Evidence of meeting #106 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was content.
4:05 p.m.
Executive Director, Music Nova Scotia
Thank you, Mr. Chair.
Excuse me in advance for my voice if it's a little weak. I've done a lot of talking.
4:05 p.m.
Executive Director, Music Nova Scotia
Singing, not quite.
Thanks for the opportunity to testify before the committee today.
The music industry has transformed itself into a predominantly digital industry, and to achieve this the music industry has worked tirelessly to adapt, innovate, and invest to drive a new digital age for music. However, for this positive development to be sustainable, there must be a fair digital marketplace for all participants playing with the same fair rules.
The sustainable and balanced growth of the digital content market continues to be undermined by a fundamental flaw in legislation underpinning the market that has created a value gap, a mismatch between the value that online user uploaded services, such as YouTube, extract from music, and the revenue returned to the music community. It is currently the biggest policy challenging the music industry today. For music to thrive in a digital world, those who are creating and investing in music must be able to negotiate fair commercial terms for its use.
Furthermore, digital music services that are licensing music on fully negotiated terms must be allowed to compete on a level playing field, something they currently do not have in Canada.
The Canadian music community is united in its call to fix the value gap, and it's advocating for a legislative solution. The government needs to look at the laws that were put in place at the dawn of the Internet that were designed to help the Internet flourish in the early days. Today those laws are hurting creators. In many cases, they mean that creators are subsidizing some of Canada's largest vertically integrated corporations. Today, the consumption of music has reached record-breaking numbers, yet our creators are worse off financially than they were in the 1990s.
Canada's creators urgently need the government to act because the laws in place now are preventing digital success stories from being shared with creators. Changes to the Copyright Act would create a functioning marketplace where artists are paid when their work is commercialized by others.
I'm sure most of you are aware of the term “value gap”. To summarize, the value gap describes the growing mismatch between the value that user uploaded services—again, such as YouTube—extract from music, and the revenue returned to the music community, to those who are creating and investing in music. The value gap is the biggest threat to the future sustainability of the music industry in Canada.
To fix the value gap, copyright reform must include the following.
Number one is an examination on the effects of safe harbour laws and exceptions. Safe harbour hosting provisions were introduced into copyright law around the world in the late 1990s and early 2000s to protect technology companies that were investing in developing the infrastructure needed to move content around the Internet from copyright infringement liabilities. Again, these provisions were introduced in the early days of the Internet, to help technology flourish at the time. In return for this protection, these companies were required to removed content only if they were notified of copyright infringements.
Years later, a number of platforms now exist that actively provide content rather than simply host it. These include video-sharing platforms, digital locker services, and user-generated content sites that are often generating vast revenues off the backs of creators' work, yet who maintain, at best, a partial liability for the content they provide.
The Canadian music industry believes that companies should only benefit from safe harbour defence if it is truly providing only technical, automatic, and passive service. Some companies are exploiting safe harbour positions, depriving creators of a fair value for their endeavours, and undermining legitimate music services in what is an increasingly important revenue stream for creators. Legislative action is needed to ensure that laws on copyright liability are applied correctly and consistently, so that online user uploaded content, services making music available, must negotiate their licences to do so with creators instead of riding freely on the backs of creators with these safe harbour privilege liabilities.
The music community is united in calling for policy-makers to take action.
Number two is the removal of the $1.25 million radio royalty exemption. When the Copyright Act was amended in 1997, every commercial radio station in Canada was exempt from royalty payments on their first $1.25 million in advertising revenue. Since then each of the nearly 700 commercial radio stations, regardless of their size or revenue, were only required to pay a nominal $100 to artists and recording companies on the first $1.25 million in advertising they earn. This is outdated and unjustified, and simply a cross-subsidy paid by artists and their recording industry partners to large, vertically integrated, and highly profitable media companies. Annually, the exemption costs rights holders an approximate $8 million, and since 1997 until 2017, it has resulted in losses to artists and labels of nearly $150 million.
These losses are contrasted to the fact that the radio industry has experienced steady growth and net profits before income tax from approximately $3.6 million in 1995, when the exception was first proposed, to approximately $437.5 million in 2016.
