Bill C-32 (40th Parliament, 3rd Session) Committee on March 10th, 2011

[Alain Lauzon]

For the societies that we represent, we receive the reproduction royalties that are collected for our repertoire in the countries of Europe, in South America and so on. And, of course, for commercial radio, for example, when we allocate the royalties that we collect, we give royalties, equivalence, to foreign societies.

That's based on the repertoire that we own, but I can assure you that the royalties that we collect from outside Canada are greater than those we send outside Canada.

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

Anything to add?

Merci.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much.

Ms. Lavallée, go ahead, please.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Thank you very much, Mr. Chairman. First, I have a question for Ms. Atwood.

Ms. Atwood, can you hear me?

[Margaret Atwood]

Yes, it's clear.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Do you have simultaneous interpretation?

[Margaret Atwood]

Yes.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

First, I would like to thank you for testifying before the Legislative Committee on Bill C-32.

Earlier you talked about confiscating copyright. These gentlemen from CSI said that Bill C-32 prejudiced authors.

Do you believe that too? Do you believe that Bill C-32 prejudices authors? What do you believe? Should we adopt it as such or not?

[Margaret Atwood]

They are being negatively affected by it because property is being taken away from them without their consent and without compensation. If somebody took your piano out of your house without your consent and without compensation, you would call it theft. I assume you would consider that harmful to you. For me it's simple. Something is being taken away that you own, without your consent and without compensation.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

So you are of the view that we should not adopt Bill C-32.

[Margaret Atwood]

We need a revised copyright bill. I do not feel that the exemption I spoke about should be passed in its present form, because it takes property away from people without compensation. That is either theft, requisition, or confiscation. Do you want to do that?

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Thank you very much. Now I'm going to put some questions to the people who are here, with your permission.

I don't know who wants to answer my questions first, Mr. Lauzon or Mr. Basskin.

Last week, the Canadian Association of Broadcasters came here and seemed to be strongly defending small stations. It mainly said two things: first, that there has been a 140% increase in royalties payable and that that was having an effect on broadcasters' ability to innovate. It also said that they were forced to pay twice for the same thing. Is that true?

[David Basskin]

First of all, describing the royalties that are paid as “punishment for innovation” is an interesting way of looking at it. We obviously disagree.

Broadcasters are taking advantage of remarkable technology that has developed in the last few years that enables them to save a great deal of money and resources. They don't have to have a room full of CDs or vinyl records anymore. They don't have to pull the records from the shelf and line them up in the order they're going to be played. Nothing gets lost; nothing gets rolled under a filing cabinet.

The operational advantages go beyond that. In the world of broadcasting, advertising pays the bills, and the advertisers are naturally very interested to know that their ad went at the correct time. In the old days, before automation, somebody had to be there with a clipboard writing it all down, and lots of errors happen any time you do that.

In the world of automated broadcasting, the system generates precise documentation: your commercial aired here and here and here and here. Advertisers demand that; the system delivers it. That's fine. I think it's great. I love computers.

Copies of music are at the absolute heart of this system. Copies of songs and recordings are necessary to make this system go. Broadcasters are taking advantage of the technology, and they're compensating those who create the music. To me that's value for value.That's a fair proposition.

To say that paying royalties is punishment for innovation is like saying it's punishment to pay for electricity to light up the building. It's part of the operating environment. We're happy to enable them to take advantage of these technologies, but as for what broadcasters pay, particularly small broadcasters, let me remind you that the most recent decision of the Copyright Board says that on the first $625,000 of revenue, broadcasters pay us, CSI, one-third of one percent of their income. So for a small station that makes, for example, half a million dollars in sales, that's $1,500. This is a relatively small component, and I would say it is very fair value for the fact that they get to make copies of every song in the world.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

The Canadian Association of Broadcasters also said that broadcasters were forced to pay twice for the same thing. They pay twice for the same disk. Is that true? Do they in fact pay twice? We know they pay for it when they receive it, for the ephemeral recording, and that they pay for it once again when they broadcast it to the public.

[David Basskin]

They are paying for two different things, first of all. The right to perform or communicate the work is one right; the right to reproduce it is another. That has been long, long established in our copyright law.

But let's talk about the copies they make. When broadcasters receive music, whether they receive it electronically or on a CD, and start copying it, they're doing a lot more than making one copy. Let me describe it. In our brief we have an extensive technical brief from a gentleman named Michael Murphy that details all of this. But I'll just outline it in very brief terms. They make a copy when they pull the music into their system, when they ingest the music into their system. They make additional copies to evaluate the music so that people in the station or the organization can listen to it. They make copies of the music on their main libraries—and bear in mind that these are permanent libraries of all the music they have. They make copies of the music when they create shows by voice tracking. This means pre-recording a show by assembling the songs, the commercials, and the various other bits with the disc jockey doing the talking. There are other purposes outlined in the report.

