Media Centre > Speeches > April 21, 2006

Speech By

Glenn O'Farrell
Canadian Association of Broadcasters

Presented to
Conference on International Intellectual Property
Law and Policy at Fordham University in New York

April 21, 2006

Good afternoon.

On behalf of Canada’s private broadcasting companies, I wish to offer our sincere appreciation to the organizers of this prestigious IP conference for having extended an invitation to the CAB to present a few of our views on the Canadian copyright regime.

Now I must tell you that it’s with a fair bit of trepidation that I accepted the invitation to speak at this event. The list of outstanding contributors at this conference is somewhat intimidating for someone of my limited – non-descript IP credentials. Nonetheless, however modest my means, I assure you that my intentions are noble, and, I have been lead to understand that this Fordham conference attracts very charitable participants who offer their generous indulgence to those who ask. And ask I do.

So to make the very best use of your indulgence, I would like to take this opportunity to approach the topic of the collective administration of copyright in Canada from the practical perspective of an industry sector that operates in a federally regulated area.

It is interesting to note that the Canadian Association of Broadcasters, which is celebrating its 80th anniversary this year, was originally constituted to provide a meeting place for private broadcasters in Canada to discuss and formulate industry positions on matters of copyright. That was in 1926 – the Canadian House of Commons was considering amendments to copyright legislation relating to a brand new medium – radio broadcasting. The group of pioneer broadcasters, who assembled at Toronto’s King Edward Hotel, in January of 1926, understood the importance of the debate to be engaged for the shaping of radio’s commercial relationship involving rights holders. The founders of our organization grasped the implications of the initial relationship by developing the organizational and permanent structure to forge industry consensus in this area of critical public policy. Clearly, the initial construct of the copyright relationship for broadcasters was far simpler in 1926. Simpler, perhaps: Yet compelling, to motivate both rights holders and rights users to establish their respective consensus forging organizations. Can it not be suggested that in today’s complex and multi-dimensional world, we should perhaps seek to emulate the wisdom of those who had such vision so many decades ago?

I believe that forging consensus is perhaps even more important in our world today than it was in that simpler environment. I’m referring here to developing multi-lateral consensus – encompassing the interests of broad cross-sections of stakeholder groups as opposed to single stakeholder consensus.

I will come back to this question later in my remarks. But first, let me provide a little obvious context by way of the five following points:

So what’s obvious?

1. It’s perfectly clear to all of us here today: the pace of change in technologies that distribute copyrighted works has accelerated immensely in the last few years – in fact there doesn’t seem to be any respite in the multitude of announcements that are constantly impacting the landscape.
   
   For many years, the broadcast environment experienced incremental technological change. We are now facing fundamental change.

So what’s obvious?

2. The technologies are becoming smarter and smarter, cheaper and cheaper, and more and more intuitive.
   
   I was in Montréal earlier this week at the annual gathering of Québec-based music industries and one of the hot topics was the recently announced Hydro –Québec plan to cover Montréal with a Wi-Fi network as was announced in Philadelphia and in a number of other major markets.

So what’s obvious?

3. Consumers are being offered more and more opportunities to access content – wherever they are, whenever they are, on a growing number of devices that are making all of us early adopters of new technology. And there doesn’t seem to be any indication that consumer appetite for the next generation of technology is in decline.
   
   What this means for broadcasters in Canada, as in many other jurisdictions, is that we now operate in an increasingly competitive marketplace, and in a marketplace with a significant division. Two systems now live side by side where there was only one a short few years ago. Today, there is a regulated broadcasting system of broadcasters holding licences, subject to the supervision of the CRTC, and there is a parallel, unregulated system of broadband content providers who enjoy unrestricted and unencumbered access to the same marketplace competing directly with our members for audience and advertising revenue.

This is fundamental change.

A few years ago, radio broadcasters were arguably the sole media operators in the consumer audio space, and tv broadcasters were arguably the only media operators in the audio-video consumer space. The new environment consisting of two parallel systems, regulated and unregulated, is an environment driven by extraordinary new technology developments that can not and should not be underestimated.

So what’s obvious?

4. The unequivocal view at the Montréal music industry conference I was referring to earlier, in emphasizing that new content delivery technologies empower the consumer. In addition to the ability to access content whenever and wherever, they also have the ability to access whatever content they choose – take Rhapsody by Real Networks for example.

So what’s obvious?

5. Digitization is changing everything. Someone mentioned to me the other day: “It isn’t about 15 minutes of fame, now it’s about 15 megabytes of fame!”
   
   So based on those five points, I think we have to ask ourselves a few questions:
   
   In this era of digitization, where businesses are being forced to reconsider or reinvent their operating models, should we expect the rest of the environment to stand still?
   
   Can we afford not to explore ways and means to adapt agencies of government to perform economic functions in the digital environment in which content creation and content user businesses operate

Obviously, I respectfully don’ think we can.

