I recently had the pleasure of sitting down with Graham Henderson, President of Music Canada, who will be inducted into the Canadian Music Industry Hall of Fame on Thursday, March 21 as part of Canadian Music Week 2013. In addition to representing record labels such as Sony, Universal and Warner, Music Canada’s role is to “create a business environment where their members can flourish” using advocacy, political outreach, and other efforts.
Music Canada also runs the Gold/Platinum program (i.e. certifying when a record has made platinum). Although famous for their efforts to strengthen copyright laws, copyright is not all that Music Canada does. For example, one of the initiatives Graham mentioned is in the area of ticketing/towing bylaws. When musicians play in clubs in Austin or Nashville, there are dedicated “artist loading zones” where the artists can park and load their equipment. The same is not true in Toronto. Many small clubs have very limited loading zones, and limited nearby parking. A single parking ticket can wipe out an entire night’s profit for some musicians, making it very difficult to practice their craft.
Another Music Canada concern is improving relations between the City of Toronto and the music industry to a similar level that the film industry has with the city. For instance, the Toronto Film & Television Office helps arrange location permits, police presence, emergency medical services, tax credits, and other services for film and television shoots on fairly short notice. In comparison, no such program exists for the music industry.
For example, Graham told a story about how the NXNE Concert held in Toronto attempted to obtain a permit for Yonge and Dundas Square. The planning process was initiated 8 months before the concert date, and the final permits to use the square did not come through until 3 days before the concert. As one might imagine, by that point the acts had been booked, media announcements had been made, etc. The organizers were taking a massive risk – had the permit not come through, the concert would have had to be cancelled, and the organizers would still have been on the hook for all costs – without the associated profits.
“Music is one of the most open formats in the universe, for all the credit they get for it.”
When asked what the biggest accomplishment from the recent Canadian copyright reform initiatives was, Graham didn’t cite digital locks or TPM protection, or the new part of the legislation targeted at pirate sites. The greatest accomplishment, he said, was the fact that we passed a bill at all. While there may be disagreement on the content of the reform, one thing many agree on was that copyright reform itself was badly needed. After three previous failed attempts, the fact that Bill C-11 passed in a global political climate where other copyright focused bills crashed and burned (e.g., SOPA and ACTA), was nothing short of miraculous. “Our government passed a bill when SOPA and ACTA failed.”
He pointed to concerns that stated that if the government enacted the bill, DRM would “lock up” content. It has been months since bill C-11 came into force, even longer since it was passed, and this assertion has not been true, at least with respect to music. To this day, music remains one of the most open, consumer-friendly content industries, a fact that Graham thinks the music industry does not get enough credit for. Today, music is sold in one of the most open, flexible formats available. The restrictive DRM you may find on other types of media is not present here. When you buy a song on iTunes, or elsewhere, you can play it on any device you own, anywhere you want, at any time you want.
There are no complicated digital hoops to jump through in order to satisfy a DRM mechanism or prove that you have the right to use the content you paid for. There is no need to purchase a new device that supports the DRM format of the file you purchased. Moving a song from your computer to an iPod (or a cell phone, laptop, MP3 Player, tablet, etc.) is as simple as cutting and pasting a file. It is truly a consumer’s dream.
There were two efforts to implement DRM in the music industry, but they were uniformly abandoned. It all comes down to history and market expectations. When the CD was introduced back in 1982, it was in a DRM free format. Conversely, as Graham notes, “the first DVDs were locked up, and people accepted that. But how many times do you re-watch a DVD?” It’s hard to watch a movie while jogging, or when you’re at work. But the same isn’t true for music. Many people listen to music throughout their entire day, playing the same songs over and over again. They take their music with them everywhere they go. Such behaviour requires a level of flexibility and convenience that would be very hard, if not impossible, to achieve with DRM protected content.
But it’s not just consumers that benefit from the openness of the music industry, its other artists too. “When you publish a song, that is fair game to create a cover.” When was the last time anyone tried to create a cover of a movie? Or a TV show? Or even a book? Well, with a song, you can.
Another thing Graham says the Canadian music industry deserves credit for is their response to the problem of piracy. While the RIAA was launching lawsuits to sue consumers in the US, these types of lawsuits are notably absent in Canada. And Canadian consumers mainly have Graham to thank for that.
“My policy was, we shouldn’t be suing people while we’re waiting for legislation.”
When Graham took over CRIA (as Music Canada was then known), there were a few brief lawsuits that went through the federal court system. This resulted in a rather infamous court verdict that basically stated that downloading music was legal in Canada. These lawsuits were appealed to the Federal Court of Appeal, not because of an intention to follow through with suing their customers, but as Graham noted “we simply had to appeal it to set the record straight.”
And they eventually did. The Federal Court of Appeal ended up reversing the lower court decision. At that point, the music industry could have continued the lawsuits against the individual downloaders directly, however, they chose not to.
“The US did it to make a point. Because they had been polling people and practically everyone thought that downloading was OK. The objective was to make the point that, NO, it is illegal.” Similarly in Canada, there was pressure from a lot of sources, including independents and artists, to initiate a similar series of lawsuits, or otherwise send the message that downloading is illegal. But Graham decided to take a different route. “My policy was, we shouldn’t be suing people while we’re waiting for legislation.” Graham instead decided to focus on lobbying the government to pass copyright reform. It was hoped that a renewed message from Parliament, in the form of the passage of a new copyright bill and all the media coverage surrounding it, would send a message to Canadians that downloading music without compensation was not appropriate. To continue a lawsuit against consumers while lobbying for legislation would taint that process, attract undue notice and probably wouldn’t even work to curb downloading (as the RIAA learned in the states).
