Industry Committee on June 5th, 2018

[The Chair, Liberal, Dan Ruimy]

Good afternoon. How are you all today?

Welcome to meeting 120 of the Standing Committee on Industry, Science and Technology as we continue our legislative review of the Copyright Act.

Today we have with us, from the Canadian Federation of Musicians, Alan Willaert, the AFM vice-president from Canada; from the Guilde des musiciens et musiciennes du Québec, Éric Lefebvre, secretary-treasurer; and from the Canadian Music Publishers Association, Margaret McGuffin, executive director.

Members, before we begin, it appears that on Thursday we're going to have about seven votes. I'd rather not cancel, because we have some really good witnesses on Thursday. Do we have consent to maybe extend that meeting for an extra half hour?

Do you have a flight to catch? All right. We'll see what we can do.

We'll go to Alan Willaert, for up to seven minutes.

[Alan Willaert, Vice-President from Canada (American Federation of Musicians), Canadian Federation of Musicians]

Thank you very much.

Yes, I'm Alan Willaert, vice-president from Canada of the American Federation of Musicians of the United States and Canada. We operate in Canada as the Canadian Federation of Musicians. Within Canada we have 17,000 members, but we also represent all musicians under the federal Status of the Artist Act.

I'd like to start with a couple of statistics, which may shock you a little bit, and which will set up my reasons and recommendations.

There are approximately 33,750 professional musicians and singers in Canada with a rate of self-employment many times higher—80%—than the labour force average. Artists have much higher levels of education than the average workforce with 44% having a B.A. or higher, double that of the average overall workforce. The average income of the average workforce is $48,100. The average individual income for musicians and singers is $17,699, but the median individual income for musicians and singers is $11,431. Interestingly as well, the male-female split for singers is fifty-fifty. The highest earnings are in the 45- to 54-year-old demographic, and the number of artists has increased by 50% since 1989.

We should look at a bigger picture as well. With 3.4% of Canada's total GDP, the gross domestic product, and $53.2 billion in revenue, the arts and culture industry in Canada is larger than the accommodation and food services industry, and twice as large as the agriculture, forestry, fishing and hunting industry. More specifically, revenue from live performances is in excess of $2 billion and from sound recording $500 million. With these kinds of staggering profits, then why on earth is the median income for musicians so low? Where is the money if not in the pockets of the musicians?

To alleviate some of the problems, of course we recommend some changes to the Copyright Act. First of all, we recommend that we amend the definition of “sound recording”. The current definition of sound recording needs to be amended so that performers can collect royalties when their recorded performances of music on the soundtracks of audio-visual works such as TV programs and movies are broadcast or streamed. Of course, to facilitate that, we recommend the ratification and enactment of the Beijing treaty.

We also recommend the removal of the $1.25-million royalty exemption for commercial broadcasters. Interestingly, when this was first put into place, it was originally supposed to be only applied to mom-and-pop stations with a $1.25-million revenue in advertising, or less. Somehow it got applied as an exemption for the first $1.25 million for all stations. That needs to be revisited, big time.

Also, we recommend expanding the private copying to include new copying technology, and this is a no-brainer, of course. Nobody uses tapes or CD-Rs any longer. It's all about digital. We recommend a reform to the Copyright Board. We recommend the reduction of piracy in the digital world. By that, of course, we mean steeper regulations on Internet service providers, specifically a notice and take down regime as it is in the U.S.

We also urge the government to work with the music community to transition content quotas and MAPL designation from an analog to a digital world so that we can regulate the streaming industry. We need to regulate streaming because this will soon be a $70-billion industry worldwide, and anything produced in Canada, such as Netflix, should be subject to the same collective bargaining processes such as the Status of the Artist Act.

