Copyright Board |
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Commission du droit d’auteur |
[CB-CDA 2024-090]
ORDER OF THE BOARD
Proceeding: SOCAN Tariff 19 – Physical Exercises and Dance Instruction (2018-2022)
November 5, 2024
I. OVERVIEW
[1] Between March 31, 2017, and March 28, 2019, SOCAN filed proposed tariffs for Fitness Activities and Dance Instruction for the year 2018 and for Physical Activities and Dance Instruction for the years 2019 through 2022.
[2] The parties listed below filed objections to one or more of the proposed tariffs. No objections were filed to the 2020-2022 proposed tariff.
· GoodLife Fitness Centres (2018, 2019)
· Fitness Industry Council of Canada (FIC) (2018, 2019)
· Ridgewood Community League (2018)
[3] On February 12, 2024, GoodLife informed the Board of its intention to withdraw as a participant for the years 2018-2022.
[4] On March 8, 2024, pursuant to Order CB-CDA 2024-010, SOCAN filed its Notice of Grounds for the Proposed Tariffs for the years 2018-2022.
[5] Ridgewood Community League did not reply to the Board’s Order and as such is deemed to no longer be participating in the matter.
[6] On May 16, 2024, FIC filed its Notice of Grounds for Objection for the years 2018-2022.
[7] On May 31, 2024, SOCAN filed a reply to FIC Notice of Grounds for Objection.
[8] On July 5, 2024, the Board denied FIC’s request to file a sur-reply to SOCAN’s reply in order CB-CDA-2024-053.
II. Initiation of the proceeding
[9] The Board has completed a preliminary assessment of this file and is ready to initiate the proceeding for the consideration of SOCAN Tariff 19 for the years 2018-2022.
[10] To this end, the Board seeks to: (i) confirm with the parties the issues to be considered; (ii) hear the parties’ position with regards to the holding of one or more technical meeting(s); and (iii) obtain comments from the parties on a draft schedule of proceeding.
III. ISSUES TO BE CONSIDERED
[11] To facilitate the initiation of the proceeding, the Board has circumscribed, on a preliminary basis, the following key issues:
Issue 1: Clarity of the Tariff Scope
[12] FIC alleges that the Tariff does not reflect the market reality as there exist intermediary services that provide music at a lower cost than SOCAN. These services have been identified by the Board as background music providers.
[13] SOCAN responded that the service providers FIC is referring to are not alternate avenues to obtain the rights granted under Tariff 19 as these are exclusively controlled by SOCAN. Rather, the services mentioned by FIC are licensed under a different SOCAN tariff for different uses.
[14] SOCAN Tariff 19 sets out a single rate applicable to various uses of musical works within fitness venues including during fitness or physical exercises and dance instruction. This formulation may seem unclear when compared to the one in Re:Sound Tariff 6.B, that sets out different royalty rates for different uses of music within fitness venues.
Issue 2: Use of SOCAN’s Repertoire
[15] FIC argues that SOCAN’s entire repertoire is not suitable for use in fitness facilities therefore, the fees should be adjusted to actual music consumption.
[16] SOCAN replied that this tariff sets out a blanket licence and that tailoring the fees to each fitness facility repertoire use would be impossible to implement, monitor, or enforce.
Issue 3: Last-approved Tariff as a Proxy
[17] In its 2018 objection, GoodLife asserted that the market for the use of music has changed within fitness venues. Fitness venues have reduced their membership fees to accommodate user preference to pay for music through online music services. As such, a modification of the formula proposed by the collective is necessary.
[18] FIC claims that the tariff is too high and unworkable in terms of implementation, even if this is the same tariff as previously approved by the Board. Furthermore, FIC added that the benefits from any negotiated agreements should be extended across the fitness industry.
[19] SOCAN replied that Tariff 19 has been approved by the Board in this form for more than 30 years. Additionally, the fitness industry has enjoyed an “inflation holiday” with respect to this tariff since the last increase for years 2015-2017. SOCAN added that any request regarding an agreement between SOCAN and another industry member is not appropriate in the context of this proceeding.
Issue 4: COVID-19 Adjustment
[20] The Board is of preliminary view that the proposed tariffs may not be adequate in light of the COVID-19 pandemic during the years 2020-2022 and intends to take this into account.
[21] Neither party requested the proposed tariffs to be adjusted to take the COVID-19 pandemic into account. However, on its own initiative, the Board has granted this adjustment in other cases[1].
Issue 5: Tariff Enforceability
[22] FIC claimed that the burden of tariffs falls unjustly on a few compliant users, while a majority remains uninformed or non-compliant. FIC requested access to compliance data from SOCAN.
[23] SOCAN replied that compliance on a facility-by-facility basis is a matter of tariff interpretation and enforcement, which the Board has consistently held is outside its
[24] The Board is of the preliminary view that while tariff enforcement is outside the Board jurisdiction, tariff effectiveness is not. If most users do not adhere to the tariff, it may be that the tariff is too costly to administer or not adapted to current business models.
IV. Technical meeting
[25] The Board takes note of the fact that FIC is self represented. Given the technical nature of some elements raised by the parties in their submissions, the Board proposes that one or more technical meeting(s) take place, at one or both parties' request.
[26] For instance, the Board suggests that one technical meeting takes place to discuss (1) repertoire use in tariffs of general application and (2) any other technical concerns that a party may need to clarify. The purpose of the meeting would be to allow all parties to better understand the cost to or the methodology associated with each of the issues, which will be conducive to a fair proceeding with informed participants.
[27] Any party requesting an informal technical meeting will be asked to provide a list (individually or jointly) of the technical questions or concerns to be addressed in the discussions.
[28] The Board emphasizes that any technical assistance offered by Board staff should not be construed as an endorsement or particular position by the Board with respect to any party’s arguments.
V. ORDER
[29] Any party requesting a technical meeting must communicate with the Board by Tuesday, November 12, 2024. The party should enclose a list of technical issues to be discussed. The technical meeting will be scheduled shortly thereafter.
[30] The Board is requesting the parties to provide, by Friday, December 13, 2024:
· their agreement with the preliminary list of issues under Section III and whether other issues should be addressed in this proceeding;
· their views, jointly or individually, regarding the following proposed schedule of proceeding:
Event
|
Date
|
Board issues Final List of Issues |
December /January |
SOCAN files Case Record |
+ 4 weeks |
FIC files Response Case Record |
+ 4 weeks |
SOCAN files Reply |
+ 3 weeks |
Further proceeding steps |
Dates to be determined |
[31] Any comment in response to the information provided by another party must be submitted at the latest on Friday, December 20, 2024.
Greg Gallo
A/Secretary General