This month, we sat down with Caroline Rioux and asked her some questions. Read her thoughts and comments below.
Q: October will mark the two year anniversary of your appointment as President. Congratulations! What are the highlights of those first two years?
A: It’s been a formidable two years for CMRRA and for me as its new President. Right from the start, in October and November 2013, CMRRA was involved in two very important hearings before the Copyright Board of Canada for the certification of royalty rates from commercial radio stations and online music services, and to settle important copyright principles related to the 2012 amendments to the Copyright Act. We are awaiting decisions on these important cases.
At the top of my list of highlights was the formation of a new management team to strengthen CMRRA in the areas of strategy, business development and financial management. We also increased our team by creating new legal, accounting and administrative positions, each now filled with extremely talented individuals, and by promoting key employees who continually and brilliantly go above and beyond the call of duty. It’s this team that has allowed us to begin expanding our activities and reengineering how we serve our clients.
To date, we have focussed our attention on three main strategic projects, all of which are well underway and are intended to increase value and services for our clients: a phased roll-out of our new IT system, the expansion of our licensing activities into the audiovisual market place and the development of better and more frequent communication of CMRRA’s activities to our clients with a redesigned website, better access to song, licence and royalty data, a new monthly newsletter, and an increased presence on social media.
In addition, we’re thrilled that new online music services such as Google Play, Spotify, and Apple Music have launched in Canada over the last couple of years. We have continued to provide value to our clients by negotiating licensing terms and rates that are at least on par with, and often better than, those we are aware of globally.
We have also welcomed two other collectives to share CMRRA’s premises: the Canadian Private Copying Collective and Access Copyright. Not only will our operating costs be reduced, this move will also provide us with opportunities to share resources and build synergies in the future.
Q: CMRRA has partnered with Spanish Point to develop a new Licensing & Royalty Distribution System (LDS). What are the main benefits that your music publisher clients will see as a result of this project? What are the next stages for LDS?
A: As a licensing collective, our main operational tasks are focused on matching vast volumes of data – sound recordings and musical works on the one hand, and musical works and copyright owners on the other – and to ensure the proper and accurate calculation, invoicing and allocation of royalties. While this is a simple concept, the challenge lies both in the inconsistency and lack of information presented by the licensees related to the songs they are using (which rarely includes songwriter information) and the lack of song registration by the copyright owners. To add to this challenge, the ownership of songs is often divided between multiple owners or administrators. CMRRA represents over 57,000 music publishing catalogues, each of which are subject to change as music catalogues are bought and sold daily. When you multiply this by millions of transactions each month, there is a real concern that, absent a robust and modern IT system, the licensing and royalty distribution processes will grind to a halt.
With this concern in mind, we had a number of specific objectives when we decided to develop our new IT system. The first was to increase our ability to process more data more quickly without reducing the accuracy of the matches. For our music publisher clients, this means processing their song registrations more quickly (via a more efficient use of CWR files), receiving their royalties more quickly, as well as lower administrative costs as a result of the increased automation. For our staff, LDS offers more streamlined and efficient workflow processes that allow them to focus their time on solving more complex problems rather than having to handle more basic and routine tasks.
We also wanted to integrate fully the licensing and royalty data received from our licensees, so that less manual review and efforts would be required to link back royalty payments to the corresponding licence and recording details. We worked with our licensees to implement new and more robust electronic licensing and royalty reporting file formats in order to ensure the consistent use of all necessary data identifiers and the automated ingestion and linkage of this information in our system. These efforts will, in turn, benefit our publisher clients who will see more complete information on their royalty statements.
Another improvement is the consolidation of the royalty distribution process for all of CMRRA’s licensing activities. Once the system is fully converted, our clients will receive a single consolidated payment of their royalties, along with an easy to read summary of the source of their royalties, as well as helpful analytics to quickly review their top earning songs and licensees. The statement data will be available online and will be downloadable as in a simple spreadsheet program such as Excel.
In addition, we are rolling out a new version of our online portal “CMRRA Direct” where our clients can access their song, licence and royalty information. This is all supported by LDS, which now also offers our clients the ability to register single songs online.
The next phase for us will be to expand CMRRA Direct by offering “self-serve” reporting functionality to our clients. For instance, a publisher will be able to get a report on the amount of royalties it has received for a specific songs or recordings without requiring the assistance of a CMRRA employee to assemble this information.
These are all exciting developments that we are very pleased to offer our music publisher clients.
Q: There is a lot of talk about the need for greater transparency in the industry. What is CMRRA doing to address this concern as it develops its new system?
A: In addition to offering better access to licensing and royalty data in LDS , we’re also very excited to have developed a new Claims Website that will provide rights owners the ability to review unmatched tracks, unidentified works and undistributed royalties associated with those works, and to make claims online via a secure web portal.
Currently, the Claims Website is available in beta mode and offers the ability to review unclaimed royalties from the major labels. We’re working to launch the feature that will allow rights owner to make claims online. The next step will be to expand this functionality to other royalty streams, such as online music royalties.
