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Canadian Recording Industry To Pay $45 Million To Settle Class Action Over Copyright Infringement

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Monday January 10, 2011
The four major record labels that comprise the Canadian Recording Industry Association - EMI Music Canada Inc., Sony Music Entertainment Canada Inc., Universal Music Canada Inc. and Warner Music Canada Co. - have agreed to pay $45 million to settle one of the largest copyright class action lawsuits in Canadian history.  The settlement comes after years of fruitless efforts to get the industry to pay for works it used without permission.  As I wrote back in December 2009:

The CRIA members were hit with the lawsuit [PDF] in October 2008, after artists decided to turn to the courts following decades of frustration with the rampant infringement (I am adviser to the Canadian Internet Policy and Public Interest Clinic, which is co-counsel, but have had no involvement in the case). The claims arise from a longstanding practice of the recording industry in Canada, described in the lawsuit as "exploit now, pay later if at all."  It involves the use of works that are often included in compilation CDs (ie. the top dance tracks of 2009) or live recordings. The record labels create, press, distribute, and sell the CDs, but do not obtain the necessary copyright licences.

Instead, the names of the songs on the CDs are placed on a "pending list", which signifies that approval and payment is pending.  The pending list dates back to the late 1980s, when Canada changed its copyright law by replacing a compulsory licence with the need for specific authorization for each use. It is perhaps better characterized as a copyright infringement admission list, however, since for each use of the work, the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee.

As I noted in the piece, the record labels had little motivation to pay up as David Basskin noted in his affidavit that the labels "devoted insufficient resources to identifying and paying the owners of musical works on the Pending Lists".  The class action lawsuit clearly got their attention.  As part of the settlement, the labels will pay approximately $45 million to settle the copyright infringement claims. It also establishes a new mechanism to help ensure that artists are paid more promptly.  The press release indicates that everyone is pleased with the settlement, though it is striking that it took a class action settlement to get the record labels to address their own ongoing copyright infringing practices in paying artists for the use of their works.
Comments (32)add comment

Bill MacEachern said:

Well, now I'm confused...
For years I've been hearing from the labels and media associations that they're all about defending the artists, protecting the artists, fighting on behalf of the artists to make sure the artists get their rightful due. It's just not possible that the labels/media assoc are ripping those same artists off as that would make them just about the worst, most blatantly hypocritical a-holes on the surface of the Earth, and I know that CAN'T be right. Right? Because, if they were to be so hypocritical, the media would be right there to call them on their shenanigans, right? Right??
January 10, 2011

Farrell McGovern said:

They want you to be confused!
Bill: The Labels claim they are about protecting the artists and being their advocate, but the reality is, they are a business and will do just about anything they can get away with to make money.
January 10, 2011

Bob LeDrew said:

I am shocked and appalled!
[sarcasm]You mean the record industry took advantage of artists without fair compensation and required judicial pressure to be put into a position to pay a sum (notice I didn't say a FAIR sum) to the creators of music without whom they'd be out of business?

Wow, I had NO idea that those involved in the music business would ever think of taking advantage of musicians and songrwiters. NO idea at all. I thought the only people who would do that were illegal downloaders, who are EVIL. [/sarcasm]
January 10, 2011

Napalm said:

No appetite for a legal marketplace
Didn't Mr. Graham Henderson of CRIA fame state that certain Canadians "have no appetite for a legal marketplace"?

Nap. :-)
January 10, 2011

Napalm said:

...
Quick question: will the C-32 legislative committee take note that now "the industry" is a convicted commercial scale copyright infringer and act accordingly regarding their input re C-32?

Nap.
January 10, 2011

IamME said:

@Nap
Depends on how much the CRIA is willing to pay for the committee to turn a blind eye.
January 10, 2011

Crockett said:

Words escape me ... almost.
What amazes me most is not this behavior from the labels, but their ability to pull the wool over the eyes of the very people they have been ripping off. How many op-ed pieces do we see daily extolling how the **AAs are fighting for the artist's fame, fortunes and creative endeavorers? You and I know this to be load of guano it is, but can they really have enough brown paper bags of money to keep the truth buried? Seems not so much any more!

