ARCHIVED — Vol. 146, No. 17 — April 28, 2012

COPYRIGHT BOARD

FILE: Reproduction of Musical Works

Proposed Statement of Royalties to Be Collected by SODRAC for the Reproduction of Musical Works Embedded into Cinematographic Works for the Purpose of Distribution of Copies of the Cinematographic Works for Private Use or Theatrical Exhibition for the Year 2013, and Statement of Proposed Royalties to Be Collected by SODRAC for the Reproduction of Musical Works Embedded in a Music Video, in Canada, By Online Music Services in 2013

In accordance with section 70.14 of the Copyright Act, the Copyright Board hereby publishes the statement of proposed royalties filed by the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) on March 20, 2012, with respect to royalties it proposes to collect, effective on January 1, 2013, for the reproduction of musical works embedded into cinematographic works for the purpose of distribution of copies of the cinematographic works for private use or theatrical exhibition for the year 2013 (Tariff No. 5), and for the reproduction of musical works embedded in a music video, in Canada, by online music services in 2013 (Tariff No. 6).

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 27, 2012.

Ottawa, April 28, 2012

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)

PROPOSED STATEMENT OF ROYALTIES TO BE COLLECTED BY SODRAC FOR THE REPRODUCTION OF MUSICAL WORKS EMBEDDED INTO CINEMATOGRAPHIC WORKS FOR THE PURPOSE OF DISTRIBUTION OF COPIES OF THE CINEMATOGRAPHIC WORKS FOR PRIVATE USE OR THEATRICAL EXHIBITION FOR THE YEAR 2013

Short Title

1. This tariff may be cited as SODRAC Tariff No. 5, Reproduction of Musical Works in Cinematographic Works for Theatrical Exhibition or Private Use, 2013.

Definitions

2. In this tariff,

“cinematographic work” means a cinematographic work initially intended for any use or exploitation whatsoever but not a work where the main content is music such as a concert, musical, variety show, video-clip, workout show or any other work of the same nature. This definition includes trailer and all audiovisual content embedded into the copy of the cinematographic work, e.g. a menu, bonus feature or trailer; (« œuvre cinématographique »)

“commercial theatre” means premises such as a commercial cinema where the principal purpose is the exhibition of cinematographic works in public and where an admission fee is charged; (« salle commerciale »)

“copy” means a copy of a cinematographic work on any video recording medium including, for exhibition in a theatre, a copy of the cinematographic work on a server; (« copie »)

“distribution revenues” means any amount a distributor may receive from any person in respect of a copy containing at least one work from the repertoire for the purpose of sale or rental to a consumer for private use or for the purpose of exhibition in a theatre; (« revenus de distribution »)

“distributor” means a person authorized to reproduce a cinematographic work for the purpose of sale or rental to a consumer for private use or for the purpose of exhibition in a theatre; (« distributeur »)

“multiple-purpose hall” means premises where a cinematographic work is exhibited in public but where the principal purpose is not the exhibition in public of cinematographic works, such as schools, airplanes, army bases or institutions; (« lieu polyvalent »)

“non-commercial theatre” means premises, such as a cinema or a multiple-purpose hall, where either no admission fee is charged or the admission fee covers only expenses incurred for the exhibition of a cinematographic work; (« salle non commerciale »)

“outdoor theatre” means outdoor premises where the principal purpose is the exhibition of cinematographic works to the public; (« ciné-parc »)

“repertoire” means SODRAC’s repertoire of musical works; (« répertoire »)

“semester” means from January 1st to June 30th and from July 1st to December 31st; (« semestre »)

“SODRAC” means the Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. and SODRAC 2003 Inc., acting jointly and severally; (« SODRAC »)

“theatre” means a commercial or non-commercial theatre, an outdoor theatre or a multiple-purpose hall; (« salle »)

“trailer” means a short film to promote another cinematographic work that incorporates musical works embedded into that cinematographic work and/or other musical works. (« film-annonce »)

Application

Private Use

3. A distributor who complies with this tariff shall be entitled to reproduce onto a copy a work of the repertoire already embedded into that cinematographic work, or to authorize such reproduction, for the purpose of selling or renting the copy to consumers for private use.

4. For greater clarity, this tariff does not apply to permanent or limited downloads, to online sales or rentals of cinematographic works to the public or to on-demand video.

However, this Tariff does apply to online sales of copies, or to direct sales to consumers by any means, where a physical audiovisual recording of the cinematographic work is delivered to the consumer.

Exhibition in a Theatre

5. A distributor who complies with this tariff shall be entitled to reproduce onto a copy a work of the repertoire already embedded into that cinematographic work, or to authorize such reproduction, for the purpose of delivering it by any means for the public exhibition of the cinematographic work.

