Evidence of meeting #111 for Canadian Heritage in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was copyright.
A recording is available from Parliament.
Liberal
The Chair Liberal Julie Dabrusin
There is the ability to put in written submissions as well if there's something that has been raised by the questions, of if there are other things you hear and you want to add in later.
We are going to suspend briefly as we move to our next panel.
Thank you to all of our witnesses.
Liberal
The Chair Liberal Julie Dabrusin
Let's get started again. I want to make sure that we have enough time for all of the presentations and the questions.
For our second panel, we have Lisa Freeman and Lyette Bouchard from the Canadian Private Copying Collective.
We have Alan Willaert from the Canadian Federation of Musicians.
We also have Benoit Henry and Jean-Pierre Caissie from the Alliance nationale de l'industrie musicale.
Why don't we begin with the Canadian Private Copying Collective, please.
Lyette Bouchard Chair, Canadian Private Copying Collective
Good morning.
Members of the committee, thank you for the invitation.
My name is Lyette Bouchard and I am the Chair of the Canadian Private Copying Collective (CPCC). As you said, Madam Chair, I am here with Lisa Freeman, who is the Executive Director.
In 1997, the Copyright Act was amended to allow Canadians to copy sound recordings on audio recording media for their private use. At the same time, the private copying levy was set up so that creators would receive remuneration for the use of their music. That was the private copying.
In compliance with the act, manufacturers and importers of blank audio recording media pay a small levy for any imports or sales of such media in Canada. Those levies are collected by CPCC for its member companies, which represent performers, songwriters, music publishers and record companies.
For many years, the private copying levy was a major source of revenue, generating over $300 million in revenue for 100,000 music creators, which, of course, helped them continue to create and market important cultural content.
Initially, the act was drafted to make the private copying regime technologically neutral. However, decisions by the Federal Court of Appeal and the previous federal government have restricted the regime to media that are quickly becoming obsolete. I'm talking, of course, about blank CD copies.
Since most consumers currently make copies of music on devices such as smartphones or tablets, the use of blank CDs to copy music is rapidly decreasing. As a result, revenues for music creators related to private copying are also in free fall.
Annual revenue from the private copying levy has decreased by 89%, from a peak of $38 million in 2004 to less than $3 million in royalties in 2016.
In 2015-16, Canadians copied more than 2 billion music tracks, more than double the copies made in 2004. However, right now, rights holders receive no compensation for most of those copies, including the hundreds of millions of unauthorized copies made on devices such as smartphones.
What would be the situation if Canada had followed the European example in 2012 when the act was last revised and made the system technologically neutral so that a levy would apply to smartphones and tablets? According to sales data for those devices, a royalty of $3, which is the European average, would generate $40 million per year for rights holders. Between 2012 and 2017 alone, the music industry lost $240 million.
It is urgent that we act.
The CPCC recommends that the government make the system technologically neutral to keep pace with the way Canadians consume music.
The solution is to amend the act so that the regime applies to both audio recording media and devices such as smartphones or tablets.
The CPCC is also proposing other very minor amendments to the act. In a sense, it is sufficient to clarify that the regime applies only to copies made from a sound recording in a person's possession. However, we want there to be no confusion: offering or obtaining music illegally, whether through an unauthorized online service, online stream ripping or even stealing an album from a store, remains illegal. Of course, stealing is an illegal act.
It must also be clear that the private copying regime must neither undermine legal online music services, nor legalize illegal services.
Whenever possible, rights holders licence the fruits of their labour for those who wish to use them. The private copying regime is only intended to compensate copies that cannot be controlled.
We need a permanent legislative solution, but in the meantime it is essential that a $40 million interim fund be put in place, as Mr. Henderson pointed out earlier.
Thank you.
Ms. Freeman, it's your turn.
Lisa Freeman Executive Director, Canadian Private Copying Collective
I wanted to focus again on the very good reasons to fix the private copying regime. Just as Music Canada had four points to make, I can give you three categories of good reasons to fix the private copying regime.
