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.