Vol. 145, No. 20 — May 14, 2011

ARCHIVED — Supplement

COPYRIGHT BOARD

FILE: Reproduction of Musical Works

Statement of Proposed Royalties to Be Collected for the Reproduction of Musical Works Embedded in a Music Video, in Canada, by Online Music Services

In accordance with section 70.14 of the Copyright Act, the Copyright Board hereby publishes the statement of proposed royalties filed by the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) on March 21, 2011, with respect to royalties it proposes to collect, effective on January 1, 2012, for the reproduction of musical works embedded in a music video, in Canada, by online music services (Tariff No. 6) in 2012.

In accordance with the provisions of the same section, the Board hereby gives notice that prospective users or their representatives who wish to object to the statement may file written objections with the Board, at the address indicated below, within 60 days of the publication hereof, that is no later than July 13, 2011.

Ottawa, May 14, 2011

GILLES MCDOUGALL
Secretary General
56 Sparks Street, Suite 800
Ottawa, Ontario
K1A 0C9
613-952-8624 (telephone)
613-952-8630 (fax)
gilles.mcdougall@cb-cda.gc.ca (email)

STATEMENT OF ROYALTIES TO BE COLLECTED BY SODRAC FOR THE REPRODUCTION OF MUSICAL WORKS EMBEDDED IN A MUSIC VIDEO, IN CANADA, BY ONLINE MUSIC SERVICES IN 2012

Short Title

1. This tariff may be cited as SODRAC Tariff No. 6, Online Music Services, Music Videos, 2012.

Definitions

2. In this tariff,

“bundle” means two or more digital files offered as a single product, where at least one file is a permanent download; (« ensemble »)

“download” means a file intended to be copied onto a consumer’s local storage device; (« téléchargement »)

“file” except in the definition of “bundle,” means a digital file of a music video; (« fichier »)

“identifier” means the unique identifier an online music service assigns to a file or bundle; (« identificateur »)

“limited download” means a download that uses technology that causes the file to become unusable when a subscription ends; (« téléchargement limité »)

“music video” means a videoclip, live concert or any similar audiovisual representation of one or more musical works; (« vidéo de musique »)

“online music service” means a service that offers and delivers permanent downloads to consumers; (« service de musique en ligne »)

“permanent download” means a download other than a limited download; (« téléchargement permanent »)

“quarter” means from January to March, from April to June, from July to September and from October to December; (« trimestre »)

“repertoire” means the musical works for which SODRAC is entitled to grant a licence pursuant to section 3; (« répertoire »)

“SODRAC” means SODRAC 2003 Inc. and Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. (« SODRAC »)

Application

3. (1) This tariff entitles an online music service that complies with this tariff, and its authorized distributors,

  • (a) to reproduce all or part of a musical work in the repertoire embedded in a music video for the purposes of transmitting the work in a file as a permanent download to consumers in Canada via the Internet or another similar computer network, including by wireless transmission;
  • (b) to authorize a person to reproduce the musical work embedded in a music video for the purpose of delivering to the service a file that can then be reproduced and transmitted pursuant to paragraph (a); and
  • (c) to authorize consumers in Canada to further reproduce the musical work embedded in the music video for their own private use, for purposes of the permanent downloading of music videos.

(2) An online music service that complies with this tariff does not incur any obligation pursuant to sections 5, 6 or 8 in relation to streams of 30 seconds or less offered free of charge to promote the online music service permanent downloading activity or to allow consumers to preview a file.

4. (1) This tariff does not authorize the reproduction of a work in a medley, for the purpose of creating a mashup, for use as a sample or, subject to subsection 3(2), in association with a product, service, cause or institution.

(2) This tariff does not entitle the owner of the copyright in a sound recording of a musical work to authorize the reproduction of that work.

(3) This tariff does not authorize the production of a music video or the synchronization of a musical work in a music video, but only the online distribution of an existing music video in which the musical work is already embedded.

Royalties

5. (1) Subject to subsections (2) and (3), the royalties payable in a quarter by an online music service for each permanent download containing a work in the repertoire shall be equal to the greater of 9.9 per cent of the amount paid by a consumer to the online music service or its authorized distributor for the permanent download and twice the sum payable by the online music service pursuant to SOCAN Tariff 22 (2012) for such a download, subject to

  • (a) a minimum per permanent download, containing a work in the repertoire, in a bundle that contains 15 or more files of 4.4¢ per work in the repertoire embedded in a music video or twice the minimum payable by the online music service pursuant to SOCAN Tariff 22 (2012) for such a download, whichever is greater; and
  • (b) in all other cases, a minimum per permanent download, containing a work in the repertoire of 6.6¢ per work in the repertoire embedded in a music video or twice the minimum payable by the online music service pursuant to SOCAN Tariff 22 (2012) for such a download, whichever is greater.

(2) Where SODRAC does not hold all the rights in a musical work, the applicable rate shall be the relevant rate multiplied by SODRAC’s share in the musical work.

(3) Where SODRAC does not hold rights in all of the musical works embedded in the music video, the applicable rate shall be the relevant rate multiplied by the number of works in which SODRAC holds rights divided by the total number of musical works embedded in the music video, subject to the minimum provided in paragraph (1)(a) if there are more than 15 works and the minimum provided in paragraph (1)(b) in other cases.

