Unnecessary at Best, Harmful at Worst: Melanie Joly Seeks Global Consensus on Culture Contributions from Digital Services
Canadian Heritage Minister Melanie Joly heads to UNESCO this week where, according to the Globe and Mail, she will be focused on making the case for a common approach on mandatory cultural contributions from companies such as Netflix. Joly states:
I’ve always said we are ready to have conversations with those companies and those platforms. We are already engaged with them, and will continue to do so. But on a general level, it is obvious that the more we are able to have a concerted approach among countries on this issue, the better we will be able to make sure it is a priority.
Joly’s goal would appear to be to develop a universal position at UNESCO that countries could then leverage to force companies such as Netflix to comply with local content regulations. I’m quoted in the article to the effect that efforts to harmonize sales taxes on digital services makes sense at a global level, but targeting companies like Netflix with new regulations or tinkering with the Internet in violation of fundamental net neutrality principles does not.
I think Joly’s seeming interest in creating a global cultural regulatory framework for digital services is unnecessary at best and harmful at worst. First, the emergence of global digital giants has largely been fuelled by the absence of content regulation. Platforms such as Netflix and Google have grown by providing consumers more choice and flexibility than the regulated system. By responding to market demands, the companies have developed enormously popular, well-priced services that offer great potential for creators to find new markets and call into question the relevance of many legacy regulations.
Second, even if there is a role for domestic regulation, UNESCO, a United Nations agency, is surely not the right venue to address these issues (the U.S. is not even a signatory to the 2005 convention referenced by Joly). There may be value in discussing cross-border issues such as harmonized sales taxes or ensuring that countries do not block access to online video services at a global level (which already takes places in venues such as the OECD), but a U.N. policy on domestic cultural regulation is a poor fit for the issues raised by online video services.
Third, the Netflix response to the government’s consultation on Canadian content provides a compelling argument against the need for domestic regulation in order to attract investment. Despite the absence of regulatory requirements, Netflix has emerged as one of the leading backers of Canadian content, reporting that it commissioned hundreds of millions of dollars in original programming in Canada in 2016 (a Netflix tax comparable to that paid by cable and satellite companies would generate a fraction of that amount). In fact, Netflix says that Canada now ranks as one of its top three locations worldwide for original productions. Given that the company spends billions each year on content, the activity in Canada is likely larger than all but a handful of regulated sources. The Netflix submission provides a full sense of the scope of its support for Canadian content. It includes:
Original Cancon co-productions with Canadian producers and broadcasters in 2016 (Netflix obtains rights outside Canada )
Original CanCon that may not qualify as such due to Netflix financing and global distribution
Netflix originals produced in Canada for global distribution making use of Canadian creative and other resources
Netflix original kids titles produced in Canada for global distribution making use of Canadian creative and other resources
Rather than looking for new forms of global Internet regulation, perhaps Joly should be asking why there are still Canadian groups calling for regulation of an entrant that would appear to be one of the leading investors in Canadian content and working on ways to ensure that Canadian content can be exported worldwide.
We are told he is the best Prime Minister Canada never had. Sir John Sparrow David Thompson served only two years in that capacity; an untimely death on 12 December 1894 cut short his stewardship. But his contributions to Canada spanned much longer than those two years would suggest.
Under Sir John A. Macdonald, Thompson held the position of Justice Minister (sworn in on 26 September 1885), a responsibility he maintained to his death. While deeply respected by his Conservative colleagues, Thompson’s sterling character did not always meet with approval from all; one party stalwart moaned: “He won’t even consider whether a thing is good for the party until he is quite sure it is good for the country.”
As Justice Minister, Thompson undertook the monumental task of giving Canada its own Criminal Code. Working closely with a bi-partisan committee, the result was a statute that reflected Thompson’s skills as jurist, and dedication as a Canadian. His first biographer, J. Castell Hopkins, would argue that the Code was far more deserving to be named for its maker than the Code Napoleon. Thompson also served as an arbiter in the Bering Straits dispute between Canada and the United States, and he staunchly supported the position that Canada should set its own copyright course—that indeed Canada had the right to do so as a self-governing Dominion.
