No, no.
Evidence of meeting #139 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 facebook.
A video is available from Parliament.
Evidence of meeting #139 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 facebook.
A video is available from Parliament.
4:05 p.m.
Chief Executive Officer and Founder, Audiam Inc., As an Individual
No, this is from me, because I can be very aggressive about that. I think what they've created is wonderful. The ubiquitousness of music creates a rare opportunity not only for consumers but also for technology companies and the creators themselves.
What I have a problem with is this free assumption that creators were put on this planet to create content for technology companies to utilize in order to achieve their business goals. The concept that we have to make it easier for them at the expense of the artists just doesn't resonate with me. I think the approach we need to take is an “artist first” approach. For example, let's extend that copyright to 70 years to get in line with the rest of the world, because now we're dealing with fathers to grandfathers to great-grandfathers through the accession of rights. Let's rule more quickly on what the rates are so that when these companies have to put together their P and Ls and people are determining how they can make a living doing this, they're able to figure out how much money they're making more quickly, ahead of time, as opposed to waiting five, six, or seven years before a ruling will come down.
I'm a big fan of the free market. I think government should remove itself from regulating music and allow there to be a true and straight-up negotiation. Frankly, that creates a symbiotic relationship, because they need them as much as the reverse. Through that balance you end up with the right tension, which will then allow for the right royalty rates to emerge.
4:05 p.m.
Dan Albas Central Okanagan—Similkameen—Nicola, CPC
Thank you, Mr. Chair.
To the witnesses, excuse me, but I am briefly putting forward a motion. I'll certainly come back to you as quickly as possible.
Mr. Chair, I am putting forward and seeking unanimous consent for the following motion:
That the Standing Committee on Industry, Science and Technology, pursuant to Standing Order 108(2), undertake a study of no less than 4 meetings to investigate the impacts of the announced closure of the General Motors plant in Oshawa, and its impacts on the wider economy and province of Ontario.
I'd like you to test and see whether there's unanimous consent for us to see that motion move forward.
4:05 p.m.
Liberal
The Chair Liberal Dan Ruimy
Just to be clear, generally you require 48 hours, so this is a notice of motion. You're—
4:05 p.m.
Central Okanagan—Similkameen—Nicola, CPC
No. I am asking for unanimous consent now.
4:05 p.m.
Liberal
The Chair Liberal Dan Ruimy
I'm explaining that. Generally it's 48 hours. That would be a notice of motion. However, you are asking for unanimous consent to do what, exactly, right now?
4:05 p.m.
Central Okanagan—Similkameen—Nicola, CPC
Again, it's to to undertake a study of no less than four meetings to investigate the impacts of the announced closure of the General Motors plant in Oshawa.
4:05 p.m.
Liberal
The Chair Liberal Dan Ruimy
You're asking for unanimous consent to move the motion. That's where we stand.
Is there any debate?
Go ahead, Mr. Longfield.
4:05 p.m.
Liberal
Lloyd Longfield Liberal Guelph, ON
I wouldn't support it, since we're just about to start an emergency debate in the House tonight. We don't know the results of that debate or even, frankly, what we're dealing with yet. I wouldn't support it.
4:05 p.m.
Central Okanagan—Similkameen—Nicola, CPC
In that case, I will move a formal notice of motion:
That the Standing Committee on Industry, Science and Technology, pursuant to Standing Order 108(2), undertake a study of no less than 4 meetings to investigate the impacts of the announced closure of the General Motors plant in Oshawa and its impacts on the wider economy and province of Ontario.
4:05 p.m.
Liberal
The Chair Liberal Dan Ruimy
I'll pass that in with the notice of motion, and you can go ahead with your time.
4:05 p.m.
Central Okanagan—Similkameen—Nicola, CPC
Thank you again to the witnesses for coming in and being part of our study.
I'd like to start with you, Mr. Schmidt.
