Supreme Court copyright rulings could be good for Internet music downloaders

Canadians who get their music and games from the Internet got a mixed but largely positive message from the Supreme Court of Canada on Thursday.

The high court ruled individual downloads of music from commercial providers are not subject to tariffs to provide royalties for songwriters and music publishers, CBC News reported.

But the court decided music service providers must still pay royalties for streamed music.

The amount of the fees amount to pennies a song, so it remains to be seen whether music services such as iTunes will pass on the savings derived from the lifting of download royalties.

Jeremy de Beer, an intervenor in the cases on behalf of the Canadian Internet Policy and Public Interest Clinic, said the rulings were good for online music customers. Prices might not drop but the marketplace might expand, he told CBC News.

"I think in the medium term we're going to see an expansion of online music services — legitimate opportunities to buy and sell digital music on the internet — because the process for clearing the rights got a lot simpler and less expensive with these judgments," said de Beer, an associate professor at the University of Ottawa.

[Related: What Ottawa's new copyright laws will mean for Canadians]

The Supreme Court had heard an appeal of a lower court ruling involving major ISPs and the Society of Composers, Authors and Music Publishers of Canada (SOCAN).

The issue revolved around what constitutes a public music performance, subject to the kind of royalties that kick in for such things as radio airplay or use at clubs and restaurants.

The advent of the Internet muddied the waters on what's public.

The court found that individual downloads constitute a private transaction, not subject to performance royalties under the Copyright Act, the Globe and Mail reported.

But it ruled streaming music, such as on CBC's music site, digital commercial stations and sites such as Rdio, is "not a private transaction outside the scope of the right to communicate to the public."

The difference is significant, the Globe noted, because streaming services are growing in popularity as sites like Rdio and Spotify, which isn't available in Canada, allow consumers to customize their preferences.

It's unclear whether the ISPs' partial victory will change anything for consumers and SOCAN chief executive Eric Baptiste it's also too early to say what impact it will have on his members' income.

"It reflects a more complex environment" Baptiste told the Globe.

But he added that the ability to collect royalties from new services such as streamed music make him optimistic, because "every penny counts" for members.

There were five copyright decisions from the court Thursday and SOCAN appears to have lost out on all but the streaming-music ruling.

The Supreme Court overturned a lower-court ruling that allowed SOCAN to collect tariffs on music used in video games when the games were downloaded over the Internet. The video game industry and ISPs argued downloads were the same as buying a hardcopy of a game at a retail store, and so not subject to the performance tariff.

The court also ruled artists and recording companies could not collect royalties from movie and TV soundtracks, which the Globe noted are treated differently from traditional recordings when they involve pre-existing recordings.

And SOCAN lost an appeal of a Copyright Board decision that found short song previews on sites such as iTunes were not subject to royalties.

A fifth ruling, also let school teachers off the hook for photocopying textbooks for use in their classes. The court found the practice did not violate "fair dealing" provisions under the Copyright Act, but it also sent the issue back to the Copyright Board for reconsideration.

The Financial Post said that taken together, the high court rulings broaden the concept of fair dealing, which limits a copyright-holder's exclusive right to their work.

"The guiding perspective is that of the ultimate user or consumer," the court said in its ruling on song download previews.

"The service providers facilitate the research purposes of the consumers. There are reasonable safeguards in place to ensure that the previews are being used for this purpose."