CNM Update

Breaking newsJumpTV drops section 31 bidFarrel Miller has pulled the plug on his bid to win a section 31 tariff for JumpTV.com Canada Inc. The company filed a letter with the Copyright Board of Canada yesterday through its lawyer Sunny Handa who wrote: "it wishes to withdraw its application to the Copyright Board for an Internet retransmission tariff effective immediately. JumpTV is currently reviewing its business model and will likely be moving away from the banner advertising model upon which its application was based. The details of any new model are unclear at this point." Handa has sharp words for the Copyright Board’s process, writing that Jump has "found that the tariff application process, to-date, has been unnecessarily long, complex, drawn-out and extremely costly. JumpTV wishes to state that the process, as it exists, creates immense transaction costs for new companies attempting comply with Canadian copyright rules." The decision by Jump not to pursue an Internet-specific retransmission tariff won’t have any legal implications for its current operations. The company enjoys full rights to the slate of programming currently being broadcast on its jumptv.com site (CNM, April 5/01). But JumpTV’s rationale for dropping the application – the lack of a business model for banner advertising – doesn’t bode well for the company’s current model. Jump president Miller wouldn’t comment last night on his company’s plans moving forward, except to re-iterate the contents of its letter to the board. For months, and especially at the recent ITV: Convergence and Beyond conference last August, Miller has stressed the importance of having two divisions within the company. The business of broadcasting programming to which the company has rights, he has said, isn’t dependent on the more controversial re-transmission of North American programming via the Internet. Still, Jump’s stated reasons for withdrawing the application, coupled with an extremely difficult online advertising market, mean it’s unlikely it will dip into the advertising trough to keep the operation alive. One likely scenario holds that the company may turn to a subscription model, arguing that it won’t require a separate tariff, and partially satisfying demands that it keep its content away from unauthorized viewers. More than a year ago Jump filed its initial application for an Internet-specific tariff which, in subsequent filings, it argued should be less than what’s currently paid by cable operators and direct-to-home (DTH) satellite TV providers (CNM, Sept. 20/00). If the company has had a change of heart and business plan, and now considers the tariff structure for a subscription-based model more palatable, it could conceivably begin paying that rate without re-approaching the Copyright Board. If it proceeds as a retransmitter paying the same tariff as DTH and cablecos, supported in that by subscription revenues, it’s likely the matter would be have to be decisively determined in court. Lawyer David Kent, who also spoke with Canadian NEW MEDIA last night, applauds Jump’s decision, but rejects the notion that it might move to a subscription model to avoid legal difficulties. Kent, who represents the Canadian Association of Broadcasters (CAB), says some of his client’s objections – over competing advertisements, for instance – might be removed, but the issue of using the open Internet versus a closed system such as cable still has to be decided. Like others CNM spoke to, Kent applauds Jump’s decision to exit the stage for the time being. "It leaves us in the position we want," he says, while noting that there is still no conclusive ruling on the matter of Internet retransmission. Everyone who spoke with CNM last night noted that even if Jump’s s.31 application is dead in the water, it’s likely another ICraveTV-like company will test the Internet retransmission waters (CNM, March 20/00). Kent, CAB president/CEO Michael McCabe, McCarthy Tétrault’s Peter Grant, and the Canadian Film and Television Production Association’s Elizabeth McDonald all stress that a parallel inquiry into s. 31 being conducted now by the departments of Canadian Heritage and Industry Canada is all the more important (CNM, June 28/01). McCabe, in particular, stressed that the issue hasn’t been resolved and that, "somebody will follow. We have to make it clear that the use of the Internet does not qualify for the compulsory licence." He argues, as the CAB has since the issue first arose, that the s.31 provision shouldn’t be extended beyond cable and DTH operations, intended as he says it was as a very narrow exception to copyright rules. In that vein, he’s pleased that the decision to extend s.31 protection to Internet retransmitters has been taken out of the hands of the Copyright Board and put on Parliament’s plate. "This uncomplicates it," he told CNM. "Our sense is the overwhelming opinion is in favour of an Internet ‘carve-out.’ The road is now open to a clean conclusion." McDonald concurs, saying: "My concern is that after ICrave, people thought they had time, and then there was Jump. I think this is an issue that has to be dealt with within a Canadian context so that we can catch up with other countries. If we’re going to say that content is going to be king, we have to make sure that people can make a living out of it and have their rights protected and not just be sold short or undercut. The issue for Jump was that they weren’t going to be paying fair and equitable rights. They were going to be coming into the market almost through a shortcut. The issue here was that that is not permitted, but I think it’s important that the government not lose steam." Grant echoes the concerns: "The issue is still there. It won’t go away unless the ambiguities that are in the legislation are resolved by legislative reform, which we’re all still pushing for," he says. " issues…won’t go away. There’s always this possibility that someone would come and pick up where JumpTV left off. As long as that argument is there, I would say this legislation should be amended to make sure it doesn’t hold." As for Jump’s concern that the company wasn’t foiled by legal arguments but by a lengthy and inappropriately expensive board process, Grant says Miller should have known what to expect. "Obviously, we’re happy JumpTV saw the light of day and decided to withdraw. But, we were certainly prepared to battle it out and this has probably saved us all a lot of money…It was a complex case. It kind of goes with the territory. You can’t expect to go in with an application raising so many horrendous issues for rights-holders and expect to sneak in just under the radar screen as though this is just a nickel-and-dime application. It just was not of that ilk. I don’t think maybe that they recognized that rights-holders were so concerned. But, they should have known that knowing what happened to iCraveTV. I mean, they were well aware that an application of this kind raised all kinds of difficult questions, and I’d say it just played out as it should." In a rare show of solidarity, McCabe offers that JumpTV may be right in pointing out the complexity of the