Mr. Bill Skolnik (Chief Executive Officer, Canadian Federation of Musicians):
Thanks very much, and thank you for having the Canadian Federation of Musicians.
I am Bill Skolnik, and I am a musician. I've worked in theatre, television, and radio in different studios for a long time. I did a lot of writing for Sesame Street, so I may have affected some of you sitting here. I am now the chief executive officer of the Canadian Federation of Musicians.
Joining me today is Warren Sheffer, who is our counsel and a lawyer with Hebb & Sheffer.
CFM has represented musicians in Canada for more than 100 years, and many of our 17,000 members are international stars and household names, but the majority are not. I got elected to serve the 17,000 folks in the organization, but there are also a number of non-members, according to the Canadian Artists and Producers Professional Relations Tribunal, CAPPRT, which I speak for on federal matters. So I'm not just speaking on behalf of the folks who pay my salary; I'm speaking on behalf of anybody who picks up an instrument and gets paid for it.
Musicians are self-employed business owners and often earn less than $20,000 a year. While they make some of their wages from performing and hitting the road, a significant portion of their income comes from recordings and the rights to past performances and work. You may not realize it, but when you go to the Sanderson Centre for the Performing Arts, the National Arts Centre, or Centre In The Square, those players you see accompanying featured performers are not with those featured performers from city to city. They are hired by a music director, and they operate as independent business people.
Some of you may know these folks. I know most of them, and I'm going to give you names of some from smaller places so you can acquaint yourselves with them. From Sudbury, we have Christian Robertson, Victor Sawa, and Yoko Hirota. The three Gray boys, John, Charlie, and Phil, are originally from Truro and now live in Toronto. I think John lives in Vancouver. He wrote Billy Bishop Goes to War. They're from a small town in Nova Scotia. From Kitchener, there is Frank Leahy, a well-known player, and Wendell Ferguson, one of the funniest guys in Canada. I also want to mention Doug Perry and Paul Mitchell. From Peterborough, we have the Cherney brothers, who don't live in Peterborough anymore, but their father was a well-known appliance dealer, Washboard Hank. If anybody has ever seen Washboard Hank play, you know who I mean. These are our members. These are the people I'm talking about.
The Leahy family is well known, from Lakefield. Frank DeFelice, Garry Munn, and Rusty James are from Brantford. You may know these folks. From Sackville, there is Ray Legere. I'm just giving you these names because these are people who bought houses, raised their children. They don't necessarily live in the big cities—some of them do—but most are from the small towns. This is who I'm talking about. These are the small business people I'm referring to.
Musicians can only make a living if there are robust copyright laws that allow them to negotiate and exploit their rights in the marketplace through collective bargaining and collective licensing. Diminished rights mean diminished income.
We support the government's effort to modernize the Copyright Act by implementing provisions of the WIPO Internet Treaties. In particular, we welcome the establishment of moral rights for performers. That's really vital to us.
We acknowledge the government's desire to address the fact that people are enjoying music in a digital format anywhere and anytime; however, just because digital technology has made it easy for works to be reproduced, it doesn't mean that it should be free. Technological advancements cannot be a rationale for depriving creators and performers of their right to be rewarded for the reproduction and use of their work.
Music has value. This work is the product of creative labour and it still has value. Unfortunately, in too many places this bill removes the value.
The Canadian Conference of the Arts has put together a package of 20 technical amendments to Bill C-11. CFM is one of the 68 cultural organizations that helped put those together, and we fully endorse each of those amendments. I want to stress how remarkable an achievement it is to get these diverse organizations to agree on this package.
Today I want to speak specifically to four amendments that would go a long way towards protecting the intellectual property and income of musicians.
Number one, put a fence around the widespread exceptions to copyrights and neighbouring rights introduced in the bill by including explicit language from the Berne three-step test.
The Berne three-step test, as found in the Agreement on Trade Related Aspects of Intellectual Property Rights, TRIPS, to which Canada adheres, provides that:
|| Members shall confine limitations and exceptions to exclusive rights to certain special cases which do not conflict with a normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the rights-holder.
We want users to be able to access and enjoy our members' work, whether for personal enjoyment or education, but not at the expense of the musicians who seek to make a living from the use of their works and performances. Make this provision explicitly in the act and it will get the government and the courts on the same page.
Second is user-generated content. This is an example of where the three-step test would be helpful by putting fences around exemptions. The UGC or mashup provision is a remarkable departure from the objective of the Copyright Act to confer exclusive rights on creators and performers. We understand what the intent is here: to allow families to post videos of their kids dancing to pop music without breaking the law. That's reasonable, but the wording in the bill goes too far for us. It would remove the ability of creators to license or have any say in what happens to their work. YouTube is the big winner here, at the expense of creators.
We recommend the exception be removed altogether, or at a minimum amend it so that moral rights are properly protected. We need to leave the door open for collectors to enter into agreements with businesses like YouTube so that performers can get paid, as is the case in other countries.
I can tell you from my perspective that a lot of our members are as much concerned about control of what their works are as they are about the payment. Both are important, but control is a big aspect with respect to moral rights. They need to have some teeth behind those.
Third is statutory damages. Bill C-11 proposes to drastically reduce statutory damages for infringement, that is for non-commercial purposes, to between $100 and $5,000. This is not an adequate deterrent. We also see no need to make a new distinction between commercial and non-commercial infringement. Such a distinction conveys the wrong message that so-called non-commercial infringement is not at all harmful to creators and performers. For example, I can take a CD, make 100 copies of it, and give it to everyone I know for Christmas. I'm not making money off it, but that's potentially 100 copies of the CD the artists aren't going to sell.
