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Good morning, everyone.
I'd like to welcome our witnesses and guests to the sixth meeting of the Legislative Committee on .
Before we begin, I have a quick announcement that we have a minor technical glitch. Our proceedings and verification officer—who is fantastic, I might add—is very quick on making sure your microphone is on. Please make sure you do not touch your microphones today, especially numbers 17 and 18 and Mr. Lake, as it will cause a bit of a glitch.
With that, I'd just like to talk to our witnesses briefly. I know you have been briefed by our clerk. Each organization will have ten minutes to speak. After your ten-minute presentation, we'll get to questions and comments from the members, who will have five minutes each.
Introducing our guests, from CHUM Radio we have Richard Gray and Tanya Woods. From ole, we have Michael McCarty. From the Canadian Council of Archives, we have Nancy Marrelli.
Starting off our presentations for ten minutes will be CHUM Radio.
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Good morning, Mr. Chairman and members of the committee.
My name is Tanya Woods, and I am legal counsel for BCE, here today representing Bell Media. I'm joined by Richard Gray, who is the general manager of Magic 100, Bob FM, CFRA, and The Team 1200 in Ottawa.
Thank you for moving forward with the copyright reform package and providing Bell Media with the opportunity to present our perspective on Bill C-11. We applaud this government's copyright modernization efforts, which will continue to allow Canadian companies to innovate and maintain a competitive edge in an ever-growing international marketplace.
In the last year, Bell Media has grown and changed as a company. We have gone from being one of the largest ISPs and telephone service providers to also becoming one of the largest broadcasters and content producers in the country through the acquisition of CTV.
Today Bell Media is the proud owner and operator of 33 licensed radio stations, including the former CHUM radio stations, operating in 14 markets across the country. We are uniquely positioned to provide perspective on copyright both as a copyright owner and distributor of content.
While Bell Media supports the goals of Bill C-11, as both a copyright owner and content distributor we would like to focus our discussion today on addressing two significant items of concern that, if addressed, we feel will ensure that this bill is both workable and balanced.
First we will address notice-and-notice; and second, we would like to spend some time discussing the exception for technical copies that are made by radio stations for the purpose of broadcasting.
We believe that the government got it right with notice-and-notice. We are pleased with the proposed regime, and with a few technical tweaks we hope it will prove to be a valuable tool in the fight against piracy.
What could not have been anticipated, but what must be considered, is that since the introduction of Bill C-32 and Bill C-11 technology and content consumption patterns have changed. This is evident when you sit in a coffee shop or airport lounge and read the news on your tablet or smartphone, possibly through the local WiFi connection.
We know from past Bill C-32 testimony that some of the bigger ISPs have been doing notice-and-notice for years. However, they are not the majority. In fact most ISPs are not yet doing notice-and-notice, and neither are most other network service providers, like wireless carriers.
As a copyright owner, we want to make sure that an effective notice-and-notice service is put in place so that we can better educate individuals suspected of piracy while protecting and preserving the neutrality of the messengers, like ISPs who pass along our message.
We know that it will take time for everyone to get their notice-and-notice service up and running at full capacity, including us, and we want to put on the record that we are supportive of granting the time needed to establish and implement an effective notice-and-notice service. We would like to see the bill explicitly provide that time so that we can build our systems to accommodate the new rules before any obligations come into force.
We also want to make clear that we view the notice-and-notice systems as a valuable service, and we are willing to pay reasonable fees to both facilitate network service providers building effective systems and to enable them to ensure that this service will keep up with technology.
We see that as drafted the bill contemplates the possibility that network service providers may not be able to charge any fees for the notice-and-notice service. As both sides of the coin, copyright owner and network service provider, we believe that network service providers need to do their part to enforce rules and pass on to their customers the notices of copyright violations they get from content owners, but also that content owners need to compensate network service providers for the cost of doing this. It is only fair.
For example, people using a courier service must pay a fee to deliver their messages. There is no exception for businesses in that case, and there is no reason for notice-and-notice to be any different. But of course we are just looking to cover our costs.
To conclude our comments on notice-and-notice, we ask that you provide the time needed to build an effective notice-and-notice service and ensure that network service providers can recover the costs to set up this service, which is to the content owners' benefit.
I will now ask Richard to speak to you about radio.
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While radio has equally been affected by technological change, as we will see, some things in the radio world have not. Local broadcasters continue to be an integral part of their communities by employing local people, contributing to local regions, creating local content, and investing in and promoting local artists.
To demonstrate Bell Media's role you might consider the following. We employ 723 staff dedicated to our radio operations. We have sponsored thousands of community events. At a more recent one, Ottawa's CFRA raised over $2.4 million to fund care programs at the Elizabeth Bruyère Hospital.
We support and promote local talent through programs like the Bell Media emerging artist initiative, which features a new Canadian artist each month on our radio stations across the country. We invest in Canadian talent development by making substantial contributions to the Canadian content development initiatives. In 2011 Bell Media paid $7.3 million to Canadian content development. We help Canadian artists achieve success in many ways, including airplay and concert sponsorship. In 2011 our radio station in Windsor—93.9 The River-—was a big supporter of Canadian independent musicians, with more than 10,000 airplays.
In addition to all of this, we continue to support the music industry as a whole through the copyright royalties we pay. Last year, of the $64 million radio broadcasters paid for the performance of the songs they broadcast, Bell Media's share was $8.1 million. This is not at issue, and we will continue to pay these royalties. As a content owner ourselves we firmly believe that broadcasters should pay for the music they broadcast.
In addition to paying to broadcast the songs, radio broadcasters are also paying $21 million to the same people for the technical copies made to get those same songs broadcast on air. Not only do two payments for one broadcast amount to double-dipping, but the $21 million reproduction payment basically amounts to a digital tax or a penalty because of innovation. We did not pay it when we spun records, and we did not pay it when live DJs played CDs. But because technology has advanced and the guy or gal that used to drop off CDs for the labels has been replaced by a digital delivery system that the labels created, we now have to pay them to receive their music and put it in a format we can use.
There is something wrong here. They gain huge efficiencies, and even though this may be helpful for us, we nevertheless aren't sharing that gain. We are paying for it, and paying a lot, despite the contributions we continue to make to support their business. Not only is this counter-intuitive, but it also fails to achieve the fundamental goals of Bill , which we understood were also supportive of innovation and business efficiency.
Bill C-11 attempts to address this problem by saying we don't have to pay for these digital copies if we destroy them 30 days after they are made. Although the overall intent is good, this is an unreasonable and unworkable solution that demands that time-intensive processes be implemented at every radio station and that more copying be done. The drafting of proposed subsection 30.9(4) fails to reflect a clear intention, and instead maintains the status quo—a status that is not pro-innovation, and sends a message to the radio industry that it will pay more for innovative and technologically specific business solutions.
