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Slyck Interviews the CPCC
August 17, 2007
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So you have a huge music collection of different kinds of music. You think to yourself that you'd like to listen to your music in a specific order without having to swap out your CD's every time. You're also worried that you could damage or lose your music collection stored on the original albums. What's the best solution for backing up purposes or making your own music mix? Easy. You go down to your local store, buy some blank CD's and fire up your CD burning software. This is known as private copying. Seems like a common and normal thing to do in this day and age. Of course, not very many who engage in this particular practice are fully aware of the legal implications of this act.

Currently, in Canada, that levy is 21 cents (CAD). The money goes through a collective. In this case, that collective is the CPCC (Canadian Private Copying Collective). The money is then distributed to artists as compensation. It seems like a pretty straightforward process, but unfortunately, there are a number of misconceptions surrounding the private copying levy. David Basskin, director of the CPCC, agreed to an interview to talk about some of the ideas floating around online about the private copying levy. What is the CPCC and what does the CPCC do?

David: The Canadian Private Copying Collective (CPCC) is a collective formed to collect and distribute the levy on sale of blank audio recording media in Canada. CPCC members are themselves collectives, divided into two "colleges": CMRRA, SOCAN and SODRAC represent songwriters and music publishers, and NRCC, which is itself made up of several other collectives, represents Canadian performers and producers of sound recordings. CPCC proposes tariffs to set the amount of levies to be collected on the manufacture or import of blank audio recording media in and into Canada, takes part in hearings before the Copyright Board of Canada to deal [with] those tariffs, collects the proceeds of the levy, distributes those proceeds to its member collectives and enforces the collection of the levy through audits and legal proceedings against those who try to evade payment. Please see the attached information regarding CPCC's mandate and activities for further information. Last year, Graham Henderson was quoted as saying: "We don't want a private copying levy that, in effect, sanctions online theft." While it is arguable that other things contributed to CRIA (Canadian Recording Industry Association) losing the discovery case back in 2004, namely an evidence issue, is he right in suggesting that the private copying levy on blank CDs and DVDs also covers downloading copyrighted content? Given how large of a demand it is, are you aware of any other reason that he would call for an end to the levy?

David: Mr. Henderson is not a spokesman for CPCC. His remarks were made, presumably, on behalf of CRIA, whose members are represented by one of the collectives which make up NRCC. Accordingly, we have no comment on Mr. Henderson's remarks and suggest that you contact him directly should you wish to pursue this line of inquiry.

Neither the private copying levy, nor the exemption set out in the legislation respecting reproduction of songs and recordings for private
purposes authorize P2P file "sharing" or "trading". The legislation creates an exemption so that private copies made for the personal use of the person making the copy, in the absence of express permission from the owners of the copyrighted works and recordings so reproduced, do not constitute infringement of those rights. The exemption specifically does not authorize a person to distribute or pass on such a copy to any other person, by any means, whether paid or unpaid. people have argued for some time that sending lawsuits to people on P2P networks is a bad idea. Some are arguing that, instead of sending lawsuits, it's better to put a levy on ISPs to counteract what the industry considers losses over the internet. Is this something that the CPCC has considered? What are your thoughts on this idea?

David: No lawsuits have been brought in Canada against individuals with respect to unauthorized file "sharing".

CPCC's mandate is limited to the collection and distribution of the levy on blank audio recording media pursuant to Part VIII of the Copyright Act. Services offered by ISPs do not fall within the ambit of the levy. One of the criticisms of collectives like SOCAN is that the royalties collected on radio tend to simply go to bigger artists and not to smaller artists that tend to generally need the money more. Is there a way the CPCC handles royalties for smaller artists? Generally, how does the CPCC figure out where the royalties go from the money collected off of blank CDs/DVDs/etc.?

David: Questions related to SOCAN should be addressed directly to that organization. At present, the levy is collected by CPCC on audiocassettes, recordable CDs and MiniDiscs. There is no levy at this time on recordable DVDs and none is being sought by CPCC.

