Industry Committee on June 14th, 2018

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

Okay.

[Gilles Daigle]

That's what we need to straighten out. It's a clarification. To be clear, we're not suggesting—

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

You don't want to stop churches that are having something—

[Gilles Daigle]

Absolutely not. As Eric, I think, well said earlier, we're the first to come forward and, in cases even where the exemption may not apply, donate our licence for these causes. So it's just a matter of—I always hate to use the word—a loophole, but perhaps this is a good example.

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

I'll pass it over to Mr. Longfield.

[Lloyd Longfield, Liberal, Guelph, ON]

I want to come from the business side for the artist again. We heard in the last session about the negotiating power of the artist and how the artist has power to negotiate in certain cases and then they come to an exemption, and then they don't and then they do. You have artists entering the marketplace. As I said, it's easier to enter in terms of self-publishing or you can have a recording studio more easily than you could have had back 30 or 40 years ago.

Is the opportunity an artist has to negotiate for themselves, the negotiating power of the artist, something that we need to look at with the act? We have the website Canadabusiness.ca now for small businesses. I'm thinking of the artist as a small business. In terms of the act, how do we support the small business person who is also an artist trying to make a living?

Then I'll share my time with Mr. Lametti after that. He has a question as well.

[Ian MacKay]

One answer to that—and this has more to do with the Copyright Board—is that currently SOCAN and Re:Sound can only go to the Copyright Board to establish rates. So even if we're able to negotiate directly with users and work out something that the users are happy with and we're happy with, it still actually needs to go to the Copyright Board. That would be one thing that could streamline things in terms of negotiations between users and musicians.

Currently as well, for equitable remuneration rights that we collect, the musicians don't have any right to negotiate. All they have the right to do is to collect the equitable remuneration afterwards. It's too bad that the act then takes away the value of that right that they get to collect after the fact—not negotiate, but collect after the fact—by putting in these exemptions that then reduce what they're getting that they never had a chance to negotiate in the first place.

[Lloyd Longfield, Liberal, Guelph, ON]

So the act would work well for the musicians if it didn't have the exemptions in terms of negotiations?

[Ian MacKay]

It would work a lot better in that then they would be getting the full value of their work as opposed to getting a discounted rate that's discounted right in the act.

[Lloyd Longfield, Liberal, Guelph, ON]

I haven't seen the website, but there's no time for that now.

Thank you very much.

Mr. Lametti.

[David Lametti, Liberal, LaSalle—Émard—Verdun, QC]

I'm going to talk about levies.

What the old regime did was set out an approximate amount for copies for which artists could not be otherwise compensated. People who bought blank cassettes or CDs used them to copy their music.

Nowadays, however, people who buy an iPad or other such device don't necessarily use it for music. What are your thoughts on that?

I, for instance, have an iPad I use for work but not for music. I have other tablets that I use to listen to music, or I use other platforms. The same goes for my cell phone. I don't use it to listen to music.

Not all devices are purchased in order to listen to or copy music. What do you say to that? In the case of cassette tapes, it was safe to assume that, usually, they were being used to copy music.

[Lyette Bouchard]

I have a number of things to say to that.

Some devices will never be used by people to copy music. That said, studies and surveys show that people still use those devices to make hundreds of millions of copies of musical works. As I was saying earlier, companies pay for the applications available on the devices. Apple, for instance, pays licence fees to Bluetooth, whether or not the user ever uses the technology on their Apple device.

In terms of private copying, the Copyright Board of Canada looks at all of the data. When it determines the value of the levy, it takes into account how many devices were sold as well as how many copies were made, based on the studies submitted. That is how it determines the value of the private copying levy.

In setting the average levy at three dollars, Europe took into account the fact that not everyone uses the device to make copies, meaning that, if they did, the amount would likely have been set higher. A number of factors come into play when determining the value of the levy.

To answer your question in part, I would say the value that is set takes into account the fact that users like you do not use all of their devices to copy music.

[Solange Drouin]

In many other areas of our lives, that's how it works as well. I don't have kids, for example, but I pay school taxes, and I'm fine with that because I know it serves the greater good. There is some equalization at work there, which is very Canadian and that's great.

[Lyette Bouchard]

I can give you another example. When you have a phone, you pay a fee for 911 service. Fortunately, I haven't had to call 911 very often in my lifetime, and I'm very grateful for that. The fact remains that everyone who has a phone has to pay for that service.

[The Chair, Liberal, Dan Ruimy]

Thank you.

For the last question of the day, we have Mr. Nuttall.

[Some hon. members]

Welcome back.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thanks. I missed you too. I actually thought we were talking about a carbon tax here.

[Voices]

Oh, oh!

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

You'll be happy to know that there'll be no motions.

Thank you for the presentations.

I just want to follow up with Mr. MacKay. There were a couple of things you said that perhaps you could provide a little bit more information on.

You're looking for a removal of an exemption for radio stations, up to a certain amount. What was that amount?

[Ian MacKay]

Yes. Currently commercial radio stations don't pay royalties to performers and sound recording owners on the first $1.25 million of revenue. That's per station, regardless how many stations are in a radio group. If you're a 400 station radio group, you get 400 exemptions.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Has there been a study done on the impact on radio stations across the country? I completely understand why you're asking for this and I'm not taking a shot at the rationale behind your request, but I do want to know what the impact will be before putting my name behind it.

I have a riding with an urban and a rural area. It's literally like driving across a border when you're leaving the city. They don't listen to the same radio stations. It's a completely different cultural environment. The impact may be different on the radio stations in that urban area, which has quite a high subscribership, and then, when you go into the rural area, it's lower.

What impact would there be on rural radio stations across the country? Have we looked at how many would be put out of business by this move, if any? The answer may be zero.

[Ian MacKay]

Yes, that has been looked at.

Even though the exemption exists, every time the copyright board sets the rate, it continues to set a rate for under $1.25 million, and the rate for under $1.25 million is 1.44% of the station's revenues. Under $1.25 million, the impact on a small station would be that they would now be paying 1.44% of their revenues to pay for the music that makes up 80% of their programming day.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

It would be, in this new iteration.

[Ian MacKay]

It would be, if the exemption is removed.

As for whether or not a study has been done on this as well, the Copyright Board, in the first commercial radio tariff, looked at precisely the question you're asking, and asked, “Can any radio station, from the smallest to the largest, afford to pay the tariff?” That's a big part of what it does, look at the ability to pay, and it looks at that every time it sets a tariff. What it said in its very first hearing was that very clearly even the smallest of stations could pay the tariff that was certified, and that the exemption was based on no financial or economic rationale and was clearly a thinly veiled subsidy. I mean, the Copyright Board looked at this and looked at it from an economic point of view, in terms of whether users can pay, and that was the conclusion it came to.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

In terms of the $1.25 million, has there been a study into a scale-back of it versus a complete removal? Has there been a study into a phase-in of such a policy?