Tariffpalooza 2014

by Dentons
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Summer 2014. The living is easy; the Copyright Board is certifying tariffs at a furious pace.

As we noted back in May 2014 (Towards Certainty on Webcasting – Re:Sound Tariff 8 Certified), the Board certified Re: Sound Tariff 8, applicable to non-interactive and semi-interactive webcasters (although not immediately apparent from the wording of the tariff, the tariff is intended to apply to audio services such as Pandora and Songza). Re:Sound’s Tariff 8 is already the subject of an application for judicial review and has been the impetus for an ongoing public debate about the appropriateness of the license fees set by the Copyright Board (see Music Canada (including the press release linked at the bottom of that page) and Michael Geist for opposing views of the issue).

On July 26, 2014 the Board certified SOCAN Tariff 4 (Board decision; Tariff), which covers venues hosting live musical performances (including, helpfully, lip synching and miming). For further details regarding licenses for public performance of music at “live events”, see this post from March 2013.

Most momentous, though, was the certification by the Board on July 19 of SOCAN Tariffs 22.D.1 and 22.D.2 (Board decision; Tariffs) – these apply, respectively, to “online audiovisual services” and “user-generated content”, meaning they apply to the biggest of the big fish of the online world: YouTube, Apple, Netflix, Facebook, Yahoo! and internet service providers such as Rogers, Bell and Shaw. Barry Sookman and James Plotkin have both offered insightful posts about the newly-certified tariffs.

Herewith, an attempt to summarize how new SOCAN Tariff 22.D.1 (Online Audiovisual Services) works:

Revenue Source

Year

Royalty

Notes

Per-program fees to end-users

2007-2010

1.7%

minimum of $0.013 per program communicated

 

2011-2013

1.9%

as above

Subscriptions to end-users

2007-2010

1.7%

where free trial offered, min. monthly fee of $0.068 per free trial subscriber

 

2011-2013

1.9%

where free trial offered, min. monthly fee of $0.075 per free trial subscriber

“Internet-related revenues” (see tariff for definition)

2007-2010

1.7% x A x B x (1-C)

A = internet-related revenues
B = (i) the ratio of audiovisual page impressions to all page impressions, if available, and (ii) if not, 0.95 for a music video service, and 0.75 for any other service
C =(i) 0 for a Canadian service, and (ii) for any other service, the ratio of non-Canadian page impressions to all page impressions, if that ratio is available, and 0.9 if not

 

2011-2013

1.9% x A x B x (1-C)

as above

     

If revenues are obtained from all three sources, the service must pay royalties in accordance with each formula, but when calculating “internet-related revenues”, can exclude fees charged to end-users in the first two formulas and related page impressions. A service with no revenues is obliged to pay $15.00 per year.

It should also be noted that the tariff imposes significant reporting obligations on those liable to pay royalties pursuant to the tariff.

Tariff 22.D.2 (User-generated content) is, thankfully, much simpler to summarize:

Year

Royalty

Notes

2007-2010

1.7% of “relevant revenues”

“relevant revenues” means all revenues generated by all visits to watch pages on a site by end users having Canadian IP addresses,
irrespective of whether the content that is subject to those visitscontains any musical works or other audio content or any musical works in the repertoire of SOCAN, including membership,
subscription and other access fees, advertising, product placement, promotion, sponsorship, net revenues from the sale of goods
or services and commissions on third-party transactions, but excluding:
(a) revenues generated from the transmission of pay content;
(b) revenues that are already included in calculating royalties
pursuant to another SOCAN tariff;
(c) revenues generated by an Internet-based activity that is subject to another SOCAN tariff;
(d) agency commissions;
(e) the fair market value of any advertising production services
provided by the user; and
(f) network usage and other connectivity access fees. A service with no relevant revenues is obliged to pay $15.00 per year.

2011-2013

1.9% of “relevant revenues”

as above

Thus far, SOCAN Tariffs 22.D.1 and 22.D.2 appear not to have generated anywhere near the uproar that Re: Sound Tariff 8 has – but whether these tariffs will be the subject of judicial review remains to be seen. As with all matters relating to online uses of music in Canada, service providers are advised to consult with an expert.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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