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Music Canada’s Graham Henderson: Junos show culture is a smart investment for Hamilton

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Music Canada President & CEO Graham Henderson has an op-ed in the Hamilton Spectator today, congratulating Hamilton on hosting a very successful JUNO Awards earlier this month. In ‘Junos show culture is a smart investment for Hamilton,’ Henderson notes the multi-million dollar economic impact the four-day event had in Hamilton, as well as the added benefits that a strong cultural scene brings, like improving residents’ quality of life and attracting creative and innovative workers.

“From the dozens of downtown streets and stores that featured free performances, to the 15 venues that took part in JunoFest, to the spectacular closing show at FirstOntario Centre, Hamilton delivered on all counts,” wrote Henderson. “More than 3,000 musicians and industry personnel attended Juno Week, and Hamilton’s tourism sector welcomed them with open arms and exhibited terrific hospitality. Hotels were at full capacity, bars and restaurants were bustling, and taxis were kept busy shuttling attendees around town. Tim Potocic, chair of the Junos host committee, has estimated the economic impact of the four-day event to be between $11 million and $12 million in Hamilton.”

The op-ed comes as Hamilton City Council is scheduled to continue the city’s 2015 budget deliberations, which include a proposed $500,000 added investment in the arts, which would represent the first major arts funding boost in Hamilton in 15 years.

Yesterday, the Hamilton Chamber of Commerce’s Keanin Loomis issued a strong statement on the economic value of music & cultural events to a city in an op-ed in the Hamilton Spectator. In ‘Arts and culture now drive Hamilton,’ Loomis notes that a city’s quality of life is among its strongest tools for economic development.

“It is indisputable that the arts activity that’s been buoying Hamilton’s cultural renaissance over the last decade led directly to the economic boost we got from hosting last week’s Junos,” wrote Loomis. “Considering the type of returns we are receiving from the limited investments we are making to enhance this city’s quality of life, more investment in the arts is an economic imperative.”

Hamilton City Council will deliberate the arts investment motion today in Council Chambers. Members of Hamilton’s arts community are attending in the gallery as a show of support for the motion. The final budget vote is scheduled for April 8th.

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Music Canada’s Graham Henderson discusses the shutdown of The Pirate Bay on CBC’s Metro Morning

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Yesterday, Music Canada President Graham Henderson appeared on CBC Metro Morning to discuss the recent shutdown of The Pirate Bay, and how to restore respect for creators’ work.

When asked why the Pirate Bay remained in operation despite legal threats for so long, Henderson replied, “I think it’s one of the realities of our digital environment, that if you are persistent, and you want to operate outside the law, there are ways to do it. And very clearly that’s what the Pirate Bay has been doing for these past years. But it also reflects an almost insatiable demand for music.”

“The site was popular, because music is popular,” said Henderson. “What we’ve seen for the past 14 years is an entirely avoidable, inappropriate loss of value for creators. I think it’s fair to say that musicians and creators in general today are worse off than they were in 1999 – was that the plan? I don’t think that was the plan, and in fact, I would suggest to you that there was an implicit promise that came from the intermediaries, that came from everybody, that creators were going to be okay – and they’re not, and I think we can thank The Pirate Bay for a lot of the reason for that.”

Host Matt Galloway asked why, with the emergence of licensed digital music options, “what still drives some people to a site like the Pirate Bay?”

“It’s not even a really good experience, we have to remember that,” said Henderson. “It’s free, but the contrast would be a service like Spotify, which is $10 a month. I think people are gradually migrating to legal – I think once they experience legal services, for example, there was a brand new high-def service named TIDAL launched here last week – once they experience these services, they realize there is a phenomenal customer experience there.”

“Intellectually, people understand that illegally downloading is like stealing,” said Galloway. “And yet they still do it – how do you convince them to make that intellectual leap, that downloading is no different than going and taking something from a store?”

“I think that a lot of people have lost the connection with the recording artist; I think we have to restore that respect for the creative process, restore the respect for the creator,” said Henderson. “I also think we need to acknowledge the elephant in the room: creators are not doing as well as it was suggested they’re doing – in fact, they’re worse off. I think when people realize that the direct consequence of their actions is to impoverish the musicians they love, then maybe we’ll move in the right direction.”

