Canada Gazette, Part I, Volume 147, Number 19: SUPPLEMENT

May 11, 2013

COPYRIGHT BOARD

FILE: Reproduction of Musical Works

Statement of Proposed Royalties to Be Collected for the Reproduction of Musical Works Embodied in Music Videos, 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 Canadian Musical Reproduction Rights Agency (CMRRA), on April 2, 2013, with respect to royalties it proposes to collect, effective January 1, 2014, for the reproduction of musical works embodied in music videos, in Canada, by online music services in 2014.

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 proposed tariffs 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 10, 2013.

Ottawa, May 11, 2013

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 CMRRA FOR THE REPRODUCTION OF MUSICAL WORKS EMBODIED IN MUSIC VIDEOS, IN CANADA, BY ONLINE MUSIC SERVICES IN 2014

Short Title

1. This tariff may be cited as the CMRRA Online Music Services Tariff (Music Videos), 2014.

Definitions

2. The following definitions apply in this tariff.

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

“CMRRA” means the Canadian Musical Reproduction Rights Agency Ltd.

“download” means a file intended to be copied onto an end-user's local storage medium or device. (« téléchargement »)

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

“free on-demand stream” excludes an on-demand stream provided to a subscriber. (« transmission sur demande gratuite »)

“free subscription” means the provision of free access to limited downloads or on-demand streams to a subscriber. (« abonnement gratuit »)

“gross revenue” means the aggregate of (a) all revenues payable by or on behalf of end-users for access to streams or downloads delivered by an online music service or its authorized distributors, including membership, subscription and other access fees; (b) all other revenues payable to an online music service or its authorized distributors in respect of the online music service, including amounts paid for advertising, product placement, promotion and sponsorship, and commissions on third-party transactions, but excluding revenues payable in relation to streams or downloads of digital files containing only sound recordings of musical works; and (c) amounts equal to the value of the consideration received by an online music service or its authorized distributors pursuant to any contra and barter agreements related to the operation of the online music service, excluding consideration received exclusively in relation to the delivery of streams or downloads of digital files containing only sound recordings of musical works. (« revenus bruts »)

“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 upon the happening of a certain event. (« téléchargement limité »)

“music video” means a videoclip or any similar audiovisual representation of a musical work. (« vidéo de musique »)

“non-subscriber” means an end-user other than a subscriber, and includes an end-user who receives limited downloads or on-demand streams from an online music service subject to the requirement that advertising be viewed or listened to. (« non-abonné »)

“on-demand stream” means a stream selected by its recipient. (« transmission sur demande »)

“online music service” means a service that delivers on-demand streams, limited downloads, and/or permanent downloads to end-users. (« service de musique en ligne »)

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

“play” means the single performance of a stream or a limited download. (« écoute »)

“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 CMRRA is entitled to grant a licence pursuant to section 3. (« répertoire »)

“stream” means a file that is intended to be copied onto a local storage medium or device only to the extent required to allow listening to the file at substantially the same time as when the file is transmitted. (« transmission »)

“subscriber” means an end-user with whom an online music service or its authorized distributor has entered into a contract for service other than on a transactional per-download or per-stream basis, for a fee, for other consideration or free of charge, including pursuant to a free subscription. (« abonné »)

“unique visitor” means each end-user, excluding a subscriber, who receives a free on-demand stream from an online music service in a month. (« visiteur unique »)

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 embodied in a music video for the purposes of transmitting the work in a file to end-users in Canada via the Internet or another similar computer network, including by wireless transmission;
  
• (b) to authorize a person to reproduce the musical work embodied 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 end-users in Canada to further reproduce the musical work embodied in the music video for their own private use,
  

in connection with the operation of the service.

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 embodied.

(4) Nothing in this tariff affects the liability of an online music service to pay royalties under the CSI Online Music Services Tariff, 2014 in relation to digital files containing only sound recordings of musical works.

ROYALTIES

On-Demand Streams

5. (1) Subject to paragraph (6)(a), the royalties payable in a month by any online music service that offers on-demand streams but does not offer not limited downloads shall be

A × B
C

where

• (A) is 4.5 per cent of the gross revenue from the service for the month, excluding amounts paid by end-users for permanent downloads,
• (B) is the number of plays of files requiring a CMRRA licence during the month, and
• (C) is the number of plays of all files during the month,

subject to a minimum equal to the greater of

• (a) 29.92¢ per subscriber; and
  
• (b) 0.08¢ for each play of a file requiring a CMRRA licence.
  

Limited Downloads

(2) Subject to paragraph (6)(a), the royalties payable in a month by any online music service that offers limited downloads — with or without on-demand streams — shall be

A × B
C

where

• (A) is 6.53 per cent of the gross revenue from the service for the month, excluding amounts paid by end-users for permanent downloads,
• (B) is the number of plays of files requiring a CMRRA licence during the month, and
• (C) is the total number of plays of files during the month,

subject to a minimum equal to the greater of

• (a) 65.34¢ per subscriber; and
  
• (b) 0.13¢ for each play of a musical work requiring a CMRRA licence.
  