Today, there are more ways to consume music than there ever was. From buying a CD in stores, to single song online retailers like iTunes, to digital radio services or even streaming subscription services like Deezer and Rdio, it has never been easier to get the music the music you want, how you want it, whenever you want.
“They are the canary, the first down the coal mine.”
The music industry has come a long way since it began. Usually it is on the forefront of the culture industries. Music was the first industry to switch to digital with the introduction of the CD in 1982. The MP3 player was the first digital media player. Digital download stores like iTunes started with music sales.
But with this innovation came its own set of problems. Graham joked that “they are the canary, the first down the coal mine.” Music had to forge its own path. And, for the most part, it has succeeded.
2013 marks the first year in over a decade that music sales have not declined, and have even risen slightly. When asked for the reason for these changes, Graham cites many factors. Copyright reform is an issue, not just for any advantages the law provides, but for the fact that the law was actually passed. Canada is a law abiding country, and when the government sends a message that downloading is illegal, people take them at their word.
Digital music now accounts for 50% of all music sales, and labels are just getting better at marketing into this space. There are also more legal music services in Canada than ever before. As legal options for purchasing music are becoming easier and more convenient, consumers are changing their purchasing habits to include more paid music and less illegal downloads. But things are still not ideal for the music industry.
“There was a time when even if you never sold another CD anywhere else in the world, you could still make a living in a middle class life [in Canada].”
The addition of more legal services in Canada is a good thing, but they are contributing a very minute portion to the overall revenue picture as yet. For example, streaming services, at least as they exist today, do not represent a sustainable model. This unsustainability is due to the fact that streaming services usually only pay out fractions of a penny per stream.
He points to a now famous exchange between the band Grizzly Bear and their fans. In it, the band emphasises the fact that a single CD sale is worth more to them than hundreds of thousands of streams on Pandora. While this generated the usual “your music stinks” or “go on tour” comments, many fans were also interested in how they could help. For those who are unaware, Grizzly Bear is a somewhat well known indie music band. They have played sold out shows at Radio City Music Hall yet they still live in small apartments and some of the band members can’t even afford health insurance.
“We have to build this back up for our young artists. They are aware that [older musicians] used to have homes, but now they can’t afford that.” Graham notes that many young artists are missing the same benefits given to artists in music’s heyday. “There was a time when even if you never sold another CD anywhere else in the world, you could still make a living in a middle class life [in Canada].”
One of the goals of Music Canada is to “create an environment where you can earn your living as a musician.” There are many ways to do this that fall outside the traditional realms of copyright and digital media. For example, ensuring that there areartist loading zones for bands as mentioned above. Cities and governments can also provide tax incentives to record albums in Canada, similar to the film tax credit program.
And it’s harder to earn a living as a musician today than it was a few decades ago. One of the main problems, of course, is copyright infringement.
“The musical middle class is at risk.”
Of course, copyright infringement has an effect on the industry, Graham noted. But the conversation needs to get away from copyright infringement or, as used in the popular vernacular, piracy. People don’t like to talk about piracy, but people care about artists. “I think the conversation needs to switch to… the effect of the digital age.”
One of the first policies Graham initiated as soon as he took over Music Canada was no lawsuits. So how else could they mitigate piracy? One way is to go after the pirate websites themselves. They do this by attacking their sources of funding. Naming and shaming corporations that advertise on pirate websites, and stopping pirate sites from using payment processors like MasterCard, Visa and PayPal.
When asked what message he would have for Canada’s youth, Graham’s message was simple: “support your artists.” As noted, there are fewer artists today that are able to own their own home and make a living in the industry. “The musical middle class is at risk.” Music plays a big part of our lives. Imagine games without music? Movies without music? When major events in your life happen, songs are playing. “Understand that the creation of music is not easy.” There are thousands of good jobs, where people go to work with nothing other than music and making careers work for people in their mind. “It will help you get through your depressions; it will help you get through your joy. To the government, it will create jobs, help the tax base and bring tourists to our great nation. Music can help you, and you can help music.”
Mark Kohras is an IP Osgoode alum and the current Features Editor for IP Osgoode. For more coverage of Graham Henderson and Music Canada, see our blog on Graham’s recent address to the Canadian Club.
The comments on the “infamous verdict” are just plain wrong. Whether it is Graham who is wrong or the interviewer or both, wrong is wrong.
The Federal Court’s comments in the BMG case on downloading echoed an earlier Copyright Board decision that downloading onto an audio recording medium is legal, regardless of the source of the music and regardless of whether a levy has been sought on the medium. This point was later confirmed by the Federal Court of Appeal when it rejected a levy on iPod type devices or the memory permanently embedded therein.
CRIA (which now calls itself Music Canada) has always had to live with the inconvenient truth and consequence that the private copying levy scheme in Canada legalizes downloading of music, as least insofar as it is done onto an “audio recording medium” – which surely includes both internal and external hard drives of personal computers. Don’t take my word for this. Read the Copyright Board decision here at pages 19-21
And subsequent FCA decisions.
In any event, the appeal ruling in the BMG case simply said the findings on infringement in the decision below were “premature” and not based upon sufficient evidence but stopped far short of saying that they were wrong.
Anyone wishing to read a balanced analysis of the FCA decision by myself who acted on the winning side and Peter Ruby and Richard Naiberg who acted for the music industry on the other side on this case can find it here:
The fact is that the appeal of the “infamous verdict” was dismissed. For whatever reason, BMG was unable or unwilling to come back with the evidence required by the FCA to pursue the cases.
And by the way, Federal Court judges don’t render “verdicts” here in Canada. Terminology matters.
As does accuracy.