Copyright Board Canada Sets Tariff for Online Music Distribution

The Copyright Board Canada (Board) has issued a decision regarding the downloading of music from online music services in Canada. In 2004, CMRRA SODRAC Inc (CSI), a firm that represents two of Canada's copyright collectives, filed a statement of royalties that it proposed to collect from the online music industries. The online music distributors and number of other interested parties objected, including the Canadian Recording Industry Association. In determining an acceptable royalty rate, the Board considered, among other things, what other media already subject to a tariff would serve as a reasonable comparison. CSI argued that downloading music was comparable to downloading ringtunes to cellphones, whereas the online music distributors argued that downloading music was comparable to buying music on pre-recorded CDs. The Board reviewed the market forces and costs behind these two media, and held that pre-recorded CDs were the most appropriate comparison. The Board set the tariff at 7.9% of the retail price per permanent download, with a minimum of 5.3 cents. They prescribed rates for streamed media and limited downloading as well, which were lower, in order to reflect the more restricted use of the content. The Board also took the opportunity to clarify its understanding of the wording of the tariff. One interesting point was that the Board contemplates applying the tariff to online services that offer music for free. Also, the Board refused to require digital rights management use. For the full text of the Board Decision, see: http://www.cb-cda.gc.ca/tariffs/certified/i16032007-e.pdf Summary by: James Kosa