Where a service does not report to CMRRA the number of plays of music videos as limited downloads, (B) will be deemed to equal either (a) the number of plays of the same music video as an on-demand stream, during the month; or (b) if the music video has not been played as an on-demand stream during the month, the average number of plays of all music videos as on-demand streams during the month.

Free On-Demand Streams

(3) Subject to paragraph (6)(b), the royalties payable for free on-demand streams shall be the lesser of 29.92¢ per unique visitor per month and 0.08¢ per free on-demand stream requiring a CMRRA licence received by that unique visitor in that month.

Permanent Downloads

(4) Subject to paragraph (6)(a), the royalties payable in a month by any online music service that offers only permanent downloads shall be

A × B
C

where

• (A) is 6.53 per cent of the gross revenue from the service for the month;
• (B) is the number of permanent downloads requiring a CMRRA licence during the month; and
• (C) is the total number of permanent downloads during the month,

subject to a minimum of 2.59¢ per permanent download in a bundle that contains 15 or more files and 4.53¢ per permanent download in all other cases.

(5) Subject to paragraph (6)(b), where an online music service that is required to pay royalties under any of subsections (1) to (3) also offers permanent downloads, the royalty payable by the online music service for each permanent download requiring a CMRRA licence shall be 6.53 per cent of the amount paid by an end-user for the download, subject to a minimum of 2.35¢ per permanent download in a bundle that contains 15 or more files and 4.53¢ per permanent download in all other cases.

Adjustments

(6) Where CMRRA does not hold all the rights in a musical work,

• (a) for the purposes of subsections (1), (2) and (4), only the share that CMRRA holds shall be included in (B); and
  
• (b) for the purposes of subsections (3) and (5), the applicable royalty shall be the relevant rate multiplied by CMRRA's share in the musical work.
  

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

(8) For the purpose of calculating the minimum payable pursuant to subsections (1) and (2), the number of subscribers shall be determined as at the end of the month in respect of which the royalties are payable.

ADMINISTRATIVE PROVISIONS

Reporting Requirements: Service Identification

6. No later than the earlier of 20 days after the end of the first month during which an online music service reproduces a file requiring a CMRRA licence and the day before the service first makes such a file available to the public, the service shall provide to CMRRA 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,
    
  • (iii) the name of each partner of a partnership,
    
  • (iv) 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) the name, address and email of the persons to be contacted for the purposes of notice and, if different from that name, address and email, for the payment of royalties, the provision of information pursuant to subsection 18(2) and any inquiries related thereto;
  
• (d) the name and address of any authorized distributor; and
  
• (e) the Uniform Resource Locator (URL) of each website at or through which the service is or will be offered.
  

Sales Reports|

Definition

7. (1) In this section, “required information” means, in respect of a file,

• (a) its identifier;
  
• (b) the title of the music video and, if different, of the musical work embodied in the music video;
  
• (c) the name of each performer or group to whom the sound recording in the music video is credited;
  
• (d) the name of the person who released the sound recording or, if different, the name of the person who released the music video;
  
• (e) if the online music service believes that a CMRRA licence is not required, information that establishes why the licence is not required;
  
• (f) the name of each author of the musical work embodied in the music video;
  
• (g) the International Standard Recording Code (ISRC) assigned to the sound recording;
  
• (h) if the sound recording was 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;
  
• (i) 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, if available,

• (j) the name of the music publisher associated with the musical work;
  
• (k) the International Standard Musical Work Code (ISWC) assigned to the musical work;
  
• (l) 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;
  
• (m) the running time of the file and of the musical work in minutes and seconds; and
  
• (n) any alternative title used to designate the music video, the musical work and the sound recording.
  

On-Demand Streams

(2) No later than 20 days after the end of each month, any online music service that is required to pay royalties pursuant to subsection 5(1) shall provide to CMRRA a report setting out, for that month,

• (a) in relation to each file that was delivered to an end-user, the required information;
  
• (b) the total number of plays of each file as an on-demand stream;
  
• (c) the total number of plays of all files as on-demand streams;
  
• (d) the number of subscribers to the service during the month and the total amounts paid by them during that month;
  
• (e) the number of plays by non-subscribers and the total amounts paid by them during that month;
  
• (f) the gross revenue from the service for the month;
  
• (g) if the service has engaged in any promotional programs during the month, pursuant to which files have been delivered to end-users free of charge, details of those programs; and
  
• (h) the number of subscribers provided with free subscriptions and the total number of plays of all files by such subscribers as on-demand streams.
  

Limited Downloads

(3) No later than 20 days after the end of each month, any online music service that is required to pay royalties pursuant to subsection 5(2) shall provide to CMRRA a report setting out, for that month,

• (a) in relation to each file that was delivered to an end-user, the required information;
  
• (b) the number of limited downloads of each file;
  
• (c) the number of limited downloads of all files;
  
• (d) the total number of plays of each file as limited downloads and, separately, as on-demand streams (if applicable);
  
• (e) the total number of plays of all files as limited downloads and, separately, as on-demand streams (if applicable);
  
• (f) the number of subscribers to the service during the month and the total amounts paid by them during that month;
  
• (g) the number of plays by non-subscribers and the total amounts paid by them during that month;
  
• (h) the gross revenue from the service for the month;
  
• (i) if the service or any authorized distributor has engaged in any promotional programs during the month pursuant to which limited downloads have been provided to end-users free of charge, details of those programs; and
  
• (j) the number of subscribers provided with free subscriptions, the total number of limited downloads provided to such subscribers and the total number of plays of all files by such subscribers as limited downloads and, separately, as on-demand streams (if applicable).
  