We have heard concerns that a meaningful exemption for broadcasters would have a big impact on Canadian artists. We know, as you heard on Tuesday morning from the Canadian Federation of Musicians, that it will not. Most of the money only goes to record labels and publishers, many of whom are not even in Canada.
In sum, we are asking the government to amend the broadcaster exception by creating a clear technical exemption for technical copies. That will acknowledge and encourage innovation, facilitate business efficiency, and more importantly it will put an end to double-dipping.
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Good morning, Mr. Chairman, members of the committee, and ladies and gentlemen.
I'm Michael McCarty, president of ole. We're Canada's largest music publisher. We have over $115 million invested in music copyrights. With that kind of investment on the line, we have a keen interest in Bill . Our catalogue of more than 45,000 songs generates significant royalty revenue around the world, which flows back into Canada, contributing to our GDP, employment, and tax base. Ole's songs and songwriters have received numerous Canadian awards, as well as a Grammy for White Horse, one of the many Taylor Swift compositions we own.
Bill may be a well-intentioned attempt to modernize Canada's Copyright Act, but the fact is that it will be destructive to music creators and rights holders, and it does not address the biggest piracy problem of all, corporate music piracy. That said, the bill's shortcomings can be overcome with relatively simple but vital changes to the legislation. We urge the committee to return the bill to Parliament incorporating these changes.
Our position is simple. Creators must be compensated for the use of their work throughout the entire digital value chain. This is perhaps an obvious statement, but one that needs to be made in the face of the anti-copyright forces so prevalent today. Here's the reality: it's been 18 years since the Internet was switched on and 13 years since Napster arrived. This powerful combination spawned a decade-long, money-drenched frat party, enjoyed by entrepreneurs, tech start-ups, venture capitalists, telecoms, Internet search engines, and hardware manufacturers. Creators and rights owners were not invited to the party but ended up footing the bill. Their financial hangover knows no end, and Bill is not the cure.
Copyright is a good thing. Copyright transactions transform art into dollars. Copyright transactions create vibrant markets that enable creators to monetize their work, leverage its value, fuel their careers, and protect their artistic integrity. This is the very currency of the value chain that enables the artists' work to reach the public and for them to be paid appropriately for it. In the digital age, ideas may be more valuable than tangible goods, and a country that fails to protect intellectual property fails to protect its economic future. This means preserving the creators' and rights holders' ability to profit from their creations, not just their right to profit.
To transform digital art into dollars, copyright laws must apply to those companies whose products and services facilitate access to the digital art. To paraphrase the infamous rock and roll pioneer Jerry Lee Lewis, there's a whole lot of monetization going on. But like much of Mr. Lewis's activity, it happens largely outside of the law.
This copyright monetization generates billions of dollars per year to the benefit of all concerned, except for the creators and copyright owners. Bill will not change this. The bill heavily favours those who are happy to benefit from music but who think it is someone else's responsibility to pay for it—the free riders. It favours the distribution industries over the creators and allows delivery systems to be built at their expense. Vast wealth has been diverted into the pockets of industries that enable and profit unjustly from infringement. ISPs, Internet search engines, advertisers, websites, and device manufacturers are all involved in monetizing music, often without paying any of the proceeds to those who created it. While severely undermining the value of recorded music, the free riders have built very lucrative businesses for themselves. Unfortunately, for the most part the system does not pay creators because the law does not require it to. Under Bill these companies will continue to enjoy their free ride.
Under the banner of protecting innovation, the bill seeks to protect the innovation of the technology sector at the expense of those who create music. In fact, songwriters and musicians provide innovative cultural work that is just as valuable to society. Favouring one innovator over another is hardly serving the Canadian public.
The bill provides no new viable tools to help creators monetize their art and misguidedly places nearly all of its anti-piracy hopes on failed strategies such as digital locks and notice-and-notice. For music, techniques such as digital locks and suing music fans have failed to reduce piracy or build the marketplace. Notice-and-notice, heralded as targeting ISPs for the piracy activity on their networks, simply requires them to assist in redirecting blame to the consumer. This amounts to even greater protection for the ISPs as they profit from piracy. We don't need band-aids for copyright enforcement; we need a marketplace. As long as the primary enablers of piracy are shielded from liability, creators' works can be taken, sold, or consumed without their being paid.
One of the great ironies of the copyright monetization act is that not only does it not provide any modern tools for our belt, it will actually take two of them away: the broadcast mechanical and the private copying provisions. This is a backward step in our ability to turn digital art into dollars. The broadcast mechanical royalty is one of the most important ways songwriters get paid from radio stations that use their music. It licenses the digital reproduction process used by most modern stations to get music on the air. The broadcast mechanical is a clear example of the copyright system working.
The government uses legislation to create a right, which in turn creates a marketplace. This important revenue stream produces approximately $20 million a year and will disappear under Bill . I hope this is an unintended consequence that will be corrected.
In the late nineties Canada created an elegant, progressive response to the nearly identical problem we face today, the widespread, unstoppable copying of music. Our private copying system was an effective tool to let music fans copy music, while ensuring that creators got paid from the sale of blank CDs. Copying music onto CDs is all but obsolete, replaced by newer digital media and services.
As a result, this private copying revenue stream, which to date has paid our artists over $180 million, is headed towards insignificance. Canada needs to catch up. There are over 40 countries around the world whose private copying system applies to most digital devices and media. Bill would permanently block our efforts to modernize our private copying system. We need to move forward, not backwards.
There are relatively simple amendments that can be made to make Bill work, and we have made detailed drafting suggestions in our written submission.
First, rein in the free riders by broadening the enabling provision. This was intended to make the enabling of online copyright infringement itself an infringement of copyright, but it is so narrowly written that it will only apply to the most egregious pirates. It should be broadened to include all of the industries that profit parasitically from piracy.
The result would be a law similar to the U.S. contributory infringement concept. Companies that contribute to copyright infringement can be as liable as those that actually commit the infringing act. It was this law that inspired the creation of the iTunes store. Apple needed a way to immunize the iPod from contributory infringement claims, so they created the iTunes store, which brought the labels onside, resulting in one of the most innovative digital services ever devised, and this delivered a new revenue stream for creators and rights holders.
An improved enabling provision would create a marketplace solution to the free-rider problem and would eliminate the need for extending the private copying levy. Companies that enable infringement would be liable for their actions. For instance, ISPs would have a simple decision to make: take the infringing material off their networks, or negotiate payment with the owners and suppliers of the content. This would jump-start a well-functioning marketplace and would enable ISPs to turn their underground piracy-facilitating business into a legitimate one.
