Canadian Heritage Committee on Oct. 16th, 2018

[The Chair, Liberal, Julie Dabrusin]

Welcome to this 124th meeting of the Standing Committee on Canadian Heritage. Today we are resuming our study of remuneration models for artists and creative industries.

Beginning with a panel of three sets of witnesses, we have with us today, from the Alliance of Canadian Cinema, Television and Radio Artists, also known as ACTRA, David Sparrow, national president and a performer. We also have Laurie McAllister, director of the Performers' Rights Society and Recording Artists' Collecting Society.

We also have with us Robert Malcolmson, senior vice-president of regulatory affairs with BCE Inc., and from Rogers Communications Inc., we have Pam Dinsmore, vice-president, regulatory cable, legal and regulatory affairs, and Kristina Milbourn, director, copyright and broadband, legal and regulatory affairs.

I'm going to go in the order that we have on the agenda, so we can begin with ACTRA, please.

[David Sparrow, National President and Performer, Alliance of Canadian Cinema, Television and Radio Artists (ACTRA)]

Hello. I'd like to thank the committee for having us here today to speak about remuneration for artists and the important issue of recognizing and ensuring robust statutory and moral intellectual property rights for audiovisual performers in the Canadian Copyright Act.

My name is David Sparrow. I am a working actor. For almost 30 years, I have been a member of the gig economy, a precarious worker, and an artist. I have appeared in over 100 film and television roles and on stages across North America. That comparatively successful career does not necessarily make me a household name or financially stable. This is a tough business.

I am also the president of ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists, where I help to represent 25,000 professional audiovisual English-language performers across Canada, who work to give voice to a wide diversity of Canadians, to help define Canadian culture and to project our culture to the world.

The average Canadian unionized performer earns less than $11,000 per year through work in film, TV and other recorded media. They build their careers by working in a number of different media and earning small incomes from a number of different sources. Every one of these micropayments is important and helps to pay the bills between gigs.

It is unfortunate that Canada has famous celebrities of years gone by who worked under terms that didn't include intellectual property protection, so that today, in their senior years, they are living in poverty and in subsidized housing. ACTRA has taken steps to negotiate use provisions into our contracts to ensure performers are paid for their work throughout its use, but the fact remains that we need strong copyright provisions to underpin our rights as audiovisual performers.

I am here today to make the case for the Copyright Act to be extended to audiovisual performers. Residuals and royalties, payments for the use and exploitation of our work here at home and around the world, are the fair compensation all performers deserve.

By example, through our negotiated contracts, I personally receive between $4,000 and $8,000 per year in royalties from the over 100 projects that I spoke of earlier. Do the math. It's not a lot of money.

We need a made-in-Canada copyright solution that will give performers, their unions and collection societies the tools that they need to go after the remuneration they are owed. Strong copyright law guards against unauthorized use or misuse of an artist's work. There are international treaties that Canada can carefully implement to address these issues, but we can start by amending the Copyright Act to ensure Canadian audiovisual performers enjoy the same copyright protections that our audio performers already enjoy under the act.

ACTRA is certainly available and willing to help or consult further with the committee to arrive at strong language that will do no harm and will address these issues in the Canadian context.

I will now pass you over to Laurie McAllister, who is ACTRA's director of the Performers' Rights Society and the Recording Artists' Collecting Society, PRS/RACS, for more insights and detail. Laurie also serves on the board of SCAPR, an international coordinating body of 60 performers' collective management organizations from 43 countries, working to improve the exchange of data and performers' rights payments across borders.

Go ahead, Laurie.

[Laurie McAllister, Director, Performers' Rights Society and Recording Artists' Collecting Society, Alliance of Canadian Cinema, Television and Radio Artists (ACTRA)]

Thank you, David.

The lack of economic and moral rights in Canada's Copyright Act means that audiovisual performers don't receive the legislated protection that others in the creative class receive, and it is out of step with international standards. In other countries around the world, audiovisual performers enjoy copyright protection, including the exclusive right to authorize the use of their performances, or an equitable remuneration right.

ACTRA, through its established collective bargaining process, negotiates use rights with producers for audiovisual performances. We are seeking the codification of those rights to underpin our bargaining efforts and provide a framework for future negotiations.

