Hello.
Thank you very much.
Thank you for inviting me to speak today.
I'm just going to start right in and I promise that my presentation is not going to be too long.
My name is Caroline Rioux. I am the president of the Canadian Musical Reproduction Rights Agency or CMRRA for short.
CMRRA acts as an agent for more than 6,000 music publishers and self-published songwriters. Together they represent more than 80,000 music publishing catalogues and millions of songs, which comprise a vast majority of the musical works commercially used and available in Canada.
Our role is to license the reproduction rights. We offer licences for the reproduction of works in a variety of circumstances. From inception, CMRRA has issued what we call mechanical licences for the reproduction of songs on physical products, such as CDs and LPs. Today, we also issue licences for the reproductions made by broadcasters and online music services.
The manner in which content is distributed and consumed has changed dramatically in recent years, both in the run-up to the 2012 amendments to the Copyright Act and a great deal more since then. Streaming services, such as Spotify and Apple Music, have emerged and we're witnessing a rapid decline in the download market.
In addition to this changing marketplace, certain exceptions that were introduced in 2012 have led to a 30% reduction in reproduction royalties from radio broadcasters. The private copying levy, too, has all but disappeared, even though the act of making private copies continues to exist on a massive scale, thanks to smart phones and digital storage devices.
As a result of this evisceration, the largest source of royalties we collect now comes from the streaming services. I'd like to take a moment to discuss that, in particular, because that too has been subject to rate reductions and unfair bargaining positions. We need your help to fix that.
Monsieur Pierre Nantel just last Tuesday made a comment that publishers are making bizarre deals with streaming services for small royalty rates. I think it's important to address this and to say that those very low rates exist at least in part because they've been based upon decisions made by the Copyright Board of Canada.
I should clarify for you that the last online tariff that was certified set us back considerably. Our streaming rates under this tariff, to my knowledge, are now the lowest in the world and well below market rates. We went from receiving 5.18% to less than 1.5% of a service's revenue. In addition, a key provision of the tariff sets out the minimum fee payable by online music services. That minimum fee is $100 per year, irrespective of the number of streams or volume offered by a music service.
The board reasoned that anyone who offered a compelling music service to consumers would naturally attract significant ad revenues, which would, in turn, generate sufficient royalties for rights holders. However, our experience has been that some of these services are happy to generate next to nothing in ad revenues, as the promotional value of a free service is much greater to them than the revenue from selling ads.
Under this tariff, major services could be paying much less than the 0.003¢ per stream, as stated by Monsieur Nantel in his remarks last week. We've seen proposed rates as little as one-quarter of one-thousandth of a cent per stream when we deal with those services.
Worse still, many of the services we've engaged with that operate an ad-supported platform have taken the position that royalties are not payable in Canada as a result of the hosting services exception introduced in 2012. This leaves us with protracted negotiations and a rate that ultimately doesn't reflect the fair value of the right. The only available alternative is litigation, which is costly, lengthy and uncertain. What's more, the only remedy available in instances of unpaid royalties are the royalties themselves. The expense of bringing a case is unjustifiable if the royalties ultimately recovered merely serve to pay the legal fees.
On the other hand, the risks for the services are low if their ultimate liability is really no greater than what they would have owed in the first place. Some collectives can claim statutory damages, but that option is not available to CMRRA, in relation to their reproduction right licensed under a tariff.
Finally, when these services are operated from outside Canada, and there are many of them, there aren't sufficient tools to enforce copyright. The ISPs are ideally placed in this fight by removing access to infringing services, but are understandably reluctant to take any position on the content they provide access to. This leaves us without any tools to meaningfully enforce against such services.
You heard last week from Michael Paris of the Movie Theatre Association of Canada, who made the point that there is no right without a remedy and on that, I agree with him.
Among the recommendations we're making on reform of the Copyright Act are several proposals we feel would assist in ensuring that the online use of music is fairly compensated.
First, we request that the Governor in Council make regulations requiring the Copyright Board to protect a minimum per use value for the copying of musical work.
Second, we request amendment of the hosting services exception to provide that it does not apply to any hosting service that actively plays a role in the delivery or presentation of musical works.
Third, we request amendment of the act to allow for all collectives to claim statutory damages for non-payment.
Fourth, we request amendment of the Copyright Act to authorize a court to grant injunctive orders requiring ISPs and hosting services to block access to infringing websites or prevent them from showing up in search results without the risk of liability to the ISP.
In addition, we urge you to limit the scope of certain exceptions to copyright, in particular, the backup copies exception which unfairly and significantly reduces the royalties paid to rights holders by commercial radio stations.
Of course, we support the extension of the private copying regime to include smart phones and tablets.
We'll be making a much more detailed submission available to the committee, but in the meantime, I welcome your questions.