This past spring, the Copyright Board of Canada issued its decision certifying Re:Sound’s Tariff 8 and setting the royalties collected for webcasting in Canada. Many parties of interest were incensed by the proposed rates, which are difficult to understand without the context of the entire royalty system in Canada.
The recording industry launched a web campaign calling the rate “a serious insult to Canada’s musicians because it sets the world’s worst royalty rates for non-interactive and semi-interactive music streaming” (The United States' rate is around $0.002 while Canada's is $0.0001, for the same retroactive period.)
Some critics felt the outrage was misleading to the public and to rights holders, suggesting that Canadian artists do earn fair rates overall, pointing out a reproduction fee in Canada that doesn’t exist in the U.S. (They presumably mean the Canadian Musical Reproduction Rights Agency’s (CMRRA) mechanical licensing fee, which applies only to pressed copies of recorded music and is payable to the publisher.)
Others, however, suggested that the idea that musicians earn from several different sources isn't entirely accurate. For example, while performers, songwriters, composers, arrangers, and producers can earn for their respective roles, no one person (unless they happen to perform every role) earns 100% of every royalty. Also, these additional sources of income, like the mechanical licensing fee, are outside of the scope of webcast earnings and, as such, aren’t accurate or cogent points when specifically discussing a criticism of webcasting rates.
All of this begs the question: what does an artist earn from online music streaming? It seems unfair to comment on the fairness of tariff rates without knowing the answer to this question. Unfortunately, the answer is far too complicated to express in one blog entry. But let’s start by looking at which tariffs are prompted by an online “play” and how they are meted out.
Tariff 8 – Non-Interactive & Semi-Interactive Webcasts sets the rates that certain music streaming services must pay to Re:Sound to play sound recordings. “Non-interactive” refers to services similar to traditional radio, where users don’t get to make decisions about what they hear, e.g. Slacker. “Semi-interactive” webcasts give users some control by choosing parameters such as genre, artist, etc., although the playlists are still largely curated by the service, e.g. Songza. Re:Sound pays artists (those performing on a recording) and makers (those responsible for financing a recording, often a record label). This means that a feature vocalist (like Celine Dion), an instrumentalist (like Glenn Gould), a singer-songwriter (like Bryan Adams), or a background performer could all be eligible for Tariff 8 royalties, while someone who is strictly a songwriter would not be.
Tariff 8 pays on a per-play basis: CBC pays 13.1¢ per thousand plays, while commercial webcasters pay 10.2¢ per thousand plays. The distributed monies are further apportioned between everyone who played on a recording. To put this into context, ten thousand plays (approximately a month of consecutive streams) of a 4 minute song from a single webcaster would yield a dollar.
Also triggered by webcasting is SOCAN’s Tariff 22 - Internet, as well as CMRRA/SODRAC’s Online Music Service Tariff, both of which pay songwriters and music publishers. These tariffs are more complicated than Re:Sound’s Tariff 8, but basically calculate royalties based on a combination of revenue and the number of plays/downloads/page impressions.
In many cases, artists who are both performers and songwriters (like Bryan Adams) will earn royalties under these different tariffs for the same play of music. However, there are many more instances where artists are only eligible for one stream of royalties: Tariff 8.
So what do these artists make? How does a singer-songwriter in a band get paid when their song is played online? What about a member of a large orchestra? Due to the wide variability of these rate structures, we would have to develop a hypothetical, realistic environment in which to calculate rates for a few tangible examples. In my next post, we will do just that.
Jordan Fine is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.