Bill C-32 (40th Parliament, 3rd Session) Committee on Dec. 6th, 2010

[Annie Morin]

It's based on sale surveys, on the one hand. Fifty per cent of the data that are used are sales data. So if someone sells albums, it can be assumed they will eventually be copied.

The other 50% are broadcasting data. So if someone is regularly broadcast on the radio or elsewhere—it can be a quite limited number of times—that person's name will appear in the broadcasting surveys and money will be sent to that person.

So it is assumed that the artists who sell music and artists who are broadcast on the radio are more likely to be copied than others.

[The Chair, Conservative, Gord Brown]

Thank you.

We're going to have to wrap up. We'll move to Mr. Angus for seven minutes.

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

Thank you, Mr. Chair.

Thank you for coming today.

I think this is very germane to the whole issue, the issue of who has a right to copy and who has a right to be paid.

I'd like to follow up on some of my colleagues' questions about the issue of the levy, because, my God, the Conservatives have got themselves worked up about this. They've got mailings going out to their ridings every few weeks that the separatists and the socialists are going to force every kid to pay $75 on their cellphone. I look at the Conservative claims, from the minister and his parliamentary secretary, and they're either misrepresenting or they don't understand the role of the Copyright Board. So I'd like to just go through this again.

They claim this is a new tax when in fact the Copyright Board assessed a tariff in 2003-04 based on the evidence that was brought before them. They assessed it again in 2008. Now, the Copyright Board doesn't just roll over when CPCC comes in and wants a tariff. You have to prove it. You have to prove it on evidence. You have to be cross-examined.

What is the role of the Copyright Board in terms of defining whether a use is legitimate or not?

[Annie Morin]

In fact, the Copyright Board of Canada is an economic regulation agency, and it operates exactly like a court.

On the one hand, the Canadian Private Copying Collective will come in with its armada of experts and lawyers to prove the value of copies made and how much the levy should be.

But believe me that, on the other hand, there are all the manufacturers, importers and retailers of these blank audio media that also come in with their armadas of experts to try to contradict what the CPCC is trying to obtain.

Based on the evidence brought before it, the Copyright Board of Canada, like a tribunal, rules and renders a decision determining what is fair and equitable to pay for a medium based on the use that is made of it.

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

And of course their favourite $75 tax that is being imposed.... Based on the evidence that we saw from the Copyright Board, the Copyright Board chose between $2 and $15. And in terms of identifying a use, the Copyright Board would say a cellphone is a cellphone even if it plays music, but an iPod is a musical player.

Does the Copyright Board make those distinctions?

[Annie Morin]

In fact, here's what the Copyright Board would do. First, it would start by looking at whether the object presented to it is indeed an object ordinarily used to copy music. That, first and foremost, is one of the analyses that it would conduct.

If it came to the conclusion that that device is not ordinarily used to copy music, then it would not even rule on a levy on that device.

For example, it ruled on DVDs at the time. It said that they were not ordinarily used to copy music, even though a lot of people do make copies of music on DVDs.

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

The other thing that strikes me is that the minister doesn't seem to be aware of his own powers. Even if the Copyright Board assessed a tariff on a musical player and the Conservatives were all getting their shorts in knots that this was going to apply to automobiles and SUVs, and, who knows, Humvee tanks in Afghanistan, the minister has the right, does he not, to prescribe not only the use...? He could say BlackBerrys are exempted, cellphones are exempted.

[Annie Morin]

Yes.

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

For example, so we don't have any market distortion, he could list it to a percentage so that the impact on an iPod would not....

Is the CPCC fully accepting of those rights of the minister?

[Annie Morin]

Yes. What can we do? It's written within the law. It's a government power to limit the devices or the support for the media on which the levy could be asked, and to limit also the amount that could be asked. It's something that is written within the law.

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

I had a financial estimate done on our private member's bill, and under the existing sales there would be $25 million in royalties coming to artists. If we remove the levy and remove the right of artists, we have a $25 million hole. Add to that $21 million in mechanical royalties. Madame Milman, that's quite the kick in the teeth that Canadian artists are expected to take to get this bill through.