I have one other thing I want to read to you quickly, and this is a letter from one of our members. She is Damhnait Doyle, and she's a musician from Newfoundland. She's quite a popular singer-songwriter, and she has this to say:

Throughout my 25 years as a long standing and proud member of Local 820 of the Musician's union, I have only seen the standard of living decrease for those of us who have chosen to make this our profession. We are being hammered from every angle, from piracy to streaming, to being at the losing end of exemptions to broadcasters and losing our royalties for our work in film and TV because the definition of “sound recording” [needs to] be redefined, while our American counterparts do get paid for their efforts. Meanwhile, the cost of living is continually rising, and our middle class has been eviscerated.

I ask you to please seriously consider the issues being presented by the CFM, which will put long overdue and necessary revenue into the pockets of Canadian musical artists, thereby allowing those of us with an inherently creative nature, to successfully pursue our aspirations and talents in this country. If there is no change or increase in revenue streams available to musicians, then the option to be a proud, professional Canadian, musical artist and creator will no longer be a viable one.

Thank you for your time.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're now going to move on.

Mr. Lefebvre, you have seven minutes.

[Éric Lefebvre, Secretary-Treasurer, Guilde des musiciens et musiciennes du Québec]

Good afternoon.

My name is Éric Lefebvre. I am the secretary-treasurer of the Guilde des musiciens et des musiciennes du Québec. I am pleased to appear before you this afternoon. On behalf of the members of our association, thank you for this opportunity to provide you with our comments on the review of the Copyright Act. I am also pleased to take part in this meeting with Alan Willaert, the vice-president from Canada of the American Federation of Musicians, with which we have been affiliated for over a century.

We understand that the Standing Committee on Industry, Science and Technology must review the Copyright Act. It is important to note that the designation of the performers' performances as a copyright category is relatively new. Actually, since September 1, 1997, the Copyright Act provides for certain rights that performers can exercise over their performances. Those rights were improved in November 2012, when new exclusive sound recording rights were introduced.

To that end, we know that the Copyright Act provides for two categories of rights for performers. First, there are the so-called exclusive rights, which mainly deal with the fixation, reproduction, distribution and the making available of the artist's performance in certain situations. Second, there are two rights to remuneration, one for the public communication of marketed sound recordings, also known as equitable remuneration, managed by the music licensing company Re:Sound, and the other for private copying, managed by the Canadian Private Copying Collective. Of all those rights, the equitable remuneration is still now the most significant, having given rise to several Re:Sound tariffs certified by the Copyright Board of Canada.

It should be noted that, in addition to the royalties paid by collective societies, the Guilde negotiates remuneration for the use of musicians' recorded performances under its collective agreements.

The royalties for performers under collective agreements have been negotiated for several decades. The 1997 and 2012 amendments to the Copyright Act changed part of the legal framework, but our concerns have not subsided, as Alan Willaert eloquently illustrated a few minutes ago.

The concerns are simple: musicians are getting poorer every year. We see that the new rights granted to performers do not improve their remuneration. Either the structural changes of the music industry initiated by Google, Amazon, Facebook, Netflix and Apple are ensuring that the middle class of musicians has now become a class of poor artists, leaving a few ultra-rich artists and producers with 95% of the revenues generated by the industry, or the new rights that benefit performers still have no impact because of legislative provisions or regulations being passed that have the opposite effect.

Let us explain. What is the use of the right to remuneration for private copying of sound recordings if the plan applies only to blank CDs, which no one uses for reproduction any more? The Supreme Court has already indicated that the legislation is technologically neutral. Why is there a double standard when it comes to regulatory amendments to benefit artists and creators? It is important to ensure that all reproduction media, such as SIM cards, USB sticks or hard drives, are covered.

Similarly, in 2012, new exclusive making available and distribution rights for performers were introduced to enable the enforcement of the rights on the Internet and on existing media, such as CDs. One wonders what those rights are for, if the money from streaming remains at subsistence level and the responsibility of Internet service providers is still not recognized because of their status as intermediaries.

