Canada: 2012 Copyright Tariff Report Vol.4 – The Society of Composers, Authors and Music Publishers of Canada (SOCAN) files its Tariff Proposals with the Copyright Board of Canada

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 fourth issue of the 2012 Copyright Tariff Report we look at the over 50 tariff proposals published in the Canada Gazette on May 28, 2011 by the Society of Composers, Authors and Music Publishers of Canada (SOCAN).

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.

SOCAN

The Society of Authors Composers and Music Publishers of Canada (SOCAN) administers the performing rights of more than 100,000 composer, author and music publisher members by licensing the use of their music in Canada. So if you play music in your establishment, or transmit music (e.g. via the internet as a webcaster or as a music supplier), you are likely responsible for royalty payments to SOCAN.

On May 14, 2011, SOCAN's tariff proposals for 2012 were published in the Canada Gazette thus opening the period for objections. Interested parties have until July 27, 2011 to file an objection to the tariff proposal with the Copyright Board. Filing a timely objection will ensure that an objector is made a party to any formal Copyright Board proceeding.

Commercial Radio (Tariff 1.A) 2012

SOCAN's Tariff 1.A Commercial Radio was last certified for 2008- 2010. In 2012, SOCAN has scaled back from the increases proposed in its 2011 proposal to rates identical to those in the currently certified tariff. SOCAN is proposing rates of 1.5% of gross income for a low-use station (down from the 2011 proposal of 2.6%) and 3.2% on the first 1.25 million in gross income and 4.4% on subsequent income (down from the 2011 proposal of a flat 6%) for all other stations.

SOCAN has proposed a few administrative changes in regards to the submission of music use information. By removing "where available" in two clauses SOCAN is requesting that it be made mandatory that stations i.) provide sequential lists of all musical works broadcast during the reference month, and ii.) provide the Universal Product Code (UPC) of the album and the International Standard Recording Code (ISRC) of the sound recording. Whereas the previously certified tariff asked that the following information be provided to "the extent possible", SOCAN is also asking that the submission of the following information also be made mandatory:

• date and time of the broadcast;
• title of the work;
• title of the album;
• record label;
• name of its author and composer;
• name of the performers or performing group; and
• duration (in minutes and seconds).

SOCAN did not however request an increase in reporting days for which such information is required from the previously certified 28 days a year.

Non-Commercial Radio (Tariff 1.B) 2012

SOCAN's Tariff 1.B Non-Commercial Radio Other Than The Canadian Broadcasting Corporation proposes a rate identical to the previously certified rates i.e. 1.9% of the station's gross operating costs. A "non-commercial AM or FM radio station" is defined as any station which is non-profit or not- for-profit, whether or not any part of its operating expenses are funded by advertising revenues. It is important to note that Tariff 1.B does not apply to the use of music covered under Tariff 22 (Internet) or the SOCAN Pay Audio Services Tariff i.e. for those uses there is an additional royalty.

Canadian Broadcasting Corporation (Tariff 1.C) 2012

SOCAN Tariff 1.C creates a licence to perform for private and domestic use any or all of the works in SOCAN's repertoire by means of the radio network and stations owned and operated by the Canadian Broadcasting Corporation (CBC). SOCAN in 2011 and 2012 has proposed an annual fee of $3,750,000. It is important to note that like Tariff 1.B, Tariff 1.C does not apply to the use of music covered under Tariff 22 (Internet) or the SOCAN Pay Audio Services Tariff. For those uses of music a separate royalty payment is required.

Current Status : A Copyright Board hearing took place in December of 2009 for SOCAN Tariff 1.C for the years 2006-2010. The decision is currently outstanding.

Television (Tariff 2.A, 2.B, 2.C & 2.D) 2012

SOCAN Tariff 2.A Commercial Television applies to broadcast television stations for the communication by telecommunication of music in SOCAN's repertoire for private or domestic use. While proposals have been filed for 2009-2011, the 2012 proposals echoes the amendments made to the 2011 proposal whereby the tariff does not apply to the use of music under SOCAN Tariff 17 (Pay, Specialty and other Television Services by Distribution Undertakings) or notably Tariff 22 (Internet). Under Tariff 2.A stations make an election for either a i.) Standard, or ii.) Modified Blanket license. Under the Standard License SOCAN is again proposing that stations pay 1.9 percent of the stations gross income. Under the Modified Blanket License stations make an election calculated in accordance with Form A which is attached to the tariff. The formula is identical to the proposals for 2009-2011 and the Certified Tariff from 2005-2008 in determining a rate for "non-cleared" versus "cleared" programs. For greater certainty, SOCAN has clarified that "gross income" includes "any revenues or other value received in exchange for the distribution of the station's broadcast signal, in the context of Broadcasting Regulatory Policy CRTC 2010-167."