“Do you think people care if Taylor Swift doesn’t get more money because they are getting it for free?”, asked Galloway.

“I don’t think everyone does, because I think people can be quite selfish in terms of the way they behave – but it’s not about Taylor Swift – that’s an easy thing to say, but what’s happening is we’re seeing an unprecedented shift of wealth,” said Henderson. “It’s moving from creators to the hands of billionaires and trillionaires – that’s where it’s going, into the hands of intermediaries. Lost in this – Taylor Swift is doing fine. It’s like the 1% problem – more and more wealth, concentrated in fewer and fewer hands, and the middle-class in the music environment: wiped out. We have more hobbyists than professional musicians. And I think it’s been very convenient in the past to think, ‘I’m doing this because rich artists are fine anyway.’”

The full interview is available on Metro Morning’s website, and is embedded below:

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Tariff 8 Q & A

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On May 16, 2014, the Copyright Board of Canada issued its decision setting rates for Re:Sound’s Tariff 8 – Non-Interactive & Semi-Interactive Webcasts, 2009-2012.  Tariff 8 sets the royalty rates that music streaming services must pay to Re:Sound to play sound recordings.  Tariff 8 does not apply to the use of musical compositions, which are subject to separate tariffs administered by Society of Composers, Authors and Music Publishers of Canada (SOCAN) and CMRRA/SODRAC (CSI).

Since the Board’s decision, 78 music industry associations and labels, led by Music Canada, CIMA, ADISQ and Canadian Council of Music Industry Associations (CCMIA), have joined together to form “I Stand for Music”, a coalition that continues to raise public awareness about the disastrous effects of the Tariff 8 ruling.  For those who are interested in exploring the issue further, here are some questions and answers to help you dig deeper.

 

QUESTION How does the Tariff 8 decision “impoverish” artists? Isn’t Tariff 8 just one revenue source for artists? Don’t artists benefit from royalties they receive from a number of copyright collectives?
ANSWER For these types of services (Songza, CBC Music etc.) Tariff 8 income is the only guaranteed source of income for an artist (performer). It is only in cases where the performer is also the composer that additional royalties may come from CMRRA/SODRAC (CSI) or SOCAN.The reality in the market is that sales of CDs and even downloads are declining, while music streaming is on the rise.   That’s why it is so important that artists are fairly compensated for their work in the context of web-based services.

 

QUESTION Isn’t it unfair to assert that artists will make less than 10% of their international counterparts such as in the U.S. because of Tariff 8? Aren’t there many additional fees available to artists in Canada that are not available in the United States?
ANSWER In a comparison of the rates payable for the same rights for the same activities (non-interactive and semi-interactive streaming of sound recordings) the rates certified for Canada are less than 10% of those payable internationally.

 

QUESTION Doesn’t it stand to reason that Tariff 8 would be lower than the U.S. equivalent since the Canadian repertoire during that period was about half as large as the U.S. one?
ANSWER Even were the rates certified by the Canadian Copyright Board doubled they would still be less than 20% of international rates for the same rights. But even more to the point: Re:Sound negotiated commercial deals with digital services doing business in Canada during the period. These agreements indicate precisely the marketplace value of the rights in question in Canada. The negotiated rates were submitted to the Board to demonstrate what the rates are and ought to be in Canada. The Tariff 8 rate represents about 10% of the Canadian marketplace rates.

 

QUESTION Isn’t internet streaming just like radio?   Doesn’t it make sense that the Board certified a rate for music streaming based on the commercial radio rate?In fact, shouldn’t a spin on the radio be considered more economically valuable than a “stream” by one consumer, since a spin may reach hundreds of thousands of listeners simultaneously?
ANSWER Comparing broadcast radio spins to digital service streams is comparing apples to oranges. Setting streaming rates based on the rates payable for over-the-air commercial radio broadcasts ignores the much greater value streaming services derive from recorded music. Streaming services offer a variety of genres and sub-genres of music not available on radio, which can be customized to individual preferences and accessible anywhere at any time through mobile devices. With their ability to substitute for, and cannibalize music sales, streaming services are far more comparable to on-demand streaming and download services than terrestrial radio.

