Graham Henderson: Canada needs copyright rules that foster digital music market

By Graham Henderson

As consultations proceed on Copyright Act reforms, there is broad agreement on a couple of the key objectives: spurring Canada’s innovation-based economy and fostering an on-line marketplace that is rich in choices for consumers and incentives for creators.

But as Canada debates how best to achieve those objectives, our international trading partners have raced into action and are pulling ahead. Take digital music, for example. Americans purchase more than twice as much digital music as Canadians on a per capita basis.

Copyright reform

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Bill Henderson: Voluntary music file-sharing fee would benefit songwriters and fans

Geof Glass: How Canada's new copyright law will affect you

Elizabeth May and Griffin Carpenter: Canada needs principled approach to copyright

Charlie Angus: Will the Conservatives get the message on copyright reform?

Marian Hebb: Collective licensing would help Canadian writers get paid on-line

In jurisdictions like Sweden and the U.K., legal digital sales are flourishing and illegal behaviour has plunged. Shortly after Sweden enacted a new antipiracy law this spring, Internet traffic there fell by at least one-third and digital music sales, according to one report, doubled.

Innovative digital music models like Spotify and Nokia’s Comes With Music are delivering an array of new choices and ways to legitimately enjoy and experience music to consumers all over the world. New business models are coming on line every day. But not in Canada. Here, effectively the only choice for on-line music is between iTunes and illegal.

What is behind this international digital divide? The answer is marketplace rules that encourage innovation and investment. Unlike Canada, our leading trading partners have long since enacted copyright reforms that are consistent with the 1996 World Intellectual Property Organization Internet treaties. In fact, many of them are now going beyond WIPO recommendations.

Opponents of change say that implementation of the WIPO treaties is bad for innovation and consumers. They argue that Canada will turn into a “police state”, iPods will be seized at the border, researchers will be jailed without trial, and creativity, culture, and personal property will be “locked down”.

But where is the evidence for this? International experience proves it false. If WIPO implementation truly discouraged innovation, Canada would be sprinting ahead of, rather than lagging, innovative digital markets in Europe, Asia, and the U.S. Instead, we see that, far from stifling innovation and consumer choice, WIPO drives it.

As Canada’s trading partners advance, the need for digital copyright reform has become urgent. We’re in a 100-metre dash where the competition has a 20-metre head start. To catch up, we need to move fast. And we are going to have to run a very smart race.

We need to set some rules of the road—so Canadians can know clearly the difference between legitimate and illegitimate on-line products and practices. We need to protect creators’ livelihoods—the fruit of their creativity, hard work, and financial investment.

Canadian culture is suffering from Canada’s failure to modernize its copyright rules. Unrestrained file sharing—the taking of other people’s property without compensation—means there is far less money available to invest in Canadian artist development, nurturing, and promotion.

We are reaping the bitter harvest of inaction. In last year’s Billboard Top 30, there were only three Canadian artists. That compares with an average of eight Canadians in the previous five years. Sadly, in music today, after years of great Canadian acts reaching new heights—from Joni Mitchell to Alanis Morissette—Canada is today punching below its weight. We can and should do much better.

As the copyright consultations proceed, I urge Canadian Heritage Minister James Moore to heed the calls of ACTRA and AFM—the largest groups representing Canadian artists—for WIPO-compliant rules to stop the theft of their work. I urge Industry Minister Tony Clement to consider that, in this century of innovation, the future rests with products of the mind, and to bear in mind that the foundation of these products is intellectual property.

If Canada is to compete at the forefront of this new world, we need to cultivate and protect intellectual property in a free market facilitated by reasonable, common sense rules—rules encoded in WIPO, and that have been proven and stood the test of time in foreign markets.

A legitimate marketplace based on clear digital rules will deliver broad benefits for all—not just Canadian culture, music artists, and the music industry, but also the network managers, whose systems today are overwhelmed by the sheer volume of illegitimate traffic, and most fundamentally for Canadian consumers, who will gain a wide array of choices in a dynamic digital marketplace.

Graham Henderson is the president of the Canadian Recording Industry Association.

Comments (14) Add New Comment
C Richard C
You're wrong, it's not just between itunes and illegal in Canada. Get your facts straight, it's legal to download music in Canada, specifically for personal use.
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Industry Rep
Let's pick this apart with research shall we:

GH: "In jurisdictions like Sweden and the U.K., legal digital sales are flourishing and illegal behavior has plunged"

The UK digital sales have declined by 6% over the past year. Filesharing with respect to bittorrent and traditional networks is down in the UK (and here in Canada), it hasn't plunged in the UK, it has in Canada though, and may be contributed to the use more of darknet type services that are not easily traceable by industry, rather than law which has yet to be implemented.

