News

Pandora Blames Licensing Costs, Not Copyright for Blocking Canada

The Canadian Press runs an interesting story on some of the mobile music services that have yet to enter the Canadian market.  Tim Westergren, the founder of the hugely popular Pandora service, places the blame squarely on the fees being demanded by record labels and rights societies, indicating that Pandora will not launch in Canada until fees come down.  MOG, another service, indicates that it may enter the Canadian market, but will have to charge higher fees (thereby slowing adoption) due to the music industry demands. 

Canadian Recording Industry Association President Graham Henderson, doing his best to alleviate the music service concerns, essentially says that they are wrong and that licence fees are not problem.  Instead, he argues that copyright that is the real reason the services are not entering the country (none of the services interviewed appear to have raised copyright as a concern), claiming that Canadians “have no appetite for a legal marketplace.”  Yet according to Pandora, it is the music industry that is to blame, not the law nor individual Canadians.

40 Comments

  1. I think I’ll believe Pandora over the CRIA.

  2. We’re all criminals, apparently
    In the article, Henderson also says, “Why would you spend a lot of money trying to build a service in Canada when Canadians take so much without paying for it?” Wow. Way to slander Canadians. Yet again, an advocate for stronger copyright is portraying all Canadians as criminals who need a stronger law to save them from themselves. I’m glad that my appetites, as a Canadian who doesn’t download music illegally and would love to see more legal media streaming in Canada, matter so much to the vaunted Graham Henderson. I guess that makes me a sheep in his eyes? I’d prefer to be called a consumer.

  3. liars!
    Mr. Henderson:

    Are you accusing Mr. Westergren of being a liar? He came right out and said why Pandora won’t come to Canada. He said you are demanding too much money. And yet here you are saying that he is lying and that his real problem is that Canada has no copyright protection.

    Why would he lie about this? What motivation does he have to hide his real reason being lack of copyright? I can think of none.

    Yet on the other hand, if it is you that is lying, I can see your motivation for it — greed.

  4. Enough With Canada’s Copyright Cartel
    Please, when are we going to say enough is enough with Canada’s Copyright Cartel?

    For years Canadians have paid a LOT more for a lot less content than Americans. Why? Because the Canadian Copyright Cartel adds in their cut BEFORE they DISTRIBUTE American content to Canadians. They can do this because the Canadian government has given them a virtual monopoly on content distribution to protect Canadian culture and local TV”.

    Recently NetFlix launched in Canada and it doesn’t take a genius to figure out why NetFlix Canada lauched with such unbelievably limited content. I suspect Canada’s Copyright Cartel definitely had something to do with it.

    It’s time for Canadian broadcasters to step out from behind their “local television” and “Canadian culture” curtains and start competing in the vaulted free market they claim to operate in.

    If I’m going to pay two or three times the going rate for content I’d rather pay the actual producer/creator rather than the dealer on the street corner in Toronto.

  5. Vincent Clement says:

    Yes, because Pandora should pay again for music it has already licensed.

    I was a MusicMatch Jukebox user before Yahoo bought the company and destroyed it. I subscribed to MusicMatch Radio. It was great way to have the music that I liked streamed to my computer. But then licensing got in the way the service was discontinued to non-US residents.

    I never did subscribe with a Canadian version since most of them were of sub-par quality.

  6. Defacto
    Piracy is the defacto reason given for not doing something by the industry. “We aren’t developing this video game title for the PC platform due to piracy concerns”, “We aren’t offering this broadcasting service because of piracy concerns”… it’s a never ending guilt trip. If there’s a demand for something and you can’t fill that demand for whatever reason, blame piracy!

    In the end I think it boils down to American protectionism. In a nation-wide temper tantrum, they’re putting up economic walls (on many fronts) and they will rot within them. Good Riddance!


  7. @David: My fear is that after they rot for a while, and hunger settles in, they will start WWW III “War On Terror and Piracy”.

    Nap. πŸ™‚

  8. This has always been a problem to access licensing and rights over the past 10 years. It wasn’t that long ago when the US cartels tried to sewer Pandora. It took many court battles and negotiations to come to a compromise.

