CBC’s Free Music Gets Cold Shoulder

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The online music debate is heating up north of the American border. Several companies have formed a coalition in an effort to shut down a free music website recently launched by the Canadian Broadcasting Corporation (CBC) stating that their actions threaten to ruin the music business for the rest of the industry.

The coalition is comprised of Quebecor Inc., Stingray Digital, Cogeco Cable Inc., the Jim Patterson Group and Golden West Radio is convinced that the new free music service offered from CBCmusic.ca will have a catastrophic impact on private radio stations, streaming music websites and of course themselves. The coalition hopes to include Rogers Communication Inc. and Corus Entertainment Inc. which are two of the largest owners of radio stations in Canada.

The Coalition intends to file a formal complaint with the Canadian Radio-Television and Telecommunication Commission (CRTC) stating that the broadcaster has no legal right under its current mandate to compete with private broadcasters in the online music arena.

“The only music that you can hear for free is when the birds sing,” said Stingray CEO Eric Boyko, whose company runs the Galaxie music app that charges users $4.99 a month for unlimited listening. “There is a cost to everything, yet CBC does not seem to think that is true.”

The main source of contention is the fact that the CBC avoids paying royalty fees because they are considered a not-for-profit corporation. The coalition contends that the CBC must charge subscribers of for their streaming service.

In a letter, the coalition demands that Ottawa’s Federal Heritage Minister James Moore to either shut the site down, force it to play only Canadian music, or charge for access like private companies do. There has been no follow up statement from Mr. Moore.

Where Canada is

“The CBC is using the preferential royalty rates it receives from the various collective societies because of its status as a non-profit public broadcaster to make the service viable in the long term,” the group wrote in a letter to be delivered to the minister today.

“We asked that the CBC be compelled to justify its actions and explain how the launch of the CBC Music service is not competitive with existing services offered by private broadcasters and how it is not damaging to the industry.”

The CBC’s actions are part of a larger dispute regarding the role of the CBC, whose federal funding was slashed in Jim Flaherty’s most recent budget and about how online music services should compensate rights holders for music played online.

Broadcasters feel that because of the recent budget cuts, the CBC will record fewer live music broadcasts and will need to introduce advertising on its Radio 2 network. There are growing concerns that the musicrtc, cbc, c service is a foreshadowing of the CBC’s larger ambitions to cut into their profits.

“These actions further distances the corporation from its mandate, while placing it directly on a collision course with private broadcasters who can only rely on advertising and subscription revenues to sustain their services,” the broadcasters warned.

After the service was launched by the CBC in February, the Society of Composers, Authors and Music Publishers stated that when it set flat fees for the more than 100,000 music publishers it represents, it never envisioned a constant stream of music flooding the Internet.

The society plans to review the royalty policies in the wake of the new CBC service which is becoming exceedingly popular with over 4.2 million hours of music streamed from listeners to date.

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