Private Copying

CPCC

150 Eglinton Avenue East, Suite 403
Toronto, Ontario M4P 1E8
Tel.: 416 486 6832
Toll free: 1-800-892-7235
Fax: 416 486 3064 (fax)
e-mail: inquiries@cpcc.ca
Web: http://www.cpcc.ca

A. HISTORY AND STRUCTURE

The CPCC is the Canadian Private Copying Collective. It was federally incorporated by Letters Patent in March 1999 under Part II of the Canada Corporations Act to act as a "collective society" and a "collecting body" within the meaning of the Copyright Act [ss. 83(8)] "to collect royalties arising from or in connection with the right to receive remuneration in respect of the reproduction for private use of eligible musical works embodied in sounds recordings, eligible performers' performances of musical works embodied in sound recordings, and eligible sound recordings in which performers' performances of musical works are embodied, and to distribute such royalties..."

Pursuant to subsection 83(14) of the Copyright Act, the CPCC operates as an "umbrella" collecting body to receive revenues generated from the levy on blank audio recording media.

The CPCC's Board of Directors is composed of six directors, three of whom are from the "performer/maker" class and appointed by NRCC; and the other three of whom are from the "author/publisher" class and appointed by SOCAN, CMRRA and SODRAC.

B. MEMBERS / MEMBERSHIP

The five founding members of the CPCC were SOCAN, SODRAC, CMRRA, NRCC and SOGEDAM. NRCC and SOGEDAM formed the "performer/maker" class. SOGEDAM has since wound up, its members now solely represented by NRCC. A schematic of the relationships among the member collectives is found at the end of this section.

In contrast to other collectives such as SOCAN and SODRAC, individuals and companies are not direct members of the CPCC but derive their remuneration through one of the four member collectives.

The CPCC has entered into identical Mandate Agreements with its four members under which it is granted an exclusive mandate to prosecute and defend private copying tariffs before the Copyright Board, to collect the levies thereunder and to remit to the member such portion as to which it is entitled.

The term of each Mandate Agreement is two (2) years and automatically renews for successive two-year terms unless terminated on three months notice prior to the end of a term. Each member may unilaterally and without cause terminate an agreement at any time, however, on 180 days' notice.

Because the CPCC has few "members", its role as educator differs markedly from that of SOCAN. It members are sophisticated participants in the music industry. However, the CPCC's website contains a news page for the media: http://cpcc.ca/english/news.htm; and a general information page for the public: http://cpcc.ca/english/privCopKey.htm, along with a brochure at http://www.cpcc.ca/english/pdf/CPCC_CorePrinciples_Web_Eng_120508.pdf. Also a detailed explanation of the distribution process is available at http://www.cpcc.ca/english/pdf/CPCC_Distribution_Eng_280408.pdf.

C. OPERATIONS

The CPCC has been operating since 1999 and has collected royalties since December 18, 1999. It maintains its head office in Toronto.

Repertoire Administration

Being the collecting body, the CPCC collects the levies arising out of the private copying sections of the Copyright Act (sections 79 - 88) and pays its collections to the member collective that represents the eligible authors, eligible performers and eligible makers in the proportions set by the Copyright Board under the Tariff. Songwriters, music publishers, recording artists and record companies are all eligible to receive private copying payments. Each of the CPCC's member collectives represents a particular type of rights holder and is responsible for representing their members in private copying distributions.

Relationship with Users

Statutory Requirements

Under subsection 83(1) of the Copyright Act, the CPCC is to file a tariff of fees it proposes to collect from the manufacturers and importers of blank audio recording media.

The deadline for filing is March 31 of the year preceding the proposed effective date. Tariffs may be certified for multiple years. There is a formal process by which objections to a proposed tariff are to be filed. The Copyright Board is required, under subsection 83(7), to consider the proposed tariff and any objections thereto. As the CPCC does not have users or licensees, it is not possible to a negotiate a tariff without going through the tariff hearing process. The first CPCC tariff was certified for two years, from 1999-2000; since then, the tariffs have been certified for multiple years.

The levies through 2007 were as follows:
	1999-2000	2001-2002	2003-2004	2005-2007
Audio cassettes over 40 minutes	23.3 cents	29 cents	29 cents	24 cents
CD-R or CD-RW	5.2 cents	21 cents	21 cents	21 cents
CD-R audio/CD-RW audio/minidisc	60.8 cents	77 cents	77 cents	21 cents

In the CPCC's first full year of operation, 40% of earnings were from levies on cassettes; by 2001, this had dropped to 14% and is now negligible. Minidiscs have all but disappeared and the bulk of earnings now come from CD-Rs.

Licences

The publication of a tariff in the Canada Gazette acts as a notice to manufacturer and importers of the amount of levy to be paid. The levies are not licence fees and the statutory notice does not therefore constitute a licence, as it does for SOCAN for example.
Revenue

The historical earnings of the CPCC (as well as information on expenses and distribution) can be tracked at http://cpcc.ca/english/finHighlights.htm.

