Copyright Board rules SOCAN can collect online music tariffs retroactively

The Copyright Board of Canada has issued a ruling that opens the way for the Society of Composers, Authors, and Music Producers of Canada (SOCAN) to charge royalties for the online use of music on websites belonging to radio and television stations. The decision, reached last week, comes after years of legal tussles and means that all music on audio or audiovisual simulcasts and webcasts, podcasts, and games, will be charged fees. Tariff 22 deals exclusively with many aspects of online music and was introduced by SOCAN in 1995. In the past, Tariff 22 has stoked controversy, causing SOCAN and other players to lock horns. For instance, in 1996, SOCAN appealed to the Supreme Court of Canada to have ISPs pay royalties for music that crossed their networks. Calls to the Canadian Recording Industry Association (CRIA), which has in the past expressed strong opinions about tariffs on digitally downloaded music, were not returned. Last week’s ruling is the second part of the tariff and comes in the wake of a ruling on the first part last year. Part one dealt only with online music sites that allow downloads of music. Last year, the Copyright Board ruled that such sites should pay royalties to SOCAN. “For the users already paying royalties to SOCAN for their conventional activities, today’s decision essentially extends the existing tariffs to their Internet activities,” said Claude Majean, secretary general of the Copyright Board of Canada. Websites of commercial radio stations and stations with low music use must pay SOCAN 1.5% of their Internet-related revenues and 4.2% for others not in this category for the period 1996-2006. For non-commercial radio stations, the retroactive ruling sets the rate at 1.9% of their gross Internet operating costs. In addition, Internet-only radio will pay a rate between 1.5% and 5.3% of their revenues, charged according to the amount of music they use. Game sites will pay 0.8% on a fraction of their revenues. Reacting to the Copyright Board’s decision, Paul Spurgeon, SOCAN’s VP legal services and general counsel, says he’s generally pleased that a decision has finally been reached, but added that he’s not happy with a part of the ruling that absolves restaurants, hotels, bars, amateur podcasts, social networking sites and other business sites from paying royalties for music used on their sites. In the ruling, the Copyright Board said SOCAN did not provide reliable evidence on these users and it would be unfair to charge them a tariff “in the absence of a reliable benchmark.” Spurgeon disagrees, saying that in certain cases reliable evidence existed, though not in all. “In some cases there was evidence and we felt that they should at least have approved a tariff that would allow us to licence, maybe on an anomaly basis, a lot of these miscellaneous uses.” Asked whether SOCAN would challenge this part of the ruling, Spurgeon was non-committal, but added that “we are looking at it now, we are studying it.” Parties not pleased with Copyright Board decisions have 30 days to consider filing for a judicial review. The ruling also allows SOCAN the right to charge tariffs retroactively or not. Spurgeon says users will be charged reasonable royalties. With the Internet landscape changing almost daily due to innovation, it is likely that the definition of users and the use of music online will change. That, says Spurgeon, is fodder for another day. The rates at a glance Commercial Radio1.5% for low music use 4.2% otherwise Non commercial Radio1.9% of gross Internet operating costsCommercial televisions, non-broadcast television, pay audio services, satellite radio services Applicable rate pursuant to main tariffs CBC, TVO, Tele-Quebec 10% of the total amount they already pay to SOCAN Audio websites1.5% if music use is 20% or less, subject to an annual minimum fee of $284.2% if music use is more than 20% and less than 80%, subject to an annual minimum fee of $79 5.3% if music use is 80% or more, subject to an annual minimum fee of $100 Game sites0.8%, subject to an annual minimum fee of $15

Copyright Board rules SOCAN can collect online music tariffs retroactively

Broadcast | October 29, 2008

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