Behind the Scenes of Bill C-32: Music Copyright Collectives Say Digital Locks Won’t Increase Revenue

Two of Canada’s largest music copyright collectives warned the Bill C-32 committee against digital locks, arguing that it was unrealistic to think that the implementation of digital lock rules would increase music industry revenues. While there is much to take issue with in the CMRRA and SODRAC submission, the following is not among them:

Contrary to the government’s public statements, it is unrealistic to expect that the other measures contained in Bill C-32 as initiatives to implement the WIPO treaties would result in an increase in online music revenues for authors and publishers and musical works that will be sufficient to offset the revenue losses documented above. In fact, these measures would be unlikely to result in any substantial increase at all in legitimate online revenues for the music industry.

This can best be seen by comparing the growth in sales of legal digital downloads of music in Canada with the corresponding growth pattern in the United States, where the WIPO treaties were implemented in 1998. Apple’s iTunes Music Store launched in Canada in December 2004, 18 months later than in the U.S. Since then, the rate of growth of online sales in Canada has every year been much more rapid than in the United States. Nielsen SoundScan data show that, between 2005 and 2010 the sale of paid, legal downloads of individual songs or single tracks increased by 914% in Canada, compared to 232% in the U.S. Digital album sales increased 1207% in Canada, compared to 431% in the U.S.

As a result, CSI fundamentally disagrees with the suggestion that the “modernization” measures in Bill C-32 are in any way necessary in order to improve the fortunes of the music industry.

I have been making the case for many years that Canadian digital music sales have been growing faster than the U.S.  It is good to see that leading Canadian copyright collectives are paying attention.

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  1. I predict revenues will decline
    If the law is successful in dampening file trading, the music industries best customers will be left with no way to find music they like and want to buy. So they won’t buy new music and industry revenues will decline, possibly catastrophically.

  2. Digital lock = loss sales
    I for one will not buy music with digital locks. There are enough worries about the continued support for the file format through time. Will I be able to listen to my (digital) music in 20 or 30 years? If I add digital locks into the equation, it becomes an assured loss.

  3. Agree With Doug
    My prime example comes from an international viewpoint. Artists outside North America wouldn’t have the foothold they do today without file sharing. I found a lot of my favourite bands completely by chance back in the Napster days. It opened the door to so many different bands to get international fans.

    This is my thing with downloading. I would buy the albums or mp3’s to support the bands I like, but more often than not it’s extremely expensive. I’ve had several cases where albums I’d like are not available for legit download and would have to be imported and end up costing me $90-$120.

    As Michael has said, digital music sales are increasing. If it’s available we will use it. With all these laws they’re just poking at the beast who’s trying to sleep. It’s resolving itself but they’re just going to provoke the spite in everyone, bringing us back to square one.

    They just don’t get it. It’s much better to adapt to the times than trying to get the times to adapt to you.

  4. Wendell Chrysler says:

    No Brainer
    Well, they’re right. With digital locks I will obtain less music, both paid and unpaid. For the last 40 years my music collection has always been partly bought and partly borrowed, copied, etc. Next, they’ll want to prosecute your for playing music while other people can hear it … why don’t they arrest people for sharing music by playing it with their car windows rolled down? (public performance). A lot of the music that I have been exposed to and become loyal to, I have been introduced to by a tape that someone has handed to me, or a record that I have borrowed. If I can only hear what I can buy, I will simply hear far less … my spending will not increase. It amazes me that these people do not understand the ecosystem that they operate inside of. They don’t want to control music like they always have, they want to control it more than they ever have and are bound and determined to kill the market in the process.

    I’ve just been reading more and more books that I take out of the library … this game gets tiresome.

  5. While I agree with the overall conclusion
    I am concerned about an issue with respect to comparing the Canadian and US digital sales numbers possibly misleading the casual reader.

    I have no reason to doubt the numbers that are presented on page 25, however it is interesting to compare the percentage increase as a function of how long iTunes has been available in each country. Remember that iTunes was available in the US about 18 months before Canada; therefore it wouldn’t be unreasonable to examine the Canadian numbers for 18 months after its introduction in Canada (basically the same amount of time after than major player entered the marketplace). Using those numbers, Canada is pretty much equivalent. For instance, in 2010 the increase for Canada was 20% for singles. This represents 5 AI (After-ITunes). At this same point in the US the increase was ~27%.

