Tag Archives: Digital

Rescind the Digital Exemption

Published 10/17/2019

By Ed Henderson

In February 2007, believing that nothing major would ever become of Internet broadcasting, the Canadian Radio and television & Telecommunications Commission (CRTC) announced an exemption order (C-58) – now referred to as the Digital Exemption – for Internet delivered content. This exemption meant the Internet would not be treated as a broadcaster and would pay no taxes. Foreign ownership would be unregulated and there would be no requirement to feature Canadian content nor make financial contributions, as all other broadcasters do, to the creation of Canadian content.

Internet broadcasters have laughed all the way to the bank ever since.

The Canadian government has long recognized our proximity to the USA as a threat to our cultural existence. Since the early 1900s, government sought ways to protect Canada’s unique culture. In 1936, the federal government introduced the Broadcasting Act, which established a place for Canadian voices to be heard in every part of our country. Since 1957 the Canadian government has regulated the allowable percentage of foreign ownership of Canadian broadcasting entities at 20%.

Canadian content regulations in television (enacted in 1961) and radio (enacted in 1970) have helped build our culture, so much so that artists from the 1970s onwards were able to establish their careers in Canada. Before those regulations were created, many aspiring Canadian artists were forced to leave the country to find success.

Today, the presence of an increasingly dominant and unregulated Internet means history is repeating itself. Once again, we are seeing Canadian artists leave Canada to establish their careers in the arts.

The result is that we are losing jobs in all media and arts. We are also losing Canadian content and programming.

Creators, artists and publishers in Canada are not the only sectors affected by the unregulated Internet. As Internet broadcasting has grown, traditional media in Canada have suffered: newspapers, TV, radio and cable have seen their advertising revenue drop year after year. Conventional TV revenue fell from $1.984 billion in 2011 to $1.411 billion in 2018 – nearly 30%. This has resulted in financial losses every year, beginning in 2012, with $7 million to last year with $144 million (total deficit in only seven years is $675 million). Commercial radio revenue peaked in 2013 at $1.6 billion falling to $1.49 billion in 2018 (a loss of 7%).

The result is that we are losing jobs in all media and arts. We are also losing Canadian content and programming.

Such losses of revenue have caused less spending on production. Producers have less to pay creators. Producers increasingly demand creator copyrights and the royalties that are due to them – surely, an unintended side-effect of the Digital Exemption.

Meanwhile, the Internet broadcasters, mostly located in California, are making billions. Over the top (OTT) revenues have gone from $115 million in 2011 to $1.3 billion in 2018 (a 1,130% increase), and projections for 2022 are $2.351 billion. Almost none of this revenue stays in Canada.

Richard Stursberg and Stephen Armstrong in The Tangled Garden (published by James Lorimer & Company Ltd., 2019) provide a simple fix for this problem: rescind the Digital Exemption.

They write: “Culture is an enormous business in Canada. It is worth, by the government’s reckoning, almost $54 billion per year and employs 650,000 people. This makes it almost twice as large as agriculture, forestry and fisheries industries combined. It accounts for double the number of jobs in mining and oil and gas.”

Stursberg and Armstrong vividly describe the swift pace of the losses to Canadian culture: “Beginning around 2010 . . . much of what had been accomplished began to erode. The once mighty newspaper industry struggled to survive, shedding journalists and closing bureaus across the country. The vastly profitable television business began to lose money. CTV, Global and CityTV, the powerhouses of the private news business and the biggest commissioners of Canadian drama and comedy, were all under water by 2012. The magazine and film businesses were also swept into the downdrafts created by the FAANGS.” (Facebook, Amazon, Apple, Netflix, Google)

Action by government is urgent.

Rescinding the Digital Exemption will likely cost Canadian citizens and government nothing. According to Stursberg and Armstrong, “Extending the sales tax, abolishing the tax credits for foreign offshoots and eliminating the loophole on the application of C-58 will generate sufficient funds” to protect Canadian Content in the digital marketplace.