[Sophie Milman]

Absolutely. Since the government, with this bill, did not completely scrap the levy on blank CDs, they do recognize that copies have value. I don't understand why they're only keeping it on devices that are phased out. They're becoming completely obsolete.

I would like you to try to go to any other group and say, “We believe you can live on two-thirds of your income, so we're going to take that other third.” Why does the government feel it has the right to do it to artists, especially people who live on, literally, between $12,000 and $30,000 a year? We're not talking about rich people here. We're talking about people who take every dollar and stretch it beyond any reasonable amount.

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

Madame Levy, one of the concerns I have about this legislation is that copyright, when we update it, is usually about access and it's usually about remuneration. This seems to be about a bill of deciding how many people don't have to pay.

When you've set up copyright, you have neighbouring rights. You have reciprocal agreements with other countries that you trade with, that if you're collecting royalties and they're collecting their royalties, there's remuneration internationally.

Have you looked into the question of how many of these exemptions, from the mechanical rights exemption to the exemptions on collective licensing, would be in compliance with our international obligations, in terms of suddenly deciding to create a bill that says where there were rights, those rights now cease to exist? And if we're not in compliance, are there issues in terms of trade retaliation?

[Roanie Levy]

Absolutely. I think you're correct to point out that, especially when you're dealing with a situation where remuneration is currently received by creators and by other rights holders, removing the remuneration would conflict with the normal exploitation of a work or would unreasonably prejudice legitimate interests of the rights holders. If you're familiar with our international obligation, you would recognize that these are two of the three-part steps that every exception needs to be met.

In Bill C-32 there is a surprising number of changes that outright eliminate remuneration that is currently being received. There are some in the education sector, there are some in the mechanical reproduction sector, and there are some in others as well.

It also goes to the ability of creators to be able to perceive future revenues. As the use is moved to a digital environment, the elimination of the licensing regimes and the undermining of collective society is going to have a serious impact on the ability of creators and rights holders to be able to actually benefit from the promise of the digital economy, which would otherwise allow them to receive compensation where the consumer is at, where the consumer is actually making uses.

When you think of the digital economy, you think of this seamless web of licences, licences that would be through collective society as well as directly with the rights holders, that would allow the uses to take place in a seamless way to the consumer, but where the creators and the rights holders would receive compensation. The elimination of these revenues today and the dismantling of collective societies generally, which Bill C-32 creates, would seriously undermine the innovation of these types of business models in the digital economy.

[The Chair, Conservative, Gord Brown]

Thank you.

We'll move to Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chairman, and my thanks to the witnesses for appearing today.

This is an interesting discussion. It seems to me that the role of copyright is to establish a market. It's to establish a system by which people who create things can be paid for their creations. It recognizes that when a work is created, it should be bought and not stolen.

I want to go back to some of the comments of my colleagues across the way, because it seems they're missing the purpose of the bill. I don't want people to copy your music for nothing; I don't. I want them to pay for it. When I was a kid...it's not that long ago; I guess I'm a few years younger than anybody on the opposition side. I had to buy 45s, I had to buy cassette tapes, and I had to buy CDs. In fact, I bought hundreds of CDs.

It seems we have a defeatist attitude on the other side now and some in the lobby, who say, “You'll never shut down isoHunt, and you'll never shut down these organizations.” It doesn't matter. Mr. Isaac says, close up the loopholes. I want to close the loopholes up. I want to shut them down, and I want you to get paid for every song you sell.

What I don't want to do is put in a system.... I need to understand this better. You said you'd only tax music devices. This phone is a music device. It's a phone, it's a computer, and, by the way, as technology improves, it's going to be even more seamless. The same device you use to open your garage door will be the device you use to change channels on your television--and it might well be your television. All these things are converging. Technology is converging. There will be no such thing--there is virtually no such thing today, as we sit here...if you go to the store shelves, unless you're buying very, very cheap devices, there is no such thing as strictly a music device for sale. The good devices are all converging. They do multiple things.