The published income figures (in '000s) were as follows:

2000 2001 2002 2003 2004 2005 2006

$7,245 $24,258 $27,809 $28,425 $39,366 $35,075 $37,158
Collections and Enforcement

The CPCC benefits from a unique civil remedies provision - s. 88 of the Copyright Act. Under subsection 88(2), failure to pay the levy may subject a manufacturer or importer to paying up to five times the amount of the levy. Subsection 88(3) permits the CPCC to seek a court order to direct compliance with any obligations under the regime. The existence of these remedies is helpful in its dealings with evaders.

The CPCC also exercises its audit rights under the Tariff.

The Collection and Enforcement department consists of the General Counsel, the In-House Litigation Counsel, a Compliance and Enforcement Officer, a Research and Collections Officer and a Collection and Enforcement Assistant. The General Counsel is responsible for the supervision of the Collection and Enforcement department and for management of litigation files. The In-House Litigation Counsel works with the CPCC's external counsel on litigation files. The collection and enforcement staff is responsible for ensuring compliance with the Private Copying Tariff

The published income figures (in '000s) were as follows:
2000	2001	2002	2003	2004	2005	2006
$7,245	$24,258	$27,809	$28,425	$39,366	$35,075	$37,158

D. DISTRIBUTION OF ROYALTIES

The Colleges

Pursuant to the tariff, the CPCC divides its income as follows:
- 66% to the author/publisher college; and
- 34% to the performer/maker college, further broken down into:
  - Eligible Performers: 18.9%; and
  - Eligible Makers: 15.1%.
While songwriters and music publishers are eligible regardless of nationality, only Canadian recording artists and record companies may receive payments under current law. It should be noted that because "eligible" authors comprise a broader class than "eligible" sound recordings (and therefore indirectly performers), fewer sound recordings qualify than the musical works that are embodied on them.
Distribution

Manufacturers and importers of blank media submit levies owing to the CPCC bi-monthly. Distribution is based on the annual net revenues reflected in the CPCC's annual audited financial statements which are presented at the CPCC's AGM in the following year. Once the financial statements are approved, the CPCC can begin the distributions for that year.

The private copying levy distribution is based on representative samples of radio airplay and album sales, which are given equal weight in the distribution. Every year the CPCC validates tens of thousands of tracks.

The sales sample is taken from the SoundScan database which summarizes album sales in Canada for the year. For each album, the CPCC identifies each track on the album. This is done in multiple ways: by pulling information from the CPCC's master database which includes albums from previous years; by using Muze, a track listing database that is purchased annually; and by conducting research on the Internet. Once identified, the tracks are added to the sales file.

Airplay logs received from SOCAN are used to generate the airplay sample for the author/publisher college. The sample identifies the work and how many plays it received during the year. This log is not available until September of the following year.

The CPCC also receives an airplay log file from NRCC, which is used for the performer/maker college. The sample identifies the work and how many plays it received during the year. This log is not available until September.

E. COOPERATION WITH OTHER COLLECTIVES

Internationally

The CPCC does not have reciprocal representation agreements with its counterpart societies.
Domestically

The CPCC interacts with its member collectives (NRCC, SOCAN, SODRAC and CMRRA) in the manner outlined in the mandate agreements. There are no parallel organizations domestically with which the CPCC could interact.

F. REVENUE GROWTH ATTRIBUTABLE TO THE AMENDMENTS

All revenue since the CPCC's inception is the result of the 1997 amendments to the Copyright Act.

See Part C 2 (c) above for actual growth figures.

G. CURRENT CONCERNS

The blank audio recording media covered in the Private Copying Tariffhave become or are quickly becoming eclipsed by MP3 players (e.g., iPods). CPCC revenues could decrease dramatically.

The CPCC filed a proposed tariff for 2008-2009 with the Copyright Board that includes digital audio recorders. In its interim decision of July 19, 2007 [ http://www.cb-cda.gc.ca/decisions/c19072007-b.pdf ], the Copyright Board held that a digital audio recorder does qualify as an "audio recording medium" if it is later established that it is ordinarily used by individual consumers to reproduce sound recordings. That decision is now subject to judicial review, at the instigation of the objectors to the tariff. CRIA has been granted intervenor status.

Private Copying

CMRRA

56 Wellesley St. West, Suite 320
Toronto, Ontario M5S 2S3
Tel: (416) 926-1966
Fax: (416) 926-7521
Web: http://www.cmrra.ca
e-mail: inquiries@cmrra.ca

A. HISTORY AND STRUCTURE

CMRRA is the Canadian Musical Reproduction Rights Agency Ltd. It was federally incorporated by Letters Patent in 1975 as a non-profit music licensing agency to license Canadian record companies and to collect mechanical reproduction rights royalties on account thereof, on behalf of music publishers doing business in Canada. CMRRA also offers audio-visual synchronization licensing services (licensing TV, film and commercial producers) and also offers foreign representation, for the collection of mechanical royalties abroad through its reciprocal agreements with sister societies.

CMRRA's shares are held in trust for the members of the Canadian Music Publishers' Association (CMPA). Its Board of Directors is composed of nine directors, appointed by the CMPA.

B. AFFILIATES AND AFFILIATION

CMRRA represents over 30,000 music publishers whose repertoire is primarily Anglo-American and Canadian. It issues the bulk of English-language repertoire mechanical licences in Canada.