    The leading problem for artists and creators and their income are those that make licensing an almost impossible task for innovators. This is very common still in the US. It’s not copyright that’s the problem with slow innovation. MP’s should and need to look deeper into the problems currently faced by innovators, especially in the media sector.

    Innovation is the key to economic success, it’s too bad the CRIA doesn’t believe in innovation, and in fact innovation will continue to slow down huge if we all were to cave into the CRIA’s requests. We need fair licensing, and a stream lined system that helps innovators, not a system where cartels have control over the market, and set prices to the point where innovation can not occur the way it needs to right now.

    Mr. Henderson is contributing to the downfall of all of the artists pay cheques by his comments on this story. Canadian creators should seriously start to add up the numbers on how much potential income people like Mr. Henderson have robbed you of!

  9. This line makes me laugh!!!
    “Why would you spend a lot of money trying to build a service in Canada when Canadians take so much without paying for it?”

    This is classic chicken vs. egg mentality. They claim Canadians take so much, so why build a service. But without affordible services what options do Canadians have? There is A LOT of content simply NOT available to Canadians. For some reason whole situation reminds me a Pink Floyd quote, “If you don’t eat yer meat, you can’t have any pudding! How can you have any pudding if you don’t eat yer meat?!”

    This is a smokescreen put on by the Canadian media industry as a means to keep these services out. If a service like an actualy “full blown” NetFlix, or Pandora, or Hulu launched in Canada, it would be devastating to our industry as it exists today. They’re so far behind with the technology, that there is no way they could actually compete.

  10. It seems the Music and Movie Industries DON’T want us to have US content
    They seem to be happying turning away Last.fm,zune,hulu,pandora,etc..
    “cause they ain’t canadian enough.” Isn’t a answer..It’s a EXCUSE that they keep sputtering out of their mouths.Ppl like bell can’t have fast speeds like the US cause “They are only for americans,we can’t have those speeds.”It’s the big fat cat canadian businesses that are making us fall behind.

  11. Government should regulate licensing fee’s based on a percentage of income. I think this article quoted that the Canadian cartels wanted close to 47% of total income for licensing. Where’s the incentive to innovate? Artists are losing out BIG time because of this.

    PRS for Music (the UK version of SOCAN) released a white paper a few years back. They were asking for a 2 year moratorium on copyright for new innovators, and digital start ups. I don’t think that actually went any where, but we need something in the media industries to drive innovation forward. Oppressive copyright laws will only make it worse on industry and for creators.

    I believe in the right for the creator to get paid for their works. What I don’t believe in is a few companies determining how, how much, and where that money is made. Creators that align themselves with the CRIA and other creators groups calling for much stricter copyright reforms, will not see any raise in their pay as a result, and if government obliges their situation will get much worse due to the all out attacks on digital innovation for legal services. As a result, the use of illegal services will continue to rise, you can count on that.


  12. @Junji Hiroma: “They seem to be happying turning away Last.fm,zune,hulu,pandora,etc.. ”

    They want to stick to their model of selling encrypted plastic discs. I guess they’re scared by any kind of competition, so they’re asking outrageous licensing prices for everyone else – as to dissuade them from even starting.

    Nap.

  13. Un-Trusted Computing says:

    Go Pandora for telling it like it is
    To be clear I really don’t think Pandora is worth the money they charge for their services…

    When they were in Canada, (before that whole rights fiasco started back in ~2005 era)

    I thought it was an “interesting” service, and played with their algorythms a lot to try and get inspired to find other artists that were similar to what I was listenning to at the time.

    I thought it was a good time waster but no more.

    Tim Westergren is right about one thing though… lincensing in Canada is a huge pain. (not that I feel his service should even require it but I digress) So there you have it, straight from the horse’s mouth:

    “We’re not it Canada because it’s too hard to do business; not because we’re worried about our safety”

  14. Anarchist Philanthropist says:

    We don’t need it.
    Seriously every radio station broadcasts their music online. Sirius Satellite / XM broadcast their stations online as well. Why do we need pandora?

  15. Guillaume Ferland says:

    It has been a problem for years
    I have been working with many radio stations on digital audio strategies and services for many years now. I’m working mainly with community radio stations and smaller private broadcasters.

    Currently there is no way to do simple things like offering an archive of radio shows that contains music online in a fully legal way. The collection societies have refused many times to discuss with anyone to enable that kind of service.

