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Should amateur podcasters, peer-producers, social networks, video-sharing hubs and "all other sites" pay copyright royalties for the music they communicate? The Copyright Board says no. Or at least not yet.
In a long-awaited decision released today the Copyright Board of Canada declined to set a tariff of royalties for a miscellany of web sites that transmit music in one way or another. Among those exempted are Facebook, MySpace and YouTube, as well as hundreds of thousands of other businesses whose sites incorporate some music. Amateur podcasters are also off the hook for payment of this tariff.
SOCAN, the collecting society that administers authors’ and composers’
performing rights in Canada, had sought to charge at least $60 annually to
amateur podcasters who use music for less than a fifth of their
content. "Other" sites like those listed above might have paid up to 7% of
gross revenues or expenses, whichever was greater.
But the Board said it would’ve been unfair to require podcasters and
web site operators to back-pay royalties to 1996, which is the
effective date of this tariff. The Board also pointed out that any
royalty rate would be somewhat arbitrary because there’s no proximate
benchmark price for this kind of music use. It was not immaterial for
the Board that imposing a tariff that might potentially be applied to thousands (more likely millions, I think) of
users putting music into their peer-produced videos and onto their
social networks could have “deleterious” effects. Ultimately, a lack of
evidence about this novel phenomenon led the Board to conclude it
simply couldn’t rationalize a tariff to cover what SOCAN had broadly
categorized as “other” web sites.
Here’s where it is important to bear in mind the history of this whole
proceeding. This is the latest instalment in the infamous “Tariff 22,”
originally filed in 1996 to target internet service providers. When the
Supreme Court of Canada decided that ISPs weren’t normally liable for
music transmitted through their networks, SOCAN refilled the tariff to
target music-using sites directly.
It isn’t clear from the Board’s reasons whether or not SOCAN again
expected to collect its tariff at a chokepoint—like YouTube or
Facebook—or from end users who upload and share content using those
sites. Implicitly, the Board seemed worried that it might be both the
sites and the users affected by the proposed tariff. It is somewhat paradoxical that SOCAN's unsuccessful efforts to target the original Tariff 22 at intermediaries led to the new proposal aimed at individual sites and services, yet the breadth and generality of the reformulated Tariff seems now to be its Achilles' heel.
The decision not to certify this part of SOCAN’s tariff is certainly
controversial. A dissenting opinion of one Board member points out that
the effect of this decision is to allow web sites that use significant
amounts of music and generate impressive revenues free access to
SOCAN’s repertoire of music.
That point is compelling, but warrants
clarification. Simply
because there’s no SOCAN tariff doesn’t mean that copyright holders are
powerless and these sites are off scot-free. In fact, social networks,
online video sites and amateur podcasts might be worse off without a
tariff, because it means they could get sued for what they’re doing.
Paying a tariff would’ve protected them against an infringement action.
So the sort of litigation over peer-production that I've written about
in articles here and here remains a real possibility in Canada.
I don’t want anyone to get the impression that today’s Board decision
is only about podcasters and peer-producers. Indeed there’s much more
to the decision than that. The Board DID set a tariff for webcasts and
simulcasts from radio and television broadcasters, as well as new
online-only radio sites and video game sites. Those aspects of the
decision are noteworthy, but certainly not what got my attention.
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