The Debate Over Royalties: The Other Side of the Canadian Music Streaming Fees Debate

You may have heard the sound of weeping and gnashing of teeth coming from the direction of the Canadian music industry about the fees set by the Copyright Board for streaming music services in this country.  There are promises of judicial review, requests to sign petitions, social media campaigns and attempts to get the public onside with musicians, composers and rights holders.

In short, there’s a whole lot of lobbying going on.  But like most controversial issues, there’s more than one side to the story.

Wait.  Back up.  Let’s start from the beginning.

Any enterprise that seeks to use music as part of their business model needs pay for the privilege. Radio stations, for example, must pay a percentage of their gross advertising revenues to a number of performing rights organizations (also called “PROs” or “collectives”) such as SOCAN and Re:Sound. The PROs then distribute that money to their clients.  Every once in a while, those fees–that percentage of ad revenues–goes through a period of renegotiation and the rates inevitably go up.

Streaming music services–Songza, Rdio, Deezer, Slacker, the lot of ’em–also have to pay in order to use music.  The issue is, however, how much these companies should pay for the music they funnel to their customers.

Because technology moves much, much faster than bureaucracy, all these companies negotiated a rate with the music industry while the Copyright Board was still trying to figure out what rate(s) should apply.  A preemptive rate ahead of the Board’s decision was the only way these companies could get going.

Turns out that this rate–a fee per 1,000 plays of any given song–was much, much higher than what the Copyright Board ended up approving. In fact, it was TEN TIMES higher.  You can see why the music industry is upset. They’re calling this “10 percent of nothing.”

Case closed, right?  “The music industry has every right to be pissed!” you say. “Is this how much we have devalued music? What about musicians who are trying to make a decent living?  This must be addressed–and now!”

Well, hang on.  As Michael Geist (a thorn in the side of the music industry on a good day), points out that the truth is quite a bit more complex.  His article in the Toronto Star makes for some interesting reading.  If you’re at all interested in this controversy, you should give it a look.

 

Alan Cross

is an internationally known broadcaster, interviewer, writer, consultant, blogger and speaker. In his 30+ years in the music business, Alan has interviewed the biggest names in rock, from David Bowie and U2 to Pearl Jam and the Foo Fighters. He’s also known as a musicologist and documentarian through programs like The Ongoing History of New Music.

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