Industry not showing a lot of love for Songwriters’ new licence fee proposal

The Songwriters Association of Canada’s (SAC) latest proposal for a licence fee on Internet services to legalize music file sharing isn’t getting a lot of love from record labels, Internet service providers (ISPs) and screenwriters. In the latest version of its policy proposal, updated in January, the SAC calls for a new monthly licence fee on Internet service bills that would license customers to upload, download and exchange music via file sharing web tools such as BitTorrent. The feel, which is being pitched as optional for Internet customers, would be administered by ISPs, which would take a portion of the funds. The remainder of the revenue would be distributed to music makers, copyright collectives, record labels and other music industry groups. It’s a quadruple win, the SAC says: creators get paid for their work; labels and music publishers garner a new revenue stream; ISPs further monetize their networks; and music lovers can file share legally. The proposal is a variation of one that the SAC made in 2007, arguing for changes to Canada’s copyright framework to create a mandatory ISP levy to compensate rights holders for illegal file sharing. The SAC’s proposals speak to ongoing concern about troubles facing the music business. “It’s a very tough situation,” Eddie Schwartz, the SAC’s president, said in an interview. “The music industry is in something approaching freefall.” He pointed out that CD sales have dropped since the advent of online music-sharing platforms. He said the industry had hoped that digital music sales would skyrocket, but they’ve stalled, and the vast majority of music continues to be acquired via illegal online file sharing. Apple Inc.’s iTunes emerged as the most popular American music retailer in 2008 and, according to NPD Group Inc., accounted for 69 per cent of all digital downloads in the country last September. But iTunes and other online music services have seen slowing sales growth, and some observers say digital sales will never replace the revenues and profits generated by compact discs. Bloomberg reported this month that Apple is holding discussions with recording companies to make the music service more flexible and attractive to users who want unrestricted access to use their music on multiple devices and make backup copies. Given the rising popularity of iTunes at the time, the SAC’s 2007 proposal for a mandatory ISP levy tied to copyright reforms wasn’t very popular. “We had a tremendous amount of negative publicity,” Schwartz acknowledged. He added that after discussing the idea with consumer groups, the SAC found little support for a compulsory fee. But the new proposal for a licence fee does away with an obligatory levy, instead proposing an optional charge. The SAC says a $5 monthly fee would generate $420 million annually from seven million Internet accounts. Nor does the new version propose any amendment to Canada’s copyright framework. It instead depends on copyright collectives, content creators and record labels to develop a direct licensing system with ISPs. Schwartz said reaction to the new proposal has been mixed, but increasingly positive. “I feel that more and more people are coming around to seeing that what we’re suggesting is a viable alternative to what has happened for most of the last 10 years, which is lawsuits, digital locks, and in Europe the three-strikes-and-you’re out rule ... It hasn’t worked. You can’t put yourself in an adversarial position with your audience.” Under a “graduated response” or “three strikes and you’re out” policy toward copyright liability for ISPs, repeated online copyright infringers can receive limited Internet access or even be cut off. Graham Henderson, president of the Canadian Recording Industry Association (CRIA), said his organization doesn’t support the SAC’s proposal. The idea, he said, would associate the music industry with an additional Internet service fee. He suggested that could alienate customers at a time when the industry needs to win them over. He said the proposal also undermines services such as Rdio.com, a recording-industry-approved online service that lets people listen to songs on-demand. “If it really came down to paying $10 a month for some virus-ridden BitTorrent service or you spending $5 a month for one of these new streaming services ... why wouldn’t you do that?” Henderson said. Schwartz said the SAC has also discussed the proposal with small, independent record labels. “People are coming around to the notion that this is not a bad idea, and it deserves further study,” he said. The SAC is polling Canadians to find out how much people would be willing to pay for the right to legally file share music, Schwartz added. The SAC has also held informal discussions with ISPs, and the group hopes to conduct a trial with a service provider this year, he said. Tom Copeland, chair of the Canadian Association of Internet Providers (CAIP) and president of Cobourg, Ont.-based ISP Eagle.ca, said he doubts that a voluntary licensing system would generate enough money to satisfy music rights holders. “Having an opt-in file sharing tax will get them no closer to adequately compensating those that should be compensated,” he said. Copeland said ISPs don’t support the SAC’s proposal because it would be too expensive to administer and revenues wouldn’t offset costs. File sharers aren’t inclined to pay for music, he added. “If you were, you’d be buying through eMusic.com or iTunes.” In its proposal, the SAC references a 2008 University of Hertfordshire study in the United Kingdom, which showed that 80 per cent of people who file share music said they would pay for a legal option to do so. Maureen Parker, executive director of the Writers Guild of Canada (WGC), representing more than 2,000 English-language screenwriters, said that, on one hand, the SAC’s proposal is understandable. “I certainly empathize with their impatience relying on a copyright bill to ensure artists are fairly compensated,” she said, adding that the government has spent years trying to update Canada’s Copyright Act. “It’s been going on since the ‘90s.” But she added that she doesn’t think the proposal is a “complete solution,” noting that it applies to music only and not to visual media. “We think any payment for use should extend beyond music to include audiovisual,” Parker said. “We need to look at what the marketplace is consuming ... Much of the content we’re downloading now is audiovisual.” The WGC told the House of Commons heritage committee last May that a broad ISP levy should be in place to compensate rights holders and creators for file sharing and illegitimate content distribution. Parker added that, from the WGC’s point of view, ISPs are broadcasting distributors and should support content creation through vehicles such as the Canada Media Fund (CMF). ISPs are not legally considered broadcasting distributors, however, and don’t contribute to the CMF or Canadian content development. The WGC and other organizations want the Supreme Court to review a Federal Court of Appeal decision that said ISPs do not act as broadcasting distributors. Parker said the court is expected to announce this month whether it will hear the case. news@thewirereport.ca

Industry not showing a lot of love for Songwriters’ new licence fee proposal

Broadcast | March 14, 2011

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us