“The measures are neither novel nor strange. They are, in fact, simply extensions of the rules that have historically governed broadcasting and newspaper businesses. They require that the FAANGs be subject to the same tax regimes as the traditional media, that they make the same contributions to the production of Canadian content and respect the same standards of civility and truthfulness that bind the newspapers and broadcasters.”

Action by government is urgent. The authors warn us: “these changes in policy . . . must be made now. The financial situation of the traditional media is so fragile that they can not wait much longer.”

These simple changes would nearly double the amount of support for our Canadian cultural industries and provide increased tax revenue for Canada. Stursberg and Armstrong hypothesize that, if the Digital Exemption was rescinded and the Internet broadcasters were treated as what they are: broadcasters, – the $100 million that Netflix spent on production in Canada in 2017 would have been $230 million and would rise to $320 million by 2021.

The European Union has taken action. It recently passed legislation to support its thriving cultural economy by applying the same regulations that all non-Internet broadcasters are subject to all Internet broadcasters.

Canada must do the same. Treat the Internet as the broadcaster that it is. Regulate it, require it contribute their fair share of and support and broadcast Canadian content.

Canada’s cultural existence depends on it.

A version of Ed Henderson’s editorial was published in the October 15, 2019, edition of The Globe and Mail.

About Ed Henderson

 

Using Copyrighted Music in Podcasts

Published 09/30/2019

By Alan Cross

Since its debut on January 25, 2017, my Ongoing History of New Music podcasts has been downloaded 5.9 million times by people in virtually every country on the planet, save French Guyana, Western Sahara, Niger, Chad, South Sudan, Eritrea, the Republic of the Congo, and North Korea. That’s 188 out of 195 countries.

Not bad for a documentary program that goes deep into the music, despite not being able to play the songs – copyrighted commercial music – about which I talk. It’s a music documentary without the music because, well, them’s the rules.

When an artist signs a deal with a record label, the label is granted the sole and exclusive right to distribute that artist’s music. When a podcaster includes a song in a production, the podcaster becomes a de facto distributor of a digital file of that song. That breaches the contractual rights owned by the label, opening the podcaster to charges of unauthorized duplication of a copyrighted work. Piracy, in other words.

The most we can do without getting into any kind of trouble is offering short clips to illustrate points made by the narrative. But even this is officially verboten. (More on that risk in a moment.)

There’s no licensing mechanism by which podcasters can legally include this sort of music for distribution in their programs. No matter how much money you want to throw at the situation, there’s no one that’s empowered to help you.

You may have done some research that says it’s permissible to use commercial music in podcasts, even if it’s just a 15-second clip. This is not true. There is no minimum duration that makes using the clip of a song okay.

Some people will justify their use music based on the concept of “fair use.” But if you dig into the Berne Convention, you’ll see that the applicable copyright law is in the country where the podcast is available and consumed, not where it’s hosted.

For example, the U.S. has fair use in its copyright law. But that only applies to the United States. Canada, the U.K., and Australia do not (we have something called “fair dealing,” by the way). Many countries haven’t even got that far. And even then, “fair use” (or its local equivalent) is something you’d only use if you’re hauled into court, which means you’ve already spent a gusher’s worth of money.

Does it matter that your podcast doesn’t make money? Nope. Irrelevant. Move on.

“What if,” you say, “I have the permission of the artist to use their music?” That’s fine, but the artist is just part of the chain. You still need the okay from the label, the publisher, and the composers (if different from the artist).

Chances are, too, that the artist has signed up with a performing rights organization. You’ll need permission from them, too. Currently, anybody can license the performing rights for music in their podcast by getting a Tariff 22F license from SOCAN, but that’s only for the performing rights, and only in Canada. They’d still need to license the master recording, and the reproduction rights.

