Thank you very much, Mr. Chair.
Good afternoon, Mr. Chair and honourable members.
I'm here on behalf of the Movie Theatre Association of Canada, which I might interchangeably refer to as MTAC for short today. We are the trade organization representing the interests of film exhibitors behind more than 3,000 movie screens across Canada. We are exactly what the name suggests. Our members sell the tickets, sell the popcorn and ensure that films are presented the way that creators intended—on the big screen.
Among other things, MTAC represents exhibitors in negotiations with collective societies and otherwise intervenes in proceedings such as this one. Having said that, we are not frequent flyers or by any means regular visitors to copyright proceedings, so we do thank you for the invitation. We're not a collective or an institution that is regularly involved in the business of copyright, although it certainly affects our members and we do pay tariffs to certain collectives.
I'm going to tell you some quick things that you may not know about exhibitors. The first is that exhibitors in fact rent their films from distributors, and we keep less than 50% of every ticket our members sell. They don't control the film product they show, so if you are tired of sequels, you should take that up with the producers.
As a sector of the film industry, exhibition is more than 80% Canadian owned and operated, and it includes hundreds of mom-and-pop locations in places big and small. We also employ thousands of Canadians, and we're a leading first-time employer.
We are also an industry that is experiencing a great deal of disruption. As Telefilm noted in a recent study, while theatres still attract two-thirds of Canadians from time to time, Canadians are increasingly turning to streaming options. Exhibitors are competing with a universe of entertainment options like never before.
Having said all that, MTAC has been historically involved in one single issue that has been raised before this committee, and that concerns the proposal from some of the music industry to amend the definition of sound recording in the act. This is the only issue I'll speak to this afternoon, and I'll keep it very brief.
In this review of the act, a group of stakeholders led by multinational record labels and Canadian affiliates have expended considerable resources to promote the idea of a gap in the business of copyright. This group suggests bleak prospects for creators and depicts a diminishing future where technology causes them to fall further behind if their demands aren't met with legislative amendments.
With respect to this amendment, they're proposing to amend the definition of sound recording in the act to remove the exception that exists for film soundtracks where they accompany a cinematographic work. I'm just going to say “film” from now on, if that's okay. The sole purpose of this amendment is to unlock a stream of royalties from the exhibitors that would provide this constituency with a share of box office revenue.
MTAC believes the current definition of sound recording in the act strikes the appropriate balance between creators, rights holders and exhibitors. The amendment proposed by some of the music industry will aggravate the ongoing forces of technological disruption that affect exhibitors and risks further destabilizing the role of cinema as the primary showcase for Canadian creators within the domestic and global film industry.
The proposal also isn't new. From 2009 to 2012, MTAC successfully responded to legal proceedings initiated by some in the music industry. In those proceedings, they argued that the current definition of sound recording should not be interpreted to contain the exemption for soundtracks that it obviously does contain. It wasn't until the Supreme Court of Canada weighed in in 2012 that this issue was put to rest.
Contrary to the repeated refrain from some, the definition of sound recording is not arbitrary. It's not inequitable or unjustified. As the courts found, it was quite intentional and reflects a balance struck between creators, copyright owners and exhibitors as drafted by thoughtful legislators.
These stakeholders are now asking this committee to pick up the pen where their litigation left off. However, the same problems identified by the courts continue to apply to this proposed amendment.
The first thing I would say is that this amendment is not as simple as they suggest. It will require a significant rewriting of the act to eliminate absurdities identified by the courts in their decisions and other inequities that this amendment would create. I don't have time to go through everything, but I will identify what I think is the most objectionable, and that is that this amendment would create a system of double-dipping where creators and copyright owners are paid on the front end for the inclusion of their work in a film and then also on the back end when the film is played. This is exactly why the exemption was instituted, and it's consistent with how the work of other creators is treated in the act when their work is incorporated into a film.
It was never a subsidy. Neighbouring rights compensate for uncontrolled usage of sound recordings that can arise without the record label's involvement. However, the right to exploit music in a film is a right for which a licence is required, and for which compensation has already been provided by the filmmakers. That compensation is expressly agreed upon in a contract. The inclusion rights are negotiated directly with the copyright owner and acquired on a worldwide basis to facilitate the global distribution and exhibition rights for the film as a singular unit, not as a collection of works.
This distribution model is critical to the global box office returns, which in turn pay the costs of the filmmaker, including payment to music industry stakeholders.
That's about as far as I can go in the short time provided here today. We will be making a more detailed brief available to the committee later this week on behalf of our members. Thank you for the invitation and your time today. I am pleased to respond to any questions.