What should be done? Repeal subparagraph 68.1(1)(a)(i) of the Copyright Act. This will give power back to the Copyright Board and to stakeholders to come to a fair, market-based tariff, one that is set on a sliding scale and takes into account station revenues, use of commercial music, and ability to pay.
Number three is the amendment of the definition of “sound recording”. The current definition of “sound recording” in the Copyright Act is worded in such a way that performers and record labels are excluded from receiving royalties for the use of their work in television and film soundtracks. This exception is unique to television and film, and does not apply to composers, songwriters, and music publishers. It is inequitable and unjustified, particularly in light of the profound role that music plays in soundtracks. It is estimated that artists and recording labels lose $45 million annually to the current definition of “sound recording” in the Copyright Act as it stands now.
What should be done? Part II of the Copyright Act should be amended to allow for sound recordings used in television and film to be eligible for public performance compensation, pursuant to section 19 of the Copyright Act.
In summary, the Canadian music industry recommends the following changes: one, examining safe harbour provisions for companies that corner business as provision of content; two, eliminating the $1.25 million radio royalty; and three, changing the definition of “sound recording” in the Copyright Act.
At the outset of the digital era, creators were promised that they would be ushered into a golden age that would deliver them financial and artistic rewards. However, the reality for artists and their partners in the creative industries has been almost exactly the opposite. As a result of rules established two decades ago, wealth has been diverted from creators into the pockets of massive digital intermediaries, and what little is left over for creators has been concentrated into fewer and fewer hands. As a result, the creative middle class is disappearing, and with it numerous jobs and opportunities.
When we compare the global revenue from the sale of recorded music in 1999 with today, it is obvious to anyone that jobs and opportunities have been lost. This is a problem we're solving. Help us put Canadians back to work in the creative sectors. Help artists and other creators get back to full-time creative work. The government can address this and other effects caused by the value gap by taking simple, moderate steps to rebalance rules created at a time when everyone was guessing how the digital age might unfold.
The guessing is over. Now we know that the golden age promised to creators has never happened. We therefore collectively owe it to them to address the rules that have so profoundly undermined their careers. These rules must be adapted to the reality of today's digital marketplace in a way that is fair to all stakeholders.
Thank you.
4:15 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move to Canadian Publishers Hosted Software Solutions. Mr. Lorimer, you have up to seven minutes.
4:15 p.m.
James Lorimer Treasurer, Canadian Publishers Hosted Software Solutions
Thank you very much.
My name is James Lorimer. I'm the publisher of Formac Publishing in Halifax and the CEO of another publishing company, Lorimer, in Toronto. My colleague, Errol Sharpe, from Fernwood Publishing, who's involved in the project I'm talking about, wanted to be here today, but, unfortunately, he's ill.
I'm speaking on behalf of Canadian Publishers Hosted Software Solutions, which is a non-profit consortium of five independent publishing houses. Actually, I feel like I'm kind of an add-on to the session earlier today because what I have to talk about is what was being discussed in the earlier session.
For the last three years, the five of us, the publishers, have been working on a project to offer middle ground in the polarized conflict between Canadian universities and Access Copyright. We think the middle ground is to make it appealing, easy, and affordable to buy chapters of our books for course use. You can go onto our website, which is up and live now, and see how this works. It's www.canadiancoursepacks.ca.
On our platform, course instructors can search the chapters in the books published by our firms and by other Canadian publishers on the social sciences and humanities. When they find a chapter that looks interesting, they can get a short abstract of its content, and they can read the whole chapter right on the website.
Each chapter is priced, and the cost averages 10¢ a page. The course instructor can select the chapters they want to use for the course and put them together in what's called a course pack. The course instructor gets a unique identifier for the course pack to take to the university bookstore just like they take the title of a textbook they are requiring their students to use.