For us, this is not just a question of transparency — it’s a matter of putting power in the hands of rights owners to collect their unpaid royalties and to allow them a clear view into what might otherwise be described as a “black box”. It’s worth noting that CMRRA, in large part, does not collect royalties pursuant to blanket licence agreements. We’re required to invoice the online music services on a song by song basis for the works in our repertoire in order to get paid. The digital “long tail”, in particular, can be incredibly challenging to work through, and we welcome the rights owners’ involvement to ensure their royalties are properly identified, collected and distributed. We’re here to provide them with the tools they need to do this.
Q: How is the licensing of online audio services in Canada different from what your clients experience in the USA?
A: To start, in Canada, CMRRA directly licenses all online music services, without the need to pass through any intermediary. As such, royalty payments are regularly remitted directly by CMRRA to our music publisher clients who then benefit from faster payments with better reporting. This is unlike what occurs in the United States, where the reproduction of songs offered as permanent downloads is licensed and accounted for by the record companies rather than by the online music service.
In addition, CMRRA licenses the reproduction right via its joint venture CMRRA-SODRAC Inc. (CSI). CSI represents the joint repertoire of CMRRA and SODRAC, which together cover the vast majority of songs streamed and downloaded in Canada. Our combined efforts have allowed us to attain very favourable rates and administrative terms to ensure a greater level of transparency. For instance, all tariffs certified by the Copyright Board of Canada are public, and rates are not bound by confidentiality agreements. In addition, all online music services are required to disclose all of their sales and streaming activities to CSI, so that we may then identify and invoice them for the songs we represent. The fact that we have the complete picture on this activity allows us to easily invoice and collect royalties for past activity when new publishers join CMRRA and new songs are registered and identified.
By contrast, publishers in the USA don’t often have a clear idea of what’s been used by the online music services. Putting the puzzle together requires a great deal of effort and resources. The process is much more efficient in Canada and we’re ensuring that rights owners of all sizes can get paid We have been licensing online services for over a decade and, as a result, have compiled a vast and comprehensive database of songs, sound recordings and information on rights owners.
Furthermore, CMRRA has attained some of the best royalty rates internationally for online music services and our percentage rates are subject to minimum payments for all uses of songs.
Q: CMRRA recently filed new tariffs related to music videos and audiovisual service. What can you tell us about these new lines of business?
A: Our entry into audiovisual licensing is a big step forward for CMRRA in the expansion of our services. This move was motivated by a couple of different factors.
First, we were motivated by the success of our ‘broadcast mechanical’ tariff which serves to license the reproductions made by traditional radio stations in the course of their operations. These copies facilitate the ingestion, selection, retrieval and broadcast of music content and provide tremendous efficiency and value to those operators. Our commercial radio tariff, which was first certified by the Copyright Board of Canada for the year 2001, has earned copyright owners more than $135 million in royalties since inception, which reflects the economic value of those copies in Canada.
Our recent drive to pursue similar tariffs for the reproduction of music incorporated in audiovisual content was born out of the rapidly changing audiovisual marketplace. The reproduction right related to the distribution of audiovisual content has never been as important as it is today. Online music videos and user generated content are now at the forefront of music consumption. At the same time, movies and television programs are now accessible through a wide variety of different media. Content can now be viewed practically at anytime and anywhere using a variety of devices from television and computer screens to tablets and mobile phones. Each of these delivery methods necessitates reproductions of the program content in order to deliver it to the end users, and to allow such users to make additional reproductions in order to watch it. Every time audiovisual content is reproduced by a delivery service or its users, so too is the music contained in that content.
Just like radio broadcasters, those services derive significant value from the copies they make and they should, accordingly, obtain licences and pay royalties for those copies. It’s a matter of fairness. CMRRA’s mission, as always, is to realize the full economic value of the use of our clients’ rights in Canada. We’re excited to pursue these new audiovisual tariffs on their behalf and add this to our list of services.
Q: 2015 marks CMRRA’s 40th anniversary – what a tremendous achievement. As you prepare for your AGM this month, what are the main priorities for you, your Board of Directors and your staff?
A: With the ongoing decline in CD sales and private copying royalties, we’re focussed on maintaining the strength of our other licensing activities (online and broadcast mechanical activities) and developing new revenue sources.
Our priorities will very much depend on the outcome of the Copyright Board’s decision related to our commercial radio and online music services tariffs, which we hope will be rendered before the end of this year. This will ultimately determine the value of the reproduction right in those areas and will drive our strategic direction.
We have proposed audiovisual tariffs to generate new revenue for our clients. This will require much of our attention in the months ahead. In addition, we’re looking to develop new services for our music publisher clients and other organizations to optimize their business both here and internationally. Our excellent reputation for quality, expertise and transparency, in addition to the enormous amount of data we have meticulously assembled, puts us in a unique position to successfully diversify our services. The world of collective management is changing rapidly in the USA and Europe. Although it’s too early to make any announcement, there’s no question that CMRRA is part of this changing landscape and it’s clear to me that our future will incorporate a broader scope of activities and partnerships in order to maintain the economies of scales required to efficiently deliver our core services.