Confusing matters are that some broadcasters – the BBC and U.K. commercial broadcasters leap to mind – have spent millions on music licensing, as part of all these do with music. About a decade ago, they negotiated a 30-second limit for songs within podcasts heard within the U.K. only. Everything else is supposed to be geo-blocked to avoid copyright infringement in non-U.K. territories.

Some people have tried to skirt the rules by placing their podcasts on YouTube. Nice try, but then we’re talking about a stream, not a podcast, so different rules apply. And even then, the chances of YouTube’s ID algorithms flagging the podcast for a copyright violation on music are pretty good. Spotify, which had gone deep with podcasts, also appears to have some copyright bots searching for similar violations, and have kicked off a few podcasters.

To be clear, there’s been no takedown of a major podcast for running afoul of these rules. That would require time and expensive lawyers. But it’s also possible that rights holders are just waiting for things with certain high-profile podcasters to reach critical mass before pouncing on violators with a big bill.

There’s no doubt that a lot of money is being left on the table, so why can’t someone just come up with a blanket license for music in podcasts? Various proposals are being floated, especially since the U.S. podcast market is predicted to exceed US $1 billion by the end of 2020. The new medium is exploding, and the bigger things get, the more difficult it’ll be to keep things orderly and legal.

But first, there are endless negotiations that need to be conducted with rights holders around the planet.

All artists, composers, and those associated with a song deserve to be compensated for their labour. The situation with music in podcasts is one of the most challenging things the industry has had to face since the blanket licenses that came in with radio almost a hundred years ago. Except, like, about a million times trickier.

About Alan Cross

How can struggling live-music venues and musicians move forward?

Published 02/14/2017

By Shawn Wilson, CEO/Chef de la direction, Muzooka

Smaller live music venues across Canada are struggling, and the climate for local, small-scale live music in Canada is challenging. It’s hard for venues to remain profitable enough to stay open, and to hire and pay the best musicians for their venue. It’s also hard for musicians to find places to play live, with fewer venues at their disposal. This is especially important for musicians, because with the bulk of music sales lost to streaming, live performance has become a crucial component – some would say the most crucial – in their ability to earn a living. And this is especially true for those who play smaller, local venues.

Some would say that without the right support and tools, a full-scale crisis could emerge, with a trickle-down effect on local economies, neighborhood culture and community pride. Both venues and artists need better tools – faster, easier, cheaper, and more effective – so that they can spend more time doing the things they’re expert at, like making music and running an establishment, and less time with niggling and often expensive details that, more often than not, are simply bypassed, with fingers crossed that everything might work out.

Muzooka recognizes, understands and is working to solve these problems.

The nucleus of the Muzooka digital platform is the Artist Page, which serves as a valuable link between musicians and venues or festivals, where each party can find the other and explore the possibilities of working together. The Artist Page is a great way for SOCAN members to find live gigs, and for venues and festivals, Licensed To Play by SOCAN, to source great new talent. The Artist Page serves up all the content needed for a festival or venue lineup, and Muzooka’s Demo Submission tool streamlines the booking and programming processes. Artists, managers, and agents can update their information instantly over multiple venue and festival websites. Artists can keep their online content up-to-date, no matter where it’s shared or embedded online.

Another tool that’s useful to both musicians and venues is the Digital Gig Poster. Like a physical poster for a gig, it announces all the details for an upcoming performance. But the digital version can include live videos, songs, and all of the artist’s social media, so venues, festivals, artists, and fans can all quickly and easily share the posters online.

Muzooka Digital Gig Posters are automatically added to a venue’s Facebook page. Potential ticket buyers can listen to featured songs and watch live videos to get a taste of what the artist’s live show is like. Fans can invite their friends to have a look and listen, and most importantly, they can actually buy tickets. One click adds the Muzooka Gig Poster to Twitter, tags the artist(s) and venue, and posts it as a media-rich Twitter Card. Fans can play featured songs, learn more about the event, and buy tickets, all inside of Twitter. Muzooka also e-mails the artist an Instagram-friendly video that plays 15 seconds of the featured video with a text overlay of the show’s details, as well as copy/paste text with proper @mentions.

