OTTAWA – The Copyright Board of Canada has set the royalties for Canadian satellite radio services at approximately 6.2% starting in 2010, and is offering discount rates for prior years to the two struggling services.
Royalties can be collected from multichannel subscription satellite radio services by three copyright collective societies – the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the Neighbouring Rights Collective of Canada (NRCC), and by the Canadian Musical Reproduction Rights Agency/Society for Reproduction Rights of Authors, Composers and Publishers in Canada, or CMRRA/SODRAC Inc. (CSI).
The Copyright Board set the tariff rates at 4.26% of total revenues in respect of the communication of musical works to be collected by SOCAN, and at 1.18% for the communication of sound recordings to be collected by NRCC.
The rates for the reproduction of musical works, to be collected by CSI, were set using a formula that includes payments for the communication of musical works, the communication of sound recordings and rates for the reproduction of musical works. The reproduction rate varies depending upon the type of receiver used by the subscriber.
“This is lower than the total equivalent rates of 7.1% set by the Board, that conventional commercial radio stations pay to obtain similar licences”, said Claude Majeau, secretary general of the Copyright Board, in a statement. “The U.S counterparts of the satellite radio services currently pay 6.5% for the right to only broadcast sound recordings; that rate will increase to 8% in 2012.”
The Board said it recognized “the difficult financial situation of the satellite radio services”, due in part to high front end costs in launching their services.
Noting that the satellite radio services themselves expect to be profitable only by about the year 2010, the Board included discounts of 25% for the years 2005 to 2007, and of 10% for 2008 and 2009. As a result of these discounts, the applicable rates for 2009 will total about 5.6%, rather than 6.2%.
Canada has two satellite radio companies – Canadian Satellite Radio Holdings Inc., which operates under the name XM Canada, and Sirius Satellite Radio. Both services, which provide a mix of music and talk channels to their subscribers, launched their Canadian operations late in 2005. By the summer of 2008, XM Canada reported subscriber levels of 440,000 and Sirius had 750,000.
XM Canada expressed its support of the Copyright Board’s decision, and promised that in addition to the royalty payments, it would continue to be a “passionate supporter of homegrown Canadian talent” through the Canadian Talent Development program.
"This has been a long process and we are pleased to have a decision which will lead to greater certainty for all parties involved," said Michael Moskowitz, XM Canada’s president and CEO, in a statement. “We believe there needs to be an appropriate balance established between being able to provide our subscribers with the very best in programming at an affordable price while fairly compensating artists for their creative work. And, as the Board recognized, this is a young industry that has made significant upfront investments and is not yet profitable."
To read the complete decision by the Board, click here.
