Thank you, Mr. Chair.
Members of the committee, thank you for inviting us to appear before you.
I am the chair of the Canadian Private Copying Collective. I am joined by Lisa Freeman, the collective's executive director.
In 1997, the Copyright Act of Canada was amended to allow Canadians to copy audio recordings to an audio recording medium for their private use. At the same time, the private copying levy was created, so that creators would receive compensation for the use of their music.
Under the act, manufacturers and importers of blank audio media pay a small levy for any imports and sales in Canada. Those levies are collected by the Canadian Private Copying Collective for its member societies, which represent performing artists, composers, music publishers and disk producers.
For many years, the private copying regime was an important source of revenues, generating over $300 million for 100,000 content creators, helping them continue to create and market important cultural content.
The wording of the Copyright Act originally aimed to make the private copying regime technologically neutral. However, the decisions of the Federal Court of Appeal and the previous federal government restricted it to blank CDs, which are now becoming obsolete.
As most consumers are currently copying music onto devices such as smart phones, the use of blank CDs to copy music is declining rapidly. As a result, the private copying revenues for content creators are also dropping rapidly.
In 2015-16, Canadians copied more than two billion music tracks, or double the number of copied tracks in 2004. However, copyright holders currently do not receive any compensation for the majority of those copies, including hundreds of millions of unauthorized copies on devices such as smart phones.
During the same period, annual revenues stemming from private copying levies decreased by 89%, going from a peak of $38 million in 2004 to less than $3 million in 2016.
What would have happened if Canada followed the European example in 2012, when the act was reviewed, and made the regime technologically neutral, so that levies would apply to smart phones and tablets? According to sales data for those devices, a levy of $3, which is roughly the equivalent of the European average, would have generated $40 million per year. That is an amount of $240 million lost, only between 2012 and 2017. Urgent action is needed.
The CPCC recommends that the government make the regime technologically neutral, so that it would be in line with the way Canadians consume music.
The solution is to amend the act, so that the regime would apply both to audio recording media and to devices.
The CPCC is also proposing that other minor amendments be made to the act. In that sense, it would be enough to clarify that the regime applies only to copies of a sound recording an individual has in their possession. However, we don't want there to be any confusion. Providing or obtaining music illegally, be it through an unlicensed online service or through stream ripping, or even, of course, by stealing an album in a store, is still illegal.
It should also be clear that the private copying regime must neither harm online music services nor legalize illegal services.
Whenever it is possible to do so, copyright holders license the fruit of their labour to those who want to use it. The private copying regime is not intended to compensate copies that cannot be controlled.
We need a permanent legislative solution, but, in the meantime, it is of the utmost importance to establish an interim fund of $40 million.