Tariff 2.C Socieite de telediffusion du Quebec was last certified until 2008. After proposing the existing rate of $180, 000 in 2009, the proposed rate for 2010 through 2012 have increased to $216,000 a year.

SOCAN's proposals for Tariff 2.D for CBC for 2009 through 2012 mirror the certified rates for 2006-2008 of $6,922,586. The proposal again notes that Tariff 2.D does not apply to the use of music covered under Tariff 22 (Internet) or the Tariff 17 (Pay, Specialty and other Television Services by Distribution Undertakings).

Cabarets, Cafes, Clubs, Cocktail Bars, Dining Rooms, Lounges, Restaurants, Roadhouses, Taverns and similar Establishments (Tariff 3.A, 3.B & 3.C) 2012

Under Tariff 3.A Live Music, SOCAN has proposed tariffs applicable to establishments whose music use relates to Live Music (i.e. using live bands does not exempt you from SOCAN tariff royalties). Tariff 3.B Recorded Music Accompanying Live Entertainment covers recorded music (e.g. CD's) used to accompany live music. Tariff 3.C Adult Entertainment Clubs is for recorded music to accompany Adult Entertainment. As it did in its 2011 proposal, SOCAN is seeking rates identical to their certified tariff for 2005-2010. Under Tariff 3.A SOCAN is again proposing 3% of the total amount paid as "compensation for entertainment" to the performers, subject to a minimum fee of $83.56 per year. Under Tariff 3.B, 2% of the "compensation for entertainment" paid to the performers, subject to a minimum fee of $62.74 per year. And under Tariff 3.C SOCAN is again proposing 4.4¢ per day times the capacity (seating and standing) authorized by the liquor license (or a comparable document).

Live Performances at Concert Halls, Theatres and Other Places of Entertainment (Tariff 4.A.1, 4.B.1 & 4.B.3) 2012

SOCAN has made a number of amendments to Tariff 4 which significantly expand its scope. SOCAN has clarified that all the proposals included under Tariff 4 also apply to the performance of i.) musical works by lip synching, ii.) miming, and iii.) notably to the performance in public of an audio-visual recording of a concert.

Last certified from 2003-2008, Tariff 4.A.1 Popular Music Concerts applied to Live Performances at Theatres or Other Places of Entertainment. In addition to the amendments mentioned above, SOCAN has now clarified that Tariff 4.A.1 applies to the use of any or all of the works in SOCAN's repertoire at concert halls, theatres and other places where entertainment is presented, including i.) open-air events; ii.) or when there is a communication to the public by telecommunication of a concert or an audio-visual recording of a concert to another venue customarily used for the presentation of concerts. The tariff is now called Tariff 4 – Live Performance at Concert Halls, Theatres and Other Place of Entertainment.

While the scope of Tariff 4.A.1 has expanded thus expanding the rate base, the rate proposals themselves remained relatively unchanged. Under a per event license SOCAN is proposing (a) 3% of gross receipts from ticket sales of paid concerts, exclusive of any applicable taxes, with a minimum fee per concert of $35; or (b) 3% of fees paid to singers, musicians, dancers, conductors and other performers during a free concert, with a minimum fee per concert of $35. As the tariff now also includes the communication and performance of recorded audio-visual works, where no admission is charged to attend such a performance, the minimum fee per concert of $35 applies. Under an annual license, SOCAN is seeking (a) 3% of gross receipts from ticket sales of paid concerts, exclusive of any applicable taxes, with a minimum annual fee of $60; or (b) 3% of fees paid to singers, musicians, dancers, conductors and other performers during a free concert, with a minimum annual fee of $60. The total fee payable when no admission is charged to attend a performance in public of an audio-visual recording of a concert, or the communication to the public by telecommunication of a concert or audio-visual recording of a concert is $60.

In terms of reporting under Tariff 4.A.1, SOCAN is also proposing that no later than 15 days after each concert, the licensee provide:

• the legal names, addresses and telephone numbers of the concert promoters (if any) and the owners of the venue where the concert took place (if other than the licensee);
• the name of the act(s) at the concert; and
• the title of each musical work performed.

Tariff 4.B.1 Classical Music Concerts applies to live performances at concerts or recitals of classical music. SOCAN has expanded the scope of the proposed tariff in a manner identical to that of Tariff 4.A.1 in that it also now applies to the use of recorded audio-visual works.

The rates for paid concerts under Tariff 4.B.1 are proposed at the previously certified rates for 2008 of (a) 1.56% of gross receipts from ticket sales of paid concerts, exclusive of any applicable taxes, with a minimum fee per concert of $35; or (b) 1.56% of fees paid to singers, musicians, dancers, conductors and other performers during a free concert, with a minimum fee per concert of $35. Like Tariff 4.A.1, where no admission is charged to attend the performance in public of an audio-visual recording of a concert, or the communication to the public by telecommunication of a concert or audio-visual recording of a concert, SOCAN is proposing that the minimum fee per concert of $35 apply. SOCAN is also seeking reporting requirements identical to those proposed in Tariff 4.A.1.