    But, after this, they have now send requests for tariffs to the Copyright Board for most kind of uses online. If these rates are approved as is, then it’s the end of radio content on the web in Canada. If you assume the minimum rates apply, the monthly bill is 200 $/month for royalties to SOCAN + percentages of Gross Income (not just on the audio part, which usually is 0) for SODRAC and CSI and . That’s excluding any fee associated with offering the service.

    Currently everythjing web-related is a center of cost for radios, especially smaller players. They spend thousands of dollars a year of offering these services, as people demand them, but see no return. Radios also know that the listenership is moving online, and they want to follow the trend. They need to if they want to stay relevant. But not at all cost.

    If you add another 3000-5000 $ a year, they will simply stop, as the expense will be too high.

  16. Hmm, an awful lot of lint in there.
    I have used the Pandora example in my posts quite often. It’s no secret that licensing costs, not Canadian law, sunk the Canadian service, just go to the FAQ on their website. When Pandora actually did operate in Canada I quite enjoyed it and bought at least three albums of new artists I discovered through it. I was quite disappointed when it was shut down.

    I was also excited about Netflix launching in Canada and subscribed yesterday when it launched. Only to discover that it will not run on netflix ready TV’s or Blu-ray players as it does in the USA. Is this a technological issue or licensing? Either way I cancelled as it was meant to be a service for our family room and was disappointed at the reduced selection over the American service.

    So, here I am, a vocal supporter of fair dealing [not stealing] trying to find and use legal services but being blocked by bureaucracy, myopia & greed. Is it any wonder that some resort to less legal methods for their media?

    Amusing statistics and facts:

    – International business executives actually rank Canadian intellectual property protection [13th] ahead of the United States [24th].
    – India, Chile and Canada each saw the greatest worldwide improvement in reducing software theft, each achieving a 3% decline in their piracy rates in 2009.
    – The volume of copyright infringement in the USA is 600% higher that Canada.
    – The USA mysteriously does not appear on the Special 301 copyright infringement list.

    – And interestingly, online content piracy has risen in France despite the nation’s super-tough three-strikes Net ban law. Just showing my long standing opinion that greater attempts at draconian control will only lead to lead to less respect for the media itself and greater infringement.

    Mr. Henderson must live in a candy coated world if he thinks he understands the Canadian market or consumer. It seems to me the content industry elite should spend less time contemplating their navels and get to work for benefit of their clients .. the artists and creators.

  17. Question
    What other countries is Pandora available in?

  18. C-32 enhancement
    @Guillaume Ferland: “The collection societies have refused many times to discuss with anyone to enable that kind of service. ”

    So there’s something missing from C-32. Practically a copyright law creates a monopoly for the “copyright holder” but in the case of C-32 doesn’t say anything on what should be done if the “holder” abuses its monopoly position.

    So either:

    – repeal the copyright law so there would be no monopoly created at all

    or

    – add an antitrust clause that would create sanctions for abuse (like in the “holder” loses his “copyright” if he refuses to license it for a reasonable fee to other distributors).

    Nap.

  19. Anarchist Philanthropist says:

    @Crockett

    “blu-ray players”

    Works just fine on the PS3.

  20. @Anarchist Philanthropist “Works just fine on the PS3.”

    Which would be just fine if I had a PS3 and not just bought a netflix capable Blu-Ray player for that purpose!

  21. @Doug “What other countries is Pandora available in?”

    It was operating in Canada and a few others for a time, now it it only available in the USA.

  22. @Crocket And interestingly, online content piracy has risen in France despite the nation’s super-tough three-strikes Net ban law.

    Ah but thats simple, pirated works now have a consumer value attached to them and that is you could lose your Internet access if cought. So there’s probably more commercial pirating going on as they’re probably making money from it. Prohibition never works unless you’re the one receiving money from the prohibited items or the politician who got paid off to pass the law..

  23. lint
    …”Mr. Henderson must live in a candy coated world if he thinks he understands the Canadian market or consumer.”

    I suspect he understands it all too well, but since it presages the end of his business model(s), he and many others, will fight it to the bitter end. There is all too much passion and rhetoric, and not enough logic, observation, and recognition that the world has and continues to change.