My main thrust of blogging the past few years has not been to promote the 'free culture' that is often characterized as being (falsely) the goal on this blog, but rather creators have other choices to both increase their due and also to repair and enhance their relationship with their fans/customers.

I know, I'm a dreamer. Sue me.
January 10, 2011

reader not with these readers said:

...
@nap "Quick question: will the C-32 legislative committee take note that now "the industry" is a convicted commercial scale copyright infringer and act accordingly regarding their input re C-32? "

It's a settlement, not a conviction. If you're going to comment at least read Geist's article. Sometimes I want to throw a virtual snowball at you napalm for your non sense
January 10, 2011

Reader not with the reader that's not with these readers said:

...
Dude, we understood the sentiment... No need to be angry.
January 10, 2011

Kai said:

...
I'm glad the artists are finally being paid. Though, part of me wonders, how does the 45 million number compare to the number of songs times the amount for damages (per song) that the CRIA advocates for?
January 10, 2011

IamME said:

...
"It's a settlement, not a conviction."

No it's not, but they have deep pockets and a lot of fight. To me, a settlement in this case means they didn't think they would win if they dragged it back in to court. Agreed, it's not the admission of guilt we'd all like, but the next best thing.
January 10, 2011

Napalm said:

...
@reader: "It's a settlement, not a conviction."

I stand corrected: "proven commercial scale copyright infringer".

Nap.
January 10, 2011

TonyV said:

The Lables faired better than....
So, we have the woman who was ordered to pay $1.9M for downloading 24 songs in the US (no statutory damages), that’s $80,000 / song. Why could she not use the defense that the songs were on her 'pending purchase list' in which she assumed that she would buy them sometime in the future for $0.99. Under the price per infringement for this settlement is $150 / song (oh, but that's commercial infringement, not personal. So she should have to pay less).

Statutory damages of $20,000, at 300,000 infringements is $6B. BS! I have no respect for the CRIA or major labels.
January 10, 2011

Doc Harry said:

...
Ever wonder why there are artists that specifically tell you to rip off their stuff? They weren't getting paid anyway so why did they care how you got their music.
January 10, 2011

john walker said:

...
I would assume that a musician worth putting on a Compilation Would be not that hard to track down . and I would assume that record companies on the whole, when re-releasing older recordings, use good quality master recordings done in professional recording setups.

"the record label openly admits that it has not obtained copyright permission and not paid any royalty or fee." Surely this is a open unambiguously illegal act.
January 10, 2011

Napalm said:

...
@John: "I would assume that record companies on the whole, when re-releasing older recordings, use good quality master recordings done in professional recording setups."

Bwahaha. Check this one:

http://en.wikipedia.org/wiki/Kind_of_Blue

it has a long history of being re-released from the wrong tapes or with the master tape running at the wrong speed. It took them some 4 attempts until they produced a decent recording.

Nap.
January 10, 2011

Serge said:

$150 a pop
This is a good news story. Artists got paid for the use of their works. Sounds like the artists and the labels were willing to settle at $150 a song in order to avoid going to court. As far as a class action suit against one's employer, that's pretty good -- there is power in a union (well, a class)!
January 10, 2011

Danux said:

$150
@TonyV - I also wondered what happened to the $6,000,000,000.00 "value" of that unpaid music. $150/song, on the *supply* side of the economic equation. That number really demonstrates just how little value is inherent in the product. While I don't think it is reasonable to apply the broken American legal system's assessment of damages to a Canadian circumstance, I do expect yesterday's number to be cited when the media giants start trying to leverage Canadian law against Canadian citizens for their financial gain. I'm sure small claims court is terribly enthusiastic about the whole circumstance -rolling eyes-.
January 10, 2011

Mark said:

...
Yeah...Michael Geist...Let's lift foreign ownership restrictions in telecom and SELL OUT Canada's telecom industry. YOU ARE A CLEAR CONSERVATIVE SHILL WHO WANTS TO SELL OUT THIS COUNTRY TO FOREIGN MULTINATIONALS! GET OUT OF MY COUNTRY!
January 10, 2011

john walker said:

...
If Canada really wants protective tariffs , go for it... But be strait forward about what it is and use a properly supervised government agency to collect and redistribute it.