Tariff 4.B.3 Annual License for Presenting Organizations applies to music that forms part of an artistic season of a presenting organization. Under an annual license for a presenting organization, SOCAN is again proposing a rate of 0.96% of gross receipts from ticket sales, subscription and membership revenues, for all concerts (including concerts where no work of SOCAN's repertoire is performed), exclusive of any applicable taxes, with a minimum annual fee of $35. Where a series of concerts and recitals forming part of a presenting organization's artistic season are free of charge, the fee payable is 0.96 % of the fees paid to singers, musicians, dancers, conductors, and other performers, for all concerts (including concerts where no work of SOCAN's repertoire is performed) in the series, with a minimum annual fee of $35. As mentioned above, for Tariff 4.B.3 SOCAN is now proposing additional reporting requirements.

Exhibitions and Fairs (Tariff 5.A & 5.B) 2012

Tariffs 5.A & 5.B license the use of music at an exhibition or fair. The terms and rates of the 2012 proposal are identical to the currently outstanding proposals for 2009-2011 which are identical to the certified rates for 2005-2008. The rates vary whether attendance is over or under 75,000 people. Where attendance is under 75,000 the rates are $12.81 per day if the total attendance is less than 25,000 people; $25.78 per day if total attendance is between 25,001 and 50,000 people; or $64.31 per day if total attendance is between 50,001 and 75,000 people. Where attendance is over 75,000 people the rates are 1.07¢ per person for the first 100,000 people; 0.47¢ per person for the next 100,000 people; 0.35¢ per person for the next 300,000 people; and 0.26¢ per person for any additional people.

In addition to the above rates, a separate rate applies under Tariff 5.B when the exhibition or fair has a musical concert, for which there is an additional admission charge. SOCAN is again seeking fees of 3% of gross receipts from ticket sales to the concert (exclusive of sales and amusement taxes). However, if the concert ticket also allows the purchaser access to the exhibition or fair grounds at any time after the opening on the day of the concert, the general grounds admission is deducted from the above. The fee under Tariff 5.B is calculated on a per concert basis and is due immediately at the close of the exhibition.

Skating Rinks (Tariff 7) 2012

Certified from 2005-2010, SOCAN's Tariff 7 proposals for 2011 and 2012 do not modify the currently certified tariff rates or administrative provisions. Tariff 7 applies to use of live or recorded music in connection with roller or ice skating. Where an admission fee is charged SOCAN is seeking 1.2% of gross receipts from admissions exclusive of sales and amusement taxes. This is subject to a minimum annual fee of $104.31. If no admission fee is charged an annual fee of $104.31 applies.

Receptions, Conventions, Assemblies and Fashion Shows (Tariff 8) 2012

Tariff 8 has been refilled in 2011 and 2012 at the previously certified 2005-2010 rates. A fee is payable for each event, or for each day on which a fashion show is held. For events without dancing, the fees are $20.56 if the room capacity is 1-100; $29.56 if the room capacity is 101-300; $61.69 if the room capacity is 301-500; and $87.40 if the room capacity is over 500. For events with dancing, the fees are $41.13 if the room capacity is 1-100; $59.17 if the room capacity is 100-300; $123.38 if the room capacity is 301-500; and $174.79 if the room capacity is over 500.

Sports Events (Tariff 9) 2012

Tariff 9 applies to the use of works in SOCAN's repertoire whether by performers or through recorded music and in connection with sporting events. SOCAN has proposed rate increases in 2010 (to .095% of gross receipts from ticket sales) and 2011 and 2012 (to .1% of gross receipts from ticket sales). SOCAN is also seeking a change in the reporting provisions whereby the fee must be paid no later than 30 days after the end of the quarter and a report must be filed that includes the actual number of events. Also of note a license under Tariff 9 does not authorize performances of music at opening and closing events for which an additional admission is charged – for such events Tariff 4 (Live Performances at Concert Halls, Theatres and Other Places of Entertainment) shall apply.

Parks, Parades, Streets, and Other Public Areas (Tariff 10.A & 10.B) 2012

Tariff 10.A which applies to strolling musicians, buskers or recorded music in parks, streets, or other public areas, proposes royalties of $32.55 for each day the music is performed subject to a maximum of $222.93 in a three-month period. The rate proposal for 2012 is identical as the 2011 proposal and the currently certified rate. This tariff, and not Tariff 4 (Live Performances at Concert Halls, Theatres and Other Places of Entertainment), applies to concert performances in parks streets or other public areas. Tariff 10.B applies to marching bands or floats with music participating in parades and seeks a rate of $8.78 for each marching band or float with music participating in the parade subject to a minimum fee of $32.55 per day. Both Tariff 10.A and 10.B seek rates identical to the 2011 proposal and the currently certified tariff for 2005-2010.

