Canadian Heritage Committee on June 5th, 2018

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Thank you very much, Madam Chair.

Thanks to the three witnesses for their presentations.

Mr. Klein, I'll speak in English. It will be simpler for you.

You spoke about Liz Rose. If I'm not mistaken, Liz Rose was a co-writer on many songs with Taylor Swift early in her career. I think she came up with a solo album one day.

Can you tell me, for example, the numbers since you co-published.... You published Liz Rose's stuff, the big international hits and her artisan work as well.

What are the differences? When you're a very big player, you can still make good money if you have a good song. However, I brought to this committee the example of Pharrell Williams, who with Happy, made one-twentieth of what Elton John made with Goodbye Yellow Brick Road, for example.

What is the comparison that you can see with your own published songwriters?

[Jason Klein]

I certainly can't speak to Liz Rose or any particular artist's or writer's royalties in particular. Certainly, when you have a hit song in 2018, the royalties are still substantial. The substantial royalties aren't really coming from the digital services, from what we've seen. We still have a very solid revenue on the traditional side, broadcasting and radio. That's where most of the money comes from. Mechanical and download is still there.

Even for the top-earning songs, it's not anywhere near where it use to be. I don't have statistics with me but it's certainly well laid out in Music Canada's report and the reports from the CMPA. The numbers on the digital side aren't anywhere near where they are currently from traditional platforms. It's not necessarily that we're concerned about it today, it's that we're concerned about where it's going.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Of course.

I see Mrs. Côté nodding.

We've seen Beyoncé's husband who started his own music streaming service. We've seen your own Taylor Swift boycotting these streaming services for a while. Then she went up.

What is the issue with these streaming services? How can Canada, as a heritage procedure, support their artists in this difficult market?

[Jason Klein]

I really think it all comes back down to value as the issue. I don't think anyone has a problem with their content being....

Again, with Taylor Swift it's more of an artist concern, and we're primarily looking at it from a publisher—

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

It's a statement.

[Jason Klein]

There's a statement potentially against that platform, but from our perspective it's all about the value return that we get from them.

One of the issues as well with exceptions is that.... There are two things that we have as rights holders. There's the right to be renumerated for the exploitation of our right. There's also the right to control its use, whether it's used or not used.

That right to control exploitation is a huge lever for us in the negotiation. Obviously, if you can pull your content that gives you a much firmer seat at the table.

That's why I think a big part of what our recommendations involve is revisiting these exclusions that really water down our ability to negotiate fair value for these services. We certainly don't have an issue as a publisher with having our content on as many platforms as possible. But we need to ensure that we are at the table and the organizations like SOCAN, which represent us, are at the table with entrenched rights that allow them to negotiate for proper return.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mrs. Côté and Mr. Daigle, do you want to comment on the question, since we're talking about you?

[Gilles Daigle]

Mr. Nantel, when new digital services pay royalties, rates will clearly have an impact on rights holders' revenues.

With regard to online services, everyone knows that the Copyright Board of Canada last year issued a decision that we found very disappointing. So we're stepping up our efforts and are working with those online services to negotiate agreements that we feel are more reasonable.

We often hear it said that rates can't exceed a certain level and that revenues must be higher than the royalties paid. However, no one talks about what happens when a service like Spotify becomes a public company. When it debuted on the stock exchange a few months ago, it generated $16 billion.

[Geneviève Côté]

I thought it was $21 billion.

[Gilles Daigle]

In any case, we're talking about billions of dollars, but that money doesn't go into the pockets of rights holders.

It seems to me something must be done about the value gap. If there are applicable rates at the outset, and those rates are declining, that's definitely a very bad way to start the conversation.

[Geneviève Côté]

We see that emerging from last week's CRTC report. We may finally decide to invite the GAFAs to the table, the players that enjoy the wealth produced by the use of content, both content used as a loss leader to promote device purchases and music that people merely listen to. Those businesses must share that wealth with the people who create and produce content. That's not currently the case.

As the SODRAC people said earlier, we hope Canada can do what the European Community is increasingly doing, which is to impose quotas in order to increase the discoverability of works so that they are consumed more, and more money is returned to the creators and remains in Canada.

Intellectual property is property. A few months ago, I heard a creator draw the following analogy concerning her house: no one could simply decide to live in her house and tell her he would pay her when he felt like it. Intellectual property is intangible, but it's still property, and it has to be respected.

[The Chair, Liberal, Julie Dabrusin]

I now turn the floor over to Mr. Breton.

You have seven minutes.

[Pierre Breton, Liberal, Shefford, QC]

Thank you very much, Madam Chair.

Thanks to you three for being with us this morning.

My first question is for Mr. Daigle and Mrs. Côté.

Back home, we have the Festival international de la chanson de Granby, with which you're very familiar. I have observed that, for many years, your organization has been a partner of that festival, which will be held from August 15 to 26. It's the biggest francophone song festival.

[Geneviève Côté]

That will also be its 50^th anniversary.

[Pierre Breton, Liberal, Shefford, QC]

Yes, you're getting ahead of me. There will be 200 artists and 11 days of events and festivities. There: consider it advertised.