First, it remains the best solution to what is an ongoing problem. Streaming may dominate the legal music market, but Canadians still value and make copies of music, over two billion per year since 2010. It has been quite consistent. The levy system is the best mechanism to compensate rights holders for copies that can't be licensed, which remains the bulk of those copies. It just needs to be amended so that it can keep up with how Canadians consume music in a changing marketplace, now and in the future.
With minimal revisions, the private copying regime can be restored to what it was originally intended to be, a flexible, technologically neutral system that monetizes private copying that cannot be controlled by rights holders without undermining legitimate online music services.
The process for setting levies would remain the same, as the CPCC would be required to file a proposed tariff with the Copyright Board and to prove through empirical evidence which devices and media are ordinarily used to copy music.
As it stands now, Canada is an international outlier. Most countries in the EU and some countries in Africa and Asia, about 40 strong regimes around the world, embraced the technological shift years ago and now have healthy private copying regimes that extend levies to a wide variety of media and devices like smart phones and tablets. In Europe, that includes Austria, Belgium, Croatia, France, Germany, Hungary, Italy, the Netherlands, Portugal, and Switzerland.
A comprehensive global study of private copying produced in December of last year by CISAC, which is an international organization of authors' societies, called out Canada in particular on the need for our regime to be “updated and adapted to new uses with levies on digital devices”. That is the first set of reasons.
The second set of reasons revolves around the question of fairness. In the past two decades, the private copying levy has answered an important need for both rights holders and consumers of music in Canada, allowing both for fair compensation to rights holders and for consumers to benefit from knowing their copies are legal. Without a legislative solution like the one the CPCC now proposes, Canadians' private copying activity will remain illegal, and royalties to music creators to compensate them for the massive private copying of their work will very soon be completely eliminated.
Canadian music creators need to be paid for this extensive use of their work, just as the businesses producing and selling the devices used to copy music all get paid. The private copying levy is not a tax, nor is it charity or a subsidy program. It is earned income.
The Copyright Board ultimately determines the value of the levy. However, CPCC's proposed levies will certainly be a small fraction of the cost of a smart phone or tablet, and will be comparable to the levy rates in most European countries where the average levy payable on a smart phone is around three dollars, the price of a cup of coffee.
As always, the levy would be payable by manufacturers and importers of the media and devices. In fact, we all know that the cost of many smart phones and tablets is already subsidized for consumers by the intermediary companies that provide the devices in a bundle with mobile network services.
The third and last category of good reasons for fixing the private copying regime I want to leave you with is the urgency around it. We can't begin to stress how urgent this matter is. As you have heard just now from Music Canada, at the same time as music creators have been losing revenue from the private copying regime, their income from many other sources has also been in decline, in part due to additional exceptions to copyright introduced in the 2012 revisions to the act.
The individual Canadian artists and Canadian businesses whose music is copied for personal use can only produce and compete on the international stage if they are paid when their work is used.
We urge the government to immediately follow this parliamentary review with the introduction of legislation so that the necessary minor amendments to the act can be made as soon as possible.
Thank you very much for your time. We look forward to your questions.
Liberal
The Chair Liberal Julie Dabrusin
Thank you.
We will now go to Alan Willaert from the Canadian Federation of Musicians, please.
Alan Willaert Vice-President, Canada, Canadian Federation of Musicians
On behalf of the musicians of this country, thank you very much for the invitation to be here. I appreciate it very much.
Much of what I will be saying was already said quite eloquently by Graham Henderson of Music Canada. It will be a repeat simply because most of what the Canadian Federation of Musicians does focuses on contract law on behalf of its members. We are not involved in the collection of copyright, per se. However, because of the direct impact on our members, this is of extreme importance to us.
Many recording artists and professional musicians have captivated international markets and left their mark at the top of the charts. We have much to offer the world, because we are a society that values creativity and innovation. Our government must ensure that its policies and regulations reflect the value we have for our creative community and the arts. This consultation should lay the foundation for the regulatory and policy tools and for the financial support needed to ensure that Canadian professional musicians thrive in the digital environment now and in the years ahead.
Our first recommendation—again, following on Music Canada's recommendation—is to amend the definition of “sound recording”. The current definition of sound recording in the Copyright Act needs to be amended so that performers can collect royalties when their recorded performances of music on soundtracks of audiovisual works, such as TV programs and movies, are broadcast or streamed on the Internet and when they are presented in movie theatres. To this end, we recommend the ratification of the Beijing treaty to ensure that this works properly.
