Canadian Radio Disappointed By Copyright Board's Ruling

The Canadian Assn. of Broadcasters (CAB) is disappointed by the March 31 ruling by the federally operated Canadian Copyright Board on royalties payable by commercial Canadian radio stations for the reproduction of musical works.

The reproduction right, passed into law with Phase II revisions (Bill C-32) to Canada's Copyright Act in 1997, addresses for the first time in Canada broadcasters' practice of making temporary, or "ephemeral," copies of programs or music for later use—as a station might do when copying songs onto a digital hard-drive storage system for easier access.

Royalties, retroactive to January 2001, are to be collected by the Canadian Musical Reproduction Rights Agency (CMMRA) and the Society for Reproduction Rights of Authors, Composers and Publishers in Canada, which filed the proposed tariffs with the judicial tribunal in April 2001.

"We are disappointed with the decision," CAB president/CEO Glenn O'Farrell says. "It suggests to an industry that it should not embrace new technologies, seek out new efficiencies, or modernize its practices and activities. There is no new advertising revenue or new audience improvement or enhancement that flows from this practice."

CMMRA president David Basskin says, "The bottom line is that much in the world of broadcasting turns on these copies from an automation and operating advantage perspective, and finally they have to pay for that right."

The CAB states the estimated impact of the new tariff to be approximately $6.5 million Canadian ($4.4 million) annually. "It's hard to put exact dollars to the decision," Basskin counters. "We now have to collect data and do auditing."

Under the two-tier royalty structure, a low-use station—one that broadcasts music for less than 20% of its total broadcast time (excluding production music) during the reference month—shall pay, on its gross income for the reference month, 0.12% of the station's first $625,000 Canadian ($424,000) gross income in a year; 0.23% of the station's next $625,000 Canadian gross income in a year; and 0.35% of any other amount of gross income in a year.

Any other station shall pay, on its gross income for the reference month, 0.27% of the station's first $625,000 Canadian gross income in a year; 0.53% of the station's next $625,000 Canadian gross income in a year; and 0.8% of any other amount of gross income in a year.

The CAB had sought an exemption to ephemeral rights under C-32, but Canada's music publishers vigorously lobbied to keep it out. "We are still very opposed to the legislation," O'Farrell says. "We find it wrong in concept, in spirit, and in form. We will continue to advocate that this matter be given new consideration, particularly in light of this decision."

The CAB has not determined if it will appeal the decision.