Canada to extend copyright term for artists and record producers

April 21st, 2015 by Barry Sookman Leave a reply »

The Canadian Government announced today that it is amending the Copyright Act to extend the term of protection for performers and makers of sound recordings from its current term of 50 years to 70 years. The announcement, which also included a statement that Canada intends to accede to the Marrakesh Treaty for the blind and visually impaired, was made as part of the Government’s Budget and is expected to be enacted as part of a budget implementation bill to be tabled in Parliament within the next few days.

The Budget expressed the Government’s intentions as follows:

Protection of Sound Recordings and Performances

Economic Action Plan 2015 proposes to amend the Copyright Act so that the term of protection of performances and sound recordings is extended from 50 years to 70 years following the date of the release of the sound recordings.

The mid-1960s were an exciting time in Canadian music, producing many iconic Canadian performers and recordings. While songwriters enjoy the benefits flowing from their copyright throughout their lives, some performers are starting to lose copyright protection for their early recordings and performances because copyright protection for song recordings and performances following the first release of the sound recording is currently provided for only 50 years…

Economic Action Plan 2015 proposes to amend the Copyright Act to extend the term of protection of sound recordings and performances from 50 to 70 years following the first release of the sound recording. This will ensure that performers and record labels are fairly compensated for the use of their music for an additional 20 years.

The details of implementation are still pending, but it is worth examining the merits of the policy decision.

The term extension amendments will enable Canada to harmonize its copyright laws with the laws in more than 60 other countries which have terms of protection for sound recordings of 70 years or more. This includes Canada’s major trading partners, such as the UK, Germany, France, Italy, Belgium, Ireland and other members of the European Union, Australia, Mexico and Singapore, which have terms of 70 years or more; and the United States, which provides 95 years of protection.

The proposed amendments will ensure that copyrights in recordings of iconic performers such as Ronnie Hawkins, The Guess Who, Buffy Sainte-Marie, Leonard Cohen, Gordon Lightfoot and Steppenwolf, to name a few, and recordings by many less well-known artists, which would soon have expired, continue to be protected. The amendments will enable these Canadian artists to enjoy royalties from the continued sales and exploitation of their recordings in Canada.

The amendments will also enable Canadian artists to continue collecting royalties from the exploitation of their recordings in other countries such as the members of the EU, which only confer the extended 70 year protection to nationals of countries which provide at least the same 70 year term of protection. As the U.S. Supreme Court pointed out in Eldred v. Ashcroft, 537 US 186 (2003), this reciprocity rule in the EU was one of the reasons the U.S. increased its copyright term.[1]

The copyright term amendments appear to apply only to rights of performers (singers and musicians) and makers of sound recordings (record companies). They do not appear to extend the copyright in other content protected by copyright, such as books, works of art, movies, TV programs or software. The copyright in these materials is typically much longer, subsisting during the life of the author or authors and for 50 years from the death of the author.

Prior to extending the term of protection for sound recordings to 70 years in the EU, the EU Commission comprehensively studied what the effect of the amendments would be on key stakeholders, including consumers, artists, and record labels. The EU Commission, in a comprehensive study that examined the implications of a term extension for performers and makers of sound recordings, found unambiguously that these stakeholders would all benefit from the term extension.[2] The EU Commission’s reasons include the following, all of which could be expected to be true for Canada:

Addresses performing artists’ income gap

Many musicians or singers start their career in their early 20’s. When the current 50 year term of protection ends, they will be in their 70’s. However, given current life expectancies, many will live into their 80’s and 90’s. As a result, performers face an income gap at the end of their lifetimes. Once protection has ended, performers do not receive any further remuneration from the commercial exploitation of their performances. Income from their recordings ends when artists are at the most vulnerable period of their lives.

Promotes investment in new artists

Research has shown that producers of sound recordings use retained earnings to invest in new artists. This investment is substantial. According to data from the IFPI, record companies investment in artists and repertoire (A&R) and marketing over the five years ending in 2014 is estimated to have totalled more than US$20 billion, with US$4.3 billion invested globally in 2014, and 15.6 per cent of its revenues reinvested in A&R alone. A longer term of protection will generate additional income to help finance new talent and allow record companies to better spread the risk in developing new talent.

Popular recordings from the 60’s and 70’s are still in demand. While record companies would still own the master copies and would earn revenues from their exploitation, they would lose revenues to re-releases by companies that publish public domain recordings. These revenues would not be invested in new talent. Accordingly, there would be a redistribution of income from record companies that would use revenues to make investments in new artists, to companies that exploit public domain works and do not invest in the creation or distribution of new recordings.