Establishing the right to receive royalties through contract or equitable remuneration is necessary to ensure that performers can earn a fair share of revenue generated from their exploitations. The need for a well-crafted statutory framework is critical, as digital distribution and consumption of content have dramatically risen, but the average income of performers has remained low. This value gap is evident in the fact that despite the production boom in Canada, the average annual earnings per performer in 2017 was, as David said, less than $11,000.

The codification of these rights is also critical to establish reciprocity with countries whose audiovisual performers already enjoy copyright protection and economic rights. ACTRA PRS negotiates agreements with CMOs in foreign territories for the financial benefit of the recording artists we represent through ACTRA RACS. By extending our existing audio performance rights to audiovisual, we could leverage our long-standing relationships with foreign CMOs to collect royalties for Canadian actors from foreign jurisdictions.

As with economic rights, there is no good reason for audiovisual performers to be denied moral rights. A performer's resume, image and reputation have a direct impact on their ability to earn a living. As such, we ask that audiovisual performers be granted moral rights in Canada. That includes the right to be identified as a performer in the performance and the right to object to any material distortion or modification of the performance that would be prejudicial to their reputation. This would have no impact on the normal course of editing and exploitation, and is a right currently afforded to sound recording artists.

For the sound recording artists we represent through ACTRA RACS, we echo requests that have been expressed here by other witnesses.

The first one is to repeal the $1.25-million exemption for commercial radio. Canada is the only country with such an exemption, and there is no reason that recording artists should continue to subsidize large, profitable media corporations that rely on the exploitation of an artist's work for profit.

Second, amend the definition of sound recording in section 2 of the act. Currently, performers and makers aren't compensated when sound recordings are used in film and TV, resulting in an estimated $55 million in lost revenue annually. In 44 countries around the world, including France, Germany, and the U.K., performers and makers receive royalties when sound recordings are used in film and TV.

Third, the private copying levy was intended to be technologically neutral but has been limited to blank CDs. We all know that copies of music are made on devices such as smart phones, meaning rights holders have not been compensated for billions of private copies made of their work. The impact has been devastating, with private copy revenues dropping from $38 million in 2004 to less than $3 million in 2016. We support the Canadian Private Copying Collective's proposal, which includes a long-term solution for copyright reform and an interim proposal for a four-year, $40-million-per-year fund to ensure that rights holders are compensated for copies of their work until a more permanent solution can be enacted.

While it's easier than ever to have your creative work seen and heard around the world, it's harder than ever to be properly compensated. Most actors and recording artists receive modest compensation for their time spent recording a work, which is exploited for profit for decades while artists continue to struggle.

We've heard it many times: The middle-class artist is disappearing. It's critical that our legislation ensures that performers are fairly compensated for the value they create. To that end, we ask the committee to consider the recommendations we have outlined here today, mindful of the rights and the need of performers to share in the economic benefit of the works they create.

[David Sparrow]

We thank the committee for their time and work today. We look forward to questions.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

We will now go to Robert Malcolmson from BCE, please.

[Robert Malcolmson, Senior Vice-President, Regulatory Affairs, BCE Inc.]

Thank you, Madam Chair and honourable committee members. My name is Robert Malcomson. I'm senior vice-president of regulatory affairs at BCE. Thank you for your invitation to provide Bell's views on copyright reform that will help ensure artists and content creators are paid for the work they create.

Bell is Canada's largest communications company, employing 51,000 Canadians and investing $4 billion in advanced networks and media content last year. We're also a key supporter of Canada's cultural and democratic system, investing approximately $900 million per year in Canadian content and operating the largest networks of both local TV and local radio stations in the country.

As a content creator and major economic partner with Canada's creative community, we share an interest in protecting the economic model that supports our cultural industries. I look forward to sharing this perspective with you.

In our presentation today, we will focus on the impact of organized content theft. This issue is fundamental to the topic the committee is studying, because no matter what remuneration model you adopt, creators can never be fairly compensated if their work is being widely stolen.

There is an emerging consensus among creators, copyright owners, legitimate commercial users and intermediaries that large-scale and often commercially motivated piracy operations are a growing problem in Canada. Piracy sites now regularly reach up to 15.3% of Canadian households through widely available and easy-to-use illegal set-top boxes. This is up from effectively zero five years ago.

In addition, there were 2.5 billion visits to piracy sites to access stolen TV content last year, and one in every three Canadians obtained music illegally in 2016. Each of these measures has also grown significantly over time.

According to research conducted for ISED and Canadian Heritage, 26% of Canadians self-report as accessing pirated content online. TV piracy has an estimated economic impact in the range of $500 to $650 million annually.