Our second suggestion is to reverse the expropriation of current rights. If Bill goes ahead without revisions, millions of dollars of annual broadcast mechanical revenue will disappear. Because of a major loophole in the legislation, in order to avoid paying royalties broadcasters would simply have to refresh their hard drives every 30 days by copying one drive onto another. Ole supports the submission of the Canadian Music Publishers' Association and CSI on this subject.
Finally, while our position is that broadening the enabling provision would create a marketplace where an extended private copying levy would be unnecessary, in the absence of such a circumstance ole supports the specific recommendations made by the CPCC and the CMPA to extend private copying.
To conclude, if Bill is passed in its current form, the result will be to reduce the collective annual income of songwriters and artists by millions of dollars, to provide increased legal protection to the companies that facilitate and profit from piracy, and to support the philosophy of “steal the content to build a distribution business".
A fair marketplace exists when a willing seller and a willing buyer are free to negotiate the sale of goods or services. When the buyer can take the product without paying, there is a failed marketplace. For the creators of music, the failed digital marketplace has left them unable to effectively turn their digital art into dollars.
How long do our artists have to wait for the law to catch up so they can make a proper living? Bill will be the last opportunity to fix this for at least a decade. We must support all Canadian creators in every area of endeavour. We must not discourage our children's dreams of becoming artists who can also pay the rent. The time to get it right is now.
Thank you.
I'm Nancy Marelli. I'm an archivist, and I'm from the Canadian Council of Archives, a national non-profit organization dedicated to nurturing and sustaining the nationwide efforts of over 800 Canadian archives. We are pleased to have this opportunity to present our views today.
The major concern for archivists with recent copyright reform bills has been those provisions dealing with photographs. Other matters of special concern for archivists in Bill C-11 include amendments dealing with copies of unpublished works and technological protection measures. A number of additional issues negatively affect archival researchers, and although many archivists are concerned about these issues, my remarks today focus on matters of direct concern to archival institutions.
Under the current law, archival institutions cannot provide researchers with a copy of a photograph or other types of unpublished works for research and private study purposes, especially for works whose term of protection and ownership cannot be determined. Archivists are delighted that Bill C-11 will solve this longstanding problem.
Once passed into law, this amendment will permit archival institutions to make a single copy of unpublished works in our holdings, for research or private study, under conditions that can be practically met. We heartily welcome and endorse this amendment.
One of the most important matters in Bill C-11 for archival institutions is the proposed amendments dealing with photographs. Many photographs in archival holdings are orphan works, works for which the copyright owners are unknown or cannot be located. The current copyright law relating to photographs is difficult, and even impossible in some cases, for archivists to apply when dealing with orphan works. This already difficult situation will be made even more complicated if the provisions of Bill C-11 are enacted.
Amending the law so the photographer is uniformly the copyright holder makes it even more difficult to determine the copyright owner of some photographs in our collections. Photographs by anyone other than professionals only rarely have an identifiable creator by the time they arrive at an archive many years after they were taken. Without this information, it is impossible to determine the term of protection of the photos, and they fall into limbo. It's not the works of professional photographers that are of concern to us here. Professional photographers usually clearly identify their work, and we can ascertain their date of death and their term of protection. But the law applies equally to all photos, professional or not.
Not all photos are created as commercial works. In fact, millions of the works in our institutions were not created for commercial purposes. They are the records that document the lives of ordinary Canadians, such as the photos your grandmother or your uncle took at the family cottage in the 1950s, photos taken by strangers your parents handed the camera to when they were on their honeymoon in Niagara Falls, or photos taken by a passerby of an entire East Asian immigrant family in front of their small family grocery business. This is our Canadian documentary heritage.
Archival holdings are accessible for research and private study on site in the archives, but in the digital environment, that is not where the vast majority of Canadians search for information about themselves, their families, their institutions, and their society. We seek information on the Internet, in multimedia works, and in specialized electronic and print publications. These essential modes of modern communication are not available for the dissemination of many of our archival holdings, especially photographs, because we do not know who took the photograph.
Archives expend scarce resources to acquire, preserve, and make our holdings accessible, but we often cannot use modern electronic communications means, such as web sites and the Internet, to make them available to the Canadian public because the copyright owners are unknown or cannot be located. They are orphan works. These orphan works fall by the wayside on the information highway of the 21st century. Important chunks of the Canadian experience fall into a black hole where access is severely limited. Researchers have to travel to an archival institution, often far way in another city or province, to use the material on site. Furthermore, without information about who the creator is and his or her date of death, the term of copyright protection is unknown, and the black hole extends into the future with no definite expiry date.
Let me give you a fictional example of the problem.
An archive has extensive materials from a variety of sources on residential schools in Canada and it wishes to share those precious resources with Canadians who are increasingly preoccupied by this difficult subject. The archival holdings include photos taken with a Brownie camera in the 1950s by an unknown person or persons. The amateur snapshots provide graphic documentation of the living conditions in an Ontario residential school. They also include ten minutes of 8-millimetre home movies of three brothers as they prepare to leave their reserve in Quebec in 1964 to attend a residential school. All three children subsequently die in the residential school. The parents are currently unlocatable and no one knows who filmed the event. The archive is at a dead end trying to identify and locate rights holders. It is not possible to create a website featuring these materials, because it is not possible to obtain permission from the copyright holders. The term of protection is unknown, since the date of death of the creator is unknown.
Access to the vast and rich legacy of Canadian documentary heritage provides a revealing window to the Canadian experience, past and present. Canadian archivists preserve and make accessible to all Canadians the diverse records of government, industry, and individuals. Canadian archives strive both to preserve and promote the essence of who Canadians are, and what we have done through the use of the rich documentary heritage that is the memory of the nation.
The changes in Bill regarding the term and ownership of copyright in photographs further complicate an already difficult situation and they highlight the urgent need to address the orphan works problem, which is not addressed in Bill C-11.
I will now deal with technological protection measures.
Bill C-11 prohibits the circumvention of TPMs for legal purposes, such as preservation activities used by archivists to protect the documentary heritage of Canada. This is completely unacceptable and is a matter of very grave concern to the Canadian archives community in the digital environment where obsolescence is both rapid and disastrous for long-term access.
The CCA recommends that Bill C-11 be amended to provide that circumvention of TPMs is prohibited only when the circumvention is for the purposes of infringing copyright, and that circumvention tools and services should be available for non-infringing uses.
Let me give you a fictional example of how Bill C-11 might affect archives.
