Senate of Canada, Standing Committee on Transport and Communications Study on Bill C-11 (Online Streaming Act) Submission of Music Canada October 3, 2022 ________________________________________________________________________________ Music Canada is the trade association for Canada’s major labels: Sony Music Entertainment Canada, Universal Music Canada and Warner Music Canada, who sign and partner with Canadian artists, helping them achieve commercial success in Canada and export music abroad.

We were grateful to testify before the Committee on September st and to share insights on the minor amendments needed in Bill C-11 to fully accomplish the government’s stated intentions and prevent unintended consequences for Canada’s artists and the businesses who partner with them. It was clear from the thoughtful questions posed by Senators that they too want to help elevate Canadian music and artists, while protecting against unintended consequences from ambiguous or overly broad wording in the Bill’s current text.

Much time, attention, and discourse has been dedicated to issues raised by the regulation of algorithms, user-generated content, and discoverability in the digital space. Understandably, these are complex and novel issues, worthy of attention. But there is a lot of noise surrounding these issues that risks drowning out concrete policy implications and solutions. These concerns can be significantly mitigated by

i) making a simple amendment at s. 9.1(8) in the Bill, and ii) clarifying that the Bill applies only to professional content, as expressly intended by the government. 1. Prevent risk of harm to Canadian creators who rely on algorithms to get their music heard, by making it clear that the CRTC cannot impose an order on an algorithm Clause of the Bill, which amends

section of the Broadcasting Act , provides: 9.1(8) The Commission shall not make an order under paragraph (1)(

e) that would require the use of a specific computer algorithm or source code. Paragraph 1(

e) is the provision enabling the CRTC to make orders regarding the showcasing and discoverability of Canadian programs. Since Day One, the Government has been explicit in its intent that the Bill not permit any regulation of algorithms whatsoever. 1 By limiting the scope of the prohibition to orders under paragraph 9.1(1)(e), and by leaving the door open to regulations indirectly regulating algorithms, the Bill as currently drafted leaves the door open to the CRTC issuing regulations that could directly or indirectly impact algorithms for numerous purposes under the Broadcasting Act .

We worry that such ambiguity and algorithmic impacts could create unintended negative consequences for Canadian creators. 1 Minister of Canadian Heritage Pablo Rodriguez, remarks from news conference upon introduction of Bill C-11, February 2, 2022: “Nous, on touche, il est nullement question de, de toucher aux algorithme de quelque façon que ce soit.” 1 Clarifying the scope of the prohibition on regulating algorithms would ensure that the text of the Bill matches the stated intent of the Government.

One way to do so would be to make the following edits with respect to s. 9.1(8): 9.1(8) The Commission shall not make an order under paragraph (1) (

e) this Act that would require changes to, or the use of , a specific computer algorithm or source code. This simple amendment will avoid unintended harmful impacts on the ways that Canadian artists reach their fans both at home and abroad. 2. Make it clear that only professional content is in scope, as intended by the Government The Government has repeatedly made clear that the bill should apply only to professional content and not to user-generated content. We agree. But the text of the Bill needs sharpening to make that clear.

We are broadly supportive of amendments put forth by digital platforms to clarify the professional content that is subject to the Bill. Why these clarifications matter to Canada’s music industry After two decades of decline from rampant piracy, the Canadian music industry is in a period of rebound and growth. This growth comes predominantly from widespread consumer adoption of licensed streaming services and investments in infrastructure, artist development and marketing made by Canada’s major labels, independent labels, publishers, and others.

The return of revenue means that the next generation of Canadian artists can benefit from further investment. But even with the wide access that Canadians enjoy to legitimate licensed streaming services today, a significant subset still obtain their music through unlicensed means. More than 30% of online users -- and 38% of 16-24 year olds -- obtain their music through copyright infringement. Our experience tells us that when listeners feel there is too much friction between them and what they want to hear, they will find their music elsewhere.

If regulation interferes with what makes digital music services so inviting to music listeners, consumers will move to unlicensed and unregulated spaces. This will deprive Canadian artists and other music industry professionals from being paid when their music is played. That outcome runs contrary to the positive policy intent behind this Bill. We support the Bill as described by the Government and we thank you for your consideration of these submissions.

Please let us know if we can be of further assistance to the Committee in its study of the Online Streaming Act. 3 IFPI Global Music Report 2022: Streaming represented 77.9% of Canadian music industry revenues, with approximately CAD$457.1M in 2021, an 18% increase over 2020. 2 Minister of Canadian Heritage Pablo Rodriguez; remarks from news conference, February 2, 2022: “No digital first creators, no influencers, no cat videos, only the companies themselves will have new responsibilities.” Parliamentary Secretary Chris Bittle to CHPC, May 24, 2022: “The government’s been clear about its objective that, between both the bill and the subsequent policy directive, digital first creators and their user-generated content are scoped out.

The Minster has stated that the policy directive will be unequivocal and that user-generated content will be scoped out.” Prime Minister Justin Trudeau, June 1, 2022: “Mr. Speaker, yes, individual creators are protected under this legislation. It is the platforms that we are targeting.” Minister of Canadian Heritage Pablo Rodriguez, May 21, 2022: “Mr. Speaker, I have been clear on this since day one: The platforms have obligations, but the users do not. Platforms are in; users are out.” 2