Free On-Demand Streams

(4) No later than 20 days after the end of each month, any online music service that is required to pay royalties pursuant to subsection 5(3) shall provide to CMRRA a report setting out, for that month,

• (a) in relation to each file that was delivered as a free on-demand stream, the required information;
  
• (b) the number of plays of each file as a free on-demand stream;
  
• (c) the total number of plays of all files as free on-demand streams;
  
• (d) the number of unique visitors;
  
• (e) a description of the manner in which each unique visitor is identified; and
  
• (f) the number of free on-demand streams provided to each unique visitor.
  

Permanent Downloads

(5) No later than 20 days after the end of each month, any online music service that is required to pay royalties pursuant to subsection 5(4) or (5) shall provide to CMRRA a report setting out, for that month,

• (a) in relation to each file that was delivered as a permanent download:
  
  
  • (i) the required information,
    
  • (ii) the number of times the file was downloaded as part of a bundle, the identifier of each such bundle, the number of files included in each such bundle, the amount paid by end-users 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
    
  • (iii) the number of other permanent downloads of the file and the amounts paid by end-users 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 delivered at each different price;
    
• (b) the total amount paid by end-users for bundles;
  
• (c) the total amount paid by end-users for permanent downloads;
  
• (d) the total number of permanent downloads supplied; and
  
• (e) if the service or any authorized distributor has engaged in any promotional programs during the month, pursuant to which permanent downloads have been delivered to end-users free of charge, details of those programs
  

(6) An online music service that is required to pay royalties pursuant to more than one subsection of section 5 shall file a separate report pursuant to each subsection of this section.

(7) Whenever a service is required to report its gross revenue for a month, it shall include, separately — and in addition to any other information specifically required by the relevant subsection — the amount of revenue received from subscribers, the amount received from non-subscribers, the amount received from advertisers, the amount attributable to sponsorships, and the amounts received from each additional revenue source.

Calculation and Payment of Royalties

8. No later than 20 days after receiving a report pursuant to section 7 for the last month in a quarter, CMRRA shall provide to the online music service a detailed calculation of the royalties payable for that quarter for each file, along with a report setting out

• (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 CMRRA is unable to provide an answer pursuant to paragraphs (a), (b) or (c).
  

9. Royalties shall be due no later than 30 days after an online music service receives a report pursuant to section 8.

Repertoire Disputes

10. (1) An online music service that disputes the indication that a file contains a work in the repertoire or requires a CMRRA licence shall provide to CMRRA information that establishes why the licence is not required, unless the information was provided earlier.

(2) An online music service that disputes the indication more than 20 days after receiving a report pursuant to paragraph 8(a) or (c) is not entitled to interest on the amounts owed to it.

Adjustments

11. Adjustments to any information provided pursuant to sections 6 to 8 or 10 shall be provided with the next report dealing with such information.

12. (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.

Records and Audits

13. (1) An online music service shall keep and preserve, for a period of six years after the end of the month to which they relate, records from which the information set out in sections 6, 7, 10 and 11 can be readily ascertained.

(2) CMRRA 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 CMRRA shall not be taken into account.

Breach and Termination

14. (1) An online music service who fails to provide any report required by section 7 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 month 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 who 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 CMRRA has notified the service in writing of that failure and until the service remedies that failure.

(3) An online music service who 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

15. (1) Subject to subsections (2) and (3), CMRRA 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) amongst CSI, SODRAC or CMRRA;
  
• (b) in connection with the collection of royalties or the enforcement of a tariff, with SOCAN;
  
• (c) with the Copyright Board;
  
• (d) in connection with proceedings before the Board, once the online music service 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.
  

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

Interest on Late Payments

16. (1) Subject to subsection (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 CMRRA shall bear interest from the date of the overpayment until the overpayment is refunded.

(3) For the purposes of this section, a report provided pursuant to section 8 following the late reception of a report provided pursuant to section 7 is deemed to have been received within the time set out in section 8 as long as CMRRA provides that report not more than 20 days after receiving the late report.

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

17. (1) Anything that an online music service sends to CMRRA shall be sent to 56 Wellesley Street West, Suite 320, Toronto, Ontario M5S 2S3, email: inquiries@cmrra.ca, fax: 416-926-7521, or to any other address, email address or fax number of which the service has been notified in writing.

(2) Anything that CMRRA sends to an online music service shall be sent to the last address, email address or fax number of which CMRRA has been notified in writing.

Delivery of Notices and Payments

18. (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 8 and to subsection 10(1) shall be delivered electronically, by way of a delimited text file or in any other format agreed upon by CMRRA 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 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.