Evidence of meeting #127 for Industry, Science and Technology in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was artists.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Freya Zaltz  Regulatory Affairs Director, National Campus and Community Radio Association
Nathalie Dorval  Chair, Board of Directors, Canadian Association of Broadcasters
Annie Francoeur  Vice-President, Legal and Business Affairs, Stingray Digital Group Inc.
Susan Wheeler  Chair, Copyright Committee, Canadian Association of Broadcasters
Dan Albas  Central Okanagan—Similkameen—Nicola, CPC
Michael Chong  Wellington—Halton Hills, CPC

3:30 p.m.

Liberal

The Chair Liberal Dan Ruimy

Good afternoon, everybody.

Welcome to meeting number 127, where we're continuing our five-year review of the Copyright Act.

With us today, we have from the National Campus and Community Radio Association, all the way from my neck of the woods, Freya Zaltz, by video conference.

We have from the Canadian Association of Broadcasters, Nathalie Dorval, chair, board of directors; and Susan Wheeler, chair, copyright committee.

Finally, from Stingray Digital Media Group, we have Annie Francoeur, vice-president, legal and business affairs.

We were supposed to also have someone from Radio Markham York with us. However, challenges came up with the tornado that affected her ability to come here. Hopefully, we can maybe get her in at another time.

We're going to get started right into this after I introduce our newest member, Mr. David de Burgh Graham.

Ms. Zaltz, you have up to seven minutes.

3:30 p.m.

Freya Zaltz Regulatory Affairs Director, National Campus and Community Radio Association

As you heard, my name is Freya Zaltz. I'm the regulatory affairs director for the National Campus and Community Radio Association. I also represent two additional associations, l'Association des radiodiffuseurs communautaires du Québec and l'Alliance des radios communautaires du Canada. These associations work to ensure stability and support for non-profit campus and community radio stations, and the long-term growth and effectiveness of the sector. Going forward, I will refer to the sector and the stations as C and C for campus and community. Together, the associations represent about 90% of the Canadian C and C sector, or 165 radio stations.

I'd like to tell the committee a little about the sector and how its stations are affected by copyright tariffs. I'll also emphasize the continuing importance of paragraph 68.1(1)(b) of the Copyright Act, which provides C and C stations with certainty and protection from some tariff increases that could impact their financial viability.

C and C radio stations reflect the diversity of the communities they serve. They are community owned, operated, managed and controlled, and some or all of their programming is produced by community volunteers. Being tied to communities so directly means that C and C stations produce programming that is rich in local information and reflection. They also present a wide variety of community perspectives, especially under-represented voices and content.

C and C stations in Canada provide their communities with access to local programming in more than 65 languages, including a number of indigenous languages. They provide an array of locally produced programming that reflects the linguistic duality of Canada and meets the needs of both French and English linguistic minority communities. They provide important community services.

The Canadian music industry and the public derive great benefit from the support that C and C broadcasters provide to Canadian artists as a result of their mandate to provide diverse content and exposure for new artists. Many successful Canadian artists owe their start to C and C radio. Because these stations focus on achieving their mandate rather than on generating profit, they can afford to take the risk of playing works by unknown artists who otherwise lack radio exposure.

One of the sector's concerns is ensuring that paragraph 68.1(1)(b) of the Copyright Act is preserved when the act is amended. That paragraph limits to $100 per year the fee that non-commercial radio stations must pay to the copyright collective Re:Sound for the rights associated with communicating to the public by telecommunication performers' performances of music works or sound recordings embodying such performers' performances within Re:Sound's repertoire, in other words, neighbouring rights.

Keeping that tariff and all others low is very important to stations in the C and C sector. Because they are non-profit, they have no stable sources of operational funding, and are usually under severe financial constraints. Some stations have tiny budgets, as small as $5,000 per year, and no paid staff whatsoever. Many already struggle to pay their expenses, and any additional tariff obligations, not matter how small, make them more vulnerable to closure due to insolvency.

Also, applicable tariffs have been steadily increasing in number and cost, and the tariff addressed by paragraph 68.1(1)(b) is only one of presently five tariffs that C and C stations must pay annually. This increase is due in part to listeners' expectations that they'll be able to access C and C stations' content via multiple platforms, including over the Internet. The costs of providing these services over multiple platforms, including the associated copyright tariffs, make it increasingly difficult for C and C stations to remain solvent.

In that vein, existing exceptions for ephemeral and internal copies should be retained for non-commercial uses, since non-profit broadcasters do not benefit financially from the use of copyrighted material.

Also, participating in Copyright Board proceedings and effective negotiations with copyright collectives requires resources and legal expertise, and for financial reasons the C and C sector has limited capability in these respects.

It would, therefore, help the associations to simplify the board's procedures where possible. The board's 2013 Re:Sound tariff 8 decision suggests that it understands non-profit users' financial limitations perhaps better than the copyright collectives do, so moving to a private agreement model is not necessarily in the association's best interests.