I have no idea how you would ever create a tax for this, and it is a tax. I also want to deal with this question of whether it's a tax or a levy. A government is only a conduit. In fact, right now government is a really good conduit, because it's paying out more money than it's taking in, some of which we're giving to artists, and I'm proud of that. But there is no difference to the consumer where the money winds up. None of the money ultimately goes to something called “government”; it all goes back to Canadians in different ways. So it is very much a tax.

I would like to understand how you would place it only on a device that only copies music. First of all, there is no such device. Secondly, I don't know how you could set it at $2, $10, or $15 and make up for the fact that what Bill C-32 seeks to do is shut down the BitTorrent sites. You must support this. Is that not the most important thing for artists, that people can't just steal their music?

[Annie Morin]

It's one of the important things. I will answer your first question about the converging technologies, and I will answer in French because it's easier for me to do so.

Even a blank CD can be used for something else than music. For example, photographs and text can be stored on them. Nevertheless, a levy was applied to blank CDs. However, when it established what the amount should be per blank CD, the Copyright Board of Canada took the other uses into consideration and accordingly reduced the amount of the levy per blank CD. You can store photos and even other things on an iPod Nano. The levy can be adjusted to take into account these other potential uses.

As for convergence, as new technologies develop... In 1997, when the act was passed, it was supposed to be technologically neutral. That's what we were told. You can even consult the English version of the act. You will see that it applies to audio media—

[Dean Del Mastro, Conservative, Peterborough, ON]

I understand that, Ms. Morin. But the point is that there is no such thing as a music device. That's the point.

[Annie Morin]

Whether I buy an iPod Shuffle or an iPod Nano, these are really what you call music devices. If you look at iPod advertisements, what do you see? People dancing. They're not reading course notes or looking at pictures: they're listening to music. These devices are designed to listen to music.

[Dean Del Mastro, Conservative, Peterborough, ON]

Ms. Milman, I firmly believe the right way to go is to re-establish a market so you can sell what you create. It seems there is an attitude that it can't be done. Some songwriters who came forward with a presentation said that what they need is an ISP levy that would be placed on the consumer, so that when they copy, it will go to a collective and then songwriters and musicians will be paid from that. Does that hold true? Is that along the same line as the device levy? Do you think that if we put this levy on at the ISP level we wouldn't need to worry about shutting down the BitTorrent sites, or it would become less important to shut them down?

[Sophie Milman]

Ms. Morin, please, and then I'll answer the rest of the question.

[Annie Morin]

The option of making downloading illegal is a central issue. However, whether or not there is illegal downloading, that will never prevent copies of musical works from being made, in particular using all the CDs that are bought. Music copying is a recurring phenomenon.

However, if buying music on line was the only option in the world, part of the problem would already be solved, but that would not prevent copies from eventually being made. So compensation must be paid for those copies because they have value.

[Sophie Milman]

We're not talking about piracy here. I'm all in support of any bill that fights and gets these guys out of business. Experience over the last 10 years, since 1999, has shown that you kill one and another bunch spring up in China, where you absolutely have no judiciary authority to go after anybody.

At the same time as you're fighting the bad guys, we want actual market mechanisms that allow us to monetize the copies that are made, copies maybe from legitimate sources, right? Somebody legitimately buys a record and feels the need to put it on his iPod so he can jog to it. That is a copy made that under the new proposed bill I would get no reimbursement from, even though the person who is listening to his iPod derives a lot of enjoyment from it.

It's not that we're being defeatist. We're being, on one hand, realistic. On the other hand, while you're fighting crime, we want market mechanisms. You say that the levy is a tax. Taxes are at the discretion of government. So on one hand, you're a conduit, but where the money goes depends on government. The levy goes to artists only. There's no government. There's no other party with any sort of mandate standing between the levy and artists. So we want those mechanisms to stay in place to make sure that we can afford to continue making records.

[Dean Del Mastro, Conservative, Peterborough, ON]

There's an important feature in Bill C-32, which is a technological protection measure, as Mr. Isaac mentioned. If you don't want people to make additional copies of your work, we actually say that we'll let the market work. And that's an important distinction....

[Sophie Milman]

Are you talking about digital locks?

Can I address that question?