An archives holds a copy of a CD on the history of a small Ontario company that built and sold distinctive cast-iron stoves throughout Canada over a period of 150 years. It was the main industry in the small town that grew up around the factory. The CD was created by a small communications group that came together briefly in 1985 as the company was closing its doors. The CD deposited by the family that owned the factory includes photographs, oral history interviews with the owners and several generations of workers and customers, company catalogues, and some film footage of the factory. Only one copy of the CD remains. The communications group disbanded when a fire destroyed its offices and all the original material it had collected for the project. As the lifespan of this important CD approaches obsolescence, the archives wishes to ensure the important documentary heritage it contains is preserved for posterity in a suitable format. But the CD is protected with a digital lock and the archives has not succeeded in locating the original creators. If the archives cannot circumvent the digital lock to preserve the unique historical material the CD contains, an important part of our documentary history will be lost as the CD becomes obsolete and the files become unreadable.
The CCA believes that Bill C-11 is drafted too narrowly in relation to TPMs. Its legislative intent should be extended to include activities related to preservation, management, and maintenance of archival holdings, activities that are currently permitted under the act. Archives should be able to harness the benefits of digital technology to fulfill our preservation mandate. If this requires circumvention of access control TPMs, then the interests of archival preservation for the public good should take precedence.
Copyright legislation has a very significant impact on making the documentary heritage of Canada available to Canadians and to researchers worldwide. The archival community welcomes the opportunity to present our concerns and discuss positive approaches to finding solutions that will ensure we are able to carry out our mandate as the enduring source of Canada's documentary heritage.
Thank you.
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It makes a lot of sense to me.
Mr. McCarty, you talked about digital storage, and I want to speak about this for a minute. You said that digital locks have failed. But everything that underpins the cloud are technical protection measures. We can acknowledge, for example, that Netflix is a new way that people are consuming movies, and YouTube is a new way that people are consuming music.
My two nieces don't store anything. They're young, but if they want to watch Taylor Swift—and I've got to tell you, they watch a lot of Taylor Swift—they watch it on YouTube. They replay it and they replay it and they replay it. But they're not storing any of it. How will anything to do with “mechanical” impact on that when the next generation...?
Even me: I own hundreds of CDs, hundreds of DVDs, but I'm not buying any more of them. The reason I'm not buying any more of them is that I can access them very simply over the Internet, legally, and consume that product. I'm going to pay, as are, I imagine, most people in this room, in the not-too-distant future for access to digital libraries that will reward creators as part of the contract, but I won't have to store anything any more.
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Let me start with a historical perspective. The way it used to work was that record labels would bring us disks, and we would store a number of disks in libraries. Copies of those disks would go into our studios and into our broadcast booths. Disks became CDs and were delivered the same way.
But now there's a very different delivery system. It's a digital delivery system called DMDS. The record labels have given us access to their music system. We select the cuts that are appropriate for our particular format of a radio station. We download those. We make a copy of that music that then is appropriate for playback on our stations and is complementary with, is in line with, a number of different systems that are in place to drive the engine that is a radio station.
A radio station is a little more sophisticated now than it used to be, in that it's not just one announcer sitting in a booth with two turntables and a microphone and a commercial card deck. It's much more elaborate. It's much more computer-based. It's much more sophisticated.
I hope that answers your question to some degree.
You also asked about the 30-day exemption and what that process would involve for us as broadcasters. To replace the entirety of our music libraries every 30 days would be hugely onerous and massively time-consuming. Even the smallest of music libraries have about 3,000 songs in them. So if you were to download these at a rate of 15 songs an hour, and assuming nothing went wrong with any of the recordings, it would still take 200 hours a month or 20 very long business days to complete the task at every radio station across the country.
I think the other key consideration in this component that perhaps has been missed in the discussions and the presentations to date is that radio is a very different industry from others. Since we broadcast 24 hours a day, seven days a week, 365 days a year, it's not possible for us to shut down to retool. This purge and duplication process that we're being asked to do every 30 days to gain this exemption would have to go on while we continued to broadcast, complicating the process a great deal further.
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On our side we're very interested in ensuring that artists get paid, and ensuring that the small-business person, who is essentially the artist, is supported in ways that nurture a growing middle class of artists.
I like to say that the music industry is a great place to get rich and a lousy place to make a living. In other words, there are a few people who can strike it rich and the rest are working extremely hard and every dollar counts.
I think this is important for this committee to understand. I'm sometimes surprised at the members on the government side who dismiss the $2,000 or $3,000 that some artists get from the different royalty streams as being just a couple of grand and what's the big deal with that? Well, this is the underpinning of the music business in Canada. It strikes me as outrageous to sometimes hear this lack of understanding. One of the core pillars of the arts and culture sector in Canada is made up of essentially thousands upon thousands of micro-business people, who are trying to pay the rent, raise a family, write a good song, and make life a little more joyous, even for those of us on Parliament Hill.
When I hear this talk about actually taking money for artists off the table, this raises a huge red flag. We're talking about $20 million right across the country.
Let's talk in real dollars here for a second. For a radio station with a revenue of about $500,000—we're talking about a small station—its broadcast mechanical is about $1,500. Are we saying that a small radio station whose broadcast mechanical is $1,500 is going to spend way more than that on a staffer to copy the music?
Mr. Gray, that sounds like a strange business model to me.
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Ladies and gentlemen, witnesses, and members, I'd like to welcome you to the second half of the sixth meeting of the Legislative Committee on .
Before I begin, we still have those technical glitches, so I'm going to remind the members and the witnesses to ensure you do not touch the microphones today to ensure that our fantastic proceeding and verifications officer can make sure the mikes are on.
If there is a point of order, of course you have the right to do that. We just ask that you take one second, take a breath, and then speak. That will give our PVO the opportunity to turn your mike on. Again, we apologize for this inconvenience. It's beyond our control, but we will do our best to make sure we can get through this today and make sure everyone has the mikes on when they speak.
With that being said, I'll turn to our witnesses and thank them for coming today. Each of you has been briefed by our clerk that you have ten minutes of opening time. I will ensure that you stick to those ten minutes. That's part of my job.
I'd like to introduce our guests. From Corus Entertainment, we have Mr. Gary Maavara.
Did I say your name correctly, sir?
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Good morning, Mr. Chairman and members of this special legislative committee.
My name is Gary Maavara, and I'm executive vice-president and general counsel at Corus Entertainment. With me today is Sylvie Courtemanche, who is our vice-president of government relations. Sylvie is also the chair of the Canadian Association of Broadcasters.
We wish to thank the committee for this opportunity to speak to Bill C-11. We certainly recognize that the introduction of legislation to amend the Copyright Act of Canada is long overdue.
We applaud the government for its efforts on copyright reform and are generally supportive of Bill C-11, but Corus is seeking small changes to this bill to correct a historical mistake. Before we discuss this issue, we would like to establish our credentials on copyright matters.