6. A distributor may authorize a third party to make the necessary copies for public exhibition in a theatre, including on a server.

Restrictions

7. This tariff does not authorize the fixation or reproduction into a cinematographic work of a musical work that has not already been embedded into it.

This tariff does not authorize the fixation or reproduction into a trailer of a musical work that is not embedded in the cinematographic work that such trailer promotes.

Authorization

8. This Tariff does apply to all copies that a distributor authorizes the making of, in Canada or abroad, intended for distribution for private use in Canada or for the purpose of exhibition in a theatre in Canada.

Royalties

Private Use

9. For copies intended for private use, a distributor shall pay to SODRAC

  1. (a) 1.2% of its distribution revenues or an amount of 8¢ per copy, whichever amount is higher, for each copy delivered for sale that contains a work from the repertoire in the feature presentation; and

  2. (b) 1.2% of its distribution revenues or an amount of 36¢ per copy, whichever amount is higher, for each copy delivered for rental that contains a work from the repertoire in the feature presentation.

Exhibition in a Theatre

10. For copies intended for exhibition in a theatre, a distributor shall pay to SODRAC 1.2% of its distribution revenues.

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

Reporting and Payment Requirements for Private Use

12. (1) No later than 31 days after the end of a semester, a distributor shall provide the following items to SODRAC, with respect to each cinematographic work for which the information has not already been provided and a copy of which was delivered for private use during the semester:

  1. (a) a physical or electronic sample of the cover of the copy of each version of the cinematographic work;
  2. (b) a distribution report in an electronic format for each cinematographic work containing the following information:

    1. (i) the name, address, telephone number, fax number and email address of the distributor,

    2. (ii) the original title in the original language, any alternate titles in the original language and any titles in other languages used on the copy, per episode if a series,

    3. (iii) the identification numbers [Universal Product Code, product number, International Standard Audiovisual Number (ISAN), International Standard Book Number (ISBN)],

    4. (iv) the name of the production company,

    5. (v) the country, the year and the type of production,

    6. (vi) the release dates of the cinematographic work and of the copy, and

    7. (vii) the names of the director and of the starring performers; and
  3. (c) a complete list of the musical works embedded into the copy of the cinematographic work differentiating between the feature presentation, menu, bonus features, trailers and other parts, and including the titles of the musical works, their duration and the names of the authors and composers of the musical works.

(2) As soon as possible after receiving the information set out in subsection (1), SODRAC shall notify the distributor in writing of those cinematographic works that include a work from the repertoire.

(3) No later than 15 days after the end of a semester, a distributor shall provide to SODRAC, with respect to each cinematographic work mentioned in a notice referred to in section (2) that was received before the end of the semester, a copy of which was delivered during the semester for the purpose of sale or rental to a consumer, the following information relating to that semester:

  1. (i) the number of copies in inventory at the beginning of the semester,

  2. (ii) the reserve for returns in the previous report,

  3. (iii) the number of copies made during the semester,

  4. (iv) the number of copies delivered,

  5. (v) the number of promotional copies delivered,

  6. (vi) the amount received by the distributor for each copy,

  7. (vii) the type of use (sale, rental),

  8. (viii) the number of copies returned,

  9. (ix) the number of copies in inventory at the end of the semester,

  10. (x) the current reserve,

  11. (xi) the total distribution revenues, and

  12. (xii) the royalties payable to SODRAC.

(4) A distributor who withdraws from a catalogue a cinematographic work mentioned in a notice referred to in subsection (2) shall notify SODRAC of the withdrawal at the same time as it provides the information set out in subsection (3) for the semester during which the withdrawal occurs.

(5) A distributor who destroys a copy of a cinematographic work mentioned in a notice referred to in subsection (2) shall notify SODRAC of the destruction at the same time as it provides the information set out in subsection (3) for the semester during which the destruction occurs. The distributor shall provide a written sworn statement with the notice.

