Music Canada was one of several witnesses that appeared before the Standing Committee on Industry, Science and Technology this week as part of the copyright review. The group continued its campaign on the so-called value gap, largely ignoring huge increases in streaming revenues with claims about legislative reforms that bear little resemblance to the Canadian experience. While those arguments will be old news to the committee members, it was the discussion of piracy and government handouts that merit attention.
With respect to piracy, the industry acknowledged that unlicensed streaming has largely disappeared. When asked about the YouTube music channel Vevo, Music Canada’s Graham Henderson responded:
“98% of everything that’s on YouTube is licensed now, right, because we’re all remunerating it. The days of it all being illegal content is drifting away.”
Henderson went on to say that he wasn’t exactly sure who Vevo is, an odd comment given that it is owned by music labels Sony Music Entertainment, Universal Music Group and Warner Music Group. In fact, Vevo recently struck an advertising deal with YouTube that highlights how the industry is capitalizing on the potential of ad-based streaming services.
Yet even more remarkable was the committee discussion on one of the four main “asks” from the music industry. After Henderson opened with a specific request for an annual $40 million handout from the government for private copying (the lack of payment being implausibly characterized as “an unfair subsidy”), committee members asked for specifics. It started with MP Frank Baylis:
Baylis: I’m going to talk, then, about private copying. I think, Ms. McAllister and Mr. Henderson, you brought that up. When we used cassettes, discs, and blank CDs, there was a levy put on them. That doesn’t exist, I believe you said, due to a court case. It doesn’t exist, let’s say, when iPod came out, or my phone that has music. Do I understand and maybe you could elaborate that you’d like to see it applied to these mediums, and what amounts? Do you have any amounts that you’re thinking of? How would you see that being distributed among the artists? I’ll ask both of you.
Henderson: What’s being asked by the community, and I think we’ve all aligned on this, is not to
impose a levy on consumers but to seek a fund, a temporary four-year fund. The number that has come up is about $40 million per year. That is, therefore, not a levy. It becomes something that comes out of Treasury, and it’s a decision that the Government of Canada will have to make as to whether it feels it’s important enough to remunerate artists and others for private copying, which, by the way, is what happens elsewhere in the world, often through levies. But that’s not our proposal.
After Henderson called it temporary and another witness reiterated that the fund would be a short term measure as the government developed new legislation to apply the tax to all devices, MP Dane Lloyd questioned the fairness of a broad based device tax:
Lloyd: If it’s just a blanket levy on a device, wouldn’t you admit that there are people who could buy these devices who won’t be infringing on any copyright?
Henderson: I think the important thing is if you were to go the fund route, then we’re not worried
about impacting consumers.
Lloyd: That’s the short-term route.
Henderson: Yes, but it could be the long term. The point would be that the government is recognizing the importance of performers and others getting paid for this type of copying.
In other words, despite having said it was a temporary measure minutes earlier, Henderson switched gears to argue it could be long-term. In fact, as Lloyd continued, Henderson acknowledged that he opposes a levy on devices:
Lloyd: So in my last 30 seconds, you would say there’s no better way that you can think of to implement a levy than to put a levy on devices?
Henderson: Well, I personally think it should be a fund.
Having now acknowledged that he does not support a levy on devices and would like the government handout to run on a long-term basis, MP Mary Ng wanted more details and Henderson desperately wanted to change the subject:
Ng: So beyond the four years then, we talked about moving towards a system where there could be levies, and then the levies would actually generate the income. If I think about it at the macro level, the income of the content creators has been so disrupted because of the overall disruption following the emergence of the Googles, Youtubes, etc., right? So how do we get to a place, then, where in that rebalance the content that is created by the creators then has a fair compensation in the new world? Right? A fund is a fund but presumably, somewhere down the road, you’re going to
have to increase it because there’s more content generated, etc., so that’s not sustainable.
Henderson: No, I think that this is absorbing a lot of attention here today, but it’s actually a minor
piece in the puzzle.
What message did the Music Canada appearance leave the committee on the issue of a device copying tax or massive government handout? Presumably with the view that it is asking for $160 million for copying despite acknowledging that in a streaming world “illegal content is drifting away”, admitting that it actually opposes a levy, and that what it originally billed as a “short term” solution is really a long-term expectation that taxpayers will spend hundreds of millions of dollars for non-existent copying.