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Michael Geist's Blog

Copyright Collectives Gone Mad: How the ERCC Spent Dollars to Earn Pennies

Howard Knopf points to an interesting Copyright Board of Canada decision that provides a instructive lesson in how copyright collectives fail. At issue is the Educational Rights Collective Canada, a collective formed in 1998 to collect royalties for educational copying of broadcast programs in classrooms. The ERCC, which includes the CBC as a founding member, asks the Copyright Board to effectively put an end to its tariff as it admits that it has never distributed any money to rights holders and is hundreds of thousands of dollars in debt.

How did it come to this? The ERCC acknowledges that royalties for its tariff have never exceeded $10,000 per year, however, the collective's debts stand at $830,000. There is little cash on hand and its creditors (which presumably include the CBC) will receive less than 5 percent of what they are owed. The debt was largely accumulated in trying to create its tariff in the first place. Yet it is difficult to understand how broadcast organizations ever thought this was a good idea. Even before the advent of Internet-based video, the law permitted schools to copy news and news programs for playback in the school for one year without payment. Today, the tariff is a non-starter since Bill C-11 significantly expanded the rights of educational institutions.

The decision to wind-up the ERCC reflects both changing laws and a tariff that has always offered very limited value. While some collectives are insistent that changing laws should have little impact on their business, the reality is that new technologies, methods of distribution, and user rights will invariably have an impact on copyright collectives and the value associated with their licences. The ERCC was simply a bad idea in which millions was spent by both sides to decide on royalties worth a fraction of expense, but all must recognize that the shifting environment requires a recalibration of the value of certain licences and a re-assessment of the use of the Copyright Board process.
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