Industry Committee on June 7th, 2018

[The Chair, Liberal, Dan Ruimy]

Good afternoon, everybody. Welcome to meeting 121 of the Standing Committee on Industry, Science and Technology as we continue our study on the legislative review of the Copyright Act.

Today we have with us, from the International Alliance of Theatrical Stage Employees, John Lewis, International Vice-President and Director of Canadian Affairs. We have, from Artisti, Annie Morin, General Manager, and Sophie Prégent, Vice-President. From the Directors Guild of Canada, we have Tim Southam, President, National Office, and Dave Forget, Director of Policy, National Office.

We thought that our time was limited because of the votes in the House, but we're not, so you'll each have up to seven minutes for your presentation. Then we'll go into questions. We're going to start with Mr. Lewis.

You have have up to seven minutes.

[John Lewis, International Vice-President and Director of Canadian Affairs, International Alliance of Theatrical Stage Employees]

Thank you, and I appreciate this opportunity to speak with you this afternoon.

The IATSE is one of the oldest and largest trade unions representing workers in Canada's entertainment industry. We were formed in 1893 and presently represent 22,000 workers in Canada and 140,000 in North America. We are the technicians and artists who work on big-budget foreign productions such as Star Trek: Discovery in Toronto and Deadpool in Vancouver, but we also work on Canadian productions like Cardinal in Sudbury, and Maudie, which was shot in Newfoundland.

I am certain many witnesses who will be appearing before you will speak to the importance of the cultural industries establishing and nurturing our national identity and how a modem copyright legislative regime promotes creativity and innovation.

I am here, however, to talk about jobs. Effective copyright legislation is a vitally important tool to protect the economic interests of Canadian consumers, creators, producers, broadcasters, and workers. Canadian film and television production is now an $8 billion industry that creates 171,000 full-time equivalent jobs. Digital theft has a direct impact on our industry.

For our members, there is no job security. We are the workers behind the camera—the grips and hair stylists, the set decorators and camera operators—who depend on a healthy industry for their employment. IATSE members receive no residual payments once a production has wrapped. Their incomes depend solely on what is shooting each day, because once your show wraps, so does your paycheque.

Why is strong copyright protection important to the IA? Because when producers—who are our employers—are hit with financial losses due to piracy, there is less money in the pot for future projects and therefore fewer job opportunities for our members. Piracy is not a victimless crime.

Streaming services have overtaken peer-to-peer platforms like BitTorrent and now account for up to 85% of all piracy. In 2016, there were 1.88 billion visits to piracy sites by Canadians. An estimated 375 million pirated movies and TV shows were downloaded using BitTorrent in Canada in 2016 alone.

The latest method for viewing illegal content is the fully-loaded media player. The most popular of these is the Kodi set-top box. These players come preloaded with applications that provide users with access to licensed content, but there are add-ons available that allow users to access unlicensed content. Almost one in 10 Canadian homes now has a Kodi box. Of these, 70.9% are using a piracy add-on.

Here is a specific example of the impact of piracy. Letterkenny is the second-most pirated TV show in Canada. The show is one of thousands available to watch legally through a subscription to CraveTV at a nominal cost of $7.99 a month. It has been downloaded illegally more than one million times. Estimates are that these downloads have resulted in up to 350,000 fewer subscriptions to CraveTV, which has a monthly value of up to $2.8 million.

In 2012 the Copyright Modernization Act was passed with its mandated review of the legislation every five years. There have been some positive outcomes from its implementation. For example, the Federal Court of Appeal affirmed a trial court interlocutory injunction in March of 2017 against retailers of set-top boxes such as the Kodi box. Another example is the 2015 injunction obtained by the Motion Picture Association of America against the Canadian programmers of Popcorn Time, a website that allowed for the dissemination of free online content.

There are still many areas in which the current legislation falls short. The rapidly evolving digital landscape has highlighted serious weaknesses with the current act. On January 2, 2015, the notice and notice system came into force, which was intended to be an educational tool for end-users. Education is good, but there is no evidence that the notice and notice has contributed to any significant change in consumer behaviour. There are no consequences for the consumer and no substantive incentives for internet service providers to purge their services of illegal material. There are also insufficient incentives for ISPs to respect the notice and notice system, because any failure on their part to forward notices from rights holders has no impact on their exposure to copyright infringement liability.

Governments worldwide are coming to the realization that there must be regulation for online platforms. Considerable attention has been placed recently on privacy concerns with respect to online platforms, both in the United States and Canada, but there has also been discussion and legislative action aimed at regulating responsible behaviour on the Internet and placing obligations on online platforms. The Internet is no longer the Wild West. Governments are coming to realize that regulation and greater oversight are necessary.

There is no single solution that will solve this many-faceted issue, but the IA offers one for your consideration. We are one of the 25 organizations behind FairPlay Canada, which includes unions, broadcasters, production companies, and other stakeholders.