The bookstore orders copies of the course pack from us. If they order a digital version, the bookstore pays a package price of about 10¢ a page, so that would be $30 a copy for a 300-page course pack, which would often cover all the reading material required for a single course. If the bookstore orders printed copies, they pay a few dollars more, six or seven dollars more, for the printed bound copy. Our option puts the course instructor's selection of chapters into a university bookstore printed and bound for $36 or $37 a copy. With its usual markup, the bookstore would sell the package to the students for about $50.
This option compares well to standard university course textbooks, which are now priced, as you probably have already heard, at $50, $75, $100, $125, and up. To summarize, the middle ground we've developed is a digital platform for publishers to sell individual chapters for course use at reasonable prices.
We're well aware that most Canadian university administrations have implemented a policy that the course instructors and students—you were hearing about this earlier—can take chapters of our books for free and use them in courses. They use a guideline of 10% of the original book, usually one or two chapters.
We realize the alternatives to this 10% policy, which have been open to the universities today, are awkward, frustrating, and expensive. One alternative, paying the excess copyright tariff, is very costly to universities, and it doesn't connect directly to use. The other alternative, assembling permissions from rights holders for each individual portion of a book and negotiating fees for each item in the course pack, is awkward, expensive in staff time, often frustrating, and unpredictable in terms of the bottom-line cost.
Our project aims to break through the current impasse between the universities and Access Copyright. We think university administrations can believe that the education exemption is fair and may use them to take our chapters for free, but still opt to advise course instructors and bookstores to use our platform and purchase course packs that they can sell to students. Why would they do that? Because, as I've said, our option is easy for course instructors to use, requires no staff time for copyright clearances, produces reasonably priced course materials for students, and leaves universities free of the risk that in a few years the courts will rule that they should have been paying.
We do believe that when all is said and done, the courts will find that fair dealing under the Copyright Act today does not allow universities to take our chapters for free.
Even if the courts determine that it has been fair use up to now, we expect they will find that it's no longer fair use to take chapters for free when they can be easily found and purchased at reasonable prices on an easy-to-use platform aggregating thousands of chapters from hundreds of books from many leading Canadian publishers.
Nevertheless, I am here today to ask you to recommend that the act be amended. The request is for an amendment to clarify that when portions of a copyright work are readily available for purchase at reasonable prices, fair use does not encompass taking them for free. While we believe that the courts will ultimately make this determination based on the Copyright Act as it stands right now, that process may take many more years. Conflict on this issue will continue unabated. You've been exposed to lots of that in the hearings you've had up to now.
Incorporating clearer and more definite language in the act would likely encourage universities to move away from their current hardline stand, and to accept a middle ground resolution.
If there's time in the discussion to follow, I'd be happy to brief you on the initial responses we've had from the 35 universities we've approached since January to brief them on our platform and on our middle ground resolution around using copyright material for courses.
Thanks for the opportunity to tell you about our course pack project.
4:20 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move on to Ms. Andrea Bear Nicholas, Professor Emeritus, from the Maliseet First Nation.
May 7th, 2018 / 4:20 p.m.
Professor Andrea Bear Nicholas Professor Emeritus, St. Thomas University, As an Individual
[Witness speaks in Maliseet]
[English]
My name is Andrea Bear Nicholas. I am from the Tobique First Nation in New Brunswick, and I've been teaching as the St. Thomas University chair in native studies for 20 years. I'm very grateful for this opportunity to speak with you.
As chair in native studies at St. Thomas, I began working over 25 years ago with a group of Maliseet families to publish nearly 5,000 pages of stories in our language, which had been recorded by a non-indigenous academic between 1970 and 1983. From 1994 to 2004, we worked with the collector to publish these stories. When he offered to sell the 37 original, large, double-sided tapes to the families for $4,000, they agreed to pay him, but only on condition that he surrender copyright to the families, otherwise they wouldn't be able to use them.
He signed such an agreement and was paid his price, but subsequently changed his mind. Since Canadian copyright law gives copyright to those who record stories rather than to those who tell them, he refused to allow the families to publish the stories except under his sole copyright. For the families this would have been tantamount to surrendering claim to the oral traditions of their elders, and they could not bring themselves to do it.