(4) All royalties payable under this tariff are exclusive of any federal, provincial or other governmental taxes or levies of any kind.

ADMINISTRATIVE PROVISIONS

Reporting Requirements

6. (1) No later than 20 days after the end of the first quarter during which an online music service reproduces a file requiring a SODRAC licence, and in any event before the service first makes that file available to the public, the service shall provide to SODRAC the following information:

  • (a) the name of the person who operates the service, including
    • (i) the name of a corporation and a mention of its jurisdiction of incorporation,
    • (ii) the name of the proprietor of an individual proprietorship, or
    • (iii) the names of the principal officers of any other service, together with any other trade name under which the service carries on business;
    (b) the address of its principal place of business;
  • (c) its address (including email) for the purposes of notice and, if different from that address, for the payment of royalties, the provision of information pursuant to subsection 17(2), and any inquiries related thereto;
  • (d) the name and address of any authorized distributor;
  • (e) the Uniform Resource Locator (URL) of each Internet site at or through which the service is or will be offered;
  • (f) with respect to each file that was reproduced
    • (i) the file identifier,
    • (ii) the title of the music video and of each musical work embedded in the music video,
    • (iii) the name of each author of each musical work embedded in the music video,
    • (iv) the name of each performer or group to whom the sound recording embedded in the music video is credited,
    • (v) the name of the person who released the sound recording or, if different, the name of the person that released the music video,
    • (vi) the International Standard Recording Code (ISRC) assigned to the sound recording,
    • (vii) if the sound recording is or has been released in physical format as part of an album, the name, identifier, product catalogue number and Universal Product Code (UPC) assigned to the album, together with the associated disc and track numbers,
    • (viii) if the file is being offered as part of a bundle, the name and identifier of the bundle as well as the identifier of each file in the bundle, and
    • (ix) if the service believes that a SODRAC licence is not required, information that establishes why the licence is not required; and
    (g) with respect to each file that was reproduced, if the information is available,
    • (i) the name of the music publisher associated with the musical work,
    • (ii) the International Standard Musical Work Code (ISWC) assigned to the musical work,
    • (iii) the Global Release Identifier (GRID) assigned to the file and, if applicable, the GRID of the album or bundle in which the file was released,
    • (iv) the running time of the file and of each musical work in minutes and seconds, and
    • (v) any alternative title used to designate the music video, the sound recording and the musical work.

(2) No later than 20 days after the end of each subsequent quarter, an online music service shall provide to SODRAC the following information:

  • (a) any change to the information previously reported pursuant to paragraphs (l)(a) to (g) as well as any information set out in paragraph (l)(g) that became available during the quarter;
  • (b) with respect to each file that the service first made available during the quarter, the information set out in paragraphs (1)(f) and (g); and
  • (c) with respect to each file that the service ceased to make available during the quarter, its identifier.

7. (1) No later than 20 days after receiving a report pursuant to section 6, SODRAC shall send to the online music service a notice indicating

  • (a) which files contain a work that it then knows to be in the repertoire;
  • (b) which files contain a work that it then knows not to be in the repertoire;
  • (c) which files contain a work that it then knows to be in the repertoire only as to a fraction of the rights, with an indication of that fraction; and
  • (d) with respect to all other files, an indication of the reason for which SODRAC is unable to provide an answer pursuant to paragraph (a), (b) or (c).

(2) No later than 20 days after the end of each quarter, SODRAC shall update the information provided pursuant to subsection (1).

(3) No later than 20 days after receiving a report pursuant to subsection (1) or (2), if the online music service disputes the indication that a file contains a work in the repertoire or requires a SODRAC licence, the service shall provide to SODRAC the information that establishes why the licence is not required, unless the information was provided earlier.

Sales Reports

8. (1) No later than 20 days after the end of each quarter, the online music service shall provide to SODRAC a report setting out, for that quarter

  • (a) the total number of permanent downloads and the total number of bundles supplied;
  • (b) the total amount paid by consumers for bundles;
  • (c) the total amount paid by consumers for other permanent downloads; and
  • (d) the total number of permanent downloads that may require a SODRAC licence and the total amount paid by consumers for such downloads, including
    • (i) the number of times each file was downloaded as part of a bundle, the identifier of each such bundle and of the file as included in that bundle, the amount paid by consumers for each such bundle, the share of that amount assigned by the service to the file and a description of the manner in which that share was assigned, and
    • (ii) the identifier and number of other permanent downloads of the file and the amounts paid by consumers for the file, including, if the file is offered as a permanent download at different prices from time to time, the number of permanent downloads of the file at each different price.

(2) No later than 20 days after the end of the quarter during which an online music service is notified, in an update provided pursuant to subsection 7(2), that a file contains a work now known to be in the repertoire, the service shall provide to SODRAC the information set out in subsection (1) in relation to that file for each quarter during which the work was in the repertoire.

Calculation and Payment of Royalties

9. No later than 20 days after receiving a report pursuant to section 8 for the quarter, SODRAC shall provide the online music service with a detailed calculation of the royalties payable in that quarter for each file.