FairPlay Canada has filed an application with the CRTC to help protect content creators. We propose a system similar to one used in countries like the U.K., Australia, and France, which would empower the CRTC to identify and remove the ability of illegal piracy websites to reach Canadians. Under our proposal, the CRTC would create an independent, not-for-profit organization called the independent piracy review agency, or IPRA, which would make recommendations to the CRTC on which sites should be blocked.

Any interested parties could make an application regarding a site, and the application would be served on the website and the ISPs. IPRA would then make a recommendation to the CRTC on whether to add the site to the list of blatant piracy sites. It would only recommend adding a website to the list if the evidence presented established that it was blatantly, overwhelmingly, or structurally engaged in piracy. The CRTC would be responsible for making the final determination. The CRTC decision would also be subject to oversight by the Federal Court of Appeal. Once a site was on the list, the ISPs would be required to block any Canadian user from accessing that site, which could be located anywhere around the world.

I want to make clear that this proposal in no way infringes on net neutrality. Both the IA and FairPlay support open access to all legal content on the Internet. However, net neutrality protects only the flow of legal content and is not impacted by this proposal. Again, we're talking exclusively about blatant piracy sites, not sites where piracy might exist. We mean a site like The Pirate Bay, which exists primarily to share copyrighted materials, and not, for example, YouTube, where the majority of content is original and posted by the creator.

It is time for Canada to look at more innovative solutions to piracy. The creative industries need support to ensure that the livelihoods of tens of thousands of talented Canadians are protected.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much. May I say that you had me at Star Trek.

We're going to move Artisti.

You have seven minutes.

[Sophie Prégent, Vice-President, Artisti]

Thank you.

Ladies and gentlemen, first I will say a few words about Artisti.

Artisti is a collective management society created by the Union des artistes in 1997 to administer the copyrights of performers. Since its inception, Artisti has distributed more than $43 million to its 4,500 members.

We are proposing the following six recommendations to make the Copyright Act fairer and more in tune with reality.

[Annie Morin, General Manager, Artisti]

First, we recommend that the private copying regime also be extended to the digital audio devices that make the copying of music possible, not just to blank CDs, as is the case today.

Creators should be paid royalties for the use of their work, regardless of the medium used.

Second, we recommend limiting the free exceptions and reinstating subsection 30.9(6) of the Copyright Act, which was repealed in 2012. Removing that subsection contributed to significantly reducing the tariffs paid by radio to performers.

The exceptions in place do not meet the requirements of the three-step test imposed by international treaties. Artisti is asking the legislator to correct this situation.

[Sophie Prégent]

Our third recommendation is to treat performances incorporated into music videos as musical performances, not as cinematographic performances.

Currently, once a performer authorizes the incorporation of their performance into a cinematographic work, including a video, they give up their copyright.

For example, a performer whose performance is captured on video and is also audio-recorded may only exercise copyright or receive equitable remuneration when their sound performance is dissociated from the video. Yet a music video is a song with images. I don’t know anyone who watches a YouTube music video of a song on mute. That person is “watching” the song.

In such a case, depriving the artist of their rights is absurd. The international community recognized this in 2012, when it adopted the Beijing Treaty on Audiovisual Performances.

It is therefore imperative that Canada ratify that treaty and extend the exclusive and moral rights for performers in the sound recording industry to all performers.

However—and this is our fourth request—the definition of “sound recording” must also be changed so that songs used in movies or TV shows are also covered by equitable remuneration.

The definition of “sound recording” is problematic since it excludes soundtracks of cinematographic works broadcast at the same time as the film. In addition to being discriminatory, this deprives performers of significant revenues, since authors enjoy equivalent royalties in similar circumstances.

Fifth, it is necessary to find ways to compensate performers for the use of their performances on the Internet.

Quebec artists are well aware that the revenues from the streaming of their works are ridiculously low, even for their most popular songs.

First, revenues for non-interactive and semi-interactive webcasting are generated from a tariff set by the Copyright Board of Canada. The rate is almost 11 times lower than the one in effect in the United States.

Second, revenues for on-demand webcasts, such as Spotify or Apple Music, for example, are subject to contracts between artists and producers requiring the recovery of production costs before royalties are paid to the artists. Given the small sums generated by album sales and on-demand webcasting, performers are too often deprived of royalties from this commercial exploitation.

[Annie Morin]

Our recommendation has two components.

First, guidelines should be incorporated into the act so that the tariffs of the Copyright Board of Canada align with those that apply to our neighbours to the south. Streaming should have the same value, whether in Canada or the United States. Guidelines should also be provided for the Copyright Board of Canada to respect agreements between users and collectives.