Some of you may be surprised to learn that Corus is one of Canada's largest publishers of books for children through Kids Can Press. Corus is also one of the largest producers of television content, and our Nelvana studio makes some of the most popular children's programming. Our characters, such as Franklin the Turtle and Scaredy Squirrel, are seen by audiences and readers in more than 140 countries.
Corus also operates some of the most popular television channels in this country, including household favourites such as YTV, Treehouse, and the soon-to-be-launched ABC Spark channel. We are also partnered on television operations that serve audiences in the United States, Europe, Africa, and Asia.
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We also operate 37 radio stations that serve local communities from Cornwall to Vancouver. Corus Radio is all about personality and connecting with local listeners and communities. Our stations reach approximately 12 million Canadians each week.
We are part of a radio industry that employs people and is a fundamental part of the local culture of virtually every riding in Canada, including that of every member of this committee. If you think about it, there are very few industries that can say that.
Radio stations are at the core of each community, providing entertainment, news, and public affairs programming, as well as important information such as weather and highway conditions. In a multimedia world, radio remains relevant and is one of the only ways local businesses and government can get their messages out to the community on a timely basis.
In particular, Corus's radio stations support and give voice to their communities. John Derringer's 13 Days of Christmas on Q107 Toronto is an example of how we support hundreds of local, provincial, and national charities across Canada. CHED's Santas Anonymous in Edmonton leads a campaign of 3,000 volunteers to collect, wrap, and deliver toys to as many as 25,000 children each Christmas. It has been doing so since 1955. Dave FM 107.5 runs Dave Cares, a service that promotes local charity events in the Kitchener, Waterloo, and Cambridge communities of Ontario.
Local radio also promotes local musicians and artists. Corus runs initiatives such as the Canadian Artists Selected By You awards, and the Fox Vancouver Seeds independent music competition. In September 2010 Corus launched the first-ever integrated music-based social media platform to support new independent music on air and online. In Peterborough, our station The Wolf is showcasing local music acts through annual music festivals, such as Wolfstock and The Gift of Christmas.
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In this context, Corus creates a significant amount of content and is therefore concerned with the protection of our proprietary works. We know about copyright and we are invested in ensuring the laws make sense for creators and for users. We believe it is important that the members of this committee understand a basic reality about copyright: it does not create markets for content. It is true that good copyright law can help to protect the value in content, but it does not create it. Other factors contribute to that. Some of the most important of these value creation factors are what Corus Radio does each day. When you think about the modern digital world, we are surrounded by an ocean of music that is available everywhere from your personal iPad to the local bar, restaurant, club, concert hall, supermarket, elevator, and these days even at the gas station pump.
Local radio uses a small portion of this music and mixes it with local personality and information to create listeners, advertisers, and revenue. Radio competes with every other medium for your attention, so we understand the challenges of the digital economy. It's important to understand that in the context of the massive amount of piracy that the music industry endures as a result of digital technologies, radio is an island of stability. We pay higher amounts to the music industry each year and we provide massive amounts of support for local music content development and promotion.
Our cash contribution on music development alone has increased by 487% in the last ten years, and as an industry we paid about $65 million to music collectives last year for the use of their music. Our payments in this regard have increased by 63% in just the last decade. We are not disputing these payments, and they will continue.
We create an enormous amount of value in that music for the artists who create it. We are proud of our efforts in that regard, but we are seeking small changes to Bill , the most important of which is to the exception for incidental copying done to facilitate our broadcasts. The proposed exemption would require radio stations to delete their entire catalogue of music and related data every 30 days. This involves thousands of songs and related data for every station. Operationally, it just won't work. Imagine if your local riding team had to re-enter your constituent mailing list data once a month. Let's say that process took five minutes for each name and address, and you had to do a few thousand a month. You get the picture. It's a big job, and deleting and reconstituting the same information is a waste of time and money. Requiring radio to do that would fly in the face of this government's stated wish to make Canada more efficient and competitive.
To take advantage of the new Canadian digital economy, radio needs the Copyright Act to support our growth in innovation, not stand in our way. Without our proposed technical amendments, radio stations will be forced to operate as they did in 1995 to limit this unnecessary liability. This is neither progressive nor logical. Creative businesses like ours need the necessary tools to remain competitive in the new digital economy.
The main opposition to our request is the assertion that artists benefit from the money we pay for the reproduction right and that they will lose $21 million. This is a gross exaggeration and it flies in the face of the actual economics of the situation. The vast majority of the current industry payments goes to offshore recipients and almost none of it ends up with any artist, let alone a Canadian one. This was confirmed to you on Tuesday by Bill Skolnik of the Canadian Federation of Musicians, who said the mechanical royalties are for the publishers and record labels, not the artists.
At best, artists may only see a fraction of the amount. If local radio can continue to grow local value, then the artists will continue to grow their revenue, but if radio is forced to continue to pay these reproduction tariffs, our ability to create local content will be threatened and so will revenue for local artists. Getting this provision right will make a significant difference to the future of local radio. Radio is about the only place where a member of Parliament can talk to constituents about important matters. Furthermore, we employ people who live in your riding and we help local retailers and their businesses to get their messages out to the local community in ways and at times that no other media can do. Local radio fills a need that no other medium does as well as we can, and our model is not sustainable under the current tariff regime.
The truth is that the reproductions made by broadcasters to get music into our playback systems do not harm or shortchange the rights-holders in any way. Private radio broadcasters make reproductions only to facilitate the broadcasting of the music we've already paid to use. This process also reduces the music companies' costs for distributing their content to our stations. No new use is made of the music. Radio makes no additional revenues, but our use adds enormous incremental value to the music.
For all these reasons, we are asking that be amended to provide for a real exception that will still help artists protect their music while helping us to create the value in that music.
We have attached to our speaking notes our proposed amendments. These changes are very technical in nature, so we won't review them here.
Mr. Chairman and members of the committee, we thank you for your attention on this matter and we welcome any questions you may have.
Thank you.
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Thank you, Mr. Thibeault.
Good morning. I would like to thank you for asking the Coalition des ayants droit musicaux sur Internet to appear before you.
CAMI is an organization that brings together the five author, composer, performer, producer, publisher and musician trade associations, and the four music right collectives that are active in the music industry. CAMI therefore is the unified voice of the entire Quebec music industry, representing over 100,000 music right owners.
CAMI is represented before you today by Solange Drouin, Vice-President, Public Affairs, and Executive Director of the ADISQ, and myself, President of the Société professionnelle des auteurs et des compositeurs du Québec.