It only makes it harder and less worthwhile for small business people with limited resources to pursue damages for infringement. We understand what the government intends with this change, but it's not necessary. We have seen no cases in Canada where individuals have been forced to pay exorbitant awards for copyright infringement.
Even more puzzling is the bill's proposal to exempt those who enable acts of copyright infringement on the Internet from statutory damages. Statutory damage awards must be a proportionate deterrent and must be applicable to mass infringers like peer-to-peer sites that makes tons of money off the backs of hard-working artists.
Fourth, and finally, is private copying. CFM members earned more than $4 million from private copying in the past 10 years. Unfortunately, Bill C-11 will allow that critical source of income to dry up by not extending the private copying regime to new technologies. The revenue stream needs to be replaced—and I emphasize replaced—to recognize that long-standing principle that copies have value, and that exclusive rights-holders are to be compensated when copies are made.
The first choice is to make the bill technology neutral by extending the current private copying regime to digital audio recorders that are designed, manufactured, and advertised for the purpose of copying music. But if the government chooses not to take that route, part 8 of the Copyright Act should be supplemented by another restitutive mechanism. What I'm saying here is that there is a principle involved that's already been established: that copies have value and that people seem to have a right to make some money from that.
We're not intending to say extend the technology if that's not palatable. We believe there are other methods. We have examples of other methods of getting remuneration to artists for the extended use of their copies, the storage, and the duplication. So it's the principle that we're arguing and the ability to keep that principle going and keep money going. You know, a musician would get statements. As I say, they're business people, and they can't go into the bank and say, “Well, I have six, seven months of contracts coming up, I've got tours coming up.” They say, “What if you get hit by a car? What if that happens?”
But they can go with those statements that they get from Re:Sound and Canadian Private Copying and they can go with other things that show their income and regardless of what happens to them get money. And they don't need much. The average guy maybe gets $2,000 or $3,000 from private copying in a year, but that can get him studio time, it can get him sidemen to play with. This is an important aspect of their income. It's been there for—what?—20 years, and it's now being removed. It's being removed because of technology, not because anybody here believes they shouldn't get it.
Mr. Don Conway (President, Pineridge Broadcasting):
Thank you, sir.
Good morning. My name is Don Conway. I'm the president and the majority owner of Pineridge Broadcasting. We're a small private broadcaster serving Cobourg, Port Hope, Northumberland County, Peterborough, and the Kawarthas in Ontario. Thank you for inviting us to appear before you.
I hope that by the time we part you'll have an understanding of small-market radio, the part we play in the everyday life and economy of our communities, and the financial stresses we live with each day in order to do it.
Due to the tight timelines, my comments to you will be limited to my oral presentation, but I'd be pleased to follow up with any written submission, if you require it.
I was born in Chute-à-Blondeau and raised on a farm at Alexandria. I sold my first calf to buy a transistor radio so that I could listen to music on the Cornwall station and the stations in Montreal to hear the play-by-play of les Canadiens and les Expos.
I started in radio in 1974 as a sales rep in Brockville. In 1983 the owner purchased a little, bankrupt AM radio station in Cobourg and asked me to go and run it for him. It was called CHUC, but on the street it was better known as “up-chuck radio”.
A Voice: Oh, oh!
Mr. Don Conway: It took many years and a lot of work to turn it around.
I'm going to skip the details of how we got to today, other than that I purchased the company in 1991. Suffice it to say that what we did to grow our little company out of bankruptcy in 1983 is not much different from the way we operate the company today. It takes hard work, a dedicated staff, fiscal patience, and a strong community involvement.
Local radio reflects retail. When retail is down, as in this past year, then radio revenues are down. That means cutting expenses and staff. In small markets, there are not a lot of staff to begin with; we live very close to the profit-loss line. Add in the extra expenses this past year for new and retroactive copyright tariffs and there was no profit.
Our small main office is in Hamilton Township. We are one of the largest employers, with about 25 staff for our two stations there. Our new Peterborough studios have about 15 staff.
We desperately need more staff, but with the state of the marketplace we can't afford to add. Yet when I have to figure out how much to pay in copyright fees for each of our stations, we are classed as bigger than a typical medium-sized station.
I can tell you that we are small and that the “small” classification should be closer to $2 million than to $1.25 million.
Before I get to talking about copyright, I'd like to spend just a minute to explain how a small-market radio station survives.
We build loyalty. Not only do we daily talk about the community and promote the activities of community groups, but the staff become personally involved in the community. We talk on air about what matters. If it is snowing, we talk about what school buses are cancelled; if council voted to limit garbage to two bags, we put the mayor on; if the 401 is shut down, we tell the best detour to use and give a toll-free number to call to update us.
We do not subscribe to a costly national news service. Most days, each of our newscasts is 100% local. We are part of the disaster plan for the various municipalities. When the two water pumps went down recently in the town of Port Hope and an emergency was declared, the town coordinator called me at home to set up airing messages to residents.
Local emphasis extends throughout our programming. The Community Booster Club twice an hour promotes community events at no charge. We put community groups on air to discuss their event. This is not just a casual relationship. Their success helps build loyalty to our brand and ultimately helps build a better community.
For example, the Northumberland United Way supports 16 member agencies. We promote the United Way itself and each of its member agencies, and each fall we air a weekly update with the campaign chair.
