Every year on March 31 Canadian Collective Societies (Collectives) file tariff proposals with the Copyright Board of Canada. These tariff proposals set out what the Collectives believe businesses should pay for the use of music, audio-visual works (e.g. movies) and literary works (e.g. books).
In this third issue of the 2012 Copyright Tariff Report we look at the proposals published in the Canada Gazette on May 21, 2011 by i.) the Audio-Visual Licensing Agency (AVLA) and Société de gestion collective des droits des producteurs de phonogrammes et de vidéogrammes du Québec (SOPROQ), ii.) the ACTRA Performers' Rights Society (ACTRA PRS) and the Musicians' Rights Organization Canada (MROC), and iii.) ArtistI for reproductions made by Commercial Radio Stations.
What is a Collective Society?
A collective society is an organization that administers rights in copyrighted works as set out in the Copyright Act of Canada (the "Act"), such as CDs, movies or books. Collectives operate on behalf of the thousands of copyright owners who are its members. Collectives monitor and collect compensation for the use of creative works where it would otherwise be unmanageable or inefficient for individual copyright owners to do so on their own due to the large number of users involved. For example, it would be challenging and costly for an individual copyright owner to monitor and collect compensation from restaurants across Canada who may play her music as background music. Collectives also simplify the act of licensing by allowing businesses to make one payment rather than potentially hundreds to use copyrighted works in their day-today operations.
Are Collective Societies legal?
Yes, under Canadian law Collectives are legal in Canada. Many Collectives are given rights under the Act or granted rights by the Copyright Board of Canada.
What is a tariff?
A tariff is a legal document drafted by a Collective which sets out the terms and conditions for using copyrighted works in a business. Tariffs set out the royalty (i.e. dollar amounts) a user must pay, how these royalties are calculated (e.g. based on square footage or a percentage of revenues) and any reporting or administrative provisions a user must comply with (e.g. reporting songs used or number of copies made). Tariffs can be proposed by the Collectives and certified by the Copyright Board of Canada to be paid for multiple years.
Who do tariffs apply to?
Tariffs apply to businesses that play music or show videos as background in their establishments (e.g. a fair, a restaurant or a fitness facility). Businesses who sell music are also required to pay tariffs (e.g. background music suppliers, online music retailers). Educational institutions or businesses that photocopy articles or textbooks must pay tariffs as well. Television and radio stations are required to pay tariffs for using copyrighted works such as music, movies, or television programs.
What is the Copyright Board of Canada?
The Copyright Board of Canada (the "Copyright Board") is an economic regulatory body located in Ottawa. The Copyright Board is empowered to establish and certify the tariffs to be paid for the use of copyrighted works in Canada, following a formal public legal proceeding. When the Copyright Board certifies a tariff this means that it has determined the tariff is enforceable under Canadian law.
Why do tariffs matter?
The enforcement of tariffs can result in businesses paying significant royalties that directly affect their bottom-line. Businesses may also be liable to make payments under more than one tariff. While large broadcasters are aware of their obligations to make royalty payments to the Collectives, many small Canadian businesses or industry associations may not be aware of the tariffs or the multitude of Collectives who administer these rights. While the tariff process may seem confusing or daunting, with expert advice the smallest player can advance its interests and meaningfully participate in Copyright Board proceedings, potentially influencing the outcome of decisions that directly impact profitability.
When do tariffs apply?
Tariffs apply for the entirety of the time frame proposed by the Collective and as approved by the Copyright Board. As a result, the tariffs discussed in this document that were filed on March 31, 2011 will apply from January 2012 onwards. While the formal certification process by the Copyright Board may take years (e.g. the tariff may not be certified until 2015), the Collective is within its rights to seek payment back to the beginning of the proposed period (i.e. January 1, 2012), with interest.
How to become a party to a Copyright Board proceeding?
The tariff's publication in the Canada Gazette serves as official notice to Canadians of the tariff's existence. A business wishing to object to a tariff proposal filed by a Collective must, on its own or through its representative, file a notice to the Copyright Board within 60 days of its publication in the Canada Gazette. The business then becomes an "Objector" and is entitled to make its views known as part of the royalty rate-setting proceeding at the Copyright Board.
What generally happens during a Copyright Board proceeding?
Once the list of objectors has been confirmed, the Copyright Board will set a schedule for the formal legal proceeding in consultation with the Objector(s) and the Collective that filed the tariff. This schedule includes the opportunity to ask questions of the other parties. Following a period of questions, each party will file their Statement of Case (the Collectives generally go first) and the Collective will also file a Reply Case in response to the arguments of the Objector(s). The proceedings occur in Ottawa and can last anywhere from a day to a few weeks depending on the complexity of the proposed tariff.
