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

[The Acting Chair, Conservative, Maxime Bernier]

Good morning, everyone, and welcome to the 18th meeting the of Legislative Committee on Bill C-32.

Pursuant to the order of reference of Friday, November 5, 2010, today we are continuing our study of Bill C-32, An Act to amend the Copyright Act.

In the first hour, by videoconference from Dubai, we have with us Ms. Margaret Atwood, writer. She is testifying as an individual.

I hope you can hear us.

[Margaret Atwood, Writer, As an Individual]

I hear you clearly. I do not see you.

[The Acting Chair, Conservative, Maxime Bernier]

Okay. Thank you.

I'll give you the floor in two minutes from now.

We also have with us, from CMRRA-SODRAC Inc., Mr. David Basskin, president; Mr. Alain Lauzon, vice-president; Mr. Casey Chisick, legal counsel; and Mr. Martin Lavallée, legal counsel.

Good morning and welcome.

We also have with us Ms. Marian Hebb, from the Artists' Legal Advice Services.

Good morning, I'm delighted.

We're going to start first with Ms. Margaret Atwood, from Dubai. I will give you the floor for five minutes, and after that we'll have other witnesses, also for five minutes. At the end of all of the presentations, the members of this committee will be able to ask questions of everybody.

Madam Atwood, you have the floor for five minutes. And thank you very much for being with us from Dubai.

[Margaret Atwood]

Thank you very much, good evening.

Thank you for inviting me.

I address this committee from the position of an author who has been involved in publishing since the 1960s, both as writer and as publisher, and who has lived from the proceeds of writing--fees and royalties--since the early 1970s.

I am in the 10% of North American authors who live from writing. Even those within that 10% often end up with tiny incomes. The loss of a thousand dollars is significant to them.

A writer with a salaried position at a university may have a different view. I frequently allow free use of my copyrights. When I make such gifts, that is my choice.

One, I will speak only about the extension of fair dealing to include education, however interpreted.

Two, I am in favour of cheaper education for students. But if cheaper education is a public good, all should contribute, not just authors.

Three, removing authors' copyright for education, without compensation or choice, would not be fair dealing. It is not fair--why only authors?--and it is not dealing. It takes two to deal.

Four, a copyright is property. It can be owned, sold, licensed, and inherited. There are only four ways in which property can be removed from its owner without consent: one, theft; two, expropriation, which does however include some payment; three, confiscation, as from criminals; and four requisition, as in a war.

If this copyright property grab is confiscation, what criminal act has the author committed? If requisition, what is the war? If theft, those authorizing the stealing should be charged. If this property grab is expropriation for the public good, as in land or highways, etc., the public should pay.

Five, the author will be compensated, we are assured. How? There is no mechanism proposed and no recourse for unfairness except through the courts. Given what I have said about tiny incomes, it is obvious that authors could not afford this, whereas big educational institutions, floating as they do on public money, can.

Six, finally, if the government can snatch the property of authors in this way, without consent or payment, who and what will be next?

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much.

I will now give the floor to the representatives of CMRRA-SODRAC Inc.

I don't know who is going to start.

Mr. Lauzon? No.

Mr. Basskin, you have the floor for five minutes.

[David Basskin, President, CMRRA-SODRAC Inc. (CSI)]

Thank you, and good morning.

My name is David Basskin. I'm the president of CMRRA-SODRAC Inc. (CSI). With me are Alain Lauzon, CSI's vice-president, and our legal counsel, Casey Chisick, and Martin Lavallée.

CSI represents the reproduction right in musical works—songs. Broadcasters, including commercial broadcasters, the CBC, pay audio, and satellite radio at present pay CSI when they reproduce works in our repertoire.

Since 1997, the act has required payment only if a blanket licence is available. A single payment licenses the millions of works in our repertoire.

Broadcasters pay CSI either pursuant to tariffs certified by the Copyright Board of Canada or through negotiated agreements. They paid CSI $17.6 million in 2009-10.

The commercial radio broadcasters want you to strip away our rights. Why? They'll tell you that the copies they make are worthless. That's nonsense. Expert evidence, accepted by the Copyright Board, extensively documented the benefits that broadcasters receive from these copies. For one example, through voice tracking, broadcasters can produce a four-hour program in just 20 or 30 minutes.

They'll tell you that it's unreasonable and unsustainable to continue paying seven-tenths of one percent of their earnings for the right to make copies. Unreasonable? They pay 5.7% of their revenue to all collectives for the music that makes up 80% of their programming. Unsustainable? When the commercial radio tariff was introduced, the industry enjoyed average pre-tax margins of 10%. In 2009, in a severe recession, their margin was 21.2%.

And there's this: the broadcasters want a double standard. They license the reproduction rights in their broadcast programs to media monitoring companies. They receive a royalty of 10%, and for 2011 to 2013 they want a 40% increase, to 14%, ten times higher than the 1.4% they themselves pay to reproduce music, seven-tenths of a percent for songs and seven-tenths of a percent for recordings.

There's no similar exception that applies to Canadian broadcasters' reproduction rights.

