Music Canada AGM: MacKay Says Copyright Act Exemptions Cost Creators $100M a Year

By Nick Krewen

Citing such Canadian Copyright Act legislation subsidies as the commercial radio industry royalty exemption, a policy that allows broadcasters a further royalty break when a sound recording is paired with an audiovisual image and private copying compensation, Ian MacKay says creators and labels are suffering a $100M revenue shortfall.

Speaking on a panel concerning the Canadian Copyright Act Review at the recent Music Canada Playback AGM, MacKay first targeted the $1.25M commercial radio royalty exemption, suggesting the loss for artists and labels was much more than what the seven-figure exemption implies.

"There are subsidies that artists have been effectively paying to radio stations to the tune of about $8M a year," explained MacKay, president of Re:Sound, the Canadian not-for-profit agency that issues music licenses to businesses and distributes performance rights royalties.

"And that's because those royalties that are paid by radio stations are being used to pay the exemptions and that's costing the artists and sound recording companies the $8M a year."

MacKay says that when the royalty exemption was enacted in 1997, Canadian radio stations had successfully convinced the federal government that they were losing money. 

"Of course, radio's profits have multiplied since then," he contends.

MacKay says the "unequal treatment" discriminates against artists and sound recording companies but rewards songwriters with royalties for aired music.

He states that a further exemption that excuses broadcasters from paying performance royalties on a sound recording coupled with audiovisual images is costing artists and labels a further $50M-$55M yearly.  He also cites private copying compensation - or lack thereof, since it's restricted to obsolete technologies - as another subsidy that's shortchanging artists and sound recording companies to the tune of an additional $40M-$50M.

"When you add that all up, there could be $100M reinjected into the system by just eliminating subsidies for people who are using music at the expense of the people who make music," he noted.

MacKay drew attention to the Canadian Copyright Board, criticizing the often five-year time lag in which decisions concerning royalty rates are debated and then implemented out of step with the current industry standards. 

"We need to ensure that (the Board) is making decisions on a real-time basis, looking at what is going on in the marketplace, what’s going on in other territories and what people are freely negotiating with each other," MacKay said.

MacKay also called for more individual negotiations to take place outside of the Canadian Copyright Board's jurisdiction.

"Artists and labels should be able to really negotiate the use of their music more than they are now.

"There are restrictions in the Copyright Act now in terms of ways to do that. There are certain rights you have to go through the Copyright Board to set rates. You can’t negotiate those directly with users, but also there are these subsidies for certain users of music – but not for others of music – which artists and sound recording owners cannot negotiate out onand have to be changed in the legislation."

As much as he can provide numbers and analysis, MacKay says some of the most effective testimony that the government hears in order to facilitate policy change should come from the musicians and songwriters who create music.

"I think it’s really important that in this discussion that the government in particular is hearing from artists and how they're affected day-to-day.

"Those stories resonate with Ottawa," he admits.

MacKay wasn't the only person on the panel, which also included economist Dr. George Barker and artists and songwriters Loreena McKennitt and Maia Davies, to offer salient points of discussion.

The upshot is - in a refrain that's been sung too many times - that most musicians are close to - or living in - a state of poverty.

As Maia Davies, a one-time member of Ladies of the Canyon and currently a solo artist, songwriter and producer admits: "We're all making a lot less money than you think. We don't talk about it because we're all supposed to be successful and rich and that's part of your appeal.

"My main problems right now are the Spotifys and the YouTubes - and just how little money comes from them."

Davies, who had 12 Top 10 hits on commercial radio last year, was involved with another 40 songs that were released and is working on an artist project, said she was having a better year financially than she had previously enjoyed, but admitted," I should be doing better than I am."

She noted that a fellow songwriter who had three cuts on a non-specified Drake album "can't afford his rent because they weren't singles."

Davies - who says she has "seven jobs" - labelled "Spotify and the services" as greedy and laid the majority of the blame at the feet of corporate interests.

"The main problem is the corporations – they know they’re doing the wrong thing," Davies said.

However, it's not just those artists and writers who are suffering due to the changing times: even 14M album seller Loreena McKennitt is feeling the pinch.

McKennitt says when "Mummer's Dance" was a hit for her in 1998, she had two offices and a full-time staff of 13. Today, it's down to "one office and two full-time staffers."

But the celebrated harpist, also the owner of the independent Quinlan Road Records label, says that there are additional victims impacted by the downturn of physical album sales and the industry's conversion to lower-paying digital streams: the cottage industry that she could previously support with her album projects.

"When I think of the ecosystem - the studio, the engineers, the photographers, the graphic designers, the caterers, the travel agents, the masterers, the duplicators - that broad ecosystem that paid a lot of dividends is gone," McKennitt laments. "And now there's so much power and influence that is in very few hands -  that being digital companies. They need to be broken up to allow new competition."

McKennitt says that she is sure that if she began her career today, "I would have never reached the height of my success."

When it comes to the five-year process involving the Canadian Copyright Act Review, Re:Sound's Ian MacKay says it's important that the Canadian music industry projects a united front.

"We need to tell the government the same key messages so they hear it again and again and again," he states. "We're not allowing the technology companies or the people who are not paying for music to divide and conquer different sections of the music industry.  It's really important to not allow other people to find a way to pit the songwriter against the artist, or the artist against the record label.