Andy Nichols

Café owner Michael Landry was surprised when told he may owe six years of royalties for playing music in his shop.

He listens to local radio stations, supports local music talent and pays for all of his CDs. In other words, Michael Landry, owner of Ground Effect Café, is an ideal music consumer.

So Landry was shocked when he received a letter earlier this month from an obscure Canadian music licensing company demanding six years of royalties for playing music in his small coffee shop.

“I thought it was a joke, to be honest,” says Landry, sitting inside his modest southeast Calgary coffee shop. “I’ve never heard anything before this. No one ever sent me information explaining this. I’m pretty politically active and keep abreast of what’s going on, but I’ve never heard of this.”

But the letter, in fact, seems legit. Under Canada’s Copyright Act, recorded music can only be played for personal use. That means businesses, community associations and nightclubs that play background music are supposed to pay royalties to artists, record companies and publishers.

The letter demanding money from Landry came from Re:Sound Music Licensing Company, which earlier this year changed its name from Neighbouring Rights Collective of Canada and is tasked with collecting royalties for recording artists, sound engineers and record companies.

Because the background music tariff is relatively new, Re:Sound faces a monumental task of building awareness about the company and the music tariffs it collects, says Martin Gangnier, director of licensing for Re:Sound. “We don’t want people to not play music; that’s not the goal,” he says. “Ultimately, we want the tariffs to be fair to our members and to people paying the tariff as well.”

Approved in 2006 by the Copyright Board of Canada, the federal legislation allows Re:Sound to collect royalties when published music is played publically, including on-hold telephone music, weddings and funerals. Charitable and religious events are exempt from paying the music tariffs, as is music used for educational purposes.

At this point Landry isn’t sure how much money he has to pay Re:Sound, but whatever the amount, he believes the principle is unfair. “All they’re doing is collecting revenue for people to listen to music,” he says. “Re:Sound isn’t concerned with creating music, they don’t create music, they have nothing to do with music at all.”

According to Re:sound’s letter to Landry, music users are told to calculate how much they should pay. Rather than charge a flat rate, music users are given two formulas: The first is based on the maximum number of occupants of the business; the second is based on square footage accessible to the public. For example, a business with 2,000 square feet that is open 300 days a year would owe about $150 annually.

Landry’s fees are retroactive to 2003 — when the collective first proposed the tariff. Refusing to pay the royalties can land one in court. In 2007, Re:Sound collected about $1.5 million for music performers and record companies. Gangnier says more than 80 per cent of the royalties Re:Sound collects goes to their members.

Several local business owners question whether the fees end up in musicians’ pockets, and they say this may be a detriment to the local music scene. “People don’t come here to listen to music,” says one Kensington shop owner who asked not to be named. “But if incidentally they come here and there’s a local, Canadian artist playing, then I think that’s just a betterment to the music industry.”

Beyond collecting music royalties, Re:Sound is now lobbying Canada’s copyright board to approve an additional new tariff targeting dance studios, fitness venues and nightclubs that play recorded music. Hearings for that proposal begin April 27, and if passed, dance venues could pay a minimum $250 a year or a monthly fee of $5 multiplied by its occupancy capacity (a bar with a 250-person capacity would have to pay $1,250 a month). Fitness venues would face a minimum $100 annual fee or five per cent of gross receipts each month.

These costs could bankrupt many businesses, says David Harris, senior executive vice-president for the Toronto-based Canadian Restaurant and Foodservices Association, which represents 31,000 members across Canada. “It comes in the midst of a recession and it hasn’t been well-received,” says Harris, adding big venues may have to pay tens of thousands of dollars. “Large establishments have a life cycle and if they’re at the tail end this could push them over.”

Decidedly Jazz Danceworks, a local non-profit organization, may be forced to pay hundreds of dollars in monthly royalties if the proposed tariff is approved — a cost that, ultimately, will be passed onto customers, says manager Kirstin Anderson. “For us to have to gauge our members for something like that when all we’re trying to do is provide a service because we love dance and music and we respect artists is kind of a bummer.”

Other Calgary business owners — those who haven’t yet been hit with the tariff — scoff at the idea of paying for what they say amounts to free marketing for musicians. “I’d fight it until they could show me the fairness of the whole thing, that not only my business was being audited but that every store in the entire nation that plays music was being done,” says one Kensington store owner.

Several businesses owners who spoke to Fast Forward Weekly on condition of anonymity, fearing speaking publicly would make them a Re:Sound target, said the law is ludicrous. “How do they know what music I’m even listening to?” asked a 17th Avenue shopkeeper. If he had to pay the royalty, he would simply quit playing music. “How many consumers would there be then if there was no music being played.”