Vol. 142, No. 16 — April 19, 2008

COPYRIGHT BOARD

FILE: Reproduction of Musical Works

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

In accordance with section 70.14 of the Copyright Act, the Copyright Board hereby publishes the statements of royalties filed by CMRRA/SODRAC Inc. on March 31, 2008 with respect to royalties that it proposes to collect, effective on January 1, 2009, for the reproduction of musical works, in Canada, by online music services in 2009.

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 June 18, 2008.

Ottawa, April 19, 2008

CLAUDE MAJEAU
Secretary General
K1A 0C9
613-952-8621 (telephone)
613-952-8630 (fax)
majeau.claude@cb-cda.gc.ca(email)

STATEMENT OF PROPOSED ROYALTIES TO BE COLLECTED BY CMRRA/SODRAC INC. FOR THE REPRODUCTION OF MUSICAL WORKS, IN CANADA, BY ONLINE MUSIC SERVICES IN 2009

Short Title

1. This tariff may be cited as the CSI Online Music Services Tariff, 2009.

Definitions

2. 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 »)

“CSI” means CMRRA/SODRAC Inc.; (« CSI »)

“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 sound recording of a musical work; (« fichier »)

“gross revenue” means the aggregate of: (a) the gross amounts paid by or on behalf of consumers to an online music service either directly or, where the service is distributed by an authorized distributor, to the authorized distributor, for downloads and on-demand streams; (b) the gross amounts paid by any person for the use of services or facilities provided by an online music service, including but not limited to payments for advertising and promotion, whether such amounts are paid directly to the service, to an authorized distributor, or to another person or entity; and (c) amounts equal to the value of the consideration received by an online music service or an authorized distributor, as the case may be, pursuant to any contra and barter agreements related to the operation of the service; but excludes any revenues from investments, rents, or any other business unrelated to the distribution of music; (« 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 when a subscription ends; (« téléchargement limité »)

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

“online music service” means a service that delivers streams or limited downloads to subscribers or permanent downloads to consumers, other than a service that offers only streams in which the file is selected by the service, which can only be listened to at a time chosen by the service and for which no advance play list is published; (« service de musique en ligne »)

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

“play” means the single performance of an on-demand stream; (« écoute »)

“portable limited download” means a limited download that uses technology that allows the subscriber to reproduce the file on a device other than a device to which an online music service delivered the file; (« téléchargement limité portable »)

“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 CSI 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 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 a consumer with whom an online music service, directly or through its authorized distributor, has entered into a contract for service on a monthly or other periodic basis, other than a transactional per-download or per-stream basis, whether the consumer pays a fee or provides other consideration for the service or receives the service free of charge on a trial or other promotional basis. (« abonné »)

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 for the purpose of transmitting it in a file 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 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 for their own private use,

in connection with the operation of the service.

(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 service 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.

Royalties

5. (1) Subject to paragraph (4)(a), the royalties payable in a month for an online music service that offers on-demand streams but does not offer limited downloads shall be:

A ´ B
   C

where

(A) is 6.8 per cent of the gross revenue of the service for the month,

(B) is the number of plays of files requiring a CSI licence during the month, and

(C) is the number of plays of all files during the month,

subject to a minimum of 43¢ per subscriber.

(2) Subject to paragraph (4)(a), the royalties payable in a month for an online music service that offers limited downloads with or without on-demand streams shall be:

A ´ B
   C

where

(A) is 9.9 per cent of the gross revenue of the service for the month, excluding any amount attributable solely to the sale of permanent downloads,

(B) is the number of limited downloads requiring a CSI licence during the month, and

(C) is the total number of limited downloads during the month,

subject to a minimum of 96¢ per subscriber if portable limited downloads are allowed, and 63¢ per subscriber if they are not.

(3) Subject to paragraph (4)(b), the royalty payable for a permanent download requiring a CSI licence shall be 9.9 per cent of the amount paid by a consumer for the download, subject to a minimum of 4.4¢ per permanent download in a bundle that contains 15 or more files, and 6.6¢ per permanent download in all other cases.