Unlike SODRAC, CMRRA does not take an assignment of reproduction rights. It enters into non-exclusive agency agreements with its principals, the music publishers. It also differs from SODRAC in that it only represents music publishers and excludes authors and composers.

Its main affiliation agreement, covering the licensing of mechanical rights has an open-ended term and can be terminated effective at the end of any calendar quarter following notice. CMRRA will mail out its Publisher Information Kit on request. It contains the full affiliation agreement, as well as the rider agreements for synchronization licensing, the broadcast mechanical right and private copying.

CMRRA charges its publishers a straight five per cent (5%) commission on all its mechanical licences. Its commission rate is 10% for synchronization licences.

CMRRA makes available a great deal of information on its website: www.cmrra.ca. The website is oriented toward music users (record companies and film, television and commercial producers). An overview of mechanical licensing can be found at http://www.cmrra.ca/cmrradocs/mlbe06.pdf. The searchable data base [http://www.cmrra.ca/Site_Policy/site_policy.html] is a useful tool, particularly since CMRRA does not represent the universe of song titles.

For prospective affiliates, the Information Kit contains some 40 pages of information including the affiliation agreements, international agreements, repertoire and release advice forms, etc.

CMRRA maintains its head office in Toronto.

C. OPERATIONS

CMRRA has been operating since 1975. Prior to its existence, mechanical licensing in Canada was handled by the Harry Fox Agency, a similarly constituted agency, operating out of New York City.

Repertoire Administration

CMRRA depends on two sources for information: its publisher affiliates and the record companies that it licenses. CMRRA encourages its publisher affiliates to use CMRRA Direct to advise CMRRA of song titles and publisher and composer splits. The four major record companies who are signatory to the CMRRA-CRIA Mechanical Licensing Agreement (MLA) are obligated to send to CMRRA a copy of every record they release.
Relationship with Users
1. Statutory Requirements
  
  CMRRA's mechanical and synchronization licensing activities are not governed by any statutory requirements under the Copyright Act to deal with the Copyright Board.
  
  As a collective society, however, in March 2000, CMRRA availed itself of the optional provisions of section 70.13 to file with the Board a proposed Broadcast Mechanical Tariff to collectively license ephemeral copies made by radio broadcasters. SODRAC filed a similar tariff.
2. Licences
  
  The bulk of CMRRA's mechanical licensing falls under the CMRRA-CRIA Mechanical Licensing Agreement (MLA), a 25-page agreement renewed most recently for the period January 2004 through June 2006. The MLA was filed in the broadcast mechanical tariff hearings for the year 2007 as Exhibit Coalition 3-B and is a public document.
  
  The primary purpose of the MLA is to establish a negotiated mechanical royalty rate to apply in the absence of the statutory rate which was abolished in 1988. Although it technically binds only CRIA members (the four major record companies and some others), the MLA has generally (but not as a matter of law) has replaced the statutory rate. The current rates are 7.7 cents for the first five minutes and 1.54 cents for each minute or portion thereof in addition thereto.
  
  The MLA also covers a number of other critical issues including an override of the "controlled composition" clause found in most English Canadian recording agreements. It also addresses issues such as "free goods," reserves, promotional copies and deletes.
  
  Record companies must be licensed for every release and must report sales to CMRRA, remitting at the same time the fee calculated based of the standard or otherwise approved mechanical rate. The five major record companies render statements in a standard electronic royalty statement format which in turn can be delivered to the publisher clients on-line via CMRRA Direct.
3. Sources of Licence Revenue
  
  Mechanical licenses:
  
  Not surprisingly in light of the decline in CD sales in the first years of the millennium, CMRRA's royalties from mechanical licences decreased from $50,306,835 in fiscal year 1999/2000 to $34,129,659 in fiscal year 2004/2005. More recent figures are unavailable but would be consistent with the further decline in CD sales over the past two years. It is noteworthy that the decline in CD prices has not had a compounding effect on mechanical license income, as the flat penny rate per track is not price-dependent.
  
  Synchronization licenses:
  
  CMRRA offers synchronization licensing services to its affiliates. However, most publishers prefer to carry out their own synchronization licensing. As a result, CMRRA's income from this source is relatively small.
  
  Broadcast mechanical licenses:
  
  CMRRA/SODRAC Inc. ("CSI") is a joint venture with SODRAC set up to secure tariffs for the reproduction of their respective repertoires by radio stations and by online music services.
  
  Its first tariff was certified in 2003 for the years 2001-2004, for commercial radio. Unlike the tariffs for NRCC and SOCAN, these rates did not increase in subsequent CSI tariffs. The current tariff for 2007 is posted at http://www.cb-cda.gc.ca/tariffs/certified/i17022007-b.pdf. The step rates of 0.27 per cent on the first $625,000 of gross annual income, 0.53 per cent on the next $625,000 and 0.8 per cent thereafter have generated between $5 to $7 million annually. For 2007, the Copyright Board estimated, in its February 16, 2007 decision, that the newly certified tariff would generate approximately $8 million.
  
