Canadian Musicians Get Shafted on Streaming Royalties...

Canadian musicians to fight truly pathetic royalty rates for their streaming music royalties.

Canadian artists are going to court to overturn a new royalties schedule that pays them only one hundredth of a penny every time one of their songs is streamed online...

After six years of hearing opposing arguments, the Copyright Board of Canada ruled this year that many streaming music sites must pay artists 10.2 cents every thousand plays, or a pathetic $0.0102 cents per play.

The CBC must pay slightly more at 13.1 cents per thousand streaming plays under what’s known as Tariff 8.

The Canadian rate is 10 times lower than in the United States, according to figures from the copyright board.

Now the music industry is fighting back...

Their campaign notes that the Barenaked Ladies song If I Had $1,000,000 would have to be played 9,200 times to afford the box of Kraft Dinner mentioned in the song. It would have to be played almost 10 billion times for the band to make one million dollars.

Nova Scotia artist Joel Plaskett said in an interview Tuesday the royalty fees are so small it’s almost meaningless for artists, especially new acts.

At a certain point only the really huge musicians are going to profit from that,” said Plaskett.

You just don’t get paid from the recorded material anymore; you have to make money from the live shows or maybe the licence from your song being used in a commercial.”

Now the group representing musicians has filed for a judicial review of Tariff 8 in the Federal Court of Appeal.

Re:Sound, the not-for-profit that represents the rights of performers, says the copyright board set its tariffs “in complete isolation of international rate standards.”

The society argues these rates will have “disruptive and devastating effects” on the industry. The other parties, a slew of Canadian broadcasters, have not yet responded to the court filing.

In its decision, the board found American rates are not a fair comparison. The American system is intended to replicate a competitive market outcome, but it also includes unique factors.

The American regime includes a “promotional value” of airplay and is designed to prevent reducing record sales. Neither of these views is in play in Canada.

Artists in Canada make much more money from radio royalties, largely because the radio industry is massive compared to the burgeoning online streaming industry.

In 2011, radio stations paid $56 million in music royalties.

But there is no straight comparison between radio and streaming fees. Radio stations pay royalties not per song, but as a percentage of gross revenue — up to 4.4 per cent — which are then paid out to artists through a formula that calculates several factors.

Tariff 8 applies to “non-interactive” or “semi-interactive” streaming sites. An online radio site or playlist site like Songza, where a person’s musical tastes affect their playlists, fall under Tariff 8.

YouTube and sites like Rdio are exempt because listeners pick each song they listen to. Those sites negotiate their fees directly with record labels.

Tariff 8 would also apply to Pandora, one of the most popular music sites in the United States. Pandora has not yet entered Canada, saying it was waiting for the royalties issue to be resolved.

Last month, Pandora CFO Mike Herring told an investor conference that Tariff 8 set the groundwork for his company to do business in Canada.

We have to solve the publishing side now. But we’re a big step closer to being in Canada,” said Herring.

The copyright board projects Pandora, with three billion plays per year, would pay $306,000 in royalties in Canada. The CBC would pay about $36,000.

The board expects Songza, with 70 million plays per year, would pay $7,140 in fees. In total, it projects Tariff 8 will bring in $500,000 in royalties annually if Pandora does enter the Canadian market. Because the case has been tied up for so long, Tariff 8 actually only applies retroactively to the years 2009 to 2012. But the rates for 2013 and beyond will be based off of this first decision.


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