Finally, what is the point of the new exclusive distribution rights if, as I indicated earlier, the main source of music listening is now streaming? As confirmed by the survey on online consumption of copyrighted content, commissioned by the Canadian government in 2017, in the three months leading up to the November 2017 survey, 11.2 million Internet users streamed music online. Clearly, this reality has an impact on the sale of sound recordings, both in the form of CDs and online downloads, which are still the only ways to obtain remuneration in compliance with the regulations.

It is important to obtain compensation from Internet service providers, which are taking unfair advantage of the situation. Mechanisms must also be put in place to rebalance the forces at play, while no longer using legislation to weaken the rights of rights holders through case law that puts the rights of users and creators on equal footing, as in the case of literary works, or that allows an industry to continue to decline, as in the case of music.

To achieve that objective, we recommend that the government accept the following proposals: amend the Copyright Act so that the private copying levy applies to all media used to reproduce a recording; amend the Copyright Act so that the private copying levy applies to all reproduction devices and sound recordings; and finally, make Internet service providers liable, from a more technical point of view, by eliminating the exemption they enjoy under section 31.1 of the Copyright Act.

We also support our federation's recommendations on amending the definition of sound recording, which must allow for royalty payments when a sound recording is incorporated into an audiovisual production, or on an exemption that currently benefits broadcasters in the case of neighbouring rights.

We often hear people say that copyright is extremely complex. In fact, it has become complex because of the amendments made to the legislation over the past several years, diluting the effectiveness of those rights. Among other things, too many exceptions are now in effect.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We’re going to move to Ms. McGuffin.

You have up to seven minutes. Go ahead, please.

[Margaret McGuffin, Executive Director, Canadian Music Publishers Association]

Thank you.

I would like to thank you for giving me this opportunity to make this presentation. I would like to begin by telling you briefly about us, about Canadian music publishers, and the role that international trade plays in ensuring Canadian songs are heard around the world.

While some musicians record their own songs, there are many who do not. Instead they either co-write their tracks with other songwriters or perform songs written by other songwriters. Additionally, there are also many composers who create the soundtracks of your favourite movies and television shows. You don't know their names, but they are a very important part of the creative economy in Canada and around the world.

Our association represents large companies such as ole, music publishers, and entrepreneurs who run small or medium-sized businesses, like Jennifer Mitchell at Red Brick and Vince Degiorgio at CYMBA Music. These companies all represent and invest in thousands of Canadian songs, songwriters, and composers who are heard daily on the radio, on streaming services, in video games, and in film and television productions around the world. Each are holders of copyright and this discussion goes straight to the heart of their creative and their business efforts.

The music industry revenue is increasingly built around streaming and digital platforms. The technology around the distribution of music has changed dramatically over the past 10 years, but my members are changing too. We recently released a new report called “Export Ready, Export Critical”, which examined the importance of export to our members.

Music publishers are innovators and their strong export strategies have allowed these entrepreneurs to compete internationally with two-thirds of their revenue now coming from foreign sources. This is a dramatic change from 2005 when only 28% was from these same foreign sources. The key to dealing with changes in technology has been my members' ability to expand globally.

In order to continue to be globally competitive, songwriters and music publishers require a functioning marketplace in Canada in order to innovate. In the music publishing world, our members continue to deal with quickly changing models where royalties from new digital models have not yet replaced traditional royalties from physical sales and downloads.

While detractors point out that streaming revenues are increasing by double digits, they fail to mention that royalties do not match previous sales levels. Unfortunately, music publishers and songwriters suffer further when the Canadian Copyright Act includes safe harbours, exceptions, and barriers to enforcing their rights in this new digital world and when we have a Copyright Board that takes years to respond to these changes.

Music publishing is about championing a songwriter and a song through the lifetime of their career and that song's copyright. Our members take a long-term perspective and work a lot behind the scenes to create value. The most valuable songs can be covered over and over again by different artists and continue to be heard in audiovisual productions long after that first recording. This is known as a sync.

