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Music Canada Report Urges Federal Government to Take Steps to Address the Value Gap

October 18th, 2017
Music Canad Pres. Graham Henderson

Music Canada Pres. Graham Henderson

At its annual general meeting, Playback 2017, Music Canada yesterday released The Value Gap: Its Origins, Impacts and a Made-in-Canada Approach, the first comprehensive collection of information about the “value gap” and the solutions available to Canadian policy makers.

The value gap is defined as the significant disparity between the value of creative content that is accessed and enjoyed by consumers, and the revenues that are returned to the people and businesses who create it.

“The value gap challenges the livelihood and sustainability of an entire global social class, and threatens the future of Canadian culture,” says Graham Henderson, president and CEO of Music Canada. “Our creative industries and the Government of Canada need to come together to acknowledge that the problem facing our creators is real, that the landscape has dramatically changed, and that we need to adapt our rules and regulations before full-time creativity becomes a thing of the past.”

Music Canada says that at the heart of the value gap for music is misapplied and outdated “safe harbour” provisions in copyright law, which result in creators having to forego copyright royalty payments to which they should be entitled, and amount to a system of subsidies to other industries.

The European Commission has pinpointed the Value Gap as the cause of a marketplace that isn’t functioning properly, and acknowledged that a legislative fix is needed. Hundreds of thousands of U.S. music creators have agreed that the safe harbour provisions in the Digital Millennium Copyright Act need to be changed.

In Canada, thousands of musicians, authors, poets, visual artists, playwrights and other members of the creative class, have urged Mélanie Joly, Minister of Canadian Heritage, to put creators at the heart of future policy in a campaign called Focus on Creators.

The Value Gap: Its Origins, Impacts and a Made-in-Canada Approach provides insights into how policy makers can reverse the value gap. For instance, the Canadian Copyright Act contains provisions that allow and, in some cases, even encourage the commercialization of creators’ work without the need for proper remuneration, undercutting one of its overarching principles: to ensure that creators receive a just reward for the use of their works.

To address these inequities, Music Canada says the federal government should take the following actions:

  1. Focus on the Effects of Safe Harbour Laws and Exceptions

The Canadian government should, like its international counterparts, review and address safe harbour laws and exceptions, and their subsequent misapplication by some technology companies, as well as the cross-subsidies that have been added to the Copyright Act.

  1. Canada’s Creative Industries are Asking for Meaningful Reforms

During the mandated five-year review of the Copyright Act slated to begin in late 2017, the government should review the Act for instances that allow others to commercialize creative works without properly remunerating artists, and end these cross-subsidies.

  1. Remove the $1.25 Million Radio Royalty Exemption

Since 1997, commercial radio stations have only been required to pay $100 in performance royalties on their first $1.25 million advertising revenue. This exemption should be eliminated. It amounts to a subsidy being paid by artists to large vertically-integrated media companies.

  1. Amend the Definition of Sound Recording

In the Copyright Act, recorded music is actually not considered a ‘sound recording’ (and thus not entitled to royalties) when it is included in a TV or film soundtrack. The definition should be changed to allow performers and creators of recorded music to collect royalties when music is part of a TV/film soundtrack.

The full report can be downloaded at this link.

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