Industry Committee on June 5th, 2018

[Margaret McGuffin]

If you're looking at online streaming services, on average, the services are paying between 12% and 15% for the performance, which is collected by SOCAN, and the mechanical, which is collected by SODRAC and CMRRA. That is paid to the songwriter and to the publisher.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I forget the example you used, but for the one million uses, is that initial amount split in half between the two?

[Margaret McGuffin]

It is routine in English Canada that 75% goes to the songwriter and 25% goes to the publisher.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay.

The record-maker, is that...?

[Margaret McGuffin]

That is a separate side and I'm not an expert in that. You're best to talk to CIMA or to Music Canada about that.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Okay.

You're not an expert on that either, Mr. Willaert, I assume.

[Alan Willaert]

No. However, there are some anomalies out there that create havoc for our musicians. for instance, Spotify, as 20% of it is owned by the labels, one issue for musicians is that, when Spotify approaches one of the major labels and acquires access to the catalogue, there's a several million dollar fee for that access and then, of course, there's a per stream fee as well. In that huge amount of money that is paid for catalogue access, the musicians see none of that at all—zero.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

I'm sorry to cut you off. I think you can probably get to some more of that. I just want to quickly get another question in here.

Regarding the YouTube exception that was put in place, part of that was to address the streaming and the popularity of it. They've now opened up a YouTube Music or YouTube “Remix”, whatever it's being called, here. It isn't yet available in Canada. Does that help address some of your concerns with the YouTube exception?

[Alan Willaert]

I'm not as familiar with that as I should be, so I'll pass on that.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Anybody—?

[Margaret McGuffin]

On the publisher-songwriter side, that new service is being licensed in a way similar to Apple or Spotify. YouTube is not being licensed that way.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Ms. Ng. You have five minutes, please.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Thank you, Mr. Chair. Thank you, everybody, for coming today.

You're at the beginning of this new segment for us on the music and the music publishing side. We've spent some time in the education sector, so this is a great opportunity to begin that. Forgive me if my questions are a bit preliminary. I want to begin by understanding the issues. On the education side and on the book publishing side, we've heard a lot about what, perhaps on this side, is called a value gap. There's an issue with respect to those who are the creators and the generators of the content and then there are those who have a responsibility or who put it out to consumers and so forth. There's a disparity there and, as I understand it, there's a disparity here as well.

I'm trying to understand a bit about how that disparity exists. In all of your testimonies, you have said that musicians' incomes have decreased. It would be good to begin to understand a bit about the cause and how and what the Copyright Act might be able to do to not only address that but to look at content creators in the future. Therefore, in the act, what is it that we would need to do to support that?

With respect to the value gap, talk to us about where it is and help us understand that disparity. Maybe I'll go from left to right, please.

[Alan Willaert]

As I stated earlier, much of the value gap exists because of the loss of CD sales, and now, with the movement over to streaming and things that are not fully regulated and not fully monetized within our laws.

Of course, the other issue is that, years ago, an artist was signed to a label and there would be an A and R person who would groom these musicians and put out a product that was certainly sellable. They would make hits. It was a hit-making process. Now, with the Internet—and I'm not saying that this is a bad thing—artists no longer need the labels. They can go out and cheaply make these recordings, in their basements or in their garages, with very inexpensive equipment, and get their product out there on the Internet, but it's lost within this plethora of music out there. The advent of independence has also caused a lot of product to be out there, and therefore, less money to be divided among those who are making the product.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Ms. McGuffin.

[Margaret McGuffin]

In terms of the recommendations we are talking about today, this is a change in times. It's a change in technology, so part of the falling revenues are around changes in where the revenue is coming from.

One of the things the private copying levy allowed, when it was fully in force with $38 million a year, was a stream of revenue that was there in addition to the traditional sales revenues and now the streaming revenues. We fully support the implementation of that in a technology-neutral way so that we can continue to collect on that, on new devices. That would be of assistance to all sectors.

Additionally, when you don't have a functioning Copyright Board to fall back on, and people won't come to the table and negotiate in a way that is sincere, where you need someone to facilitate that negotiation.... If we had had a Copyright Board, that might have helped along the way. We urge Copyright Board reform so that when negotiations cannot productively continue, there's a way to look at what the rate should be—a Copyright Board that is responsible and looks at both sides and the evidence they're providing.

Also, we know there is still stream-ripping. We know there are foreign players who won't come to the table—not the names you know, the named services—but there is a problem and we need remedies and statutory damages that will allow us to enforce our rights when players won't come in and negotiate.

[Mary Ng, Liberal, Markham—Thornhill, ON]

Monsieur Lefebvre.

[Éric Lefebvre]

I can explain it perhaps in a somewhat simplistic way.

Twenty-five or 30 years ago, when a sound recording producer decided to release an album, they recorded it in a studio. Then they found a record company to market it. Then a distributor would supply thousands of music stores that sold records and albums. Since then, those thousands of music stores that sold albums have all disappeared.

What happened? Albums went digital. The digital album ended up with one online distributor and only a few platforms on which to play the sound recording. So we went from a thousand retailers selling a physical album to just a few digital distributors doing business with three or four platforms that control the market. We are faced with a sort of oligopoly—it is not a monopoly, but almost— that controls the business model and prices.

A digital album sells for $10 on iTunes, while a physical album sold for $25 in a music store at the time. You see the difference. We end up with a model where the number of players is reduced to a few—earlier, I mentioned Google, Amazon, Facebook and Netflix—who control the entire business model of the market, who control prices and who impose the business model.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Lloyd, you have five minutes.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

My first question is to Ms. McGuffin.

You had mentioned that Canada is behind in regard to certain standards and in regard to our international counterparts. Could you tell us what standards you think we should be following and which regimes in other countries we should be looking to for inspiration?

[Margaret McGuffin]

When I was making that comment, I was specifically talking about term extension, extending the term to life of the author plus 70. It's currently at life plus 50. All our major trading partners have that, with the exception of Japan, and it's moving in that direction.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Do both Europe and the United States have that?

[Margaret McGuffin]

Yes. We're one of the few in the world. It's not just our major trading partners.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

My next question is for Mr. Willaert.

You were talking about radios and the royalty exemption for radio stations. How do you think it could be better done? Obviously, we have these large radio conglomerates and they're using all of these exemptions for each individual radio station. How do you think it could be better done, where we could ensure that creators get the royalties they deserve, but at the same time not discriminate against local radio stations?