Circuses, Ice Shows, Fireworks Displays, Sound and Light Shows, and Similar Events (Tariff 11.A) 2012

Tariff 11.A seeks royalties of 1.6% of gross receipts from ticket sales subject to a minimum fee of $61.85 per day for performing the works in SOCAN's repertoire, by means of live performers or recorded music. The 2012 rate proposal is identical to the 2011 proposal and the currently certified 2005-2010 tariff.

Comedy Shows and Magic Shows (Tariff 11.B) 2012

Tariff 11.B proposes rates for live performers or recorded music when used in conjunction with events where the primary focus is on comedians or magicians and the use of music is incidental.

SOCAN is proposing royalties of $36.60 per event. The 2012 rate proposal is identical to the 2011 proposal and the currently certified tariff (2005-2010). When the comedy act or magic show is primarily a musical act, Tariff 4.A (Popular Music Concerts) will apply.

Themes Parks, Ontario Place Corporation and Similar Operations (Tariff 12.A) 2012

Tariff 12.A does not apply to performances covered under Tariff 4 (Live Performances Concert Halls, Theatres and Other Places of Entertainment) or Tariff 5 (Exhibitions and Fairs). Tariff 12.A seeks royalties of $2.41 per 1000 persons in attendance (rounding the number of persons to the nearest 1000); plus 1.5% of live music entertainment costs. The 2012 rate proposal is identical to proposals for 2009-2011 and the currently certified tariff (2005-2008).

Paramount Canada's Wonderland Inc. and Similar Operations (Tariff 12.B) 2012

Tariff 12.B does not apply to performances covered under Tariff 4 (Live Performances at Concert Halls, Theatres and Other Places of Entertainment) or Tariff 5 (Exhibitions and Fairs). Tariff 12.B creates a license to perform the works in SOCAN's repertoire at Paramount Canada's Wonderland and similar operations and seeks royalties of $5.09 per 1000 persons in attendance (rounding the number of persons to the nearest 1000); plus 1.5% of live music entertainment costs. The 2012 rate proposal is identical to proposals for 2009-2011 and the currently certified tariff (2004-2008).

Public Conveyances (Tariff 13.A, 13.B & 13.C) 2012

Aircraft

Certified from 2005-2008 Tariff 13.A applies to the use of recorded music in an aircraft and varies per the type of use and seating capacity of the aircraft.

Rates have been proposed for 2009 to 2010 identical to the certified tariff. However, SOCAN sought an increase and amended its proposal to include audio-visual works starting in its 2011 proposal. Under Tariff 13.A.2 if there is in-flight music played on an aircraft, the fee per calendar quarter for each aircraft ranges from $320 if the seating capacity of the aircraft is 0 to 100 and $660 if the seating capacity of the aircraft is 251 or more. Under Tariff 13.A.3 if there are audiovisual presentations played on an aircraft, the fee per calendar quarter for each aircraft ranges from $160 if the seating capacity of the aircraft is from 0 to 100 to $330 if the seating capacity of the aircraft is 251 or more. Under Tariff 13.A.1 if there is no in-flight music or audiovisual presentation played on an aircraft, the fee per calendar quarter (paid in respect of music while on ground) ranges from $80 if the seating capacity of the aircraft is 0 to 100 to $160 if the seating capacity of the aircraft is 251 or more. Where in-flight music (Tariff 13.A.2) or audiovisual presentations (Tariff 13.A.3) are offered on an interactive basis i.e. the passenger can make their own choice, the proposed rates are doubled. The fee paid in respect of music on the ground (Tariff 13.A.1) is only paid if there is no in-flight music (Tariff 13.A.2) or audiovisual presentation (Tariff 13.A.3) played on the aircraft.

Passenger Ships

Tariff 13.B Passenger Ships applies a rate to recorded music of $1.05 per person per year subject to a minimum annual fee of $62.74. For passenger ships operating for less than 12 months in each year, the fee is reduced by 1/12th for each full month during the year in which no operations occur. The proposed tariffs for 2009-2012 are for the same rates as the certified tariffs for 2005 to 2008.

Railroad Trains, Buses and other Public Conveyances

Tariff 13.C Railroad Trains, Buses and other Public Conveyances (excluding planes and passenger ships) proposes a fee for each conveyance of $1.05 per person per year subject to a minimum annual fee of $62.74. The 2012 rate proposals under Tariff 13.B and Tariff 13.C are identical to the proposals for 2009-2011 and the currently certified tariff (2005-2008).