 

QUESTION Isn’t it true that the Board’s decision will pave the way for new online music services to enter the Canadian market and result in more choices for consumers?
ANSWER There are many reasons why digital services may or may not have entered the Canadian market including uncertainty regarding rates. Given the extreme discrepancy between the Tariff 8 rate and international standards, and knowing it applies to a period of time that has already ended and that it may be years before the rate for the current period is known, the Copyright Board decision does not erase the uncertainty that has clouded the Canadian market.

 

QUESTION Doesn’t the Copyright Board’s Tariff 8 decision simply establish that the relative values of the rights of creators and their publishers on the one hand (“authors’ rights”), and of the record companies and performers on the other hand (“neighboring rights”), are generally equal and should be treated as such?
ANSWER The Copyright Board rejected marketplace rates, throwing out years of precedential agreement and North American precedents. They did this because the “authors’ rights”, i.e. SOCAN rates, were so low they conflicted with marketplace rates freely negotiated in Canada (and equivalent to those in the U.S. and around the world) for artists and the music companies that invest in their careers. If the Board were to certify Re:Sound’s suggested rates for Tariff 8 royalties, they would have to raise SOCAN rates by 90%. Since they were not prepared to address the issue of low SOCAN rates, they devalued the rights of record companies and performers to bring everyone down to the lowest common denominator.

 

QUESTION As online streaming services become more established, build their paid subscriber bases and generate more ad revenue from free subscriptions, doesn’t it make sense that compensation to rights holders would increase as the economics metrics for their businesses improve?
ANSWER The Tariff 8 rate places such a low value to a stream in Canada it may very well have an impact on the international standard as music companies in other jurisdictions argue that they should pay 90% less for content. This race to the bottom will only further devalue music. Even as the digital services companies become more economically viable, it does not stand to reason that devaluing the streams will lead to fair compensation for rights holders later. Tariff 8 was an opportunity to certify that music in Canada has the same value as music in the United States and elsewhere around the world. Even royalty rates in the United States – which are 90% higher – are hotly contested as musicians, including songwriters, fight for fairer compensation. With Tariff 8 rates set at 10% of a standard that is already considered to be far too low, it will make it even harder for Canadian musicians to make a living and to thrive internationally while digital music companies continue to grow and flourish.

 

 

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Toronto Music Policy Survey – 2014 Mayoral Candidates

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Music Canada is a passionate advocate for music and those who create it, identifying ways to strengthen Canada’s music sector.

Our research shows that Toronto has the potential to be the greatest music city in the world. It is the third biggest music market in North America, and is home to a vibrant music scene. This is why Music Canada has also led the 4479 Toronto Music City initiative, and why this survey has been created. Music Canada has surveyed Toronto’s mayoral candidates in order to raise awareness of music issues in Toronto, and to secure music friendly commitments.

We asked Olivia Chow, Doug Ford, and John Tory three questions on key music policies as identified by Music Canada. We have listed their responses alphabetically below, and encourage Torontonians to consider a candidate’s positions on music policy when casting their ballot. Voting day is Monday, October 27, 2014, and Advance Polls are open now through October 19th. For information on how or where to cast your vote, visit the City of Toronto’s Election Services site.

 