(4) Where CSI does not hold all the rights in a musical work,

(a) for the purposes of subsections (1) and (2), only the share that CSI holds shall be included in (B); and

(b) for the purposes of subsection (3), the applicable rate shall be the relevant rate multiplied by CSI’s share in the musical work.

(5) 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 month during which an online music service reproduces a file requiring a CSI licence, the service shall provide to CSI 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;

(d) the name and address of any authorized distributor;

(e) the Uniform Resource Locator (URL) of each Internet website at or through which the service is or will be offered;

(f) with respect to each file that was reproduced:

(i) its identifier,

(ii) the title of the musical work,

(iii) the name of each author of the musical work,

(iv) the name of each performer or group to whom the sound recording is credited,

(v) the name of the person who released the sound recording,

(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 CSI licence is not required, an indication to that effect, 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, in minutes and seconds, and

(v) any alternative title used to designate the musical work or sound recording.

(2) No later than 20 days after the end of each subsequent month, an online music service shall provide to CSI 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 month;

(b) with respect to each file that the service first made available during the month, 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 month, its identifier.

7. (1) No later than 20 days after receiving a report pursuant to section 6, CSI 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 CSI is unable to provide an answer pursuant to paragraph (a), (b) or (c).

(2) No later than 20 days after the end of each month, CSI 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 CSI licence, the service shall provide to CSI 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 month, an online music service that offers only on-demand streams shall provide to CSI a report setting out, for that month:

(a) the identifier and number of plays of each file that may require a CSI licence;

(b) the total number of plays of files that may require a CSI licence;

(c) the total number of plays of all files;

(d) the number of subscribers to the service and the total amounts paid by them; and

(e) the gross revenue of the service for the month.

(2) No later than 20 days after the end of each month, an online music service that offers limited downloads shall provide to CSI a report setting out, for that month:

(a) the identifier, number of portable limited downloads, number of other limited downloads, and number of plays of each file that may require a CSI licence;

(b) the total number of portable limited downloads, other limited downloads, and plays of files that may require a CSI licence;

(c) the total number of portable limited downloads, other limited downloads, and plays;

(d) the number of subscribers entitled to receive portable limited downloads, the number of other subscribers and the total amounts paid by all subscribers; and

(e) the gross revenue of the service for the month.

(3) No later than 20 days after the end of each month, an online music service that offers permanent downloads shall provide to CSI a report setting out, for that month, with respect to each file that may require a CSI licence:

(a) the identifier and number of times the file was downloaded as part of a bundle, the amount paid by consumers for each bundle, and a description of the manner in which the service assigned a share of that amount to the file;

(b) the identifier and number of other downloads of the file and the amount paid by consumers for the file;

(c) the total amount paid by consumers for bundles; and

(d) the total amount paid by consumers for permanent downloads.

(4) No later than 20 days after the end of the month 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 CSI the information set out in subsections (1) to (3) in relation to that file for each month 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 last month in a quarter, CSI 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 month 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) CSI 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 CSI shall not be taken into account.

Breach and Termination

13. (1) An online music service who fails 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 royalties should have been paid and until 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 CSI 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

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

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

(a) amongst CSI, SODRAC and CMRRA;

(b) with the Copyright Board;

(c) in connection with proceedings before the Board, once the online music service had a reasonable opportunity to request a confidentiality order;

(d) with any person who knows or is presumed to know the information;

(e) to the extent required to effect the distribution of royalties, with royalty claimants; and

(f) 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 an online music service and who is not under an apparent duty of confidentiality to the service.

Interest on Late Payments

15. (1) Subject to subsection (3), 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 CSI shall bear interest from the date of the overpayment until the overpayment is refunded.

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

(4) 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 CSI shall be sent to 759 Victoria Square, Suite 420, Montreal, QC, H2Y 2J7, email: csi@cmrrasodrac.ca, fax: 514-845-3401, or to any other address of which the service has been notified in writing.

(2) Anything that CSI sends to an online music service shall be sent to the last address of which CSI 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 CSI 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.

NOTICE:
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