The AVLA Audio-Video Licensing Agency (AVLA) and the Société de gestion collective des droits des producteurs de phonogrammes et de vidéogrammes du Québec (SOPROQ) (jointly AVLA/SOPROQ) are collectives that administers the copyright in master audio recordings and license the reproduction of audio recordings for commercial uses.
Commercial Radio 2012-2017
AVLA/SOPROQ's inaugural tariff for Commercial Radio was certified for 2008-2011. Under the AVLA/SOPROQ Commercial Radio Tariff 2012-2017, it is proposed that a low-use station pay .15% (up from 0.113%) on its first $625,000 in gross income in the year; .288% (up from 0.234%) on its next $625,000 in gross income in the year; and .482% (up from 0.405%) on any subsequent gross income.
It is proposed that any other station pay .338% (up from 0.278%) of its first $625,000 in gross income in the year, .663% (up from 0.564%) of its next $625,000 in gross income in the year; and 1.375% (up from 1.192%) on any subsequent gross income. AVLA/SOPROQ have proposed a number of administrative changes in their 2012-2017 proposal. In terms of scope, the tariff now also applies not just to reproductions of sound recordings but also to those performers' performances which AVLA or SOPROQ administer on behalf of the record labels or other rights holders in the sound recordings. In regards to royalty calculations, where two or more stations, including lowuse stations, are owned by the same company, it is proposed that the station pay royalties based on the total combined gross income for the year of all of the stations owned by the company. In respect of music use reporting requirements, in the event that a station does not provide the sequential lists by the prescribed due date, AVLA/SOPROQ are proposing that the station pay a late fee of $50.00 per day. AVLA has also proposed a number of changes to the music use reporting requirements such as the submission of:
- catalogue number of the album;
- track number on the album;
- duration of the sound recording as listed on the album;
- type of usage (feature, theme, background, etc.);
- whether the track is a published sound recording; and
- cue sheets for all syndicated programming.
AVLA/SOPROQ is also requesting music use information be provided in regards to all sound recordings broadcast. The previous tariff required radio stations to submit sound recording information for 28 days a year.
ArtistI is the collective society of the Union des artistes ("UDA"). It administers the remuneration rights and copyrights of performers.
Commercial Radio 2012-2014
The inaugural ArtistI Commercial Radio Tariff was certified for 2008-2011. Under the ArtistI Commercial Radio 2012-2014 proposal, it is proposed that a low-use station pay to ArtistI .005% (up from 0.003%) of its first $625,000 in gross income in the year; .009% (up from 0.005%) of its next $625,000 in gross income in the year; and .015% (up from 0.008%) on any subsequent gross income. Any other station shall pay to ArtistI .01% (up from 0.006%) of its first $625,000 in gross income in the year; .02% (up from 0.011%) of its next $625,000 in gross income in the year; and .042% (up from 0.023%) on any subsequent gross income. The remainder of the tariff proposal remains similar to the previously certified tariff for 2009-2011.
ACTRA PRS/ MROC
The ACTRA Performers' Rights Society ("ACTRA PRS") is responsible for the collection and distribution of fees, royalties, residual fees and all other forms of compensation or remuneration to which members and permit holders of the Alliance of Canadian Cinema Television and Radio Artists (ACTRA), and others may be entitled to as a result of their work or engagement in the entertainment and related industries. Musicians' Rights Organization Canada (MROC) is the copyright collective that collects and redistributes to its musicians royalties and remuneration flowing from Re:Sound and similar societies around the world. Those monies arise out of the radio airplay, public performance and the private copying of sound recordings on which musicians have performed.
Commercial Radio 2012
ACTRA PRS/MROC Commercial Radio Tariff 2012 seeks remuneration from Canadian commercial radio stations for the reproduction of performers' performances. The previous proposals for 2010 and 2011 have yet to be certified (or heard) by the Copyright Board. The 2012 proposal seeks monthly payments from a "low-use" commercial radio station of 0.054% (down from 0.1%) of the stations first $625,000 in gross income; .112% (down from 0.21%) of the station's next $625,000 in gross income; and .195% (down from 0.32%) of the stations remaining gross income. For all other commercial radio stations, the rate payable for the reference month is .133% (down from 0.3%) of the stations first $625,000 in gross income; .273% (down from 0.6%) of the station's next $625,000 in gross income; and .573% (down from 0.91%) of the stations remaining gross income.
In terms of administrative changes ACTRA PRS/MROC have made a number of changes streamlining both the language and scope of the tariff. In terms of scope, the 2012 tariff proposal also now entitles a station to authorize a person to reproduce a performer's performance for the purpose of delivering it to the station.
Please note that there may be additional terms and conditions in the tariff proposals which affect your business. Interested parties have until July 20, 2011 to file an objection to the tariff proposals with the Copyright Board. Filing a timely objection will ensure that an objector is made a party to the proceeding.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.