Toronto Music Policy Survey – 2014 Mayoral Candidates

Toronto’s live music venues, concert promoters, and studio owners have all revealed that regulations and red tape at City Hall are creating an impediment to business growth. Based on best practices from Austin, Texas, Music Canada has recommended that the City of Toronto create a Music Office within its Economic Development & Culture Division. With a modest budget, this office would assist Toronto’s music community in navigating city infrastructure and regulations, and in stimulating business development opportunities, all of which will lead to greater investment and employment in the music sector.
We asked: How will you support the creation of a Toronto Music Office?
Olivia ChowOlivia Chow “As an artist herself, Olivia has a history of championing the arts. Olivia will create the Toronto Music Office, which could be paid for with increased revenue from the billboard tax. Like the Film Office already does to support film in our city, the Music Office will create an even more attractive environment for music and culture in our city.Olivia supports making city services work for people, from small business tax cuts to ensuring that economic development agencies in the city streamline their processes. Austin, Texas is a leader on the music front and we can do the same here in Toronto with a much larger population and pool of artists. This will build on the incredible musical talent in our city, and the music festivals and awards shows that already attract so many to our city.”
Doug Ford
Doug Ford		 “I believe in the power of the music industry to stimulate our economy, bring jobs to our city and create a vibrant cultural scene. In the past four years we have supported the arts and we have supported Toronto’s music industry. We increased arts funding by $22 million to support arts and culture in Toronto. I am also very proud of our work in partnership with Music Canada to help advance the music industry by travelling to Austin Texas on Toronto’s first music industry business mission. In Austin we signed the world’s first Music Cities Alliance between Toronto and Austin. We have also helped fund a new position at City Hall to liaise with the music industry to help them do business with the City of Toronto. We want to replicate the success we have seen with Toronto’s Film Office and apply that same approach to the Music Industry. I will work with stakeholders like Music Canada to make sure we expand on this and create fully functional Music Office at the City of Toronto.”
John Tory
John Tory		 “John Tory’s “Music City” policy is an important part of his larger Arts and Culture policy which acknowledges the vital contribution the creative sector makes to the city. The creative sector creates the conditions for the city to thrive – it builds our international reputation, employs hundreds of thousands of people, and contributes billions to our GDP. It is important that the city creates the conditions for our creative sector to thrive.In May during Canadian Music Week, John announced his plan to support the growth of the music industry in Toronto. Included in his “Music City” program is the commitment to establish a new stand–‐alone Music Office which will act as a one stop shop for the music community.The City of Toronto can learn from its efficient and collaborative work with the film and television community. The city’s film office has succeeded in improving customer service has helped to increase the level of activity in Toronto in this important creative sector. Based on this success story, and a similar experience in Austin Texas in the music sector, the City of Toronto will benefit from the creation of a Music Office. The Music Office will be established within the Economic Development department and will open in 2015. The Music Office will be expected to accomplish two main goals: reduce red tape and stimulate greater economic activity in the music community. Both of these activities will help to reduce the impediments to business growth currently being faced by the music community in Toronto. Targets will be set and progress measured over a 5 year term. Expected results will include greater activity in the music sector, increased employment and private sector investment, and greater efficiency at City Hall.The Music Office will be supported in its work by the Toronto Music Advisory Council which was established in December 2013 and reports to the Economic Development Committee. John commits to extending the mandate of the Music Advisory Council.”

 

Tourism is an important part of Toronto’s economy, with almost ten million overnight visitors in 2010, generating over four million in city revenue. The specific impact of music tourism on Toronto’s economy has yet to be measured, though given the concentration of the music industry in the GTA, it could be significant. Working with the music community, the City of Toronto and Tourism Toronto could quantify existing music tourism revenues and develop targeted initiatives to further increase its impact.
We asked: How will you champion the development of a music tourism strategy for Toronto?
Olivia Chow
Olivia Chow		 “Olivia has committed to seeing the city invest more in the arts, bringing our investment from $22.5 per capita to $25 per capita. With worldclass awards shows like Polaris Music Prize and the MMVAs, and festivals like Pride Toronto and the Scotiabank Caribbean Carnival, Toronto is a cultural capital unlike any other. Our commitment to investing in parks and green space in our city will reduce red tape surrounding large events and help support street festivals and open streets initiatives. Through strategies like this, we can continue to make our city a vibrant and dynamic cultural centre.”
Doug Ford
Doug Ford		 “When we went down to Austin, Texas, last year I saw the power of the music industry first hand. Austin is a City one third the size of Toronto, yet they have created a thriving music industry that generates three times the economic activity of Toronto’s. I learned a lot in Austin, I learned the potential of the music industry to drive tourism and stimulate economic development. I will support Toronto’s music industry to help it thrive. A vibrant cultural scene makes a City more attractive to visitors, investors and businesses alike. I will drive a music tourism plan through the Economic Development Committee to ensure we are doing everything we can at the City of Toronto to attract more music tourism to our city.”
John Tory
John Tory		 “John Tory believes our creative sector is one of our best tourism assets. Addressing the barriers to growth in music activity by establishing a Music Office will, in itself, help to further boost the opportunity to attract music tourists. Festivals, concerts and other music events, staged throughout the city, will position Toronto as a key destination for music tourists. John is also committed to facilitating greater connectivity for tourists to Toronto’s creative hotspots through the SmartTrack line. This will improve the overall tourist experience, as well as benefit Toronto residents who want to access music events. Increasing the audience, whether drawn from afar or here at home, will create greater demand for live performances and therefore, generating more opportunities for artists and musicians to perform.Toronto’s destination marketing organization, Tourism Toronto, should work with the music community in order to further incorporate Toronto’s music story into our tourism marketing.”