Performance of an Individual Work (Tariff 14) 2012

Tariff 14 provides a license to perform an individual work (or an excerpt) in SOCAN's repertoire by a performance at any single event when that work is the only work from SOCAN's repertoire performed. Different fees are charged for performances by Musical Groups or Orchestra (5.35 to $133.25) versus Single Instruments ($2.72 to $66.68), regardless of whether there is vocal accompaniment or not, and the appropriate fee is then determined by the size of the potential audience. If a performance is more than 3 minutes to 120 minutes, the rates are increased on a sliding scale from 75% to 500%. The proposed tariff for 2011 and 2012 seek the same rates as the approved tariff (2005 to 2010).

Background Music (Tariff 15.A, 15.B) 2012

A tariff with very broad application across the retail and hospitality sectors, Tariff 15.A provides a license to perform the works in SOCAN's repertoire, by means of recorded music (including through a television set), in an establishment not covered by Tariff 16 (Background Music Suppliers). Under Tariff 15.A SOCAN is seeking annual royalties of $1.23 per square metre (or 11.46¢ per square foot) subject to a minimum annual fee of $94.51 payable by January 31 of the year covered by the license. If no music is performed in January the fee is prorated on a monthly basis and calculated from the first month in which music was performed. Seasonal establishments operating less than 6 months per year pay half the rate, or 60.15¢ per square meter (or 5.73¢ per square foot) subject to the same minimum annual fee of $94.51. The proposals for 2008-12 are identical to the rates certified for 2006-2007. It is important to note that this tariff does not cover use of music expressly covered by other tariffs, including Tariff 8 (Receptions, Conventions, Assemblies and Fashion Shows).

Tariff 15.B deals with telephone music on hold in an establishment not covered by Tariff 16 (Background Music Suppliers) and the 2012 proposal is identical to the rate proposals for 2009-2011 and the current tariff which has been approved for 2005 to 2008 sets rates of $94.51 for one trunk line; and $2.09 for each additional trunk line. A trunk line is a telephone line linking the licensee's telephone switching equipment to the public telephone system and over which music is provided to a caller while on hold.

Background Music Suppliers (Tariff 16) 2012

Tariff 16 creates a license for a background music service supplier to communicate the works in SOCAN's repertoire to the public by telecommunication, or authorize a subscriber to perform such works in public as background music, including any use of music with a telephone on hold. The tariff was recently certified applicable to 2007-2009. While SOCAN had previously proposed increased rates, the proposals for 2011 and 2012 now mirror the certified rates for 2007-2009. For a supplier who communicates a work, the fee per quarter is 2.25% of revenues from subscribers who received such a communication during that quarter. This is subject to a minimum fee of $1.50 per relevant premises. Of note is that any amount paid by a subscriber for equipment is not included as part of revenue for purposes of calculating royalty payments.

For a supplier who authorizes a subscriber to perform in public a work as background music, the fee per quarter is 7.5% of revenues from subscribers who were authorized to perform a work in public as background music during that quarter. Any amount paid by a subscriber for equipment are not included as part of this revenue. This is subject to a minimum fee of $5 per relevant premises. Relevant premises is not defined in the tariff, but is presumed to mean the number of users of the background music service. The fees are reduced by half for "small cable transmission system". This is a cable transmission system that transmits a signal to 2,000 or less premises. If a system's service area is within 5 km of a service area of another system which are commonly controlled and the systems together transmit a signal to more than 2,000 premises, neither system is eligible to have their fees reduced by half.

Transmission of Pay, Specialty and Other Television Services by Distribution Undertakings (Tariff 17) 2012

This tariff licenses the communication to the public of works in SOCAN's repertoire by telecommunication in connection with the transmission of a television signal for private or domestic use. This includes Canadian pay and specialty services, non- Canadian specialty services, community channels and other programming and non-programming services. Tariff 17 does not apply to use of music subject to Tariff 2 (Commercial Television Stations), Tariff 16 (Background Music Suppliers) or Tariff 22 (Internet). It also does not apply to the copying, translating performing of works in a format designed for persons with perceptual disabilities, provided it is done at the request of a person with perceptual disability or for a non-profit organization working for their benefit.

The Tariff is certified for 2006-2008 and the proposals for 2009- 2012 are identical to the certified tariff. For Small Cable Transmission Systems and Unscrambled Low Power Television Stations the total is $10 per year. For community channels, non-programming services and other services generating neither affiliation payments nor gross income that are transmitted by a distribution undertaking, the fee is .014¢ per each premise or Television Receive Only Earth Station designed for the reception of signals transmitted by satellite ("TVRO") served. The tariff allows programming undertakings to elect i.) a Standard Blanket License which is calculated using 1.9% of affiliation payments plus gross income multiplied by number of premises or TVRO's served by the distribution undertaking times 1.9% and then divided by the total number of premises or TVRO's receiving the television signal, or ii.) a Modified Blanket License which is calculated in accordance with Form C to the tariff and takes into consideration a number of factors such as Cleared Programs, gross income and affiliation payments when determining the applicable royalty rate.