PRS for Music study located: http://tinyurl.com/nww8dd

Bittorrent Submission to the CRTC Net Neutrality Hearings in which quoted below:

From: http://tinyurl.com/nrcbsg

"In conversations with Motion Picture executives who track P2P usage, they indicated that there has been a dramatic decline in P2P usage in Canada in the last year with a corresponding increase in other applications that are server based (and presumably not currently targeted by ITMP). "

Currently the UK is also engaged in copyright consultations as we are, and WIPO has been consulting as well in order to find the "Right balance" between artists and consumers:

http://unctad.org/Templates/meeting.asp?intItemID=2068&lang=1&m=17516

GH: "Here, effectively the only choice for on-line music is between iTunes and illegal."

Not true..currently there are a huge amount of digital stores outside of Itunes that are offering services on a Global Scale (including to Canadians), through the use of paypal. Labels outside the fab 4 often set up stores where music can be purchased directly through them using paypal.

http://www.trackitdown.net/
http://www.audiojelly.com/
http://www.beatport.com/
http://www.djdownload.com/
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Industry Rep
Also:

GH: "Opponents of change say that implementation of the WIPO treaties is bad for innovation and consumers. They argue that Canada will turn into a “police state”, iPods will be seized at the border, researchers will be jailed without trial, and creativity, culture, and personal property will be “locked down”.

Opponents are worried about ACTA not WIPO, which Canada is currently in secret negotiations with in respect to: Canada turning into a “police state”, iPods will be seized at the border" due to leaked documents that were made public a few years ago on these negotiations:

http://wikileaks.org/wiki/Proposed_US_ACTA_multi-lateral_intellectual_pr...

Attempts at trying to obtain further information on ACTA negotiations have failed through the freedom of information act here in Canada, and in the US the Obama Whitehouse refused to release any information stating ACTA was a matter of National Security. Mr. Henderson and his colleges need to get acquainted with the term “Creative Destruction” as it applies in the most relevant way with respect to the economics of the situation, and without a major understanding of that term, investors in companies tied with the CRIA must take caution. As reported in the PRS report, the money has shifted to other area’s in the industry. While recorded sales are down, the overall industry revenue is up 13% in the UK.

Mr. Henderson needs to stop misleading the Canadian Public, and our Politicians, and start diving into the economics of the situation. There are a number of different reasons that could be applied to Canadian slipping the billboards top charts, to blame this solely on Canadian law is extremely small minded (considering the global economic situation and current buying habits of the Canadian Market), and not understanding of the problems members of the CRIA have with respect to proper promotions in the digital realm to ensure Canadian Content is front and center.

The CRIA’s solutions to the problem of declining digital sales is to strip away your internet, rather than make money for talent off of monetizing the networks:

http://www.zeropaid.com/news/86785/copyright-industry-demands-canada-ado...
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Industry Rep
And Finally:

The longer monetization is delayed to more talent will suffer due to the economics of the situation and where the market is currently placed. Those that continue to test their ideologies where the constitution rights of a free and just society are jeopardized over creative rights are doing extreme harm to not just the talent they represent, but prolonging potential income for themselves and creators. There is currently no president to look at with respect to the balancing of both the creative, and consumer rights. The Worlds Governments are currently grappling with the same thing we are and finding that true balance. What there is ample evidence of, is that the longer creative lobby’s refuse to follow and understand the paradigm shift, the market, and how to sell to this market rather than trying again to force it back to the way “they want it”, the more income for creative talent goes down the drain.

If black smiths did what the CRIA has done in this debate with respect the industrial revolution, then the cars of today would have horse shoes on the wheels. Talent deserves solutions, not a continuation of failed and absurd ideologies of the past decade. File sharing will morph (already has) to a system that is not trackable by industry. Good luck with that.

Personal comments from a member and researcher of the United Nations Conference on Trade and Development on the "Creative Destruction" process currently going on in the music industry with quoted research:

http://www.dime-eu.org/node/477#comment-1

The Institute of European Media Law:

http://www.ip-watch.org/weblog/2009/05/11/the-world-is-going-flat-rate/

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Arlo Bundsen
Didn't we just experience a similar plea for corporate-minded copyright reform from Danielle Parr and the Entertainment Software Association of Canada? I would recommend all readers re-read her entry; though the themes are exactly the same, so are probably wasting your time:
*Our industry is failing because the government won't pass legislation to enforce our antiquated business model that few of our customers actually want
*Consumers will be happier with copyright reform because the few conglomerates that will own the majority of created works can maximize their profit today, and ensure continued profit for 75+ years. This will give those few companies a stable platform of growth.