And it’s all 100% free for participating musicians and venues.

In another initiative aimed at helping musicians – and music publishers – Muzooka is working directly with SOCAN on strategies for their application program interface (API) portal. SOCAN’s APIs have the potential to enable a marketplace of new innovative apps, that could revolutionize how writers and music publishers work with SOCAN, to get paid when their music is played.

SOCAN has already launched two APIs, for song registration and concert notification. The former enables tech developers to build new workflow apps and software to allow songwriters to register their songs more accurately with their music publishers, labels, digital services and SOCAN, while the latter enables those developers to build apps that allow songwriters and music publishers to more easily register their concerts with SOCAN, to get paid faster and more accurately for their live performances.

SOCAN is leading the transformation of music rights, and Muzooka is proud to support them by helping SOCAN members and licensed venues be more effective and productive, so that they can focus on the stuff that they’re actually good at – like making and presenting music.

Streaming requires new business model for record companies

Published 11/5/2014

By Terry McBride

Streaming is the future of music consumption.

In Nielsen and Billboard’s sales numbers for 2013, streaming music increased 32 percent over the previous year, to 118.1-billion track streams. Overall music sales dropped 6.3 percent to about 1.5-billion tracks, albums, and videos. Digital music sales (downloads) dropped too, by 6 percent, about the same rate.

The Recording Industry Association of America recently announced that revenue from streaming-music services overtook that from the sale of physical CDs, and came in just a hair behind total physical sales. The RIAA also said that streaming now accounts for 27 per cent of recording industry revenues in the first half of 2014, versus 20 per cent the year prior.

About 35 percent of the revenues of my record company, Nettwerk Records, already come from streaming, and that amount is only going to grow in the coming years.

When music is streamed online, songwriters in North America are currently being vastly underpaid for the music they create, some thousandth fraction of a penny for each streaming play (though, as SOCAN CEO Eric Baptiste pointed out in his last SOCAN blog, there are reasons for this).The same is generally true for the artists, and the non-major record companies whose music is being streamed, which is why streaming is not yet offsetting the decline in physical sales and downloads in North America.

The solution to this problem is for record companies to seek a percentage of the revenue earned by the streaming companies, rather than a penny rate “per play” (or in this case, “per stream”). The solution must also create equitable deals between the labels and their artists to ensure that the artists are fairly compensated after such negotiations.

There’s a great deal of generational resistance to this idea. Past generations are strongly invested in the attitude that rates of remuneration for recordings have to be set by a governmental regulatory body. But in the online world, where borders are becoming more and more meaningless, where a song streams to one person at a time rather being played to hundreds of thousands of people via a spin on radio, and where streaming companies’ revenues are dwarfed by many orders of magnitude when compared with traditional media such as TV and radio, the only practical way forward is to abandon penny-rate regulations and negotiate percentage deals directly with the streaming companies. In addition to payment for access to their music, major labels are already obtaining equity in music streaming companies.

This approach can work. In fact, it already has. Nordic European countries are seeing growth from streaming music, and their artists are earning a significant portion of their living from it. The Norwegian recording industry reported that streaming revenue was up 66 percent in the first half of 2013. Streaming revenue accounted for two-thirds of total music revenues in Norway. It’s been a similar story in Sweden, Finland and Denmark. Sweden’s music industry is now back to double-digit growth, even though about 90 percent of the music consumed there occurs via streaming.

By comparison, if the penny-rate mentality doesn’t disappear sooner rather than later, the North American record industry will continue to shrink annually at a rate of five to six percent. In fact, one of the reasons Nettwerk has been able to prosper in the face of this continuing decline is that 90 percent of our income comes from outside of Canada.

The writing is on the wall. The old way needs to go. The record industry has got to get moving, and moving fast, to adapt to the new reality of music streaming.


Views expressed in this and all posts on this blog are not necessarily those of SOCAN.