Our second recommendation is to remove the $1.25 million royalty exemption for commercial broadcasters. Amending the Copyright Act to remove this unnecessary exemption for commercial radio would add millions of dollars' worth of royalties for recording artists. One issue that was not brought up earlier was the fact that the $1.25 million exemption was originally only supposed to be to mom-and-pop stations that had $1.25 million or less in revenue. Suddenly it appeared that it was now the first $1.25 million exemption on all broadcasters. It was not set up right from the get-go.
The third recommendation is to expand private copying to include new copying technology. As we heard eloquently from the collective, we should undertake the necessary legislative changes to update the private copying regime to reflect advances in digital copying technology.
We also recommend some reform of the Copyright Board to its operations and practices. I have that covered under a separate submission.
With regard to reducing privacy in the digital world, our cultural policies and laws must offer a practical response to piracy that better aligns how Canadians consume content and helps Canadian professional musicians and their content creators succeed in a digital global market. There are all kinds of technology out there. There are algorithms that can track the use of any song anywhere in the world. The fact that we have not utilized such technology and properly monetized the recordings for our musicians is just wrong.
Our last recommendation is with regard to Canadian content regulations. We urge the government to work with the music community to transition content quotas and the MAPL designation from an analog to a digital world. First we must regulate streaming, which will soon be a $70-billion worldwide industry, and those that produce in Canada, such as Netflix, should be subject to the collective bargaining process, such as Status of the Artist.
Thank you very much. I await your questions.
Liberal
The Chair Liberal Julie Dabrusin
Thank you.
We'll now go to Benoit Henry and Jean-Pierre Caissie, from the Alliance nationale de l'industrie musicale.
Benoit Henry Chief Executive Officer, Alliance nationale de l'industrie musicale
Good morning.
First, thank you for the invitation to appear before you.
The Alliance nationale de l'industrie musicale (ANIM) works in francophone and Acadian communities, or, in other words, in official language minority communities.
ANIM is a small organization; I am the only employee. I am accompanied by Jean-Pierre Caissie, who is an administrator on the board.
We are certainly not copyright experts, but on the ground, we can certainly understand and see that there is a problem with artists' remuneration. We note that nations are still able to legislate and to ensure that their artists receive fair remuneration. When we look at the statistics, we see that some countries are much more generous than ours in this regard. We would like Canada to be a leader, not a laggard in this area.
I will let Mr. Caissie make the presentation.
Jean-Pierre Caissie Administrator, Alliance nationale de l'industrie musicale
My name is Jean-Pierre Caissie. I am member of the board of directors of the Alliance nationale de l’industrie musicale, or ANIM. I am also the assistant director of the Association acadienne des artistes professionels du Nouveau-Brunswick.
It is important for artists and creators to be able to make a living from their art in Canada. The same goes for artists in the francophone and Acadian communities in minority situations in Canada. Mélanie Joly, the Minister of Canadian Heritage, is quite right to say that Canada is creative. The time has now come to support that creativity. According to Hill Strategies, a company that analyzes the data in the Labour Force Survey, the number of artists increased by 56% between 1989 and 2013. There are therefore more and more artists in Canada, including in French-Canadian communities.
These artists have access to many production tools that were not available to their predecessors. These include home recording studios, online distribution platforms, and a public that can discover their work remotely in the same way. Artists have many possibilities. Being an artist often requires investing time in related occupations such as management and communication. The number of hours spent creating is decreasing and being replaced by the management side of the career.
Let us recall that, according to the National Household Survey, the average annual income of musicians and singers was $22,770 in Canada in 2010. In New Brunswick, the average annual income of an artist is $17,562. That, by the way, is below the poverty level.
In order to be completely supported in their career development, artists need increased support from specific areas of expertise: management, recording companies, scheduling and assistance with touring, both nationally and internationally. Support, training, qualified labour, and networking opportunities are the needs identified in the Étude sur le développement des artistes et des entreprises de l'industrie de la musique au sein des communautés francophones en situation minoritaire, published in 2017, of which we will send you a copy. They are the indispensable aspects in the career development of a musical artist.