    Certainly technology allows new and more efficient business models ($$$). But it also enables new or repressed society behaviors, things people could never do before. If your focus is only on the business model aspects, you will get sideswiped by the society changes.

    Consider: In this digital age, the cost of distribution for digital goods approaches zero. Would you like to deliver 1 million digital items at a nickel each, or 10,000 digital items at a dollar each? Especially when the second choice greatly increases the likelihood of society to exploit their newly enabled behavior, and “share” the comparatively expensive item.
    Yeah a dollar doesn’t seem like a lot, but it is still 20 times the value of a nickel. Statistics regularly show that the largest percentage of users doing “illegal” content sharing are also the most likely to be avid purchasers of content as well.

    Digital technology doesn’t change the global percentage of money available for entertainment and creative appreciation. Technology simply allows it to be spread to a wider audience. What does change, is localized competition for a percentage of that pool.

    The internet and the digital age is a worldwide technology. Artists and copyright societies should be focusing their energies on enabling worldwide distribution and licensing schemes that play into these technology enabled changes in society.

    We shouldn’t assume the digital world will be a “golden age” for people that derive their income from copyright, although it certainly changes all the rules. They can still make the same income if they adapt quickly enough. But it *will* be a “golden age” for their expanded audience and society, one way or another.

  24. In all fairness “45% of all revenue” is somewhat steep… because that could easily be in excess of a company’s total profits based on the markups they wish to use. It should, IMO, read as a percentage of profits after provable expenses rather than of actual revenue.

  25. Mark,
    The media cartel themselves are well known for their creative acounting that leaves no profits to be shared with those silly enough to enter into a % of profits contract with them (see hollywood acounting). Since they themselves have perfected this method of ‘stealing’/’pirating’ why would they think the suppliers of these services wouldn’t do the same to them?

  26. Creative Accounting
    As a bit of an aside from copyright, since we’re talking about creative accounting. This is not a word of a lie. Years ago a Sheritan Casinos wanted to build a casino in my home town attached to the arena. The local Indian reserve argued that it should be built on the reserve since it was obvious (This was their arguement) it would be mostly Indians using the facility. They took Sheritan to court over it and settled out of a court to allow the casino to be built by the arena for a percentage of all profits taken in the casino. Through creative, but legal, accounting, that casino makes a net profit of 0% or less every year. How many casinos have you seen that lose money? There was a big stink made about it at the time, but the courts sided with Sheritan since they had all their books in order.

    This is an illustration how a huge multinational organization can make the books say anything they want. We can’t believe any of the statistics the CRIA, RIAA, MPAA or any other huge company report. Their investments, holding, member companies, portfolios and god know what else are diverse enough that they can hide anything they want.

  27. claiming that Canadians “have no appetite for a legal marketplace.”

    Wow, thats a bold statement… I have a pandora subscription even though i’m in Canada. many of my fellow canadian friends and family also have subscriptions!

    There is a huge market here.

  28. @Brendan
    “There is a huge market here.”

    Technically an illegal market…at least under C-32 because you’re not giving Canadian copyright it’s 42% of the cut.

    Are you using free proxies or are you using a pay service? I had thought of looking in to a pay service to access Hulu once I got the free (SLOW) option working, but deemed myself too lazy. πŸ™‚

  29. hardly surprising coming from man with cake; eating
    unabashedly lifted from slashdot this comment says it well:

    http://news.slashdot.org/comments.pl?sid=1797378&cid=33679568

    Henderson is a liar

    “Why would you spend a lot of money trying to build a service in Canada when Canadians take so much without paying for it?” said Graham Henderson, president of the Canadian Recording Industry Association, which represents major record labels.

    Somebody please tell Mr. Henderson to take his head out of his ass. The fact, as he well knows, is that Canadians already pay hefty fees. We already pay for recorded music at a rate far in excess of the cost of distribution. Radio stations already pay royalty fees. And everyone already pays a surcharge on recording media and players so that we can be legally entitled to generate copies for personal use.