We will be splitting the presentation of CAMI's five main recommendations, which are set out in the document we are providing to you today. That document also contains the specific, concise amendments that should be made to Bill C-11 based on those recommendations.
The five recommendations are: make Internet service providers liable; consolidate the right of reproduction; modify the user-generated content exception; address the private copying regime; and define educational fair use.
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To begin, we would like to talk about the liability of ISPs or Internet service providers.
For ISPs, the only consequence of Bill C-11, as you know, is requiring them to notify an offender when rights owners report potential infringements of their rights. That scheme thus places the responsibility of reporting and prosecuting infringers squarely on the shoulders of right owners. As was stated earlier this morning, right owners do not have the capacity or resources to police the Web.
As well, habitual offenders will not be deterred by such a system and will simply keep up their illegal activity knowing that there will be no penalty from their ISPs. The ISPs themselves will simply go on hosting and allowing the unauthorized use of their works.
However, the ISPs have access to enormous resources that could be used to combat piracy, educate consumers and compensate the music industry for losses sustained. Yet, the proposed legislation stops short of asking ISPs to take any such actions or to compensate right owners in any way. The balance between the rights of creators and the interests of users that the government is seeking in Bill C-11 has therefore not been achieved—far from it.
Why not assign the people who are controlling and monetizing the bandwidth the job of introducing practices that protect the rights of the people who produce the content that circulates on it? How could we allow ISPs devoid of any liability to highjack the commercial appeal of content for the purpose of selling more subscriptions? ISPs are part of the solution and must never be excluded from the debate.
We therefore recommend, to make the notice and notice regime more effective, that ISPs be required, at a minimum, to disclose the names and addresses of potential offenders, and that notices be published in a register and kept there for a minimum of three years. That procedure would enable us to verify the efficiency of the system and to revise it if it proved to be unable to curb piracy. CAMI also recommends that Internet service providers, which have largely benefited up until now from the circulation of content provided by right owners without any remuneration or compensation in return, be made liable.
Second, the exception for user-generated content needs to be modified. The so-called "YouTube exception" makes it possible, for instance, for individuals to disseminate family videos on a pop music soundtrack. Individuals may also post any new work derived from a work, thus causing creators almost completely to lose control. Any individual can thus cause considerable harm to the market for a work.
Currently, websites whose contents are managed by users, such as YouTube, are required by law to negotiate conditions either with copyright owners individually or with organizations that represent them collectively. If Bill C-11 were to become law, Canada would become the first country in the world where companies such as YouTube would have the right to use protected works to generate revenue without any obligation to compensate content creators.
We believe that the current scope of this exception is too wide and causes irreparable harm to right owners, who have the right to benefit from this economic model in the making. We therefore recommend that the government limit the scope of the exception to acts accomplished for personal use and to limit this practice to works that have already been published or made available to the public with the agreement of the right owner.
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Let us talk about reproduction rights and ephemeral recording.
The government wishes to bring broadcasting rules up to date by making sure that radio broadcasters will no longer be required to compensate copyright owners for making temporary reproductions of sound recordings required for digital operations. Ephemeral reproduction enables radio stations to create their own music catalogues by optimizing the operation of program management software and facilitating the use of the music. The exercise of reproduction rights results in savings on personnel, space and productivity.
The Copyright Board examined these considerations and set a tariff establishing the value of the right. The associated royalties are paid to us by commercial radio stations and the market has not collapsed as a result. To put things in perspective, the royalty rate that radio stations pay for all reproduction rights for works represents 1.4 per cent of their $1.5 billion revenue for the use of the music that itself comprises over 75 per cent of their programming. That is a good deal. The financial burden for broadcasters that is attributable to paying for reproduction rights is therefore not heavy. Consequently, the repeal of subsection 30.9(6) is not justified. Nonetheless, our brief proposes that in the event that a 30-day exception is introduced, there should be an amendment to provide that the exception could not be applied over and over.
Let us talk about temporary reproduction for technological processes.
The government's intention is to stimulate innovation and allow some technical reproductions by making sure that some temporary reproductions are not an infringement of copyright. However, in spite of the conditions that apply, the wording of the exception is still so broad as to threaten numerous digital reproductions with already established value. What we are particularly afraid of is the possibility that many would claim that almost all of their reproduction activities represent technological processes. What would then be left of the reproduction and of the related royalties?
So, in order to dispel any uncertainties as to the scope of the definition, we believe it necessary for the duration of the technological process to be defined and we propose introducing this notion in the wording of the law. The clarifications we are recommending in the form of specific amendments would make it possible to better identify the scope of this exception in accordance with the examples provided in the technical specifications. As well, these clarifications to the bill would exempt acts of reproduction that are already protected and that provide users with actual benefits, and have significant economic value that right owners should benefit from.
Let us now talk about private copying.
Initially, the private copying levy was collected from importers and manufacturers of blank audio cassettes and CDs. Today, only blank CDs are eligible. Hardly anyone uses these supports for copying anymore; they use digital audio recording devices such as iPods. Out of the 1.3 billion songs copied each year in Canada, 70 per cent are copied onto that kind of device. As these have become the main method of copying music and the levy does not apply to them, right owners receive no compensation for copies made on such devices. Incidentally, the revenue stream provided by the current levy is eroding at an alarming rate. Between 2008 and 2011 alone, it fell by nearly 70 per cent. The levy should have been extended to the new supports in order to reflect the new ways music is being copied, which would not be accomplished by Bill C-11. By legalizing reproductions made for personal use across the board without compensation, Bill C-11 in its present form would be catastrophic for music creators. CAMI, the Coalition des ayants droit musicaux sur Internet, therefore adopts the two recommendations by the CPCC, the Canadian Private Copying Collective. First, should it prove impossible to amend the legislation in order to allow this compensation, Parliament should ensure that the provisions found in section 29.22 are eliminated, so that copies of musical works are not allowed to be made without compensation. Second, the Berne Convention three-step test should be incorporated in the Copyright Act.
Let us move on to educational fair use.
The proposed legislation, while being represented as a balanced approach to copyright, contains many exceptions in favour of educational institutions, libraries and consumers without providing for monetary compensation for right owners. I would ask you candidly what favour we would be doing for educational institutions by eroding the value of intellectual property. Is that doing them a service? While exceptions to copyright are sometimes granted, under the international treaties that Canada has adhered to, they must be confined to certain special cases that do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the right holder.
As these exceptions represent a form of expropriation of copyright, they generally come with fair remuneration. That is the case everywhere, but not in Canada.
My name is Jacob Glick. I am Google's Canada policy counsel.
It's my pleasure to talk to you today about copyright law, not only because I'm a copyright law nerd, but also because copyright law has become an increasingly important public policy issue for everyday Canadians.
