Industry Committee on June 19th, 2018

[Erin Finlay]

I'll hand it over to Wendy, but article 8.3 in the InfoSoc Directive out of the EU is the best example, and Wendy has already spoken about that, so that's what we're modelling our request after.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mr. Lauzon, Mr. Lavallée, do you have anything to add on this topic?

A few weeks ago, the committee heard from David Bussières, from the Regroupement des artisans de la musique. He demonstrated that, even if Canada were equipped with a legal and policy framework to support content creators, and even if we mandated broadcast quotas for a variety of platforms to increase the discoverability of our culture, artists would still have a hard time making a living from their art. In the old days, some artists were able to live off their music, even if they did very few shows.

What do you think, Mr. Lauzon?

[Alain Lauzon]

In Mr. Stohn's case, we are talking about audiovisual. I can come back to that. This is about audio. The value has definitely decreased. The 2012 amendments to the act have cost us an incredible amount of money in many areas. I'm thinking of commercial radio and digital, for example, which we talked about. When we used to sell albums on tangible media, we had figures. In the case of downloads, it's very low.

So there are a lot of changes. You were talking about quotas. That isn't what we're discussing here, but it's important. It's also about exemptions and value. In terms of value, it isn't normal that the rate for downloads and streaming is between 13% and 15% in Europe, while it is 7% in Canada. I don't blame the board, but there must be other ways of looking at the market.

When online music services began to be offered, other countries took Canada as a model. Indeed, the first rate we set was the highest in the world. However, it's now one of the lowest. Something's not working.

I would like to make a brief comment about audiovisual. I don't know much about screenwriters, but when it comes to people who commission music, I want to say that they don't have to give up all their rights to producers and broadcasters if they want to increase their remuneration. That is the current audiovisual business model.

Mr. Stohn talked about his negotiations with the United States. Indeed, that is how they work. However, this isn't the case in Europe. There, the creators give all the exploitation rights to the producers, but no copyright is given to the producers, whose role is to collect royalties.

I, for one, am a member of the International Confederation of Societies of Authors and Composers, and I know that Canada has one of the lowest per capita collections in the world. In Europe, everyone contributes to this, especially in the digital world. We're not just talking about Netflix and all the networks, but secondary uses.

According to the current audiovisual model, the creator is paid very little. Everything goes to the producer, who assumes a risk. I'm aware of that, but there is a nuance to be made. Let's say that digital brings us to think about this business model.

[The Chair, Liberal, Dan Ruimy]

Mr. Sheehan, you have five minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

I'll share some time with Frank as well.

I'm trying to understand the current system. We've heard testimony about other systems that perhaps would be better than the current system. Under the current system, a letter is sent and then the industry, which is fairly well resourced, hires lawyers and the lawyers then engage with them.

What obstacles are there right now, and what's your success rate under the current system? Perhaps answer on the success rate first and then on the obstacles.

I'll start with Erin.

[Erin Finlay]

Thank you.

You're talking about suing infringing sites in Canada?

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes. I'm talking about piracy and going after the pirates.

[Erin Finlay]

Piracy, specifically, I haven't done for many years. I've been fortunate enough not to be in private practice, so I can't speak to the success rate. I can tell you a bit about the process typically.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I just want to know about the obstacles. I know what the process is.

[Erin Finlay]

One of the obstacles is that currently under our present system we would have to sue, for example, Google, to seek some sort of an injunction, a Mareva injunction or something like that. Google would then defend itself as any defendant would by saying it's not liable. The challenge with that is that instead of working together and coming up with a solution together, you end up having very opposed views because you're in a court case dealing with it.

The other issue is that there's always a debate over whether the injunction is actually available.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

You'd like the government to have Google under—

[Erin Finlay]

I never should have said “Google”. It's a search engine.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

You want the government to enact some legislation to make it mandatory for the service providers to work with you.

[Erin Finlay]

Not mandatory—and Wendy, absolutely you can jump in—but there are a number of options available. The problem is that we have a very long court process. There's a debate right at the beginning of the court process on whether these are even available to rights holders, so you wind up in a tussle over that. It takes years and years.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I'll let Wendy chip in. Is there any success that you know of? I need to understand this.

[Wendy Noss]

I think the difficulty is that we're conflating.... We're sort of talking at each other as opposed to having a common understanding. I think what you were getting at earlier was the notice and notice system.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes.

[Wendy Noss]

That's what I thought. You can tell I'm used to translating Canadian into American for Americans. Under the notice and notice system, a notice goes to a user of a P2P site—an individual who's been accessing a BitTorrent site. The notices that we send, for example, really are educational devices. They tell the user, “Hey, you may not know that your network isn't secured” or “Hey, you may not know somebody else in your home is accessing this BitTorrent site”.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Wouldn't it be introduced in some sort of court proceeding that the letter was sent?

[Wendy Noss]

No. Again, I can speak only for my members and our studios. These are educational tools that are going to the individuals who are accessing the BitTorrent sites. That's only for P2P, and it's only an educational tool. I think that's what your original question was.

Then, sort of at the back end, you were talking about success rate.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Yes, go ahead.

[Wendy Noss]

The different tool that we're talking about today is being able to get injunctive relief, such as site-blocking, against intermediaries. The reason we're quite different from when we were before Mr. Lake before is that we now have close to a decade of experience in the EU and 40 countries around the world where they have site-blocking in place. The research has proven, first of all, that it has reduced users' accessing the site that's blocked. That's obvious, but the research has also shown two very important things. Number one, in those jurisdictions where you have site-blocking there is an uptick in users' accessing legal means more, so they are accessing all the legal over-the-top services and download services more. Number two is that there is a reduced overall usage of piracy.

There definitely is research in other jurisdictions where they have these tools that shows it's both technologically advanced and extremely effective.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much. I'm going to turn over some time, because those are excellent answers.

[The Chair, Liberal, Dan Ruimy]

Make it very brief.

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

I have a question for Mr. Lavallée.

The fifth point addressed in your presentation was the location of servers. You mentioned servers that weren't located in Canada, but I didn't really understand what you meant. Could you explain the challenge this represents for you?