Sunday, June 19, 2011


SOCAN, Netflix and Greed


So the Society of Composers, Artists and Music Publishers of Canada has gone to the Copyright Board of Canada and filed a request for something called an interim tariff. The purpose of said tariff is:
to enable it to license the use of music on websites that profit from audiovisual webcasting and user-generated content services. While tariffs applying to the use of music in this manner are currently being considered by the Copyright Board, the interim tariff would accelerate the compensation to music creators and publishers for the use of their work and would give businesses some assessment of the royalty payments necessary to run their operations.


Many believe this is an attempt by SOCAN to get some of the proceeds from services such as Netflix, YouTube and a few other services that stream content which may contain music that was produced by members of said organization. Apparently there is a feeling that this is being done on the back of hard working musicians who again are getting stiffed. Well, let me say they are getting stiffed but its not from Netflix etc, its from the organizations that say they are 'helping' the musicians, such as CRIA. Remember that fun group, its the people who collect the tariffs from blank media and distribute it all to the members, except they are woefully behind on the payments.

I think a few things need to be understood before we proceed; music that is used in soundtracks, be they movies or television programs are licenced by the content holders. If you think for one moment that a movie is going to feature music that is not licensed, you're not paying much attention, if a studio did that, don't you think that the RIAA would go after them with all the lawyers in their fold? Of course they would. The licensing agreements can be quite good. I went to the site "How Stuff Works" and came up with this explanation:
According to the book "All you need to know about the music business" by Donald Passman, "The fees for synchronization licenses are really all over the board, and they vary with the usage and the importance of the song." For example, Passman's book mentions some fee ranges:

* Low-end TV usage (e.g. -- music is playing from a jukebox in a scene, but no one in the scene is paying any attention to the music) -- free (for exposure) to $2,000 for a 5-year license. In a film, the fee would be $10,000 in perpetuity.
* A more popular song is worth more, perhaps $3,000 for TV and $25,000 for film.
* A song used as the theme song for a film might get $50,000 to $75,000.
* Commercials fetch even more money: "a song can command anywhere from $25,000 to $500,000 plus per year. The typical range for a well-known song is $75,000 to $200,000 for a one year national usage in the United States, on television and radio."


This is why artists love to have their works featured on commercials, it can be quite a lucrative adventure for the license holder.

None of this makes it into the press release of SOCAN, they want to go on about the poor starving artist.

So what do they want? Well, another website has this:
It also appears as if SOCAN will not allow the Copyright Board of Canada to determine what constitutes an "acceptable" tax rate. The organization has created an outline that shows what percentage should be taxed, depending on the service and host "sharing" their intellectual property.

SOCAN hopes that streaming services like Netflix, Apple TV and Sony Crackle would be taxed around 1.9 per cent of gross revenues. For user-generated sites like YouTube, however, SOCAN recommends payment from 6.8 per cent of advertising revenue incurred from music videos and 1.9 per cent from all other audiovisual content.


Let's discuss the outcome of said tax, which will probably be a dynamic tax, 1.9% this year, and going up every year from now on; how they plan to go after YouTube is rather interesting, since YouTube does not have a Canadian branch at all. I have a feeling Google could just as easily block access to YouTube with people who are using a Canadian based ISP. Or they will simply ignore it. If people dont want their music used, simply ask Google to take it down.

What about Netflix? I think there is a few possibilities:

1) they pay the tariff and pay on the costs to consumers. This is usually what happens when companies are taxed. So instead of $8.00/month, figure it might be $10.00
2) Pull out of Canada. If the tariff is ridiculous and the paperwork becomes too much, close it all down. There are a lot of services unavailable to Canadians, think of Hulu, so this would be one more.

In both cases the consumer gets it in the neck.

This explains why in a lot of ways, Canada is becoming a digital backwater for these services. As I said, Netflix is legitimate, it is buying the rights to the programming it delivers. Everybody should be winning, then along comes a group that gets greedy and in the end, we lose out.

These people need to be told to butt out and let us enjoy watching what we want on what we want. Or we can wait for BestBuy to commence their service.

1 comment:

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