Broad range of players object to CMRRA/SODRAC tariff proposal

A who’s who of the online music industry has lined up against steep new tariffs proposed by copyright owners on digital reproductions (CNM, May 14/04). A broad range of players including online retailers, ISPs, record labels and broadcasters, both in Canada and in the U.S., filed objections with the Copyright Board of Canada in late June to a tariff proposal by the Canadian Musical Reproduction Rights Agency (CMRRA) and the Société du droit des auteurs, compositeurs et éditeurs au Canada Inc. (SODRAC) that would slap a hefty $0.10 per track fee or 15% of gross revenue for permanent music downloads to be paid to songwriters and publishers for the reproduction right online. Canadian NEW MEDIA has confirmed that objections were filed by: CBC/SRC, represented by Valérie Demers; CBC/SRC, Sirius Satellite Radio Inc., and Standard Radio Inc., all acting on behalf of a corporation to be constituted, represented by Isabelle Reinhardt; Canadian Cable Television Association (CCTA), represented by Jay Kerr-Wilson; Yahoo! Canada Co. and Yahoo! Inc., represented by Asha Gosein; Bell Canada, represented by Suzanne Morin; Canadian Recording Industry Association Inc., and each of its members individually, Moontaxi Media Inc., Napster LLC, MusicNet Inc., Music Match Inc., and Apple Canada Inc., represented by Randall J. Hofley; Moontaxi Media Inc. (owner and operator of Puretracks) represented by Richard Dermer; RealNetworks Inc., represented by Zahavah Levine; Canadian Association of Broadcasters, represented by Erica Redler; TELUS Communications Inc., represented by Jay Thomson; Groupe Archambault inc., represented by Jean-Philippe Mikus; CHUM Ltd., represented by Peter Miller; and, The board has also received a request to intervene from the Association du disque, de l’industrie du spectacle québécois et de la vidéo (l’ADISQ), represented by Stéphane Gilker. The presence of the music labels on the list comes as little surprise. The labels were taken aback last May at the proposed rates, and quick to say publicly that the tariff came as a surprise and was well higher than what had been previously contemplated in negotiations between themselves and CMRRA. In fact, says CRIA in its filing, a contract between itself and CMRRA supercedes the proposed tariff in accordance with Copyright Act rules. Furthermore, writes CRIA, the proposed tariffs are grossly unfair: "… is the Coalition’s position that the royalties sought in Section 3 of the Proposed Tariff are excessive, unwarranted and unreasonable: they bear no relation to the value of any copyright works that may, in fact, be proven to be in issue with respect to the online distribution of sound recordings of musical recordings of musical works nor do they adequately consider the differing nature of the types of services offered by online music services and the potential copyright liability associated therewith. The Coalition further contends that the proposed royalties are neither fair nor equitable, inter alia, in terms of the proposed rate and minimum fee components thereof," writes CRIA and its allies. Objections by the broadcasters were also predictable as many radio and television stations eye Internet music sales as an alternative revenue source. ISPs, including cable operators and the incumbent telcos also operate large portal sites, and at least Bell Canada and TELUS Communications have already begun to sell music through those sites in partnership with Moontaxi. The CCTA and TELUS, which have worked closely in past on copyright issues, both object to the proposed tariff as being too high. TELUS states: "In TELUS’ view, the proposed fees do not appear to provide for fair and supportable approximations of the value of streamed and downloaded works, nor do the rates adequately take into consideration the impact on retail pricing of online music of Canadian and international market forces (particularly downward pricing pressures)." Both CCTA and TELUS also object to provisions in the tariff that would restrict use of downloaded products. Again, TELUS writes: "In TELUS’ view, this obligation is overly broad, imposes liability on licensees for matters beyond their control, and is possibly beyond the ability of CMRRA/SODRAC to direct. The obligation on licensees to use technical means is potentially limitless. Further, licensees, or their authorized distributors, would be unable to assess or influence use of the work by the user to ensure the use was ‘private,’ and in any event, the imposition of such means may intrude on the legitimate expectations users have of their entitlements under the Copyright Act’s private copy sections." CCTA builds on the theme. It objects to "the structure of the proposed tariff and, in particular, the fact that proposes to issue a licence for online music services to authorized users to reproduce musical works for their own personal use when no such licence is required because, pursuant to Section 80 of the Copyright Act, copying musical works for personal use is not an infringement of copyright." Apple, Napster and MusicNet would not comment last spring, but their objections also come as no surprise since a 15% of revenues charge has the potential, according to experts, to cripple the young industry. More interesting is Moontaxi. Puretracks’s Ron Dermer, manager of the company’s Quebec operations and indie label relations, tells CNM the company has three areas of concern with the proposed tariff. First, he says the tariff would hike the reproduction royalty from its traditional eight cents to 15 cents, which would force the company to raise its retail prices. "We would be fine with it provided that the record companies were prepared to drop their price. But, of course, if you talk to a record company, they don’t want to drop their price. So, in a way we’re caught in the middle of this. We’re caught in the middle of the firing match between two opposing parties. And, so there is that neutrality, but like I said, in a perfect world, if that tariff didn’t affect what we consider our aggregate wholesale price, we wouldn’t be concerned. But, we’re concerned because if it does affect our aggregate. In other words, if the record companies hold firm on their price, and then there’s this much higher tariff, ultimately what that would mean is as a retailer we would have to charge a higher price to the consumer…I’m not meaning to say that the publishers don’t deserve, or the songwriters don’t deserve, that money. I want to be very clear about this because there’s a certain linkage you can make in what I just said that’s saying, ‘ah, what Puretracks is saying is that we’re going to have to raise the price because the publishers and the songwriters want more money.’ I’m not saying they’re necessarily the villain in all this." Secondly, Dermer tells CNM the company is concerned about provisions in the proposed tariff that would see Puretracks and others pay the royalty directly to publishers and songwriters. He says the measure would upend the traditional one-stop rights payment model. "It’s kind of like buying the car, then having to buy the engine somewhere else…It puts a huge administrative burden on us if there’s no easy way to do that…If the publishers can provide us with an easy system to do that, it may not be so bad." Finally, he says the company is opposed to the proposed rates for streaming songs. He says a proposal to charge $0.75 per subscriber, before record companies take their share, would be disastrous for the industry. He notes that record labels which hold the master recording traditionally take 10 times more in fees than the publishers. "If we started giving out $0.75 to the publishers, that’s not even the record companies, we’d have to shut down the service today," Dermer says. "We’d have to charge about $25 per subscriber. That whole business would end." The company, he says, currently charges paid users of TELUS’ Pureradio service $5 per month.

Broad range of players object to CMRRA/SODRAC tariff proposal

Broadcast | July 13, 2004

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us