Thank you for the opportunity to appear before you today. My name is Victoria Shepherd. I am here on behalf of Connect Music Licensing, which represents over 1,800 rights holder members. Our members own the vast majority of sound recordings and music videos listened to and watched in Canada. Our members include major and independent record companies and many independent artists.
The Copyright Act provides that no one may copy sound recordings or copy and broadcast music videos without the rights holder's permission. These are referred to as exclusive rights. Directly negotiating licences to use each individual sound recording and music video can be complicated and time consuming for both rights holders and music users. For example, if I wish to broadcast a single video on my television station, such as Hedley's Invincible, I need to approach the label to obtain permission and negotiate an appropriate fee. If a broadcaster wishes to broadcast many videos, this process of licensing on a case-by-case basis would place an onerous administrative burden on both rights holders and music users.
Connect Music Licensing was founded 30 years ago, as the AVLA Audio-Video Licensing Agency, as a group of rights holders banding together to help the marketplace to work more efficiently. If a broadcaster wishes to broadcast many music videos, a single licence from Connect Music Licensing grants access to all of the repertoire owned by our members. A single payment and report of use is provided to Connect Music Licensing, and funds are distributed to our members. There's no cost to join. We only deduct the cost of doing business, and our cost is among the lowest in the world.
We think it is vitally important to ensure that rights holders generate revenue from their work. We have identified three areas where we think the government can help: educate the marketplace, provide additional resources to the Copyright Board, and ensure that every government institution that uses music is licensed.
The Government of Canada has created important rights for creators that puts money in the pockets of recording artists and record companies. We need to make sure the marketplace is informed of its obligation in regard to these rights.
MusicWorks in the United Kingdom has conducted studies showing the positive effect of music on branding, sales, and productivity. Some of the findings from their 2012 study include the following: 80% of pubs and bars believe that customers and staff would complain if music was shut off; 86% think music increases the anticipation of the crowd when played before an event; 83% say silence makes a place feel unfriendly and unwelcoming.
The Service Canada website provides helpful information about starting a business. It would seem to be consistent with government objectives to also provide information as it relates to the use of music in businesses in Canada. Noting the positive contribution music can make to business success, Service Canada could provide the information businesses need in order to ensure they are compensating rights holders for that contribution.
The Canada Music Fund offers an opportunity to ensure that rights holders are aware of the various revenue streams associated with their music. One method of doing this would be to introduce, on each application for funding, a section about the various revenue streams available to creators. A component of the application could include the applicant's confirmation of understanding of the various revenue streams available, and confirming either membership in, or anticipated membership in the organizations that can help them access this revenue should the funding application be approved. Even in cases where funding applications are unsuccessful, rights holders will have had the benefit of this information. We must ensure that no rights holder revenue is untapped simply due to a lack of awareness.
In addition to the exclusive rights administered by Connect Music Licensing, the Copyright Act provides that there are also rights that bind the music user to pay for use, but that do not entitle the rights holder to authorize or prohibit use. These are referred to as remunerative rights, such as the right to perform or communicate sound recordings to the public. The Copyright Board is the tribunal that sets rates and terms with respect to remunerative rights.
The Copyright Board provides an invaluable service to rights holders and music users. It ensures payment for use and offers marketplace certainty. However, due to lack of resources, the process is very time consuming. It can take two years for the board to reach a decision for a given licence. This can leave rights holders in a position where they are not receiving compensation for new uses of their music, and it leaves music users without any certainty regarding payment obligations for the use of music.
The Government of Canada has committed itself to the development of an efficient digital marketplace. The Copyright Board of Canada should not be seen as a barrier to business or as an impediment. Rather, it should be considered a business development office. It needs resources to ensure it can render decisions at the pace of technological development. In order to attract new digital services to Canada, it is imperative that these services know what their payment obligations will be.
The Recording Industry Association of America reported that in 2013, streaming revenue contributed 21% to total industry revenue. In Canada that number is under 7%. Imagine if you were an investor who wanted to open a new music service in Canada but were told you would not know your costs for two years. A well-resourced efficient Copyright Board will help attract new digital businesses to Canada.
The third way the government can help is to ensure that any government institution that uses music is licensed. This example will reiterate the importance of licensing music use to music users. Connect Music Licensing would be delighted to work with you to facilitate this.
We believe marketplace education will generate increased revenue for rights holders and help music users comply with their legal obligations. Allocating additional resources at the Copyright Board will permit it to function effectively as a business development office, attracting new revenue for rights holders. Ensuring all music uses are licensed in government institutions will serve as a benchmark to other music users.
Thank you.