The strongest and most stable publishers are those who own a balanced portfolio of songs including older catalogues and newer creations. The revenues from those tried and true songs allow a music publisher to take a risk to invest in an emerging songwriter.

For example, Jennifer Mitchell of Red Brick Songs is a publisher member with both a large foreign catalogue that she administers and sub-publishes for foreign partners in addition to a Canadian one that includes the songs from emerging and established Canadian songwriters. In Canada she represents Dan Davidson from St. Albert, Alberta; Charlotte Cardin from Montreal; Jeen O'Brien from Stratford, Ontario; and the members of Said the Whale from Vancouver.

One or two songs in a catalogue can make a huge difference to the viability of a music publisher and the Canadian songwriters they choose to invest in. A number of Red Brick's titles will come into the public domain soon because Canada's copyright legislation is not in line with international standards. Day to day these individual songs may not generate much money. However, holding on to this copyright over an extra 20 years could translate into hundreds of thousands of dollars if a good sync deal is in place.

That is why it is so critical to align with Canada's global trading partners and extend the term of copyright to life plus 70 years.

It is truly insincere for our critics to claim that Canadians need more works in the public domain. There are many songs already in the public domain. There are many that can be licensed on a moderate or free basis, and there is only a very rare instance where songs will be used in new digital productions and not released beyond Canada's borders where a licence will be needed.

Additionally, it is important that Parliament not introduce new exceptions that play havoc with the lives of these small businesses. We ask that you amend the exceptions introduced in 2012 for backup copies and technological processes. We also ask that you amend the section on network services to address the value gap, by treating Internet intermediaries as more than “dumb pipes” and make them liable for infringing activities in certain circumstances.

As well, we ask that, through a combination of legislative and regulatory change, you improve the efficiency of the Copyright Board's processes and timelines, and the predictability of its decisions. We know this already is seen as a priority and may take advance action before the rest of the copyright changes. We support that and appreciate the work that is being done on this. Finally, we support our colleagues here to make the private copying regime technologically neutral.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to jump right into questions, starting off with Mr. Longfield.

You have seven minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you, Mr. Chair, and thank you all for your presentations this afternoon.

I had a meeting earlier this year with Miranda Mulholland, one of Guelph's local artists who is internationally published. She was talking to me about the safe harbour laws from 1997 and then the changes that have happened since 1998, resulting in a 20-year decline in revenues.

One of the suggestions she made was to look at having a third party review of exemptions. Whether that's something that's practical within the scope of this study for us to look at, looking at the exemptions the creators are faced with.... This is similar to the previous part of the study, where we looked at publishers making more money and artists making less money because of exemptions.

Could one or all of you talk about how we might do a review of exemptions, and whether that's something your organizations would support?

[Margaret McGuffin]

I think I'd probably see it as a responsibility of this committee to move ahead with this. We have all collectively—publishers, labels, artists, and songwriters—worked together to come up with common recommendations. We spent 18 months doing that, so we have a lot of information you're going to be hearing over the next few weeks about those exceptions.

My warning is that exceptions look very minor. To a certain degree, as somebody told me, it's “death by a thousand cuts”. There was a lot of uncertainty around the exceptions the last time. In 2012, we had a non-functioning Copyright Board that led to decisions not being released for three and a half years, and then those decisions were appealed. At that point, for my members and for the songwriters they support, there was money being held back during a time when the digital economy was completely changing. My warning on exceptions is to look at them carefully, review the ones from 2012, and please make sure you're not leaving a situation where there's uncertainty for songwriters and small businesses.

[Lloyd Longfield, Liberal, Guelph, ON]

Is there anything to add from either side?

Mr. Willaert.

[Alan Willaert]

In answer to your question, we would be very willing to work with the committee to look at these exceptions and to help you go through what is relevant and what isn't, and what should be there and what shouldn't. We certainly have the ability to poll our thousands of members to find out what affects them the most.

[Lloyd Longfield, Liberal, Guelph, ON]

As a committee, we wouldn't be dealing with that directly. There's a governance body that would have to....

