IPR in Montreal Part 2 - Music Fans and Industry

UNCLAS SECTION 01 OF 03 MONTREAL 000436

SIPDIS

SENSITIVE

SIPDIS

SECSTATE FOR WHA/CAN, WHA/PD, DS/IP/WHA

E.O. 12958: N/A
TAGS: ECON ETRD KIPR CA
SUBJECT: IPR in Montreal Part 2 - Music Fans and Industry
Stakeholders Take IPR Into Their Own Hands

Ref: A Montreal 365, B Ottawa 406, C 05 Ottawa
2970

This message is Sensitive but Unclassified

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Summary
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1. (U) The strength and popularity of Quebec's music and
film industries have made them attractive targets for
illegal file sharing and pirating. Quebec music and films
are routinely pirated and sold at Montreal-area flea
markets along with internationally recognized music and
films. Although later overturned on appeal, a March 2004
ruling by a Federal judge that peer-to-peer file sharing
was legal posed a major setback for IPR proponents. That
decision, although now in limbo, legitimized file sharing
in the minds of many Canadian consumers and encouraged the
C$1.6 billion in illegal music downloads that occur in
Canada each year. Recognizing that potential music
consumers often do not fear legal repercussions from their
downloading, the Quebec music industry and fans have begun
taking IPR enforcement into their own hands. The
Association Quebecois de l'Industrie du Disque, du
Spectacle, et de la Video (ADISQ) has started campaigns to
make consumers aware of the detrimental impacts of file-
sharing on the local music industry. In September 2005,
the Quebec National Library stopped offering its patrons
the chance to burn copies of its CDs in response to
negative press coverage and pressure from ADISQ. While
these are encouraging steps, the continued popularity of
file-sharing and lack of legal remedy mean that IPR
violations in the Quebec music industry are not a temporary
trend.

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Fans / Local Industry Respond to IPR violations
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2. (U) Quebec has its own French-language music industry
complete with music awards shows and eight entertainment
magazines. With local Quebec musicians monopolizing some
38% of all CD sales and with more than half of the twenty
largest musical successes between 2002 and 2004 considered
"local creations," IPR issues have taken on a new level of
importance for Montreal's recording industry and music
fans. Quebec music CDs, like its films (Reftel A),are
being copied and sold at local venues, such as Montreal-
area flea markets, just like big-label music artists.


3. (SBU) Because the protection of IPR falls to the
federal Department of Industry and Department of Canadian
Heritage, the Royal Canadian Mounted Police (RCMP) alone
has the authority in Quebec to go after IPR violators. The
RCMP has focused its energy on IPR violators who are using
their profits to finance terrorist activities, pirating
operations that are run by organized crime outfits, and
"large-scale, commercial operations." An RCMP officer in
Montreal admitted the RCMP is not as intent on targeting
"mom and pop" establishments and "does not have the
resources to go after everyone" alleged to be involved in
the sale of pirated goods. Consequently, some private
sector groups have filed civil charges against pirated disk
producers.


4. (SBU) Pride in, and loyalty to, local artists led some
music fans to alert their favorite musical groups when they
found illegally copied versions of the Quebec artists'
music for sale at Montreal-area flea markets. Fan emails
prompted musicians to get in touch with ADISQ, the
professional association that represents independent Quebec
music artists and assists such artists in selling their
products to international markets. As a result, ADISQ
started a civil procedure to gain the authority to seize
all pirated disks for sale at flea markets in Quebec for a
period of one year. Getting the rights to seize pirated
materials was, according to a member of ADISQ, "not
complicated, but required proof" of the presence of pirated
discs. In August 2005, ADISQ sent representatives out to
the flea markets in question "dressed in t-shirts and
jeans," to gather evidence of the pirated disks being sold
(for an average price of C$4) and query vendors.


5. (SBU) Based on the proof that ADISQ's members collected,
four people were arrested and eventually found guilty by a
November 2005 civil procedure. The judge fined the four
guilty parties C$200,000 in total. According to an

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employee of the Canadian Motion Picture Distributors
Association (CMPDA),some of the same individuals who had
been implicated in the sale of these pirated CDs had also
been selling pirated Quebec films at the same flea markets.
The sale of pirated DVDs and CDs at Montreal-area flea
markets stopped directly after the judge's decision to
impose the fine on the four suspects. However, the CMPDA
representative said that pirates of local films and music,
while currently "scared" by the civil verdict, will
gradually regain the courage to sell their wares in flea
markets. "They'll be back. Just wait until the spring."
Press coverage of the court's decision increased public
awareness in Quebec of the presence of pirated goods;
articles also mentioned that the sale of pirated CDs harms
not only music vendors, but also the artist themselves.


