Competition Bureau - Information Request (music, payola, DRM)
russell at flora.ca
Tue Aug 16 14:43:47 EDT 2005
Dear Ms. Lambert,
Thank you for your reply. It is very helpful, and I will spend more
time later analyzing the references you sent.
I am wondering if the Private Copying regime was considered in your
analysis of the music marketplace. This is a levy that is collected on
the import and manufacture of "audio recording media", and then
distributed to music publishers and the recording industry based on radio
airplay and soundscan music sales. The issue with airplay is not whether
there is competition in the market for access to radio as a music
distribution mechanism, but how airplay is being used as a marketing tool,
as a method to manipulate market statistics (for lobbying and other
purposes), and as a way to gain unfair access to the CPCC levy.
I realize you are using the word "firm", but I can't believe that there
is a loophole in Canada's competition policy where a small number of
dominant players can work together to fix a marketplace as a way to get
around Canadian competition policy. With music we have a small number of
major labels represented by CRIA who control 95% of the market, but who
have far less than 5% of Canadian musicians signed to them.
In the case of Internet distribution there are additional competition
problems, as the major labels represented by CRIA are using the tied
selling of DRM (Digital Restrictions Management) to tie the access of
content purchased through so-called "legal" download sites like
Puretracks, Archambaultzik, and Napster Canada to the additional purchase
of Microsoft Media access technology. The "portable devices" and "digital
devices" (including home computers) you mention must contain Microsoft
technology in order to access content "purchased" from these services.
Those of us who are not customers of Microsoft (I work in a competing
software sector) must either circumvent the digital tie (a technique Bill
C-60 will make illegal in Canada, and is already illegal in other
countries who have ratified the 1996 WIPO treaties), or be non-consumers
of music downloads from the labels that control over 95% of the market.
While I am quite happy to boycott these labels, other music consumers will
not be as motivated and will feel forced to purchase Microsoft software in
order to access CRIA content.
The only major "competitor" is Apple which ties the access to iTunes
distributed content to the use of Apple access software. This is a
wildcard in the market as the major labels often see Apple and iTunes as a
competitor to their control.
I only use pro-competitive Free/Libre and Open Source Software (Free as
in Free Market), and thus am also a non-consumer of Apple products. I
have no interest in purchasing music that is tied to the use of any
software vendors product. I believe there are competition policy issues
regardless of whether it is Apple and/or Microsoft that is granted a
market monopoly/duopoly on authorized access technologies for content.
All these anti-competitive techniques are inter-related. I do not
believe that there is a healthy market for competition through
alternative means given market control for one distribution mechanism is
being leveraged to control other mechanisms.
(Enclosed below for our public list is your letter, with email and other
information removed to avoid SPAM)
Russell McOrmond, Internet Consultant: <http://www.flora.ca/>
2111+ Canadians oppose Bill C-60 which protects antiquated Recording,
Motion Picture and "software manufacturing" industries from change...
http://KillBillC60.ca Sign--> http://digital-copyright.ca/petition/
---------- Forwarded message ----------
Date: Mon, 15 Aug 2005 10:33:25 -0400
From: "Lambert, Christine: #CB - BC"
Subject: Competition Bureau - Information Request
Hello Mr. McOrmond,
Thank you for your recent inquiry to the Competition Bureau. As you
requested, I will address both of your inquiries in the following e-mail.
First, as to your inquiry regarding the legality of "payola", that is the
practice of offering bribes on radio stations and their employees in order
to get music on the air, your concern does not raise an issue from a
competition law standpoint.
There is a three-part test that must be met in order for the Competition
Act to apply, more specifically for the civil abuse of dominance
provisions to come into play. The Act will only apply in cases where 1) a
firm that is in a dominant market position; 2) has engaged in a practice
of anti-competitive acts; 3) with the result that competition has been or
is likely to be prevented or lessened substantially in a market.
Nowadays, music can be listened to through various means (i.e. internet,
portable devices, digital devices). The fact that certain radio stations
are being offered cash and perks in exchange for airtime, although these
practices do diminish fair competition in the music industry to some
extent, they will not substantially lessen competition in the music
industry. For more details concerning the Bureau's approach to
enforcement, I refer you to the Abuse of Dominance Guidelines which can be
found on the Bureau's website (
Secondly, with regards Bill-60, the Competition Bureau is, in fact, aware
of the possible consequences that may arise from this Bill. Rest assured,
the Bureau is currently looking into these competition issues.
There is very little case-law relating to section 77. Tele-Direct is the
leading case on tied selling. Additional cases include : BBM, Nutrasweet,
Xerox, Chrysler. These cases may be found on the Competition Tribunal's
website : (http://www.ct-tc.gc.ca/english/SearchCases.asp?x=67) as well as
on the Canadian Legal Information Institute website :
I hope this information is satisfactory for you, but do not hesitate to
contact me again if you require more information.
Agente du droit de la concurrence / Competition Law Officer
Gouvernement du Canada / Government of Canada
Bureau de la concurrence / Competition Bureau
50, rue Victoria / 50 Victoria St.
Gatineau, Québec K1A 0C9
More information about the Discuss