The digital market for music has never been so
competitive. Online music services such as Pandora and Slacker
are quickly gaining users and - less quickly - expanding into new
markets worldwide. Part of the reason for the gradual
expansion of such services is the need to clear copyright
jurisdiction by jurisdiction.
In Canada, the Copyright Board of Canada (the "Board")
sets certain essential licences, known as tariffs, for online music
services. Various Canadian copyright collective
societies have filed tariff proposals with the Board to revise
these licences for 2012 and 2013. They seek significant
royalty increases: in some cases, more than doubling the current
rates.
The following is an overview of key proposed changes to the
existing tariffs.
Operators of online music services who intend to file objections
to the following tariff proposals with the Copyright Board should
note the deadlines for each tariff (see "Next Steps" for
each tariff, below). Full versions of the tariffs are
available on the Copyright Board website at http://www.cb-cda.gc.ca/home-accueil-e.html
.
Generally speaking, online music services must clear the
"communication" or "performance" right and the
"reproduction" right. These rights are administered
by different collectives. The following tariffs set out
proposed royalties for various music uses (streams, downloads,
etc.) payable to various rightsholders, however, even taken
together, the proposals do not purport to clear all rights for
every use of music by online music services. It is recommended
that service operators obtain legal advice from a
copyright specialist to discuss all clearances required to
launch a service in Canada.
A. AUTHORS/COMPOSERS/PUBLISHERS
1. The Communication Right: SOCAN Tariff 22.A
(Online Music Services)
(a) Tariff proposal
The following points compare the current tariff proposals
(2012 and 2013) to the currently applicable, certified
tariff (1996-2006).
Definitions and scope of licence - SOCAN proposes to:
- extend the licence to video clips;
- extend the revenue base on which the rates are calculated to include additional forms of revenue;
- clarify/extend "online music service" to include cloud-based services;
- clarify/extend the service to include "recommended streams"; and
- clarify that a "subscriber" includes all users, even those who use the service for free.
Rates - SOCAN proposes to:
- increase the rates for on-demand streams from 6.8% to 15.2% of gross revenue, with a minimum fee of 96.2¢ per subscriber;
- increase the rates for limited downloads: from 5.7% to 12.6% of gross revenue, with a minimum fee of $1.22 per subscriber if "portable limited downloads" are allowed; 79.8¢ if not;
- increase the rates for permanent downloads: from 3.1% to 6.8% of gross revenue, with a minimum fee of 3.4¢ per permanent download in a "bundle", and 4.6¢ per permanent download in all other cases; and
- set a rate of 4.6¢ per streamed file for free streams.
Administrative terms - SOCAN proposes to:
- significantly expand the information to be reported by the service; and
- shorten the delay for payments and reporting.
(b) Next steps
Objections to the 2013 tariff proposal may be filed with the
Copyright Board by August 1, 2012
The tariff was last certified for the years
1996-2006. The Copyright Board's decision on the 2007-2010
tariff proposals is under advisement. These proposals
were heard together with the CSI Online Music Services proposal for
2008-2010.
2. The Reproduction Right: CMRRA-SODRAC Inc.
("CSI") Online Music Services
(a) Tariff proposal
The following points compare the current tariff
proposals (2012 and 2013) to the currently applicable,
certified tariff (2005-2007).
Definitions and scope of licence - CSI proposes to:
- extend the application of the tariff to webcasting.
Rates - CSI proposes to:
- set a new rate for webcasting of up to 4.5% of gross revenues, with a minimum fee of up to 0.065¢ per play.
- increase the rates for on-demand streams from 4.1% to 6.8% or greater of gross revenue, subject to minimum fees;
- increase the rates for limited downloads: from 5.3% to 9.9% or greater of gross revenue, subject to minimum fees; and
- increase the rates for permanent downloads: from 7.9% to 9.9% or greater of gross revenue, subject to minimum fees.
Administrative terms - CSI proposes to:
- expand and restructure the information to be reported by the service.
(b) Next steps
Objections to the 2013 tariff proposal may be filed with the
Copyright Board by July 11, 2012.
The tariff was last certified for the years 2005-2007. The
Copyright Board's decision on the 2008-2010 tariff
proposal is under advisement. These proposals were heard together
with the SOCAN Tariff 22.A proposals for
2007-2010.
3. Reproduction Right: SODRAC Tariff 6 (Online Music
Services - Music Videos)
While a large part of SODRAC's repertoire is French-language,
it also includes a large number of popular English-language (and
other foreign-language) musical works.
(a) Tariff proposal
This new tariff would apply to permanent downloads of music
videos, at a rate of 9.9% of the consumer payment,
subject to minimum flat rates per work.
(b) Next steps
Objections to the 2013 tariff proposal may be filed with the
Copyright Board by June 27, 2012.
This tariff proposal was first filed for 2010, and has not yet
been heard by the Copyright Board.
B. RECORD LABELS/PERFORMERS
Performance of Sound Recordings: Re:Sound (Simulcasting and
Webcasting)
(a) Tariff proposal
For 2012, Re:Sound sought rates of up
to 45% of gross revenues for semi-interactive
webcasting, subject to a minimum annual fee of
$720.
For 2013, Re:Sound seeks 30% of gross revenues for simulcasting or
webcasting, subject to a minimum annual fee of $30,000.
(b) Next steps
The Copyright Board hearing for the 2009-2012 proposals
will begin in Ottawa on September 24, 2012.
Objections to the 2013 tariff proposal may be filed with the
Copyright Board by August 8, 2012.
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