Government Publishes Study on Collectives Operating In Canada

For years, common themes have emerged about copyright collectives. Some wondered if every artist received royalties for airplay or if it was merely the more popular artists that was on the receiving end.

Note: This is an article I wrote that was published elsewhere first. It has been republished here for archival purposes

Now, it seems the Canadian government is looking into the situation. They sponsored and published a study about how collectives function. Some of the findings may not come as a surprise.

The department of Canadian Heritage, the same department responsible for the potential copyright reform legislation that has been long promised, asked C. Craig Parks to conduct a study on the collectives operating within Canada.

Specifically, he was asked to identify advantages, problems and issues with collectives operating in Canada. These collectives include SOCAN (Society of Composers, Authors and Music Publishers of Canada), Access Copyright, and CPCC (Canadian Private Copying Collective) among others.

SOCAN, in most recent memory, has been known for having a roll in the Canadian Tariff 22 debacle where radio stations across Canada are being threatened with retroactive fees on radio stations and internet radio. During an interview with the NCRA (the National Campus and Community Radio Association), Melissa Kaestner commented, “As an online tariff, SOCAN Tariff 22 affects most every station in our sector.” Another recent development was SOCAN sending a cease and desist letter to over the use of a trademarked logo.

The study which touched on SOCAN suggested the following from “the Collective’s and its Rights Holders’ Perspective”:

“-special status of SOCAN under s. 67 (shared with NRCC): obligatory regime creates a bargaining advantage in negotiating with small users who must file objections with the Board.

-robust committee system ensures fair and equitable distributions and responsiveness to member complaints and problems.”

As for the users perspective, the study noted:

“-instant access without concern about infringement

-radio broadcasters: logs (monitoring usage of works) now standardized with NRCC and CSI to avoid duplication of efforts.”

Though while there were benefits to SOCAN, it seems that the study noted more disadvantages than advantages. Disadvantages included:

“[Collectives perspective] – issues arising out of Copyright Board hearings, linked to costs and particularly the interrogatories process, as well as applications for judicial review of Board decisions (at both SOCAN’s and users instance).

[rights holders perspective] – some members question the make-up of the board of directors and the frequency of turnover and even the electoral system itself. For example, should every member, whether an income earner or not, have the right to vote for the directors? (A large percentage of members of record earn no income in any given year).

– some members are also users in certain contexts and find SOCAN’s tariff initiative at odds with their own interests. For example, self-producing members must pay SOCAN’s concert tariff fees and may receive more or less royalties back under the distribution rules.

[…] – divergent interests of publishers and writers, as well as those of large earners and small earners are not always effectively dealt with by the board of directors or its committees.

[…][Users Perspective] – radio broadcasters particularly galled by the imposition of the CSI broadcast mechanical tariff in addition to the SOCAN tariff. Same members are being paid twice for the same activity.

– unfair enforcement of tariffs: licensing some users while ignoring others within the same class.

– inflexible attitude to special cases for tariff reduction. For example, the Retail Music Association of Canada (RMAC) asked for a special reduction in the background music tariff to account for the promotional value of in-store play in selling records (acknowledged by the US performing rights societies) and had to appear before the Copyright Board to plead its case (unsuccessfully).

[…] – the same objectors to the Internet tariff cited the invasiveness of the interrogatories process and the required disclosure of sensitive business information as compounding the chilling effect.”

Access Copyright was also studied. Access Copyright is largely remember for their Captain Copyright debacle earlier this Summer. Under the benefits, the study suggests:

“[Collective and Rights Holders Perspective] – capturing income that would otherwise be lost.

– Access Copyright provides outreach education for the benefit of rights holders and users (e.g.

[Users Perspective] – instant access without concern about infringement.

– “course packs” allow professors to select materials from several sources to create made-to-order textbooks for their specialized courses. This would be difficult if not impossible to achieve through separate negotiations with the various publishers.”

Unfortunately for Access Copyright, like SOCAN, the study pointed to more “issues and problems” than benefits. In this case, the list was nearly three times longer than the positives. Of the many points made, here’s a few:

“[Collective’s perspective] – shift to digital downloading will erode Access Copyright’s base unless digital licensing expands. Some changes in legislation are required.

– threat of successful lobbying by the educational sector for changes in legislation that would broaden exemptions and exceptions that could seriously reduce income and possibly affect the viability of the collective.

[Rights Holders Perspective] – creator group notes that distribution of income is skewed toward publishers.

– the absence of a reliable use monitoring system has led to a policy of redirection of a portion of the royalties to creators. However, the distribution system for those redirected royalties (based on work registrations as opposed to usage) tends to favour the much published and frequently published writers.

[Users Perspective] – technical schools and colleges tend to use works not licensed by Access Copyright because their publishers are not publishers by trade.

– licenses are for print copies only; moving more toward making digital copies which is not covered in the license.

– process of challenging increases in fees before the Copyright Board is prohibitive for most user groups (except the Council of Ministers of Education of Canada who are currently challenging the tariff sought for the K-12 sector).

– tendency to complicate, rather than simplify licenses: Access Copyright is now proposing differential rates for five genres which could open up definition-related disputes.

– notable increase in aggressiveness and decrease in cooperative spirit. One example: dealing directly with institutions rather than with their associations (perceived as bullying).

– the current proposed increase in the tariff for course packs may have a chilling effect on their sales to students; some worry about students circumventing the legal process instead.”

Finally, the CPCC may have successfully stayed out of the public eye, but it didn’t evade the study. Generally speaking, when some refer to the blank media levy, one may be more likely to think about where the money could possibly be going (like CRIA – Canadian Recording Industry Association for instance), or the fact that there is a tax on their media in the first place. Some have pointed out that CRIA has benefited at an ever increasing rate as blank media sales rise over the years. Among the advantages, there were the following

“[Collectives/Rights Holders Perspective] – only one tariff to administer.

– administrative costs since inception have been approximately 10%.

[users perspective] – regime permits home copying without threat of copyright infringement actions.

– no usage monitoring required; distribution of levy amount is handled on a proxy basis.”

The issues and problems contain the following:

“[Collectives Perspective]- the blank audio recording media covered in the Copyright Act (cassette tapes, CD-Rs, CD-RWs and minidisks),have become or are quickly becoming eclipsed by MP3 players (e.g., iPods); unless the Act is updated soon to include these MP3 players, CPCC revenues could decrease dramatically.

[Rights Holders Perspective] – lack of solidarity within “maker” section regarding the private copying regime.

[Users Perspective] – retailers do not directly pay the levy which only applies to manufacturers and importers, but the levy affects the price at which they can sell media.

[…] – some manufacturers and importers complain about being targeted for enforcement while others evade the levy”

The first point regarding blank media may be the most important one. Available statistics offered by the CPCC suggests that revenue between 2000-2004 has increased steadily to over 39 million Canadian dollars only to fall between 2004-2005 by 4 million on a per year basis. The iPod levy has stirred the copyright debate pot given that, as Michael Geist notes, up to 75$ per iPod may be collected if the CPCC gets its way.

All in all, the report commissioned by the government has given a refreshing perspective on the collectives operating in Canada.

Drew Wilson on Twitter: @icecube85 and Google+.

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