However, even if the broadcast mechanical right were left as it is, other provisions in Bill C-32 would undermine the rights of our members. Alain Lauzon will speak to those other provisions in the bill.

[Alain Lauzon, Vice-President, CMRRA-SODRAC Inc. (CSI)]

Modernizing the Copyright Act should aim to create a stable, innovation-friendly environment without eliminating existing or potential royalty sources for creators.

The current law is technologically neutral and this principle should not be called into question. What constitutes copying or reproduction today should remain so as technologies continue to evolve.

In determining the value of various types of reproductions, the courts have thus far applied a range of economic values established on the basis of the reproductions' utility and effectiveness in the eyes of various users. However, Bill C-32 creates numerous exceptions that do away with royalties.

More specifically, section 32 of the bill, which authorizes technological reproductions, should be withdrawn. At the very least, the wording should be revised to ensure that it covers only transient reproductions without real value. If not, the subjective notion of "facilitate a use" will prompt certain broadcasters to think that the reproductions they currently pay for will be free of charge.

Section 22 of the bill, which authorizes multiple backup copies, should be reviewed. Why should multiple copies be authorized when a single copy is sufficient?

In addition, section 22 would allow "commercial intermediaries" such as YouTube to keep on developing profitable business models by distributing non-commercial user-generated content without compensating the rights holders.

One of the solutions proposed in our brief would be to allow these intermediaries to reproduce existing works if they obtain a licence from a collective society.

A straightforward solution aimed at fixing the current bill would be to stipulate that the exceptions created by the bill would only apply if a collective society were unable to issue a licence.

The collective licensing system has been in place for several years now and has not brought about a market collapse. Collective licensing is the best solution to reach a balance that would support innovation while ensuring compensation for rights holders.

Thank you for your attention.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much.

Thank you, Mr. Lauzon.

I now give the floor to the representative of the Artists' Legal Advice Services, Ms. Marian Hebb, who is a board member and past co-chair.

Go ahead, please, madam.

[Marian Hebb, Board Member and Past Co-Chair, Artists' Legal Advice Services]

Artists' Legal Advice Services is a summary legal advice service that provides free legal service to artists of all disciplines: musicians, visual artists, writers, actors, and dancers. We are therefore acutely aware of how difficult it is for artists to earn a living.

The preamble of Bill C-32 mentions two goals that are in the public interest, which could conflict but can be compatible: for rights holders, recognition, remuneration, and the ability to assert their rights; for users, further enhancement of users' access to copyright works.

Everyone wants easy access to copyright works. That can be achieved by either collective administration or by statutory exceptions. Both provide the same ease of immediate access to consumers, but collective administration also provides creators with remuneration that's either negotiated with users or fixed by the Copyright Board.

Rights-holder-run collective societies administer collectively licences or tariffs, which replace multiple, low-value transactions that could otherwise be between the individual rights holders and users, but in fact it's often impossible for individual creators to negotiate individual licences for secondary uses of their work.

Most independent professional creators in this country earn less than $20,000 a year from their professional work, many of them far less, and comparatively few considerably more. Cutting back further on creators' rights with new exceptions will make it more difficult for them to support themselves. ALAS submits that statutory exceptions should be considered only where individual licences are not practicable and collective administration is not available.

We live in times of rapid technological change. Copyright legislation should remain neutral to changes in the marketplace and not introduce exceptions that will prevent creators from earning revenues from new or future business models. The preamble to Bill C-32 refers to the Copyright Act as an important marketplace framework law, affecting many sectors of the knowledge economy through clear, predictable, and fair rules.

It is hard to see how some of the proposed exceptions can be considered clear or the outcomes predictable, leaving aside the question of fairness. For example, there's no guidance in the proposed legislation to consumers or rights holders on how the new fair dealing exception for education might relate to existing educational exceptions or to the new ones proposed in Bill C-32, or whether it relates to them at all. No one will know what this new fair dealing for education means until the courts tell us.

We do know that savings for education mean less money in the pockets of creators. There are other exceptions for education in the current Copyright Act, which Bill C-32 proposes to revise at the expense of creators, because they either remove or reduce the ability of collective societies to license schools and post-secondary institutions for certain uses.

To take an example, the updated version of the interlibrary loan exception in Bill C-32 would allow a single library to supply the same copyright material copied from either print or digital publications directly to the computer of every student or other person across Canada who might choose to order it from his or her school, university, or local public library. We all want digital delivery from libraries. Creators will be among the most frequent users. But their collective societies, which today license photocopying in libraries, should have a reasonable opportunity, following the update of other provisions of the Copyright Act, to offer licences for digital delivery.

The exception for user-generated content, or mashups, is a brave step to recognize current realities, intended to catch up with consumer behaviour by allowing existing works to be used in the creation of a new work by a different author for his or her non-commercial purposes. But much stronger restrictions are needed to make any user-generated content exception fair to the original author. A new work that uses an existing work by another author, also often including performances by artists, should remain private unless there is permission or payment. Collective societies should collect royalties for the creators from a disseminator such as Google-owned, advertising-rich YouTube.