Thompson’s commitment to the rule of law, fairness and justice were unparalleled, earning him praise from both sides of the aisle. He was, in a word, a statesman. Throughout though, he was confronted by the internecine Catholic/Protestant mistrust, a challenge that has largely faded from Canadian memory but was as potent in its time as the misplaced-hostility over multiculturalism is today. Thompson, a Methodist turned Catholic, initially turned down Governor General Lord Stanley’s request to assume the helm following Prime Minister Macdonald’s death—Thompson felt that his Catholicism would provoke trouble for the government. But when MacDonald’s successor John Abbot resigned on account of poor health, Thompson agreed to lead the Conservative Party and thus too the Government of Canada.
My interest in Thompson was sparked during my doctoral exploration of Canadian copyright history. In 1889, under Thompson’s guidance, the Canadian Copyright Act was amended as necessary to address the complexities of Canada’s geographic and political position, caught as the country was between American capitalism and British imperialism. Passed with unanimity by Canadian parliamentarians, the Act encouraged the development of a national publishing industry by ensuring the legitimate reprinting of works of foreign authors, through a compulsory royalty. This measure applied only if the copyright holder did not seek publication in Canada within one month of publication elsewhere. Canadian readers and all authors would have benefited.
But the passage of the 1889 Act required disengagement from Imperial copyright law, as also from the blanket pronouncements of the recently-formed Berne Convention. Thompson argued, not for Canadian autonomy, but for recognition of the autonomy as it already existed in the British North America Act of 1867 and had further developed in the decades following Confederation. Unfortunately, although Thompson held the better argument, the political clout of British and American publishing industries ensured that such recognition was withheld.
British intransigence towards Canada stemmed in part from the desire to bring about an Anglo-American copyright treaty; Canada was a valuable bargaining chip. Even before a treaty of sorts eventually transpired, the Canadian market was offered up by savvy copyright holders who sought private arrangements with American publishing houses. If assured that no similar arrangement would be made with a Canadian printer, American publishers were willing to provide some compensation to the owner. As P. B. Waite describes, the tone was not always benign: “You will get no compensation whatever from us, if you permit any Canadian house to publish your work.”
These practices were so widespread as to merit inclusion in a Royal Commission on Copyright. Aware of the gentleman’s agreement among American publishers (some might say honour among thieves), whereby the right to continued publication was reserved to the house that gained first publication, the Commissioners observed:
[S]ecured from competition … it is worth while for [American publishers] to rival each other abroad in their offers for early sheets of important works. We are assured that there are cases in which authors reap substantial results … and instances are even known in which an English author’s returns from the United States exceed the profits of his British sale …. (para. 242)..
Notably, that same Commission report supported the measures that Canada would later attempt to enact in 1889 (paras.206-207).
When the long-desired Anglo-American Treaty came into being, it provided much less benefit than what Canada had offered. The United States would not abandon its manufacturing clause—ensuring the betterment of American industry and loss to the British counterpart—meaning that foreign authors could only obtain copyright for works set and printed within the United States. Faced with that expensive proposition, English authors and publishers were left with little to show for the years of waiting. Following the passage of the American Copyright Bill, C.J. Longman (of the House of Longman) did not mince words:
The Act … offers protection—on conditions—to any British author. There are already signs that the value of this protection may be over-estimated in this country. It is desirable therefore to point out that to those writers whose published works are before the world, … but have failed to attract the attention of pirates, the Act gives no advantage. If there had been any prospect of republishing those books profitably, the enterprising American publisher would certainly have availed himself of his chance when he could have had them for nothing. ….
Despite the inadequacies of the American arrangements, the British Crown continued to refuse Canada’s requests for independent action regarding copyright. Even though Sir Charles Trevelyan had emphasized for years that partnering with Canadian publishers would allow England to gain the upper-hand in the reprints market of North America as a whole. That logic, not to mention the greater benefit for English authors, fell on deaf ears. English authors and copyright holders could neither envisage altering the model of monopoly copyright, nor tolerate diversity within colonial implementation of the law.
Thompson continued to press his case with clarity, evidence, and appeals to the rule of law. Invited to serve as a member of the Queen’s Privy Council, he traveled to London in December 1894 to be sworn in. In the days prior to the ceremony, Thompson discussed the copyright issue with members of the Colonial Office, and achieved some recognition of the legitimacy of Canada’s position: “… the claim of the Canadian legislature is a good one, and the burden of proof that it is contrary to public policy rests on those who contest it.” But whatever ground Thompson had gained, was never to be capitalized on. Within hours of the swearing-in ceremony Thompson collapsed at Windsor Castle and died. He was forty-nine.