Reporting and Payment Requirements for Exhibition in a Theatre

13. (1) No later than 31 days after the end of a semester, a distributor shall provide the following information to SODRAC, with respect to each cinematographic work for which the information has not already been provided and a copy of which was delivered for exhibition in a theatre during the semester:

  1. (a) a distribution report in an electronic format for each cinematographic work delivered to be exhibited as a feature presentation containing the following information:

    1. (i) the name, address, telephone number, fax number and email address of the distributor,

    2. (ii) the original title in the original language, any alternate titles in the original language and any titles in other languages used on the copy, per episode if a series,

    3. (iii) the identification numbers [Universal Product Code, product number, International Standard Audiovisual Number (ISAN), International Standard Book Number (ISBN)],

    4. (iv) the name of the production company,

    5. (v) the country, the year and the type of production,

    6. (vi) the theatrical release date of the cinematographic work,

    7. (vii) the names of the director and of the starring performers, and

    8. (viii) a complete report of the musical content including the titles of the musical works, their duration and the names of the authors and composers of the musical works; and
  2. (b) a distribution report in an electronic format for each trailer containing the following information:

    1. (i) the name, address, telephone number, fax number and email address of the distributor,

    2. (ii) the original title in the original language, any alternate titles in the original language and any titles in other languages of the cinematographic work promoted by the trailer,

    3. (iii) the identification number and International Standard Audiovisual Number (ISAN) of the trailer,

    4. (iv) the release date of the trailer, and

    5. (v) a complete report of the musical content of the trailer including the titles of the musical works, their duration and the names of the authors and composers of the musical works.

(2) As soon as possible after receiving the information set out in subsection (1), SODRAC shall notify the distributor in writing of those cinematographic works that include a work from the repertoire.

(3) No later than 15 days after the end of a semester, a distributor shall provide to SODRAC, with respect to each cinematographic work mentioned in a notice referred to in subsection (2) that was received before the end of the semester, a copy of which was delivered during the semester for exhibition in a theatre, the following information relating to that semester:

  1. A. For cinematographic works exhibited as feature presentations

    1. (i) the number of copies delivered,

    2. (ii) the provinces where the copy was distributed,

    3. (iii) the distribution revenues, and

    4. (iv) the royalties payable to SODRAC.
  2. B. For trailers

    1. (i) the number of copies delivered,

    2. (ii) the provinces where the copy was distributed,

    3. (iii) the distribution revenues, and

    4. (iv) the royalties payable to SODRAC

Payments, Reserves and Promotional Copies

14. (1) A distributor shall forward to SODRAC the royalties payable in respect of a copy at the same time as it sends the information set out in subsections 12(3) and 13(3) in respect of that copy.

(2) A distributor who fulfils for the first time the obligations set out in sections 12 and 13 in respect of a cinematographic work also fulfils these obligations in respect of all previous semesters.

(3) A distributor may deduct in its calculation of the royalties otherwise payable in respect of a cinematographic work a reserve for eventual returns up to a maximum of 20% of the number of copies delivered for private use in each of the three first semesters. In each subsequent semester, the maximum will be reduced to 5% per semester until such cinematographic work is withdrawn from the distributor’s catalogue.

For greater clarity, the reserves for each cinematographic work are independent from one another and deductions cannot be applied to copies of another cinematographic work.

(4) No reserve for returns is allowed to the distributor in the determination of the royalties in respect of copies intended for exhibition in a theatre.

(5) A distributor that complies with the requirements for reports and payments of section 12 may deduct in its calculation of the royalties otherwise payable a maximum of 10% of the number of promotional copies intended for private use, up to a maximum of 300 copies, in any format, of a given cinematographic work. This deduction in respect of promotional copies of a cinematographic work applies only for the first semester of a copy’s release and only for that specific cinematographic work.

(6) A distributor may not take any deduction in its calculations of royalties in respect of promotional copies intended for exhibition in a theatre.

Accounts and Records

15. (1) A distributor shall keep and preserve, for a period of four years after the end of the semester to which they relate, records from which its distribution revenues and the information set out in sections 12 and 13 can be readily ascertained.

(2) SODRAC may audit these records at any time during the period set out in subsection (1) on notice of ten business days and during normal business hours.

(3) SODRAC shall, upon receipt, supply to the distributor a copy of the audit report.

(4) If an audit discloses that royalties have been understated in any semester by more than 10%, the distributor shall pay the reasonable costs of the audit within 30 days of the demand for such payment.

(5) When a distributor enters into an agreement with a third party pursuant to the authorizations granted in this Tariff, the distributor shall incorporate in such agreements the same rights to audit the third parties as are provided to SODRAC in this tariff.

Confidentiality

16. (1) Subject to subsections (2) and (3), SODRAC shall treat in confidence information received from a distributor pursuant to this tariff, unless the distributor who supplied the information consents in writing to the information being treated otherwise.

(2) SODRAC may share information referred to in subsection (1)

  1. (a) with the Copyright Board;

  2. (b) in connection with proceedings before the Copyright Board, if SODRAC has first provided a reasonable opportunity for the distributor providing the information to request a confidentiality order;

  3. (c) to the extent required to effect the distribution of royalties, with a collective society or with a royalty claimant; or

  4. (d) 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 a distributor and who is not under an apparent duty of confidentiality to that distributor.

