30 Seconds to Mars the SCC

iTunes, Amazon.com, Puretracks.com, Rogers Music Store, Sympatico Music Store. For those music lovers who legally download music, these various websites are but a few examples of online sources for mp3 and AAC downloads. As part of the digital consumer experience and convenience of online shopping, previews of songs are provided: 30 second clips that allow consumers to aurally sample the music. Is this that song I heard on the radio the other day? Do I like American Trad Rock? What about Classical Crossover? The acoustic or studio recorded version? What about this electronic remix? Do I want the whole album for $9.99 or just the $0.99 hit single? It’s called consumer research!

We do it for almost everything we purchase. Take cars for example. I’m in the market for a new car. I go to the dealership – Mercedes-Benz is a tad out of my price range, so I head over to Kia. What does the salesperson ask me while I am there? Would you like to take the car out for a test drive? The motor vehicle industry has recognized the value of test drives for consumers. The Kia dealership is willing to take a financial hit in order to assist me in finding the car of my choice. By allowing me to go for a test drive, there is an increased chance that my choice car will be Kia’s 2011Rio. Not only is the price right, I love the way it drives! Digital music download services have recognized the value of the test drive model; it is embodied in the 30-second preview.

What is even better for the digital download service is that no financial loss needs to be taken. A full copy of the download is not distributed, only a 30-second clip can be streamed online. It is at this point where the artists, equipped with lawyers and the Copyright Act, RSC 1985, c C-42 [the Act], can step in.

On December 23rd 2010, the Supreme Court of Canada (“SCC”) granted leave to appeal from the judgment of the Federal Court of Appeal (“FCA”) in Society of Composers, Authors and Music Publishers of Canada v Bell Canada, et al, 2010 FCA 123. The debate in the case concerns the interpretation of the word “research” and the issue of whether the offer made to the consumer to preview a 30-second clip of a musical work constitutes fair dealing for the purpose of research within the meaning of section 29 of the Act, which provides that “fair dealing for the purpose of research or private study does not infringe copyright.”

Mo Money, Mo Problems

The issue arose in the context of a tariff proposal before the Copyright Board of Canada by The Society of Composers, Authors and Music Publishers (SOCAN). SOCAN applied to the Board for the approval of tariffs calling for a higher rate for downloads with previews than for downloads without previews. SOCAN did not seek a specific tariff for copyright in previews. A number of parties including Bell Canada, CBC, Apple Canada Inc, and Rogers Canada Inc. challenged the proposed tariffs.

Although the Board surprisingly did not hear submissions of the affected parties on the scope of research in s. 29 of the Act, the Board took a large and a liberal approach to the interpretation of the word “research.” The Board held the meaning of research in s. 29 to encompass “streaming a preview with a view to deciding whether or not to purchase a download or CD” (para 109 of the Board’s decision).

The Board also held that a preview constituted a dealing with a musical work for the purposes of research. Taking into account the six considerations set out by Chief Justice McLachlin in CCH Canadian Ltd v Law Society of Upper Canada, [2004] 1 SCR 339, for whether a dealing is fair (listed below), the Board held that “generally speaking, users who listen to previews are entitled to avail themselves of section 29 of the Act, as are those who allow them to verify that they have or will purchase the track or album that they want to permit them to view and sample what is available online” (para 116 of the Board’s decision).

Last Fair Deal Gone Down

The FCA in reviewing the Board’s decision found the contextual interpretation of the concept of research in section 29 applied by the Board to be neither unreasonable nor in error. “The consumer is searching for an object of copyright that he or she desires and is attempting to locate and wishes to ensure its authenticity and quality before obtaining it…listening to previews assists in this investigation” (para 20 of the FCA decision).

The FCA also agreed with the Board’s analysis of the six CCH factors for whether a dealing is fair: the purpose, the character and the amount of the dealing, alternatives to the dealing, the nature of the work, and the effect of the dealing on the work. Upon judicial review, attention was only drawn to the third factor, but the court found that the Board did not err in taking the amount of  dealing to be the length of each preview in proportion to the length of the complete work rather than considering the aggregate number of users and previews and the resulting hours of uncompensated music. The FCA could not find the Board’s decision regarding fair dealing with respect to previews to be unreasonable or in error.

I Can’t Get to Sleep, I Think about the Implications

The practical significance of the FCA’s decision is that it broadens the activities that may fall under the section 29 exemption of the Act. The struggle in copyright law is a battle between the rights of creators and the rights of users. Does the exception recognized by the Copyright Board and FCA decisions strike a balance between the competing interests? Is this the way we should be moving considering our evolving digital economy? Are we taking the correct approach by considering previews from the point of view of the consumer, or should we put greater emphasis on the idea that previews are a marketing tool used by digital download services to increase sales and profits?

I recently made my first purchase on eBay: a new pair of used glasses. I initially went into an optical store, tried them on and discretely wrote down the model number of the pair I liked (admittedly, I felt a bit guilty about not buying them there). I went home, immediately searched for the model number online. I found the model number and a Canadian vendor in Montreal – but how was I to know whether the one’s being sold were the correct pair? Conveniently, the vendor had put an image up. The vendor likely copy and pasted the image of the glasses from the eyewear designer’s website. Would anyone think twice about whether royalties were paid for that image?* Likely not. Should the eyewear designer be entitled to a royalty on that image? I’m not too sure I would say yes.

However, when it comes to musical works – I might be one to disagree. Composers, authors and music publishers have been notoriously taken advantage of by record companies for decades. Why did Radiohead release In Rainbows as a pay-what-you want digital download? SOCAN reasonably did not seek a specific tariff for copyright in previews; they just wanted a higher tariff for downloads with previews. Are the digital download services becoming the new record companies? I’m not too sure. However, what I do know is that the last album I downloaded, I did so directly from the artist’s website, where previews and youtube clips were abundantly available.

(*Note, I realize I may be missing some copyright law exceptions out there, as I am not an expert in the field.)