I and the families subsequently spent three years and $30,000 in legal fees trying to negotiate with the collector. The families were even willing to publish the stories under a joint copyright with the collector, but he refused even that. In the end, his lawyer stopped responding to our lawyer. Consequently, the families made the difficult decision not to publish the stories at all, fearing the real possibility of being sued under section 18 of the Canadian Copyright Act.
A moment is needed here to explain how detrimental this has been for my language, Maliseet, which is said to have only 60 lifelong speakers out of nearly 7,000 people. Like most indigenous languages in Canada, ours is in fact deemed to be critically endangered, which is the last category before becoming extinct according to UNESCO's Atlas of the World's Languages in Danger. When I received a sizable SSHRC grant in 2010 to investigate the effectiveness of adult immersion in revitalizing an endangered language, we were prohibited by Canadian copyright law from using both the tapes and the transcriptions that we had made from the tapes.
When the Canadian Association of University Teachers, CAUT, learned of this appalling situation, they helped us to publish the first volume of stories and promised to provide legal support in case we were sued. We now actually look forward to being sued, so that the matter might be settled in court.
We are aware that songwriters do not lose rights to their songs when someone else records them, and we ask only for the same right to be guaranteed to storytellers, particularly indigenous storytellers, who are the keepers of our intellectual and cultural heritage. For anthropologists, linguists, and others, however, Canadian copyright law has served as the perfect tool for stealing and exploiting our intellectual and cultural heritage, rather than for protecting it and promoting the survival of indigenous cultures.
One of the calls to action in the 2015 report of the Truth and Reconciliation Commission called on the federal government to fully adopt and implement the 2008 UN Declaration on the Rights of Indigenous Peoples, and in 2016 the Government of Canada declared its intention to do so. Article 11 of the declaration declares that indigenous peoples must have the right to “practise and revitalize their cultural traditions and customs”, including “the right to maintain, protect and develop the past, present and future manifestations of their cultures”.
There can be no question that the oral and written versions of our stories are manifestations of our culture, and there is no question that the theft of these traditions has had a destructive impact on our ability as Maliseets to revitalize our language and culture.
The final report of the Truth and Reconciliation Commission declares that reconciliation “requires constructive action on addressing the ongoing legacies of colonialism that have had destructive impacts on Aboriginal peoples' education, cultures and languages....”
Residential schools may no longer exist in Canada, but many destructive legacies of colonialism still exist and actually reinforce each other. That our language is in such a critical state is not so much the consequence of residential schools, since very few of our children were actually sent to one; it is the consequence of being forced, generation after generation, to send our children to schools conducted in the medium of English rather than in the medium of our own language. Since section 18 of the Canadian Copyright Act effectively legalizes the theft of our stories, the right of our children to the oral traditions of their people has been, and still is, doubly denied.
Unless this country moves quickly to remove these legacies of colonialism in its laws and policies, our language and most other indigenous languages in Canada will soon be extinct, and the promise of truth and reconciliation will be meaningless. I sincerely hope this will not be the case.
Woliwon. Thank you.
4:25 p.m.
Liberal
The Chair Liberal Dan Ruimy
Thank you very much.
We're going to move right into our questions, and we're going to start off with Mr. Baylis.
You have seven minutes.
4:25 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Thank you, everybody, for being here.
Mr. Long, I'd like to discuss the value gap with you a bit more. If I understand it, you're saying the artists are the losers in this aspect. Who are the winners?
4:25 p.m.
Executive Director, Music Nova Scotia
It's the distribution services on the Internet that are providing the content to the public, such as YouTube, Facebook, and Instagram. It's also any video service where people are uploading their own user-generated content, where music is used but not licensed.
4:25 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
What's happening? Let's talk about YouTube. They're putting up a music video. Is the artist getting something, or nothing?
4:25 p.m.
Executive Director, Music Nova Scotia
Very little. It depends on the level of where you are in your career. If you're a regional artist just starting out, it's probably almost nothing.
YouTube has one of the lowest-paying streaming services rates per stream in the world for the broadcasting of the stream.
4:25 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
We'll come back to how much it's paying.
