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CRIA and Kazaa

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Tuesday September 06, 2005
CRIA' s reaction to the Kazaa ruling provides a helpful advance preview of its likely comments before the parliamentary committee reviewing Bill C-60.  The release applauds the Kazaa decision (CRIA was ready for this one as its PR firm emailed journalists on Friday with offers to comment on the decision), includes some deceptive comments (eDonkey and BitTorrent have not been shut down; servers or nodes running the programs have been targeted) and uses the decision as a springboard to make several claims that must be challenged.  

First, CRIA seeks to link the Australian decision with Canadian copyright reform.  In reality, the two have as much in common as Australian rules football does to ice hockey.  As I noted yesterday, the Kazaa case turns on authorization, an issue that is not at play in Bill C-60 since it is grounded in Supreme Court doctrine.  Even if Parliament were to enact Bill C-60 with the additional dangerous amendments advocated by CRIA, a Kazaa case in Canada would still boil down to the authorization analysis.

Second, in a claim designed to appeal to Canadian Heritage, it describes the implementation of WIPO in Canada as "WIPO-Lite", questioning whether the bill will be effective and allow Canada to "implement its international treaty obligations."  We should be clear: Bill C-60's provisions (particularly the anti-circumvention provisions) are absolutely WIPO compliant.  While a few lawyers may be paid to say otherwise, the independent law professors representing ten universities from across Canada contributing to the forthcoming book on Bill C-60 leave little doubt that the Canadian approach meets the requirements of the treaty.  Moreover, it should be noted that Canada does not have any international treaty obligations.  We signed the WIPO Treaties in 1997 but that act does not create any new obligations on the country (only ratification of the treaty creates obligations).

Third, there is the absurd claim (designed to appeal to Industry Canada) that Canadian copyright laws have hamstrung online music sales.  CRIA claims that "digital sales in this country run at one-half of one percent of US levels, but should be in the 12 to 15 percent range given relative broadband penetration in the two countries."

We should again be absolutely clear: Canadian online music sales have nothing to do with Canadian copyright legislation or copyright reform.  What is behind the slower Canadian sales (assuming this is correct; the industry has not provided the public with these numbers)?

First, slower sales reflect a broader Canadian trend in e-commerce.  There is no correlation between broadband penetration and online music sales nor any other form of e-commerce as Canadians have been slower to gravitate to all e-commerce offerings, from books to travel to music.  You don't see Amazon or Expedia claiming that it is the Canadian legal framework that has slowed adoption of their online offerings because the two simply aren't directly linked.

Second, there are far fewer online music services in Canada than in the U.S.  According to IFPI, the global recording industry association, Canada currently has six services (Archambault, iTunes, Napster, Future Shop, Sympatico, and Puretracks).  By comparison, IFPI lists 34 U.S. services.  With nearly one-sixth the number of online music services, the lower Canadian numbers are precisely what you would expect.

Third, the Canadian services offer far less music than their U.S. counterparts.  Numerous U.S. services offer more than 1 million tracks.  In Canada, only iTunes does.  Moreover, iTunes has some major Canadian misses.  Where is the French content (funny that Canadian Heritage Minister Liza Frulla is concerned with satellite radio french content but says nothing about the lack of French offerings on iTunes)?  Where are groups like The Arcade Fire, one of Canada's hottest bands that made the cover of the Canadian edition of Time Magazine?

Fourth, the Canadian services are much newer than their U.S. counterparts.  Consider the growth rate of iTunes in the U.S.: it took Apple 11 months to sell its first 50 million songs and then another four months to get to 100 million songs. Three months later, the company hit 150 million, and it took just two months to get to 200 million.   The growth rate has continued with iTunes recently surpassing 500 million songs.  Here in Canada, iTunes only debuted nine months ago in December 2004.  In other words, Canada is still at the very beginning of the growth chart and its performance is similar to what occurred in the U.S.

Fifth, the online music services themselves are turning off consumers due to compatibility problems.  As a Macintosh user, I still can' t use services such as Puretracks or Napster.  Moreover, even if I could, Napster doesn't allow me to listen to the music on my iPod.

