keep my business competitive, investments in research and development for new platforms to ensure the music we play gets heard by as many people as possible and frankly also to help me promote local artists in my area—particularly because this $21 million is on top of the $64 million that our industry pays to play the music in the first place, and then an additional $51 million in contributions to Canadian content development.
I'm a small business. There are many more like me across the country. Our increasing copyright payments have a huge impact on our bottom lines. Of the four radio stations I own, two are relatively new and they're not making money yet.
Now, listen, don't get me wrong; I am more than happy, and I think it's more than just, that we pay our fair share for music. We should; we get great value for it. Our stations have always had a terrific relationship and partnership with Canadian artists. We have many awards from their industry to support this fact. But this reproduction payment is just downright unfair. When I explain the subject to my musician and artist friends, they agree it's irrational. Most of them are not even aware of it. And when I tell them that most of the money goes outside of Canada to international record companies, they often get mad.
The bottom line is that the reproductions made by broadcasters to get music into our computer system do not harm or shortchange the rights holders in any way.
Broadcasters make reproductions only to facilitate the broadcasting of the music. We've already paid to use it. New use is made of the music; radio makes no additional revenues. This is a purely technical event and is no different from what individual consumers do when they transfer songs they've legitimately acquired onto their iPods.