The Canadian Blood Service.... Since my leukemia marrow transplant in 1987, we do live broadcasts every month from the blood donor clinic.
Our stations were instrumental in the success of the first annual anti-bullying awareness event sponsored by the Northumberland Youth Advisory Council. Through an on-air campaign and interviews with those involved, we brought county-wide awareness to the issue of bullying.
Relay For Life is the Canadian Cancer Society's largest fundraiser in Northumberland County. Our stations have sponsored this event every year, and in 2011 alone the event raised over $270,000.
There are many community initiatives that our stations support financially and through on-air campaigns. I could give you a list of community groups that we've worked with in the past year, but in the interests of your time, I'll not read them here.
All our staff walk the talk. We are all directly involved in many community groups. I myself am past chair of the United Way campaign, the United Way board, the Hospital Foundation board, the Waterfront Festival, and the Cobourg Rotary Foundation Committee, amongst others.
In addition to many charitable organizations, Northumberland has a large arts and music community, and our stations make their time available to help promote their activities. For example, Summerhouse, a local rock band: our station was the key supporter of the release of their debut CD, and they are interviewed and perform on air regularly. Zack Werner and his band Haymaker: our station hosted studio live performances and interviews with Haymaker during the release of their debut album and subsequent fundraising efforts with the ALS Society of Canada. For Blue Sky Revival, our concerts to raise environmental awareness featuring an all-Canadian line-up of established musicians and emerging artists, we provided an on-air campaign as well as on-site support with organizational assistance and an emcee.
We have developed a great relationship with people in the music industry over the years. They understand that our stations want performers to be successful and that we will do what we can to promote those artists.
Community extends to our high schools and our community colleges. Each semester we provide co-op training for three to four students from the four high schools. Each spring we also provide co-op training to students taking various radio courses at Loyalist College in Belleville and others. Our staff sit on various advisory boards at Loyalist College.
Pineridge Broadcasting is not some big corporation with a head office in a lofty office tower. We don't have vice-presidents. We don't have unlimited funds for staff. We are community folk not afraid to get our hands dirty. We want to be a good promoter. We would like to do even more in our communities. We want to be a good employer. We'd like to hire more staff. We believe in supporting the artists who make the songs that allow us to put a product on the street. But we believe in fair play, and I don't think being forced to pay multiple times for the same thing is fair.
In the past we received music from the record labels on 45s, and then, even up to four years ago, on CD. We've always had the music from the labels and we've never had to pay for it. It doesn't make sense that because they now force us to download digital tracks we have to pay for them. In each of our stations the music is downloaded to the very same computer that then plays it back over the airwaves. The only other time a clip might be copied is to create a promotional ad to tell listeners about the artist.
If anything has changed in the 39 years I've been in radio, it is that we have reduced to almost nil any need to copy music. I told you of our shortages of staff. Is it fair play, then, that you would pass a bill that requires our company to reassign one of our very busy staff members to erase and re-record every piece of music in our library every 30 days? You're just adding prohibitive costs to our operations. Let's say I have 3,000 songs in our musical library and let's say they average three and a half minutes. That's 10,500 minutes. When re-recording the music, we'll have to do it in real time, which would take, let's say, 175 hours. If a person works a solid seven hours each day, they're going to take 25 days to re-record that library and they're going to have to do it every month.
I'm asking you to remove the requirement that music be deleted every 30 days. The resources required to do that are just beyond the scope of possibility for a small operation like ours. Simply put, the 30-day limit doesn't make sense, nor does the fact that we should be paying any reproduction tariff.
Folks in the music industry know how important radio airplay is. That's why they've always worked with us to get performers on the air. We know how important music is. That's why we pay our core copyright fees for broadcasting; that's why we promote the artists. It's a fair balance.
To conclude, we're a small private broadcaster trying to make our communities better. We're trying to be good corporate citizens, we're trying to be good employers, and we're trying to grow our business. We promote the music and the artists we play. We pay the copyright royalties. But ever-increasing tariff payments are threatening our ability to do all of these things.
Thank you for the opportunity to appear before you today. I'm happy to answer any questions you have.
Mr. Ian MacKay (President, Re:Sound Music Licensing Company):
Re:Sound is the not-for-profit collective dedicated to obtaining fair compensation for artists and record companies for their performance and communication rights. We represent the royalty rights of more than 12,000 musicians, including featured and session musicians and record companies. The money we collect is split 50-50 between the performers and the labels.
We appreciate that many of you have had your fill of copyright discussions, so I can assure you we would not waste the committee's time if our proposals did not align with the economic and job creation goals behind Bill C-11 and if they were not properly in order.
Re:Sound has tabled three straightforward proposed changes to Bill C-11.
One of these is highly technical, so in the interest of time I invite members to consult the background document and proposed amendment language we've given to the clerk. On this amendment I'd only state that it is a very simple language omission in the Copyright Act related to ministerial statements on reciprocity.
The other two amendments I believe warrant some more discussion at committee as they mean more money for more people. The first amendment would bring needed clarity and would allow Re:Sound to get millions of dollars out of a trust account and into the hands of musicians and businesses.
The second amendment addresses the serious market distortion in the current Copyright Act that dates back to the 1990s. Fixing this would inject millions of dollars a year into Canada's creative sector at no cost to taxpayers or consumers.