In light of these concerning trends, we believe it is necessary to modernize the Copyright Act and related enforcement measures to meet the challenge posed by global Internet piracy.

To be clear, protecting creators in this way does not mean targeting individual Canadians who access copyright-infringing materials. Rather, it means addressing the operators of commercial-scale copyright-infringing services. It is these large infringing operations that harm the cultural industries, which employ more than 600,000 Canadians, account for approximately 3% of our GDP, and tell the uniquely Canadian stories that contribute to our shared cultural identity.

With all of this in mind, we have three recommendations.

First, modernize the existing criminal provisions in the Copyright Act. Criminal penalties for organized copyright crime are an effective deterrent that do not impact individual users or interfere with legitimate innovation.

The act already contains criminal provisions for content theft undertaken for commercial purposes, but they deal with illegal copying, while modern forms of content theft rely on streaming. These provisions should be made technologically neutral, so that they apply equally to all forms of commercial-scale content theft.

Second, increase public enforcement of copyright. In jurisdictions such as the U.K. and the United States, law enforcement and other public officials are actively involved in enforcement actions. We recommend that the government should create, and consider enshrining in the Copyright Act, an administrative enforcement office, and should direct the RCMP to prioritize digital piracy investigations.

Third and finally, directly empower either the CRTC or the courts to order intermediaries to contribute to remedying copyright infringements.

All players in the ecosystem have a role to play in promoting compliance with the rules that support the appropriate remuneration of creators. Early this year, FairPlay Canada, an unprecedented coalition of creators, broadcasters and other industry players, filed an application with the CRTC seeking to require Internet service providers to disable access to the most egregious piracy sites. Earlier this month, the CRTC recognized the harm being caused by piracy but determined it did not have the statutory jurisdiction to grant the coalition's application. This committee could recommend that the Telecommunications Act be updated to provide that jurisdiction to the CRTC.

In addition, a new provision could be added to the Copyright Act that would apply more broadly to intermediaries such as ISPs, web hosts, domain name registrars, search engines, payments processors, and advertising networks.

In practice, this would mean adding a section to the Copyright Act that allows a court to issue an order directly to, for example, a web host to take down an egregious piracy site, a search engine to de-list it, a payment processor to stop collecting money for it, or a registrar to revoke its domain.

While financial liability for these intermediaries is not appropriate, they can and should be expected to take these reasonable steps to contribute to protecting the integrity of copyright, which is essential to all remuneration models for creators.

Thank you for the opportunity to present our views. We look forward to any questions you may have.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

Now we will go to Rogers Communications, with Pam Dinsmore and Kristina Milbourn.

[Pam Dinsmore, Vice-President, Regulatory Cable, Legal and Regulatory Affairs, Rogers Communications Inc.]

Thank you, Madam Chair and members of the committee. My name is Pam Dinsmore. I am vice-president for regulatory cable at Rogers Communications Inc. I am here with my colleague Kristina Milbourn, director of copyright and broadband at Rogers. We appreciate the opportunity to share our views with you today.

Rogers is a diversified Canadian communications and media company offering wireless high-speed Internet, cable television, and radio and television broadcasting. We support a copyright act that takes a balanced approach to the interests of rights holders, users, and intermediaries, thereby optimizing the growth of digital services and investments in innovation and content. As a member of both the Canadian Association of Broadcasters—the CAB—and the Business Coalition for Balanced Copyright, we also support their comments in this review.

While both the INDU committee and the heritage committee are dealing with Copyright Act reform, we understand that this committee's focus is on increasing remuneration to artists, creators, and rights holders for the use of their creative works.

Fair compensation for creators is key to ensuring the continued health of the Canadian media landscape, and we believe we are doing our part to ensure that creators are paid for their work. For example, in our capacity as a broadcaster, a BDU, and an ISP, Rogers contributes to the compensation of artists in the following ways.

We spend $900 million annually on the production of Canadian programming; and each year we remit copyright royalties for the music in specialty and TV everywhere streaming services, as well as approximately $25 million annually in copyright payments to compensate creators whose programming is retransmitted in the distant signals we distribute.

The importance of these contributions and royalty payments cannot be overstated. There is, however, leakage in the system. As we stated before the INDU committee, we have watched the rise of the streaming of stolen content on preloaded set-top boxes with deepening concern.