Without Thompson’s leadership, Canada could not achieve meaningful independence on matters relating to copyright.
 Quoted by Gordon Donaldson in The Prime Ministers of Canada (Doubleday Canada Limited, 1994) p.53
 I cover this period of history in detail in “The Copyright Act of 1889–A Canadian Declaration of Independence,” Canadian Historical Review, Vol. 90, Issue 1, p.1-28.
 Quoted by Peter B. Waite in “Sir John Thompson and Copyright, 1189-1894: Struggling to break free of Imperial Law,” Bulletin of Canadian Studies. Vol.6 No.2, p.36-49.
In the decade of lobbying leading up to the reform of Canadian copyright law in 2012, copyright lobby groups had one core message: Canada needed to implement and ratify the World Intellectual Property Organization’s Internet treaties. While many education, consumer, and business groups expressed concern that the digital lock rules in the treaties would harm innovation, the industry was insistent that the treaties represented an essential component of digital copyright reform.
My op-ed for the Hill Times notes that the lobbying campaign was successful as Canada proceeded to implement and ratify the treaties. The legislation is still relatively new, but in a stunning reversal, one of the leading lobby groups now says that the drafters of the WIPO Internet Treaties were just guessing and suggests that they guessed wrong.
The intensity of the lobbying for the WIPO Internet treaties is difficult to overstate. For years, the industry emphasized the importance of the treaties as the baseline starting point for reform. But in a speech to the Economic Club of Canada last month, Music Canada President Graham Henderson acknowledged that “the people setting the rules for our world were well-intentioned and clever; but the reality is that they were guessing.”
Henderson proceeded to make the case that the drafters guessed wrong, arguing that “everything would come down to the question of balance” and that “very quickly, fissures began to appear” with benefits to intermediaries and losses to creators. This led Henderson to claim that there is a “value gap”, which he defines as “the gross mismatch between the volume of music being enjoyed by consumers and the revenues being returned to the music community.”
The criticism of the WIPO Internet treaties raises several issues.
It is striking to see Henderson now talk about the need for balance in the treaties since that is exactly what educators, librarians, consumer groups, and many innovative businesses argued in 2010 when the reform bill was introduced. Simply put, there was no balance in the bill’s digital lock provisions, which remain among the most restrictive in the world and badly undermine the traditional copyright balance in the digital world.
While Canadians can freely exercise their fair dealing rights in the analog world, the 2012 reforms went far beyond the WIPO treaty requirements by creating unnecessary restrictions on fair dealing in the digital environment. This creates a “fair dealing gap”, where there is a gross mismatch between user rights in the analog world and the digital world. The fair dealing gap should be addressed in 2017 by establishing a long overdue fair dealing exception for the digital lock rules.
Second, claims that the treaties led to an unfair balance favouring technology companies simply does not apply in Canada (if anywhere). Canada did not implement the U.S. DMCA notice-and-takedown system nor grant safe harbours from liability in 1998. The 2012 Canadian reforms include some safe harbours, but not before the industry received the right to forward an unlimited number of notices to Internet users at no cost through the notice-and-notice rules, a new enabler provision to make it easier to target piracy websites, and the restrictive digital lock rules.
Further, the government also gave the music industry a copyright term extension for sound recordings in 2015 with little public debate or consultation. In other words, claims that “policy-making regarding copyright law continues to be driven by the popular mythology that digital technologies and platforms produce lucrative new opportunities for the creative economy”, as stated by Henderson, is not reflective of the Canadian experience.
Third, unlike the fair dealing gap which is the result of legislative reform, the so-called “value gap” has nothing to do with legislative change. Industry frustration with payments for streaming services are not a function of the law, but rather based on revenue sharing from advertising.
Some may wish to paint the Canadian and U.S. digital copyright experiences as the same, but the reality is that they are very different. Canada did not enact the U.S. rules in 1998. Rather, it ultimately gave the industry what it asked for, implementing and ratifying the WIPO Internet treaties in an overly restrictive manner that created a fair dealing gap that persists to this day.
If Canada is to re-examine the decision to ratify those treaties on the basis that it was all just a wrong guess, the starting point would be to fix the imbalance on fair dealing in the analog and digital worlds that has undermined Canadian innovation and the commitment to balance found in copyright law.
The post Canadian Copyright Reform Requires Fix to the Fair Dealing Gap appeared first on Michael Geist.
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