Collectives, radio stations preparing for battle over new reproduction right exception

OTTAWA--A major copyright fight between broadcasters and rights holders is taking shape over a seemingly innocuous provision in the Conservative government’s Bill C-32, which proposes to repeal a line of the Copyright Act and give radio stations a new exception for the reproduction of sound recordings. Copyright collectives say they plan to fight the proposal, which if passed, will cost rights holders more than $20 million annually. Members of one of the major affected copyright collectives, CMRRA/SODRAC Inc. (CSI), say they want the proposal removed from the bill. “We will obviously be seeking that strenuously. We’re not going to be sitting by idly,” David Basskin, president of the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA), a partner in the CSI, said in an interview. “You’re looking at music publishers whose businesses will fold as a consequence of this.” Bill C-32 proposes to repeal section 30.9(6) of the Copyright Act, which overrides an exception to permit copyright collectives—or groups of rights holders—to charge radio stations for the reproduction of musical works. Repealing the section would mean radio stations no longer have to compensate collective societies for reproduction rights. Right now, radio stations pay royalties on six different rights related to the use of music. The stations and the collectives must go before the Copyright Board to determine the royalty rates. Collectively, the tariffs for reproduction rights alone are worth more than $20 million annually. A Copyright Board decision this month increased the tariffs that all commercial radio stations pay by $13 million annually, from $72 million to $85 million. In 2009, the Canadian commercial radio market earned collective revenues of more than $1.5 billion. Of the $13 million in new tariffs, $10.2 million results from the introduction of two new reproduction right tariffs for copyright collectives AVLA/SOPROQ and ArtistI. The CSI now collects about $11 million annually for reproduction rights, and with the new tariffs introduced by the Copyright Board, the collectives say more than $20 million annually is at stake for the commercial radio sector alone. That $20 million does not include reproduction royalties that will be lost from those outside the commercial radio sector, such as the CBC, satellite radio and television, they say. “If the government wanted to subsidize the broadcasting industry, it should do that out of tax revenues,” Paul Audley, a consultant at Paul Audley & Associates in Toronto, who has represented collective societies, said in an interview. “It shouldn’t do it by confiscating the rights of people in the music industry and forcing them to allow their property to be used by broadcasters with no payment. The broadcasting industry is in pretty good shape.” Gabriel van Loon, a lawyer with Hayes eLaw in Ottawa who represents the broadcasters, acknowledged that the exception could wipe out more than $20 million in annual tariffs for the collectives, but said the collectives will continue to collect more than $60 million annually in other royalties, such as communication and performance rights fees. “Of course they’ll fight it, because they have a vested interest in fighting this sort of thing,” van Loon said. “This exception merely helps fix what I consider to be an anomaly in Canada and gives broadcasters a slightly better position to work from. It doesn’t mean that all liability disappears for reproduction.” Van Loon said the exception is long awaited for the radio industry and is intended to address advances in technology. The need for the exception arose when radio stations began moving to digital systems in which they stored music on hard drives. Collective rights societies saw the shift to digital systems as an opportunity to charge stations for copying, or reproducing the works, he said. Van Loon said radio stations’ digital use of music was an issue when the last copyright reform amendments received Royal assent in 1997. The Liberal government had included the reproduction right exception in the legislation, but late in the legislative process, provision 30.9(6) was added to the bill, which qualifies the exception, adding that “this section does not apply if a licence is available from a collective society to reproduce the sound recording, performer’s performance or work.” “That was basically an invitation for the rights holders to band together as a collective society and collect on the right, notwithstanding the exception in the act,” van Loon said. Radio stations have been seeking the removal of provision 30.9(6) ever since, he said. “They’re merely trying to get what they should have got the last time around, which was over 12 years ago.” But Basskin said radio stations can choose whether they back up their works digitally. They could use CD players to avoid paying reproduction royalties, he said. “They can use record players or CD players. There’s nothing that keeps them from operating without copies,” Basskin said. The collectives and others in the music industry lobby will be seeking to reverse the repeal of section 30.9(6) at a special legislative committee the government intends to strike this fall to study bill C-32. Catherine Saxberg, executive director of the Canadian Music Publishers Association (CMPA), which advocates for music publishers, said rights holders intend to meet with parliamentarians and bureaucrats to discuss the repeal of the provision. They will also try to bring the matter to the attention of Industry Minister Tony Clement, Saxberg said. “We will have to ensure that he’s briefed on this,” she said. Saxberg added that the rights holders hope to make a case to members of the legislative committee, conveying “the damage that this provision will do to creators and rights holders. Hopefully that will give them pause to reconsider the implications of it.” But van Loon said he believes the government included the provision in the bill for a reason, and that the move is in line with other proposals in the legislation that address how people use copyrighted materials in the digital age, such as new user exceptions to permit format shifting (copying content from one medium to another) and time shifting (storing content for later use). “Rights holders have rights over their works and should be compensated for the use of those works, but there has to be some reasonable exceptions, especially in circumstances where you’re paying them anyways," van Loon said. sdoyle@thewirereport.ca

Collectives, radio stations preparing for battle over new reproduction right exception

Broadcast | July 19, 2010

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