Second, it is necessary to introduce a right to remuneration for the digital use of performances such as the one advocated by the European group, Fair Internet for Performers. In addition, that tariff should be subject to mandatory collective management. Better still, equitable remuneration, which is paid half to the performers and half to the producers of sound recordings, should also apply to webcasting on demand, as is the case for radio.

Finally, our last recommendation is very simple: abolish the exemption that allows broadcasters to evade the obligation of paying fair compensation royalties on the first $1.25 million of their annual advertising revenues. Adopted in 1997, this exemption does not apply to authors and was intended to be transitional. Twenty years later, the abolition of this discriminatory measure is urgent.

[Sophie Prégent]

I will conclude by asking a question: why do we find it so hard to recognize the value of the performer when talking about music?

Current practices do not adequately recognize the performer's contribution and risk taking. Artists spend hundreds, if not thousands, of hours developing their talent. Their contribution must be fully recognized.

Our laws must support artists who have to deal with the cultural industry giants, because, as I often say and repeat: there is no culture without the artist.

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

We're going to move to Mr. Southam.

You have up to seven minutes.

[Tim Southam, President, National Office, Directors Guild of Canada]

Thank you, Chair, vice-chairs, members of the committee.

My name is Tim Southam. I'm the President of the Directors Guild of Canada and a director of feature films, documentaries and series on platforms ranging from theatrical release to linear television and the Internet.

I recognize your love of Star Trek, but I have to put in a pitch for Lost in Space, which I directed this year.

[The Chair, Liberal, Dan Ruimy]

That works too.

[Tim Southam]

Okay, good.

With me is Dave Forget, Director of Policy.

We appreciate the committee's invitation to present the DGC's work with the Directors Rights Collective of Canada, particularly as this work reflects a core principle of the DGC, which is that Canadian directors and screenwriters should be recognized in law as co-authors of the audiovisual work.

The DGC is a national labour organization representing key creative and logistical professionals in the film, television and digital media industries. Today, we have approximately 5,000 members covering all areas of direction, production, editing and visual design.

In 1998, the Directors Guild of Canada founded the Directors Rights Collective of Canada (DRCC), a collecting society that administers foreign royalty payments from copyright legislation in other jurisdictions and distributes those earnings to all Canadian directors, from all genres. In 2017, the DRCC paid out $796,000 in foreign royalties to its membership of 1,349 Canadian directors.

Directors are entitled to these royalties under national copyright legislation and monetization systems outside of Canada, primarily in Europe, but increasingly elsewhere where copyright laws identify audiovisual directors as the authors of their work and require payments in much the same way as SOCAN requires payments for composers and songwriters in Canada.

Here in Canada, while the current Copyright Act leaves the authorial status of so-called cinematographic work ambiguous, both the text and subsequent legal rulings give overwhelming support to the proposition that the screenwriter and the director are co-authors of the work.

Section 11.1 of the act distinguishes between audiovisual content with “dramatic character” and content without dramatic character, giving a normal term of copyright, which is the life of the author plus 50 years, only to those works where “the arrangement or acting form or the combination of incidents represented give the work a dramatic character”.

A writer, of course, creates a “combination of incidents” known as a plot or a script. A director then directs the acting and conceives and arranges all of the various creative elements that will ultimately appear on screen, creating the staging, camera frames, camera movements, conceiving the settings and selecting locations, determining the tone and interaction of performers, arranging the final sequence of images in the edit and determining the sound design and musical score.

Section 11.1, for all intents and purposes, gives a job description for screenwriters and directors. If authorship in audiovisual media means creating an original work and giving it dramatic character, as the act defines it, then it only stands to reason that the author is the originator and creator who provides that dramatic character.

[Dave Forget, Director of Policy, National Office, Directors Guild of Canada]

The term of the copyright itself, set as the life of the author plus 50 years, constitutes further evidence that the author must be an individual and a physical person, someone who can be credited with authorship and natural ownership of moral rights, not a corporation or other legal entity. This interpretation of the act is supported by all existing Canadian case law and Quebec jurisprudence under the Civil Code.

The act also explicitly distinguishes between the author and the maker of a work. While the maker designation is mostly used in relation to sound recordings, it is also defined for audiovisual works, and nowhere in the act is first ownership of copyright or moral rights ever assigned to the maker of an audiovisual work. This further establishes that ownership of copyright and moral rights must belong solely to the originating author and that the author must be a physical person giving the work its original dramatic character.

This is not only the existing interpretation of the courts, but it is effectively already the policy embedded in the agreements and contracts in our industry. Businesses require certainty, and no producer, studio, broadcaster or distributor would ever invest in a project without knowing they had secured the rights necessary to exploit it. This is why screenwriters and directors already routinely sign over their exploitation and moral rights and are already compensated with fees for their talent and for future use of their creation.