Recorded Music for Dancing (Tariff 18) 2012

Certified for 2005-2010 SOCAN through Tariff 18 has proposed rates identical to the existing certified tariff for 2011 and 2012.

For premises accommodating 100 or less patrons the rates vary based on operations. For premises which:

• operate 6 months of the year or less and 1-3 days per week, the annual fee is $267.33;
• operate 6 months of the year or less and 4-7 days per week the annual fee is $534.66;
• operate more than 6 months of the year and 1-3 days per week the annual fee is $534.66; or
• operate operating more than 6 months of the year and 4-7 days per week the annual fee is $1,069.32.

For premises accommodating between 101 and 120 patrons, the above fees are increased by 10% and for premises accommodating more than 120 patrons, the above fees are further increased by 10% per additional 20 patrons accommodated.

Fitness Activities & Dance Instruction (Tariff 19) 2012

Certified from 2007-2010, SOCAN Tariff 19 for Fitness and Dance Instruction (dancing, aerobics, body building, and other similar activities) places a rate for each room in which performances take place of $2.14, multiplied by the average number of participants per week in the room. This is subject to a minimum annual fee of $64. The 2011 and 2012 proposals are identical to the certified tariff for 2007-2010.

Karaoke Bars and Similar Establishments (Tariff 20) 2012

Certified from 2005-2010, SOCAN Tariff 20 licenses the performance of the works in SOCAN's repertoire by means of karaoke machines at karaoke bars and similar establishments and sets annual fee's of $191.24 (for establishments operating karaoke no more than 3 days a week) and $275.56 (for establishments operating karaoke more than 3 days a week). The proposals for 2011 and 2012 are identical to the certified tariff.

Recreational Facilities Operated by a Municipality, School, College, University, Agricultural Society or Similar Community Organizations (Tariff 21) 2012

Tariff 21 creates license to perform the works in SOCAN's repertoire in a recreational facility operated by a municipality, school, college, university, agricultural society or similar community organization (if the facility's gross revenue for the year does not exceed $15,422.88) during recreational activities that would otherwise be subject to Tariff 5.A (Exhibitions and Fairs), Tariff 7 (Skating Rinks), Tariff 8 (Receptions, Conventions, Assemblies and Fashion Shows), Tariff 9 (Sports Events, including minor hockey, figure skating, roller skating, ice skating, youth figure skating carnivals and amateur rodeos), Tariff 11.A (Circuses, Ice Shows, Fireworks displays, Sound and Light Shows and Similar Events), or Tariff 19 (Fitness Activities and Dance Instruction). Approved for 2005 to 2010, the annual fee is $185.07 for each facility, so long as the licensee's gross revenue for the year does not exceed $15,422.88. Tariffs identical to the certified tariff have been proposed for 2011 and 2012.

Online Music Services 2012

SOCAN Tariff 22.A applies to Online Music Service. In its 2012 proposal SOCAN has expanded the definition of an "online music service" to mean a service that:

• delivers streams (recommended or on demand) and downloads (limited or permanent) to subscribers;
• includes cloud-based music services and other services using similar technology; but
• excludes a service that offers only streams (other than recommended) in which the file is selected by the service, which can only be listened to at a time chosen by the service and for which no advance play list is published.

Recommended and On-Demand Streams

SOCAN has expanded the rate calculation for On-Demand Streams to include "Recommended Streams." A Recommended Stream is defined as a stream delivered by an information filtering system that presents content that is likely to be of interest to the user. The rate proposed for a service offering Recommended and On-Demand Streams - but which does not offer Limited Downloads - is proposed at 15.2% (compared to the certified 6.8% for 1996-2006) of the gross revenue of the service for the month, excluding amounts paid to the service for permanent downloads, multiplied by the number of plays of files requiring a SOCAN licence during the month, and then divided by the number of plays of all files during the month. This calculation is subject to a minimum fee of 96.2¢ per subscriber (compared to the certified rate of 43.3¢).

Limited Downloads

For a service offering Limited Downloads - which are defined as a download which uses technology that causes the file to become unusable when a subscription ends - with or without streams the rate proposed is 12.6 % (compared to the certified 5.7%) of the gross revenue of the service for the month (15.6% in the case of a service that offers previews), excluding amounts paid to the service for permanent downloads, multiplied by the number of limited downloads requiring a SOCAN licence during the month, and then divided by the total number of limited downloads during the month. This calculation is subject to a minimum fee of $1.22 per subscriber if Portable Limited Downloads are allowed, and 79.8¢ per subscriber if they are not. A Portable Limited Download means a limited download that uses technology which allows the subscriber to reproduce the file on a device other than a device to which an online music service delivered the file.