The first amendment is what we call the orphan amendment. What are orphans in the copyright context? They're eligible rights-holders, musicians, or labels who have not yet signed up with us at a particular point in time. They may not have signed up because they don't know about their rights or they may not have made a recording or existed as a band at the time a particular tariff was set.
The concept of orphans is not unique to us. They also exist in the context of reproduction rights, retransmission rights, private copying, and others. The difference is that in all of those other cases there are clear and expressed provisions in the Copyright Act that set out clear rules and obligations with respect to orphans. We are alone in not having these kinds of rules and this kind of clarity and can only think this was an oversight at the time of drafting.
Without any rules in the Copyright Act to clear up what obligations we have to these orphans, we may need to hold some funds indefinitely. To correct this problem, we simply seek an amendment—it's two lines long—that would give us the same clarity regarding obligations to orphans that all these other collectives have.
In short, this amendment would provide clarity on the entitlement of orphans to be paid, empower the Copyright Board of Canada to establish clear rules around limitation periods, and, crucially, it would allow Re:Sound to pay out millions of dollars in royalties that we've been forced to hold indefinitely due to the lack of clear rules under the Copyright Act.
Our job at Re:Sound is to collect and distribute money, not to collect and hold money in a trust fund. We're a flow-through organization and we need clear, transparent rules in order to do our job. If you can make this technical change to the act, we'll get money—that's money that's already been collected—out the door and into the hands of the rights-holders.
The other amendment I will talk about today is the elimination of the $1.25 million exemption for commercial radio in section 68 of the Copyright Act. The last time the Copyright Act was reviewed in the mid-1990s, Canada was in the middle of a deep recession and the future of commercial radio was uncertain. In 1995, for example, the entire Canadian radio industry—that's the entire industry—posted a total profit of only $3.6 million. So the government of the day enacted a “Special and transitional royalty rates” section of the act. Under this section, performance royalties to musicians and labels were phased in over time and each commercial radio station was only required to pay $100 on their first $1.25 million in advertisement revenues. This was and remains the only such subsidy in the Copyright Act and the only subsidy of its kind in the world.
Fast forward to the last few years and radio has been thriving and posting record profits in every market, in every language, and in every region of the country. In fact, between 2006 and 2010, the Canadian radio market experienced the second-largest absolute increase in revenue in the world behind only China. It grew by $330 million. This growth story is great news, and I want to be clear that we want to see the continued success for commercial radio in Canada.
However, because the Copyright Act has not been reviewed since 1997, neither has the $1.25 million subsidy been reviewed to reflect the huge and growing profits of the Canadian radio industry. All the while, musicians and labels, including hundreds of Canadian independent labels and musicians, are not receiving fair market compensation for the content they provide. This subsidy reduces the royalties earned by musicians and labels by about one-third, or $8 million a year. The bulk of this subsidy goes to a handful of large radio groups—not small radio groups but the large radio groups. This is a serious market distortion that benefits a very profitable industry at the expense of those who create the content that drives that industry.
Once again, I would state that we love radio and we recognize the tremendous work that many stations do in their communities, but please remember, commercial radio is a for-profit venture. That's why it's called commercial radio, and the business model is simple. Stations play music because music draws listeners. Listeners attract advertisers. In fact, 13% of all advertising dollars spent in Canada are spent on commercial radio. That's the highest proportion in the world.
Simply put, music drives commercial radio. It helps with the station branding and it helps target and retain certain demographics. Our proposed amendment allows the musicians and businesses who invest in and create the products that radio puts on the air to get properly compensated.
Remember, this is a legislated subsidy, so radio stations do not have any option but to be subsidized. To their credit, broadcasters acknowledge the importance of paying for music. In fact, the chair of the Canadian Association of Broadcasters stated to the precursor of this very committee that, and I quote, “We want to emphasize that broadcasters are not opposed to paying for the communication right.” That is, they are not opposed to the paying of royalties to musicians and labels that Re:Sound collects.
As far back as 2005, the Copyright Board weighed in on this subsidy and stated, and again I'm quoting here:
||Even the smallest of stations would be able to pay the tariff. Allowing large, profitable broadcasters to escape payment of the full Re:Sound tariff on any part of their revenues constitutes at best a thinly veiled subsidy and is seemingly based on no financial or economic rationale.
So radio acknowledges that they think it's important to pay for the communication right, and even the Copyright Board, the expert regulatory body that is tasked with reviewing all economic data before it sets fair rates, has stated that every station can afford to pay the full royalty rate.
This amendment would have no impact on any other part of the Copyright Act and would ensure that $8 million a year is injected into the Canadian creative sector at absolutely no cost to taxpayers or consumers.
Re:Sound is very supportive of the goals behind Bill C-11, particularly to generate economic activity and jobs in the creative sectors. We believe the two amendments we have detailed today align very closely with those goals, and we would be happy to take any questions.
Hon. Geoff Regan (Halifax West, Lib.):
Thank you very much, Mr. Chair,
Thank you all for coming today as witnesses. You know, this is a little different, having government so involved in making decisions that will affect whether or not industries thrive or individual artists thrive.
There are many industries in this country where it doesn't happen as much. In fact, we're a government far less involved as an arbiter in that way, and in the way the CRTC plays a role, and in the way that Parliament making legislation will play a role in your case. We have to ask ourselves, I guess, in view of the fact that we are involved in this, how do we ensure—and what is the role of government in ensuring—that small radio stations of that industry and all artists thrive?