The change we're advocating today would cause no disruption to the status quo in our industry, no change to the way business is typically done, but it would acknowledge our moral rights as individuals and creators and make clear for the discussion of any future platform that those rights must continue to be respected.

Members of the committee, I thank you for your time.

We'd be pleased to answer your questions.

[The Chair, Liberal, Dan Ruimy]

Thank you very much. We're going to jump right into questions.

Mr. Longfield, you have seven minutes.

[Lloyd Longfield, Liberal, Guelph, ON]

Thanks, Chair.

Thanks to everybody for not only giving us concise presentations, but also giving us some clear recommendations at the end. That's really helpful as we go forward.

Maybe I could start with Mr. Lewis. Talking about the revenue streams, when you were speaking I was thinking of Napster and how some of the pirating sites that were originally set up on the Internet were could be shut down. I wasn't involved with copyright at that part of the process. Do you see something similar in terms of identification of pirating sites? Are they as identifiable as Napster was?

[John Lewis]

Yes, the industry knows them. In many countries, they've already identified those sites and they have been shut down.

Canada is falling behind. I'm sure you're going to hear this from a number of witnesses in terms of copyright. We're not leading the charge, that's for sure.

What we're looking to do with the FairPlay application is really just to match what a lot of our western European countries are doing, where the cultural industries are vibrant and they saw a need to protect them. We looked at notice and notice, and, quite frankly, it was ineffectual, so we need some teeth.

The industry knows who the players are and this is a quick, efficient, and not costly way of addressing it, because some of the other initiatives that have been looked at.... For a copyright holder to try to enforce their rights, it's time-consuming and lengthy. This is a process that we think would allow for due process but get a quick result.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

You mentioned the international reviews. Do international businesses in this area know of sites? Is there a report that we could see? Is there something that's being generated by the international arts community that would help?

I see the report, “The Value Gap”, that was mentioned in our last testimony. I've gone through that report. It's a made-in-Canada approach. It references international studies. Do you have any international studies that you could provide to us?

[John Lewis]

We will provide them. We'll figure out how to do that properly through the committee but we will provide them, yes.

[Lloyd Longfield, Liberal, Guelph, ON]

Terrific. Thank you very much.

Ms. Morin and Ms. Prégent, you were telling us about the focus on creators, which seems to me to be the starting point of all this, namely, to make sure that the creators are covered. It obviously isn't working right now.

Is the union or the collective approach...? Has there been a focus on creators that we need to know about that you could inform us about?

I'm fishing right now.

[Annie Morin]

Actually, as a collective, we try as much as possible to ensure that the royalties collected for the use of performers' work do not decrease over time. Unfortunately, many exceptions were introduced in the Copyright Act when it was modernized in 2012, and that certainly makes things difficult. We are seeing a significant drop in royalties.

I was talking about private copying, for example. At the height of private copying, the royalties were over 50% of the Canadian royalties Artisti could distribute to artists. Last year, only 7% of Canada's royalties came from private copying.

We see that the act has not kept pace and that it would be appropriate to modernize it further so that it can be extended to devices.

I could talk about a lot of other exceptions that have been introduced in the act.

Unfortunately, this unfavourably draws the attention of foreign countries to Canada. As recently as May 2017, the Association littéraire et artistique internationale (ALAI) made a recommendation or expressed a desire to the Canadian government to limit free exceptions. In fact, if exceptions are introduced in the act, they should at least come with compensation.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you.

I'm watching the time and I wanted to ask you about the Beijing treaty. It's been mentioned a few times now to us. I haven't looked it up, but is the Beijing treaty something that we should be using as a basis? Has it worked in other countries?

[Annie Morin]

So far, the treaty has been ratified by 18 countries only, I believe. Yes, 30 countries must ratify it for it to be fully in force. It is a treaty that grants all exclusive rights to performers in the audiovisual sector, including moral rights, which is important.

[Lloyd Longfield, Liberal, Guelph, ON]

Thank you very much. You guys are doing great.

Mr. Forget and Mr. Southam, if we look at the review of the CRTC that was just announced this week, how much of what you're discussing would apply to that review, and how much of it is something that needs to be looked at in terms of the Copyright Act itself? Would some of what you're talking about be covered by the CRTC review? If so, could you separate that out for us a bit? I know it's a brand new announcement.

[Tim Southam]

My instinct today would be to say that they're separate. As you know, the CRTC review is a comprehensive recommendation. Obviously, the rights market is fundamental; how it operates is fundamental. This goes directly to copyright, to what we're saying here.

[Lloyd Longfield, Liberal, Guelph, ON]

Okay.

You mentioned the personal creator. When you're doing digital files and you're doing images, creating in the style of someone else can undermine the creator's value. Maybe it's a nuance that I'm spending too much time thinking about, but in a digital creation it's hard to trace the actual creator sometimes. Is that fair?