SHANNON LEBLANC | MARCH 10, 2014
The Society of Composers, Authors and Music Publishers of Canada (SOCAN) have sent in External License agent, Philippe Girouard, to Peterborough to crack down on music crime and to catch music lawbreakers in the act.
Local businesses are being put under the pressure of ensuring that they abide by standard music laws and to ensure that their SOCAN licenses have been renewed.
The Canadian Copyright Act recognizes three main rights: 1. The right to produce or copy the musical work, 2. The right to reproduce the musical work, including mechanical rights and synchronization rights, and 3. Performing rights, which are the rights to perform a work in public and the right to communicate to the public by telecommunication.
Artists and songwriters join SOCAN to help preserve their musical integrity and to prevent copyright infringements.
SOCAN charges a rate of $0.1146 per square foot, with the minimum fee being $94.51. Each license is valid for one year. By then, each business is expected to renew their music license and produce payment before the Jan. 31 deadline.
The fee for Tariff 15A, which covers “the playing of background music in retail stores, restaurants and other similar establishments,” is based on the square footage that’s accessible to the public, not on the overall square footage of the establishment itself.
The fee for Tariff 20, which covers “karaoke bars and similar establishments,” is based on the number of days on which an establishment operates.
Tariff 3A, which covers live music, states that “the fee payable by the establishment is three percent of the compensation for the entertainment paid in the year covered by the license subject to a minimum annual fee of $83.65.”
According to Script 264 of the Canadian Bar Association’s Music Law Copyright and Trademarks, it states:
“To publicly play or perform music that’s been created or recorded by another songwriter or musician, you, your label or the venue are legally obligated to pay a fee or royalty … You also have to pay royalties if you record cover songs, whether you manufacture CDs or simply sell the song over the Internet.”
But how would you know if an artist is registered in the database? Well, SOCAN utilizes a public repertoire search function on their website “containing information about musical works in SOCAN’s repertoire which includes foreign works that SOCAN is authorized to license.”
However, you would need to know the title of the song or work in order to determine whether or not it is registered with SOCAN, which is an inconvenience in itself, especially if a business has a playlist containing several hundred songs.
If a business were to schedule a live performance, the artist would need to send them a line-up of every song.
In relation to the confusion surrounding fees and tariffs, a SOCAN spokesperson clarified that if a business plays music in the form of radio, it is exempt from fees.
However, if a business plays music via Internet radio, such as Pandora, SiriusXM Internet Radio, or Live365, a fee would apply, amounting in the minimum amount of $94.51 as stated above.
If a business plays the music of a local musician whose music hasn’t been registered with SOCAN, they are exempt from fees. However, if the store plays a song that is registered in SOCAN’s database, then a license is required for that business.
Even recreational facilities operated by the municipality of Peterborough, including Trent, are subjected to paying fees, as stated in Tariff 21. So, if Trent were to put on an event where music, prerecorded or live, were to be used, such as #introfest or the 2014 Fashion Show, they would need to register for a SOCAN license.
It isn’t clear if Trent has registered for a license as the TCSA could not be reached for comment.
A license is not required for stores or workplaces playing music through a satellite provider.
SOCAN is vague about how money is used, stating that the distribution of license fees consists of 86 percent royalties and 14 percent going towards operating costs.
As of now, there are no reports of any businesses being found guilty of music misconduct and playing without a license, but as Judy Byrne from George Street’s Hi Ho Silver stated, “I was waiting for it,” along with other Peterborough businesses, who, when questioned, were not aware of the licensing agent’s visit.
In a short interview, Communications and Marketing Specialist for SOCAN, Leigh Kenderdine, outlined the aspects of SOCAN’s mission statement and the impacts their regulations have on local businesses.
When looking into the distribution of licensing fees, I noticed that 14 percent goes towards operating costs. Would it be possible to get a general breakdown of the operating costs?
SOCAN performs an extremely complicated task for member songwriters, composers, and music publishers. This work requires extensive information technology and specific expertise, and the benefit to members is that SOCAN identifies tracks, collects, and administers royalties far more thoroughly and conclusively.
The preliminary results for the 2013 annual report showed that:
• A record year for total revenue, $276-million brought in for members, an increase of approximately nine percent over 2012.
• International revenue of $51-million, the first time that SOCAN members have surpassed the $50-million mark for royalties originating from outside of Canada – an increase of eight percent over 2012.
• A record $240-million was distributed in 2013 to members, a year-over-year increase of nine percent (excluding years with extraordinary arrears payments to members).
• Internet streaming revenues of $3.2-million were distributed to members – another first.
As SOCAN’s media liaison, I would like your take on how you believe SOCAN music regulations are affecting small local businesses who may not necessarily be able to afford the licensing fees, in addition to how you believe that SOCAN is protecting the music industry as a whole.
When a business uses music, it is adding value to its business through the use of work of music creators and publishers. The person(s) who composed, wrote, and published the song are entitled to be compensated for the time, effort, and money they put into the creation of that work.
According to the Copyright Act, any public performance of copyright-protected musical works requires a licence. When a song is played in public, music creators (not just the performers) are entitled to be compensated – it supports their livelihood. Without SOCAN, businesses that use music in public would have to get permission from every composer, songwriter, lyricist, and publisher for every musical works they intend to use, and they would have to pay each of them directly. This permission is not granted when you buy a recording, whether it is through a CD, MP3 file, etc., which only allows you to privately use the purchased music. SOCAN simplifies this complex process for businesses through licences.
How significant is that cost for a small business?
The cost to obtain a SOCAN license is relatively inexpensive. For example, the average small business is 800 to 1600 square feet. A SOCAN licence for background music in businesses of those two sizes would be $94.51 per year (minimum fee) and $183.36 peryear, or $0.31 per day and $0.59 per day assuming the business is open 6 days per week, respectively. To put things in perspective, if the small business is a coffee shop, that cost is approximately the same cost of a single wholesale carton of 12oz paper coffee cups and tops, which is approximately $100. If the small business is a retailer and they use 13” by 10” white or brown paper bags with their logo, the cost of their SOCAN license at $0.59 per day is approximately equivalent to the cost of one paper bag per day at $0.56 each. If that paper bag is coloured, that cost increases to $0.98 for a single bag in bulk, which is 75 percent more expensive than the daily cost of a SOCAN license.
Based on a Leger study that was performed by SOCAN in 2013, 72 percent of business owners feel that playing music is important to their customers’ overall experience. If you couple that with the fact that 55 percent of business owners think that customers would complain if music wasn’t used, and 44 percent also believe that not playing music would drive their customers to the competition – music is an important part of creating an atmosphere to attract customers.
Ultimately, SOCAN’s strict regulations and hefty sanctions play a big role in developing an equitable, stable, and compensating system of music in Canada.
However, the impact it has among the Peterborough business community, especially considering the city’s already unstable economy, is unknown at this moment.
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