 

Toronto has an active and culturally vibrant live music scene, but red tape at City Hall has made it difficult for new and existing festivals and events to put on live music in Toronto’s parks and squares.
The application process is ambiguous and unclear, and can be overwhelming for people who are unfamiliar with it. If City Council were to place a higher priority on live music there would be a greater impetus to overcome these barriers.
We asked: How will you support the growth and development of live music in Toronto?
Olivia Chow
Olivia Chow		 “At the beginning of this year the Fords went after Electronic Dance Music (EDM) in our city and tried to prevent any EDM on city property, especially on the Exhibition grounds. Olivia has been a long-time supporter of safe EDM events on public property. As a city councillor, she worked to reverse an ill-conceived ban on raves in public spaces and bring in protocols to ensure the events were safe and fun.The city has a vital role to play in facilitating great music in our city. The Toronto Music Office will lead this effort and we need to make sure that there are places, throughout our city, that can easily serve the needs of music artists. Fort York, for example, has become a musical and event destination in our city. Olivia has pledged to reduce the red tape and process in getting permits on public space.4479 is a great initiative that will help move our city’s cultural sector ever more forward. Olivia looks forward to working with 4479, Music Canada, other partners, and the new Toronto Music Office to make our city even better.”
Doug Ford
Doug Ford		 “I will support the creation of a music office to make it easier for the music industry to operate in Toronto, especially the live music scene. Toronto already has an amazing live music scene, we have amazing festivals like NXNE. I believe what we need to make Toronto’s live music scene even better is more cohesion between the industry and the City and a concerted effort from the City of Toronto to make it easier to get permits for live music events. In Austin we attended the ACL music festival, a live music events that attracts thousands of visitors and generates over $100 million in economic activity each year. I want to bring a live music festival to match ACL to Toronto, while still supporting our existing music events and helping them grow. I am also committed to exploring the creation of a music industry incubator to support new music industry startups.”
John Tory
John Tory		 “The importance of the music community and the broader creative sector cannot be understated. In addition to the direct economic benefits that result from a vibrant music sector, live music also serves as a magnet for tourism, investment and talent (both inside and outside the creative community). In order to ensure greater communication with the creative community, John will appoint a Creative Economic Advocate within the Mayor’s office who will act as a liaison to the Mayor. This measure will, along with other initiatives, ensure that the creative community and its benefits, including music, are better understood and appreciated by City Council and staff.In regards to presenting music in particular, the establishment of a Music Office will help to eliminate the barriers facing music presenters who wish to program Toronto’s underutilized spaces, and help to stimulate greater activity in the music community through business outreach efforts. A large international festival, for instance, is a missing critical component in Toronto’s music infrastructure. Whether growing an existing festival, or attracting the creation of a new festival, John will support efforts to fill this gap.”

For more information on Toronto’s municipal election, visit the City of Toronto’s Election Services page.

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Canada’s Copyright Board Tariff 8 Decision Devalues Music as a Profession, Suggests Music is Worth 900% More in the U.S.

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On May 16, 2014, the Copyright Board of Canada issued its decision setting rates for Re:Sound’s Tariff 8 – Non-Interactive & Semi-Interactive Webcasts, 2009-2012.

The Tariff 8 decision is a serious insult to Canada’s musicians because it sets the world’s worst royalty rates for non-interactive (e.g. CBC Music) and semi-interactive (i.e. Songza and Pandora) music streaming.

As noted previously, the new rates certified by the Board amount to about 10% of what digital services companies have been paying in Canada and less than 10% of what those same services pay in the United States.

In The Rambler by Graham Henderson: Tariff 8 decision establishes “10% of Nothing Rates”, Music Canada President Graham Henderson poses the rhetorical question:  “Do Canadian plumbers get paid wages equivalent to 10% of American plumbers? Teachers? Auto workers? Farmers? Who? What profession receives compensation in Canada for their labour that is equal to 10% of the wages paid across the border?”

The answer, obviously, is nobody.

In fact, on closer examination, the answer is that in each of those professions, Canadians – on average – happen to earn MORE than their U.S. counterparts.