To deal more directly with the question that interests us today, remuneration models for artists and creators, we, like several of our colleagues, would like to talk about streaming. Before we address that issue, we must emphasize the importance of the royalties paid to authors and composers as a result of radio broadcasts. The royalties paid to the artists are critical for their financial health. In addition, when there are royalties, it means that the songs are being played on the radio and becoming known to a wider audience. The 2017 Communications Monitoring Report, published by the Canadian Radio-Television and Telecommunications Commission, or CRTC, reminded us of the importance of radio in the daily life of Canadians. It pointed out, in fact, that 91% of francophones listen to traditional radio. It is therefore important to maintain and even to improve the royalties paid to artists when their works are played on the radio.
With online streaming, the rates paid to the artists are significantly lower. The Copyright Board of Canada determined a rate of 0.012 ¢ per play. In the United States, the rate is about 25 times greater. We are encouraged by the fact that the government has asked the board to conduct a study. We believe that improvements are possible and we stand in support of the Coalition pour une politique musicale canadienne, which is asking the board to make decisions more quickly and for the decisions to be more in tune with rates elsewhere in the world.
In the context of streaming, the challenge of discoverability is often mentioned. This is much like finding a needle in a haystack, you may say. Maybe, but by using keywords and by understanding the algorithms better, you can hope for a greater number of plays on the platforms. Of course, we would like to be on the playlists of ministers, even the Prime Minister, but space there is limited. In reality, much of the promotional work really has to be done elsewhere, including by giving concerts and getting media coverage in local papers and on community radio. Online media do not exist in a closed world that is separated from real life. Hence the importance for musicians to use the assistance of those in the community who are doing the management and communications work, in order to do the additional tasks related to the Internet and to all the existing platforms.
For your information, I would like you to know that some Acadian artists are currently considering taking their songs off the streaming services that do not provide reasonable rates. That is sad, you may say. It runs counter to the government's wishes, as expressed in the cultural policy entitled Creative Canada, which encourages the distribution of Canadian works online. Copyright holders still have, and always will have, the right to refuse to allow their works to be used. Actually, artists in the francophone and Acadian communities want to be in cyberspace, especially on distribution platforms, but they do not want to give the impression that they are paying to develop them. Without songs, there are no streaming services.
The same goes for YouTube, which pays creators ridiculously low royalties. Remuneration categories are established according to the number of views, as you know. It is a proportional curve, which works to the disadvantage of those whose works are viewed less. It is a little as if radio paid a lower rate to artists whose works were played on the radio less often.
Fairness is important for us. Why is the YouTube platform not subject to the same rate as other streaming services? It operates like a radio station, especially when you consider that more than 50% of Canadians listen to music on the platform.
The private copying scheme is another way of remuneration available to creators. Their representatives here have told us that royalties are decreasing. Between 2007 and 2015, the royalties paid to artists have decreased approximately eight-fold.
In a way, the principle underlying the private copying scheme is to make sure that Canadian artists can continue to create songs, which are then used, among other things, to fill tablets and touchscreen telephones. We agree with the proposals of those representatives.
We wonder why Internet service providers, ISPs, are not subject to conditions similar to those for cable companies, which have to pay a part of their profits into independent production funds or the Canada Media Fund. These are the funds that help to finance films, broadcasts or interactive media. Why do ISPs not have the same responsibility in terms of Canadian content, so that their distribution channels can contribute to new works and distribute new songs from French-speaking Canadian artists?
We would like a new Copyright Act that would contain fewer exceptions, or, at very least, clear exceptions that would not have to be defined in court. Too many recent cases show that the exception for fair dealing in education is not clear. A number of educational institutions have found ways to use copyright-protected works in what might be classified as unfair dealing.
There are a number of legal cases. As you know, copyright management companies too often find themselves in court. We have Canadian Copyright Licensing Agency v. York University, and, coming soon, there will be Copibec v. Université Laval.
