The HAC legal challenges with both SOCAN and the Neighbouring Rights Collective and their respective legal representatives continues.
The HAC has provided IH&RA members with this for information only at this time; although keep in mind these two new tariffs could very well impact you in the near future. We will keep you apprised of all developments.
SOCAN TARIFF #23 PROPOSAL
The Society of Composers, Authors and Music Publishers (SOCAN) has applied for a new royalty fee on the use of pay per view movies, video games and local television.
SOCAN's proposal calls for a minimum annual tariff of $12 per room - a fee that would add up to more than a $250,000 for Canada's largest operators. In addition, SOCAN wants these fees applied retroactively to 1999.
SOCAN is also seeking a new royalty fee for any pay audio service with music in a guest room. The overall fee would be a minimum charge of $12 per month per room , occupied or unoccupied.
The Copyright Board of Canada turned down the HAC position that the hotel is simply the venue for services and that the validity and application for new Royalties rests with Third Party Providers.
The HAC is now participating in hearings to assess the validity of SOCAN's proposal and the associated fee structure.
On January 27, 2005 several hotels across Canada have now been ordered by the Copyright Board of Canada to provide financial data through the HAC.
NEIGHBOURING RIGHTS COLLECTIVE OF CANADA FEE PROPOSAL
A new amendment approved by Parliament will force our lodging industry to pay to the Neighbouring Rights Collective of Canada (NRCC) a second background music fee of a minimum of $175 for meetings, conventions and restaurant space. This fee compensates performing artists and studio engineers, in addition to a current SOCAN tariff for the same.
The proposal from the NRCC would increase the minimum fee for the use of background music by 194%.
The Neighbouring Rights fee is applicable only to Canadian and "International" music, but not American music. This means that the lodging industry could avoid paying this new Tariff simply by playing "American" music.
The HAC is formally on record opposing this new fee. In fact, most hoteliers across Canada have now completed an HAC survey stating that they oppose the tariff and will in fact switch to American music.
Here is a recent press release issued 11 February 2005 from the Hotel Association of Canada on this issue:
HOTELS AND RESTAURANTS BEING FORCED TO PLAY NON-CANADIAN MUSIC
The Hotel Association of Canada (HAC) has filed a statement of Objection to the Neighbouring Rights Collective of Canada's (NRCC) proposed Tariff 3, a proposed fee on background music being played in the public spaces of hotel and restaurant establishments.
There is already a tariff that governs the royalties to be paid to SOCAN for the same use. In 1997 the Board set the royalties payable to SOCAN for the use of music supplied by background music suppliers at 7.5% of the amount paid by subscribers for background music performed in non-industrial premises. SOCAN and background music suppliers have agreed that this rate should continue to apply until December 31, 2005.
The HAC conducted and has retrieved the results of a national HAC survey of hotels across Canada regarding background music and related fees.
The results of the HAC survey identify several key points to the issue of background music in general and the NRCC proposed fee in particular:
- American music is not affected by the proposed fee.
- Customers place no value on the origin of the music or nationality of performer
- There is very low or no cost associated with switching to royalty free music only, as the service provider would simply be requested to make the changes.
"It is a sad day when our hotels and restaurants will be forced to play non-Canadian music" said HAC President Tony Pollard, who also serves as IH&RA Vice President for Hotels.
The Hotel Association of Canada is the national organization representing the accommodation industry in Canada. HAC membership encompasses the provincial and territorial hotel associations, the corporate hotel chains, independent hotels, motels and resorts and the many suppliers to the hotel industry. Our objective is to assist both our national and international members as they endeavor to enhance their competitiveness and achieve their bottom line.
Tony Pollard invites all IH&RA members with questions on this issue to contact them at: pollard@hotelassociation.ca.
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Anthony Pollard, President, Hotel Association of Canada & IH&RA Vice President for Hotels
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