Is there one that exists that could look at that, or is there one that needs to be created? I'm going to guess that when it gets to that level of technical...members of Parliament wouldn't be qualified, for the most part.

[Margaret McGuffin]

I think this is something we could help you with. I'm not sure a third party committee is needed. As I said, we have already pulled multiple groups together to carefully outline that. We can also come back with suggested language and recommendations on that.

[Lloyd Longfield, Liberal, Guelph, ON]

Any recommendations you can give us for our study we'll be putting forward to the different ministries within government that will be looking at our report.

You mentioned also the “Export Ready, Export Critical” report. If that could be sent to us through the clerk, that would be very helpful. We're looking at small businesses. We've looked at small businesses in other studies and at similar challenges in manufacturing in terms of keeping money in Canada and making sure our intellectual property is protected. I think there are likely some similar themes. Does that report look at intellectual property or copyright?

[Margaret McGuffin]

It does, in an indirect way, but it outlines exactly what independent music publishers are doing, the fact that they are small businesses, and that they have to complete globally. In the case of music publishers, it is a very competitive international market, so we want to be able to make sure that Canadians put their best foot forward as they compete internationally.

[Lloyd Longfield, Liberal, Guelph, ON]

I was personally very proud of the work this committee did on the intellectual property study and of what came from that: the recommendations to the government, and actually getting budget line items in last year's budget around creating an intellectual property regime with a review, with a flow of money, and with people who could help to translate for the creators of intellectual property how they can come to market and how they can protect their ideas.

Is there a liaison service for copyright for musicians? Is there a lack of knowledge, or are they quite knowledgeable? Is that something that we need to look at for this type of a study as well: to have liaison people to help artists protect themselves from losing their revenues to publishers and to other leakage points?

[Alan Willaert]

I certainly think that is an excellent idea. Since 1997, with the bringing about of neighbouring rights in this country, we've seen all kinds of independent agencies pop up as well that purport to represent musicians. They are middlemen and take a large portion of the money, and then very little trickles down to the artist. There are all kinds of caveats and pitfalls that have to be exposed so that these musicians get what they're entitled to.

[Lloyd Longfield, Liberal, Guelph, ON]

Great. That could be a solid recommendation from you as well.

[Margaret McGuffin]

I think funding is another. There are very strong organizations that don't have the funding to provide that sort of training. The Songwriters Association and the Screen Composers Guild of Canada would be good sources that already are in touch with those people, and could often help in advising younger members as they're entering the field for the first time. We've also completed a report with WorkInCulture where we look at the need for training to onboard new employees. Not many people graduate with an understanding of music publishing, so we know that we want to be rolling that out. There are many people who have managers or labels, and who don't understand that they're not fully monetizing their music publishing, so we're looking at steps to offer training in those cases, as they do in the U.K.

[Lloyd Longfield, Liberal, Guelph, ON]

Mr. Lefebvre—

[The Chair, Liberal, Dan Ruimy]

Thank you.

[Lloyd Longfield, Liberal, Guelph, ON]

Oh, darn.

[The Chair, Liberal, Dan Ruimy]

We'll come back to you.

Mr. Bernier, you have seven minutes.

[Maxime Bernier, Conservative, Beauce, QC]

Thank you, Mr. Chair.

Before I ask my questions, I would like to give verbal notice of a motion. I would like it to be studied by the committee, and it reads as follows:

That the Standing Committee on Industry, Science and Technology formally recommend the Standing Committee of Finance to undertake a study of four (4) meetings to review, among other things: the cost of buying and expanding the Trans Mountain Pipeline project, the costs related to oversight (crown corporation) of the project, and how this decision will impact investor confidence in Canadian resource projects and; that the Committee reports the findings back to the House and make recommendations on how to restore investor confidence.

Thank you, Mr. Chair.

[The Chair, Liberal, Dan Ruimy]

Thank you for this notice of motion.