Current broadcasting laws and regulations were designed for radio and television. While these rules have been effective, foreign digital platforms have zero obligations to support and promote Canadian creators, even to Canadian audiences. Reforming the Broadcasting Act is a necessary step to strengthening Canadian songwriters and composers’ place within Canada, and supporting Canadian music in a digital world.
SOCAN is advocating for broadcasting reform to include online undertakings under the Broadcasting Act because royalty distributions to Canadian songwriters and composers are significantly lower on unregulated digital broadcasters, which have no Canadian contribution requirements, such as promotion and funding, as opposed to regulated traditional broadcasters that do. Lower royalty distributions also means that the Canadian public is listening to less Canadian music, which has knock-on effects for Canadian culture, Canadian jobs, and Canadian identity.
The below charts demonstrate that distributions to Canadian songwriters and composers from digital broadcasters are 69% lower than distributions from traditional broadcasters:
The stark difference in distributions can be explained in part by the regulatory systems for traditional broadcasters, which include Canadian contribution requirements, compared with digital broadcasters operated by foreign companies, which do not.
Instead of a 34% share of collected royalties distributed to SOCAN songwriter and composer members on traditional media, only around 10% of royalties collected on digital media are distributed to SOCAN songwriter members. This represents a 69% decrease in distributions staying in Canada for songwriters with a song played on traditional media, versus a songwriter with a song played on digital media.
The situation is even more dire for Francophone SOCAN songwriter and composer members.
On traditional media, they receive an average of 7% of all traditional royalties collected, while on digital media, they receive an average of 2% of digital royalties collected.
To an outside observer, there may be an apparent paradox: SOCAN revenues have been increasing, so how is it possible that distributions are decreasing? The answer to that paradox is understanding the difference between SOCAN’s collection of royalties and its distribution of royalties.
First, let’s look at the domestic collection of royalties.
SOCAN domestic royalty collections have increased from $203 million in 2012 to $282 million in 2020. Domestic digital collections have increased 571% since 2015 – from $15 million in 2015 to $104 million in 2020.
For SOCAN’s domestic collection of royalties, these revenues are collected from issuing licenses to organizations for all music uses, by all music creators in the world (Canadian and international), for public performances and communications within Canada.
So, when SOCAN’s domestic collection of royalties goes up, this means that more music is being used across Canada. That’s a good thing.
Now, let’s look at the domestic distribution of royalties.
For SOCAN’s domestic distribution of royalties, SOCAN analyzes the music use data we obtain from licensees for certain uses of music (or we use an analogous data set if no data is provided by the licensee) to match the musical works used to the correct rightsholders, and distribute the matched royalties to them. In this matching exercise, SOCAN matches musical works to Canadian rightsholders and international rightsholders – with royalties for international rightsholders going outside of Canada to the music rights organization representing them.
In short, for the $104 million in domestic digital collections, only 10% stays in Canada and is distributed to Canadian creators. The rest is distributed to international creators.
SOCAN’s goal is to see Canadian contribution requirements on digital broadcasters, so that more Canadian creators are paid for their work in Canada. Reform of the Broadcasting Act is the first step in figuring out how that goal can be accomplished.
Stay tuned for further articles in this series.