In our view, the proliferation of unlawful IPTV streaming services and preloaded set-top boxes is inextricably linked with decreased remuneration for creators. For instance, it has been estimated that streaming piracy is resulting in approximately $500 million of lost subscriber revenue to the Canadian television industry. This means that for creators, on this $500 million of lost BDU revenue, zero copyright royalties are being paid to rights holders for programming in distant signals, zero contributions are being made to the Canada Media Fund, and zero programming contributions are being made for Canadian productions.

That Canadians are increasingly and often unwittingly consuming stolen content online is borne out by recent studies. For example, Sanvine, a Canadian company that conducts network analytics, reported that in 2017 roughly 15% of Canadian households were streaming stolen content using preloaded set-top boxes. These boxes access an IP address that provides the stream. While illegal downloading remains a major problem for rights holders, illegal streaming has become the primary vehicle by which thieves make the stolen content available.

We have taken action to address this growing problem using the existing remedies under the Copyright Act, but these remedies are insufficient. We therefore propose the following changes to the act.

First, the act should make it a criminal violation for a commercial operation to profit from the theft and making available of rights holders' exclusive and copyrighted content on streaming services. In our experience, the existing civil prohibitions are not strong enough to deter this type of content theft.

Second, the act should allow rights holders to apply to a court for injunctive relief against any intermediary that forms part of the online infrastructure that is distributing stolen content, including ISPs, domain name registrars, search engines, web hosting services, and content delivery networks.

For example, a rights holder should be able to quickly obtain an order from a court to require an ISP to disable access to stolen content available on preloaded set-top boxes without concern that the operation of section 36 of the Telecommunications Act might impede this effort. Currently, the existing judicial process available to rights holders is too time-consuming, too expensive, and too multi-faceted to be effective, in a world in which stolen content can be shared around the world with the click of a mouse before a court has an opportunity to provide relief against copyright infringement.

The Fair Play coalition of which Rogers is a part explicitly requested that the CRTC create an agency for the expedient adjudication of online piracy disputes. In denying the Fair Play application, the commission specifically pointed to the Copyright Act review as the right venue for considering this issue.

In our view, it is now incumbent on this committee to seriously consider that request of rights holders in order to preserve the healthy operation of the Canadian broadcasting system.

In addition to these proposed amendments addressing illegal streaming, we have two further suggestions that, if implemented, would benefit creators.

First, amend subsection 19(3) of the Copyright Act to create a more advantageous royalty split between artists and record labels. More specifically, change the 50-50 split to a 75-25 split, for example, in favour of artists. This was a suggestion made to the INDU committee last month by noted copyright lawyer Jay Kerr-Wilson, who underscored that such an amendment, if implemented, would result in the immediate enrichment of creators without threatening the radio industry.

Second, augment the resources of the Copyright Board to increase the expediency with which it releases its decisions. Last year, within the context of the Copyright Board consultation, the BCBC introduced a number of suggestions to improve the operation of the board. We would direct this committee to that document in order to ensure that Canada's rate-setting body continues to keep pace with the rapid progression of technology so that creators can receive remunerative payments within a reasonable amount of time.

These are our brief comments. We would be pleased to answer any questions you may have. Thank you very much.

[The Chair, Liberal, Julie Dabrusin]

Thank you.

We will now begin the question and answer period.

Mr. Breton, please go ahead.

[Pierre Breton, Liberal, Shefford, QC]

Thank you, Madam Chair.

I will ask my questions in French, so I don't know if you need your headset for the translation.

My first question is for Mr. Sparrow and Ms. McAllister.

The value gap, which Music Canada defines as the large gap between the value of the creative content consumed and the revenues flowing to the persons and companies that create it, has been the topic of many discussions in the music sector in Canada and internationally.

Is there a comparable gap in the Canadian television and film industries? If so, what are the causes and the consequences of this value gap for the sector in Canada?

Mr. Sparrow and Ms. McAllister, can one of you answer that question?

[David Sparrow]

I think the first and most important thing is that because we as audiovisual performers are not currently recognized under the Copyright Act, we don't have the statutory and moral rights to basically demand or negotiate the payments tied to international and even national exploitation of our work. We do have strong contracts within ACTRA that allow for residual payments to be paid as our producer partners gain monies, but there are other monies around the world that we don't have access to. I would say that is certainly a gap that we're not seeing filled.

