US Performance Rights Act and Canadian Neighbouring Rights

Ben Sheffner notes that the Obama Administration, via the Department of Commerce, has expressed its support of the Performance Rights Act (Open Congress has a page dedicated to the House of Representatives version of the bill, HR 848).  According to Sheffner, the bill “has been approved by the House and Senate Judiciary Committees and is awaiting floor action in both bodies”.  (Ars Technica has a good roundup of competing views.)

As the Department of Commerce’s letter indicates, passing the Act would address “a long-standing omission in US copyright law that may have harmed American performers and record companies”.  As the law currently stands, when a song is played on an “over the air” radio station, the owners of the publishing in the composition (normally the songwriter(s) and their publishing companies) receive a royalty (the “public performance” royalty) – however, the performer(s) of the song (ie the artist or band) and the owners of the sound recording itself (normally the record company) receives nothing.  (Oddly, under US law, if the song is transmitted by digital means (eg webcasters and satellite stations), a royalty is payable to the performers and sound recording owners.)  Thus, if a band records a cover version of a previously-released song which becomes a hit, the composers of the original song get a royalty, but the band and its record company (whose track is being played) receive nothing for radio broadcasts of the track.

In Canada, the “neighbouring rights” provisions of the Copyright Act, which were enacted in 1997, created a right on the part of performer’s and sound recording “makers” to receive “equitable remuneration” for the use of their performances and recordings – meaning the right to collect the type of royalties now being contemplated by the Performance Rights Act (see Sections 15, 18, 19 and 20 of the Canadian Copyright Act).  Re:Sound (previously the Neighbouring Rights Collective of Canada), collects and administers the royalties owing to Canadian performers and owners on account of the playing of their tracks.

How much are these royalties worth?  It’s difficult to obtain definitive numbers, but according to the Copyright Board the commercial radio tariff (ie the royalty paid by commercial radio stations on account of their exploitation of neighbouring rights) resulted in $15.9 million worth of royalties being paid to Re:Sound (then the NRCC)  in 2005 (see para. 95 of this February 22, 2008 decision by the Board).  If one were to apply the 10:1 rule of thumb when translating US and Canadian numbers, you’re looking at upwards of $150 million per year in royalties.

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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