Written Submission for the Pre-Budget Consultations in Advance of the Upcoming 2025 Federal Budget

Recommendation 1: Generative artificial intelligence must be transparent and compensate rightsholders

That the Government ensure a) that artificial intelligence systems comply with transparency obligations, such as publicly disclosing the copyright-protected works they use; b) that artificial intelligence systems comply with fair market principles to obtain licences and compensate copyright owners for the use of their works; and c) that no new exceptions from copyright or other intellectual property rights are created.

Recommendation 2: Clarify the exemption at section 32.2(3) in the Copyright Act

That the Government amend the language of the exemption at section 32.2(3) of the Copyright Act to clarify that the exemption only applies where an organization acts “without motive of gain.”

Recommendation 3: Modernize private copying

That the Government amend the Copyright Act to make the private copying regime technologically-neutral and confirm the ability of the Copyright Board to set levies for unlicensed private copies made on audio recording media and audio recording devices.

Background

1. SOCAN (the Society of Composers, Authors and Music Publishers of Canada) is Canada’s largest rights management organization. SOCAN has over 190,000 songwriter, composer, and music publisher members and clients, and licenses tens of thousands of businesses and organizations across Canada. SOCAN issues licences for the performing rights and reproduction rights of musical works, and collects and distributes royalties to its members and the international rights management organizations with which it has reciprocal agreements.
2. In 2023, SOCAN collected $523 million in licence fees.

Recommendation 1: Generative artificial intelligence must be transparent and compensate creators

3. Generative artificial intelligence (AI) models have been programmed on vast numbers of copyright-protected works, obtained either from large-scale text and data mining (TDM) activities or from datasets containing unlicensed works. However, it is extremely difficult, if not impossible, for creators to know when their creative works have been used.
4. Generative AI companies must have transparency, record-keeping, and disclosure obligations to ensure that creators understand how and when their works are used by AI developers and whether that use has been licensed or not. It is a fundamental objective of the Copyright Act that creators receive remuneration for the use of their works. Imposing transparency obligations will encourage AI companies to obtain creators’ permission through licensing agreements to use their works to program their AI models or for other purposes. This will ensure the development of a licensing market that will set the appropriate remuneration for creators when their works are used.
5. In addition, SOCAN would have serious concerns should the Government entertain proposals that attempt to create new exceptions in the Copyright Act to allow the use of creators’ works without consent, credit and compensation. We are only starting to uncover the full potential and implications of AI in the creative sphere. We are also only beginning to understand the potential disruptive effect of AI on cultural activity and economic business models. SOCAN urges the Government to ensure that the balance and policy objectives of the Copyright Act are preserved, namely, to foster creativity and allow creators and their representatives to continue to have the means to control how their works are used, by whom, and on what terms.

Recommendation 2: Clarify the exemption at section 32.2(3) in the Copyright Act

6. The Copyright Act, at section 32.2(3), provides an exception for the payment of royalties for the public performance of music when the performance is “in furtherance of a religious, educational or charitable object” by a religious, educational or charitable organization. Some organizations rely on this provision as carte blanche for refusing to pay music creators when they perform their music, even when the performances are for an ordinary business purpose.
7. No other creative profession (including filmmakers, literary authors, or visual artists) is legislatively required to subsidize the use of their works by charitable, religious or educational organizations. These organizations, regardless of the purpose for which they are using literary, dramatic, artistic or cinematographic works, must properly remunerate the creators and artists for those uses.
8. We recommend that the Government amend section 32.2(3) to state:

“32.2(3) No religious organization or institution, educational institution and no charitable or fraternal organization shall be held liable to pay any compensation for doing any of the following acts without motive of gain in furtherance of a religious, educational or charitable object: …”

9. The language “motive of gain” exists in the exemption for agricultural exhibitions and fairs in section 32.2(2). This language has been judicially considered by the Supreme Court of Canada and interpreted such that a performance that is “without motive of gain” means that the performers cannot be paid and the exhibitors cannot receive private profit.[1]

Recommendation 3: Modernize Private Copying

10. The introduction of private copying in the Copyright Act in 1997 addressed the then-revolutionary technological advances in recording technology that provided ordinary Canadians the means to copy sound recordings onto audio-cassettes and blank compact discs for their personal use and enjoyment, while music copyright owners could not authorize, prohibit or monetize those copies. The private copying regime covered this gap by levying the blank audio recording media used to make these copies, and distributing the collected royalties to music copyright owners to compensate them for these copies of their works.
11. Unfortunately, the private copying levy has not changed with new technological advances and only applies to blank compact discs when most of the current unlicensed private copying is done on devices like smartphones and tablets to which the levy does not apply. For years now, the large technology companies have been enjoying the benefits and profits from facilitating private copying but have not been obliged to share those profits with music copyright owners. As a result, the annual royalties collected under the private copying levy have plummeted – from $38 million in 2004 to less than $1 million in 2022 – even though annual private copying activity has more than doubled.
12. We recommend that the Government amend the Copyright Act to make the private copying regime technologically-neutral and confirm the ability of the Copyright Board to set levies on audio recording devices, to capture the value of unlicensed private copying that uses current and future technologies.
13. SOCAN supports the pre-budget submission of the Canadian Private Copying Collective (CPCC) on this important recommendation.

Conclusion

14. The creative industries are an important economic sector in Canada. It is paramount that the Copyright Act continues to serve its objective to foster human creativity and that it continues to provide rights holders with a just reward for their creation.
15. Ensuring a strong copyright framework is critical to help future generations of Canadian music creators and publishers.
16. We thank the Government for the opportunity to contribute to this important process.

[1] See Composers, Authors and Publishers Association, Limited v. Western Fair Association, 1951 CanLII 5 (SCC), [1951] SCR 596.