Do we have to really worry about every single one of them? I don't think any of you would ask that the government ensure that every single station or business of any size makes a profit. In a lot of ways, we don't control the various factors in terms of productivity, and their business models, or that every artist will prosper, because not every artist will survive. I suppose if I were singing, people would say that I shouldn't be doing that, and shouldn't be making a living at it, for example. I'm sure many of my sisters would argue that.
The question is, how do we do that? How do we ensure that both artists and small radio stations, for instance, survive?
Mr. Bill Skolnik:
I agree with you about the government intervention. I can tell you it was a shock to me to find out that the government paid my salary when I started writing music. I had no idea. I appeared before, at that time, the Copyright Appeal Board, and I looked at all these people who were getting paid a heck of a lot more than me and realized that there were three people up there who were determining what type of food my kids would eat and what clothes my wife would get. I of course never bought any.
How to ensure it? We've gone a far way. Federally, we've done status of the artist, which permits us to bargain on behalf of musicians. Mr. Conway's station, for example, is susceptible to that. We can go into Peterborough and we can ask the CAPPRT to have him sit down and bargain with us to make sure that those players are compensated properly, or different actions can take place.
We haven't gone around to every small town and done that. We can't. We have relied upon the community to determine that. So, yes, we are dependent on the local radio stations, we are dependent on the local theatres, we are dependent on the local clubs, and we have let the market take its place. That's why the supplemental income that these people need to keep going is so important to us. That's why the licensing to ensure that artists can continue, and continue without having their supplemental income diminished.... If they have a project they can go to a bank and get a loan—that this continue. The only way so far is through the licensing, either of the performance or the performing.
It is federally regulated; it is internationally regulated. When you look at WIPO, it's not something we're going to change, but it is something that we need to look at. We need to make sure that it remains rejuvenated, that it remains there as a level, and that there's an ability for all of our performers, all of our creators, to take part in it, so they can continue to present this country to the rest of us.
Ms. Aline Côté (President, Les Éditions Berger, Association nationale des éditeurs de livres):
Good morning. My name is Aline Côté and I am the president of the copyright committee at the Association nationale des éditeurs de livres.
The Association nationale des éditeurs de livres represents a hundred French Canadian book publishing firms across Canada. Over the past few years, and despite all the pieces of legislation in place, we have been asking for more protection, or at least we have been constantly reaffirming the copyright principle in order to protect our capacity and stability in terms of both revenue and investment.
People do not always realize that Canadian publishers are competing with giants. Over the past 40 years, we have had to get back a significant share of the market. In the 1970s, French Canadian publishers were barely claiming 20% of their own market, the rest was being taken up by France or other countries. The situation was pretty much the same for English Canadian publishers. Today we control 51% of the market. It took 40 years to slowly conquer that share of the market, to develop expertise, to increase the professionalism of our employees and to establish an entire book industry.
We have also worked closely with the people from the Canadian Conference for the Arts to bring our proposals to the table and to reach consensus with the other cultural sectors in Canada. That was an unprecedented effort. In my view, the fact that cultural associations from all sectors, working in both languages, have managed to reach a consensus is unprecedented around the world. That takes weeks and weeks of work. We have made a series of proposals, knowing that, if they were accepted, we could really establish and develop sustainable industries in Canada that would prosper in the digital era.
The French Canadian book industry has been successful in adapting to the digital era. Very early on, we developed a business platform and model. We have developed partnerships and we now have a sale and distribution platform that is connected to all francophone digital bookstores in Quebec and in France. Our original model inspired large publishers from France, Italy and the United States to join. There is still a general feeling that the book industry is a bit prehistoric, but we have been really proactive and we have had a great success. We have received support from governments, Canadian Heritage, SODEQ, and our ministries in Quebec. We are now estimating the cost of this collective effort at about $25 million at least. Please note that these numbers are the actual math. They are not based on extrapolations or projections of potential losses, but that is what was really invested.
We now know two things. We are increasingly hearing people everywhere say that the added value of culture is a factor in sustainable development. WIPO studies have also revealed that the key to the success of cultural industries is the legal environment of copyright, of intellectual property. The two countries that currently have the best numbers are the United States and Australia and they are the nations with the strongest industries. That is where cultural industries take up the largest share of the market.
Books, physical books, disks, support materials or CDs are not our main asset. Our main asset and our only asset is intellectual property. It is not tangible.
We feel that the significant changes that Bill C-11 will bring will create an artificial disruption. We have been able to develop gradually over the years with the market rules that were in place. We have managed to take up more and more of our markets. We have a Canadian aboriginal industry—if that is the right term—that is successful, dynamic and competitive, but it could be better positioned in the market. Compared to the position of the book or culture industry in other countries, we are still lagging behind and we could do better. We still have room to grow.
We have shown that we were able to do very well with the way the game was played. The shock of the digital revolution did not affect us because we took action very early on, six years ago. We convinced the governments to give their support; we have put in about $25 million in development and private investments. And now that it is all starting to roll and we are on board, we realize that a piece of legislation might jeopardize all those business models that work well. That will create an artificial tidal wave in the current market. It is not a normal evolution; it is something abrupt when we have already developed everything that we wanted to develop.
We are also going to look at our close ties with the national education system and I hope that you will have questions about that. If our education systems had to outsource to produce materials, they would create a book industry. Our close ties with culture are very important. We feel that allowing free use without permission in education is extremely dangerous for our industry.
I will let my colleague continue.
