Canadian Heritage Committee on Oct. 4th, 2018

[Martin Shields, Conservative, Bow River, AB]

Thank you.

Thank you for your presentation. It was very good, very smooth, and I think that's what your career is about, because you do it very well.

To me, the uneducated part of your audience listening to this, it's not something of my world in particular, as it is to many, but I understand the platform. I look at the sense of what you're talking about, and what we're interested in are Canadian performers. I see your model. If the partners do better, you do better, but our concern is how we make the Canadian partners do better.

I know you've been asked that already to some extent, and I heard your answer. I want you to go back to your recommendation. I know the transparency part, and you've set that over on somebody else's shoulders on the supply chain because it disappears for you.

Go back to the first part of your recommendation. Can you go through that again?

[Jason Kee]

Do you mean with respect to the Copyright Board?

[Martin Shields, Conservative, Bow River, AB]

Yes.

[Jason Kee]

The Copyright Board is the third party organization that essentially receives proposals from collectives and then determines the appropriate tariff rates that are applied on classes of works, predominantly musical works. This applies to all classes of usage. Basically, a collective like SOCAN or CMRRA will apply for a tariff; the Copyright Board will adjudicate on that tariff and then decide what the amount is going to be. A case then goes up for judicial review, but it sort of sets what the rate will be.

The challenge is that on average it takes 3.5 years for them to reach a decision on a tariff rate. Between creators and platforms—so-called users—that level of uncertainty is very challenging, because no one can build a business without knowing what the rates that are properly supposed to be paid are going to be.

This is why there's a unanimity among all stakeholders with respect to finding ways to reform the Copyright Board process that will actually make that process more efficient. The board's process itself will set the rates and there may be some disagreements amongst the stakeholders about what that final rate might look like, but we can all agree that the process needs to be more efficient because that generates certainty in the marketplace.

[Martin Shields, Conservative, Bow River, AB]

In the world of “instant”, three and a half years is a lifetime—everything that we ever knew three and a half years ago disappearing in the tech world, right?

[Jason Kee]

Yes.

The other challenge is that when the Copyright Board finally does set that rate, the rate applies retroactively. What happens then is that suddenly the amount you thought you might be paying is radically different, either in your favour or against you. In either case, it's challenging to actually operate.

[Martin Shields, Conservative, Bow River, AB]

That's because you're talking about trying to redo history.

[Jason Kee]

Correct.

[Martin Shields, Conservative, Bow River, AB]

That doesn't work well.

How would you do it, then? You've identified what is a very time-sensitive industry, which I agree with, versus a bureaucratic process. How would you do it?

[Jason Kee]

It's a combination of basically establishing the proper resources so that the Copyright Board can adjudicate the claims quickly and efficiently along with streamlining their process. Right now it goes through a very formalized process whereby you file a formal tariff, and then there's an objection process, and so forth. It's quasi-legalistic.

I think there are ways to streamline that to make it more efficient, which will result in tariff rates being set very quickly. These are ways that don't require the length of time and, frankly, the engagement of very expert lawyers to participate in that.

There are models. You can look at the United States, for example, where they move much faster on this.

[Martin Shields, Conservative, Bow River, AB]

That was my next question—“Are there examples?”—and you said the U.S. has an example.

[Jason Kee]

Yes.

[Martin Shields, Conservative, Bow River, AB]

That's sort of self-defeating for a lawyer. You're working out of billable hours, and you're going to shorten that up? That doesn't seem like something a lawyer would suggest.

[Jason Kee]

If I'm being uncharitable, I might say that the primary beneficiaries of the current process are actually the lawyers.

[Martin Shields, Conservative, Bow River, AB]

Right.

[Jason Kee]

It doesn't benefit the creators. It doesn't benefit the platforms. It doesn't benefit the users. Trying to find ways to simplify this process and to do it more expeditiously will actually help the parties that are supposed to be the principal beneficiaries of this process.

[Martin Shields, Conservative, Bow River, AB]

As a partnership, you're looking to increase the revenue streams for both partners. You would suggest there is a process whereby it could be done that way, and the U.S. is an example.

[Jason Kee]

That's correct with respect to the Copyright Board process. It's also worth noting that in many instances we rely on the Copyright Board process, but when that process has been extremely inefficient, we have negotiated our own agreements with the collectives. This is in part because the delays were making it challenging to operate, so we actually made agreements with them directly.

[Martin Shields, Conservative, Bow River, AB]

You found a way to go around.

[Jason Kee]

That's correct.

[Martin Shields, Conservative, Bow River, AB]

Then I'm going to ask you about the future. Where is the future in this? Things change so drastically. Where do you see the future going with this?

[Jason Kee]

In many instances, it's about creators, musicians and artists finding ways to take advantage of the opportunities provided by this range of platforms. Again, the power of having access to an audience of 1.9 billion logged-in users is tremendous. It means you have access to global audiences and you can build sustainable businesses by scaling that and finding ways to monetize that audience.

However, it requires a very different approach from the one artists may historically have taken. It requires what I will call more of a creative entrepreneurial approach: basically, it's not just a matter of creating, writing and performing the music, but about actually engaging in the wide range of business activities that are required to create almost a personal brand that you leverage into revenue opportunities.

As a result, artists and creators who have been able to do that and wear all the hats—who are also our marketers, business managers and so forth—have been able to achieve tremendous success on the platform. They have been able, as I said, to secure sponsorship and brand deals that can result in very lucrative contracts, doing product integration and so forth.

That is the principal way in which artists will find success, because it's how they also diversify. Like any investor, you want to diversify your revenue streams to make sure that if one changes, you're still all right. That is the way most creators are going to be successful on the Internet.

[Martin Shields, Conservative, Bow River, AB]

When you say that, how is that knowledge going to come to the artist? Where would the kid in the basement making that video at 16 years of age get the expertise to understand that?

[Jason Kee]

This is part and parcel of a lot of the investments we make in our creators. Again, we view ourselves as a platform that is empowering others to succeed. We enable their success. We invest in resources to help that happen. That includes many online resources we make available through what we call the creator academy so that YouTube creators can learn how YouTube works and how they can optimize their content. They learn about achieving success based on a number of case studies that other creators have participated in, to sell what worked and what didn't.

It's similar to why we host workshops on the YouTube space. It's why we actually engage in production workshops. It's why we engage in keynotes and engage with the audience to help them build that out, as well as making sure we facilitate networking events to enable creators to speak to each other and learn from each other's success.

[The Chair, Liberal, Julie Dabrusin]

With that, I will now have to switch.

We now go to Mr. Nantel.

You have seven minutes.