@Nap I am as well aware of the Soundexchange story and its struggles to find its own 'arse' as you are. I do wonder at the immunity from the consequences of clear evidence of lawless acts repeated over and over again for decades.

These Guys are fools , do they really think that its the way to encourage respect for the law in the average punter?
January 10, 2011

Napalm said:

...
@Mark:

"Verizon Wireless [...] will offer unlimited data-use plans when it starts selling the iPhone around the end of this month"

http://online.wsj.com/article/...62244.html

Nap.
January 11, 2011

Napalm said:

January 11, 2011

Crockett said:

Mark?
It sure sounds like you work for Bell or Rogers or ?? ... if so, tell your bosses to offer competitive products at a reasonable value and stop gouging the Canadian public. Until then bring on the competition, for you have made your own bed.
January 11, 2011

Jo said:

...
The thief's that run the record companies are the same lobbyists that are writing policy for the government.
January 11, 2011

Scott said:

I wonder...
Can I buy the rights to any song I want for $150 and make money off it? If so, I'd be all over it! Or can I only do that if I plan to use the song now and pay later (if ever).
January 11, 2011

pat donovan said:

hey,
a settlement doesn't have the legal apparatus to force payment.
ever try to get someone to pay up onna court order?

they'll find a way to out the cash back into their own pockets FAST.

opportunistic cannibalism being what it is...

packrat
January 11, 2011

CndCitizen said:

Something smells fishy....
This doesn't really make sense to me. Why would the class action settle for 150$ per song when the industry made a fortune on those 300000. So some analysis for the artists for those 300000 songs.

I know we are doing some leaps but since this "pay later" has been going on since late 1980's we don't know if they were released on tape or vinyl or CD so I am just going to do average CD analysis using a well known Canadian artist Bryan Adams.

Bryan Adams sold more then 100 million CD's with his 22 (might be 18) albums (wiki) which would if we used current CD prices (which are lower then they were in the past) of $14 new. That would have resulted in the industry getting $1.4 billion dollars in revenue for around 300 of Bryan Adam's songs which would mean that price per song would be around 4.7 million dollars. I know they would have to pay only a very small portion to the artist say average contract of 5% which would mean the revenue for each song to a well known artist would be around $233000.

So why would they settle for $150 per song instead of $233000?

I would definitely question the lawyer on settling for this paltry amount instead of going after at least the minimum $20k per song for commercial copyright infringement. Most likely some back room deal was agreed upon. From what I can tell only one person was part of the class action so what happens to the others that were not represented. Does this settlement mean that the 1.4 billion that was earned they just had to pay a small $45 million to make it go away for ALL artists that owned the CR for those 300000 songs....most likely the industry wanted it to go away quickly so they wouldn't have more people sign on to it.
January 11, 2011

IamME said:

...
This is on public record now. So it does set a precident that could be used in future court cases as a defence against unfair stat damages. Any decently lawyer should be able to have any outrageous stat damages thrown out. If the CRIA only has to pay a pawldry $150 per COMMERCIAL infringement, why should joe public, who isn't making any money from the activity, have to pay any more?
January 11, 2011

No One said:

...
Michael, what's your take on this? [slashdot.org]
http://yro.slashdot.org/comments.pl?sid=1945282&cid=34835930
January 11, 2011

Jess said:

...
Wow, the hypocrisy is staggering. They are paying less per song infringement than most convicted song downloader’s, even though the downloader’s were just trying to possess a copy of the song to enjoy and the music labels were selling the music for profit. No discrepancy there.

I'm going to start stealing music again, and send musicians cash directly.
January 11, 2011

CndCitizen said:

I bet you that...
...the $45 million went to the CRIAA to punt back to the RIAA/MPA and nothing ever went to artists...one hand washing the other corrupt one....which is consistent with money laundering and corruption charges. Just wondering if anyone ever investigated racketiring or collusion in the RIAA/CRIA for price fixing. I know it is being investigated in the rest of the world right now....but is it in Canada?
January 11, 2011

Lonnie L. Jones said:

Trust me
Musicians, artists, actors, technicians, are all the LAST to see any money from these works while the corporations and labels reap billions in profit.
January 21, 2011

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