Obviously, we've heard from many witnesses that they make so little money from Spotify royalties that it may as well be nothing. The claim is that only the biggest artists make any money from Spotify. Does your platform pay a standard per-stream royalty to all artists?
4:05 p.m.
Senior Counsel, Spotify
There is no standard royalty. As I described in my opening statement, we have licence agreements with rights holders, which means rights holders on the sound recording side of the spectrum and the music publishing side of the spectrum.
4:10 p.m.
Central Okanagan—Similkameen—Nicola, CPC
In your opening comments, you also mentioned that a particular song may have multiple different rights holders, particularly on the composition side. Again, without having an example in mind, originally I wrote down that Drake makes more money because more people listen to his music. Is that fundamentally still the case?
4:10 p.m.
Senior Counsel, Spotify
Without talking about Drake in particular, I think it's fair to say that if lots more people are listening to some piece of music versus another, the first one would make more money. That's correct.
4:10 p.m.
Central Okanagan—Similkameen—Nicola, CPC
If you were to raise the per-stream royalties to increase what smaller artists get, it would radically increase what the larger artists would get as well. Is that correct?
4:10 p.m.
Senior Counsel, Spotify
I think there's a misunderstanding here in the idea that we have a per-stream royalty at all. For the most part, that's not true.
We have hundreds of licence agreements. I have to generalize somewhat because they're all somewhat different, but there are certain commonalities in that for the most part, we're talking about revenue-sharing agreements that don't typically include per-stream rates. When people talk about per-stream rates, they're usually backing into that rate after the fact: They see that there are a number of streams on the service, they see a payout, and they do a simple calculation as if that's the per-stream rate. That isn't how we do it.
It really is a function of how much revenue we're bringing in, both on our premium service, which obviously brings in a lot more revenue, and our free service, which brings in less. About 90% of our revenue comes in from our premium service. I think it's reported in the Financial Press that we pay out 65%-70% of our gross revenue to rights holders. That's one reason, as Mr. Price mentioned, that at present Spotify is not profitable.
4:10 p.m.
Central Okanagan—Similkameen—Nicola, CPC
I know you have to generalize in some cases, because there are a lot of complexities to your business. Would an increase in royalty payouts generally make you have to increase the subscription cost for Canadian consumers? That's the point I'm trying to get to: Would changing that model cost more for Canadian consumers?
4:10 p.m.
Senior Counsel, Spotify
Could you restate the question a little bit? I'm not sure I follow the if and then.
4:10 p.m.
Central Okanagan—Similkameen—Nicola, CPC
I do recognize that there are different rights holders, and you might have a collective that might collect more in a certain case or an artist who made a direct contract with you, which isn't often. What I'm trying to say is, if you have a higher stream cost for a particular song, does that inevitably mean...? If we were to give more to a smaller artist, that would also mean that the larger artist would demand more income as well and therefore increase the cost.
We keep hearing over and over that—and Mr. Price referenced it earlier—there's more money to be made in this space, but it seems the people, the artists themselves, are getting less.
Again, I'm trying to ask...if we suggest smaller artists be remunerated more in some way, will there be a greater cost to the final consumer in that case? I don't see the big producers or the ones who receive more revenues wanting to see their revenues go to someone else.
4:10 p.m.
Senior Counsel, Spotify
It is possible that what you're talking about would result in greater cost to consumers. We don't tend to look at it that way.
The way we look at it is that despite having 87 million paying subscribers on the service today, we're in the very beginning of what's happening. More money coming into the revenue share pool, as I call it, means more subscribers to the service. If you have more subscribers to the service and the same number of artists for that money to be split among, that's more money to the artists.
4:10 p.m.
Central Okanagan—Similkameen—Nicola, CPC
Okay.
I'd like to go to Mr. Kee.
Many witness have specifically suggested that we should remove the safe harbour provisions in order to force companies like yours to be liable for having infringing content on your platform.
In a world where 65 years of content are uploaded to YouTube every single day, could your business operate without safe harbour?