Towards Certainty On Webcasting – Re: Sound Tariff 8 Certified

by Dentons
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We inch closer to certainty regarding what royalty rates are payable in Canada by online webcasting services such as Pandora, Songza and Last.fm.

On May 16, 2014, the Copyright Board of Canada released Re:Sound Tariff 8, applicable to non-interactive and semi-interactive webcasts for the years 2009-2012. Re:Sound is a collective which collects “equitable remuneration” payable to performers and the owners of sound recordings for the public performance or telecommunication to the public of sound recordings on which performances of musical works are embodied.

The Board released the tariff itself, a 227-paragraph decision, and a plain English “fact sheet”.

Before setting out the rates themselves, a few notes:

  • as the Board describes in para. 7 of its decision, streaming music over the internet can involve “as many as six rights or sets of rights”; which is to say: this is complicated stuff, and should not be navigated without the assistance of someone with a solid understanding of the various rights at play, who owns/administers those rights and what the current state-of-play is with respect to the various proposed and certified Copyright Board tariffs which might apply
  • Re:Sound Tariff 8 covers only “equitable remuneration to which performers and makers are entitled when a published sound recording of a musical work is communicated to the public by telecommunication”; which means that…
  • Re:Sound Tariff 8 does not cover “the right to communicate a musical work to the public by telecommunication; the right to reproduce a musical work; the right to reproduce a sound recording; the right to reproduce any reproduction of an authorized fixation of a performer’s performance for a purpose other than that for which the authorization was given; the rights granted, on November 7, 2012, to Canadian performers and makers over the communication resulting from making available a sound recording to the public”; all of those rights might (or might not!) be the subject of a different tariff which might (or might not!) be in some stage of proposal, discussion, certification, appeal, etc.; tread carefully!
  • as much grief as I sometimes give the Copyright Board, the reasons for the decision actually make for some interesting reading (well, relatively speaking, of course – I’m sure you’ve got better things to do with your time, but I don’t)

Without further ado, the rates payable to Re:Sound by non-interactive and semi-interactive webcasters, set for 2009-2012 by Re:Sound Tariff 8:

Licensee

Rate

Minimum Fee

CBC

13.1¢ per 1,000 plays

$100 per year

Commercial webcaster

10.2¢ per 1,000 plays

$100 per year

Community/non-commercial webcaster

N/A

$25 per year

Two additional points to consider, both taken from the Board’s “fact sheet”:

  • “In the United States, for 2012, the rate that webcasters must pay for the same rights when their sole business is webcasting is $1.10 per thousand plays” – so, basically, the Canadian rate, “for the same rights” is roughly 10% of the US rate; make of that what you will. The Board spends a fair amount of time in its decision (see paras. 119ff) explaining why the Board arrived at a such a strikingly different rate as compared to the US rate.
  • the Board’s “fact sheet” contains a very interesting table (see question 7 in the “fact sheet”) which sets out how much the Board anticipates certain users will pay under the certified tariff; most noteworthy: the Board’s estimate is that Pandora, classified as a “very large webcaster”, with 3 billion plays per year, would pay around $306,000 per year to Re:Sound under Tariff 8 as certified, and the Board estimates that a “very large webcaster” would reap annual revenues of $5.8 million – so a little over 5% of annual revenues would be payable to Re:Sound; again, note that Tariff 8 covers only a subset of all the rights which Pandora would need to clear

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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