Thank you, Mrs. Côté.
Good morning, ladies and gentlemen.
A second aspect that the committee should examine is the loophole created by subsection 32.2(3) of the Copyright Act, which provides for an exception for so-called charitable organizations that use music "in furtherance of a religious, educational or charitable object." Let's be clear: we at SOCAN do not intend to penalize activities that are charitable in the true meaning of that term but would like instead to restrict organizations that circumvent the act and attempt to avoid paying what they owe.
Allow me to explain. Certain organizations, theatres, and festivals that have multi-million-dollar budgets currently assert that they are charities within the meaning of the Income Tax Act. Since they have that status for tax purposes, they claim they are not subject to the Copyright Act by virtue of section 32.2. Although the Montreal International Jazz Festival pays SOCAN royalties in accordance with the applicable tariffs, many others, even though they make extensive use of musical works, refuse to pay those royalties, relying on the exemption for charitable organizations.
To close these loopholes, we propose two changes. First, It should be specified that the exception under the subsection in question applies only where the music is used without any intent of monetary gain. That's already the case for the preceding exception, which applies to agricultural and industrial fairs. It should also be stated that charitable status under the Income Tax Act is not in itself sufficient to allow the exception. Consequently, the act should provide that a proper benefit concert may qualify for the exception, whereas an event in which the principal activity is to present truly commercial concerts may not.
The third aspect is the private copying royalty. The private copying system was established to offset lost revenue due to the emergence of certain media, cassettes in particular and, subsequently, blank compact discs. As you may imagine, the sums previously collected and distributed to creators evaporated, and only a few crumbs remained. The present system must be reviewed and should include a technology-neutral element so that new digital media, which are now the standard for music listening purposes, are incorporated. Here we are talking mainly about tablets and smart phones. Together with the music industry, which is united on this point, we also advocate the establishment of a transition fund of $40 million a year over five years to support significant use of our creators' musical works.
In addition to these three main aspects, we support the request by certain groups that the exception under which commercial radio stations pay no royalties in respect of sound recordings and performers on the first $1.25 million of revenue be repealed. We believe this is an injustice that must be corrected. It was intended as a transitional measure but has become permanent for no reason. The same is true of the change made to the definition of sound recording: we believe this isolated exception is obsolete and unfounded.
We take this opportunity to underscore the government's efforts with respect to the Copyright Board of Canada. More particularly, the government has begun to reform the organization and invest additional funding in it. We hope to see a reduction in the observed time it takes for the board to render its decisions.
Ladies and gentlemen, it has taken 15 years for the Copyright Act to be amended for the digital era. During that time, enormous changes have occurred in the way we consume music. From 1997 to 2012, smart phones became omnipresent, streaming and downloading surpassed sales of physical copies, and new services afforded consumers finger-tip access to the global musical repertoire. The purpose of the amendments made in 2012 was to recognize the changes in the digital landscape, but additional efforts must be made to bring the act into the modern era and guarantee a fair balance between users' rights and those of creators.
Let's not wait another 15 years before making further significant amendments.
Thank you.