Another extraordinarily broad exception will allow everyone to reproduce any work without compensation to the author or performer for private purposes. This reproduction is subject to some restrictions, but without the clear, predictable, and fair rules promised in the preamble to the bill, it will be left to individual litigants to find out what the courts may allow as a private purpose. Digital locks are not an acceptable substitute for clear law.

Creators mostly do not want to use digital locks. They want users to access their work freely, but not for free. A collective administration model already exists for the private copying of music, although it badly requires updating for the digital environment.

All of the exceptions I have mentioned are intended to exempt users from licensing and payment for uses that currently are or could be administered efficiently by collective societies, subject to the oversight of the Copyright Board.

Copyright provides the legal foundation for creators' business models and is the economic basis for all of the creative industries. Particularly in the digital environment, collective administration of secondary rights plays a critical role. Confiscating creators' rights means more copying and less licensing of Canadian works. Artists and other cultural workers will find it harder to survive as their markets shrink and jobs disappear. Inevitably there will be fewer made-in-Canada works for all of us to benefit from.

Thank you.

[The Acting Chair, Conservative, Maxime Bernier]

Thank you very much.

I now give the floor to Mr. Pablo Rodriguez for seven minutes.

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

Thank you, Mr. Chairman.

Good morning, everyone. Welcome. Since we have little time, I'm going to go ahead with a series of questions.

Mr. Lauzon, you mentioned that there should not be any exemptions if a licence is available from a collective society. You said something like that.

Could you provide a few more details on that point?

[Alain Lauzon]

Certainly. There are principles according to which creators must receive compensation for the use of their works.

The act also seeks to strike a balance between compensation for rights holders and public access to works. The exemptions are not the only way for the public to access works.

I'm going to hand over to Casey so that he can explain some of the details surrounding this issue.

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

Yes.

If you could do so quickly, please.

[Casey Chisick, Legal Counsel, CMRRA-SODRAC Inc. (CSI)]

It's important to recognize that the purpose of exceptions to copyright infringement is to guard against situations where otherwise reasonable access to works would be unavailable; it would be compromised. But there is more than one way to achieve that.

CSI's position is that where there are ways to achieve that balance between access and compensation without depriving creators of the right to receive compensation, those alternatives should be preferred. In our view, collective licensing is exactly that alternative, because collective licensing provides access to users at a reasonable and regulated price with reasonable effort at a reasonable time. That principle is already enshrined in the Copyright Act, both in relation to the federal recordings exceptions, which we talked about today, and to many of the exceptions that are available for educational institutions, which are not available if the work is commercially available.

We propose the same for the other new exceptions that are suggested in Bill C-32.

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

Thank you. Merci.

Mr. Basskin, you seemed a little bit critical of the bill. Are there any benefits for music creators in the bill?

[David Basskin]

Certainly, on the provisions regarding technical protection measures, DRMs, we're glad to see Canada becoming on the verge of compliance with the WIPO treaties, but to be honest with you, digital rights management matters very little in practice to the music business. Virtually no music products today are covered by them, though it might happen in the future. Protecting them is a good idea.

To be quite honest, the small amount of good that the bill might do in that regard is more than outweighed by the range of exemptions, not just the exemption that would attack vital income for songwriters and publishers today in the ephemeral exception, but all of the other exemptions that carve out compensation and allow use.

We're all in favour of use, and that's what we're here for, to give access to works, but the fact is that the bill would eliminate compensation. That strikes us as unfair. There's not that much in the bill that's good for us.

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

The bill, as it is, would hurt music creators.

[David Basskin]

I'd say, on balance, that is true.

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

Is that what you guys think, most of you?

[Casey Chisick]

It is, and it's important to note that provisions that are intended to fight piracy, especially the online enabler section, really do nothing of the sort because in the end they're completely hamstrung by the caps on statutory damages. So even if music creators wanted to deal with piracy by suing people—which they don't—this bill would not give them the tools to do that because the cost of litigation would far outweigh any potential benefits.

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

Last week, the broadcasters were here, and I asked them the question about the value of the copy. I wanted to know whether the copy they were making so that they could then play it had a value, and I didn't really get an answer. Does that copy have a value?

[Alain Lauzon]

Certainly the copies of musical works have a value. The Copyright Board of Canada determined at our hearings before it that broadcasters achieve major savings because they reproduce our works.

As I mentioned in my address, the Copyright Board has recognized the value of those copies from the standpoint of utility and efficiency. So it has recognized that there is value, given the savings made by broadcasters, and as a result of which, according to economic theory, authors, composers and publishers must receive compensation. So there is definitely a value.

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

Anything to add? That's fine? Okay.

They also told us that broadcasters in most developed countries didn't have to pay for that right. Is that the case?

[Casey Chisick]

That's false. We provided specific information about that in the CSI brief. We've established that in the jurisdictions of most of Canada's major industrialized trading partners, broadcasters are required to pay for the reproduction right—or could be required on demand to pay for the reproduction right because of the lack of an exception. I won't go into detail, but suffice it to say that in most of those countries there are either no exceptions or exceptions that are more limited than those in Canada. So broadcasters pay the same or more in those countries for the reproduction right.

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

They tell us that a large part of that money goes to other countries than Canada—we had a debate on this point. Do you have any comment to make on that subject?