Mr. Jean Bouchard (Vice-President and General Manager, Groupe Modulo, Association nationale des éditeurs de livres):
Aline is right: publishers represent the research and development of the education departments in the country. If there were a single most important thing one could do to improve this bill, it would be to leave out the word “education” from the fair dealing exception in section 29. Because it gives educational institutions and all other commercial or non-commercial private training businesses the right to use any copyright protected work without permission or compensation, it is the one exception that will have the direst consequences on the book industry. On the one hand, academic publishers will see their textbooks largely reproduced without compensation. And on the other hand, literary publishers will lose the benefits of having one of their works studied in class. Moreover, this right is created even though educational institutions have no problem accessing material thanks to the copyright licensing agencies. We are talking about 0.5% of the total annual budget for education in Canada, which is around $70 billion.
Without a precise definition of fair dealing, everything has been said about this exception. The government says it means restricted to “a structured context, including private training but not for the public in general”. The Canadian Association of University Teachers defines fair dealing as “the right, within limits, to reproduce a substantial amount of a copyrighted work without permission from, or payment to, the copyright owner”, while the Conference of Rectors and Principals of Quebec Universities says that the proposed exception “does not mean in any way the end of compensation for creators”.
Let us resolve the issue this morning: it is open ended, free and without permission, as long as it is fair. This one and only restriction to the free use of any given material for educational purposes, fairness, does not protect the book industry in any way.
Establishing what is fair under the new law will drive to litigation and judicial proceedings. The destabilization of legitimate and well-established business models and the costs of litigation will jeopardize middle and long term investments until the courts will have decided on which uses are fair and which are not.
Without a precise definition, The Supreme Court developed a non-exhaustive list of six factors to assist in determining whether a use is fair: purpose, character and amount of the use, alternatives to the dealing, nature of the work and effect of the dealing on the work. However, the court ruled that: “Although the effect of the dealing on the market of the copyright owner is an important factor, it is neither the only factor nor the most important factor that a court must consider in deciding if the dealing is fair”. In other words, a court could conclude that dealing is fair even if it harms the market for a work. In contrast, in the “fair use” regime of the United States, this factor is the “most important, and indeed, central fair use factor”. This gives American publishers the comfort they need to invest in innovative educational resources. If Bill C-11 passes as written, Canadian publishers and foreign investors would not have the same comfort level.
This is why the second and most important thing to do to improve Canada's Copyright Act would be to make sure the “three-step test” of the Berne Convention is incorporated into our legislation so as to become the basis on which courts will rely for the interpretation of fair dealing. This would, among other things, ensure the effect of the use on the work would be prioritized in the determination of what is fair and by the same token ensure our law meets our international obligations.
Ms. Cynthia Andrew (Policy Analyst, Ontario Public School Boards Association, Canadian School Boards Association):
My name is Cynthia Andrew. I appear before you this morning as a representative of the Canadian School Boards Association.
The Canadian School Boards Association members are the provincial school board associations that represent over 250 school boards across Canada and serve more than three million elementary and secondary school students.
I am an employee of one of the provincial associations, the Ontario Public School Boards Association. I am the key staff person both in Ontario and within CSBA member boards on matters relating to copyright, and I am pleased to be able to join you this morning to talk about copyright and Canadian school boards.
CSBA submitted a response to the previous copyright reform legislation. It is my understanding that this committee has access to those submissions and does not wish to see ours again. I thank you for saving me that time, and I direct you to that brief that was submitted to the committee in December of 2010. Our recommendations between then and now have not changed.
Copyright directly affects all of Canada's school boards, and it is reflected in policies and practices in school board administrations and in classrooms across the country. Technological advances have made the current Copyright Act all but obsolete. The lack of clarity that arises from this outdated legislation is the reason that Canadian school boards, along with other national education organizations, have been persistently urging the federal government to clarify digital copyright law. Therefore, CSBA is pleased with a great deal of what we see in Bill C-11 and we want to see the legislation passed. We believe Bill C-11 is good for education in Canada, and with minor amendments to certain sections it can be even better.
I wish to highlight for you this morning some matters that are of particular importance to school boards.
First, CSBA supports the inclusion of the educational use of Internet amendment. Technology has changed teaching and learning in Canadian schools. From kindergarten to advanced calculus, classrooms are filled with innovative, new learning opportunities. The proposed Internet amendment is important because the current copyright law is not clear about the extent to which teachers and students and other educational users can legally engage in what are now routine classroom activities, such as downloading, saving, sharing text or images or videos that are publicly available on the Internet. Without exception, provinces are investing in technological infrastructure in schools, but without this amendment, Canadian schools may be legally obliged to forego many learning opportunities and curtail Internet use in the school out of concern that they may be breaking the law.
The proposed amendment applies only to publicly available material, that is, material posted on the Internet by the copyright owner without password protection or technological restrictions on access or use. Most of this material is with the intention that it be copied and shared by members of the public. It is publicly available for those who wish to use it.
School boards develop and guide and administer policy and procedures in schools across the country. Legislative clarity ensures that school board policies on copyright appropriately guide teachers and other board employees without restricting access to material that supplements and enhances the typical learning experience. It is important to remember that school boards are also creators of intellectual property. As both creators and users, Canadian school boards believe that this legislation does provide a good balance, the right balance, between the rights of users, creators, and industries that market the work of creators.
Secondly, CSBA supports and is encouraged to see the inclusion of education in the fair dealing provision; however, although welcome, we do suggest that the education and fair dealing amendment needs to be clarified. For this amendment to have its desired effect, the term “education” should be clarified by stating that education includes teachers making copies for students in their classes. This clarification is needed so that teachers may copy short excerpts from copyrighted material for their students.
