August 16, 2010
TODAY'S BUSINESS LAW: Ruling body estimates commercial stations will pay a combined $85 million under new tarriff rates, an increase of $13 million over previous rates

Radio royalties are complex.

On July 9, 2010, the Copyright Board of Canada issued its long-awaited Commercial Radio tariff and reasons. It dealt with payments radio stations must pay to copyright collectives to obtain rights to play music.

The rights to use most music flows through copyright collectives that collect royalties from broadcasters and other users, so they don't have to deal with rights holders individually. The collectives in turn pay the royalties to the rights holders.

Even with the collectives taking the place of rights holders, the various copyright payments broadcasters must pay for music are complex. Radio stations must pay for six different rights.

The board stated:

A Canadian radio station that broadcasts recorded music off a server reproduces and communicates musical works, performers' performances and sound recordings. Four copyrights and two remuneration rights must be accounted for.

The board estimates that commercial radio stations will pay a total of $85 million annually in royalties under the new rates, an increase of $13 million over previous rates.

Of the $85 million in royalties, the board estimates $51 million will go to SOCAN, $13 million to Re:Sound, $11 million to CSI, $10 million to AVLA/SOPROQ and $200,000 to ArtistI.

SOCAN administers the exclusive right of the owner of the copyright in a musical work to communicate it to the public by telecommunication for most composers, authors, and publishers.

The second and third rights are the remuneration rights that performers and record companies enjoy when a recording of a musical work is communicated to the public by telecommunication. Re:Sound administers these rights for most eligible performers and makers.

The fourth set of rights is the exclusive right to reproduce a musical work. CSI, SODRAC and CMRRA administer these rights.

The fifth set of rights is the exclusive right to reproduce a sound recording. AVLA and SOPROQ act for most record producers, record companies and artists.

The sixth set of rights is the exclusive right in a performer's performance to reproduce the performance for a purpose other than the purpose for which authorization was given. ArtistI, ACTRA PRS, AFM Canada Artisl, and others administer this right.

The estimated $85 million in royalties payable by radio broadcasters does not include instances where collectives have not filed tariffs. As a result, the $85 million estimate may be understating the monies payable by radio broadcasters.

The Commercial Radio tariff is a consolidation of several proposed tariffs filed in 2007 and 2008. If the board's decision ends up being judicially reviewed by the Federal Court of Appeal, a final decision will likely be over a year away.

David Canton is a business lawyer and trade-mark agent with a technology focus at Harrison Pensa LLP. This article, written with the assistance of Brent Hodge, contains general comments only, not legal advice. Contact David at 519-661-6776 or www.canton.elegal.ca.