Plumbers
Median Annual Salary according to payscale.com
Canada = $57,950
U.S. = $48,632

Professors
Median Annual Salary for a “Professor, Postsecondary/Higher Education” according to payscale.com
Canada = $91,550
U.S. = $83,801

Auto Workers
Median Annual Salary of “Assembly Line Worker, Automotive” according to payscale.com
Canada = $50,565
U.S. = $32,150

Farmers
Median Annual Salary according to payscale.com
Canada = $42,000
U.S. = $32,030

Despite the absurdity of a Canadian earning less than 10% of what his or her counterpart south of the border earns for the same job, the Copyright Board of Canada has decided that professional musicians should get paid 90% less for certain types of music streaming.  Some people may argue that Tariff 8 isn’t an artist’s only source of income.  But the reality is that for these types of services (CBC Music, Stingray, Songza, etc.), Tariff 8 royalties are the only guaranteed source of income for a performer.  Artists deserve to be fairly compensated for their music.  The Tariff 8 decision sends a message that music is not valued as a profession here, and this message is completely inconsistent with Canadian values.  The Canadian government – who did not create this problem – should step in and take the necessary steps to fix Tariff 8 so Canada is not offside with royalty rates in the United States and around the world.

Send a copy of I Stand for Music’s Open Letter to Industry Minister James Moore to show your support for Canada’s music community.

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Global News Halifax: Tariff 8 cuts affect East Coast musicians

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Earlier this week, East Coast Music Association Executive Director Andy McLean and artist and producer Daniel Ledwell spoke with Global Morning News Halifax about the Copyright Board of Canada’s Tariff 8 decision. The rates set by the Copyright Board are approximately 10% of the rates negotiated by Re:Sound in its direct agreements with digital services, and less than 10% of the comparable U.S. rates.

“We’re trying to get the Copyright Board to re-evaluate the decision that they made in the light of the fact that people are standing here saying, ‘this is ridiculous,'” said McLean. “It sends a really wrong message, it’s the worst possible rate in the world. There’s no other country that devalues it’s musicians like Canada does. And we have the greatest musicians in the world here.”

The full segment is now available on the Global News website, and is embedded below.

A growing coalition of artists, labels, industry associations, and music fans are speaking out against the Copyright Board decision; to learn more and to add your voice, Like and Share the I Stand For Music Facebook Page, or tweet using the hashtag #IStand4Music.

For more information on the Tariff 8 decision, see our Backgrounder.

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Music Canada’s Graham Henderson discusses Tariff 8 on Newstalk1010’s In The Studio

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Last month, Music Canada President Graham Henderson joined Bob Reid and Blair Packham on Newstalk1010’s In The Studio to discuss the Copyright Board of Canada’s recent decision on Tariff 8. The rates set by the Copyright Board are approximately 10% of the rates negotiated by Re:Sound in its direct agreements with digital services, and less than 10% of the comparable U.S. rates.

“This is a problem that actually can be fixed by the Government of Canada,” said Henderson. “Because it’s Government of Canada who sets the rules by which something like the Copyright Board decides how rates will or won’t be set. And it would be very helpful, we think, if the Government of Canada could step in, take recognizance of the ludicrousness of this decision, and maybe help us try and fix it.”

The full segment is now available on Soundcloud, and is embedded below:

A growing coalition of artists, labels, industry associations, and music fans are speaking out against the Copyright Board decision; to learn more and to add your voice, Like and Share the I Stand For Music Facebook Page, or tweet using the hashtag #IStand4Music.

For more information on the Tariff 8 decision, see our Backgrounder.

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Backgrounder: The Copyright Board’s Tariff 8 Decision

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On May 16, 2014, the Copyright Board of Canada issued its decision setting rates for Re:Sound’s Tariff 8 – Non-Interactive & Semi-Interactive Webcasts, 2009-2012.

What is the Copyright Board?

The Copyright Board of Canada is an economic regulatory body empowered to establish, either mandatorily or at the request of an interested party, the royalties to be paid for the use of copyrighted works, when the administration of such copyright is entrusted to a collective-administration society. The Board also has the right to supervise agreements between users and licensing bodies and issues licences when the copyright owner cannot be located.

What is Re:Sound?