The wording of our proposed clarification is similar to the United States fair use clause, which has been in place since 1977. Adding education, including multiple copies for class use, to the list of enumerated fair dealing purposes will not mean teachers can copy whatever they want. Simply qualifying as a fair dealing purpose does not automatically deem that all copying for that purpose is fair. Such copying must still meet the standards of fairness that are set forth by the Supreme Court of Canada.
Third, it has been suggested that the education community does not want to pay for education materials. This is incorrect. Education institutions currently pay for content and for copying of these materials. These payments come at both the ministerial level and the school board level, depending on the material in question and the provincial financial structure.
CSBA is not suggesting, nor have we ever proposed, that school boards should not pay for intellectual property. The education sector currently pays hundreds of millions of dollars to purchase and license content, such as printed and digital curriculum in many formats, film, music, and art. With Bill C-11, the education sector will continue to pay hundreds of millions of dollars. Nothing in this proposed legislation alters our current relationship with education publishers, content providers, copyright collectives, or the Copyright Board.
Lastly, CSBA is not in favour of the amendment that requires teachers or students of online courses to destroy their notes upon completion of that course. This amendment is unreasonable and impractical, and it does not reflect current practices in online learning where teachers reuse their course materials each year that they teach the same course. Requiring them to destroy their materials will result in wasted time and limit a teacher's ability to effectively teach that same course multiple times.
In closing, the Canadian School Boards Association has always believed that a modern and balanced copyright framework will protect the public interest and produce many societal benefits. The need has reached a critical state, as schools across the country increasingly rely on the Internet and other digital resources to deliver programs.
CSBA supports the passage of Bill C-11 with the minor amendments we have put forward, so that the necessary legislative framework exists to support Canadian students learning in a digital world.
Mrs. Michèle Clarke (Director, Government Relations and Policy Research, Public Affairs, Association of Canadian Community Colleges):
Good morning, Mr. Chair and members of the committee.
My name is Michèle Clarke. I'm the director of government relations and policy research for the Association of Canadian Community Colleges. I'm accompanied today by Claude Brulé, the dean of the faculty of technology and trades at Algonquin College, here in Ottawa.
I would like to thank the committee for extending an invitation to our association to appear here to speak on this important bill.
The Association of Canadian Community Colleges, or ACCC, as it's commonly referred to, is the national and international voice of Canada's 150 colleges, institutes, polytechnics, CEGEPs, university colleges, and universities with a college mandate. With campuses in 1,000 rural and remote communities and urban communities, and 1.5 million learners and 60,000 educators, these institutions draw students from all socio-economic quarters and supply graduates with the advanced skills essential to Canada's economic growth and productivity. Canadian colleges host applied research and innovation projects carried out in partnership with Canadian business communities.
Colleges play a pivotal role in Canadian skills development and in building greater capacity for our Canadian economy. Copyright law is therefore important to them as both creators and users of copyright material.
Colleges understand the need for balance and clarity in the Copyright Act. Bill C-11 helps achieve this by providing a legal framework for areas of copyright law that are currently not addressed in our country's current written law.
Digital technology is rapidly changing the face of post-secondary education in Canada. New technologies are providing teachers and students with fantastic opportunities for teaching and learning in many new ways. Without a clear and modern copyright law, teachers and students may have to forego some of these opportunities provided by technological development.
We welcome the education amendments in the legislation, particularly those dealing with the educational use of the Internet. ACCC supports Bill C-11 for it passes two fundamental tests for our post-secondary community: number one, it strikes a fair and reasonable balance between the rights of copyright owners and users of copyright works; and number two, it has achieved, in large measure, being technologically neutral and meeting the needs of teachers and students today.
ACCC recommends some minor amendments to Bill C-11 that do not alter the essential balance that has been struck in the bill. A summary of these can be found in ACCC's brief addendum, which will be submitted to the committee in the days ahead. The addendum is relatively identical to the brief that was submitted last year by ACCC, with some minor modifications to reflect the new language in Bill C-11.
I would like to share three key points.
First, ACCC strongly supports the educational use of the Internet amendment. It is balanced, reasonable, and a necessary clarification of rights for teachers and students in the digital age. Bill C-11 is needed to provide a clear, modern, and balanced framework for educational use of copyright in the digital age.
Second, ACCC supports the addition of education to the fair dealing purposes. The fear that adding education will allow unlimited copying is unfounded. Copying must still be fair in order to be fair dealing, as set out by the Supreme Court of Canada in 2004. Colleges are not trying to get out of paying for copyright materials. Colleges have paid and will continue to pay for millions of textbooks, periodicals, course packs, digital databases, and collective licences. Nothing in Bill C-11 will change that.
However, the bill needs to clarify that fair dealing can include making copies for a class of students, provided the dealing otherwise qualifies as fair. The U.S. has a fair use provision that is far broader in scope than what is proposed in Bill C-11. The U.S. fair use provision explicitly permits the making of multiple copies of a work for classroom use. Despite this broad fair use provision, the educational publishing industry in the U.S. would appear to continue to thrive.
Third, Bill C-11's digital lock provisions are unnecessarily broad. A better approach is to prohibit breaking a lock only if the purpose is to infringe. Breaking a lock to engage in a lawful activity such as fair dealing should not be prohibited.