Like the Société canadienne des auteurs, compositeurs et éditeurs de musique, or SOCAN, and Ré:Sonne in music, management companies are critical for creators, both in French Canada and in the rest of Canada. If schools do not pay for the works presented in class, Canadian artists will earn even less income and will have to keep working at second or third jobs. I would not like to ask the same sacrifice from educational staff, or from other service providers in the school system.
We appreciate your work and we thank you for appreciating ours.
Thank you.
Liberal
The Chair Liberal Julie Dabrusin
Thank you.
We now start the period for questions and comments.
Ms. Dhillon, you have the floor for seven minutes.
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
Thank you, Madam Chair.
My first question is for the Canadian Federation of Musicians.
How does the Canadian copyright and remuneration system in the music industry differ from that of the United States? What is the difference between the Canadian system and the U.S. one?
Vice-President, Canada, Canadian Federation of Musicians
With the Digital Millennium Copyright Act in the United States, primarily we have a notice and takedown system in the U.S., which is very valuable. We find that the notice and notice regime in Canada is probably not sufficient given the new types of technology and the streaming theft that occurs.
In addition, they have royalties available on digital radio. We have that as well, but the Tariff 8 stuff that we attempted to get through in Canada has not yet been approved, so we're not in a position to collect at the same levels as the U.S. is in that regard.
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
Why do you think it hasn't been approved or it's taking so long? You just mentioned the technology and that they're having trouble keeping up with it. Why do you think this is the case?
Vice-President, Canada, Canadian Federation of Musicians
I believe it's a function of the Copyright Board itself in that the decisions take way longer than they need to, and they rely on past tariffs that were in place many years ago for composers and lyricists as opposed to the new neighbouring rights regime for the musicians, performers, and labels. Part of it is the delays that take place and a reliance on old tariff models.
Liberal
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
We heard in the previous hour that somebody recorded something that's bringing in maybe millions for a certain person but the person who did it only made $100. Could you explain how this could happen to Canadian artists while U.S. artists are paid for every little thing, every little royalty? Here in Canada, this is not the case.
Vice-President, Canada, Canadian Federation of Musicians
That's not 100% true. That's a problem for artists right around the world.
One of the issues is that a certain percentage of Spotify is owned by the labels. When the labels make their catalogue available, there's a large fee involved that the streaming service has to pay to the labels in order to access that catalogue. That money is never seen by an artist, in any way, shape, or form.
Then you have the issue where recordings that were made years ago under a royalty artist deal, no matter where they were in the world, are now being played on streaming services. That distribution was never contemplated in the original royalty artist deal. It should follow the distribution that was in these royalty artist deals, which was a fifty-fifty split between the label and the artist. You would think that this would be how it would be applied in the digital realm, and of course it's not. It has been completely forgotten about.
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
Which country would have the best model to protect our artists from this advance in technology and free online streaming? Which country, so far, has the best record for that?
Vice-President, Canada, Canadian Federation of Musicians
Sweden had a case involving this very thing, regarding artists who sued the labels based on the fact that their model was wrong, and they were very successful. Sweden is a good example of that particular problem.
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
Okay. My next question is for the Canadian Private Copying Collective.
The primary focus of this committee is to study the remuneration models for artists and creative industries. Could you describe how the artists are paid through your organization?
My second question is with regard to the new technologies and options for buying and listening to music. How are they impacting the Canadian copyright?
Chair, Canadian Private Copying Collective
I will answer your question in French.
The first question you asked is about how artists and creators are paid through the program. Is that right?
Chair, Canadian Private Copying Collective
First and foremost, royalties are determined by the Copyright Board of Canada. The royalties are paid to the Canadian Private Copying Collective by the manufacturers and importers of blank media. Then the collective redistributes them to the songwriters, the performers and the producers.
I do not want to get into all the details of the distribution, but I will say that it is essentially based on a model of selling music and listening to music on the radio and through distribution methods. Each of the companies that are members of the Canadian Private Copying Collective redistributes the royalties to companies of performers, producers and authors. Royalties are paid to performers, singer-songwriters and producers through a very specific and precise distribution method.
Liberal
Anju Dhillon Liberal Dorval—Lachine—LaSalle, QC
Okay.
In your opinion, how can the new technology harm an artist? How can we protect our artists?