    Will the Canadian numbers go down to the 1% for single tracks in 2012? Time will tell, but based on the trends that is a possibility to be watched for.

  6. As a student of a law course, I’d like to thank you for this enlightening article. I’d like to offer a counter stance on that. The digital lock helps expand the music industry a lot. And it can help the person gain recognition world-widely. Sure, it can hamrful and hurtful for said artist. I don’t deny this fact, at all.

  7. @Naiwen
    Can you supply details on how you think digital locks help expand the industry, and can help a person gain world recognition?

    If you assume the “locks” actually do the job as marketed, I can see where you might get this impression. But they don’t. Go back and look at these “locks” from a technology perspective instead of a legal perspective. Once you fully understand the technology side, you will see that they actually presage a legal snakepit. Not only are they ineffective in doing the task they purport to do, they open the doors to legal abuse.

  8. I agree with Philippe
    I am 57 years old, so I got burned on 8 tracks and in the long run vinyl. Enough already!

    John Kerr
    Guelph, Ontario

  9. More Millions wasted ny Harper?
    How many TENS of MIILIONS of Canadian taxpayer dollars have been WASTED BY THE HARPER GOVERNMENT on kissing hollywood’s ass on this one issue?

    Whom THE F___ DOES THE HARPER GOVERNMENT work for? It is most certainly not the Canadian people.

  10. Ahoy!
    Is anyone really planning to put DRM back on music? I thought that ship had sailed. Books & video is another matter though.

    Some ‘types’ of DRM to allow streaming is one thing that most are fine with. If you buy it outright then DRM is more of a problem than a solution.

  11. I think this law is completely backwards. There are many good reason why DRM is bad and why people will soon enough drop it (or producers will not enforces it). DRM is a technology that is hurtful to everyone in the long run and here are the reasons why:
    1. When people buy a product they buy it to use it (being music, games, etc). If your products does not work as people expect it then that will piss off clients and will only lead to boycotts (from fans) or people abandoning your business – Examples: Ubisoft games lots of people got pissed of at Ubisoft and you can see how their stock has gone down since that, but it could be the recession)
    2. When people buy a product they expect that they own it and they can do whatever they want – not so much with DRM. That music you bought can only be played on the DEVICES they approve. So that means that once you bought a new device you have to buy again the product you already own (and if that happens I bet people will protest)
    3. It makes criminals of people who are not doing illegal activities (at least by what people agree its not illegal) – Think about it, it will be illegal to *copy* your music for a backup if that CD/DVD has a protection (And which movies/CD does not have TMP)
    4. Makes us less secure – researchers are no longer granted the freedom to check if said security vulnerability exists/is patched. So the good guys can no longer protect us but the bad guys (criminals that USE such security vulnerability wont give a hoot about this law).

    And also all that misconception about digital downloads in Canada – I still can’t find a store to buy my music online (I do not run windows) so I tune is a no go and sadly amazon, which does have most of the music I want does not sell here. I guess they don’t want my money – I was more than willing to spend it to buy tracks one by one but hey I guess I can just save them.

    For those reasons I have vowed to not buy DRM devices/Products – In fact I do buy games and I do buy other online products and services but only if I am allowed to use them on my terms and free to do as a I please with them (also I do respect the authors that do provide such products and recommend them if they are good).

  12. World Traveller says:

    Multicultural Short Comings of the new copyright bill
    I like to purchase on Amazon European CDs and DVDs of European Origin. According to the new copyright law playing any non-region material will then be illegal in Canada. It seems incomprehensible that I can in the future no longer play legally such material for which the original copyright holders were properly compensated for when the material was purchased, when this bill comes into effect. I don’t see why I cannot use a European model DVD player playing European material in Canada. I did not break any digital lock because my disks and player are from Europe and match with their region code.

    Why should I not be able to purchase beloved German Language TV series from a long time ago so I can see them again. What is the harm to North American or Canadian companies?

    For example anybody can purchase a DVD reader for their computer. These DVD readers lock the region after 5 playings of a particular region. Now, if I dedicate such a reader to only play European disks it will no longer play region 1 disks. The question is, did I break any law? I didn’t do anything on my part to circumvent any lock. I simply purchased the device in legally operating retail stores and I am using it to play my European disks. According to the new bill that should be legal. But, is it really?