    How did this media surcharge come about? Because Mr. Henderson’s own organization, the CRIA, successfully lobbied for it! [http://arstechnica.com/tech-policy/news/2007/09/cria-about-face-on-ipod-levies-tied-to-concerns-over-legitimizing-downloads.ars] That’s right. They insisted that Canadians must pay a surcharge in order to legally record music. And so we have been doing, ever since the late 1990s.

    Mr. Henderson finds this convenient to forget, but the rest of us have not forgotten. Even those of us who do no music copying at all have already paid in full for entitlement to copy.

  30. This Finally Comes to the Surface
    This is one stunt they’ve been pulling – preventing legal services from coming to Canada and then claiming that Canadian uptake of “legal” music and movie downloads is poor (due to “piracy”, of course).

  31. @IamME
    Latency is a big issue on free services.
    I have a server sitting in a 1-U rack in seattle. I just set up a proxy for me, family and friends. For pandora, cbs, comedy central, etc.
    I am working on setting up a Layer 7 tunnel on the server so that I can use Pandora on my iphone and use Hulu, Netflix.

    Though netflix is now in canada… the content is quite sparse..

  32. @Brendan
    Nice!! I had thought of setting up something similar at a friend’s house in St. Louis, but decided against it. I couldn’t get Pandora working on a proxy, I had to use a VPN and even then it took a couple tries to get the shockwave app to load. I would probably take this approach and set up a VPN rather than a proxy. I haven’t tried NetFlix but Hulu works both over proxy and VPN.

  33. Pandora
    I have to say, I tried Pandora tonight and it is truly a shame that such a service is not available in Canada (That I know of). Aside from the occasional advertisement from local New York businesses (The locale of the VPN I’m using), it did very well with selecting music withing the realm of the band (Within Temptation) I selected. It did make a couple odd matches, Blackmore’s Night, Sarah Brightman…but not so out to lunch so as to be unacceptable, in fact I love Sarah Brightman and own most of her solo albums. If Pandora ever comes back to Canada, I will definitely get an account.

    @Anarchist Philanthropist
    “Seriously every radio station broadcasts their music online. Sirius Satellite / XM broadcast their stations online as well. Why do we need pandora?”

    Need is a strong word. Realistically, we don’t “need” any music, TV or movies. It’s more a matter of being deprived of a nice service for stupid reason. I can’t pick a conventional or satellite radio station and say I want to only hear music similar to “Within Temptation”. It played Epica, Sirenia, Nightwish, Lacuna Coil, Xandria, Leave’s Eyes, and Theatre of Tragedy…all stuff, stylistically, very closely related to Within Temptation. Then, my wife complained that I never play music she likes, so I changed it to Nickelback. πŸ˜› Someone mentioned that they collect a zip code to ensure the user has a US address, but what’s to to stop someone from looking up a random zip code on Google and using that. As far as they’re concerned I live in Manhattan somewhere. Really, they collect minimal demographic information, including zip code, only so they can customize region-specific advertising to the 99% of legitimate users.

    The US has so many services and we have so few. Those we do have are very limited, very expensive and/or crippled in some way compared to the US counterpart. Under current Canadian law I don’t think there’s anything illegal about accessing Pandora like this, but I’m sure there’s something in C-32 to make it illegal. It’s no wonder people are starting to get angry.

  34. Where the “pirates” are
    “Over the course of 90 days, the [KeyesLabs] app was installed a total of 8,659 times. Of those installations only 2,831 were legitimate purchases, representing an overall piracy rate of over 67%…. The largest contributor to piracy, by far, is the United States providing 4,054 or about 70% of all pirated installations…”

    http://yro.slashdot.org/story/10/09/29/1531202/

    Funny that in all the “piracy by country” lists the US are not even mentioned… maybe just because it’s them that compile the lists, eh?

    Talking about hypocrisy….

    Nap.

  35. KeyesLabs
    So, in Canada we had 71 pirated installs with a population of about 34,260,000, that is approximately
    0.0000021 installs per person

    The USA has 4054 pirated installs with a population of about 310,362,000, that is approximately
    0.0000131 installs per person

    As much as Canada had a marginally higher piracy rate at 74%, for this app, the US rate of piracy “per capita”, is over 6 times higher than in Canada.

    What I find intersting is that Japan, with 467 purchased copies, is the only country on the list with a rate lower than 50%, and they’re 0%. Every copy installed in Japan was fully legit.