The C and C sector understands that copyright tariffs are intended to compensate copyright holders for their use of the work. Since C and C stations don't derive any profit from such use, and since, instead, their goal is to increase the exposure and further the careers of Canadian and emerging artists, they believe there's value to copyright holders in keeping tariffs low for the C and C sector.

The associations, therefore, appreciate the protection that paragraph 68.1(1)(b) provides by limiting the cost and providing ongoing certainty for one of the many tariffs that C and C stations must pay. They ask that this committee keep these issues in mind when contemplating possible changes to the act in order to ensure that Canadians continue to reap the benefits of a strong C and C broadcasting sector.

In conclusion, I appreciate the opportunity to speak today, and I would be pleased to answer any questions.

3:35 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

We're going to move to the Canadian Association of Broadcasters.

Ms. Dorval, you have the floor. You have up to seven minutes.

3:40 p.m.

Nathalie Dorval Chair, Board of Directors, Canadian Association of Broadcasters

Ladies and gentlemen, on behalf of the Canadian Association of Broadcasters, I want to thank you for the opportunity to appear before you today to discuss issues relating to copyright, which are integral to our businesses.

Local broadcasting in our country provides entertainment, but it is also a critical source of news and information to Canadians from large urban centres with diverse ethnic populations to the most rural, remote and first nations communities.

From emergency alerting to local news in a variety of languages, radio connects communities. In fact, radio is one of the sole sources of local news and culture in rural and remote communities across Canada, many of which have already felt the sting of local newspaper and television closures.

Radio also plays a key role in maintaining the health of the Canadian music eco-system. Not only is private radio the number one source for discovering Canadian music it is also the number one source of funding for the development, promotion and the export of Canadian musical talent.

Last year alone, private radio contributed $47 million in Canadian Content Development funding, the majority of which was directed to the country’s four largest music funding agencies: FACTOR, MusicAction, Radio Starmaker Fund and Fonds RadioStar. Those agencies provide critical support to Canadian music labels and artists to create, promote and export their music internationally and across our vast country.

We are proud of the role we have played in helping to create the vibrant and successful community of internationally successful music artists our country enjoys today.

Over and above this important role, radio also invests in broadcast talent at the local level, creating employment opportunities, enhancing creativity and bringing local content to people everywhere.

Finally, let's not forget that local radio serves as one of the key channels that local businesses use to market their products and services.

We believe the Copyright Act, in its current form, strikes the very delicate balance of ensuring that artists are renumerated for their work while also ensuring that local radio has a reasonable and predictable copyright regime that reflects its continued investment in local communities and music artists. Indeed, section 68.1 of the act provides important support for local radio stations by mandating that radio will pay neighbouring rights of $100 on the first $1.25 million in revenue, and then paying a higher rate through a percentage of advertising revenue which is set by the Copyright Board of Canada. While the rate structure for neighbouring rights payment is subject to this special measure, as Parliament intended in 1998, the music industry still collects over $91 million in copyright payments from private radio each year.

If Parliament agrees to amend the Copyright Act by removing these exemptions, the primary beneficiaries will be the multinational record labels that are proposing it. Under the existing neighbouring rights regime, payments are allocated fifty-fifty between performers and record labels. Where the money flows from there is unclear, and worth further discussion before any amendments to the act should be contemplated.

What we do know from publicly available information is that Re:Sound, the copyright collective responsible for distributing neighbouring rights payments, takes 14% off the the top in administrative fees before anyone gets paid. Of the remaining amounts, the music industry has carefully concealed where that money might go. For example, in the English market, based on radio repertoire, we estimate that of the performers' share, after administration costs are deducted, 15% goes to international performers and 28% goes to Canadian performers. Of the labels' portion, no less than 41% goes to the multinational record labels, with Canadian labels receiving only about 2%. What this tells you is that multinational record labels will be the primary beneficiary of the proposed change to section 68.1, at the cost of local Canadian businesses.

The American labels are also asking you to change the definition of sound recording in the act to extract additional royalty payments from television broadcasters. In fact, the labels are attempting to squeeze out an additional payment for the use of music from broadcasters, distributors and digital platforms in a television program that has already been paid for up front by the producers of that program. Quite simply, they are asking us to pay twice for the same product, otherwise known as double-dipping.

The current definition of “sound recording” is carefully worded to reflect the contractual realities of the audiovisual production sector. This was confirmed by the Supreme Court of Canada in a 2012 decision. Any consideration of adding new costs on conventional television broadcasters, or on the digital sector, should be rejected as it would diminish Canadian broadcasters’ ability to invest in Canadian productions by shifting more than $50 million into the hands of foreign owned corporations.