  SODRAC's and CMRRA's shares are determined internally, based on their respective shares of radio performances.
4. Collections and Enforcement
  
  CMRRA allocates considerable resources to auditing and enforcement. The major record companies are audited on a regular basis and discrepancies are often found. The smaller record companies attract a disproportionate amount of resources and individual one-time licences are labour-intensive in terms of educating, policing and enforcement.
  
  CMRRA's President reports no measurable improvement in enforcement as a result of the new remedies available, although he concedes that they may be instrumental in helping to settle disputes and that they have certainly not made matters worse

D. DISTRIBUTION OF ROYALTIES

CMRRA collects and distributes the mechanical royalties it collects on a quarterly basis. After deducting its 5% commission, all royalties collected under a mechanical licence are remitted to the publisher client. Revenues from broadcast mechanical licenses are distributed based on radio performances, also on a quarterly basis.

E. COOPERATION WITH OTHER COLLECTIVES

Domestically

Although SODRAC and CMRRA "compete" for Canadian clients, SODRAC primarily represents francophone and non-English language repertoire while CMRRA specializes in English-language repertoire. CMRRA's reciprocal representation agreements are with the main publisher-based societies in the US and the UK while SODRAC's agreements are with author/publisher societies in the non-English speaking world. As such, the two societies can and do cooperate on matters of mutual interest including government lobbying on common issues and, most recently, working closely on the joint hearings for the broadcast mechanical tariff.

CMRRA has entered into an affiliation agreement with CPCC for the collection of the blank media levy on its behalf. Through its participation on the CPCC Board, it also interacts with SODRAC, SOCAN and NRCC. (CMRRA does NOT participate in NRCC royalties, as its repertoire consists of musical works, not sound recordings).
Internationally

CMRRA has closest ties with the US' Harry Fox Agency (HFA) and the UK's Mechanical Copyright Protection Society (MCPS). These two organizations control the bulk of the Anglo-American repertoire.

CMRRA no longer represents Canadian copyrights outside Canada and has dispensed with reciprocal agreements for that purpose. A Canadian publisher with foreign releases must either license the foreign record label directly or appoint a subpublisher in the territory of release to collect mechanical royalties on its behalf.

F. REVENUE GROWTH ATTRIBUTABLE TO THE AMENDMENTS

Only revenues from private copying, collected through CPCC can be attributed to the 1997 amendments. See the section on CPCC for details.

The broadcast mechanical tariffs and the resulting royalties have not arisen as a result of those amendments. Changes in the way broadcasters and online music services store music for broadcast / radiocommunication purposes have given rise to the reproduction right that was always inherent in the Copyright Act. Physical CDs are no longer played directly but rather are reproduced as music files copied onto servers or downloaded as music files directly to those servers.

G. CURRENT CONCERNS

One of CMRRA's major concerns is the impact of private copying. Although the CPCC Tariff makes up for some of the decrease in revenue from CD sales, CMRRA is still concerned on behalf of the publishers it represents about the real shortfall in earnings that a shift from purchasing to copying will create.

SODRAC

759 Victoria Square, Suite 420
Montreal, Quebec H2Y 2J7
Tel: (514) 845-3268
Fax: (514) 845-3401
e-mail: sodrac@sodrac.ca
Web site: http://www.sodrac.ca

A. HISTORY AND STRUCTURE

SODRAC was founded in 1985 by the Société professionnelle des auteurs et compositeurs du Québec (SPACQ), the Société des auteurs, compositeurs et éditeurs de musique (SACEM - France) and the Performing Rights Organization of Canada (PROCAN). Before April 1, 2004, SPACQ and SACEM were the Society's only shareholders. On that date, the society was newly incorporated as SODRAC 2003 Inc. and thenceforth has belonged to its members.

Its Articles of Association are posted on its main web page at www.sodrac.ca under Articles and Bylaws.

The SODRAC Board of Directors consists of 11 members: six (6) are authors and/or composers and five (5) are publishers. Its current directors are listed at http://www.sodrac.ca/anglais/structure.html.

B. MEMBERS AND MEMBERSHIP

The Society has more than 5,000 Canadian members. Close to 95% of the composers and publishers in Quebec are members. It also represents the repertoire of 85 countries.

Members assign to SODRAC their reproduction rights in their existing repertoire as well as in any compositions they create or acquire during the term of their agreement. The Member Application Form for Writers (similar for Publishers) is found at the following link: http://www.sodrac.ca/oeuvres_artistiques/eng/pdf/Demande%20d'admission%20auteur%20AV%20anglais.pdf.

Members are kept informed of news via the web site at: http://www.sodrac.ca/anglais/PDF/SodracInfo-41.PDF

Users can search the SODRAC database of composers, publishers and works that it represents: http://www.sodrac.ca/RechercheAyantDroit/intro_rechercher_ayant_droit.aspx?lang=e which is a useful tool, given that SODRAC does not represent the universe of works.

C. OPERATIONS

SODRAC manages the rights of artists and rights holders in the area of visual arts as well as the reproduction rights of authors, composers and music publishers. SODRAC's operations consist of administering the rights it controls, i.e. documenting the works, licencing the users and distributing the royalties to its members. To that end, it must keep up to date a data base of its works. The data is collected from information supplied by its assignors.