10. Royalties shall be due no later than 30 days after an online music service receives a report pursuant to section 9.

Adjustments

11. (1) Subject to subsection (2), adjustments in the amount of royalties owed, including excess payments, as a result of the discovery of an error or otherwise, shall be made on the date the next royalty payment is due.

(2) Any excess payment resulting from an online music service providing incorrect or incomplete information about a file shall be deducted from future amounts owed for the use of works owned by the same person as the work in that file.

(3) Adjustments in any information provided pursuant to section 8 or 9 shall be provided with the next report dealing with such information.

Records and Audits

12. (1) An online music service shall keep and preserve, for a period of six years after the end of the quarter to which they relate, records from which the information set out in section 6, subsection 7(3) and section 8 can be readily ascertained.

(2) SODRAC may audit these records at any time during the period set out in subsection (1) on reasonable notice and during normal business hours.

(3) Subject to subsection (4), if an audit discloses that royalties due have been understated in any quarter by more than 10 per cent, the online music service shall pay the reasonable costs of the audit within 30 days of the demand for such payment.

(4) For the purposes of subsection (3), any amount owing as a result of an error or omission on the part of SODRAC shall not be taken into account.

Breach and Termination

13. (1) An online music service that fails to provide any report required by section 8 within five business days of the date on which the report is required or to pay royalties within five business days of the date on which the royalties are due is not entitled to do any of the acts described in section 3 as of the first day of the quarter in respect of which the report should have been provided or the quarter in respect of which the royalties should have been paid, as the case may be, and until the report is provided and the royalties and any accrued interest are paid.

(2) An online music service that fails to comply with any other provision of this tariff is not entitled to do any of the acts described in section 3 five business days after SODRAC has notified the service in writing of that failure and until the service remedies that failure.

(3) An online music service that becomes insolvent, commits an act of bankruptcy, makes an assignment for the benefit of its creditors, files for protection under the Companies’ Creditors Arrangement Act or other comparable legislation in another jurisdiction, winds up its affairs, ceases to carry on business, or has a receiver/manager appointed for it or for a substantial part of its property is not entitled to do any of the acts described in section 3 as of the day immediately preceding the day of the relevant occurrence.

Confidentiality

14. (1) Subject to subsections (2) and (3), SODRAC, the online music service and its authorized distributors shall treat in confidence information received pursuant to this tariff, unless the disclosing party consents in writing to the information being treated otherwise.

(2) Information referred to in subsection (1) may be shared

  • (a) between SODRAC and SOCAN;
  • (b) between the online music service and its authorized distributors in Canada;
  • (c) with the Copyright Board;
  • (d) in connection with proceedings before the Board, once the online music service has had a reasonable opportunity to request a confidentiality order;
  • (e) with any person who knows or is presumed to know the information;
  • (f) to the extent required to effect the distribution of royalties, with royalty claimants; and
  • (g) if ordered by law or by a court of law.

(3) Subsection (1) does not apply to information that is publicly available, or to information obtained from someone other than SODRAC, the online music service or its authorized distributors and who is not under an apparent duty of confidentiality to the service.

Interest on Late Payments

15. (1) Subject to subsections (3) and (4), any amount not received by the due date shall bear interest from that date until the date the amount is received.

(2) Any overpayment resulting from an error or omission on the part of SODRAC shall bear interest from the date of the overpayment until the overpayment is refunded.

(3) Where an online music service fails to provide a report required under section 8 within the time set out in that section, any amount payable for the quarter to which the report relates shall bear interest from the date on which the service would have been required to pay royalties for that quarter, had the report been submitted when required and had SODRAC provided the report required under section 9 to the service 20 days after receiving that report from the service, until the amount is received.

(4) Any amount owing as a result of an error or omission on the part of SODRAC shall not bear interest until 30 days after SODRAC has corrected the error or omission.

(5) Interest shall be calculated daily, at a rate equal to one per cent above the Bank Rate effective on the last day of the previous month (as published by the Bank of Canada). Interest shall not compound.

Addresses for Notices, etc.

16. (1) Anything that an online music service sends to SODRAC shall be sent to 1470 Peel Street, Tower B, Suite 1010, Montréal (Quebec) H3A 1T1, email: sodrac@sodrac.ca, fax: 514-845-3401, or to any other address of which the service has been notified in writing.

(2) Anything that SODRAC sends to an online music service shall be sent to the last address of which SODRAC has been notified in writing.

Delivery of Notices and Payments

17. (1) Subject to subsection (2), a notice may be delivered by hand, by postage-paid mail, by fax, by email or by File Transfer Protocol (FTP).

(2) Information provided pursuant to sections 6 to 9 and to subsection 11(2) shall be delivered electronically, in plain text format or in any other format agreed upon by SODRAC and the online music service.

(3) A notice or payment mailed in Canada shall be presumed to have been received four business days after the day it was mailed.

(4) A notice sent by fax, by email or by File Transfer Protocol (FTP) shall be presumed to have been received the day it is transmitted.

(5) All amounts required to be reported or paid under this tariff shall be reported or paid in Canadian dollars.