Honourable members, the Canadian Association of Broadcasters respectfully urges the committee to reject any proposed amendment to the Copyright Act that would harm the Canadian broadcasting sector and jeopardize the important service that local broadcasters provide to Canadians.

I want to reiterate that the current legislation strikes the right balance between rights holders and local broadcasters, and that the proposal being advanced by the music industry risks coming at the expense of local programming and the valued and essential services that we provide to Canadians.

3:45 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

We're going to move to Stingray Digital Group.

Ms. Francoeur, the floor is yours for seven minutes.

3:45 p.m.

Annie Francoeur Vice-President, Legal and Business Affairs, Stingray Digital Group Inc.

Good afternoon, ladies and gentlemen.

On behalf of Stingray Digital Group Inc., I would like to begin by thanking you for the invitation to participate in the discussions on the review of the Copyright Act, particularly with respect to music, the industry in which Stingray operates.

Founded in 2017, Stingray is a Canadian company headquartered in Montreal and currently employs 340 people in Canada. We distribute our services not only in Canada, but also abroad to approximately 400 million subscribers or households in 156 countries. We also serve 12,000 commercial clients in 78,000 locations.

For fiscal year 2018, approximately 47% of Stingray’s revenue comes from Canada. The more successful Stingray is abroad, the more Canadian artists benefit from the visibility abroad.

Stingray’s portfolio of services in Canada includes an audio music service called Stingray Music, which includes 2,000 channels dedicated to approximately 100 musical genres. Our services also include videos on demand, music videos, karaoke, concerts and a dozen linear audiovisual channels such as Stingray Classica, Stingray Festival 4K, Stingray Ambiance, and so on.

Our services are available on multiple digital platforms and through devices such as cable or satellite television, the Internet, mobile apps, video game consoles, in-flight or on-train entertainment systems, connected cars, WiFi systems such as Sonos, and so on.

More than 100 music experts from around the world are responsible for programming Stingray's various services and channels. This is one of the differences between Stingray and a number of other music service providers, which normally use algorithms to select the content they offer. Stingray's channel programming is also adapted to local markets and demographics.

Out of necessity, Stingray is also a technology company. Managing a large portfolio of digital assets and delivering the content across multiple platforms and markets requires Stingray to remain at the forefront of technology. The Stingray Group therefore invests several million dollars a year in research and development in order to remain competitive and retain its clients.

Stingray is committed to encouraging Canadian talent and artists, and it participates actively in the development and promotion of Canadian content. During the last broadcast year, Stingray spent approximately $379,000 in Canadian content development initiatives, which include payments to Factor, Musicaction and the Community Radio Fund of Canada, but also awards at music events and festivals, artists' performance fees, workshops, educational sessions, etc.

In addition to such CCD initiatives, after Stingray's IPO in 2015, the CRTC approved the change in ownership and effective control of Stingray, but it required that Stingray pay tangible benefits corresponding to $5.5 million over a period of seven years. In addition to these regulatory obligations, Stingray also contributes voluntarily in many other ways to promote and develop Canadian artists.

Very recently, Stingray partnered with ADISQ to create a new music video channel made available through television operators in Canada, named PalmarèsADISQ by Stingray. Pursuant to Stingray's desire to invest in young talent, a portion of the profits generated by the channel will be invested in local music video production through existing third party funds like RadioStar.

Through this initiative, Stingray will finance the production of music videos broadcast on its channels, but it will also help develop the careers of up-and-coming Canadian and Quebec directors and artists. Each year, Stingray also gives certain amounts to events or partners involved with the development and promotion of Canadian talent. For example, Stingray has been a regular sponsor of panels at les Rencontres de l'ADISQ and other similar events.

Stingray also produces the PausePlay series, which consists of exclusive interviews and intimate performances of popular and emerging artists recorded live to promote their new albums or tours.

Such recordings are made available by Stingray on social media platforms and channels to offer important exposure for those artists. We also have a Stingray blog where we have editorial coverage on album reviews, concert reviews, etc.

With respect to the review of the Copyright Act, we respectfully submit that the Copyright Act should remain as is at this time. We do not believe that any amendments are necessary. We believe that the current Copyright Act establishes the right balance between the rights holders and users such as Stingray.

Thank you.

3:50 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

We're going to move right into questioning.

Mr. Longfield, you have seven minutes.

3:50 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Thanks, everybody, for your presentations today.

Thanks to the clerk for getting us a range of presenters covering different media styles and different sizes and types of businesses.

I want to try to get an idea first of all in terms of the National Campus and Community Radio Association. I've participated on the the University of Guelph station CFRU, on Open Sources, a local political commentary that's been going for about 15 years now. I'm just about to go on Zombie Jamboree. They've asked me to bring a Canadian playlist with me and discuss Canadian music. There's a lot of volunteer activity.