There are a few Canadian agencies that are deserving of some attention in this regard, but today, I would like to focus on the Copyright Board.

Let’s begin again with the obvious. The Copyright Board, and its predecessors, have and continue to perform a very important function in Canada. By and large, its record is impressive. However, given its role and the economic significance of its decisions in Canada, and given the changing environment described earlier, I also believe that we must encourage discussion and debate on potential improvements to ensure that it too adapts to this evolving landscape.

Perhaps we could begin by exploring the context of today’s increasingly complex and multi-layered copyright environment – ever more complex by the new uses of copyrighted works made possible by the Internet and wireless distribution platforms – and ask if there is room within the Board’s legislative mandate to allow for a new approach that is more responsive to the evolving realities of creators and users alike?

In recent years, there has been an increasing burden of tariffs applicable to broadcasting. Let’s take the example of commercial radio where there are three separate tariffs:

• the SOCAN tariff for communication to composers, authors and publishers;
  
  
• the NRCC tariff for neighbouring rights to performers and music publishers; and
  
  
• the CMRRA/SODRAC tariff for reproduction rights to composers, authors and publishers – essentially the same copyright owners as SOCAN represents.

These three separate yet overlapping tariffs, translate into higher effective rates payable by radio and television broadcasters in Canada than those paid by their counterparts in the U.S.

So why does this matter?

It matters in practical terms. The current condition of collective administration in Canada is characterized by an increasing burden of tariffs, an increasing complexity for rights owners, users and the regulator alike; and an inefficient operating model. Furthermore, it matters in the competitive environment described earlier, where regulated and unregulated content providers now operate side by side. The new unregulated competitors access the market from wherever they choose to originate as a result of technology that neutralizes borders. It creates a competitive advantage for service providers originating from the U.S.

In these increasingly complex times, we can perhaps take a page from the early representatives of copyright stakeholders and seek to forge consensus among multiple stakeholders by encouraging open debate as to how to improve the operations of the Copyright Board. Would it not be in all stakeholders’ respective interests to agree that there is room within the Board’s legislative mandate to allow for a new approach focussing on Clarity, Certainty and Clear Direction to better respond to the evolving realities of creators and users alike?

Our answer is yes. To produce a new approach to guide the Board in exercising its mandate and setting tariffs, I would recommend consideration of three principles to be encompassed in regulation:

1. When the Copyright Board establishes the value of a right, it should look at the total compensation received by the same rights owners in relation to the same activity, and
   
   it should take into account any other rights payable for the same activity whether these rights are the subject of other tariffs or of private contracts.
   
   In Canada rights owners may receive multiple revenue streams for use of their works. Take the earlier example of radio stations and the requirement to pay the same rights owners the communication right through the SOCAN tariff and the reproduction right through the CMRRA/SODRAC tariff.
   
   Moreover, the same activity – broadcasting – may involve the exercise of several rights which are inextricably linked in the sense that all are required. Practically speaking, radio broadcasters cannot broadcast music without paying the SOCAN and NRCC tariffs and the CMRRA/SODRAC tariff.
   
   Such is the logic to support the suggested principle to require the Copyright Board to take a broad view of total copyright costs in setting tariffs.
   
   
2. The second principle would have the Board set tariffs on economic factors relating to the value of the right to users. No social or cultural policy consideration should be relevant to setting the tariff rate for the right, particularly where other agencies of government are specifically charged with the regulation of social/cultural matters.
   
   The view here is that the Copyright Board should be strictly a rate-setting body making decisions based on purely economic considerations. There are other components of the Canadian government with important and effective roles in ensuring appropriate levels of support for Canadian creators. Under no circumstances should the Board directly or indirectly deviate from economic considerations to incorporate subsidies for creators in copyright tariffs.
   
   
3. And finally, the third principle would require the Copyright Board to have regard to right payments in the United States for the same or analogous activities.
   
   In today’s rapidly evolving communications environment, digitization of content and new distribution platforms require on-going re-evaluations of existing business models, competitive forces and compensation. There remains a strong likelihood that our business models will remain directly influenced by business models operating in the U.S. Given the Canada – U.S. significant trading relationship and resulting economic inter-dependence along with the growing relevance of the common market for many communications activities, the Board must take into account the copyright payments made in the U.S. in respect of the same or analogous activities.

Conclusion

The CAB is calling for a multi-stakeholder discussion to make the Copyright Board relevant in the context of the digital age in which we all live.  Digitization has caused a paradigm shift in business operations, competition among players in the communications environment, and fundamentally, in matters of copyright.  The Board must adapt to this new environment, as we all must.  This will best be achieved by forging consensus among the stakeholders involved, including copyright owners and users.  In fact, achieving consensus among stakeholders is more important now than ever before.