The following is another in a series of forecasts and reflections about the music business in Canada that readers have seen in FYI in recent weeks.Today is a submission from Caroline Rioux who is ably facing up to the challenges as president of the Canadian Musical Reproduction Rights Association.
Following my appointment as President of CMRRA three years ago, we set out to pursue several strategic objectives intended to increase value and services for our music publisher clients. Delivering on those objectives has continued to be the focus of CMRRA’s efforts and attention in 2016, which resulted in several enhancements to our new IT system and in the expansion of our licensing activities to the audiovisual market place.
As a licensing collective, our mission, as always, is to maximize the value of the rights we represent, and ensure the most royalties can be distributed to our clients. Our main operational tasks are focused on matching vast volumes of data – sound recordings on the one hand and musical works and copyright owners on the other – and ensuring the proper and accurate calculation, invoicing and allocation of royalties.
CMRRA represents close to 60,000 music publishing catalogues, and each month we ingest countless new work registrations and usage files from a variety of sources. The proper management of all this information is at the core of what we do – and it requires a robust system, ever increasing data processing capabilities, as well as specialized workflows to move the maximum amount of royalties out of our licensees’ coffers and into our clients’ pockets quickly and efficiently.
Several years ago, we partnered with Spanish Point Technologies to design and build CMRRA’s new cloud-based Licensing and Royalty Distribution System (LDS) using the latest Microsoft technologies. Today, this new system is benefitting our music publisher clients who are seeing increased royalty distributions as a result of our expanded matching capabilities. Not only have we gotten better at processing current usage data, we’ve also improved our ability to collect and distribute past royalties. In 2016, for instance, we distributed nearly the same amount of royalties for physical products and permanent download as we did in 2015, despite the ongoing downturn in the sale of these formats.
In March 2016, we rolled out significantly enhanced royalty statements that are available electronically to all CMRRA clients through a new CMRRA Direct portal. Our new statements were improved in both form and content. First, the statements can now be downloaded and read using any common spreadsheet software such as Excel. This resulted in a vast improvement for many smaller publishers who have limited abilities to process complex data file formats, and as a result used to receive their statements in PDF form. Second, the enhanced statements provide much more complete product and usage information to assist our clients with their royalty tracking and analysis needs.
In addition to offering better access to licensing and royalty data, we’re also very excited to have developed a claims website that provides rights owners with the ability to review unmatched tracks, unidentified works and undistributed major label royalties associated with those works, and to make claims online via a secure web portal.
One of our goals for 2017 is to expand our claims website to also facilitate the identification of unmatched online tracks. For us, this is not just a question of transparency — it’s a matter of putting power in the hands of rights owners to collect their unpaid royalties and to allow them a clear view into what might otherwise be described as a black box. The digital “long tail”, in particular, can be incredibly challenging to work through, and we welcome the rights owners’ involvement to ensure their royalties are properly identified, collected and distributed. We’re here to provide them with the tools they need to do this.
With the ongoing decline in CD sales, downloads, and private copying royalties, we’re focused on maintaining the strength of our other licensing activities (online and broadcast mechanical activities) and developing new revenue sources.
We’re very excited to have concluded an agreement with YouTube that will compensate rights owners for the use of the reproduction right in Canada. The agreement with YouTube is part of CMRRA's new audiovisual licensing line of business, which is very similar in concept to our broadcast mechanical licensing: each time audiovisual content is reproduced by YouTube or their users, so too is the music contained in that content. We are collecting royalties on YouTube advertising revenue on their existing platform, as well as on subscription revenues on any subscription services they bring to Canada (including YouTube Red). The agreement also covers YouTube’s Electronic Sell Through (EST) and Transactional Video-On-Demand (TVOD) services.We are very proud to have concluded this ground breaking new licensing regime for Canada, which has created an opportunity for an entirely new revenue stream for CMRRA’s clients.
We have also entered into licensing agreements with several major streaming services. We’re extremely pleased by the success of these services in the Canadian marketplace, which are now making up for the ongoing decline in physical product and permanent download royalties.
In April 2016, the Copyright Board of Canada rendered its long-awaited decision related to the Commercial Radio Tariff. The tariff sets the royalty rates payable by commercial radio broadcasters for the use of music, including the songs that CMRRA and SODRAC (CSI) license for reproduction.
This decision was the first by the Copyright Board to set rates for the reproduction right in music since certain amendments to the Canadian Copyright Act took effect in November 2012. CSI disagrees with many aspects of the decision and, together with Connect Music Licensing and SOPROQ, applied to the Federal Court of Appeal for judicial review. The Canadian Association of Broadcasters (CAB) did the same. Since having filed the applications, the parties have reached agreement in principle on revised rates and terms that will apply through the end of 2018.
CMRRA continues to wait for a decision for the Online Music Services Tariff. In the fall of 2013, we went before the Copyright Board to advocate for the value of those rights in Canada, and to update our existing royalty rates for various uses of our publishers’ musical works. We look forward to the Copyright Board’s decision on those proceedings to update the royalty rates for reproductions of musical works by online music services – especially webcasting services.
We have also been gearing up for a Copyright Board hearing related to our newly proposed music video and audiovisual services tariffs.While a hearing has not yet been scheduled, this new business requires a great deal of upfront preparation. Our motivation to pursue tariffs for the reproduction of music incorporated within audiovisual content was born out of the rapidly changing audiovisual marketplace, where the reproduction right has never been as important as it is today.
In 2017, we’re looking to develop new services for our music publisher clients and other organizations to optimize their business both here and internationally. Our excellent reputation for quality, expertise, transparency and continuous information technology improvements, coupled with the enormous amount of data we have meticulously assembled, puts us in a favourable position to diversify our services.
The world of collective management is changing globally and CMRRA is very much part of this changing landscape. Our future will incorporate a broader scope of activities and partnerships in order to remain competitive and continue to efficiently deliver our core Canadian services.