The Canadian copyright review in the age of technological disruption

[Len]

The Canadian government launched its much-anticipated copyright review last week, asking the standing committee on industry, science and technology to conduct a study on the issue that is likely to run for much of 2018. While the timelines suggest major changes will have to wait until after the next election, the report will be the foundation for future reforms to Canadian copyright law.

The instruction letter to the committee from Innovation, Science and Economic Development Minister Navdeep Bains and Canadian Heritage Minister Mélanie Joly points to the challenges of copyright, which invariably engages a wide range of stakeholders with differing perspectives.

Indeed, Mr. Bains and Ms. Joly note in their letter that "this diversity of viewpoints is because copyright affects a wide range of industries, works, and uses: from telecom and tech companies, to scientific institutions, and academia, from photographs, music, and books, to augmented reality content; and from museums, art galleries, and brick and mortar stores, to machine-readable data, and beyond." Reconciling such a broad range of interests with a law that affects all Canadians is exceptionally difficult.

The letter touches on everything from compensation for artists to the public domain and open access, but the most important passage may well be the recognition that while market disruption often drives copyright reform, the law may not always be the best tool to address the current state of technology-driven change. The ministers note that many issues fall outside the scope of the law, suggesting that efforts to use legal tools to impede changing dynamics in the marketplace may ultimately harm the very stakeholders the law is intended to assist.

In fact, the top-line issues for many of the traditional stakeholders in the copyright debate are largely grounded in the view that technological disruption requires a legislative response based on copyright law. For example, publishers and authors have been lobbying the government for several years to roll back the rules on "fair dealing," Canada's version of fair use. The Supreme Court of Canada has said that fair dealing – which allows for the use of portions of works without further permission or licence – is a user's right. The groups point to declining revenues from a licence offered by Access Copyright, a copyright collective, as evidence of the problem.

Yet the publishing and education sectors represent a classic case of technological disruption. Since the 2012 copyright reforms, the publication of new Canadian titles has not declined, and educational spending on licensing works from publishers and authors has increased as the sector shifts from buying physical books and paying for collective licences to licensing e-books and access to massive content databases. Many universities today, including my own, licence more than a million e-books, many with perpetual licences. This means that even as some publishers and authors express concern about educational copying, they earn new revenues from digitally licensing their works to educational institutions.

Disruption is also a theme in music-industry lobbying, which claims there is a gap in the revenues earned from internet music streaming and the value of that music. Yet, a closer look at the numbers points to an industry earning record revenues from new technologies and the internet.

The days of worrying whether consumers would pay for music are largely over, with the Canadian music market growing much faster than the world average (12.8 per cent in 2016 compared with 5.9 per cent globally), streaming revenues more than doubling last year to $127.9-million (U.S.) – up from $49.82-million – the Canadian digital share of revenues of 63 per cent exceeding the global average of 50 per cent and Canada leaping past Australia to become the sixth-largest music market in the world.

Virtually every cultural sector has similar stories. Since the 2012 copyright reforms, music collective SOCAN has experienced a tenfold increase in internet-streaming revenues, with growth rates of more than 100 per cent over the past year alone, but it is still calling for an extension of 20 years to the current international standard term of copyright, the creator's life plus 50 years.

Movie theatre and overall broadcast revenues have continued to increase since 2012, but that has not stopped some in the industry from demanding new website-blocking rules. Many media organizations have struggled with the transition to digital, leading to the hope that a new "link" tax could be added to copyright law that would require compensation merely for linking to a work. That approach might provide some incremental revenue, but would undermine valuable referral networks that increase website traffic and support digital advertising earnings.

The 2012 copyright reforms ushered in innovative changes, including legal protection for user-generated content, the notice-and-notice system for online infringement allegations, which enables rights holders to educate users on the boundaries of copyright, and some of the world's toughest anti-piracy rules. The five-year review offers the chance to take stock of those amendments and chart a course for future policies. In doing so, the committee should ensure it opens the process to all Canadians and keep the ministerial admonition on the limits of copyright law in an ever-changing, disruptive marketplace very much in mind.