Permanent Downloads

For services offering Permanent Downloads, meaning a download other than a Limited Download, the rate proposed is 6.8% (compared to the certified 3.1%) of the gross revenue of the service for the month (9.8% in the case of a service that offers Previews), multiplied by the number of Permanent Downloads requiring a SOCAN licence during the month, and then divided by the total number of Permanent Downloads during the month.

Where an online music service subject to payment for Recommended and On-Demand Streams or Limited Downloads also offers Permanent Downloads, the royalty payable by that service for each Permanent Download requiring a SOCAN licence is 6.8% of the amounts paid to the service for the Permanent Downloads (9.8% in the case of a service that offers Previews), subject to a minimum fee of 3.4¢ per Permanent Download in a Bundle that contains 15 or more files, and 4.6¢ per Permanent Download in all other cases. A Bundle is defined as two or more digital files offered as a single product, if at least one file is a Permanent Download.

Other Uses of Music on the Internet 2012

Tariff 22.B to 22.G apply to Other Uses of Music on the Internet. The 2012 proposal in a "Note to Prospective Users" provides a summary of the current state of Tariff 22.B to 22.G which were first proposed by SOCAN for the year 2006 as part of a new Tariff 22 structure. As noted by SOCAN, the proposals were:

Tariffs 22.B to 22.G apply to "Sites or Services". SOCAN has defined these to mean, "a site or service accessible via the Internet or Similar Transmission Facilities from which content is transmitted to Users". In its 2012 proposal SOCAN has also added the following to the definition, "For greater certainty, "Sites or Services" includes cloud-based services and other services using similar technology."

Audio Webcasts (Tariff 22.B) 2012

1. Similar to Pay Audio
   
   For Sites or Services whose content is similar to that of a pay audio service (SOCAN Pay Audio Services), SOCAN is proposing royalties of:
   
   
   • the greater of 20% of the Gross Revenues earned by the Site or Service, or
   • 20% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     
2. Similar to Commercial Radio
   
   Sites or Services whose content is similar to that of a conventional radio station (i.e. those covered by Tariff 1.A), SOCAN is proposing a royalty rate of the greater of:
   
   
   • 15% of the Gross Revenues earned by the Site or Service, or
   • 15% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     
3. Similar to CBC Radio
   
   For Sites or Services whose content is similar to that of a CBC radio station (i.e. those stations subject to Tariff 1.C), SOCAN is proposing a royalty of the greater of:
   
   
   • 15% of the Gross Revenues earned by the Site or Service,
   • or 15% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     
4. Similar to Non-Commercial Radio
   
   For Sites or Services whose content is similar to that of a conventional radio station subject to Tariff 1.B (Non-Commercial Radio), SOCAN is proposing the greater of:
   
   
   • 7.5% of the Gross Revenues earned by the Site or Service, or
   • 7.5% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     

Webcasts of Radio Station Signals (Tariff 22.C) 2012

Tariff 22.C applies a royalty for the additional use of music over the Internet (in this case webcasting) by those radio stations who are subject to a tariff for their traditional broadcast offerings.

1. Webcasts of Commercial Radio Signals
   
   For the communication of musical works as part of the signal of a conventional radio station (otherwise subject to Tariff 1.A), SOCAN is proposing a royalty of the greater of:
   
   
   • 15% of the Gross Revenues earned by the Site or Service, or
   • 15% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     
2. Webcasts of CBC Radio
   
   For the communication of musical works as part of the signal of a conventional CBC radio station (otherwise subject to Tariff 1.C), SOCAN is proposing a royalty rate of the greater of:
   
   
   • 15% of the Gross Revenues earned by the Site or Service, or
   • 15% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     
3. Webcasts of Non-Commercial Radio
   
   For the communication of musical works as part of the signal of a conventional radio station (otherwise subject to Tariff 1.B), SOCAN is seeking a royalty of the greater of:
   
   
   • 7.5% of the Gross Revenues earned by the Site or Service, or
   • 7.5% of the Gross Operating Expenses of the Site or Service,
   • with a minimum monthly fee of $200.
     
     

Audiovisual Webcasts (Tariff 22.D) 2012

In its 2011 proposal SOCAN clarified that Tariff 22.D applies to Sites or Services that communicate television programs, films and other audiovisual content containing musical works, irrespective of the technical nature of the communication (e.g. whether the communication is in the form of a stream or download). The tariff applies to Sites or Services whose content is similar to that of a conventional television station (i.e. subject to Tariff 2) or a programming undertaking (i.e. subject to Tariff 17). So a tariff with a broad application to virtually all Sites or Services which utilize audio-visual works on the internet, SOCAN is seeking the greater of:

• 15% of the Gross Revenues earned by the Site or Service, or
• 15% of the Gross Operating Expenses of the Site or Service,
• with a minimum monthly fee of $200.