On the user side, SODRAC issues reproduction rights licences for its repertoire. Some of its licences are the subject of tariffs approved by the Copyright Board, such as the tariff filed by SODRAC for the reproduction of musical works embodied in cinematographic works in view of their video-copy distribution.

Other licences will be the result of negotiations for blanket use of the entire repertoire. SODRAC has general licence agreements with television broadcasters.

Finally, for CD reproduction, individual licences to record companies are issued in accordance with the conditions stipulated in the standard licence agreement with l'Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) downloadable in French only at http://www.adisq.com/doc/pdf/ADISQ-SODRAC-03-06.pdf (the "ADISQ Agreement"). The most recent amendment to that agreement may be downloaded at http://www.adisq.com/doc/pdf/lettre_entente2006-2008.pdf. A similar agreement with the Canadian Recording Industry Association (CRIA) governs the licensing terms and conditions for CRIA members. Licences may also be issued to independent record companies according to a different royalty rate.

The ADISQ Agreement provides for a fixed rate to be paid to composers, authors and publishers for the reproduction of their works on sound recordings (mechanical royalties) for each work reproduced. The rate varies according to type of record.

The Agreement accords authors and composers better remedies against record companies who reproduce their works without authorization or whose payments are in default. Not only does it provide for remedies but it also provides that such record companies may not obtain new licences until the arrears are paid.

Because SODRAC is a society and does not have the status of professional association, it is not recognized by the Canadian Artists and Producers Professional Relations Tribunal. However, because the ADISQ Agreement signatories include most of the record companies in Quebec, and because the rest of the industry follows suit, its standards apply practically universally within Quebec. For example, the practice of seeking or imposing reduced rates for "controlled compositions" has been virtually renounced by the Quebec record industry. Also, even if old mechanical licences provide for a rate lower than the current one, the record companies will generally pay the current rate.

Some of the interesting provisions of the ADISQ Agreement include those dealing with:

the credits that must appear on the recordings (s. 3.4);
the frequency and the terms and conditions of reporting and paying royalties (ss. 4 and 6);
audit rights (s. 8), including a provision which allows the owner to obtain sales reports directly from the distributor if the record company fails to provide them (s. 8.2).
SODRAC makes its license applications available online at: https://secure.sodrac.ca/AchatLicence/acheter_licence_intro.aspx?lang=e.

Commission

SODRAC's commission is 8% of mechanical royalty collections. A 15% commission applies to "general licensing" and a 20% commission applies to artistic works licensing

D. ROYALTIES - COLLECTION AND DISTRIBUTION

The growth in royalties collected since 1991 is illustrated in the graph entitled SODRAC: Evolution des perceptions which can be downloaded at the following link: SODRAC Graphiques Perceptions 2005-2006.pdf

Mechanical Reproduction

SODRAC has a general mechanical license agreement with the Quebec independent label association ADISQ, available (in French only) at http://www.adisq.com/doc/pdf/ADISQ-SODRAC-03-06.pdf. The most recent amendment to that agreement may be downloaded at http://www.adisq.com/doc/pdf/lettre_entente2006-2008.pdf. The royalty rate provided in the ADISQ/SODRAC Agreement is set for 2007 at $0.091 per work reproduced. The agreement imputes a regular retail price of $25.98 for ordinary CDs.

SODRAC collects mechanical royalties based on the record companies' sales reports. The record companies are also asked to produce their distributors' reports, thereby making auditing easier. It also makes it easy to allocate royalties based on sales of each work in the repertoire.
Private Copying

As a member of CPCC, SODRAC receives its share of the royalties allocated to the author-publisher college and distributes it to its members. For the years 2000 to 2006, SODRAC has collected, through CPCC, more than $ 6 million for distribution to its members.
Broadcast Mechanical Tariff

CMRRA/SODRAC Inc. ("CSI") is a joint venture with CMRRA set up to secure tariffs for the reproduction of their respective repertoires by radio stations and by online music services.

Its first tariff was certified in 2003 for the years 2001-2004, for commercial radio. Unlike the tariffs for NRCC and SOCAN, these rates did not increase in subsequent CSI tariffs. The current tariff for 2007 is posted at http://www.cb-cda.gc.ca/tariffs/certified/i17022007-b.pdf. The step rates - 0.27 per cent on the first $625,000 of gross annual income, 0.53 per cent on the next $625,000 and 0.8 per cent thereafter - have generated between $5 to $7 million annually. For 2007, the Copyright Board estimated, in its February 16, 2007 decision, that the newly certified tariff would generate approximately $8 million.

SODRAC's and CMRRA's shares are determined internally, based on their respective shares of radio performances.

E. COOPERATION WITH OTHER ORGANIZATIONS

Domestically

Although SODRAC and CMRRA "compete" for Canadian clients, SODRAC primarily represents francophone and non-English language repertoire while CMRRA specializes in English-language repertoire.

SODRAC has entered into an affiliation agreement with CPCC for the collection of the blank media levy on its behalf. Through its participation on the CPCC Board, it also interacts with SOCAN, NRCC and CMRRA. (SODRAC does NOT participate in NRCC royalties, as its repertoire consists of musical works, not sound recordings).

