Apple announces arrival in Canada of iTunes despite lack of licence agreements

Apple Corp. has announced that it intends to launch its Apple iTunes online music store in Canada in November. The announcement, made October 26 in San Jose as part of the launch of iTunes in several countries in Europe, is surprising since negotiations with the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) have not been concluded, and there is no indication that the Canadian music labels have signed agreements with Apple, either, for rights to their repertoires. CMRRA head David Basskin said prior to the official announcement, in response to a question about the rumoured news, that he would be "highly surprised" if an official release were forthcoming, but has since declined comment about the launch citing the need to familiarize himself with the details of Apple’s plans. He did tell Canadian NEW MEDIA when contacted after the news became official that he looks forward to working with Apple to strike a deal before the company’s deadline for launch, and has told other media outlets that he anticipates it will be possible to sign a deal with Apple in time for its proposed deadline Richard Pfohl, general counsel for the Canadian Recording Industry Association (CRIA), directed questions about whether or not Apple has secured rights from Canadian labels to use their master recordings to the labels themselves, saying the necessary agreements are a matter of private negotiation. Brian Chater, president of the Canadian Independent Record Production Association tells Canadian NEW MEDIA that he is unaware of any deals struck between Apple and his members for the use of their master recordings. Apple could be opening itself up to copyright infringement suits if it begins service in Canada without those agreements in place. However, there is a model agreement in place, currently being used by Puretracks.com, Archambault Music and Napster, that provides the necessary legal framework to offer downloads in Canada, though the agreement does not specify a royalty rate. That rate is now the subject of a heated dispute before the Copyright Board of Canada. Last summer, the CMRRA filed a tariff proposal that would levy a charge of $0.10 on each permanent digital download, or 15% of gross revenues, whichever is higher. The amount is significantly higher than the traditional 8% of wholesale rate that is usually paid for the mechanical reproduction rate (CNM, July 13/04). The proposal caught many in the industry off-guard, and has since been opposed by a broad spectrum of digital music stakeholders, including Apple Canada Inc. While it’s possible that Apple will be successful in negotiating rights to sell music tracks in Canada and avoid illegally launching in November, it will still be at the mercy of the Copyright Board in terms of the final rate. The company is already embroiled in a dispute over copyright levies following last year’s private copying decision that slapped a $25 fee on music storage devices with more than 10 Gb of memory. Apple and other manufacturers and retailers were in front of the Federal Court of Appeal earlier this month to challenge that ruling, with uncertain results. Despite specific differences, however, it’s unlikely anyone in this country is anxious to see Apple blocked from entering the market. The number of digital downloads, even adjusting for differences in the size of market and iTunes’ head start, are still dwarfed by U.S. figures. The addressable market in Canada will be increased by at least 10% as Macintosh users are able to take advantage of the service, and the deep pockets of Apple’s marketing department will likely create greater awareness of the offering across all the providers. Puretracks, which has consistently touted its made-in-Canada advantage, will also likely be a winner should the Apple store open in this country. It’s unlikely that the deep relationships forged between Puretracks and Canadian ISPs and record labels will be easily replicated by Apple, giving Canadians a clear choice of providers for a broad range of Canadian artists sold by Canadian companies. Apple officials declined to comment on the announcement further than what was contained in its press release.

Apple announces arrival in Canada of iTunes despite lack of licence agreements

News | 10/29/2004 4:00 am EDT

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