You mentioned in your presentation maintaining paragraph 68.1(1)(b). Was there a life before that? Was there a time when local campus radio stations weren't protected in a way that's being done right now through the exemptions?

3:50 p.m.

Regulatory Affairs Director, National Campus and Community Radio Association

Freya Zaltz

I'm not familiar with the history of the act in detail, but my understanding is that neighbouring rights is a relatively new concept in Canada and that exemption was introduced at the same time as the neighbouring rights regime. I may be incorrect about that, but that's my basic understanding.

I don't think there was a neighbouring rights tariff prior to the introduction of that portion of the act. Certainly, campus and community radio stations were required to pay other tariffs prior to that, for example, to SOCAN. I don't think there was a tariff for neighbouring rights earlier. My understanding is that it was introduced in the late 1980s or early 1990s.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Thank you. The purpose of the question was to see if there was something to fall back to, that we had in place before and that might have been more successful than this. I think distinguishing the not-for-profit from the for-profit operations is something that is really worth consideration as we go forward, so thanks for putting that on the table.

I want to go to Ms. Dorval from the Canadian Association of Broadcasters.

I've spoken with local musicians in Guelph who have talked about the technology that's used to determine how songs are played and reimbursed and how it's really a sampling that's done versus having the technology taking the actual digital playlists and reimbursing against digital playlists.

Is your association either aware of or looking into a more accurate way of paying artists when their songs are being played?

3:55 p.m.

Chair, Board of Directors, Canadian Association of Broadcasters

Nathalie Dorval

My understanding is that more and more we are required to provide the list of artists that are played and that it is done in accordance with the songs that have actually been played, as opposed to samples.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

It sounds to me as if the technology is there and we aren't using it. Why aren't we?

3:55 p.m.

Chair, Board of Directors, Canadian Association of Broadcasters

Nathalie Dorval

We are using it.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

That's not what I heard.

3:55 p.m.

Susan Wheeler Chair, Copyright Committee, Canadian Association of Broadcasters

We remit, as part of our remittances to the various collectives, the song list. It's captured through software that we use at the broadcast level. How it's then reallocated amongst the rights holders within the collective is not something we have any view into. That's something the collectives themselves would have to answer.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

There's possibly some transparency there at some level that we're not reaching, and that we could consider.

We've heard really the opposite testimony to what you've provided today, that the major beneficiaries of the current exemptions are the broadcasters that have multiple locations, and that instead of protecting small radio stations, as it was initially intended, we're now giving protection to large stations that have multiple locations across Canada.

Have you heard that argument? Is there something I'm not understanding there?

3:55 p.m.

Chair, Board of Directors, Canadian Association of Broadcasters

Nathalie Dorval

We've certainly heard this and we find it very interesting.

First of all, I think you must know that many of the radio stations that are under the CAB umbrella are small stations. Almost 60% of these stations are small stations.

As for the stations that are owned by bigger ownership groups, they still remain small stations, but they obviously benefit from being part of a larger constituency. What happens there is that when we talk before committees like this one, radio is seen to have a sole operation, which is the great support it gives to artists and the cultural sector, but when you look at a broader range, where radio really does very well, you see that it's one of the last media outlets to provide reliable and professional news and information to Canadians wherever they are.

Many newspapers have closed. OTA stations have closed. What happens is that larger groups that have larger stations subsidize the smaller stations of the group for them to be able to provide those broader services to Canadians, in addition to the great support for artists and the cultural sector.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

The struggle being that artists are having a declining revenue, of course, and stations are having an increasing revenue, and we're trying to square that situation.

3:55 p.m.

Chair, Copyright Committee, Canadian Association of Broadcasters

Susan Wheeler

Just to clarify, in terms of increasing revenues, radio has experienced four years of consecutive revenue declines. I think that may be also a miscommunication in terms of our—

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

If there's a graph you could provide the clerk so that we can include it in our study, that would be very helpful.

3:55 p.m.

Chair, Copyright Committee, Canadian Association of Broadcasters

Susan Wheeler

It would be my pleasure.

3:55 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Very quickly, because I only have about 30 seconds left for Madam Francoeur, on the cost of streaming and how much artists get for streaming versus how much they get for radio broadcasting, do you have a comparison of that?

3:55 p.m.

Vice-President, Legal and Business Affairs, Stingray Digital Group Inc.

Annie Francoeur

We do not, because all we know is how much we pay in royalties to collective societies or to the rights holders we have agreements with, but after that, in terms of how they allocate it to their members, we have no visibility on that.

4 p.m.

Liberal

Lloyd Longfield Liberal Guelph, ON

Okay. It seems like there's a possible inequity there if digital radio stations are paying a certain amount and digital streaming services are paying substantially less.

4 p.m.

Liberal

The Chair Liberal Dan Ruimy

Thank you very much.

We're going to move to Mr. Lloyd for seven minutes.