Music Canada's Henderson: Fair YouTube Royalty Payments Would Pump $500M Annually Into Canadian Artist And Label Coffers

By Nick Krewen

It's time to close the gap.

In an eloquent speech to the Economic Club of Canada earlier this week to introduce his non-profit organization's latest report, Closing the Value Gap: How to Fix Safe Harbours & Save the Creative Middle Class, Music Canada President and CEO Graham Henderson revealed how quickly the financial picture for Canadian copyright holders, creators and labels would improve if user-upload services were regulated by legislation and paid their fair share of royalties.

Using video streaming platform YouTube as an example, Henderson said if the Google-owned company properly compensated Canadian music creators for the use of their music, "half-a-billion dollars would flood annually from the Silicon Valley treasure chest into the hands of Canadian musicians and record labels."

And there's more wealth being denied Canadians where that came from, added Henderson, speaking from a podium in a suite at Toronto's Fairmont Royal York hotel before an estimated gathering of 300 business professionals, labels and such artists as Miranda Mulholland, Amanda Martinez, Moe Berg, and Andy Maize, among others.

"To put that further in perspective, fair pay would double the size of the Canadian music industry overnight," he noted, backing his facts with numbers researched by Dr. George Barker, Visiting Fellow, London School of Economics, and Honorary Associate Professor, Australian National University. Numbers that claim the loss of Canadian creator monies to third parties alone in 2017 represented $1.6B, with a cumulative total loss of $19.3B between 1997-2017.

Long before the Value Gap - described by Henderson as "a concept we use to describe the gulf between the revenues that third parties receive from their exploitation of creative content and the money they pay to creators, artists,  journalists, business, authors - you name it" - was identified, Music Canada had been engaged in fighting for copyright holders to receive their fair share and value of royalties for their creations.

What was initially supposed to be a windfall turned out to be anything but.

"Despite what creators were promised - by tech companies and their promoters in the early 2000s, the digital era did not usher in a utopia in which artists, freed from the middleman, would earn more money by connecting directly with consumers," Henderson explained.

"There was no golden age. Artists saw opportunities implode as tech behemoths took an ever greater slice of a shrinking pie." 

But Henderson said the tide of public opinion is changing, thanks to the recent Parliamentary hearings on Copyright Act reform. He particularly pointed to the efforts of several musicians who made the trek to Ottawa to testify before the Heritage Committee and present their perspective on the personal impact that the Value Gap was having in their lives.

Henderson cited testimony by singer and songwriter Damhnait Doyle, who painted a vivid picture of an impoverished lifestyle and underscoring her point by mentioning that only one artist in her social circle had been able to buy a house in the past 10 years. 

"Most can't afford to pay the rent, let alone a trip to the dentist," she told the Heritage Committee.

Henderson said that Doyle's speech "crystallized for our policymakers, an unsettling truth of our Internet era - the creative middle class is being annihilated." 

And the chief cause of that annihilation, according to Dr. Barker:  broad safe harbour laws "that allow user-upload services like YouTube to underpay artists and thereby contribute so significantly to the Value Gap."

"There are rules that tech companies are relying on to circumvent the need to bargain in good faith with the owners of copyrighted materials," Henderson explained. "These rules that they shield behind were actually updated from telephone laws in the 1890s - and they have lived long beyond their shelf life. The result of these rules is that artists and music creators are effectively forced to subsidize Big Tech."

Henderson heaped praised upon the Heritage Committee, chaired by Julie Dabrusin, member of Parliament for Toronto and Danforth, for their Shifting Paradigms Report issued in May.

Among other things, the report recommended that, a) safe harbour exceptions and laws should be reviewed to ensure that ISPs are responsible for both distribution and content - and b), that the Copyright Act's Radio Royalty Exemption be amended so that it's applicable only to independent and/or community-owned radio stations, not the commercial radio stations currently enjoying a $1.25m advertising revenue respite before ponying up airplay royalties.

"In the heritage committee, we now have a true champion," Henderson enthused.

He was less effusive about the Standing Committee on Industry's Statutory Review of the Copyright Act, issued earlier this month,  which Henderson deemed "baffling," claiming that they "willfully, openly and flagrantly, disregarded the Heritage Report, a report that they in effect, commissioned."

While disappointed with the Industry Canada report, Henderson says that the reports of the Heritage Committee and the latest Music Canada "Value Gap" release offer enough recommendations and solutions "to lead the way" in rebalancing the music marketplace and restoring fairness to the creators of music.

"The Copyright Act has been weaponized to force creators to effectively subsidize," Henderson declared.  "We in the music community aren’t asking for special treatment or a handout, and we’re certainly not looking to break the internet.  

"What we are insisting on is fairness, so that money that properly and fairly should be in the hands of artists is available to them - to earn a decent living, to buy food, to pay the rent, to put their kids through school, and to record music - to give them a shot to enter the middle class so that money - that properly and fairly should be in the hands of record companies - is available to them for reinvestment in artists to build their careers and bring more great music to fans. 

"Artists and record companies should not be the 21st-century casualties of outdated laws written in the 20th century."

Henderson says one big hurdle remains - the upcoming October Federal election. Once that is concluded, Henderson says Music Canada will "be calling on the government to move forward with a sense of urgency. The Heritage Committee report - and now Music Canada’s report - show us the way.  And we look forward to continuing to work with each of our music industry colleagues to reach our shared goal."

Following Henderson's speech, there was a fireside chat between him and Julie Dabrusin, the Chair of the Heritage Committee. Dabrusin admitted that it was an impassioned speech by artist Miranda Mulholland about the personal impact of the Value Gap at a previous Economic Club of Canada luncheon that awakened her to the plight of musicians affected by the digital era. 

And she urged that moving forward, Canadian musicians should reach out to their local MPs and continue to address the issue.

"Tell your individual stories - that’s what changes things," Dabrusin advises. "And always share your data, but bring life into that data so that people can see what's going on.."