6. (SBU) Quebec's music industry loses money each year to
the sale of pirated disks as well as from peer-to-peer file
sharing. The black market nature of the pirated CD sale
industry and the difficulty of translating peer-to-peer
downloads into potential CD sales make it difficult to
calculate monetary losses from music piracy in Quebec. One
estimate by ADISQ calculated the number of pirated disks
for sale at flea markets in the province (prior to the
seizure of CDs and the court's decision) at C$750,000 and
the monetary value of lost CD sales in the millions of
dollars.


7. (U) CDs from local artists are typically as expensive
if not more expensive, than CDs from major-label artists,
but this has not stopped the local music industry from
developing and protecting its interests in Quebec. Since
2004, ADISQ has financed an annual promotional campaign in
February to alert consumers to the damage inflicted by
file-sharing and piracy on the music industry and to
encourage music lovers to purchase CDs. In February 2006,
for example, people who purchased a CD from a Quebec artist
received a gift bag inscribed with the phrase (in French)
"for those who love music, say no to copying." The first
such promotion in 2004 coincided with an increase of 30.4%
in the sales of local artists' CDs over the same period in

2003. This increased level of sales has continued with the
program in 2005 and 2006.

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Library a magnet for disk burners
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8. (SBU) Another battle over file sharing and disk burning
raged last August at the Grande Bibliothque National (the
Quebec National Library),located in downtown Montreal.
Press reports that the Library offered access to
audiovisual materials only steps away from computers with
disk-burning software offered a sharp contrast to
simultaneous stories about ADISQ's efforts to combat music
piracy. While ADISQ was urging music lovers to purchase
CDs to support local stores and avoid copying and file-
sharing, many Quebeckers were taking advantage of the
Quebec National Library's extensive music library and free
disk burning software. The library's 90,000 audiovisual
materials represent one third of all its loans and are one
of the biggest attractions of the state-of-the art facility
(that opened in Spring 2005). The library's computers
afforded the library's patrons the opportunity to burn
their own copies of CDs without ever removing them from the
library. The Library's spokesperson initially stated that
the CD burners did not permit patrons to make multiple
copies of CDs, and asserted, incorrectly, the widely-held
perception that burning a disk is not itself an
infringement of Canadian law.


9. (SBU) In September 2005, faced with pressure from ADISQ
as well as negative media coverage, the library blocked the
disk burning software on all of its computers. According
to the Library's coordinator of the music and film
collection, "once we became aware that patrons were using
the computers to make copies of music, we had to do
something. It was happening right in front of our eyes.
We could not pretend it was not happening." This change in
the library's computer software, however, does not prohibit
the Quebec library's patrons from borrowing CDs and making
copies at home, or making such copies within the library on
their personal laptops. The Library's film and music
coordinator admitted that Library patrons could burn disks
on their personal computers while working in the library as
well as take disks home to copy. He did note that the
library places a three disk maximum on music loans, and
that library employees have been instructed to keep an eye

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out for patrons burning library music on personal
computers. "Though we can't really see what applications
[library patrons] are using" he added.

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Comment
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10. (SBU) Like its films, the local popularity of Quebec's
music places it in a unique position to highlight the
impacts of IPR violations on smaller artists who are not
internationally recognized. One RCMP official involved in
IPR violation investigations in Quebec noted to Econoff
that his staff, faced with limited resources, had chosen to
focus their efforts on IPR violations that had a public
safety component (such as the sale of substandard
electrical products with counterfeit stickers) rather than
sales of pirated music. However, in a positive development,
one contact at ADISQ noted that her group had been
"cooperating very closely with RCMP officials" in the wake
of the seizure of pirated goods at the Montreal-area flea
market and that she expected this cooperation to continue.
New federal Minister of Industry Maxime Bernier hails from
Quebec, and although his views on IPR protection have not
yet been clearly defined, it is likely that he will face
pressure from Quebec's music and film industry to tighten
existing regulations and increase penalties for IPR civil
convictions.


MARSHALL