Industry Committee on Nov. 26th, 2018

[Jason Kee]

No.

[Dan Albas]

Okay.

I understand the liability for content that a platform itself uploads, but anyone can create a YouTube account and upload any music video or any other infringing product. Your Content ID system will probably flag that, but we know that system has problems. I've heard about them.

Is the concept of user-driven content incompatible with platform liability?

[Jason Kee]

I wouldn't agree with that.

Number one, it's worth noting that on the music side, we're actually a licence platform. We have thousands of licence agreements with collectives, publishers and labels worldwide. They feed what we call “YouTube main”, the general online video platform, as well as some of the specific music-related services we have, such as Google Play Music or YouTube Music. We're operating in a licensed environment there.

Second, with respect to the broader user-generated content, despite the fact that we had the benefit of the safe harbour, which allowed us to operate the business, it still didn't stop us from implementing our Content ID system in order to basically manage that content.

I think it's one of the most powerful copyright management tools on the the planet. It allows all rights holders of any class, whether music or any other type, to monetize content uploaded by users and make revenue, or, if they choose, they can block it and take it off the platform if they want to drive revenue to other platforms. They can do that as well. That certainly didn't stop us from introducing it and working with partners so they could monetize.

User-generated content aspects are critical to an open Internet. This is the whole point. We have any number of very successful music artists—lately it's been Shawn Mendes—who essentially made their mark on the platform, and if it weren't for open platforms like this, they might never have been discovered. Justin Bieber is another classic example.

[Dan Albas]

Thank you.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Nantel, you have seven minutes.

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

Thank you, Mr. Chair.

I wanted to ask Mr. Price a question, first and foremost, since we're talking about copyright. It would be good to discuss the topic with a creator, then to move on to user rights. Since Mr. Schmidt must leave before 5 p.m., I want to make sure that I can talk to him.

When I was part of the Standing Committee on Canadian Heritage, I had the opportunity to hear you speak by video conference from New York. I don't know whether you can answer my question. It concerned figures shared by an artist, songwriter and producer who was well aware of the value of these things. I'm referring to the brother of Pascale Bussières, David Bussières, a member of Alfa Rococo. He had a very successful piece that was played extensively on the radio. I don't have the exact figures on hand, but I know that he earned about $17,000. The piece was a hit about three years ago. I was wondering about the fees paid by Spotify. The fees amounted to $11, as opposed to $17,000 for commercial radio. That's a very clear example. How can this be explained when it was the same piece and about the same period?

Streaming platforms such as Spotify are the dominant model. That's the issue, as Mr. Price said. Everyone here is wonderful. All your products are wonderful. My girlfriend has just subscribed to Spotify, and she loves it. She finds it much better than Apple Music. That's not the issue. As Mr. Price pointed out, the issue is that the people who provide content can no longer make a living off it. I don't know whether you see how clearly these two amounts illustrate the issue. It's the same period, the same type of success and the same type of listeners. In Quebec, on the radio, he earned $17,000, whereas on Spotify, he earned $11.

How can you explain this?

[Darren Schmidt]

To start with, I want to apologize if you did not get a response to this question after our first committee hearing. We sent a letter to the committee. I don't know if you saw it. We sent a detailed response to this question, among others. I don't have that response handy, that letter, but we do have that—

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

Okay.

[Darren Schmidt]

—so now, I'm sorry to say, I need to operate on some memory about what was said—

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

Just like me, and I hope yours is better than mine.

[Voices]

Oh, oh!

[Darren Schmidt]

I want to stress that I don't know the mechanics, unfortunately, of how radio airplay gets paid in Canada. All I know is how Spotify pays. Also, I should say that we don't typically have relationships directly.... I know this is frustrating to hear. I don't know what happens in the value chain from when we pay the rights holder, the copyright owner—in this case, it might have been a record label or some other entity—and they then pay the artist.

That artist might have an unrecouped advance. That often happens in the record label—

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

I can tell you right away that this is not the case. As I told you, this is a very articulate, well-managed team. He has his own publishing and he has his manager, but the deal is clearly not there. When we're comparing $11 and $17,000, I guess we've made the point.

I would probably put this to Mr. Price. This situation can be less dramatic for bigger artists with bigger markets who can still make a living out of it, and probably a very good living, but even an artist like the one who sang Happy in the Despicable Me movie....

What's his name again?

[Jeff Price]

It's Pharrell.

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

Thank you.

It's Pharrell. Pharrell Wilson...?

[Jeff Price]

I just know him as Pharrell.

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

Anyway, he complained so much about getting, in my approximation, about $300,000 for that song. It is ridiculous.

Twenty years ago that same type of worldwide hit, which made everybody dance in the street and feel happy, would have brought in something like $3 million for him, which should be very normal, because he enlightened the lives of everyone, which is the beauty of music.

Let me make it clear. I will check out that submission that you sent on this question. I can't wait to see it, because clearly this is something that....

You're tough to hate, because you have a great product. It's the same for Facebook and the same for Google. We all know that Google is in the top five of the most loved brands in the States, on both the Republican and Democratic sides. You can't be against Google. I use it all the time, but the reality is that in some markets, as I've said many times to you, we are not a northern domestic market; we are a bubble of France for whom copyright is super-important, just as it is in France.

I need to make sure that Mr. Price gets to say something, because in Quebec we have a very articulated industry where we know each other very well and we have a large importance for local content in our consumption of television or music. For us, we see the big difference.

Mr. Price, as an American artist composing and being so involved everywhere, would you agree that there's a mystery deal that has been done in the micro-pennies that are paid to artists? How on earth can a publishing house sign such deals with the streaming services?

[The Chair, Liberal, Dan Ruimy]

You have about 30 seconds left.

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

You'll stay. He won't.

[Jeff Price]

The short version is that it's because of regulations from the government and the acceptance by the traditional music industry. It's created a flawed system. That is combined with the fact that—forgive me—the product isn't being sold at the right price point. I'm sorry, but $10 a month for 35 million songs...? Most people don't want 35 million songs, and it's too low a price.

Is that bad for consumers? Maybe it is for those who want to pay less money to have access to music, but you can't squeeze blood from a rock. If you want to have more money, you need to charge the appropriate price for the product.

Everybody wins then. They'll be profitable and the artists will make more money. Sure, you'll have a smaller consumer base utilizing the service, but so what?

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Before we move on to our next questioner, Mr. Schmidt, we all have a burning desire to see this letter, so if you could forward this letter to our clerk, that would be great.

[Darren Schmidt]

I will, absolutely.

[The Chair, Liberal, Dan Ruimy]

Thank you very much.

Mr. Graham, you have seven minutes.

[David de Burgh Graham, Laurentides—Labelle, Lib.]

Thank you.

Mr. Chan, it's nice to see you again. I know we had you at PROC this spring because we were discussing Facebook's impact on elections, and now you're here discussing Facebook's impact on the creative economy writ large. I guess Facebook has quite a bit of impact in general.

I want to talk a lot about Content ID and Facebook's equivalent. In September, a pianist named James Rhodes uploaded to Facebook a video of himself playing Bach. Facebook's copyright filters triggered the content, and it was removed. He had a great deal of difficulty getting it restored. Even at life plus 70 years, the Bach he had played would have been out of copyright by about 198 years. I'm wondering what we can do to avoid abuses, and what you are doing to avoid abuses in the system. As far as I can tell, it's a system that assumes guilt, and then you have to prove innocence.

That applies to Mr. Kee as well, for the Content ID system.

[Kevin Chan]

I'm sorry, but I just want to confirm, sir. You're referring to a piece of Bach that was uploaded, and then—