Adjustments

17. 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.

Interests on Late Payments

18. Any amount not received by the due date shall bear interest from that date until the date the amount is received. 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.

The late provision of the reports described in subsections 12(1) and 13(1) is comparable to a late payment and shall require the payment of interest specified in this section.

Delivery of Notices and Payments

19. (1) Anything that a distributor sends to SODRAC shall be sent to 1470 Peel Street, Tower B, Suite 1010, Montréal, Quebec H3A 1T1, fax number 514-845-3401, email: sodrac@sodrac.ca, or to any other address of which the distributor has been notified in writing.

(2) Anything that SODRAC sends to a distributor shall be sent to the last address of which SODRAC has been notified in writing.

20. (1) A notice may be delivered by hand, by postage-paid mail, by fax or by email.

(2) A notice or payment mailed in Canada shall be presumed to have been received three business days after the day it was mailed.

(3) A notice sent by fax or email shall be presumed to have been received the day it is transmitted.

Termination

21. (1) SODRAC may, upon a 30-day notice in writing, terminate the licence of a distributor who does not comply with this tariff.

(2) Upon termination of the licence, a distributor shall immediately withdraw from the market all copies it owns that contain a work of the repertoire.

Term

22. This Tariff comes into force on January 1, 2013, and ends on December 31, 2013.

STATEMENT OF PROPOSED ROYALTIES TO BE COLLECTED BY SODRAC FOR THE REPRODUCTION OF MUSICAL WORKS EMBEDDED IN A MUSIC VIDEO, IN CANADA, BY ONLINE MUSIC SERVICES IN 2013

Short Title

1. This tariff may be cited as SODRAC Tariff No. 6, Online Music Services, Music Videos, 2013.

Definitions

2. In this tariff,

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

“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 music video; (« fichier »)

“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»)

“music video” means a videoclip, live concert or any similar audiovisual representation of one or more musical works; (« vidéo de musique »)

“online music service” means a service that offers and delivers permanent downloads to consumers; (« service de musique en ligne »)

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

“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 SODRAC is entitled to grant a licence pursuant to section 3; (« répertoire »)

“SODRAC” means SODRAC 2003 Inc. and Society for Reproduction Rights of Authors, Composers and Publishers in Canada (SODRAC) Inc. (« SODRAC »)

Application

3. (1) This tariff entitles an online music service that complies with this tariff, and its authorized distributors,

  1. (a) to reproduce all or part of a musical work in the repertoire embedded in a music video for the purposes of transmitting the work in a file as a permanent download to consumers in Canada via the Internet or another similar computer network, including by wireless transmission;

  2. (b) to authorize a person to reproduce the musical work embedded 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
  1. (c) to authorize consumers in Canada to further reproduce the musical work embedded in the music video for their own private use,

for purposes of the permanent downloading of music videos.

(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 online music service permanent downloading activity 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.

(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 embedded.

Royalties

5. (1) Subject to subsections (2) and (3), the royalties payable in a quarter by an online music service for each permanent download containing a work in the repertoire shall be equal to the greater of 9.9 per cent of the amount paid by a consumer to the online music service or its authorized distributor for the permanent download and twice the sum payable by the online music service pursuant to SOCAN Tariff 22 (2013) for such a download, subject to

  1. (a) a minimum per permanent download, containing a work in the repertoire, in a bundle that contains 15 or more files of 4.4¢ per work in the repertoire embedded in a music video or twice the minimum payable by the online music service pursuant to SOCAN Tariff 22 (2013) for such a download, whichever is greater; and

  2. (b) in all other cases, a minimum per permanent download, containing a work in the repertoire of 6.6¢ per work in the repertoire embedded in a music video or twice the minimum payable by the online music service pursuant to SOCAN Tariff 22 (2013) for such a download, whichever is greater.

(2) Where SODRAC does not hold all the rights in a musical work, the applicable rate shall be the relevant rate multiplied by SODRAC’s share in the musical work.

(3) Where SODRAC does not hold rights in all of the musical works embedded in the music video, the applicable rate shall be the relevant rate multiplied by the number of works in which SODRAC holds rights divided by the total number of musical works embedded in the music video, subject to the minimum provided in paragraph (1)(a) if there are more than 15 works and the minimum provided in paragraph (1)(b) in other cases.