My plan, in the 9.721 minutes I have remaining, is to touch on Google's commitment to Canada and discuss how the framework established in Bill C-11 is critical to jobs, growth, culture, and productivity.
Let me begin by discussing Google in Canada. We have offices in Kitchener--Waterloo, Toronto, Montreal, and Ottawa. In addition to adding people and space in Kitchener--Waterloo, Google is poised to reopen our expanded Montreal office. If I have time in the questions I'll tell you all about the climbing wall connecting the first and second floors in that office.
Google is consistently named one of the best places to work in Canada. Google Canada increased its employment by over 50% last year, and expects continued hiring growth in 2012. Through the “Get Your Business Online” program, Google is helping over 60,000 Canadian businesses get online for free. Our engineers in Montreal and Kitchener--Waterloo are developing products used by hundreds of millions of people all around the world. These engineering offices are expanding and will continue to generate highly skilled, knowledge-based jobs right here in Canada.
I am pleased to say that Google supports Bill C-11. It's not perfect, but perfection is rarely possible on complex public policy issues with a wide variety of divergent stakeholders. Of course, like many stakeholders we suggest some technical amendments to ensure that the stated purposes of the bill are reflected in the language. These suggestions, which have been provided to the clerk of the committee, are submitted on behalf of Google and Yahoo.
In addition, we support the amendments put forward by the Business Coalition for Balanced Copyright, a coalition of Internet, telecom, mobile, and retail companies and trade associations that appeared previously before the Bill C-32 committee.
While we have taken positions on a number of aspects of the bill, I want to focus my remarks on two issues: the non-commercial, user-generated content provisions; and the appropriate role of online intermediaries.
First, on non-commercial user-generated content, the Internet and digital technology have democratized the economics of content, production, promotion, and distribution. Never before in the history of mass communication has it been so easy for an individual to create and disseminate content reaching global audiences with ease. In 2011 alone, hundreds of thousands of hours of new Canadian content was uploaded to YouTube. The vast majority of this new Canadian content was non-commercial and user-generated.
Members are likely aware of Maria Aragon, the Winnipeg pre-teen whose Lady Gaga cover got her global recognition from an audience as diverse as Lady Gaga herself and Prime Minister Harper. The provisions in Bill C-11 that protect non-commercial, user-generated content can help nurture the next generation of artists like Maria, who will help tell and shape Canada's story without risk of lawsuit. As long as they meet the reasonable conditions set out by the bill, these artists will be free to experiment, re-mix, and mash-up content.
The Internet also makes it easier than ever for creators to move from the non-commercial world to the commercial one. Canadians have proven remarkably adept at becoming commercial successes online.
One of my favourite examples is Haligonian Andrew Grantham. He produces talking animal videos on YouTube. One could make the case that Haligonian Grantham was the most-watched Canadian entertainer last year anywhere in the world. His “Ultimate Dog Tease” video was the second-most-popular video on the planet. This is Canadian content, popular on its own merit, shaping a global discourse.
Bill C-11's protections for non-commercial, user-generated content will be important to creative communities in Canada. They allow creators to continue to confidently share their creations online with the world, and help foster the next generation of commercial successes.
The second issue I want to address is the appropriate role of Internet intermediaries.
In general, we support the Internet intermediary safe harbour provisions in Bill . I'd like to offer some evidence on how important clarity on these provisions can be to the growth of the online economy.
One of the critical issues the government has identified in this bill is ensuring that copyright law doesn't hinder the development of cloud computing in Canada. This is an important exercise, as the wrong legal framework could slow or handicap investment in Canadian cloud services.
A recent study by the Harvard Business School looked at the impact of a U.S. court decision on investments in cloud computing in the U.S. and the EU. The case in question was brought against Cablevision by a consortium of U.S. TV networks. The networks claimed that Cablevision's network PVR service violated copyright, and the courts disagreed.
The court decision clarified the U.S. rules around cloud computing generally. In Europe, that kind of legal clarity on cloud computing hasn't been developed yet. So the Harvard researchers compared investments in cloud computing in the U.S. with investments in Europe. After the Cablevision decision, investments in cloud computing increased by as much as $1.3 billion in the U.S., and Europe lost out.
The Harvard study shows that clarity on copyright may be the single most important factor in determining whether investment flows in the online economy to one jurisdiction or another.
Another study, by Booz & Company, on U.S. angel investors and VCs and their attitudes toward copyright, underscored this point. It found that 80% of investors are uncomfortable investing in business models that are open to unpredictable regulations. Additionally, 81% of investors also said that weakened copyright safe harbour rules would be more likely to slow their investment decisions than would a weakening economy.
To reiterate, for these investors, bad copyright law, with insufficient safe harbours for online intermediaries, is worse than a recession. The study showed that investors want to see clearly defined legislation to protect intermediaries who are acting in good faith. The study concludes that the net benefit of appropriate protections for intermediaries could more than double the pool of investors.
Both of these studies demonstrate how important it is for investment, growth, and productivity that government get the legal regime right. Largely, Bill succeeds in this task. There are a few amendments Google and Yahoo recommend to provide clarity to ensure that the companies and investors make Canada a leader in cloud computing. The clerk has been provided with these.
You have the amendments put forward by the Business Coalition for Balanced Copyright, which we also support. We would also urge you to avoid amending the enabler provision in a way that would put at risk the safe harbours in Bill and consequently chill investment in cloud computing.
Let me conclude by saying that Canadian content is succeeding online. Canadians have embraced the open Internet, and they benefit from the increased choice and competition it provides. Clearly, we are in the midst of a new era of individual creativity, facilitated by the Internet. With this legislation, the government is protecting an important creative platform, allowing for the creation of new Canadian cultural content, and helping to grow a critically important Internet economy.
Thank you for this opportunity to speak today, and for those of you playing the home game, I tweet at jacobglick.
I'm happy to answer your questions.
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Of course we play it for longer than 30 days.
It's important to also think of the download of that music in the same context as you might an iTunes context. When we bring the music down from the service that's provided to us by the studio—which incidentally saves them the cost of having to ship the CD to us by an over-the-ground process—there's a lot of money saved on both sides of the equation.
We get a song that comes down that's in a particular form—and the Bell representative talked about that a little bit—but we also get a range of data as to who wrote the song, who published the song, and whether the song has Canadian content or not. The process of entering that on iTunes has the stuff all load into your computer automatically, but it doesn't work like that for us.
In our case it's a little bit like what it is for those of you who maintain a contacts database, say in Outlook, where you've got to put in the name of the person, their address, phone numbers, and e-mail, and that all takes time—say five minutes. So it takes five minutes to download the song, and then it takes five minutes for you to input that data, which sounds great, but then think about it in the context of 9,000 pieces of data a month. That's where we get to that small-market broadcaster who was talking about having to hire somebody. You literally have to have somebody who has to sit there for 9,000 times five or ten minutes for every song, every month.
