Reproduction right ‘punishes’ radio stations for adopting new technology, Lake says

Music copyright collectives defended the tariffs that radio stations pay to transfer music files Thursday against charges from the government that the royalties are “punishment” for the adoption of new technology. Music copyright collectives, which administer the collection and distribution of royalties for rights holders, are stepping up their pressure on the government and the opposition parties in an attempt to change a proposal in the Conservative government’s copyright reform bill, which would eliminate a mechanical tariff that radio stations pay to transfer and format digital music. The Canadian Association of Broadcasters (CAB) says private stations pay $21 million annually for the mechanical right to transfer and format works digitally. This is in addition to the royalties that broadcasters pay to perform musical works on air. On Thursday, at the legislative committee studying Bill C-32, the Conservative government’s omnibus copyright reform legislation, Mike Lake, the parliamentary secretary to Industry Minister Tony Clement, suggested that the music copyright collectives are “punishing” radio stations for using new technologies. He couched the debate within the government’s efforts to encourage the adoption of new technologies, which is expected to be a major component of its digital economy strategy to be released this spring. “They’re using technology to change the way that they organize. That’s all they’re doing,” Lake said of the radio stations. He argued that stations should not have to pay twice to compensate music rights holders, especially if it discourages the use of new technology. “When we have a scheme that punishes, basically, the adoption of new technology, there’s absolutely no benefit to that operation,” Lake said. But David Basskin, president of copyright collective CMRRA/SODRAC Inc. (CSI), told the committee Thursday that, although the copies being made are digital, it is a principle under copyright law that music rights holders are paid for the reproduction of their works. “The copies have value,” Basskin said. “Broadcasters are taking advantage of remarkable technology that’s developed in the last few years that enables them to save a great deal of money and resources. They don’t have to have a room full of CDs or vinyl records anymore.” Bill C-32 proposes to repeal section 30.9(6) of the Copyright Act so that radio stations no longer have to compensate collective societies for mechanical reproduction rights. Right now, radio stations pay for the reproduction right plus a tariff for the performance of music. The Copyright Board says that, in 2009, commercial radio stations paid a total of $72 million in music royalties, when total station revenues nationally were $1.5 billion. The opposition parties on the legislative committee are against the proposal in Bill C-32 to repeal the section in the Copyright Act. In an effort to defend the bill, the CAB has launched a national radio ad campaign (outside of Quebec) that targets the Liberals and calls on the public to write their MPs to “keep local radio alive.” Baaskin said radio stations make several digital copies in their operations. He said copies are made when they pull music files into their system, when they evaluate their quality, when they store them in their libraries, and when they create pre-recorded radio programs. The digital, automated world of broadcasting also makes it easier for stations to keep track of ad spots for advertising clients, he said. “Copies of music are at the absolute heart of this system,” Baaskin said. “To me, that’s value for value. That’s a fair proposition. To say that paying royalties is punishment for innovation is like saying it’s punishment to pay for electricity to light up the building. It’s part of the operating environment.” Baaskin added that the mechanical rights fees are not exorbitant, particularly for small broadcasters. For a small station that earns half a million dollars, the mechanical rights fees (in addition to performance fees) would be $1,500, he said. At a meeting of the C-32 committee last week, the CAB said that, as a result of increasing copyright tariffs, radio broadcasters are looking at their operations and questioning whether they can afford to operate. Baaskin told the committee Thursday that broadcasters are facing many competitive forces, including new media, the online distribution of music, and other media outlets in small and large markets. He said he “sincerely doubts” that the mechanical reproduction rights fees could “take down” a radio company. But Lake questioned the principle of whether broadcasters should pay to transfer digital works, and said the copyright collectives’ strongest argument appeared to be that the stations could afford to pay. sdoyle@thewirereport.ca

Reproduction right ‘punishes’ radio stations for adopting new technology, Lake says

Broadcast | March 10, 2011

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