Good afternoon, and thank you for the opportunity to testify to this committee on behalf of Music Canada.
This committee's review of the Copyright Act comes at a critical time for Canada's creators. It is a time when governments around the world are questioning whether the current digital marketplace is functioning fairly for the world's creators. The reality for music creators in Canada is that there are provisions in our own Copyright Act that are preventing them from receiving fair market value for their work. I believe the best way this committee can assist in creating a marketplace that is transparent and that supports Canadian creators is by providing the government with straightforward, accessible solutions to address the value gap.
Music Canada has produced a comprehensive report—almost one of a kind in the world—on the value gap, and you have it in French and English in front of you. We define the value gap as “the significant disparity between the value of creative content that is accessed and enjoyed by consumers...”. This is enormous, and the revenues that are returned to the people and businesses who create it are tiny.
Today more music is consumed than at any time in history; however, the remuneration for that content has not kept pace with the record levels of consumption. The same is true for digital video content, film, and journalism.
I was pleased to hear Minister Joly recognize this point earlier this year, when she stated, “The benefits of the digital economy have not been shared equally. Too many creators, journalists, artists have been left behind...”.
The origins of the value gap can be found more than 20 years ago. It was the dawning of the digital marketplace, and countries around the world struggled to reinterpret copyright laws that were designed for an analog age. They wanted to protect creators, but they also wanted to give a boost to young technological start-ups. Inevitably, perhaps understandably, mistakes were made.
Around the world, lawmakers and policy analysts thought of the Internet as a series of dumb pipes, where your browsing habits were anonymous and the data travelling between sites was so vast it was unknowable. Twenty years later, we know that the Internet is composed of the smartest pipes humankind has ever devised. Your web habits are meticulously tracked, and metadata that they generate is collected, analyzed, and sold every second of the day, mostly without our consent or knowledge.
While well intentioned when created, the impact of these laws today is that wealth has been diverted from creators into the pockets of massive corporate entities. What little is left over for creators is unfortunately concentrated in fewer and fewer hands. As a result, the creative middle class has virtually disappeared, and with it numerous jobs, opportunities, and dreams.
Now, there's no need to point fingers. No one planned for the creative middle class to suffer. The important thing at this juncture is to move forward purposefully and without delay to get the rules right. You should make absolutely certain that Canada's Copyright Act ensures a creator's right to be fairly remunerated when their work is commercialized by others.
The value gap is built on outdated safe harbour policies from around the world. The announcement made last week by Minister Bains and Minister Joly that the Telecommunications Act and the Broadcasting Act will be reviewed is an important step and in line with international movement to find a solution to the problem. Safe harbours have been raised by other witnesses, and I hope that the committee will give significant consideration to addressing them.
Right now, the Copyright Act is exacerbating the value gap by effectively requiring creators to subsidize billion-dollar technology companies. There are four steps that this committee could recommend. They could be immediately and quickly implemented, and would help creators and harmonize Canadian policy with international standards.
The first one would be to remove the $1.25-million radio royalty exemption. Since 1997, commercial radio stations have been exempted from paying royalties on their first $1.25 million of advertising revenue. This amounts to an $8 million annual cross-industry subsidy paid by artists and their recording industry partners to large, vertically integrated and highly profitable media companies. The costs to creators since inception have been $150 million.
Internationally, no other country has a similar subsidy, and the exemption does not apply for songwriters or publishers, meaning that performers and record labels are the rights holders who are singled out to subsidize the commercial radio industry. This is unjustified and should be eliminated.
The second one would be to amend the definition of “sound recording” in the Copyright Act. The current definition of “sound recording” in the Copyright Act excludes performers and record labels from receiving royalties for the use of their work in television and film soundtracks. This exception is unique to television and film soundtracks, and does not apply to composers, songwriters, and music publishers. This is inequitable. It's unjustified, particularly in the light of the profound role music plays in soundtracks, and it is costly to artists and record labels who continue to subsidize those who exploit their recordings. The cost to creators is about $55 million a year.
The third one would be to amend the term of copyright for musical works. The term of copyright protection in Canada for the authors of musical works is out of line with international norms. Under the Copyright Act, protection for musical works exists for the duration of the author's life plus a further 50 years, and that is out of line with international standards.
The fourth and final one would be, in private copying, to renew support for music creators. Years ago, a private copying levy had been created, originally intended to be technologically neutral. It has been limited by various decisions to media that are obsolete. This important source of earned income for more than 100,000 music creators is now in jeopardy unless the regime is simply updated. Music creators are asking for the creation of an interim four-year fund of $40 million.
Each of these changes would remove an unfair subsidy. This would harmonize our laws within our industries and bring us to international standards. These changes can be done simply, and they can be done today.
This is an exciting time. Seize the moment. As you review the act, you have the opportunity to put creators at the heart of your policy-making, ensuring that they are paid every time their work is commercialized by others.
Thank you.