Benefits consumers

The EU Commission summarized its findings of the impact of a term extension for performers and record companies on consumers as follows:

A term extension would have no negative impacts on consumer prices and would have a positive impact on the quality of services offered to consumers as well as on consumer choice. It would send a clear signal that the interests of the music industry and of consumers are not opposed but instead concur on a competitive music market.

Some seem to think that once a recording enters the public domain, it will be freely available to all and at the same quality as the recordings made available by the record label. The EU Commission found the opposite to be true.

Empirical studies show that prices for recordings that are out of copyright are not lower than those for recordings in copyright. A study by PricewaterhouseCoopers found that that there was no systematic difference between prices of in-copyright and out-of copyright recordings.[3]

The empirical evidence indicates, and economic analysis such as a study conducted by LECG Ltd suggests, that public domain companies would not necessarily sell sound recordings for lower prices than the record label. Thus, if the term of protection is not extended, the revenues from sale would merely be shifted away from the artists and record producers to public domain companies. While this may be good for public domain record labels, it does not promote cultural diversity, because the revenues would not be used for investments in new talent. Conversely, an extended term would have a positive impact on consumer choice by generating revenues to fund and develop new talent and to digitise and market back catalogue of old recordings.

The EU Commission also noted that keeping sound recordings in copyright would positively impact the quality of the recordings offered to consumers. It pointed out that record producers have an interest in defending their artistic integrity and their reputation, which ensures the highest quality recordings are made available to the public. In contrast, some public domain companies re-release recordings without due regard for the quality of the recording, without re-mastering old titles, and often use them as cheap promotional materials. “This is true to such an extent that in some instances… the moral rights of the performer can be infringed.”

Addresses inequality between songwriters and performing artists

Songwriters and performing artists both contribute to the success of a recording. In Canada, the copyright in musical works subsists for the life of the songwriter plus 50 years. Performing artists are not treated equally, as their copyrights expire 50 years after the recording is made. Term extension to 70 years after recording or release partially addresses this disparity.

Promotes digitisation and marketing of back catalogues

Record companies also use retained earnings to make investments to digitise and make their back catalogues available. Digitisation is an ongoing process which is costly but needed to cater to the needs of local markets. The digitisation of record producers’ back catalogue would be facilitated by increased revenues. In Eldred v. Ashcroft, 537 US 186 (2003), the U.S, Supreme Court noted that “longer terms would encourage copyright holders to invest in the restoration and public distribution of their works”.

Benefits cultural diversity

Longer terms of protection in a market provide incentives for companies to invest in repertoire in that market. There is a tendency for record producers to cater to those jurisdictions where most revenue can be achieved. Economists such as Dr. Stan Liebowitz point out that over time this could lead to fewer incentives to produce sound recordings that appeal to markets with shorter terms of protection.

Enables performers to protect their moral rights

The Copyright Act provides songwriters and performers moral rights in their works. These rights enable them to ensure that their works and performances are not used in a derogatory fashion and that they are associated by name with their creations. The songwriters’ moral rights extend during their lifetimes and can be protected after their deaths for another 50 years.

By contrast, the rights of performers in their performances is limited to the 50 year term. This means that if the term of protection is not extended, artists would lose the right, even during their lifetimes, to restrict objectionable uses of their performances, such as for uses in objectionable advertising, in conjunction with pornographic material, and in other potentially offensive contexts. The risks of objectionable uses increased in 2012 in Canada, when the Copyright Act was amended to permit the creation and dissemination of user generated works. Term extension will address this problem, at least for the expected lifetime of most performers.

Since the amendments to the Copyright Act will probably be made as part of a budget implementation bill, they will likely become law before the summer break.

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[1] “By extending the baseline United States copyright term to life plus 70 years, Congress sought to ensure that American authors would receive the same copyright protection in Europe as their European counterparts. The Copyright Term Extension Act (CTEA), Pub. L. 105-298, may also provide greater incentive for American and other authors to create and disseminate their work in the United States. See Perlmutter, Participation in the International Copyright System as a Means to Promote the Progress of Science and Useful Arts, 36 Loyola (LA) L. Rev. 323, 330 (2002) (“[M]atching th[e] level of [copyright] protection in the United States [to that in the EU] can ensure stronger protection for U.S. works abroad and avoid competitive disadvantages vis-à-vis foreign rightsholders.”)”

[2]  EU Commission, “Impact Assessment on the Legal and Economic Situation of Performers and Record Producers in the European Union”, SEC(2008) 2288

[3] PwC Economics, “Impact of Copyright Extension for Sound Recordings in the UK” (28 April 2006).

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