On Saturday, June 19, 2010, the Copyright Board published the most recent tariff proposal of the Society for Reproduction Rights of Authors, Composers and Publishers in Canada ("SODRAC"). This tariff is entitled: SODRAC Tariff No. 6, Online Music Services, Music Videos, 2011 (the "Proposed Tariff"). It proposes that online music services pay royalties in 2011 to SODRAC for musical works in SODRAC's repertoire that are embedded in music videos in Canada.

SODRAC is a copyright collective that administers the royalties stemming from the reproduction of musical works. SODRAC represents some 6,000 Canadian songwriters and music publishers, as well as the musical repertoire of over 89 countries.

The Objection Period Now that SODRAC's Proposed Tariff for 2011 has been published in the Canada Gazette, in accordance with section 83(6) of the Copyright Act, any person who wishes to object to the Proposed Tariff has 60 days in which to file written objections with the Copyright Board. This means that any objections to the Proposed Tariff must be received by the Copyright Board no later than Wednesday, August 18, 2010.

SODRAC's Previous Tariff Proposals This is SODRAC's first proposed tariff specifically in relation to music videos. The Copyright Board previously certified the CSI Online Music Services Tariff 2005 – 2007 that dealt generally with online music services' reproduction of musical works for online transmission. Despite the Proposed Tariff's focus on music videos, licences pursuant to the 2011 and 2005-2007 tariffs largely authorize online music services for the same uses. There are other proposed CSI online music services tariffs (for the 2008 to 2010 calendar years) that have not yet been certified by the Copyright Board. These tariff proposals were heard together at the Copyright Board hearing that began on June 22, 2010.

SODRAC's 2011 Proposed Tariff

(a) The Proposed Rate

In each quarter, online music services are liable to pay royalties to SODRAC for each permanent download of a music video containing a repertoire work. The amount will be whichever is greater of either:

Click here to view table

The above rate is subject to a minimum fee calculated as:

(i) for bundles of works of fifteen or more files, whichever is greater of either:

Click here to view table

(ii) in all other cases, whichever is greater of either:

Click here to view table

(b) Other Considerations

  • Where SODRAC owns only partial rights to a work in a music video, the applicable rate should be multiplied by SODRAC's ownership share in the musical work.
  • Where a repertoire work is in a music video with non-repertoire works, the rate will be multiplied by the number of repertoire works, divided by the number of works in the music video.

(c) Licenced Uses

The Proposed Tariff authorizes online music services (and their authorized distributors) to the following uses with respect to the permanent downloading of music videos containing musical works falling into SODRAC's repertoire:

  • Reproduce all or part of a musical work for the purposes of transmitting the files online to consumers in Canada (including wireless transmission);
  • Authorize the reproduction of musical works for the purpose of delivering to the online music service a file that can then be reproduced and transmitted as described above; and
  • To authorize consumers in Canada to further reproduce the work for their own private use.

Permanent downloads are those that do not employ technology to destroy downloaded files after a subscription ends.

The Proposed Tariff specifically does not authorize;

  • the use of the above reproductions in a medley, "mashup" or for use as a sample, in association with a product, service or institution;
  • the owner of copyright in a musical sound recording to authorize the work's reproduction; or
  • the production of music videos or the synchronization of musical works in music videos.

 (d) Exemptions

In order to promote the service and give consumers previews, licensed online music services can reproduce streams of less than 30 seconds if offered to consumers free of charge. These reproductions are not compensable.

(e) Reporting and Payment Requirements

SODRAC requires a quarterly report of the reproductions and a quarterly sales report.

Within twenty days of the end of the first quarter in which the licensed uses take place, and before the files are made available to the public, online music services should provide to SODRAC the details of the copying. The required details include corporate information on the service operators and authorized distributors and details respecting the copied files. A full list of the reporting requirements can be found in section 6 of the Proposed Tariff. Subsequent reports should be made within twenty days of following quarters, and must reflect any new reproductions made or files that have ceased to be publicly available.

Further, the online music service should also provide SODRAC with sales reports within twenty days of the end of the first relevant quarter. These should include details such as: the number of permanent downloads and bundles supplied that are subject to licence, and the total amount consumers paid.

(f) Enforcement

Within twenty days of receiving the report, SODRAC will notify the online music service of which files (and to what extent) are repertoire works, and which are not, and bill the required royalty amount. The online music service may contest this report within twenty days and make arguments as to why a licence is not required. Otherwise, payment is due within 30 days of receipt of notification of payment.

If the online music service has not proffered the sales reports or royalty payments required within five days on which they are due, the licence is deemed to be breached and the online music service must cease to perform the licensed uses. The licence may be reinstated upon delivery of the outstanding report and royalties (and interest). Failure to comply with the other reporting requirements or any other provision of the tariff also has the consequence of precluding the online music service from any of the uses requiring a licence.

Finally, the Proposed Tariff requires online music services to keep records for every quarter for at least six years. SODRAC reserves the right to request the reports mentioned above at any time and upon reasonable notice, during normal business hours. The online music service is liable for any underreporting found.