February 18, 2015 – Canada’s current copyright framework for recorded music is shortchanging artists, according to a new report from the C.D. Howe Institute. In “The Value of Copyrights in Recorded Music: Terrestrial Radio and Beyond,” author Marcel Boyer finds that the competitive value of recorded music is about 2.5 times greater than the current level of copyright payments.
“In today’s digital age, copyright regimes everywhere face common piracy threats along with wide dissemination,” states Boyer. “Meanwhile, rights holders and users contest the market value of copyrights in public forums, legislatures and in the courts.” The root of those conflicts is the difficulty of properly valuing the intellectual property rights of authors, composers, performers and makers.
In groundbreaking research, Boyer provides a method for calculating the fair value of copyrights. Focusing on terrestrial radio as a useful subject for determining royalty rates, the report identifies three issues with Canada’s current royalty system:
The approach followed by the Copyright Board of Canada to determine the competitive value of copyrights in the commercial terrestrial radio industry has deprived rights holders of significant royalty payments.
Such undercompensation is carried over to Internet radio webcasting since royalty payments in new broadcasting technologies are based in part on the royalty regimes in terrestrial radio broadcasting.
Failing to take into account the major differences between new broadcasting technologies and over-the-air broadcasting is detrimental to rights holders as well as to the Internet radio industry itself.
According to Boyer’s calculations, in 2012, royalty payments should have been about $440 million compared to the estimated $178 million. His method could also be extended to Internet radio webcasting to assess the payments due to rights holders in this competing sphere.
“It is possible to determine the competitive value of recorded music in the terrestrial radio industry from the behaviour and broadcast choices of radio operators,” concludes Boyer. This value can help implement a fair copyright regime.
The C. D. Howe Institute is an independent not-for-profit research institute whose mission is to raise living standards by fostering economically sound public policies. It is Canada’s trusted source of essential policy intelligence, distinguished by research that is nonpartisan, evidence-based and subject to definitive expert review. It is considered by many to be Canada’s most influential think tank.
Click here for the full report.
For more information contact: Marcel Boyer, Emeritus Professor of Economics, Université de Montréal, and Associate Member, Toulouse School of Economics, Fellow of CIRANO and the C.D. Howe Institute; or Ben Dachis, Senior Policy Analyst at the C.D. Howe Institute at 416-865-1904; E-mail: amcbrien@cdhowe.org.