You're saying it's also using safe harbour laws in a manner that was not originally intended. If I understand this, YouTube puts up some music videos it does not have the right to put up. The safe harbour laws only say the distribution service has to be informed and has to take it down.
First of all, is that happening?
4:25 p.m.
Executive Director, Music Nova Scotia
Sometimes, yes, if the record labels are on top of it. There's technology in place now that enables major record labels to know when their licensed content is being streamed or accessed. They can be alerted to it, but smaller, independent labels wouldn't have as many resources to be able to track that. The Internet is so vast and ubiquitous that it's almost impossible to know where and when your intellectual property is being consumed.
4:30 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
You're an artist. You're in the music business. You make a video. You want to put it out there. Do you want it on YouTube, or do you not want it on YouTube?
What are you asking us to look at, specifically, to change? Do you want us to remove safe harbour? Do you want us to get these services to be more strict in enforcing copyright? What's the perfect world for you?
4:30 p.m.
Executive Director, Music Nova Scotia
For owners of intellectual property and digital content to be able to negotiate based on a fair base royalty rate. Really, it's that simple.
YouTube decides what they're paying, which is almost nothing.
4:30 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
We'll come back to negotiating prices—that's one question—but that has nothing to do with safe harbour. You say it's an issue. Let's say they're paying you fairly. You had an issue about safe harbour. I want to understand that specific aspect. You're concerned that the safe harbour laws are allowing them to pay you too little, but I don't think they're tied to that. Safe harbour, from what I understood, was just protecting them from copyright infringement, if they were to act against it.
4:30 p.m.
Executive Director, Music Nova Scotia
There are other services out there streaming content that probably don't pay anything and may be using safe harbour privileges for that reason.
I'm not exactly an expert in this area, but my gut feeling is that it would not be fair to say that because YouTube pays little to nothing to intellectual property owners, they're not abusing some sort of safe harbour privilege. YouTube is now in the business of promoting content to get users onto an ad-driven platform; they're selling advertising to bring users to it, as opposed to being a passive distribution mechanism.
4:30 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Yes, so for argument's sake, we have the content providers; they make these music videos. People want to watch them, so they go to YouTube. They start watching them, and they get the advertisement on the side, and YouTube's making all the money. All that advertising is going to YouTube and the artist is getting little to nothing. If the artist is put up there and they're not breaking copyright law, your concern is that YouTube is not paying a fair value. Would that be a better way to say it?
4:30 p.m.
Executive Director, Music Nova Scotia
Yes, and there are also copyright infringement issues because YouTube is a user-generated platform as well, where average consumers are allowed to and encouraged to upload their own content that may contain licensed music that they don't have a licence to use.
4:30 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
Is YouTube being a good corporate citizen in that respect? If they're informed something shouldn't be up on YouTube, are they taking it down in a timely fashion?
4:30 p.m.
Executive Director, Music Nova Scotia
You know, it's a bit of a mess, to be honest with you. There are all kinds of different conflicting stories around that from individual artists we deal with. Sometimes yes; sometimes no; sometimes people who own copyright have it taken down but want it there, and it was pulled off by someone else who claimed they owned it. It's messy.
4:30 p.m.
Liberal
Frank Baylis Liberal Pierrefonds—Dollard, QC
I understand that.
With respect to negotiating, YouTube pays too little. Would you be looking for governments to regulate a minimum that it has to pay? If you say that every artist wants to negotiate on their own, basically what will happen is all the small people would get wiped up because YouTube would say, “We'll get to you in 10 years; we're busy dealing with the big guys.” Then when they get to you, they'll say, “Look, we're going to give you 10¢. Take it or leave it.” They have negotiating power. What can the government do in that sense?
4:30 p.m.
Executive Director, Music Nova Scotia
Yes, there needs to be a balanced mix there. There should be a royalty rate set in the Copyright Act, and also with a minimum, I suppose, with room for people to negotiate, as they do with the audio streaming services now, like Spotify, Deezer, and Apple Music. Those markets are open to negotiation with the rights holders and the people who own the catalogues of the intellectual property. There are some negotiations that may happen with the large multinational major labels, but still, the rate's too low.