[CB-CDA 2024-083]

ORDER OF THE BOARD

Proceeding: SOCAN Tariff 18 – Recorded Music for Dancing (2023-2025)

October 21, 2024

I. OVERVIEW

[1] On October 15, 2021, SOCAN filed a proposed tariff for the use of Recorded Music for Dancing for the years (2023-2025).

[2] On December 3, 2021, the Hotel Association of Canada and Restaurants Canada filed their objections to the proposed tariff.

[3] On March 8, 2024, pursuant to Order CB-CDA 2024-009, SOCAN filed its Notice of Grounds for the Proposed Tariff.

[4] On April 8, 2024, the Hotel Association of Canada and Restaurants Canada (together “the Associations”) filed a Notice of Grounds of Objection.

[5] On May 10, 2024, pursuant to Order CB-CDA 2024-031, SOCAN filed a reply to the Notice of Grounds of Objection.

II. Initiation of the proceeding

[6] This file has been assigned to a Panel which has completed a preliminary assessment of the file, and is ready to initiate the examination of SOCAN Tariff 18 for the years 2023-2025.

[7] To this end, the Panel seeks to confirm with the parties the issues to be considered.

III. ISSUES TO BE CONSIDERED

[8] The Panel is of the preliminary view that the key issues to be considered in this proceeding are twofold:

Issue 1: Should the royalty rate be adjusted to account for inflation?

[9] The Associations allege that SOCAN has not provided any substantive economic evidence to support their argument that inflation in other sectors of the economy should be reflected in an adjustment to the royalty rate for the use of works in SOCAN's repertoire.

[10] SOCAN responded that the Objectors' suggestion ignores the Board's long-standing approach, namely that the purpose of adjusting dollar-denominated royalties for inflation is to preserve the purchasing power of rights holders.

[11] The Board recently published its inflation adjustments guidelines[1] (The “Guidelines”). The Guidelines present the default methodology used by the Board to adjust royalty rates to inflation when appropriate. The Guidelines allows parties to make submission on the methodology and the appropriateness of using it in any given proceeding.

Issue 2: What methodology, if any, should be used to adjust for inflation?

[12] The Associations oppose the use of the Consumer Price Index (CPI) to determine the royalty rate adjustment on the basis that it has no significant correlation with music valuation, as music represents a very small proportion of the total goods and services used in its calculation.

[13] SOCAN replied that the CPI-All Items provides a strong economic foundation for determining inflation adjustments. It is the index most often used by renowned organizations such as Bank of Canada to calculate the rate of inflation. SOCAN also notes that parties and the general public are familiar with this approach, which aligns with the Board practice related to inflation adjustment.

IV. ORDER

[14] No later than November 11, 2024, the Parties shall file a Joint Statement of Issues which should indicate their agreement (or not) with the preliminary list of issues above and identify any other issues that should be addressed in this proceeding. If Parties are unable to file jointly, they may each file a separate Statement of Issues.

[15] If Parties file separate Statement of Issues, they may reply to the other Party’s Statement of Issues by no later than November 25, 2024.

Greg Gallo

A/Secretary General