Newly Certified SOCAN Tariff 22.A Expands to Cover “Video-Clips”

On October 5, 2012, the Copyright Board of Canada certified SOCAN Tariff 22.A (2007-2010) and CSI Online Musical Services Tariff (2008-2010).  The tariffs themselves (SOCAN, CSI), the Board’s reasons and a fact sheet are all available at the Board’s website.  While in some respects this was a relatively unremarkable event (both SOCAN and CSI had similar prior certified tariffs), there are a few significant aspects of the new tariffs – this post will focus on the expansion of the SOCAN tariff to apply to “video-clips” and various uncertainties which result from that expansion.  (This post will not make further mention of the fact that these tariffs have been certified more than five years after they were first proposed, and nearly two full years after the last date of the period to which they apply because, well, life’s too short to keep pushing that particular boulder up that particular hill.)

The tariffs apply to three different online activities (or, as the Board describes them, “products”): the offering of permanent downloads, limited downloads and on-demand streams.  As a result of the Supreme Court of Canada’s decision in ESA/C v SOCAN (2012 SCC 34), discussed previously here, SOCAN is no longer entitled to a licensee fee in respect of downloads, so the new SOCAN tariff is restricted to streaming.  The previously certified tariffs contemplated the downloading and streaming of audio files – but the new SOCAN tariff has been expanded, starting with the 2010 tariff, to include both audio and “video-clip” files (the reason that the newly certified CSI tariff does not apply to video-clips is because CSI evidently did not request such an expansion (we can assume they will forthwith make such a request with respect to tariffs which await certification)).  Therein lies the interesting aspect of the new SOCAN tariff: what exactly does it apply to?  In other words, when the new SOCAN tariff uses the term “music video”, what does that cover and what kind of online services will be required to pay a license fee to SOCAN as a result?

Walking through the SOCAN tariff: Section 3(1) of the tariff states that it “sets the royalties to be paid for the communication to the public by telecommunication of works in SOCAN’s repertoire in connection with the operation of an online music service in the years 2007 to 2010″.  An “online music service” is one which “delivers streams to end users”.  A “stream” is “a file that is intended to be copied onto a local storage medium or device only to the extent required to allow listening to the file at substantially the same time as when the file is transmitted”.  A “file” is “a digital file of a sound recording of a musical work and includes a music video“.  A “music video” is “an audiovisual representation of a musical work”.  (The tariff uses the term “music video”, whereas the reasons use the term “video-clip” – it is unclear why the difference in terminology exists.)

Here’s where things get interesting.  The basic question raised by this post is this: does the new SOCAN tariff apply to a service like YouTube or any other service which delivers to its users “content” which consists primarily of audio-visual content making primary use of musical compositions (as distinguished from something like Netflix, which delivers audio-visual content like movies and TV shows which might contain musical compositions, but as a subordinate aspect of the content being delivered)?  Because if that’s the case, then this new tariff represents a significant expansion in the scope of SOCAN’s tariffs (recognizing that there is also a significant shrinking of its scope as a result of the exclusion of downloads from the tariff’s application) and a number of online services which previously were not subject to SOCAN tariffs will need to assess whether they now are subject to them.

While it is unclear the extent to which the tariff applies to a YouTube-like service, it is also unclear whether or not it is intended to.  In the factsheet for the tariff, the services iTunes, Zik, Slacker and Songza are specifically mentioned – and are described as “just a few of” the relevant services to which the tariff applies.  While there is some overlap between the activities undertaken by those identified services and what something like YouTube does, there isn’t perfect overlap – the identified services seem still oriented primarily towards delivery of audio content, with audio-visual content like “music videos” comprising a subsidiary activity.  But because of the way that “music video” is defined in the tariff (“an audiovisual representation of a musical work”), it appears that it would certainly cover at least some of the content available on YouTube – but how much of it?  For example, the “official” “music video” version of a song – by which I mean the official promotional film created or authorized by the performing artist or their record company – would certainly qualify as a “music video” under the SOCAN tariff and thus would require the obtaining of a SOCAN license.  Therefore Vevo-branded content on YouTube would seem of the type which would require a SOCAN license.  But what about “user-generated content” such as a fan-made video consisting of the audio track of a song coupled with, say, the fan’s own recorded footage or photographs?  Does that constitute a “music video”?  What about a service which provides access to audio-visual recordings of live concert performances of musical compositions?  Would each of those streams qualify as the delivery of a “music video”?

Of course, since we’re in the realm of Canadian online tariffs, other questions remain to be answered.  In applying to “music videos”, how might this tariff interface with, say, proposed SOCAN tariffs 22.D, 22.G and 22.I?  In the event of overlap, which would govern? When can we expect the current SOCAN tariffs (i.e., for 2012 and subsequent years) to be certified? When might the equivalent CSI tariff covering music videos be certified?  Will any of these tariffs be subject to judicial review?  As increasingly is the case, the certification of a tariff represents the opening of as many, or more, questions as may have been answered by the tariff.

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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