Copyright Board on Collective Administration of Performing Rights and of Communication Rights

UPDATED BELOW

The Copyright Board of Canada has issued its decision and reasons on the commercial radio tariffs of SOCAN, Re:Sound, CSI, AVLA/SOPROQ and ArtistI.  (See Decision of the Copyright Board, July 9, 2010, the Board’s news release, a useful fact sheet from the Board which summarizes various aspects of the decision and provides some useful information about the radio broadcasting industry as a whole, and, finally, the tariff itself).  In short, the decision spells out how much money commercial radio stations will be paying to the various collectives as a license fee for the years 2008-2012 (with some qualifications, since not all of the tariffs cover the entire four year period) for the right to reproduce and communicate to the public the musical works which form the bulk of a commercial radio station’s programming.  

The decision is notable for a number of reasons.  Howard Knopf points out the financial implications of the decision (quoting from the Board’s fact sheet):

How much will the new rates generate in royalty payments, compared to the old rates?

The Board estimates that commercial radio stations will pay a total of $85 million in royalties. This is based on total station revenues of slightly over $1.5 billion in 2009. Using the previously certified rates, radio stations would have paid about $72 million. The new rates thus increase the amount of royalties by $13 million. Of this amount, $10.2 million represent royalties resulting from the introduction of two new rates, for AVLA/SOPROQ and ArtistI.

How much will each collective society receive?

Of the total amount of royalties of $85 million paid by radio stations, the Board estimates that $51 million will go to SOCAN, $13 million to Re:Sound, $11 million to CSI, $10 million to AVLA/SOPROQ and $200,000 to ArtistI.

Of particular worth from the decision itself is that it provides a useful summary of all of the rights which are engaged when a song is played on the radio and the collectives responsible for administering those rights (see paras. 8-13 of the decision):

These proceedings involve six rights or sets of rights. They are reviewed in the order in which the Board was asked to set a tariff.

The first set of rights is the exclusive right of the owner of the copyright in a musical work to communicate it to the public by telecommunication and to authorize such a communication. SOCAN administers these rights in Canada for virtually all copyright owners. SOCAN is subject to sections 67 to 68.2 of the Act (the “SOCAN regime”) and if it does not file a proposed tariff, it cannot, in practice, collect royalties.

The second and third rights are the remuneration rights that performers and makers each enjoy when a published sound recording of a musical work is communicated to the public by telecommunication. These two rights are treated together because they always trigger a single payment; in the case of sound recordings of musical works, that payment is always made to a collective society authorized by the Board to collect it. Re:Sound administers these rights for the vast majority of eligible performers and makers. It too is subject to the SOCAN regime. The remuneration rights are subject to a number of conditions.

The fourth set of rights is the exclusive right of the owner of the copyright in a musical work to reproduce it and to authorize such a reproduction. Together, SODRAC and CMRRA administer most, but not all, of this repertoire in Canada. SODRAC represents the vast majority of rightsholders in Québec and most works written in French by Canadians as well as many of its foreign counterparts. CMRRA represents a large number of Canadian and foreign Englishlanguage music publishers. Both collectives are subject to sections 70.1 to 70.6 of the Act (the “general regime”) and as such, they can negotiate licensing agreements directly with users or ask the Board to certify tariffs. Where both collectives opt to use a tariff, CSI acts for them.

The fifth set of rights is the exclusive right of the owner of the copyright in a sound recording to reproduce it and to authorize such a reproduction. SOPROQ represents mostly Francophone record producers from Québec. AVLA acts for the major record companies and for many independent labels, artists and producers. Together, they represent the vast majority of the repertoire. These collectives are subject to the general regime.

The sixth set of rights is the exclusive right of the owner of the copyright in a performer’s performance to reproduce any reproduction of an authorized fixation of the performance for a purpose other than that for which the authorization was given and to authorize such a reproduction. Three collective societies administer these rights: ArtistI, ACTRA PRS and AFM Canada. Only ArtistI, which acts predominantly but not exclusively for Frenchspeaking performers from Québec, has filed a tariff. ACTRA PRS represents professional cinema, television, radio and recording artists who work in English. Its mandate includes the collection and distribution of fees, royalties, residual fees and all other forms of compensation or remuneration to which members and permit holders of the Alliance of Canadian Cinema Television and Radio Artists (ACTRA) may be entitled. AFM Canada, acting for musicians in the United States, Canada and other countries, collects and distributes government mandated or other compulsory royalties or remuneration that are subject to collective administration. These collectives are subject to the general regime.

There are two is one additional points worth noting in relation to the decision.  First, if Bill C-32 (the Copyright Modernization Act) is passed in its current form, it will eliminate the tariffs for "ephemeral reproductions" payable to CSI, AVLA/SOPROQ and ArtistI (for an explanation of how and why the tariffs will be eliminated, see my post "Bill C-32 – An Anticipatory Requiem for What We’ll Lose" at IPilogue). ; Finally, as noted in the last quoted paragraph, above, with respect to the right to reproduce a performer’s performance, only one collective (out of the three collectives who administer that right) has elected to file a tariff – meaning that there could be yet further monies payable by radio broadcasters for making use of musical works.

UPDATED (July 14, 2010): Thanks to the insight of my colleague Stephen Zolf, I need to correct the record with respect to the language struck out in the last paragraph, above.  Bill C-32, which contains a provision which repeals the "exception to the exception" found in Section 30.9(6), even if passed, will actually not eliminate the tariff for "ephemeral reproductions" (more accurately, "pre-recorded recordings").  That is because, as the Copyright Board found in their reasons of March 28, 2003 respecting the initial CSI tariff, as a practical matter, the activities of commercial radio broadcasters simply do not fall within the ambit of Section 30.9 because they generally do not abide by the requirement to delete their pre-recorded recordings within 30 days – so, the elimination of the "exception to the exception" won’t actually impact in any meaningful sense the obligation to make payments under the tariffs.  Indeed, the factors which prompted the Board to make its findings in 2003 (ie the comprehensive reproduction by radio stations of works and sound recordings onto servers and hard drives in order to facilitate broadcasting activities) are even more pronounced today.

Bob Tarantino

About Bob Tarantino

Bob Tarantino is Counsel at Dentons Canada LLP and focuses his practice on the interface between the entertainment industries and intellectual property law, with an emphasis on film and television production, financing, licensing, distribution, and IP acquisition and protection. His clients range from artists and independent producers to Canadian distributors and foreign studios and financiers at every stage of the creative process, from development to delivery and exploitation.

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