Thoughts about C-32 committee meeting 15

Today was a music industry day, with the morning session being representatives of the recording industry ("makers of sound recording"), and the afternoon session being music composers and their publishers.

The story in the morning was very familiar: The sky is falling -- look at how bad it is (spin the wheel of alleged misfortune) -- and something must be done. Bill C-32 is "something", so clearly it will stop the sky from falling. It must be passed, and we should stop talking about it.

Graham Henderson provided most of the substance when it came to actual policy proposals, as opposed to the generic performance much of the rest of the panel offered. At a superficial level I agree with him: there are some bad actors that are making it hard to make a living in creative industries, and changes to the law should target those bad actors. When it comes to specifics about who the bad actors are, and what policies would be helpful or harmful we tend to diverge greatly.

It was quite clear when the afternoon session started that what composers are asking for is very different than what the record labels are asking for. While Mr. Angus asked a pointed question asking for some contrast, the witnesses mostly didn't take that bait.

The reality is that the components of the music industry are in competition with each other, with many believing that a re-factoring of the industry is far more critical than anything that can ever be done in a copyright bill. In the recent past the recording industry has been able to extract the lions share of the revenue from music, and with changes in technology their contributions to music are much less. It should be clear that composers and performers should now be making the lions share, closer to what happens in compulsory licensing scenarios.

With the private copying regime half the money is distributed to composers, with the other half divided between performers and labels. This is far more reasonable than the scenario for CDs where the labels extract the bulk of the money, with composers and performers receiving pennies on the dollar.

Since a vote took some 25 minutes out of the beginning of the meeting, and the opposition parties voted against shifting the time such that the committee would spend the same 2 hours it normally does, there was only one round of questions.

In the afternoon, before handing things over to Maxime Bernier to ask questions, Dean Del Mastro made his own observation about the differences between the morning and afternoon session. He said there were two types of groups that were coming before committee: Those that wanted to restore a market for creative works, and those who have given up on a market and want levies as a replacement.

I wish things were that simple. I am a strong supporter of creativity existing in a market where creators have a choice of business methods and audiences have choices of content and delivery mechanisms. It is unfortunate that those who Mr. Del Mastro was suggesting support markets tend to be the ones wanting to remove creator and audience choice.

While I believe that compulsory licenses (levies) are inappropriate in most circumstances, I believe there are times when they are a necessary evil. (See: Analyzing when copyright levies are a good idea, and when they are a very bad idea where I propose the 3-step test as a way to objectively make that decision).

I believe that online distribution of music is one of those places where a compulsory license is required. Online distribution is a communication to a music fan by telecommunications, and is far more like radio than it is like the distribution of a mechanical copy like a CD. The recording industry is opposed to that interpretation as it would head us down a path towards licensing which was far more fair, and no longer allowed as much control by the recording industry.

Composers want to license their compositions, and independent performers do as well. The problem is the record labels (and the performers who do what they are told by the labels) who have been refusing to license music under terms that are reasonable. Record labels don't want to give composers and performers their appropriate (majority) share, don't want to offer at a price that allows distributors to be in business, and often limit to specific content delivery platforms and refuse money from music fans who have made different technology brand choices.

I believe that a compulsory license to remove the ability of the record labels (the folks from the morning session) to say "no" to reasonable licensing is required to move us all past the current situation. While I agree there are some citizens infringing copyright, and we should be looking into that issue as well, I believe that the actions of the record labels are by far a greater cause of lost revenue within the music industry.

Like the compulsory license for composers was removed after a time of transition, the same would eventually be true of a compulsory license for neighbouring rights holders (performers and makers) to enable more reasonable licensing of online communication of music. The compulsory license to force neighbouring rights holders to allow radio to work is still in place decades later, and I expect the same will be true of a compulsory license for online distribution.

The status-quo of allowing the recording industry to cause so many problems for composers and performers, and then to continuously misdirect government with finger pointing elsewhere, must change. It is very unfortunate that C-32 takes an approach which will only make the problems in the music industry worse.

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Radio as a model for the Internet ?

I'm not convinced that radio is a good model for anything. The existence of "payola" shows that the compulsory license for radio got things wrong. Many creators argue that the same is true of the Internet - that they benefit greatly from the free advertising of the Internet.
I understand where you're coming from, and recognise that a compulsory license may be less bad than the alternatives, but the radio compulsory license strikes me as a huge mistake, both at the time and now.

Copyright aspects / compulsory to who?

I was narrowly discussing the copyright aspects. I hope that even the "throw the kitchen sink into Copyright" folks who want nearly everything to be inside of copyright would agree that payola isn't a copyright issue.

I don't see how compulsory licensing for neighbouring rights holders could be seen as the "cause" of Payola. Can you expand on your thinking there?

Payola is an non-copyright activity that is illegal in some countries, but not others. It is a reminder to us that copyright holders can just as easily be the "bad actors" that we need strong laws to protect against. It should also be a reminder that we can not, and should not, be trying to handle everything relating to creative industries within the copyright act.

I (and nearly everyone I've read from that talks about the time) believe that if section 19 wasn't there, radio would never have played music. Like now, the neighbouring rights holders were refusing reasonable licensing. This exception to copyright was necessary to allow licensing to happen at all.

This is a narrow discussion of neighbouring rights holders (performers and makers of sound recordings), and not any other creators. Compulsory licenses are an extreme tool that should never be taken lightly, and governments must do thorough analysis of the marketplace before considering it (See: Analyzing when copyright levies are a good idea, and when they are a very bad idea.).

I think if analysis was done we would find that the situation we have for online music distribution is very similar to what we had for radio, where a majority of the neighbouring rights holders are refusing reasonable licensing. From a purely technical point of view Internet distribution is far closer to "communication to the public by telecommunications" than it is a "distribution of a mechanical copy", and it has always baffled me that the recording industry got away with promoting a legal theory that benefited their interests over the interests of the music industry.

I agree that there are some indy performers and labels who consider royalty-free online distribution to be great marketing. The compulsory part of a license is compulsory on the copyright holder, meaning it is an exception to copyright where the copyright holder no longer has the right to refuse permission. The copyright board also sets the maximum rate, not a minimum rate that must be collected by the society.

Composers still have full copyright, so if a singer/songwriter doesn't like a situation they can use their copyright on the composition to negotiate better terms.

In an ideal world the neighbouring rights holders are still free to offer works for $0 royalties if they chose, but that becomes an issue with how collective societies are managed. For instance, in Europe some collectives are trying to force creators to choose between being members of collective societies or using creative commons licenses: making it near impossible to do both.

Canadian collectives are getting excessively politically powerful. I believe that increased regulation of these societies are necessary in order to ensure that the rights of creators are not trampled on. Creators should be able to "opt out" of collective management on a per-creation/per-well-defined-scenario basis, allowing the creator (and not a third party) to determine their own business model.

I think if section 19 was extended to the Internet, Canadian performers and labels would be able to do part of what you are suggesting. They would be able to offer their works for free from their own sites, and wouldn't have to pay a collective society to communicate their own works.

I suspect the collective societies wouldn't allow them to offer works free to Pandora, Google/YouTube, Apple, or other similar commercial music communication services. It would make negotiating licensing that much more complex.

Free/Libre and Open Source Software (FLOSS) consultant.