The Power of Perspectives

The Canadian Bar Association

CBA/ABC National

Money (That's What I Want)

September 11 2015 11 September 2015

Stargrove Entertainment has filed a complaint with the Canadian Competition Tribunal against Universal Music Canada, one of the world’s foremost record labels, alleging illegal price maintenance and exclusive dealing. As Craig Blakely and Jeff Matsuura relate:

Until April 2015, Canadian copyright law applied a fifty year term for works music recordings.  In April 2015, the Canadian government enacted amendments to the copyright law which extended the term to seventy years.  That amendment was essentially the work of Canada’s major music recording companies, and was reportedly implemented without any meaningful input from the public or other interested parties.

Prior to the change in the law, Stargrove had obtained appropriate licenses from music publishers and other rights holders to enable the company to sell public domain versions of some previously released Beatles recordings.  Although the underlying recordings were in the public domain, Stargrove needed to obtain mechanical licenses from the music publishers in order to create its public domain versions of the recordings.  Stargrove obtained all necessary licenses for the first set of public domain Beatles recordings, and offered them for sale to the public.

As Stargrove prepared a 2016 release of other recordings, by the Beatles and other popular artists, it sought it licenses from the appropriate rights-holders, only to have their requests denied. The amended Canadian copyright law was also retroactively applied, further impacting the company.

Stargrove claims that the actions taken by the various Canadian music rights-holders constituted illegal conduct in violation of Canadian antitrust and competition laws.  Stargrove filed a formal complaint with the Canadian Competition Tribunal.  That complaint makes three key allegations.  It claims that the rights-holders engaged in illegal refusals to deal with Stargrove by denying mechanical licenses and other approvals that are routinely granted in the recording industry.  Stargrove also argues that the rights-holders engaged in illegal price maintenance activities, blocking Stargrove to ensure that current higher prices for music recordings were preserved.  Finally, Stargrove alleges illegal exclusive dealing requirements enforced by record companies to force distributors to deal only with them and not with Stargrove.

The company’s antitrust complaint has already raised eyebrows. Michael Geist remarks

While the legal issues will unfold at the Competition Tribunal in the months ahead, the evidence included in the complaint paints a picture of an industry desperate to keep low-priced, consumer-friendly alternatives out of the market, aided by a Conservative government willing to grant longer rights without public consultation or comment.

[…]

The Conservative government gave Universal Music what it wanted in April 2015, as the budget included a sound recording copyright term extension for an additional 20 years. As a result, Canadian consumers will now pay higher prices for some music with less choice.

The latest legal move by Stargrove offers some hope that at least existing public domain records might eventually make their way into the Canadian marketplace, while appearing to pull back the curtain on the efforts of the industry to stop low-cost competitor products from seeing the light of day.

In a similar vein, Mike Masnick delves more deeply into the “dirty tricks” played by the recording companies involved in the matter – including Universal’s encouraging its employees users to post negative reviews of Stargrove’s CD on the Wal-Mart website – and concludes:

All this because the industry so fears having to compete against the public domain. All this because, despite having total exclusivity for fifty years on some of the most popular music on the planet, that's still not enough. 

It really makes you wonder why does Universal Music and the other record labels seem to hate the public so much? When those songs were recorded, everyone knew they'd be in the public domain now. That was a part of the deal. And it was certainly enough incentive to get the songs recorded at the time. So why are they so focused on continuing to block the public domain today?

Photo licenced under Creative Commons  by badgreeb RECORDS

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