That's why it's not just about—as one of the parties who was here earlier talked about—transferring from one hard drive to another. The system doesn't work that way.
It's great to have you all here.
I think the folks back home who've been watching the copyright hearings might get the impression that you all look at each other as blood enemies, when actually we're all involved in the same business, which is creating culture and moving culture. It's finding the balance: what is fair and what's not? When I read some of the testimony of the Copyright Board, you guys go at it pretty hard, and that's your job. Our job is to step back and say, “What's the balance here?”
I only have a few minutes, and my colleagues are going to follow up on the issue of the mechanicals because it's so important. But to clarify, Mr. Maavara, you'd talked about money going offshore to these publishers, these labels. The Canadian Federation of Musicians said musicians don't benefit. The accurate thing would be to say session musicians are paid a fee; they're not involved in mechanical royalties. That's an important clarification. If you pay musicians to play on your record, they get paid, but the mechanical royalties are still part of the larger puzzle. The guy who comes in and does the flute might not get a mechanical royalty, but the publisher is given a 50% share of every dollar. The royalties are split. On every dollar, 50 cents goes to the publisher, and 50 cents goes to the musician.
When I was on Stony/Warner, they took the publishing. It wasn't that they were shipping it to an offshore bank account; they needed it to keep the label going. That's who gave us our advances. That's what made it possible. If I were independent, I could divide the 50% publishing share up with my musicians. It's money that comes back into the chain of music development. So I think we need to be clear: we're not talking about you having to pay an unfair fee that's being shipped off to some Cayman Island bank account. This is money that's going right back into our music system.
Mr. Glick, I wanted to ask you a few questions.
We're seeing these new development platforms. When I was in Washington at the Future of Music Coalition, one of the guest speakers was OK Go. Now, OK Go couldn't get played on radio; nobody would touch them till they put a video on YouTube, the famous one with them on those treadmills. The next thing we knew, they were at the Grammys. So you are creating a new platform to give musicians an opportunity.
For example, someone sent me an e-mail the other day of this group Shovels & Rope. I'd never heard of them before. I get an e-mail, and I check them out on YouTube. I figure their video probably cost them about a hundred bucks, but they're fantastic. With digital quality you don't have to pay what used to be paid. When we were starting out, it cost us $10,000 to $30,000 for a video, and it might never get played. That was a huge investment for musicians. It killed us, especially if the television station decided not to play it.
So there is an opportunity through YouTube, through the new distribution methods, for new artists to get their independent stuff out there. Everybody points to Google as making all the big bucks. We're getting access to a phenomenal catalogue of material we never had before. How do you balance that off with the other argument that some of the catalogue is being illegally distributed and someone's losing royalties? What's the balance for Google?
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Yes, I would like to add something on the question of reproduction rights. I do not know whether you want me to talk about that, but there are four things I would like to say on the subject of mechanical reproduction. There are half-truths and things being half-said here. We are going to try to tell you the whole truth, and after that you can make up your own mind.
First, when broadcasters have access to content the first time, when they receive a record, they do not pay for it. All the record producers that I know—and I have been involved in ADISQ for 20 years, so I have known many—send records out to radio stations free of charge. So, from the outset, it is incorrect to say that they pay for the content. Second, radio stations do pay for reproduction on a medium. Why has the right of reproduction expanded to this point? Some would say it was the authors and composers, who used to be the rights holders who exercised the right provided in the law. So they went to the Copyright Board and asked for a tariff, which they obtained, and obviously that generated a royalty.
The record producers who have a reproduction right under the Copyright Act, which performers do not have at the moment, exercised that right only four or five years ago, and that ultimately led to a payment. This is not a payment that will double again in three years or eight years. Now, the rights of the authors and the rights of the producers have been exercised, and that comes to a total of $21 million. I think that is very clear. That amount is not going to increase or double again in eight years. That is why there is the impression that it has increased.
I would like to say one final thing. On the question of reciprocity, perhaps if we look at the United States, certainly there is not much of a balance of trade on our side in English. In French, France recognizes these rights. Authors, producers and performers receive royalties under reciprocity. The reason money is sent elsewhere is so that our artists are able to receive money when they work outside Canada. That is called reciprocity. We treat other countries well so the other countries will treat us well. So that has to be considered when we look at the $21 million.
I would like to congratulate Ms. Drouin on her clear presentation. From the outset, I think it sets the record straight on a number of questions.
In fact, I was surprised at the rapid increase in mechanical royalties in recent years. You have said this was an adjustment. In general, that adjustment did not prevent the broadcasting industry from being a goldmine in Canada.
I have examined the rise in both total revenue and net pre-tax profits. Earlier, the representative of Corus Entertainment said there had been a 63 per cent increase in costs associated with various licences in the last five years. At the same time, however, radio stations' profits rose by 64 per cent. That is a corresponding parallel increase. As well, if we look only at pre-tax profit margin, last year it increased by 3.2 per cent, representing a return of 22.9¢ on the dollar before tax. My RRSPs do not provide that kind of return. You are part of an industry that is genuinely dynamic and efficient. As well, we are talking about a levy of 1.4 per cent of your revenue that is used for mechanical rights. What is that money used for?
I would like to ask Mr. Chenart a question. I think that money is used to produce Canadian content, which is then disseminated by the broadcasters. This is a cohesive industry that is doing very well. There is a radio industry that is extremely prosperous, with high rates of return. There is a small amount that is part of the total envelope and helps to produce Canadian content. Am I mistaken?
To give credit where it's due, we talked about the “Stuff Edmontonians Say” video. It's been up for two weeks—321,000 views. It's Colin Priestner who put that up, and it does feature a couple of Edmonton Oilers and a CHED radio personality. It's a very, very popular video. Most people who have seen it would say it's pretty accurate in terms of the way it depicts things that Edmontonians say.
Getting to the substance of what we're talking about today, I want to talk a little bit again about this ephemeral rights issue, if we could. It seems the argument on the other side, from Mr. Dionne Labelle, is that it's nice to have money, so we should have it, basically. There's not a rationale that's based on any kind of principle or fairness principle here. It's just that we get the money and we should have it.
What we're trying to do here is create a system where yes, people do receive money and artists receive money for the things they actually create. That's what this whole bill is about. It's making sure that artists are able to be compensated for what they create.
The word “perspective” was used, I think, by Mr. Chenart. I would like to put a little perspective here. On the $64 million you talked about, which is paid for the performance right, you said that's an increase of 63% from about 2001. Is that accurate?