SOCAN is a partner in that festival and takes part in every edition. You even award the Prix de la chanson SOCAN.

I hope the festival pays the applicable royalties, but I know nothing about that. Whatever the case may be, thank you for taking part in the festival.

Our committee is examining remuneration models that are more modern and better meet the needs of Canadian artists.

Mr. Daigle and Mrs. Côté, you made three major recommendations that definitely merit further attention from us.

Have remuneration models evolved elsewhere in the world? Have those models already been modernized? I know you're asking that protection be extended to 70 years after the author's death instead of 50 years. In some countries, protection even extends to 100 years after the author's death. Tell us about other models that have been examined, other studies that have been done, or other measures that have been taken or are being developed in other countries.

Mr. Klein can then answer the question as well.

[Gilles Daigle]

You noted our recommendation regarding the term of protection. In fact, several countries long ago adopted protection of up to 70 years after the author's death. Consequently, we can't really say that progress has been made. That's a historical decision that was made 20, 25 or 30 years ago. It's up to Canada to catch up in this area.

Some progress has obviously been made on private copying. In Europe, responsibility is enforced when people buy smart phones and tablets because the Europeans recognize what we consider an obvious fact: that people use those tools to make copies and to listen to musical works by streaming them. We can't understand why, in 2018, the tablets and telephones that people readily use to listen to music aren't viewed in the same way as cassettes and blank CDs, for which they agree to pay royalties. Here too, Canada really has some catching up to do.

[Pierre Breton, Liberal, Shefford, QC]

Is that the case in all European Union countries?

[Gilles Daigle]

I'm definitely talking about the European Union countries, starting with France. We have some additional information on the subject in a document we will be submitting to the committee. We can provide you with an exact list of countries.

[Geneviève Côté]

The European Union has already issued a clear directive. The countries are in the process of incorporating it in their statutes. France is definitely at the top of the class in this area.

[Gilles Daigle]

Lastly, I would say we're beginning to realize something, and our SODRAC and CIMA colleagues mentioned it this morning: dumb pipes, that is to say, simple transmission channels, are not as dumb as we thought. Internet access providers enjoy and greatly benefit from access to the music they give their clients. That can't be denied.

In Europe, they're beginning to recognize that the nearly complete exception they are granted isn't necessarily a good thing. Somewhat like what we are doing, the Europeans are reviewing and rethinking everything, although they may not have achieved their objective yet. It's high time we recognized that this is a benefit, whether you call it an unjustified enrichment or anything else, and one that hurts rights holders.

[Geneviève Côté]

I'd like to add something on the subject of dumb pipes. For a long time, we thought they really were that. Now they're capable of promoting data use. For example, in a monthly 100-megabyte subscription, they tell customers that listening to music on Spotify won't cut into their 100 megabytes. So they know what we're doing.

You can include that in your discussion.

[Pierre Breton, Liberal, Shefford, QC]

Mr. Klein, do you have something to add?

[Jason Klein]

No. I did receive from my ISP a free subscription to Spotify for a year as part of a wireless package. This certainly is value of music at the ISP level. I'm not sure that I can speak to any international initiatives to establish new remuneration models necessarily. I could certainly talk about evolving remuneration structures within the industry, like the publisher–label–artist relationships, if that's of interest.

To the points that were raised by SOCAN, I think it's very important to ensure that the principles that we've always based our negotiations on—the exclusive right to control how our works are used, reproduced, and performed—be technology-neutral and adaptable to changes in technology that are much more rapid than our legislative reform can possibly be. I think we need to ensure that this is addressed, both through the exemptions but also through looking at things like the private copy. Requests have been unanimous to try to make that technologically neutral, so that as people move to reproducing music on smart phones, tablets, or whatever comes next, we have a law that gives us a seat at the table, and wherever there's a commercially valuable use of our music, which we've invested in and created, we have the ability to negotiate fair value. I don't think the principles need to change, but we need to ensure that they can extend to new technologies and developments.

[The Chair, Liberal, Julie Dabrusin]

Thank you very much.

We will now go to Mr. Shields for five minutes, please.

[Martin Shields, Conservative, Bow River, AB]

Thank you, Madam Chair.

I'm really interested in the discussion, especially where you're rendering...because that's where I wanted to go. In my house, where's the cable for my TV? I don't think it's there anymore. Where's the land line? No, I don't think it's there anymore. My grandkids—because we still have an old land line phone sitting there—think that belongs in a museum. We're changing as rapidly as the younger generation has.

I've heard your suggestions. The 50 to 70 has come up and I think everybody has talked about that and the hardware issue. Defining hardware... as you say, things are changing rapidly and writing legislation is often behind what's happening out there in the world. That's the challenge we have with this one, because you're not dealing with concrete things, you're dealing in the aesthetic world. How do you write legislation and recommendations? I know the 50 to 70, that's a simple one, but what else would we put in there? For the future—if you're talking future—it's easy to say, “Hey, it's rapidly changing”. We know it's all going to be dead tomorrow, and this hand-held thing is going to be gone.