Thank you. My name is Ian MacKay. I'm the President of Re:Sound Music Licensing Company. Thank you for the opportunity to address the committee today on this critical issue. This is something I am particularly passionate about, having worked in the music industry for 25 years as an artist lawyer at record companies and now in my present role.
Remuneration models for artists must adequately incentivize and compensate creators if you want those creators to continue to create. As the very talented and Juno award-winning artist William Prince said—and I'm paraphrasing here—if you want me to build you a house, I have to have a reasonable expectation I'm going to be paid.
As you've heard from many others, the Canadian recorded music industry has experienced significant disruption, shifting from an economy of dollars to one of pennies. There are critical changes needed to address outdated and unnecessary subsidies and exemptions that are unfairly preventing creators from receiving fair compensation for their work.
Where does Re:Sound fit in this? Well, you've heard from other witnesses about equitable remuneration. Luc Fortin, the president of the Quebec Musicians' Guild, told you in his testimony that this revenue stream is now the most significant that Canadian performers have under the Copyright Act in terms of income.
Re:Sound is the organization that collects and distributes equitable remuneration in Canada on behalf of more than 621,000 artists and sound recording owners whom we represent directly through our member organizations—Artisti, which is here today, along with RACS, MROC, CONNECT, and SOPROQ—as well as through bilateral agreements with international collective societies.
We're a not-for-profit organization. We collect from thousands of music users, including commercial radio, satellite radio, and individual businesses such as gyms, restaurants, nightclubs, etc. It's mandatory that the rights we administer be collectively administered. Creators cannot prevent businesses from using their recordings or negotiate directly; it's a blanket licence. Creators only get to rely on collecting equitable remuneration after the fact. These income streams are crucial for creators, and they go straight to creators. As has been referenced before, the money Re:Sound collects is split 50-50 between artists and sound recording owners at source.
Both the music industry and the copyright laws that govern it must keep pace with the rate of technological change. This is why we at Re:Sound are always working hard to innovate. We do this by working with organizations such as SOCAN on streamlining the licensing process for businesses, or as Mark Schaan, the director general at Industry mentioned in his testimony on May 22, we do things like “music has value” research, doing research to help music users understand how music brings value to their business and how they can use it as a competitive advantage.
We also work to ensure we distribute royalties as efficiently as possible. This is reflective in our work to obtain full radio logs from radio stations and our work with Music Canada and Bell Media to improve reporting of data to ensure that we distribute as much of every dollar to creators as possible.
We, and most importantly creators, are missing out because of outdated, unnecessary, and unfair exemptions in the Copyright Act that deprive creators of over $60 million a year in income. As you've heard from artists like Andrew Morrison of The Jerry Cans, artists' representatives such as the Canadian Federation of Musicians and Artisti here today, and organizations representing music creators including Music Canada, ADISQ, CIMA, and SOCAN, these are fundamental issues that need to be fixed.
It's rare to get this type of consensus. I think the only other issue on which there's been similar consensus is on the reform of the copyright board.
The two things that I want to talk about in particular, because they're closest to what we do, are the removal of the $1.25-million radio royalty exemption and the definition of “sound recording”. You've already heard from other people about this, so I will keep it brief and try to add a little bit more information.
Under the current act, as you've already heard, commercial radio stations are exempt from paying royalties to performers and sound recording owners on the first $1.25 million in revenue, regardless of whether the station is part of a large, profitable ownership group. This costs rights holders $8 million a year in lost income and is unwarranted for a highly profitable industry. It was meant to be a temporary measure, but it still exists 20 years later.
Internationally no other country has a similar exemption, and the exemption does not apply to songwriter and publishing royalties, meaning that performers and record labels are the only ones asked to subsidize a very profitable industry.
Some 81% of the programming time of commercial radio is music. Going back to William Prince's comment, 81% of the house is music and it should be paid out accordingly, with no subsidies or exemptions.
Furthermore, in terms of technological neutrality this subsidy is only available to commercial radio broadcasters. It's not available to other users of music who use music commercially, such as satellite radio, pay audio, and other businesses. It's not technologically neutral.
The second one is amending the definition of “sound recording”, a concern you've heard from other people as well. Under the current act, the definition of “sound recording” precludes artists and sound recording owners from receiving any royalties when their recordings are performed in TV and film soundtracks. Once again, this only applies to artists and sound recording owners, depriving them of, our estimate would be, approximately $55 million a year in lost royalties. When music is used in a TV show or a movie on Netflix, the composer, music publisher, and songwriter are paid, but the performers and sound recordings are not. This puts us out of step both between rights holders and internationally.
Re:Sound is also a member of the Canadian Music Policy Coalition that you've heard about. We support the recommendations outlined in the documents submitted on its behalf, many of which have been explained far more eloquently by others who have already appeared before the committee. These recommendations include continuing the important work that has been started regarding Copyright Board reform. We've been a very active participant in that process, which Artisti referred to as well. We recommend updating the private copying levy to make it technologically neutral. You've heard from a number of people in depth on that. We also recommend extending the terms of copyright for authors from 50 to 70 years. You heard very eloquently from SOCAN on that. Finally, we recommend closing the charitable exemption loophole created by section 32.2(3), which, once again, Gilles Daigle of SOCAN brought forward on June 5.
These, along with eliminating the $1.25 million exemption and fixing the sound recording definition, would make a profound difference for Canadian creators and bring us up to international standards.
Thank you for your time today. I look forward to any questions.