copyright system. He says the CAB shares some of the same views regarding the cumbersome system of rights and the difficulty of administering them. Large or small, McCabe told CNM, companies are becoming increasingly lost in the maze of regulation. "It doesn’t make sense to us to pile right upon right upon right," he says. "There is not, in this country, a comprehensive policy debate. What we need is a policy debate about where copyright goes in an Internet debate." He notes that the consultation paper now before the industry with proposed changes to the Copyright Act is too legal and too specific. He recommends a broader debate about how content is valued before a proper policy framework can be drafted. More details: Securing copyright tariff key in JumpTV’s bid to become an Internet retransmitter Jump set to launch site, likely with offshore content before Canadian broadcasting Legal loophole that gave birth to iCraveTV won't be closed anytime soon Review of copyright law could pit content producers against content providersOctober 10, 2001Dagenais’ Toronto speech well-receivedA speech by Alliance Numérique president Claude Dagenais in Toronto on Sept. 28 has made serious waves in the Ontario new media community. Dagenais was in Hogtown to explain the different approaches taken by the Quebec government to support its multimedia industry. His story included generous targeted tax credits, unprecedented funding for the association, and a variety of grant programs to help start-ups achieve commercial success. In a subsequent interview with Canadian NEW MEDIA, Dagenais explained the province is lucky to have an industry champion in the premier’s chair, and he lauded the interventionist approach taken by the government. Laissez-faire economic policies may serve the industry well in boom times, he says, but don’t provide much help in a troubled financial climate. Dagenais also says he’s personally interested in seeing Quebec and the Alliance take a leadership role for the sector across the country, possibly filling the niche held briefly by the now-defunct Interactive Multimedia Producers Association of Canada. Industry sources have singled out the New Media Business Alliance and Liberty Village New Media Centre as bright spots in Ontario, but Dagenais insists he was shocked at the state of affairs in Toronto. With millions in federal/provincial money in the association’s coffers, he hopes to continue telling the same story he told in Toronto to the rest of the country in a bid to reverse the serious slide in the industry’s fortunes. The next edition of CNM will report full details of the Alliance’s latest funding, including a continuation of a generous grant program for start-ups, and how the Quebec government and private sector have worked in partnership to escape much of the current downturn. C-15 amendments voted down at committeeTwo proposed amendments to Bill C-15 were voted down on October 4 by a majority of Liberal MPs on the Justice Committee. The amendments, requested by the Canadian Association of Internet Providers (CAIP) and tabled by PC member Peter MacKay, would have altered proposed rules governing online child porn to limit the liability of Internet service providers. As written, the rules place a technically-impossible burden on ISPs to identify information about those posting illegal content, and to ensure the complete deletion of offensive material. CAIP president Jay Thomson says his association and the Canadian Cable Television Association will continue to fight for greater certainty in the Bill relating to ISP liability as it moves into the Senate. The Clerk of the Senate’s Legal and Constitutional Affairs Committee told CNM it’s unlikely hearings into Bill C-15 will be held until next year as it grapples first with Bills C-7, C-24, and expected legislation on anti-terrorism measures. The omnibus Bill C-15 has been controversial, containing as it does rules against animal cruelty that have raised the ire of agriculture workers, as well as new gun control measures. While in the Commons, it has been split into C-15A and C-15B to deal with the ISP issue separately. CNM will have full details of CAIP’s comments to the committee, and its proposed amendments in its next issue. Winnipeg VR centre complete, NewMIC lab to openTwo new multimillion-dollar facilities are set to open this month in Canada’s west. On October 18, a new 25,000 square foot research lab will open in Vancouver run by the New Media Innovation Centre (NewMIC). The centre is the result of an ongoing five-year, $12.5-million initiative to create several digital media research clusters for broadband networks and web-based applications (CNM, Mar. 8/01). NewMIC has touted itself as western Canada’s answer to the MIT MediaLab. Meanwhile, details are becoming available about a new $3.5-million virtual reality laboratory now complete in Winnipeg. The centre has been built in partnership with the National Research Council. Full details will be released as part of a concerted marketing effort by lab execs. More details. ZAQ expects to double revenues in wake of acquisitionsMontreal-based ZAQ Interactive Solutions has purchased two of Toronto-based TargetNet’s assets: COMPAS and focusIN. The divisions create products to support interactive marketing campaigns. As a result of the purchase, ZAQ expects to double its top line. While current economic conditions don’t necessarily bode well for the online advertising market, ZAQ officials insist real-time measurement of marketing initiatives remains a compelling proposition. More details. Sympatico releases multimedia search toolsSympatico-Lycos Inc has added a search function for audio and video files to its popular portal. The engine, developed by Singingfish Inc, Seattle, is being touted as an efficient alternative to popular search engines not optimized to find streaming content. Singingfish has a large stream base containing data on more than 19 million streams. More details. Students wasting time searching: pollStudents in grades nine through 12 are wasting too much time searching for info, spending about half their study time online on non-productive pursuits. While surfing, 65.7 per cent of students say they spend more than half their time rejecting unusable material. Both parents and students still report, however, that the Internet is an important research tool. The numbers come from Rogers iMedia Inc subsidiary eLibrary Canada. More details. RIAA re-inks deal with musicmusicmusicToronto-based musicmusicmusic inc has revised its deal with the Recording Industry Association of America to include a new method of calculating licensing fees based on a per-performance basis. As a result, the company will no longer pay royalties based on overhead of the division. A new licensing period has been retroactively extended to March 2001. Further, musicmusicmusic has "reduced their music streams by cutting off partners with no aspirations to bring in advertising revenue, which has further reduced their licensing fees," according to a news release. More details.

CNM Update

Broadcast | October 11, 2001

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