Girl in Front of Beatles Mural by James Jardine (CC BY-NC-ND 2.0)

Girl in Front of Beatles Mural by James Jardine (CC BY-NC-ND 2.0)


Lobbying & Licensing: Behind the Recording Industry’s Campaign to Squeeze Out New Competitors

My recent posts on the government’s surprise budget announcement that it plans to extend the term of copyright protection for sound recordings generated considerable private feedback, with several industry sources suggesting that the change is not quite what it seems. In fact, despite painting the reform as an effort to protect the rights of artists, foreign record companies have been primarily concerned with eliminating new competitors who offer cheaper, legal public domain recordings of popular artists such as the Beatles, Beach Boys, Bob Dylan, and the Rolling Stones.

From a consumer perspective, there is little doubt that the change will lead to higher prices for music. Multiple studies on copyright term extension for sound recordings have concluded that public domain recordings encourage competition between release companies and drive down the price for consumers. The songwriters are paid either way, but the consumers win with more choice and lower priced music.

My weekly technology law column (Toronto Star version, homepage version) notes that while some artists have lent support to the government’s proposed changes, the bigger story is what has been happening behind the scenes. As new public domain-based recordings began to appear at major Canadian retailers, foreign record labels adopted a two-pronged strategy: intense lobbying for legislative changes to lock down recordings for decades and blocking royalty payments to copyright owners to keep the new competitors out of the market.

The lobbying campaign started in the fall with Music Canada, the lead recording industry lobby group, hiring Tanya Peatt as its new Director of Regulatory Affairs. Peatt, who served as Industry Minister James Moore’s lead copyright policy advisor for five years, was charged with responsibility for the management and strategic direction of the industry’s relationship with the federal government.

Weeks later, Music Canada registered lobbyists began near-monthly meetings with Patrick Rogers, the Director of Policy for Canadian Heritage Minister Shelly Glover. Rogers is the former Director of Parliamentary Affairs with the Prime Minister’s Office. While a government spokesperson indicated that “it is not our practice to comment on the content of meetings with stakeholders”, the meetings appear to have had their desired effect with the copyright changes promised in the budget.

Amy Terrill, Music Canada’s Vice-President of Public Affairs defended the approach, voicing support for the changes and noting that “we believe that it is important to promote and protect the value of music and its production and we are a passionate advocate for music and those who create it. As part of that advocacy, we meet regularly with elected and non-elected representatives of all levels of government.”

If the backroom lobbying campaign does not surprise, the effort to stop copyright owners from being paid surely does. New competitors in the Canadian marketplace obtained “pay as you press” licences from the Canadian Musical Rights Reproduction Agency (CMRRA), which cover the copyright royalties for music publishers. The licences require payment for every song included on a record, ensuring that the payments add up quickly.

Those licences covered the initial run of records that made their way into Canadian stores and made sure that the artists were paid for the use of their work. Given the initial sales and the royalty rates, the low-cost records generated thousands in royalties for the copyright holders.

Yet once the major record labels became aware that the licences were being used to create competitive products, they ordered CMRRA to stop issuing any licences. CMRRA advised the new competitors that it had no choice but to stop issuing the licence and that the decision stemmed from the fact that the master recordings were in the public domain. Interestingly, these licences are compulsory in the United States and the United Kingdom, where permission from the copyright owner is not required.

Without the CMRRA licence, the new competitors are unable to compete in the marketplace. When combined with the government’s legislative proposal, that leaves few winners: foreign record labels can maintain their high prices, but consumers face the prospect of less choice and artists lose as a new source of revenue since re-releases of older titles and new public domain compilations are effectively blocked from the Canadian market.