So broadcasters make very extensive use of the right to copy, which again we are happy to license them for. So they are paying for one thing to SOCAN—the right to communicate the music—and they're paying us for the right to make copies. Two very useful rights.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you.

Now I give the floor to Mr. Angus.

You have 10 minutes.

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

Merci, monsieur le président.

[The Acting Chair, Conservative, Maxime Bernier]

I'm sorry. You have seven minutes.

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

You were correct the first time, I think.

Madame Hebb, it has been raised here before, the question of why the word private “purposes” has been put in as opposed to private “use”. It seems that if we are not clear, one could make copies for everyone, relatives and everybody's friends on the street. Would you think changing “purpose” to “use” would help close this?

[Marian Hebb]

I think it would help. There are other places in the act where they also refer to “personal uses”, “private use”, and “private purposes”, and I think there's another one too, which I can't remember just at the moment. But all these things seem quite vague, and we should stick to the same language to be consistent in the bill, if it has the same meaning.

But quite apart from that, in that context of making this copying for private use by individuals or anybody, that still isn't clear what it means. Can I send it to my friend? What can I do with it? Maybe I can't. I guess we have some interpretation of the “private use” regime now, but it's a different kind of copying, so it isn't really clear what it refers to.

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

Mr. Chisick, last week when I was speaking with CAB, I was trying to get a sense of how we break down these mechanical royalties, because I've heard the advertisements on the radio. I haven't heard your advertisements yet. Do you get radio advertisements? They were running advertisements that all their stations were going to close down. So I tried to get a sense from them, and they didn't seem to want to...or maybe they didn't know the numbers.

You take these to the Copyright Board. You don't get to pick this, right? The Copyright Board hears all sides and then sets a rate. There's a rate for small stations and medium and large stations. What is the breakdown in terms of what they're on the hook for?

[Casey Chisick]

The Copyright Board certifies rates that are organized by tiers of revenue. So for revenue under $625,000, a station that makes ordinary amounts of use of music is paying roughly three-tenths of one percent. Between $625,000 and $1.25 million they're paying roughly two-tenths of one percent. Over $1.25 million they're paying just under 1.24% of all their revenue. So when you average that out, that turns into an effective rate of approximately seven-tenths of one percent of their revenue for the use of the reproduction right. That's for the reproduction right in songs. Then they pay a similar amount for the use of the reproduction right in sound recordings and performers' performances.

All in all, you're looking at an effective amount of about 1.4% of all of their revenue for the use of the reproduction right in all of the music they use. It's a relatively small amount of money, we would argue, to pay for the right to use what really amounts to 80% of their program content in ways that, as Mr. Basskin has explained, are so vital to the efficiencies of the radio stations.

[David Basskin]

If I could, Mr. Angus, let me just add one point. This doesn't happen in a vacuum. Broadcasters pay good money for the computers. They pay good money for the very complicated software used to program, operate, and manage radio stations. They pay good money to send their staff on training courses to use this software, because it is complicated software. They pay annual maintenance and licence fees on the computer and the software. This is all as it should be. And of course, they pay their own staff and operators.

So it looks to me like every component in the value chain is receiving compensation, value for value. What this bill proposes to do is to say to those who create the music that the reason they bought the stuff in the first place...“We don't have to pay you. We'll pay everybody else.” I don't see legislation here making free software or free computers, nor would I expect to. It seems grossly unfair to say to those who create the music, “You alone will work for nothing.”

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

I want to continue on this line. The other question I had was in regard to a concern in their brief that all this money was leaving the country and paying U.S. multinationals, or they said foreign multinationals.

I remember back when I was playing music, every now and then I'd get a royalty cheque that would come in from Europe. It might not be a lot, but it made me think they were actually tracking my song on radio in Europe. Do we not have licensing agreements with our international trading partners so that if one of our songs is played here, and it's from a U.K. artist, they're getting paid, and if it's one of our artists, they're paid over there? Is this not the reciprocal agreement that radio has been involved with since the 1930s or 1940s?

[Alain Lauzon]

You're absolutely right. We have a reciprocal agreement with foreign societies, and we receive money out of the broadcast mechanicals, whether it's radio, television, satellite radio, or other things. Obviously, we receive it because we have reciprocal agreements, that's for sure.