The government’s surprise decision to include copyright term extension for sound recordings and performances in this week’s budget is being painted by the music industry as important for Canadian artists. But sources suggest that the key reason for the change is lobbying from foreign record labels such as Universal Music and Sony Music, who were increasingly concerned with the appearance of public domain records from artists such as the Beatles appearing on store shelves in Canada. As discussed in this post, Canadian copyright law protects the song for the life of the author plus 50 years. However, the sound recording lasts for 50 years. That still provides decades of protection for record companies to profit from the records, but that is apparently not long enough for them.
Earlier this year, a Canadian company called Stargrove Entertainment began selling two Beatles records featuring performances that are in the public domain in Canada. The records were far cheaper than those sold through Universal Music and were picked up by retail giant Walmart, who continues to list the records on their website (Can’t Buy Me Love, Love Me Do). There were additional titles featuring the Rolling Stones, Bob Dylan, and the Beach Boys. Some of the titles are still available for sale through Walmart.
The Stargrove Entertainment records provided Canadian consumers with low-priced alternatives while still ensures that the authors of the songs received the approriate royalties. While the sound recording is in the public domain for these works, the song itself remains subject to copyright. Therefore, the song writers were still paid for every record sold. The difference is that Universal Records was not profiting from the sale. Instead, a small Canadian company was succeeding in selling the records at a lower price to Canadian consumers.
The Stargrove Entertainment records effectively broke the monopoly enjoyed by Universal Music and Sony Music over these popular artists by offering consumers more choice at better prices. After pressure on distributors and retailers failed to stop the sales, the companies began lobbying the government to change the law. Indeed, Music Canada lobbyists met with officials in the Minister of Canadian Heritage’s office in both February and March of this year. The Harper government’s decision to cave to pressure from a couple of foreign record labels in a matter of months is remarkable. After years of concern that consumers don’t pay for music, there was a Canadian company that was offering consumers lower-priced versions of music with full payments to the songwriters. Yet because foreign record companies were not also profiting, they sought to change the law and stop the sales.
The government characterizes the reforms as good for the Canadian economy, yet the opposite is true. The changes benefit large foreign record labels at the expense of a small Canadian upstart and ensure that consumer prices for music remain high. As a result, the copyright holders in the songs will earn less revenue, the Canadian public domain is harmed, and new Canadian business models based on the public domain are extinguished.