Fee for cell phone ringtones would be levied under proposed new SOCAN tariff

Wireless operators and ringtone suppliers in Canada could soon be required to pay more money to use ringtones based on popular melodies if the Copyright Board of Canada approves an expanded tariff on the public performance of music proposed by the Society of Composers, Authors and Music Publishers of Canada (SOCAN). Released last May, a new proposed tariff (Tariff 24) would require cell phone companies and ringtone suppliers to pay 10% of annual revenue up to a maximum of $30,000 per year. Tariff 24 is a new addition to the slate of tariffs relating to the public performance of music in a whole host of venues such as bars, dance clubs and public skating rinks. The chief lobbyist for Canada’s wireless industry says the wireless carriers already pay royalties to the music’s rights holders and shouldn’t be required to pay any more. "They have an arrangement where they pay directly to the rights holder. There’s a direct deal without having to go through any cooperative for whoever holds the rights to that particular ringtone," Peter Barnes, president and CEO of the Canadian Wireless Telecommunications Association, says. "To the extent that a deal exists with the people who own the rights in the first place, there doesn’t seem to be a need to establish another overlay on top of that. If our carriers are paying those authors, composers and music publishers directly, why then pay the society (SOCAN)?" SOCAN general counsel Paul Spurgeon says that while the wireless carriers may already pay royalties for the reproduction of music in the form of ringtones, they don’t pay for the communication of that ringtone to the wireless subscriber. It’s the communication right that is the subject of the proposed new tariff, he adds. "There’s a communication that takes place between the ringtone supplier and the subscriber when they download the musical work into their telephone device," Spurgeon tells Canadian NEW MEDIA. "There’s a communication to the public by telecommunications for which we are entitled to a royalty. There are other rights holders involved. For example, the publisher of the musical work is entitled to a fee for the reproduction. But we’re not talking about reproduction, we’re talking about the communication. It’s a one-time communication, but nevertheless it is a communication and we are entitled to a fee for that." The body of the proposed Tariff 24 states, "For a licence to communicate to the public by telecommunications at any time and as often as desired, musical works of SOCAN’s repertoire incorporated into telephone or other ringtones, in connection with the supply of ringtones by a ringtone supplier to its subscribers, the ringtone supplier shall pay SOCAN 10% of the ringtone supplier’s revenue to a maximum of $7,500 for each calendar quarter." The issue seems to be complicated further by the definition of ringtone supplier because SOCAN defines a ringtone supplier as "the person supplying or authorizing the supply of ringtones to subscribers," meaning wireless operators would be on the hook for paying the proposed tariff. Spurgeon says SOCAN isn’t limiting its proposed tariff to the ringtone suppliers; it wants the cell phone operators to pay up as well. One ringtone supplier has already agreed to pay the proposed tariff, but SOCAN has yet to collect any money, he notes. "The obligation is both joint and several," Spurgeon explains. "In other words, both the supplier and the telephone company are liable. We would rather collect the money from the telephone company – we’d prefer that – but we just want to make sure the value reflects the value to both the telephone company and the supplier. In other words, we don’t just want to look at what the supplier is making. … It’s a joint and several business and that’s what we’re looking at."

Fee for cell phone ringtones would be levied under proposed new SOCAN tariff

Broadcast | March 6, 2003

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