Thank you.
My name is Ian MacKay, and I am the president of Re:Sound Music Licensing Company. I welcome the opportunity to participate in this committee's critical work in reviewing the Copyright Act and its impact on the music industry and musicians.
Minister Joly has stated that Canada “requires a copyright framework that works well in the context of our fast-paced digital world and provides creators with opportunities to get fair value for their work”, and Minister Bains has stated that we need a copyright framework that “effectively supports creativity and innovation.”
I have one more quote and it's from an artist, the very talented and Juno award-winning artist William Prince, who said, and I'm paraphrasing a bit here, if you want me to build you a house, I have to have a reasonable expectation that I'm going to get paid for it.
As you've heard from many others, the Canadian recorded music industry has experienced significant disruption, shifting from an economy of dollars to one of pennies or micro-pennies. Critical changes are needed to address outdated and unnecessary subsidies and exemptions that are unfairly preventing creators from receiving fair compensation for their work.
So where does Re:Sound fit in? Re:Sound is the organization that collects and distributes equitable remuneration in Canada on behalf of more than 621,000 artists and sound recording owners, ranging from big businesses like the major record companies to small artist entrepreneurs. We represent them directly through our member organizations and through bilateral agreements with international collecting societies.
We are a not-for-profit organization. We collect from thousands of music users, including commercial radio, satellite radio, and individual businesses like gyms, restaurants, nightclubs, etc. The rights we administer are mandatorily collectively administered. Creators cannot prevent businesses from using their recordings or negotiate directly. They can only rely on collecting equitable remuneration after the fact.
These income streams are crucial for creators, and they go straight to creators. The money we collect is split fifty-fifty between artists and sound recording owners at source.
Both the music industry and the copyright laws that govern it must keep pace with the rate of technological change. That is why we at Re:Sound are always working hard to innovate. We do this by working with organizations like SOCAN on streamlining the licensing process, or, as Mark Schaan, the director general, marketplace framework policy branch, mentioned to the Standing Committee on Canadian Heritage a couple of weeks ago, through our Music Has Value research.
We do this research to help music users understand how music brings value to their business and how they can use it as a competitive advantage.
We also work to ensure we distribute royalties as efficiently as possible. This is reflected in our work to obtain full radio logs from ratio stations and work with other organizations, including Bell Media, to improve reporting of data and ensure that as much of every dollar is distributed to creators as possible. And once again, that's half to artists and half to sound recording owners.
But creators are missing out because of two outdated, unnecessary, and unfair exemptions to the Copyright Act that deprive them of over $60 million a year in income. As you've already heard from organizations ranging from the Canadian Federation of Musicians to ACTRA, Artisti, and Music Canada, these are fundamental issues that need to be fixed.
It's rare to get this type of consensus from such disparate groups representing very different parts of the music ecosystem.
The first exemption I'm going to talk about is the removal of $1.25 million radio royalty exemption. You've already heard about this from some other witnesses, but under the current act and since 1997, commercial radio stations have been exempt from paying royalties to performers and sound recording owners on their first $1.25 million in revenue, even when the station is part of a large profitable ownership group. This exemption costs rights holders approximately $8 million in lost income, and is an unwarranted and inconsistent subsidy to a highly profitable industry.
It's outdated and was intended to be a temporary measure but still exists over 20 years later. Internationally, no other country has a similar exemption, and the exemption does not apply to all rights holders. It doesn't apply to songwriter or publisher royalties, meaning that it's only performers and record labels that are asked to subsidize a very profitable industry. Commercial radio broadcasters play recorded music for about 81% of their programming time, so that's 81% of the “house” that William Prince referred to earlier. The creators of that music should be paid accordingly with no subsidies and no exemptions.
It's also an exemption that's only available to commercial radio broadcasters, so it's not technologically neutral. It doesn't apply to such newer forms of distribution of music as satellite radio, pay audio, and streaming. It's out of step with the rest of the world.
The second exemption is the definition of “sound recording” under the Copyright Act. Under the current act, the definition of sound recording precludes artists and sound recording owners from receiving royalties when their recordings are performed in TV and film soundtracks. Once again, this only applies to artists and sound recording owners, not to other rights holders, depriving them of approximately $55 million a year in lost royalties. When music is used in a TV show or a movie on Netflix, the composer, music publisher, and songwriter all receive public performance royalties, but the artist and sound recording owner do not. This disadvantages Canadian artists and puts Canada out of step internationally.
The compensation provided by such streams as equitable remuneration has become more critical to ensuring the livelihood of Canadians working within the industry. The profound impact of these two unfair and outdated exemptions cannot be overstated. The Copyright Act should be modernized to remove these subsidies and ensure that creators are paid whenever businesses commercially use their work. Doing this would have an immediate effect on the livelihood of artists.
Re:Sound is also a member of the Canadian Music Policy Coalition. We support the recommendations outlined in the documents submitted on its behalf. Many of them have been explained far more eloquently by others who have already appeared before the committee. They include continuing the important work that has been started on Copyright Board reform, updating the private copying levy to make it technologically neutral, and extending the term of copyright for authors from 50 to 70 years.
Thank you.