Why Today’s Copyright Board Ruling Matters to You, the Music Fan

I know, I know: a story about copyright.  But it’s really, really important for you as a music fan to understand what happened today.  Let’s start at the beginning.

Anyone who wants to stream music in Canada is required to pay fees for the privilege of playing music as part of their business model.  Those fees are set by the Copyright Board.

The problem is that the Copyright Board tends to move at a glacial pace.  The industry has been waiting for a ruling on streaming fees for years–since 2010, to be specific.  And whatever the Board has been considering has been based on information given to them in 2010, which related the state of the industry dating back to about 2007.

Technology hasn’t been waiting around for the Copyright Board to get their act together.  Some companies–like Songza, Rdio, Slacker, Deezer and a few others–didn’t want to wait before launching in Canada.  They negotiated deals with the various performing rights organizations–SOCAN, Re:Sound, the CMRRA–and created a schedule of fees that everyone hoped would be in line with whatever the Copyright Board would eventually rule.

Others weren’t willing to take the risk.  Spotify and Pandora, for example, chose to wait until they had some solid financial guidance as to where fees were headed.  And as far as anyone knew–and I talked to a LOT of people at Canadian Music Week about this–the Copyright Board’s ruling wasn’t expected until sometime in 2015.

But then today, Friday, May 17, right as the first long weekend of the summer was set to start, the Copyright Board surprised everyone with an announcement.

Here’s the nitty-gritty bit.  The tariff rate for commercial broadcasters (streaming music services or any broadcaster–including radio stations with B-streams on their websites–who wants to make online music programming available on what’s known as “interactive” or “semi-interactive” basis) is 10.2 cents per 1,000 plays of a song.

That’s a relief to netcasters and streamers because Re:Sound (the not-for-profit agency that collects performance rights incomes for artists and record companies) had proposed a rate of anywhere between $1 and $2.30 per 1,000 plays.  Songwriters, performers and record labels would have loved that, obviously.

However, at 10.2 cents per 1,000 plays, that’s more-or-less in line with what had been asked by streamers like Pandora.

What does this mean for the music fan?  We’ll see Spotify in Canada sooner than later–maybe as early as this summer.  Pandora has to have a more favourable view of coming north of the border.  Radio stations now know what they’ll have to pay going forward when it comes to offering on-demand programming on their websites. And netcasters can now budget accordingly.

Meanwhile, now that a degree of certainty has been introduced into the system, we should see new companies and new services entering the fray.  That means Canadian music fans will have access to the latest innovation in the streaming space–theoretically, anyway.

On the flip side, expect big wails from the artist side a la Thom Yorke and David Byrne about how music has been devalued and how it’s impossible to replace income from sales of CDs and digital files with streaming royalties.

Once Spotify and Pandora enter the Canadian market, I predict that there will be a much greater rate of adoption of streaming by the general public.  We’ll slowly move up from 86th place in the world when it comes to streaming use.  And we’ll see an acceleration in the decline of music sales like we’ve seen in the US this year.

Another possibility is a round of consolidation.Bigger companies–telcos, national networks–might be willing to take a flyer and buy (or buy into) some of the existing services.  Financial certainty is a wonderful thing for strategic planning.

On the radio side, we should–SHOULD–see more interesting websites with on-demand offerings of on-air programming and net-only programs.

All in all, today’s ruling is big news, not just for the music industry but for music fans.  You watch.