As noted above, SODRAC cooperated with CMRRA in the first hearings for a broadcast mechanical tariff and has since incorporated a joint venture with CMRRA (CSI) to file single tariffs not only for commercial radio but for CBC, non-commercial radio, pay audio services and online services.
Internationally

SODRAC is a voting member of the Confédération internationale des sociétés d'auteurs et de compositeurs (CISAC) and of the Bureau international des sociétés gérant les droits d'enregistrement et de reproduction mécanique (BIEM).

SODRAC has entered into reciprocal agreements with similar societies in over 85 countries which are listed at http://www.sodrac.ca/anglais/autres.html. From the list, it can be seen that SODRAC's agreements tend to be with author/publisher societies in the non-English speaking world. The Harry Fox Agency represents SODRAC members in the US but not vice-versa.

F. INCREASE IN REVENUES ATTRIBUTABLE TO THE AMENDMENTS

Only revenues from private copying, collected through CPCC can be attributed to the 1997 amendments. The growth in royalties collected since 1991 is illustrated in the graph entitled SODRAC: Evolution des perceptions which can be downloaded at the following link: SODRAC Graphiques Perceptions 2005-2006.pdf.

G. COMMENTS AND SUGGESTIONS

SODRAC is currently facing many challenges related to the transition from physical to digital use of musical works. One of these challenges is based on the Internet Service Providers' lack of accountability with respect to the increase in illegal downloading. This puts the Society's author, composer and publisher members in a vulnerable position.

SOCAN

Head Office: 41 Valleybrook Drive
Toronto, Ontario
M3B 2S6
Tel: (416) 445-8700 or 1 (800) 55-SOCAN
Fax: (416) 445-7108
Web site: www.socan.ca

A. HISTORY AND STRUCTURE

SOCAN is the Society of Composers, Authors and Publishers of Canada. It was federally incorporated by Letters Patent in 1990 through the merger of two predecessor organizations, PROCAN and CAPAC. CAPAC's predecessor, CPRS, was formed in 1925 as a joint venture of ASCAP (a US performing rights society) and PRS (the UK performing rights society). PROCAN's predecessor, BMI Canada was formed in 1947, as the Canadian operation of BMI, a US performing rights organization.

Its Board of directors is composed of 18 directors of which half are publishers and half are composers. They are elected every three years by the membership at large.

B. MEMBERS/MEMBERSHIP

SOCAN has approximately 80,000 composer (sometimes called creator, composer, lyricist, writer or songwriter) and publisher (sometimes called copyright owner because it acquires copyrights from composers) members of which 18,000 composers and 4,000 publishers actually earned income in 2006. Most composers and music publishers based in Canada who earn performing rights income are members of SOCAN, although some join a foreign society such as ASCAP or BMI (US), PRS (UK) or SACEM (France), receiving Canadian earnings through such foreign society rather than directly.

In order to qualify for membership as a composer, the applicant must have written at least one musical work which has been published, commercially released or performed. In order to qualify as a publisher member, the applicant must have published five or more musical works written or co-written by a SOCAN member or by a Canadian who is a member of another performing rights society, or at least one musical work written or co-written by a SOCAN member or by a Canadian who is a member of another performing rights society, featured on a commercial recording. There is no fee for membership.

SOCAN secures from composers and publishers an assignment of the public performing rights and the communication rights (the right to communicate to the public by telecommunication) in musical works. The rights are separately assigned by the composers and publishers respectively and SOCAN makes direct and separate payments of royalties to the two groups.

Since the private copying provisions were introduced, effective January 1, 1999, SOCAN has also been requesting, on a non-compulsory basis, an assignment of the members' right of remuneration under those provisions. This allows SOCAN, as a member of the CPCC, to claim royalties on behalf of its members who have assigned that right to SOCAN.

The term of the membership agreement is two (2) years and it automatically renews for successive two-year terms unless terminated on three months notice prior to the end of a term.

The membership agreement is succinct. Members warrant title to their works and agree to register all works with SOCAN, to assist in enforcement of rights and to refrain from doing anything that might prejudice SOCAN's rights. SOCAN's obligations are to collect royalties, to distribute them and to institute and defend legal actions at its own expense.

C. OPERATIONS

Repertoire Administration

SOCAN administers the "small" (as opposed to "grand") performing rights on behalf of composers and publishers of musical works. It maintains and continuously adds to its repertoire by inputting the information it receives from affiliated foreign performing rights societies and from members on registration forms submitted by them and on cue sheets submitted by television and motion picture producers. Electronic registration software is now available from SOCAN's offices and, shortly, members will be able to register their works on line.
Relations with Members

SOCAN makes available to its members a number of printed and web-accessible documents. Its primer, called How Your Music Make$ Money at http://www.socan.ca/pdf/en/pub_HowYourMusicMakesMoney07.pdf , describes the work registration system, sources of licence income, music tracking procedures and the royalty distribution system.

SOCAN's welcome page at www.socan.ca directs the reader to information oriented toward music creators and publishers or music users. There are also very comprehensive and detailed pages on a variety of topics.

