Last month, McGill University hosted an important conference on the future of copyright and the music industry. The conference brought together music notables such as famed producer Sandy Pearlman and NDP Heritage critic Charlie Angus, yet the most interesting – and surprising – comments came from Bruce Lehman, who served as the Assistant Secretary of Commerce in the Clinton Administration where he was the chief architect of the World Intellectual Property Organization’s Internet treaties and the U.S. Digital Millennium Copyright Act.
Reflecting on the decade since the WIPO treaties were established, Lehman acknowledged that "our Clinton administration policies didn't work out very well" and "our attempts at copyright control have not been successful." Moreover, Lehman suggested that the world is moving toward a "post-copyright era" for music, a development that he believed was the result of the recording industry’s failure to adapt to the online environment.
Lehman followed the criticism of U.S. policy by issuing a challenge to Canada, urging policy makers and political leaders to think outside the box on future reform. Indeed, Lehman argued that Canada was well-positioned to experiment with new approaches consistent with international copyright law.
Lehman's challenge was premised on Canada's leadership in other emerging legal areas, however, the potential for a made-in-Canada approach might also be based on the fact that our market is truly distinguishable from our neighbour to the south.
In the copyright context, there are some obvious differences. The U.S. is a major exporter of cultural products and has therefore unsurprisingly made stronger copyright protection a core element of its trade strategy. By contrast, Canada is a net importer of cultural products, running a cultural services deficit that Statistics Canada estimates tops a billion dollars per year.
Others differences have attracted less attention. The U.S. recording industry (and its Canadian proxy) regularly bemoan declining CD sales, however, the Canadian experience is far more positive. In its most recent report on the state of the Canadian music industry, Canadian Heritage concluded that Canadian artists have seen their sales increase since 2001, with a "remarkable increase" in their share of sales from 16 percent in 2001 to 25 percent in 2004.
The success of the Canadian music industry is also being replicated online. Nielsen SoundScan Canada reports that digital download sales in Canada grew by 122 percent last year, well above the growth rates in both the U.S. (65 percent) and Europe (80 percent). Moreover, the Canadian market now features twice as many online music sellers as the U.S. when measured on a per capita basis.
Given the Canadian marketplace realities and the Lehman recommendation to chart our own course on copyright, how might Industry Minister Maxime Bernier and Canadian Heritage Minister Bev Oda respond? There are at least three major issues that would garner widespread support from Canadian artists, industry, and the general public.
First, Canada should follow the U.S. example by expanding the current fair dealing provision. This issue has the support of stakeholders from across the copyright spectrum – artists groups, including the Canadian Music Creators Coalition, Appropriation Art, and the Documentary Organization of Canada, have all focused on the need for a U.S.-style fair use provision; consumers groups have called for a fair use provision to legalize common activities such as the recording of television programs; and industry, including telecommunications giants such as Telus, have echoed the call for fair use, fearful that the current law is a barrier to innovation that places Canadians at a disadvantage in comparison to their U.S. competitors.
Second, Canada should consider formalizing a system to monetize peer-to-peer file sharing. The current private copying system arguably already legalizes personal, non-commercial downloading of music, yet the levy on blank CDs has proven very controversial given concerns about market distortions (the levy comprises as much as half of the retail price of CDs) and unfair cross-subsidization.
The levy has generated more than $150 million in revenues over the past few years, however, the imperfect system could be improved by acknowledging that consumers should be entitled to make uncompensated personal copies of store-bought CDs (as a recent United Kingdom report concluded) and instead focus on a telecommunications based supplement to cover Internet file sharing. The resulting revenues would generate millions for Canadian artists and record labels, while enabling the industry to focus on monetization, rather than litigation.
Third, Canada should recognize that strategies premised on legal protection for digital locks, known as digital rights management, are both ineffective and unnecessary. With the Canadian digital market already experiencing rapid growth, government intervention is not needed. Instead, Canadian competition regulators should carefully monitor the competitive and consumer implications of DRM implementation to ensure that new technologies are not used to stifle innovation and consumer rights.
Successive governments have understandably viewed the copyright issue as a thorny policy challenge that generates far more complaints than compliments. Bruce Lehman's acknowledgement of the failure of U.S. policy and his encouragement to consider new solutions serves as an important reminder that there still remains the potential for a truly Canadian approach to copyright.
Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at email@example.com or online at www.michaelgeist.ca.