CPCC distributes the net proceeds of the levy on the basis of airplay data and data derived from the sale of CDs. Individuals do not tell us which songs they have copied, nor do we expect them to. However, in order to be fair, any distribution must approximate, as closely as possible, the degree to which individual songs and recordings are likekly to have been the subject of private copying. Thus, we begin with the assumption that there is a close relationship between the popularity of songs and recordings and the likelihood that they will be the subject of private copying.

Since there is no way of determining exactly which works have been copied, we use airplay and sales data as "proxies" to represent such popularity. Two-thirds of the net proceeds are allocated to the collectives representing authors and music publishers (SOCAN, SODRAC and CMRRA) and one-third to NRCC on behalf of Canadian performers and producers of sound recordings. The author/publisher collectives distributes their share to claimants one-half on the basis of airplay data and one-half on the basis of CD sales data. Likewise, NRCC distributes its portion of the net proceeds of the levy to Canadian performers and producers of sound recordings on the same basis.

By general consensus, this method of distribution is both affordable and
fair: affordable, because a more detailed method of distribution would be
substantially more expensive to carry out, and would exhaust an
unacceptable portion of the net levy proceeds in the cost of distribution. Fair, because the proceeds are distributed in proportion to the popularity of the songs which show up in airplay and sales data. No significant objections to this distribution methodology have been raised since CPCC began distributing the proceeds of the levy. The levy does not exclusively benefit star songwriters or performers; more than 90,000 different rights holders have received distributions of the levy. A recent study by C. Craig Parks was posted on the government's website and it talks about a large number of collectives including the CPCC. Would you consider the study like a report card on collectives like yourself or is there more to the study than that? While reading the study, I get the sense that the collectives, generally speaking, are falling behind the times in a few respects. Is that because technology is moving very quickly, copyright laws moving slowly or a little bit of both?

David: CPCC is doing an effective job for those who it represents. By virtue of the fact that we act as a single collective, we avoid the multiplication of costs that would be incurred if each of CPCC's member collectives had simultaneously and independently pursued the levy. CPCC represents an unprecedented effort by its member collectives to jointly deliver services to those we represent, cost-effectively and efficiently.

Mr. Parks' study does not represent the policy of the Government of Canada and was, as far as we understand, commissioned by the previous
administration as a general and largely anecdotal survey of the issue of
collective administration of copyright in Canada. It is not in any sense a "report card" on CPCC.

As to whether CPCC is "falling behind the times" as technology changes, I
would strongly disagree. If you look at Part VIII of the Act, which deals with the issue of private copying, you will see that the scope of the levy is not tied to specific technologies (as it is in US legislation). Rather, the levy is applicable to any blank audio recording medium "regardless of its material form". The legislation allows the Copyright Board, in its consideration of tariffs proposed by CPCC, to deal with issues presented by changes in technology. We believe - as does the Board - that iPods and similar Digital Audio Recorders (DARs) meet the definition of "blank audio recording medium" set out in the Act, and that they are thus subject to the levy. DARs did not exist at the time the private copying provisions were introduced into the Act. The flexibility represented by the definition of "blank audio recording medium" is ample proof of the ability of CPCC and its empowering legislation to effectively respond to technological change. Michael Geist wrote a column on The Star which CPCC responded to. While you mentioned that a study disputes Geist's suggestion that there is a growing dissatisfaction for the collectives, there's also a continuing theme that there is a push for a levy on iPods. CIPPIC noted that there was a decision in 2004 and that the copyright board says that iPods are, indeed, leviable (PDF). What happened between the decision in 2004 and the recent decision? Was it a change of the times? Situation at hand? Is it just about iPods or is this about cellphones with music capabilities and MP3 players in general? Is there anything else that could soon be subject to the levy currently planned?

David: CPCC has repeatedly gone on the record to state that we have no intention to seek to apply the levy to hard disks per se, or to personal computers. There is no change in this position. The present proposed tariff originally included memory cards. However, we have withdrawn that aspect of our proposed levy because further research indicated that there was not, at this time, sufficient evidence of the use of such media for the purposes of private copying of music. Since the Act requires that a medium must be one which is "ordinarily used" for the purpose of private copying of media in order to qualify for the levy, we took this step in order to recognize the likelihood that we would not be successful in pursuing the levy on such media at this time.