SOCAN maintains a head office in Toronto as well as four regional offices in Vancouver, Edmonton, Montreal and Halifax (Dartmouth). Each of these offices has a Member Services Department to deal with members' individual queries or concerns.
Relations with Users
1. Statutory Requirements
  
  SOCAN is required under section 67.1 of the Copyright Act to file tariffs of fees it proposes to collect from various users anduser groups. The deadline for filing is March 31 of each year for the following year, although some tariffs are certified for up to five (5) years. There is a formal process by which music users may object to a proposed tariff or seek intervenor status in the proceedings. The Copyright Board is required, under section 68, to consider the proposed tariffs and any objections thereto. This may mean the scheduling of a hearing if the issues cannot be resolved through an exchange of arguments.
  
  The parties are not precluded from negotiating a settlement and filing it with the Board, but the Board remains bound to consider the settlement terms in the context of the public interest before certifying the agree tariff. In most instances, a negotiated settlement is accepted by the Board with little or no additional formality.
  
  A listing of the tariffs and their current fees can be found at: www.socan.ca/jsp/en/resources/tariffs.jsp.
  
  On October 15, 2005, the Copyright Board of Canada rendered a decision establishing the royalties that commercial radio stations must pay to SOCAN or their use of music for the years 2003 through 2007. The Canadian Association of Broadcasters applied to the Federal Court of Appeal for judicial review of that decision, asserting that the Board had exceeded its jurisdiction.
  
  On October 19, 2006, the Federal Court of Appeal set aside the Board's October 15, 2005 decision, remitting it back to the Board for re‐determination.
  
  On February 22, 2008, following its re‐determination of the matter, the Board rendered a decision that maintained the rates it established in its October 2005 decision. The parties had submitted new evidence that allowed the Board to assess the value of music to broadcasters from different viewoints. On the first $1.25 million of annual advertising revenues, music stations continue to pay 3.2 per cent of that amount. Above that threshold, the rate is 4.4 per cent. The rate for low music‐use stations (less than 20% of program time) increases from 1.4 to 1.5 per cent.
2. Licences
  
  The publication of a tariff in the Canada Gazette advises users of the licence fees SOCAN is entitled to charge. Under section 68.2(1), SOCAN cannot sue for copyright infringement anyone who has paid the specified royalties. Broadcasters and cable systems do not receive paper licences.
  
  In certain instances, it serves SOCAN well to issue a paper licence certificate so that it can be conspicuously posted in the establishment. Over 35 licence applications are now available on-line at the SOCAN web site: www.socan.ca/lic/en/tariffspdf.jsp. A music user must complete the application, sign it and return it to SOCAN with the self-calculated fee payment.
3. Sources of Revenue
  
  As discussed above, SOCAN administers both performing rights and communication rights. The latter, which are mainly exploited by the broadcasting industry, contribute the lion's share of SOCAN`s revenue. In 2006, the four largest broadcasting licensee contributor groups were: cable systems (for the specialty services they carry), commercial radio broadcasters, commercial television broadcasters, and the CBC (radio and TV). The four largest general licensee contributor groups were concerts, assemblies and dances, background music, and cabarets (live music).
4. Collections and Enforcement
  
  SOCAN's licensing department effectively handles most collection matters. Where a licensee does not pay the fee, after exhausting internal avenues, the matter is turned over either directly to the inside litigation department or to a collection agency and then to the inside litigation department
  
  In the event of infringement (no prior licensing history), the matter will go to SOCAN's internal litigation department and if it chooses, to outside counsel for copyright infringement proceeding before the courtss. These cases require detailed evidence of music use, obtained through on-site logging, as well as chain-of-title proof for each infringed composition. The direct cost of enforcement is sometimes greater than the fees owed but such cases are important to maintain SOCAN's credibility, to ensure an equal playing field throughout a particular industry ; and to establish an ongoing licensing relationship with the music user.
  
  The broadcasting sector is relatively knowledgeable about its copyright responsibilities and is generally compliant.
  
  General licensees tend to be less sophisticated about copyright and require a disproportionate amount of SOCAN's licensing and legal resources for enforcement purposes, given that the tariff level is usually much lower than in the broadcasting sector and the compliance level is also much lower.
  
  SOCAN has noticed that in some cases, the statutory damages have provided a "deterrent effect" for some users. Procedurally, SOCAN was already using the injunction remedy. One lawyer with SOCAN in Montreal reports some success in obtaining a rate that is triple the tariff in settlements with infringers and points to the new minimum damages provision [s. 38.1 (4)] as instrumental in effecting them.

D. DISTRIBUTION OF ROYALTIES

The Pools

SOCAN groups the domestic licence income from its 20 - 30 performing rights tariffs (excluding private copying) into five pools: television, cable, cinema, radio and concert. The radio pool is the depository for income from the "general" tariffs which do not comprise their own pools, with the exception of 20% of the income from certain general tariffs with a "concert" component, which is allocated to the concert pool. The so-called "cable" pool consists of non-broadcast television services available only through cable (or DTH). By contrast, TV and radio retransmission royalties, which arise from the carriage of distant broadcast signals, are put in the television and radio pools respectively.

