After Swift Shakes it Off with Spotify, US Copyright Office Promises to Shake it Up

After Swift Shakes it Off with Spotify, US Copyright Office Promises to Shake it Up

The US Copyright Office has published a report that, at the very least, promises to reopen the debate surrounding rights of remuneration for performers and makers of sound recordings. This followed huge publicity generated in the United States about artist remuneration rates for webcasting, which in turn was sparked by pop pixie Taylor Swift’s pronouncement that her music would no longer be available via Spotify and similar services.


The Canadian broadcasting and telecommunications industry is subject to a comprehensively divided network of tariffs governing a myriad of rights, all collected by dozens of Collective Management Organizations (CMOs). Unlike the US, which has continued with a remuneration system based on an anachronistic principle: commercial radio play has promotional value that excuses users (like radio stations) from paying a royalty to performers and makers of sound recordings. Such thinking dates back to a time when people actually bought music in the form of CDs or vinyl records, instead of just streaming it. The right to remuneration for performers and makers of sound recordings is guaranteed as part of the Rome Convention, but the US has not acceded to this WIPO treaty, though the proposed changes could indicate an intention to fulfil its obligations.


Canadian artists are presently up in arms about the paltry sounding 10c per 1000 plays that webcasting services like Songza* might pay to Re:Sound under Tariff 8. Particularly so when compared to the roughly $1.10 per 1000 plays paid out by similar services in the US. However such an comparison paints far less than the full picture – aside from the Re:Sound tariff, a separate rate is also paid by webcasters to SOCAN for the composition. That’s not to say that the Canadian rates always result in ‘fair and equitable’ remuneration, but it does at least address the relevant stakeholders in a sound recording of a musical work, which is one of the areas where the US system appears to be fundamentally broken.


In truth, addressing the remuneration issue can’t promise to fix the problem of artists and songwriters being paid fairly for their work. The new digital media economy is a fundamentally different landscape that requires some radical thinking to navigate. Some worrying statistics are surfacing from Europe to demonstrate how a healthy payment can easily be soaked up before it even reaches artists. Still, the US report promises to begin the sisyphean task of adapting the royalty regime to try to keep up with the pace of change.


Does this report have any significant impact in Canada? Possibly. Some commentators have speculated that because the absence of a remunerative right for radio play in the US means that Re:Sound does not include US-based works in its repertoire. This means the commercial radio tariff here is calculated to only account for recordings from countries party to the Rome Convention. This is a significantly smaller group of works. For example, if US-based works account for roughly, say, 50% of what is played on radio, then the tariff is calculated to be about half of what it might otherwise be simply because half of the musicians and sound recording makers do not to need receive any compensation from Re:Sound. A remunerative right in the US would likely trigger a reciprocal obligation, which is pretty much already guaranteed with the impending ratification of the WPPT. This means tariffs would be calculated to incorporate a much larger body of works, which would likely result in a significantly higher royalty determination than broadcasters and streaming services are currently paying. If the tariffs are discounted at a (theoretical) rate of 50% due to US repertoire exclusion, then inclusion would logically merit something close to a doubling of the tariff.


In the meantime, Canadian performers can reflect on the upcoming judicial review for Tariff 8, in the hope that their royalties amount to more than a share of 50% of 0.01c every time someone enjoys the fruits of their labour over a webcasting service. It's also worth noting that although a right of remuneration exists for internet-based services in the US, the equivalent tariff in Canada (Tariff 8) was based on the commercial radio tariff (Tariff 1A), and also appears to incorporate at least some of that aforementioned repertoire discount. Tariff 8, however, only covers a period of three years, and was determined with some serious evidentiary problems during the hearing process. Future certifications from the Board in this area are likely to rise.


There's much, much more to be said about Tariff 8, and hopefully this topic will be revisited in serious depth as the judicial review works its way through the courts. Stay Tuned.


*note that Spotify is not included as a webcaster, and is subject to a separate tariff as a fully-interactive audio website which is set at a higher rate than Tariff 8.


Andrew Hunter is an IPilogue Editor and a JD Candidate at Osgoode Hall Law School.