Copyright Board Issues Commercial Radio Decision

The Copyright Board of Canada today issued its long awaited Commercial Radio tariff and reasons. It is a 116 page bilingual decision that covers six different rights payable to six different collectives.

As the Board states:

A Canadian radio station that broadcasts recorded music off a server reproduces and communicates musical works, performers’ performances and sound recordings. Four copyrights and two remuneration rights must be accounted for. This is the first time that the Board has been asked to set tariffs for all those rights at the same time.

It is notable that this entails more types of rights and more collectives than American commercial radio stations have to deal with. Whether this additional complexity and proliferation of collectives is a good thing or bad thing probably depends on whether one is a broadcaster or someone in the music business. Even in the music business, there is internecine concern about the old “pie” theory that holds that a pie can only be a certain size - and the more people that want a piece of it, the smaller each piece can be. The one sector that clearly benefits from all of this is the copyright bar.

Today’s decision probably validates the pie theory.

In the Board’s words, this is a summary of the result:

How much will the new rates generate in royalty payments, compared to the old rates?

The Board estimates that commercial radio stations will pay a total of $85 million in royalties. This is based on total station revenues of slightly over $1.5 billion in 2009. Using the previously certified rates, radio stations would have paid about $72 million. The new rates thus increase the amount of royalties by $13 million. Of this amount, $10.2 million represent royalties resulting from the introduction of two new rates, for AVLA/SOPROQ and ArtistI.

How much will each collective society receive?

Of the total amount of royalties of $85 million paid by radio stations, the Board estimates that $51 million will go to SOCAN, $13 million to Re:Sound, $11 million to CSI, $10 million to AVLA/SOPROQ and $200,000 to ArtistI.

The overall increase is $13 million per year, which is significant because it is an 18% increase over the previous overall tariff cost to commercial radio stations. And there are still some loose ends and unknown costs, notably regarding internet simulcasting.

However, the total amount is far less than the $200 million predicted by Glenn O’Farrell, former President of the former Canadian Association of Broadcasters. Here’s an article predicting this by Glenn and pictures of former Ministers Jim Prentice and Josée Verner from the Hill Times of February 11, 2008, which seems like aeons ago.

It should also be noted that if Bill C-32 passes as is, the right to collect from commercial radio stations for “reproduction” activities - i.e. copying and storing music on servers so that it can be archived, stored and broadcast efficiently - will be gone, provided that broadcasters can live with the limited exception provided for such reproduction which would last a maximum of thirty days. If the broadcasters can work with this proposed regime, they could save annual payments of $11 million to CSI, $10 million to AVLA/SOPROQ and $200,000 to ArtistI.

Don’t be surprised if the broadcasters try to broaden and lengthen the proposed ephemeral exception.

This tariff is the result of the combination of several proposed tariffs filed in 2007 and 2008. The Board consolidated them all into one hearing, which took place in December of 2008 and January of 2009. If there is judicial review, the Federal Court of Appeal could could hear the matter in a year or less (i.e. before next summer) and typically would render a decision in a few weeks or months at the most after the hearing.

HK