Re:Sound is the collective that collects royalties on behalf of music companies (producers) and performers for certain rights, such as the communication right, by filing tariffs before the Canadian Copyright Board. The Board either accepts tariffs proposed by Re:Sound or modifies them. Re:Sound then distributes royalties collected under tariffs certified by the Board directly to performers and to music companies, who in turn may distribute them to artists under royalty agreements.

What is a “Non-Interactive Webcast”?

A Non-Interactive Webcast is an online music streaming service that does not allow the user to control the content or timing of the webcast e.g. no skipping or customizing the stream by genre or artist. Examples of non-interactive music streaming services include Slacker and CBC Music.

What is a “Semi-Interactive Webcast”?

A Semi-Interactive Webcast is a service that allows the user some level of control over the content or timing of the webcast such as skipping or pausing the stream or customizing the content by genre or artist. An example of a semi-interactive service is Pandora Internet Radio.

The Copyright Board’s decision follows a lengthy rate-setting process that started in 2008. Re:Sound proposed rates based on marketplace agreements negotiated directly between webcasting services operating in Canada and both Re:Sound and music companies. These proposed rates were also consistent with US rates, reflecting the marketplace acceptance of North American rates. Re:Sound spent years negotiating deals with digital service providers at market rates, which it presented in evidence to the Board. The Board rejected those agreements and set royalty rates for webcasting in Canada that do not reflect market rates and are a small fraction of the rates payable by the same services in the U.S.

The webcasting rates certified by the Board are based on the rates payable to music publishers by commercial radio stations for their over-the-air broadcasts, and as a result, are a small fraction (less than 10%) of the rates the same services pay in the United States. In the U.S., the Copyright Royalty Board is legislatively required to set webcasting rates based on market rates. In Canada, the Copyright Board sets rates that it considers to be fair as opposed to market rates.

The Re:Sound tariff in this case was for webcasting music, including non-interactive webcasting services and semi-interactive services, but not on-demand services such as Rdio (which are licensed directly by music companies).

Tariff 8 does not apply to podcasts, fully interactive services such as downloads or on-demand streaming, or simulcasts by Canadian commercial radio broadcasters, CBC, pay audio or satellite radio services. Other simulcasters, such as international radio stations streaming into Canada, are subject to the applicable webcasting royalties under Tariff 8.

Key Points

The rates set by the Copyright Board are approximately 10% of the rates negotiated by Re:Sound in its direct agreements with digital services, and less than 10% of the comparable U.S. rates.

The Board rejected Re:Sound’s market rate-based benchmarks and held that marketplace-negotiated rates and North American rates are irrelevant in Canada.

The Board instead set the rates based on the music publishers’ Commercial Radio Tariff, ignoring the key differences between webcasting and terrestrial radio, as demonstrated by Re:Sound’s evidence.

 

Resources:

On May 16, 2014, the Copyright Board of Canada issued its decision setting rates for Re:Sound’s Tariff 8 – Non-Interactive & Semi-Interactive Webcasts, 2009-2012. (Government Fact Sheet)

On June 16, 2014, Re:Sound filed an application for Judicial Review of the Board’s decision. (Re:Sound News Release)

In response, a coalition consisting of more than 70 music organizations released a joint statement in support of Re:Sound’s Application for Judicial Review of the Copyright Board’s Tariff 8 decision setting royalty rates for webcasting services in Canada. (Joint Statement)

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Q107 Toronto’s John Derringer on Tariff 8

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John Derringer of Q107 Toronto discussed the Copyright Board of Canada’s Tariff 8 decision on his radio show this morning, riffing on our recent blog comparing the new royalty rates for webcasting services in Canada to items mentioned in the Barenaked Ladies‘ classic song “If I Had $1000000.” The new rates are so low, it would take 9216 plays of a song to earn enough royalties to purchase a box of Kraft Dinner.

To earn $1,000,000 from streaming royalties under Tariff 8, an artist would need to have their song played 9.8 Billion times. Derringer puts that in perspective by noting that the most-streamed song in history, Avicii’s ‘Wake Me Up’, has been streamed 235 Million times worldwide.

The full segment is available on Soundcloud, and is embedded below:

A growing coalition of artists, labels, industry associations, and music fans are speaking out against the Copyright Board decision; to learn more and to add your voice, Like and Share the I Stand For Music Facebook Page, or tweet using the hashtag #IStand4Music.

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