Canada sets streaming royalty rates retroactively, favoring webcaster arguments
The Copyright Board of Canada issued a royalty-rate decision that retroactively establishes payment amounts to artists and labels for the 2009-2012 period. The official rate supports arguments made by webcasters which participated in the hearing.
The decision establishes a per-play rate of 10.2 cents per thousand plays of a track (one-hundredth of a penny per play).The collection and payout agency which works on behalf of artists and labels in Canada, Re:Sound (similar to SoundExchange in the U.S.), argued for a rate between $1.00 and $2.30 per thousand plays.
This rate-setting action applies to “non-interactive” and “semi-interactive” music services, echoing the U.S. distinction of non-interactive Internet radio. The “interactive” portion of a music service, which would remove it from government-set music licensing, includes user controls that determine exact songs and bands that are played. Pandora is the market-leading non-interactive service, and Pandora did participate in the Copyright Board of Canada deliberations that led to the decision.
It’s important to note that this 10.2-cent-per-thousand rate is established retroactively for the period of 2009 through 2012. The retroactive fact of this matter illustrates how slowly law moves compared to technology. The lagging law has contributed to sluggish expansion of U.S. (and other non-Canadian) services expanding to Canada — some have made the move without knowing what the regulatory rates were; others (including Pandora) have waited.
The Copyright Board of Canada offers an estimate of the rate’s impact on business. Noting that total payments depend on number of plays, the Board estimates that a service with $130,000 of revenue ill pay $7,000 in performance royalties — 5.38 percent. The Board also project total annual collections by Re:Sound will be $500,000.