CIMA Requests Elimination of Royalty Payment Exemption

The Canadian Independent Music Association (CIMA) is asking the Canadian government to end an unnecessary subsidy, bring balance to Canada’s copyright laws and help support and grow Canada’s music industry with a proven market solution.

Currently, Canada’s Copyright Act allows every commercial radio station to shelter their first $1.25 million in advertising revenue from the royalties they pay to music performers and record companies. This constitutes an unjustifiable subsidy for the commercial radio industry at the expense of the creators of Canadian music, and should be repealed.

CIMA has issued a letter of support (see below)  for the end of this subsidy to Heritage Minister James Moore and 23 other Members of Parliament, as an addendum to its recent submission on Bill C-11, the Copyright Modernization Act.

 

November 29, 2011

The Honourable James Moore, PC, MP
Minister of Canadian Heritage
Member of Parliament for Port Moody-Westwood-Port Coquitlam, BC

House of Commons
Ottawa, ON K1A 0A6

Dear Minister Moore:

The Canadian Independent Music Association (CIMA) asks for your support to end an unnecessary subsidy, bring balance to Canada’s copyright laws and help support and grow Canada’s music industry with a proven market solution.

Currently, Canada’s Copyright Act allows every commercial radio station to shelter their first $1.25 million in advertising revenue from the royalties they pay to music performers and record companies. This constitutes an unjustifiable subsidy for the commercial radio industry at the expense of the creators of Canadian music, and should be repealed.

CIMA represents more than 180 Canadian companies and professionals engaged in the worldwide production and commercialization of Canadian independent music, who in turn represent thousands of Canadian artists and bands. CIMA’s membership consists of Canadian‐owned companies and representatives of Canadian‐owned companies involved in every aspect of the English‐language music and music‐related industries. They are exclusively small businesses which include: record producers, record labels, publishers, recording studios, managers, agents, licensors, music video producers and directors, creative content owners, artists and others professionally involved in the sound recording and music video industries.

Some of the great Canadian independent artists and bands represented by our members include Rush, Bruce Cockburn, Sarah McLachlan, Broken Social Scene, Feist, The Trews, Tokyo Police Club, K’Naan, Luke Doucet, Blue Rodeo, City and Colour, Chromeo, K‐OS, Metric, Diamond Rings, Lights, Our Lady Peace, Said The Whale, Jenn Grant, Dan Mangan, Chilly Gonzales, Delhi to Dublin, Canadian Brass and Saidah Baba Talibah, to name but a few.

In short, our members are the owners and operators of small businesses who invest in the creation of intellectual property that spurs economic benefits in terms of jobs, increased GDP, contributions to our nation’s trade balance, and are an integral component of Canada’s culture as expressed through music.

As Canada’s economic sectors continue to evolve, CIMA believes that the creation and protection of intellectual property is one of the few potential growth areas for our economy, particularly through exports.

The commercial radio industry was granted the $1.25 million exemption in the late 1990s when the Copyright Act was amended to grant eligible performers and makers of sound recordings the right to receive fair compensation for the public performance (or broadcast) of their works (commonly referred to as ‘neighbouring rights’). At the time, only composers and music publishers received such royalties for airplay and the public performance of their music in Canada.

However, when the Act was amended, the government of the day granted radio stations the exemption as it applies to performers and makers of music only. While the financial situation for commercial radio was less certain than it is today, the government at the time rationalized that the exemption helped radio stations transition to the introduction of royalties for performers and makers.

The reality is, however, that this exemption for radio stations denies the payment of fair compensation to one group of rights holders (those that create the music such as record companies, artists and background musicians), and does not impact the other group of rights holders, namely songwriters and publishers.

In effect, the $1.25 million exemption for commercial radio amounts to an unfair subsidy, one that is unfortunately unique to Canada.

CIMA supports the government’s goal of a sustainable, home grown music industry that creates jobs for artists and the businesses behind them to realize economic progress for themselves. Canadian music creators support market solutions to the very real challenges they continue to face in this uncertain and changing market – but a balanced solution that protects copyright by ensuring fair compensation is paid when the music it creates is used by broadcasters for commercial purposes. Unfortunately, the current Copyright Act prevents Canadian music creators from collecting fair market compensation for the entire use of their work in commercial radio. This prevents the growth of our industry and slows reinvestment into the creation of Canadian music.

The government has made it clear that it won’t introduce new royalties that will increase costs for consumers. Removing this $1.25 million subsidy is a common-sense, cost-neutral solution that would provide an additional $7 million to $8 million in annual compensation to the Canadian music industry – without any cost to Canadian consumers or taxpayers.

Consider that the $1.25 million exemption:

  • Provides an unnecessary subsidy for broadcasters at the expense of creators: The exemption provides a highly profitable industry with a legislative means to avoid paying fair compensation for their use of copyrighted, recorded music;
  • Is unique in that it is the only legislative exemption of its kind in the Copyright Act;
  • Does not exist in any other jurisdiction;
  • Does not impact songwriters or publishers of music (whose royalties are collected by SOCAN), but only performers and makers. This is discriminatory between rights holders of the very same work.
  • Provides unequal treatment of music users: A wide variety of small, medium sized and large businesses pay royalties to music creators (such as satellite radio, pay audio, restaurants, retail, background music suppliers etc.); however, only commercial radio receives a legislated subsidy.

As Canada’s Copyright Act is modernized through Bill C-11, CIMA asks that you support this opportunity to ensure that musicians and the independent record companies behind them earn fair market value for their music. CIMA strongly supports the elimination of the $1.25 million subsidy for broadcasters, through the repeal of Sub-Section 68.1(1)(a)(i) of the Copyright Act.

Thank you very much for the opportunity to express CIMA’s views on how to strengthen and improve

Bill C11, a critically important piece of legislation that Canada’s independent music industry truly needs in order to grow, create jobs and be competitive on the world market.

We would be pleased to meet with you and your staff in order to discuss this critically important issue, and to answer any questions or concerns that you may have regarding this submission. You may direct your staff to contact Stuart Johnston, President, at (416) 485‐3152 ext. 232, or stuart@cimamusic.ca to arrange a meeting.

Yours sincerely,

Stuart Johnston
President

Cc: CIMA members