SOCAN also receives income from foreign societies for the foreign performance of its members' works. That income forms a separate pool for which SOCAN acts as a conduit.
Music Monitoring

SOCAN monitors the music used by the key contributors to the five domestic pools. Commercial and public television stations, as well as the "cable" services, are expected to report 100% of their music use through cue sheets. While the licensees are highly compliant, it is difficult to obtain cue sheets for every program aired and the income is, by necessity, distributed among those claimants for which data has been received.

With the exception of the CBC national and regional radio services which provide comprehensive music use information, radio stations are asked to keep logs of the music they play during randomly selected periods during the year. Commercial radio stations log 3 or 4 consecutive days four times a year. Background music services provide 104 days of programming.

In 2007, SOCAN introduced the Digital Audio Identification (DAI) technology to provide a more complete record of performances on Canadian radio, using census data provided by Nielsen Broadcast Data Systems (BDS). SOCAN will receive 100 percent census-performance data from approximately 160 radio stations across the country. These represent nearly all of the major stations, covering most genres of music, in all key advertising markets across the country. More than 18 million radio performances will be captured each year and approximately 65 percent of all SOCAN's radio revenue will be distributed based on 100 percent census data.

The monitoring of music used in motion pictures is achieved by surveying newspaper listings to determine the number of screen-weeks each motion picture enjoys. Cue sheets indicating the music breakdown are obtained from the motion picture producers.

SOCAN depends primarily on its members to supply concert repertoire information for its concert distribution, although it will accept such information from the venue, managers, promoters and affiliated societies. To be eligible, a concert must be licensed by SOCAN.
Allocation of Royalties - Credit System

A general overview of SOCAN's Distribution Rules is found in Sections V and VI of How Your Music Make$ Money, downloadable at http://www.socan.ca/jsp/en/music_creators/distbroe.pdf.

Briefly, the Television and Cable pools are allocated on a per-second credit basis, subject to weighting by licence fee paid in the case of television and by audience in the case of cable. They are further differentiated by type of use: "background" and "theme" receive a 60% weighting; feature" is at 100%; "concert feature" is at 200%; and "logo" music is at 5%. There are also exceptions for commercials, dancercise programs, 2 - 6 A.M. and non-programming.

The Radio pool uses a simple credit system for distribution. Most songs receive four credits, falling within the 1 - 7 minute duration category.

The Concert pool is allocated on the basis of a declining percentage scale which is more than triple the licence fee collected for low fee concerts (up to $75 paid for licence fees up to $25) but drops to approximately 100% of the fee collected at license fees of $300 and over.

The Cinema pool is distributed on the basis of one credit per screen-week, based on listings in Toronto and Montreal newspapers. The music in each film is then analyzed and credited using the same weighting principles for type of use as apply under the television distribution rules.
Royalty Payments

SOCAN distributes royalties quarterly on February 15, May 15, August 15 and November 15. Members have the option of receiving their royalty payments by direct deposit, the authorization form for which is available on line at: http://www.socan.ca/pdf/en/directdeposit_E.pdf.

E. COOPERATION WITH OTHER COLLECTIVES

Internationally

SOCAN has reciprocal representation agreements with over 200 similar societies, either directly or through major societies who represent the smaller ones. As Canada's tastes in music are primarily British, American and French, most of the transactions are between SOCAN and the domestic societies in those countries.

The societies cooperate, as they share the common goals of ensuring enforcement, obtaining comprehensive repertoire and usage information and the free flow of related data. An umbrella organization - CISAC (International Confederation of Societies of Authors and Composers) -meets regularly to discuss issues of common concern.
Domestically

If mandated by the Copyright Board, SOCAN cooperates with NRCC on joint tariff hearings, and the same set of music use data is sent to both organizations.

It meets with officials of CMRRA, SODRAC and other organizations from time to time to seek common ground in lobbying for copyright reform.

F. REVENUE GROWTH ATTRIBUTABLE TO THE AMENDMENTS

Reduced Commercial Television Tariff

The Copyright Board in 1999 departed from over thirty years of maintaining or increasing broadcasting tariffs by reducing the commercial television tariff from 2.1% of gross revenues to 1.8%; it was later increased to 1.9%. This net rate decrease has been offset by growth in income in both the broadcast from the cable sector. However, the decision has far-reaching precedent-setting consequences for SOCAN.

First, the decision also provided for a carve-out of rights by the composers of television music. This opens the door to direct licensing which, if it becomes widespread, could affect the ability of SOCAN to hold the current rate firm at 1.9%. SOCAN intends to re-argue that portion of the decision at future tariff hearings.

Secondly, the tariff rate is the benchmark for rating the value of other audiovisual music use, notably cable (specialty services), the CBC and retransmission. Thus, reinstatement of the previous rate is essential to prevent a ripple effect.
Encroachment of Revenue Base by New Collectives and New Rights

SOCAN worries about the impact of the introduction of new rights on its ability to maintain or increase its revenues, in light of the finite amount of money that users are prepared to pay for the use of intellectual property.
Copyright Board Discretionary Powers

SOCAN is also disturbed by the Copyright Board's discretion, under the tariff setting process, to reject or amend a tariff when the parties submit an agreement.

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