Another similar theme amongst the two tech blog entries is a plethora of misinformation. Canadians are not restricted in content because of a lack of copyright control, but mostly due to a Canadian Content mandate from the CRTC. Unfortunately services like hulu.com and pandora.com haven't figured out how to overcome these government-imposed restrictions without hefty fines. Clearly in this case regulation has limited innovation in Canada.

I have many complaints with the justifications given in Graham's argumenent, but I'll simply point out the silliness in using the Billboard Top 30 as a barometer as music success in Canada. This indicates how desperate these corporate lobbyists will go to justify their cause more than anything else. Why are we using a metric of success in the US to indicate Canadian success? I can think of many numbers which are better indicators of success (such as the ratio of number of albums sold to number of artists supported by the CRIA as a function of time), why doesn't the CRIA present those numbers.
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Eo Nomine
"it's legal to download music in Canada, specifically for personal use"

This is probably one of the most pervasive myths about Canadian copyright law that exists on the Internet. The legality of downloading music (or, more specifically, musical works embodied in sound recordings) in Canada has yet to be established. It's been suggested that the private copying exception described in section 80 of the Copyright Act could apply to music downloaded from the Internet, but this question has never been decided by a court. Moreover, there are equally strong arguments suggesting that music downloaded from the Internet does not fall under the private copying exception...namely, that hard drives and other forms of memory do not qualify as "blank audio recording media" under the Act and therefore any music copied onto this media do not qualify under the exception, and that any music downloaded via peer-to-peer filesharing generally requires both downloading and uploading and as uploading constitutes distribution the exception does not apply.

So, all in all, it's actually very unclear as to whether downloading music in Canada without authorization is actually legal, even if you are downloading for personal use.
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Industry Rep
Just a correction: I stated digital sales in the UK are down 6%, it's actually the overall spending on "retail music" that's down 6%. Those negative numbers reflect the 50% increase in the digital market. There's more choices with respect to digital content in the UK that service the global market and is not due to ratifying WIPO treaties. The UK has yet to ratify the "WIPO Performances and Phonograms Treaty", Sweden has also yet to ratify this treaty.

http://www.wipo.int/treaties/en/ShowResults.jsp?treaty_id=20

Digital sales only represented about 5% of total revenue for the music industry in 2008 for the UK.
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Lies
Some of the greatest creations known to man-kind were invented, created, distributed before the DMCA. Any person posting an op-ed which argues copyright fosters innovation is full of shit. Copyright fosters artificially scarce monopolies which doesn't necessairly mean an increase in innovation. The wordsmith who posted this article is using scare tactics to try and convince the reader of his blatant falsehoods. The UK is effectively the most over policed country I have yet to witness. Yet CTV cameras around every corner still cant catch people and the public from what I gather is furious abotu attempts at any graduated approach to infringement. Any argument for stopping the unauthorized distribution of materials is fallacious and should reflect on the writers experience. You can not stop file sharing, supporting anti-circumvention is ridiculous, and Canadian entertainment has been prosperous without the need for significant anti-consumer protections.

People who write the lies similar to what this author has used, should be considered a danger to technological evolution and "stopped" at all costs in my opinion. We should be legislating a ban on slandering Canadian consumers, artists, creators like the author in this article has so proudly done.
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Arpegio
www.jamendo.com

free, legal music. Download to your hearts content and not a single CRIA rep can tell you what you are doing is illegal (in fact it probably pisses them off).

Boycott all recording labels with ties to the RIAA http://www.riaaradar.com
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Russell McOrmond
It is important to not lump all aspects of the music industry into one. There are 3 main copyright holding groups: composers/songwriters, performers and "makers" of sound recordings. Henderson only represents the foreign major labels which represent a subset of the last group.

The changes that are happening in the music industry isn't increased infringement, but a market correction where the composers and performers are finally getting more control over the music making process. The labels were created in the past as a specialized banking system back when the capital costs of recording equipment was high, but are largely no longer needed. The labels also took over control of marketing and distribution networks, and now stand in the way of most composer and performers given the major labels focus on the star system and not what would be good for the music industry as a whole or the majority of composers or performers.

It should not be seen as a bad thing that the revenues of the major labels are decreasing. What we need to focus on is increasing rewards (monitory and otherwise) for the composers and performers. While the policies that Graham advocates for might support the interests of the major foreign labels, we can never confuse this with the interests of musicians, music fans, or the Canadian economy.


