CRIA Vs. The Minister of Canadian Heritage Drew Wilson | March 15, 2007 While the Minister of Canadian Heritage hasn’t built a reputation for being quick on the copyright legislation draw, it doesn’t mean the government has nothing to offer on the subject. Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes Apparently, it’s this open insight that has CRIA (Canadian Recording Industry Association) upset in the first place. Research studies and the recording industry have gone back a long way in both their reputation and the numbers they show. While CRIA, RIAA (Recording Industry Association of America) and the MPAA (Motion Picture Association of America) have all been known to release studies in the past, it’s the disclosure aspect of the process that CRIA and its American counterparts diverge. Some critics argue that studies released by the American entertainment industry are often vague. This appears to be the opposite case for CRIA, where in the past, studies have been released in full. The most well known study the CRIA conducted was the Pollara study in 2006. Some media outlets republished the CRIA’s claim that the study offered a crystal clear view that file-sharing was severely hurting the industry. Yet when the study was published in full, it was later revealed that only snippets supported the industry’s claim. Law professor Michael Geist picked up on the study and pointed to several instances that countered CRIA’s claim. This led to a heated argument between Geist and, surprisingly, Pollara. While CRIA’s own study may have proved to go both ways instead of such a ‘crystal clear’ outlook, another study was then released. This study was done by the Minister of Canadian Heritage, the one government official many in the creativity community have been keeping close tabs on for a long time. Last year, the Canadian government commissioned a firm called ‘The Connectus Consulting’ to do research on the issues. Later on, the firm submitted their findings to the government in a report called ‘The Economic Impact of Canadian Copyright Industries – Sectoral Analysis’. The most interesting piece of information that many noted from the study was best portrayed by a bar graph indicating that the industry has experienced major growth between 1999 and 2004 – a direct contradiction to earlier claims by CRIA. Of course, the study was released in full for the public to read. Fast-foreword to today, it seems the Canadian government has released another study, and was released in full for the public to read. “Throughout this report it is important to remember that we are looking at the music business, which according to most accounts is doing very well, as opposed to the CD and record business, which is not.” Stated the report while talking about the music business, “Indie companies are considered to be more vital today than ever before – references throughout this examination will help to explain why. Although accurate Canadian figures are not available, at the present time, there are over 10,000 indie labels operating in the United States – and our reality is at least proportionate.” Before it got into more controversial aspects that divided the industry in the first place, it first described the state of consumers with the following: “How many fans looked at their CD collections and thought – I paid $18, for one or two great songs and a lot of filler? That can happen once, but when you look at the yardage of CDs on the shelf and you feel pretty much the same way about much of your collection, trouble is brewing. In Canada, the industry decided to make matters worse. During this crucial period, a music fan could go into Virgin Megastore on the Champs Elysée, or HMV in Oxford Circus, or Tower Records in New York and lose himself in a CD single section that ran for aisles and aisles, often exceeding 5,000 square feet, offering thousands of single titles. What the industry was doing was trying to respond to some of the criticisms and reply to the fans who were willing to buy the song but not the album. In Canada, the industry decided otherwise – no singles for us.” The report then delves into the recent developments to help consumers connect with their music while still compensating artists who want to be paid; this was namely digital music stores. It seems, according to the government, that fans saw music they wanted, but couldn’t really have access to it because it was physically elsewhere. The report depicts infuriated music fans taking one of two roads to satisfy their wants. This was either finding digital music stores or resorting to file-sharing like the first version of Napster, Kazaa and Morpheus. “[…] new opportunities arose with the growth of web based virtual retailers, spearheaded by Amazon. Here was an opportunity for the busy, harried, multitudes to shop 24/7 at “retailers” who were rarely “out-of-stock”,” the report said. The effect on the “Brick and Mortar” music stores as a result could be an echo to what free and open source applications have been doing to Microsoft’s software – namely offering consumers a substitute product.. The report also describes the so-called “Wal-Mart” effect which was touched on in the controversial Pollara study. If there are a number of things that could be negatively impacting the major music record labels, it seems that the “Wal-Mart” effect could be one of those culprits. “Given the choice of buying the new Top 10 CD at a music retailer for $16.99 or $11.99 from Wal-Mart – well, the obvious happened […] The revenue per item for whatever they continued to sell would be whittled away by price pressure from the Big Boxes but the negative effect would be compounded by price cuts instituted by the multinational distributors […] By all accounts, the magical 35% gross margin that retail lived on for so long is now hovering in the mid 20% range. Given the labour and occupation costs, the picture is far from rosy for continuing to retail music through speciality retailers.” The report then goes in to the heart of an issue that has been making the major record labels crying foul for years, file-sharing. “[‘P2P’ and ‘file-sharing’] strike terror in the minds and hearts of the traditional industry gatekeepers as well as many influential stakeholders. There are those in the music industry, however, who have different takes on these issues and while not always openly endorsing the current situation (some do), they recognize that the genie will not go back in the bottle” The report also quotes Kusek and Leonhard, “Future of Music”: “New research in 2004 from the Pew Internet Project shows that 60% of the musicians/songwriters that they surveyed do not believe that the RIAA’s lawsuits will benefit artists or songwriters….In addition, 83% of the musicians surveyed have provided free samples of their work online and a significant number say free downloading has helped them sell CDs and increase attendance at concerts.” While describing the views of DRM (Digital Rights Management), the study makes a very interesting point that says, “It is instructive to remember that DRM refers to the digital management of rights and NOT the management of digital rights – a fine but important distinction” The study then describes how file-sharing came to be, “In the beginning, P2P file sharing of music became popular and easy because people often knew what they were looking for before they logged on. It was also about exploring new avenues, finding what you want and getting it. File sharing exploded in popularity because it became easy to do and supported self-directed and collaborative musical exploration.” It then quotes the BPI (British Phonographic Industry) with the statistic that over 72 million people using file-sharing networks to obtain music in the United States. 20 billion songs, according to the BPI, were downloaded worldwide with 1 billion of that coming from Canada. An interesting number considering US senators last week used Fox statistics to portray Canada as a piracy haven, though it was directed mainly at camcording. This was in an effort to pressure Canada into changing its copyright laws despite the government already explaining that camcording in theatres is already illegal in Canada. The report also cites Big Champaign figuring that, at a peak time, over 9 million people were online at one given time – but no more than 10 million. This expansive report also covers things like ‘The Net Generation’, Digitizing and ‘The Future of Downloads’, artists and many other things. While some may consider the report moving, the report also infuriated CRIA. CRIA’s president Graham Henderson reportedly described the reports as ‘one-sided’ and fails to depict what is really ailing the industry. He also said that, in Canada, 1.3 billion files were “illegally swapped annually” instead of the 1 billion the BPI had said. Graham Henderson also reiterates that the report was “erroneous” on the point that independent labels have prospered in Canada. To illustrate the point, he points to Maple Music and Paper Bag Records who cooperate with major record label Universal Music. In the same report, CIRPA’s (Canadian Independent Record Production Association) Geoff Kulawick was reportedly positive on the report, saying that while piracy is an industry-wide issue, independent musicians and record labels also face other uncertainties. One point was raised that Canadian independent musicians needs all the help they can get to benefit Canadian consumers. While it seems unlikely that a copyright bill will be tabled in this parliamentary session, it seems that the Canadian Government has aired some figures that doesn’t settle well with CRIA. Drew Wilson on Twitter: @icecube85 and Google+.