(4) 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 quarter during which an online music service reproduces a file requiring a SODRAC licence, and in any event before the service first makes that file available to the public, the service shall provide to SODRAC the following information:

  1. (a) the name of the person who operates the service, including

    1. (i) the name of a corporation and a mention of its jurisdiction of incorporation,

    2. (ii) the name of the proprietor of an individual proprietorship, or

    3. (iii) the names of the principal officers of any other service, together with any other trade name under which the service carries on business;

  2. (b) the address of its principal place of business;

  3. (c) its address (including email) for the purposes of notice and, if different from that address, for the payment of royalties, the provision of information pursuant to subsection 17(2), and any inquiries related thereto;

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

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

  6. (f) with respect to each file that was reproduced

    1. (i) the file identifier,

    2. (ii) the title of the music video and of each musical work embedded in the music video,

    3. (iii) the name of each author of each musical work embedded in the music video,

    4. (iv) the name of each performer or group to whom the sound recording embedded in the music video is credited,

    5. (v) the name of the person who released the sound recording or, if different, the name of the person who released the music video,

    6. (vi) the International Standard Recording Code (ISRC) assigned to the sound recording,

    7. (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,

    8. (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

    9. (ix) if the service believes that a SODRAC licence is not required, information that establishes why the licence is not required; and
  7. (g) with respect to each file that was reproduced, if the information is available,

    1. (i) the name of the music publisher associated with the musical work,

    2. (ii) the International Standard Musical Work Code (ISWC) assigned to the musical work,

    3. (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,

    4. (iv) the running time of the file and of each musical work in minutes and seconds, and

    5. (v) any alternative title used to designate the music video, the sound recording and the musical work.

(2) No later than 20 days after the end of each subsequent quarter, an online music service shall provide to SODRAC the following information:

  1. (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 quarter;

  2. (b) with respect to each file that the service first made available during the quarter, the information set out in paragraphs (1)(f) and (g); and

  3. (c) with respect to each file that the service ceased to make available during the quarter, its identifier.

7. (1) No later than 20 days after receiving a report pursuant to section 6, SODRAC shall send to the online music service a notice indicating

  1. (a) which files contain a work that it then knows to be in the repertoire;

  2. (b) which files contain a work that it then knows not to be in the repertoire;

  3. (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

  4. (d) with respect to all other files, an indication of the reason for which SODRAC is unable to provide an answer pursuant to paragraph (a), (b) or (c).

(2) No later than 20 days after the end of each quarter, SODRAC 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 SODRAC licence, the service shall provide to SODRAC the 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 quarter, the online music service shall provide to SODRAC a report setting out, for that quarter

  1. (a) the total number of permanent downloads and the total number of bundles supplied;

  2. (b) the total amount paid by consumers for bundles;

  3. (c) the total amount paid by consumers for other permanent downloads; and

  4. (d) the total number of permanent downloads that may require a SODRAC licence and the total amount paid by consumers for such downloads, including

    1. (i) the number of times each file was downloaded as part of a bundle, the identifier of each such bundle and of the file as included in that bundle, the amount paid by consumers 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

    2. (ii) the identifier and number of other permanent downloads of the file and the amounts paid by consumers 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 of the file at each different price.

(2) No later than 20 days after the end of the quarter 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 SODRAC the information set out in subsection (1) in relation to that file for each quarter 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 quarter, SODRAC 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 quarter 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) SODRAC 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 SODRAC shall not be taken into account.

Breach and Termination

13. (1) An online music service that fails to provide any report required by section 8 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 quarter 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 that 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 SODRAC has notified the service in writing of that failure and until the service remedies that failure.

(3) An online music service that 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), SODRAC, the online music service and its authorized distributors 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

  1. (a) between SODRAC and SOCAN;

  2. (b) between the online music service and its authorized distributors in Canada;

  3. (c) with the Copyright Board;

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

  5. (e) with any person who knows or is presumed to know the information;

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

  7. (g) 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 SODRAC, the online music service or its authorized distributors and who is not under an apparent duty of confidentiality to the service.

Interest on Late Payments

15. (1) Subject to subsections (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 SODRAC shall bear interest from the date of the overpayment until the overpayment is refunded.

(3) Where an online music service fails to provide a report required under section 8 within the time set out in that section, any amount payable for the quarter to which the report relates shall bear interest from the date on which the service would have been required to pay royalties for that quarter, had the report been submitted when required and had SODRAC provided the report required under section 9 to the service 20 days after receiving that report from the service, until the amount is received.

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

16. (1) Anything that an online music service sends to SODRAC shall be sent to 1470 Peel Street, Tower B, Suite 1010, Montréal, Quebec H3A 1T1, email: sodrac@sodrac.ca, fax: 514-845-3401, or to any other address of which the service has been notified in writing.

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