Sixth, the Canadian industry has benefited from the private copying levy.  CPCC reports that it collected more than $39 million in 2004, by far the most amount ever generated by the levy.  That will result in millions of dollars for artists and their labels that sit alongside the growing revenues from the digital sales market.

In sum, the Canadian market for digital sales may be behind the U.S. but that is an industry issue, not a copyright problem.  CRIA may have used a slow news day to generate some unchallenged news stories, but the parliamentary committee considering Bill C-60 in the fall should not allow these same claims to go unquestioned.

Comments (10)add comment

Chris Smith said:

Even More Factors to Push Down Canadian
Just in the last week, I have purchased two CDs that will never show up on Canadian sales lists. One was a Sony-BMG classical recording (originally CBS) that was deleted from the *Canadian* catalog - but not the U.S. or U.K. catalog. The knowledgeable sales rep made reference to a Sony-BMG mass deletion from last October, that dropped the bottom 10% of their releases. Of course, if it that is recording I want, I won't take another in its place. This factor can only reduce sales - deleting releases never increases your sales. You would think that a sensible thing to do is move deleted CDs to the online section, but that hasn't happened at all.

The second disc is not available at all from a major label - it's a Seattle area band, and the discs can only be obtained by emailing and asking. I'll be sending them a cheque or bank draft. That won't show up on CRIA's radar either. This way of doing business is easier now than ever - it will only reduce the sales of the majors, who - by and large - are the source of items in the online stores.

Also notable is a CD that I would buy, but can't. I heard a great tune by an Alberta musician, but it turns out the CD its on is a promo from the province - you can't actually buy it! Hello? Create demand for the music, and then don't actually sell it? The song in question isn't on any of the artists other releases, either.

Incidentally, this same artist was one who has a now-deleted CD that I managed to borrow from a friend to create my own personal copy. Again - this artist is on PureTracks, so why not make the deleted CD available there?

Finally, PureTracks is not just OS-limited. I've tried using it with Firefox, and it just seems not to work.

A final factor is the forward-looking technology factor. Because MP3 is at least a standard, I figure I can expect to play MP3 tracks for years to come. But none of the major online sites sell in that format - so I either buy CDs (see above) or I look in places that are technology-friendly to see what music they offer - which rules out most Canadian sources.
September 06, 2005

Dwight W. in Ottawa said:

Local Bands Indeed Off the CRIA Radar
I am in fervent agreement with the "local bands" and the "not affiliated with the US/Canadian major labels" points. At least two or three of the last half-dozen albums I bought this year were of these two types.

CRIA is downplaying by omission the existence of such artist-performers to make its points appear unquestionable in the eyes of the public and of our legislators, who are supposed to act in the shared interests of us all and have the means to learn at least more of the greater truths of commerce and art than they're being told.
September 06, 2005

Joel said:

Another Service
There's one more online music service available in Canada that wasn't mentioned: Emusic.com. All their songs are available in MP3 format, so it's compatible with your iPod. They even have Arcade Fire.
September 06, 2005

E.G. Howe said:

Private Copying Levy
You state in your article that "CPCC reports that it collected more than $39 million in 2004, by far the most amount ever generated by the levy... will result in millions of dollars for artists and their labels".

I have a problem with this and that is; which artists, which labels?

A similar levy in Australia has actually been used to create programs for developing local talent and creating funds and grants for Australian artists. It's been so successful that I've heard of it here in BC. I have not heard of anybody or any organization recieving monies from the Canadian Levy.

How come? Is it "just another tax"?

I am the father of two struggling musicians and they certainly aren't getting any of the $39 million. They're working at A&B Sound and McDonalds.

I agree with most of your statements however the CPCC is a load of crap and as far as I have seen hasn't benefited a single Canadian artist. At least those that could use the money.
September 06, 2005

RVidler said:

Emusic.com
Joel - EMusic.com appears to be a US site. They may sell to Canadians (I have not tried) but they are not a Canadian site, with pricing in Canadian Dollars.