Webcasts of Television Station Signals (Tariff 22.E) 2012

In a manner similar to Tariff 22.C, Tariff 22.E seeks a royalty for the communication of musical works over the Internet as part of the signal of a conventional television station (otherwise subject to Tariff 2) or a programming undertaking (otherwise subject to Tariff 17). For the webcast of Television Station Signals SOCAN is proposing a royalty of the greater of:

• 15% of the Gross Revenues earned by the Site or Service, or
• 15% of the Gross Operating Expenses of the Site or Service,
• with a minimum monthly fee of $200.

Game Sites (Tariff 22.F) 2012

For the communication of musical works as part of games (including gambling), from Sites or Services that consist predominantly of games, SOCAN is proposing a royalty of the greater of:

• 10% of the Gross Revenues earned by the Site or Service, or
• 10% of the Gross Operating Expenses of the Site or Service,
• with a minimum monthly fee of $200.

User Generated Content (Tariff 22.G) 2012

This tariff applies to the communications of musical works from user generated content Sites and Services. As noted by SOCAN this includes, but is not limited to, sites like YouTube, Facebook and MySpace. SOCAN is proposing royalties of the greater of:

• 15% of the Gross Revenues earned by the Site or Service or
• 15% of the Gross Operating Expenses of the Site or Service,
• with a minimum monthly fee of $200.

SOCAN is also proposing that in the case of an amateur podcaster whose use of music represents less than 20% of the podcast's overall programming time, and where such podcasts generate no revenues, that an annual licence fee of $60 be applicable.

Other Sites (Tariff 22.H) 2012

The catch-all internet tariff, Tariff 22.H proposes a royalty of the greater of:

• 10% of the Gross Revenues earned by the Site or Service, or
• 10% of the Gross Operating Expenses of the Site or Service,
• with a minimum monthly fee of $200.00,

for the communications of musical works from a Site or Service other than those mentioned in Tariff 22.A to 22.G.

Hotel and Motel In-Room Services (Tariff 23) 2012

Tariff 23 creates a license to communicate to the public by telecommunication the works in SOCAN's repertoire by means of hotel or motel in-room audio-visual or musical services. Last certified for 2007-2008 the fee payable per quarter is the total of 1.25% of the fees paid by guests to view audio-visual works (other than mature audience films); 0.3125% of the fees paid by guests to view mature audience films containing any work which would require a SOCAN license (films marketed as adult entertainment); and 5.5% of the revenues of the provider of any musical service. Tariffs have been proposed for 2009 through 2012 at rates identical to the approved tariffs for 2007 and 2008.

Satellite Radio Services (Tariff 25) 2012

Tariff 25 applies to Satellite Radio Services for the communication to the public by telecommunication of works in the SOCAN repertoire for direct reception by subscribers for their private use, i.e. it does not authorize the use of a work by a service in connection with its delivery to a commercial subscriber which is subject to a different tariff such as Tariff 16 (Background Music Suppliers). In 2010, the proposed SOCAN tariff differed substantially from the approved tariff from 2005-2009. In 2011 and now again in 2012, SOCAN has proposed a higher royalty of 10% of service revenues subject to a minimum fee of $1.00 per subscriber (compared to the certified rates of 4.26% and 43¢). SOCAN has also proposed additional details on how the Satellite Radio Services would be required to calculate their 10% of service revenues:

• 10% multiplied by the amounts paid by subscribers for a service (including activation and termination fees as well as membership, subscription and other access fees), subject to minimum fees of $1.00 per subscriber (The service shall ensure that the minimum fee is paid for each subscriber receiving the service free of charge); PLUS
• 10% multiplied by the total amounts received by the service for the following: advertising revenues, product placement, promotion and sponsorship, net revenues from the sale of goods or services and commissions on third-party transactions, but excluding advertising agency fees, revenue accruing from any business that is not a necessary adjunct to the distribution of the service or the use of the service's broadcasting facilities and revenue generated from the sale of hardware and accessories used in the reception of the service

Pay Audio 2012

SOCAN Pay Audio Services was certified for 2003-2009. The royalty payable to SOCAN per month is 12.35% of the affiliation payments payable during a month by a distribution undertaking. However under a number of specific circumstances (e.g. if the distribution undertaking is a Small Cable Transmission System, an unscrambled Low (or Very Low) Power Television Station, or a system that performs a function comparable to that of a cable transmission system which uses Hertzian waves) the royalty is reduced to 6.175% of the affiliation payments payable for the year. For 2010-2012 SOCAN proposed rates identical to the 2003-2009 certified rates.

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.