P.S. Ask Henderson why he and his bosses in the foreign labels aren't focused on the fact the USA has yet to ratify the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations from 1961 rather than countries that have not ratified the controvercial 1996 WIPO treaties. There are many ways in which US law is "weaker" (meaning, less tilted in favor of copyright holders) than Canadian law, and this is only one example. The 1961 treaty which Canada has already ratified is well understood to protect the interests of performers and producers of phonograms, while it is only the questinable studies from specific old-economy lobby groups which claim that the 1996 treaties help. My own analysis suggests that the 1996 treaties harm the interests of far more creators than it allegedly helps.


Note: DRM doesn't decrease copyright infringement, but protects questionable business practices. I have an op-ed for Straight that will be published soon that clarify this controversy, and who the real "thieves" are.

http://flora.ca/
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AdamInHalifax
I would argue that the "iTunes or illegal" is more about an industry that will not get off it's ass and adapt to a changing market. Maybe if you though more about business and less about lobbying then things would change. The music industry is benefiting greatly from globalization. The digital era has made it easier and less costly to reach the world but you want all the benefits with none of the downfalls. Regional licensing and DRM are what's killing the music industry. Locking down beneficial marketing tools like Pandora and Last.fm are preventing Canadians from being exposed to your market. I am a Linux user and so iTunes is not an option for me. Amazon sells non-DRM mp3's...oh, but only in the USA. You give me a convenient way to buy music, that is without DRM and accessible on Linux, Mac, and Windows, and I promise I will buy more music. For now I'll keep buying cd's because that's really the only option I have.
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melodyhill
The failure of the labels to monetize music file sharing is a business failure of huge proportions, and no treaty including WIPO is going to reverse that fact. Creators support file sharing as a cost effective, green distribution system, where virtually any song can be found. The Songwriters Association of Canada's proposal, or something similar, is good for consumers and creators, as well as record labels and other stakeholders.

Check it our at http://www.songwriters.ca/studio/proposal.php
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Geof
The statistics in this article are deceptive. Canada is not "lagging." Michael Geist points out that "Canada's digital [music] market stands 7th worldwide, while ranking 6th for all recorded music" [1].

Henderson's colorful claim that we are reaping a "bitter harvest" is extraordinarily weak. He complains that last year Canadian musicians landed 3 of the top 30 spots on an American Chart. With one tenth the American population we should not expect to take more than 10% of the spots *on their own chart*. Then consider that a quarter of our population is French-speaking and faces additional hurdles competing in the U.S. market. If anything, we are punching above our weight - not below it.

Never mind that this statistic is from a single year. By Henderson's own numbers, it is an aberration: he cites Canadians taking an average of 8 of 30 spots over the past 5 years. But according to Henderson's argument, Canada's copyright laws have been somehow deficient for over a decade - and yet we have been producing a disproportionate number of top 30 artists!

It is telling that hundreds of Canadian artists abandoned Henderson’s “Canadian” Recording Industry Association, explicitly stating that they do not think the laws demanded by Sony and Warner will help them[2].

If we really place so much stock on the Billboard numbers, the real question we should be asking is: If U.S. copyright is superior, how come so many of our artists are out-competing Americans - on their own turf?

[1] http://www.michaelgeist.ca/content/view/4321/125/
[2] http://www.musiccreators.ca/wp/?p=264
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Russell McOrmond
Henderson falsely claimed, "Here, effectively the only choice for on-line music is between iTunes and illegal. "

As an http://www.emusic.com/ customer for a few years (and for both music and audio books) I would like to point out that it is the choice of Henderson's bosses not to offer their music to me via this service. It is not my fault they have rudely thrown my money on the floor and don't want my business.

(For Audio Book commentary, see: Little Brother Audio book: Audible vs eMusic http://www.digital-copyright.ca/node/4673 )


I am so frustrated with the claim that music revenues are down because of "copyright infringement". Not only are music industry (most important components being composers and performers) revenues not really down, but there is so much content that has been made deliberately unavailable by specific old-economy copyright holders. The revenues of these specific copyright holders may be down, but that is largely a problem of their own making. Some of the unavailability is Geoblocking (IE: Television networks blocking Canadian access to things like Hulu), inappropriate brand impositions (DRM locks to specific technology brands, etc), or other deliberate media defects, but nearly all the problems are deliberate choices by people like Henderson who simply don't want my money.

I'm not offered the option to pay (their choice, not mine) to access the content with the technology of my choice, so I'm left with the option to simply not access or to infringe. In my case I don't access major label content (I don't acquire DRM infected music, whether in CD or digital formats), but I can understand why others wouldn't be so political and would infringe when the copyright holders don't want their money.

http://flora.ca
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