    Why does the bill not make explicit allowances for accessing such material?. Nobody can prove logically that doing so will cause any financial losses to anybody in all affected G8 nations. Doing so simply does not cause harm to anybody in the widest sense.

    All the Government has to do is to state explicitly that matching foreign region disks with foreign made equipment from the same region is not a violation of breaking any digital lock.

    Region 2 DVD = Region 2 Player = Equal. Therefore no digital lock is broken. The bill does not explicitly state that a person cannot import such equipment to play material it was made for. Is it the illegal to possess such equipment?

    Isn’t it apparent how short sighted the law makers approach really is?

    Anyways, I hope that allowances can still be made to legalize such use. It seems from a non lawyers point of view nothing is violated here anyways.

    It seems nobody is willing to take a common sense approach to real live challenges.

    This bill will unfairly create significant “Collateral Damage” to Multicultural international access to legally acquired material.

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  14. Bought and Payed For
    You have the best governments in both Canada and the states that corporate money can buy.You the people have brought this on yourselves by never hold you governments feet to the fire ,it matter not whether right wing or left wing both ends have been purchased out right by people allowing government to except largesse from companies stick limits on corporation meddling in the business of people needs to be law

  15. another trouncing of the people
    Today there are not many, if any CD’s, with digital locks. Even many download sites have DRM free music. If this legislation passes I would suggest that all will have digital locks before long. The consumer will not have no choice and therefore be buying nothing more than a licence to listen to the music. The medium will mean little.

  16. DRM does not increase revenue…TOTAL BS… and here is why…
    If the content holder chooses to apply DRM to their content downloaded from a web site, they must maintain a record of this purchase and allow the consumer to re-download the content, at no cost, if lost. I personally downloaded about 10 games for my iPod from iTunes at about $5 each. I had no idea if and where iTunes stored downloaded games on my computer. I had to dump my computer due to a virus. After an iPod upgrade I had to pay again to re-download these games, even though iTunes retained record of my purchases for device authorization. There was no information on the web of how to get around this. I was not about to call Apple support and wait on the phone for 30-60 minutes for a solution. I believe companies omit this common sense feature because they know many people find it easier to swallow the cost rather that deal with customer support. This is an unfair practice and they know it increases their revenue. Bill C-11 must clearly state that if DRM is used, the content holder must maintain a record of all purchases and offer a re-download at no cost and not requiring a call to customer support or jumping through hoops.

  17. Retort
    Consumer wrote…

    “and if that happens I bet people will protest”

    No they won’t. If Canadian history has shown anything, it is that a protest will be planned. Only about 10-50 will show up, often in the rain to add insult to injury only empowering the government. The rest will write an eMail or two and then bend over and take it up the rump and the government knows it.

    What we really need is a planned protest across Canada of several thousand people. If I knew this was in the works I would gladly take the day or even a week off to protest. Only at that point would Harper not be able to break the protest with police brutality as he personally did during the G20 summit.

  18. Sheogorath says:

    DRM encourages piracy
    Here’s how. Way back when, after purchasing my first cell phone, I was induced to use my phone’s credit to purchase digital music to use as ringtones or just to listen to. Big mistake! In 2009, Musiwave’s parent shut it down for everything except its own devices, so when my phone gave up the ghost in 2010, I was stuck with a load of DRMed music files that I couldn’t use. Of course, I sought replacements with the proviso in mind that I had paid for a functioning copy of each track, and I wasn’t going to pay more than that. So DRM not only greatly inconvenienced this paying consumer, it also necessitated my piracy. Nice one, Micro$oft!

  19. Ginger Sanders says:

    Thank you so much for posting this! At least they aren’t looking for personal injury lawyer in guelph, so that’s not a problem. Things would get a lot more shady if they did.

  20. hiiiiiii
    If it’s available we will use it. With all these laws they’re just poking at the beast who’s trying to sleep. It’s resolving itself but they’re just going to provoke the spite in everyone, bringing us back to square one.


  21. BlackwellRoberta says:

    reply this post
    I opine that to get the loan from banks you should present a firm reason. But, once I’ve received a short term loan, because I was willing to buy a car.