FACT SHEET
Online Music Services
SOCAN Tariff 22.A (2007-2010) and CSI Tariff (2008-2010)
October 5, 2012
What is the Copyright Board of Canada?
The Copyright Board of Canada is an economic regulatory body empowered to establish,
either mandatorily or at the request of an interested party, the royalties to be paid for the
use of works protected by copyright, when the administration of these rights is entrusted
to a collective society. The Board also supervises agreements signed between users and
collective societies and can issue licences when the copyright owners cannot be located.
What are the tariffs the Board certifies today?
The tariffs the Board certifies today set the royalties Canadian online music services must
pay for the use of copyrighted musical works when they offer permanent and limited
downloads, on-demand streaming and video-clips. iTunes, Zik, Slacker and Songza are
just a few examples of the services available in Canada. The services pay these fees to
two collective societies: SOCAN and CMRRA/SODRAC Inc. (CSI). For a description of
the two societies, see the answer to the last question.
What are the rates set in today’s decision?
The rate that online music services must pay to CSI is 9.9 per cent of the amount paid by
consumers or subscribers for permanent and limited downloads. For on-demand streams,
the services must pay to both CSI and SOCAN a total of 12.7 per cent of the amount paid
by subscribers. The following table shows the details of the rates certified today:
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Royalties to be paid to CSI (2008-
Royalties to be paid to SOCAN (2007-
2010)
2010)
Permanent
9.90% of the amount paid by the
n/a
Downloads
consumer
Minimum fee
3.92¢ per file in a bundle of 13 tracks or
more
6.86¢ per file otherwise
Limited
9.9% of the amount paid by subscribers
n/a
Downloads
Minimum fee
99¢ per month, per subscriber, if portable
limited downloads are allowed
66¢ if not
On-Demand
5.18% of the amount paid by subscribers
7.60% of the amount paid by subscribers
Streams
Minimum fee
Minimum fee
Free streaming: 0.09¢ per file streamed
Free streaming: 0.13¢ per file streamed per
per visitor, up to a maximum of 34.53¢
visitor, up to a maximum of 50.67¢ per visitor
per visitor per month
per month
Otherwise 34.53¢ subscriber per month
Otherwise, 50.67¢ per subscriber per month
Video-Clips
n/a
5.02% of the amount paid by subscribers
(2010 only)
Minimum fee
Free streaming: 0.13¢ per file streamed per
On-Demand
visitor, up to a maximum of 50.67¢ per visitor
Streams
per month
Otherwise, 50.67¢ per subscriber per month
What were the rates certified before today’s decision?
Before today’s decision, the online music services paid CSI and SOCAN a total of 11 per
cent of the amount paid by consumers of subscribers for permanent downloads, limited
downloads and on-demand streams. The following table shows the details of the rates that
were certified before:
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Royalties to be paid to CSI (2005-
Royalties to be paid to SOCAN (1996-
2007)
2006)
Permanent
7.9% of the amount paid by a consumer
3.1% of the amount paid by the consumer
Downloads
Minimum fee
Minimum fee
4.1¢ per file in a bundle;
1.5¢ per file in a bundle
5.3¢ per file in all other cases
2.1¢ per file in all other cases
Limited
5.3% of the amounts paid by subscribers
5.7% of the amounts paid by subscribers
Downloads
Minimum fee
Minimum fee
51.3¢ per month, per subscriber, if
54.8¢ per month, per subscriber, if portable
portable limited downloads are allowed;
limited downloads are allowed;
33.7¢ if not
35.9¢ if not
On-Demand
4.1% of the amounts paid by subscribers
6.8% of the amounts paid by subscribers
Streams
Minimum fee
Minimum fee
26.3¢ per month, per subscriber
43.3¢ per month per subscriber
How will the new rates affect the total royalties that the services will be paying, relative
to what they paid before?
The Board estimates that the rates it certifies today will reduce total royalties paid by
online music services by 10 per cent relative to the last certified tariffs.
The decrease in total royalties is the result of the combined impact of three key changes
relative to the previously certified tariffs. First, as a result of the Supreme Court decisions
in ESA v. SOCAN and Rogers Communications Inc. v. SOCAN, SOCAN receives nothing
for permanent and limited downloads. Second, the Board eliminates the 10 per cent, first-
tariff discount. Finally, it increases the rates for CSI by 12.5 per cent.
What are the various types of activities of online music services these tariffs apply to?
This decision deals with three types of products, namely permanent downloads, limited
downloads and on-demand streaming. The SOCAN Tariff applies to streaming of both
audio files and video-clips. The CSI Tariff applies to permanent and limited downloads
as well as streaming of audio files.
A permanent download is a file that contains a sound recording of a musical work sent
to and first stored on the device (computer, cell phone, Smartphone, iPod, etc.) used to
purchase it. The person who receives the download can listen to it indefinitely.
Limited downloads are offered as part of a subscription service and can only be used as
long as the user’s subscription is paid. The digital rights management (“DRM”) software
attached to the music file prevents further use once the subscription expires.
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On-demand streams are not downloads. The user does not receive the complete file
containing the sound recording. The service only transmits or streams enough data to
allow the user to listen to the recording at the time of the transmission and the user is
prevented from copying the recording onto a recording medium or device. This decision
also deals, for the first time, with video-clips.
Who are the two collective societies entitled to receive royalties as a result of these
tariffs?
The Society of Composers, Authors and Music Publishers of Canada (SOCAN) is a
society that administers performing rights in musical works on behalf of Canadian
composers, authors and publishers, as well as affiliated societies representing foreign
composers, authors and publishers.
CMRRA/SODRAC Inc. (CSI) acts for the Canadian Musical Reproduction Rights
Agency (CMRRA) and the Society for Reproduction Rights of Authors Composers and
Publishers in Canada (SODRAC). CMRRA is a Canadian centralized licensing and
collecting agency for the reproduction rights of musical works in Canada. It represents
more than 6,000 Canadian and U.S. publishers who own and administer approximately
75 per cent of the music recorded and performed in Canada. SODRAC administers
royalties stemming from the reproduction of musical works. It represents some 6,000
Canadian songwriters and music publishers as well as the musical repertoire of more than
89 countries.
Note: The reasons and the certified tariff can be found on the Board’s website under
“What’s New – Recent decisions” at the following address: http://www.cb-
cda.gc.ca/home-accueil-e.html.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.