Likewise, notwithstanding observations by the Copyright Board as to the further application of the levy to other media, we are not at this time seeking to apply the levy to any media to which it is not already applicable other than DARs. I refer you to the text of our proposed tariff, as amended, for further guidance on this issue.

In its decision on CPCC's 2003 tariff, the Board agreed with CPCC's proposition that the memory contained within a DAR (e.g., a hard disk) met the definition of "audio recording medium" in the Act. The Federal Court of Canada disagreed, and held that such memory components cease to fall within the definition at such point as they are permanently affixed to a DAR. However, neither the Board nor the Federal Court of Appeal considered or dealt with the question of whether the DAR in its entirety met the defnition of "medium". I strongly recommend that you read the recent decision of the Board in which it concludes that a DAR does meet the definition, and is properly the subject of the levy. We expect that this decision will be the subject of an Application for Judicial Review (i.e., an appeal), and that the Federal Court of Appeal will have the opportunity to evaluate the Board's recent decision in this matter.

We are confident that the Board's decision is sound, and that it will be upheld. The intention of the levy is to provide for compensation for songwriters, music publishers and qualifying performers and producers of sound recordings for the value of their work as used in the making of private copies. The levy is intended to be applicable to the recording media that individuals use to make such copies - "without regard," as the Act says, to their "material form". People don't do things that are worthless; they value the copies of music that they make for private use, and the law exempts the making of such copies from being infringements of copyright. The levy simply provides a means for those who create the music to be compensated for the value of those copies - a value which is determined in a public process in which any person or company who wishes to take part can do so.

To oppose the levy is to say, in effect, "the person who makes the medium - cassette, CD or iPod - gets paid. So do the suppliers of parts and materials that are used to manufacture media. So do the wholesalers,
distributors and retailers. They all get paid. But the people who make the music shouldn't get paid." This just doesn't make sense. If the music is valuable enough to copy, it's valuable enough to pay for. The levy is all about fairness. There are some statistics that are posted on the CPCC website which seem to show a number of things beyond numbers. Over the years listed, would you say that the CPCC has experienced an overwhelming success through collecting royalties and keeping overhead costs down? While revenues have gone up continually, there's is a small drop (compared to the increases in previous years). Would that be attributed solely to the adoption of iPods and other MP3 devices, a change in the economy, or are there a number of reasons for the drop? Are there any statistics for 2006 available or can you give a general idea of what the statistics would look like if 2006 were included?

David: We believe that CPCC has successfully met the challenge of efficiently and effectively collecting and distributing the levy on behalf of the organizations we represent, and their members. Our vigourous and effective enforcement of our rights has made a difference in keeping revenue coming in. I don't think there's much value in my speculating on the reasons for year-to-year income differences. Some things that relate to CPCC seem to hinge on copyright reform. There was recent news that Bev Oda was shuffled out and replaced by Josee Verner as well as Maxime Bernier being replaced by Jim Prentice. Does this change things
for the CPCC in terms of trying to voice an opinion on copyright reform?

David: CPCC's involvement in copyright reform is limited to our mandate of ensuring that the current provisions of the Act which underlie the levy are not diminished or otherwise changed to the detriment of the people we represent. There are many other issues related to copyright reform in which CPCC has no direct interest or involvement. CPCC's constituent collectives have been, and will continue to be, active in these areas. It is certainly possible that this week's cabinet shuffle may result in important developments in the area of copyright reform, but it's too early to say. In terms of Canada in the world, is Canada on the forefront of compensating artists while allowing use of media technology? Are there any examples that come to mind?

David: Canadian law does not restrain anyone from making use of any media technology for any legal purpose. We believe that the private copying levy is a progressive and effective tool which enables songwriters, music publishers and qualifying performers and producers of sound recordings to receive compensation for the value of the private copies of sound recordings which Canadians make.

Slyck would like to thank David for taking the time out of his busy schedule to answer these questions. In addition to the interview, David sent some reading materials. The 2008-2009 proposed tariff can be found here (PDF). The Copyright Board DAR Decision can be found here (PDF). The CPCC FAQ can be found here (PDF). Some general information about the CPCC can also be found here (PDF).

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File-Sharing/P2P Related :: Interviews

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