This may go into the legal issues with other non-Canadian sites such as allofmp3.com (Which I love by the way for their encodeing options)

I would actually love to hear Michael's opinion on importing music , or general software / files for that matter, in a digital world and what legal issues Canadians face for using such sites. After all, we are all aware that what is legal in one country is not in another.
September 06, 2005

Joel said:

Emusic and allofmp3
From what I understand regarding allofmp3.com, it is a Russian site that exists due to digital works not being covered by current Russian copyright law. I'm a Canadian and an Emusic subscriber. I was unable to find information on the legality of the service specifically in Canada, but they are a legitimate site "wholly owned by Dimensional Associates, Inc., the private equity arm of JDS Capital management, Inc". I support them because they support independent artists and fair use. I wouldn't consider a service that provided anything less.
September 06, 2005

Iain George said:

...
I have to say I am tired of hearing Record Companies complaining on the front of the artists, making it appear that the artists are the ones hurting because of piracy on a whole. This is an atrocious lie, the fact remains that contracts between artists and record companies are too often deals which only allow the record company to benefit and leave the artist floundering with the few cents they get from a $15 CD sale.

With regards to your comments regarding the lack of compatibility between music stores, operating systems and players. This is branched off of the record companies ensuing insecurity towards allowing consumers rights to the music they buy. If they had not forced their insecurities upon the downloading market, songs would not be encoded with DRM and such would be playable on virtually any player.

It can also be said that the CRIA alongside its United States counterpart (RIAA), failed to get on the "band wagon" when such new P2P technologies were in their infancy. Rather than denying the problem and suing those whom were their customers, they should have taken advantage of such openings. New data is showing that consumers who download music are much more likely to purchase music than those who don't. Why don't they realize this and take advantage of it?

It is also disturbing to I, as a consumer when I hear the corporate culture of the record business bashing the consumers when the sales levels do not go their way. I would not by a horrible product, and the same concept goes for music. Record industry executives try to take short cuts by blaming piracy, when they really need to be looking at the quality of content they provide. People do not purchase sludge, they buy quality and amazing. If record companies do not provide quality then they can't expect to get the same returns they did for content that was/is quality and spectacular. This is something I fear has been totally ignored.
September 06, 2005

Andrew Tonner said:

The private copying levy.
Does anyone else get the feeling that the CRIA and its larger members might want to put the pin back in on this one? =)

Either way, I'm bewildered by your idea that online music sales are being held back because the industry is benefitting from the private copying levy. What would be the rationale for industry foot-shuffling on account of the levy? The revenue keeps rolling in to the CPCC as long as the blank media keeps selling; and since some online music retailers' DRM systems allow for burning of music, it's difficult to say whether increased online music sales would shrink the market for blank media demand or grow it.

If you ask me, the slow startup of canadian online music retailing has as much to do with the lack of a DMCA-style anti-circumvention bat to back up the copy protection as it has to do with the industry's private copying levy revenue. Maybe the significance of both of these issues is magnified inside industry types' heads', seeing as out here in the real world, using anti-circumvention tools more complicated than the "Copy CD" button in Nero, and paying much attention to what private copying is legalized and what media is covered by the levy (or even knowing about them at all) are the province of a select few. I don't mean to advocate this situation. I just want to make it clear that, while on one hand I don't want us to have to decide between overly restrive copyright laws and useful online music sales, on the other hand I _want_ it to be as bad as the music industry says it is _because that would mean that canadians are taking advantage of the tools at their disposal to get the most for themselves as music listeners_.
September 12, 2005

Mrs. Joyce O'Bryan & Family said:

Bill C-37
During the period of 1 day I can often be very rudely interrupted by many (2 or 3 at least) from people during surveys, selling something, trying to get money for something or any number of other things. I am beginning to wonder why I even have a phone.

Surely this can be stopped. NO MORE CALLS!!
September 13, 2005

tOM A Trottier said:

...
It is also likely that Canadians are buying music tracks from the US sources directly, and that this is not reflected in CRIA's hidden numbers.
September 30, 2005

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