Industry Committee on June 12th, 2018

[Some hon. members]

Oh, oh!

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

I'm asking the questions here.

Where does the $40 million come from?

[Graham Henderson]

The number?

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Yes.

[Graham Henderson]

I think that's an estimate of what the number would look like if a levy were imposed.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

If a levy were imposed.

[Graham Henderson]

It would look something like that.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Okay.

[Laurie McAllister]

It's based on calculations. Back in 2004, I think the level was at $38 million. Private copying has actually increased, doubled since then.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Mr. Henderson, you brought up the aspect that the streaming gives 60% of the income while YouTube gives 6%, and that YouTube is far more used, so it's not paying its fair share.

I assume that's what you were trying to say.

[Graham Henderson]

Yes.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Would you be looking for the government to mandate a kind of tariff on a YouTube video? How do see the government addressing that?

[Graham Henderson]

I don't think the government should be getting involved in price setting or instructing people to pay this price or that price. I think what the government has to do is to remove the marketplace advantages they gave to entities like Google and YouTube. They gave them advantages by giving them a safe harbour; so whatever goes on, they say, “It's not my fault. I don't know what's going on. These are crazy dumb pipes. Who knows?” When we negotiate with them, they can shield themselves behind that.

If there were no safe harbour, then YouTube would be forced to negotiate with performers, publishers, and labels in exactly the same way that Spotify had to. You can see in the market that we got a very, very different rate.

In that realm, you get to say, “Do you know what? No. I don't like your price. We're all getting together—independents, everybody. We all agree the price isn't right, sorry.” Then they come back to the table.

[Frank Baylis, Liberal, Pierrefonds—Dollard, QC]

Safe harbour is taking away your ability to negotiate.

[Graham Henderson]

Yes, because in the case of the safe harbour, if they don't like our price, they can say to us, “Fine. There's no deal. Take your content down.” If the legal content comes down, the illegal content will go up, and it will still be available.

That's the bad old world that we were in. In that type of an environment, you are forced to negotiate with one arm tied behind your back.

[The Chair, Liberal, Dan Ruimy]

Thank you.

We're going to move to Mr. Lloyd.

You have five minutes, please.

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

Thank you.

Thank you, everyone, for coming out today. I appreciated your testimony.

In the common theme of everyone else, I'm going to be asking you questions, Mr. Henderson.

You mentioned that one of your four recommendations was to harmonize our protection rules from 50 years to 70 years, like many of our trading partners. The first thing that comes to my mind is the person who dies, and then for 70 years after their death, their estate benefits from that.

Are there further benefits for the creator while they're alive, and can you describe those, please?

[Graham Henderson]

Absolutely.

You have to think of a copyright as an income stream that stretches out into the future. You can value—like there's a business—the income stream that a given set of copyrights would throw off. If I were to extend the term of my rights in that copyright by 20 years, the net present value of that copyright increases.

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

You could borrow against that during your lifetime—

[Graham Henderson]

Correct, or when you sell it, suddenly it's like I'm not selling you life plus 50 anymore, I'm selling you life plus 70, and that has a greater value. There's an immediate tangible impact on the value of catalogues.

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

Can you also describe how, if the government were to implement that recommendation, that would affect Canadian cultural exports?

[Graham Henderson]

What it would mean is that Canadian performers would end up with rights that look like those that belong to French performers and German performers and American performers around the world. This is a real question of harmonizing. If I may say, under the last government, we were very gratified that the Conservative government extended the term of copyright in master recordings to accord with international standards.

This is sort of the mirror image. The last government was able to extend the term of copyright, and rightly so, in master recordings, and now this is almost just balancing the books.

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

I bought a computer a couple of years ago, and I was really shocked. It was the first laptop I've ever purchased that didn't have a CD-ROM in it. Looking at the levy that was put on blank CDs, clearly, despite the court decision, it's becoming obsolete on its own, just by technology.

In leading off my colleague Mr. Baylis's question, how would you envision a levy working in our digital age? Any of the other witnesses can pipe in on this one as well.

Would it be on a device? What about the streaming websites? Would it just be like a thing on the streaming website?

[Laurie McAllister]

It's any device that we use to make copies of sound recordings.

It's important to remember that back when we were making those mix tapes and those CDs, it was an infringement. The private copying levy was introduced to compensate artists rather than starting to go after all these individuals making these copies. We've lost the exchange. We've lost the compensation.

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

If it's just a blanket levy on a device, wouldn't you admit that there are people who could buy these devices who won't be infringing on any copyright?