    Removing the extremes of Austrailia and Japan, for a more realistic picture, the average rate per contry is 71.5%. At 74%, this places Canada only slightly above average and 7th out of 13. The US sits slightly below the average at 66% and is 4th out of 13. I’m not saying 74% is acceptable, but at about average, we’re hardly the haven of piracy the US makes us out to be.

    I looked up country population on Wikipedia. The actual numbers related to KeyesLab can be seen here.
    http://www.mail-archive.com/android-developers@googlegroups.com/msg113415.html

  36. …Continued
    It should be stressed that, in this case, on a per capita bases, the piracy rate in the US is much higher than in Canada. Someone in the US is more than 6 times more likely to pirate this software than in Canada. They’re painting other countries poorly in regard to this and not taking in to account the relative population base as compared to the number of infractions. See below for numbers based on a per capita bases.

    Australia: 295 / 22,477,045 / 13.1 installs per 1,000,000 people
    Austria: 7 / 8,356,707 / 0.84 installs per 1,000,000 people
    Canada: 71 / 34,260,000 / 2.1 installs per 1,000,000 people
    France: 81 / 65,447,374 / 1.2 installs per 1,000,000 people
    Germany: 123 / 81,757,600 / 1.5 installs per 1,000,000 people
    Italy: 32 / 60,418,711 / 0.53 installs per 1,000,000 people
    Japan: 0 / 127,420,000 / 0.0 installs per 1,000,000 people
    Netherlands: 74 / 16,617,300 / 4.5 installs per 1,000,000 people
    New Zealand: 4 / 4,395,738 / 0.91 installs per 1,000,000 people
    Spain: 56 / 46,030,109 / 1.2 installs per 1,000,000 people
    Switzerland: 14 / 7,782,900 / 1.8 installs per 1,000,000 people
    UK: 227 / 62,041,708 / 3.7 installs per 1,000,000 people
    USA: 4054 / 310,362,000 / 13.1 installs per 1,000,000 people

    Per capita, the US ties Australia for, by far, the worst piracy rate.


  37. I guess we should be thankful to Quebec for the low per-capita number. They wouldn’t install an English language app, even for free πŸ™‚ πŸ˜‰ πŸ˜‰

    Nap. (just kiddin’)


  38. LOL

    Touche!!!

  39. Leave the CRIA alone!
    I find it hard to believe that Mr. Henderson and his US counterparts are not telling us anything but the gospel truth. After all they are only concerned for the welfare and success of artists & creators. Their 85% of profits cut is sure to give them the resources to dig for corruption and combat injustice. Those who question their ethics, morality or intelligence should be ashamed and probably sued for a large portion of their life income. After all, politicians seem to give great credence to their cause and we know that politicians are only concerned about their constituents needs above all else. So please, leave the CRIA, RIAA, MPAA or any other #*@A alone, they are selfless warriors in the fight for truth, justice and the American way.

  40. Competition act
    If it’s true that CRIA asked Pandora 20 times their regular price, there is something about it in Bill C-34:

    “PART VIII

    MATTERS REVIEWABLE BY TRIBUNAL

    Restrictive Trade Practices

    Refusal to Deal

    Jurisdiction of Tribunal where refusal to deal

    75. (1) Where, on application by the Commissioner or a person granted leave under section 103.1, the Tribunal finds that

    (a) a person is substantially affected in his business or is precluded from carrying on business due to his inability to obtain adequate supplies of a product anywhere in a market on usual trade terms,

    (b) the person referred to in paragraph (a) is unable to obtain adequate supplies of the product because of insufficient competition among suppliers of the product in the market,

    (c) the person referred to in paragraph (a) is willing and able to meet the usual trade terms of the supplier or suppliers of the product,

    (d) the product is in ample supply, and

    (e) the refusal to deal is having or is likely to have an adverse effect on competition in a market,

    the Tribunal may order that one or more suppliers of the product in the market accept the person as a customer within a specified time on usual trade terms unless, within the specified time, in the case of an article, any customs duties on the article are removed, reduced or remitted and the effect of the removal, reduction or remission is to place the person on an equal footing with other persons who are able to obtain adequate supplies of the article in Canada.”

    Nap.