We urge the government to enact this legislation. This is an opportunity to safeguard Canadians' learning objectives for generations to come.
I thank you for this opportunity. My colleague and I would be pleased to answer any questions the committee may have.
Ms. Aline Côté:
The three-step test is really important because it defines what it's going to be.
That is going to define the main criteria.
I would like to say a couple of things about everything we have heard so far. We are seeing all kinds of practices that show that the impact of Bill C-11 and its predecessor, Bill C-32, is already being felt. For example, 35 universities have opted out of collective management. Two of them have gone back because they realized that rights management is quite a big deal.
There is also a drop in educational material purchases. With tablets, whiteboards, and so on, there is an upward trend toward buying one set of materials for the whole class. We realize that the Supreme Court also meant that fair dealing will be defined by current practices.
Over the past 15 years, digital practices have gone in all directions. We are talking about 15 years without any specific legislation for that. Even thinkers—one of them was here yesterday but maybe he did not talk about this—encourage you to hurry up and interpret fair dealing as widely as possible, as defined by the criteria in the CCH Canadian Limited decision. This way, when there is a dispute, it will be possible to rule in favour of current practices.
People call us fear-mongers, but we are already seeing things. Not only will this make us lose money and reduce our capacity to develop new materials, but the neutrality of the bill allows for format shifting. As a result, anyone can create something in any format, and shift from one platform to another, go from paper to digital or vice versa, and so on. This feature of the legislation results in a huge loss of control. And the loss of control, with everything that will be available, will make things more complicated.
For example, in many classes, they use digital tablets or iPads. That is very appealing, but then you also have access to YouTube. In light of everything that can be reorganized, posted on the Internet and reused in the classroom, we think that this will have an impact on our ability to keep track of the identification of works. Which one is the original work? Is the work I will be using truncated or tampered with?
Ms. Aline Côté:
One of the things we need to keep in mind is that most of the current course notes would not be covered by this type of provision because they come under collective management licensing. All of that is based on knowing whether it falls within the limits allowed under licensing or if we must withdraw licences because there is fair dealing for education. Everything sort of becomes up for grabs.
We think that the fact that this provision exists and that it will be controlled by external criteria—the two tests that Ms. Clarke spoke about—will lead people to withdraw from collective management, and so the problem will remain whole. If the problem is much better defined, there will be an entire portion of the rights that will effectively be paid, which will enable the entire education sector to do its work, no problem.
So we are suggesting that, for all these types of excerpts, we strongly maintain these provisions that ensure the survival of collective management and that enable the classes to do this very well. We are suggesting limiting this much more, by using the three-step test to define with much greater clarity what is fair. We must make sure not to have too many courses on the market, particularly community courses, courses offered by language schools or many other courses in the private sector, that benefit from this exception in favour of the needs of the school.
We want to develop a legal offer. We have developed a lot and this is what we are talking about. Currently in Quebec, there are 7,800 digital titles, and that number is constantly growing. We experienced an increase of 1,000% in 2011 alone.
What we are currently putting forward is these provisions to ensure that schools have the materials. We would like the excerpts of the work to not move from platform to platform without permission or royalties. However, we must note that, with the ability to shift formats and with reproduction in class, the new provision of Bill C-11 will make it possible to show complete works in full compliance because they will not be subject to the fair dealing criterion.
Given the jurisprudence, all the provisions together will have a significant impact on the market. It isn't about any one provision, but rather how the provisions are interpreted.
Mr. Mike Lake:
To look at the proposed section that's being referred to, what it says at the beginning is that:
||For the purposes of this section, “lesson” means a lesson, test or examination, or part of one, in which, or during the course of which, an act is done in respect of a work or other subject-matter by an educational institution or a person acting under its authority
—and here is the key wording—
||that would otherwise be an infringement of copyright but is permitted under a limitation or exception under this Act.
Just to be clear, what we're talking about here is the allowance of an opportunity to do something that you otherwise wouldn't be able to do. Everything else in terms of the way teaching is done is still allowed in the way that it always has been. Teachers will prepare their notes. My wife is a teacher. She'll still be able to prepare lesson plans and keep those lesson plans and use them in the future. What it allows is a situation wherein.... I'll use an example.
I don't know where Andrew Cash went to school, but he is a performer. If he decided that he wanted to, and one of the teachers invited him back to perform for a class—perhaps an arts class, or something like that—he could go back and perform. In our previous world, where there weren't distance learning opportunities, he would perform, everyone would watch that, it would be part of the lesson, they would learn something and maybe take notes on it—whatever the case—and everything would be okay. What is not allowed, and has never been allowed, is for a student to tape that performance and keep that performance forever, unless Mr. Cash gives permission to do so.
That's what this is trying to address. What it's saying is that it's necessary to make a copy of this performance, or a “fixation” as the rules call it, so that a student in Nunavut could actually see that performance and take part in the class and be able to benefit from seeing Mr. Cash perform and perhaps hear him talk about his experience. But it doesn't allow them to keep a copy forever of Mr. Cash's performance, unless, of course, Mr. Cash decides that he wants to allow that, in which case, according to the first paragraph here, it wouldn't be an infringement of copyright anymore, because Mr. Cash would have given people the right to do it.
That's an important clarification. I don't know whether you have any comment on that, but I think the focus needs to be on this as an opportunity that otherwise doesn't exist. And it takes nothing away from teachers' or professors' ability to teach the way they always have or prepare the way they always have, or from students' ability to take notes on those things and keep them forever.