[Pierre Breton, Liberal, Shefford, QC]

How do ACTRA members obtain fair and equitable compensation for the value they provide to works protected by copyright?

[David Sparrow]

Right now we have, as I said, very strong contracts. In fact, this is our 75th year as a union representing performers, and we have long contracts that deal with residual payments and royalty payments.

It's usually a producer who receives a licensing fee or monies. We get 3.6% of that distributor's gross revenue, split among all of the performers in a project.

However, as I said, there are other monies around the world. For instance, we got into an agreement with Spain through the Performers' Rights Society that Laurie could speak to, and when we signed that agreement, $928—which is not the biggest number in the world, but is important to me—flowed to me from an account in Spain. It was not going to come to me until we made that deal. If the Copyright Act is changed to give us those statutory rights, then there are opportunities all around the world for those monies to flow to performers to benefit them.

[Pierre Breton, Liberal, Shefford, QC]

Thank you.

My next question is for you, Ms. Dinsmore.

Earlier you referred to a new division of royalties, with 75% going to artists and 25% to recording studios. You made this suggestion to the Standing Committee on Industry, Science and Technology last week. Can you elaborate? Also, where do things stand now in that regard?

[Pam Dinsmore]

The proposal actually was broached with you, I believe, by the Canadian Association of Broadcasters at their appearance on September 24. Susan Wheeler, who also is at Rogers, discussed this and suggested that this committee look at that split. It was raised by Jay Kerr-Wilson in front of the INDU committee.

Under subsection 19(3) of the Copyright Act, under the regime for radio and for commercial radio, ultimately the monies, the royalties that accrue from that tariff, are split fifty-fifty between artists/performers on the one side and the labels on the other side. What we're suggesting is that this calibration be revised to provide more money to the artists and less money to the labels.

As we know, the labels are primarily multinationals. They're large companies. Many of them are based in the U.S. There are not that many that are Canadian. I think 2% of the monies go to Canadian labels. On the artists side, about 28% of the monies go to Canadian artists right now. We think that if the pool were bigger, then obviously the 28% pot would be greater and more money could very quickly and easily be funnelled toward Canadian artists.

[Pierre Breton, Liberal, Shefford, QC]

My last question is for you, Mr. Malcolmson. Thank you for your recommendations; we understood them well.

Are you aware of any other copyright management models elsewhere in the world? What could be applied here, in Canada?

[Robert Malcolmson]

There are numerous examples in other countries of regimes that allow for intermediaries to block access to pirated content. I think in the FairPlay application, we cited 47 other countries that have those regimes in place to help protect the remuneration of artists by blocking access to piracy. In our proposals, both in front of the CRTC and here today, we advocate taking those models that have proven successful in other jurisdictions and applying them here.

I think some of the data we filed with the FairPlay application showed that where there are blocking regimes for egregious pirate content, you stem the flow of piracy in the range of 90%. They're very effective, they're expedient, and they can be done at very low cost relative to protracted judicial proceedings.

[The Chair, Liberal, Julie Dabrusin]

I will now turn it over to Mr. Steven Blaney.

[Steven Blaney, Bellechasse—Les Etchemins—Lévis, CPC]

Thank you very much, Madam Chair.

Thanks to the witnesses for being here.

If I understand correctly, the representatives from Rogers and Bell are in agreement about broadcasting content. You are losing about 15% of the market because of illegal sites, and I think the message is clear.

I would like some more clarification about the presentation from our friend from ACTRA.

If my understanding is correct, you mentioned that those who are involved, actors, are not covered by the Copyright Act. Is that correct?

[David Sparrow]

Yes. It's my understanding at this time that audiovisual performers are not protected under the Copyright Act, but audio performers are—musicians—

[Steven Blaney]

Audio, but not visual.

Is it the case in other countries? You've mentioned some recommendations. You went through them. You would recommend that those visual actors would be included in the Copyright Act. Is it the same in other countries? Is it the case?

[Laurie McAllister]

Yes. There are lots of countries around the world that I think we could look to as examples, where audiovisual performers receive economic benefit for their work. We could look at France, Germany or the Netherlands.

[Steven Blaney]

Since you have those strong contracts, what would it add to your protection or benefit if this were included in the Copyright Act?

[Laurie McAllister]

What we're looking for is certainty in the Copyright Act, certainty that we can continue to negotiate for these rights. As I've heard it described before, having it codified in the act provides a contractible space—

[Steven Blaney]

Okay—