Monday, June 27, 2011
Tuesday, June 21, 2011
Here are some of the comments that I made.
1. The auditors stated in their Basis for Qualified Opinion that the copying records had the issue that 'the completeness of which is not susceptible to satisfactory audit verification.' Acknowledging that other reprographic mechanisms have similar problems, the auditors went on to say: 'we were unable to determine whether any increase might be necessary to licence fee revenue, provision for royalties for distribution, excess of revenues over expenses for the year, accounts receivable, undistributed royalties and net assets." Hmm.
2. AC spends money on mentoring other RROs in the Caribbean/China and so on. Perhaps writers would rather the money for these junkets be sent to writers instead.
3. Operating budget expenditures include: professional fees of $851K, and $730K in Copyright Board applications. One might ask, who are these paid to? Are they paid to staff members? or to businesses in which staff members might have a financial interest?
4. Expenses are $8.7 million and this is the figure that is used to calculate many others. If one adds the amount sent to the Cultural Foundation, $491K, it brings expenses up to $9.19 mil, or 27.2%. Pretty high.
5. If a writer wants to know what the board members are responsible for, look at 2(f) Undistributed Revenues. This clause means that, among other things, the $63.5 million in Money Market Funds were left there, and base payment Payback authors received $176 each due to their own representatives on the board.
6. 2(h) Tariff under appeal. Basic education providers have appealed the tariff the Copyright Board thought was reasonable. As education may win on appeal, should AC be treating the possible money as 'deferred revenue'?
7. 2(k) Revenue Recognition takes the novel approach in 'deferring' what it has not received and 'accruing' what it may never get in the same clause. That's interesting, and perhaps a bit unfair. I mentioned that I have a friend who spent his career at the federal Auditor General. I will be asking him his thoughts on the financial statements. I will let you know what he says in due course. This and most of the rest are examples of why writers who are AC members should have basic accounting and legal advice, paid by AC, but at arms-length from it, so that we can receive advice from professionals hired to tell us what our best position is.
8. Cash and Cash Equivalents are held in Money Market Funds of $63.6 million. The latter are usually thought of as too risky an investment for money that has to be invested at low risk. The other thing is most writers would rather have the money. Those funds represent 1673.7% of what writers received under Payback. Do remember that board members make the decisions on how much money goes to writers.
9. Nowhere in the financial statements, nor in the annual report itself, does AC mention that writers received a small $3.8 million. The balance sheet, on the other hand, notes that AC has assets of $104.2 million. This amount is 2742.1% more than what writers received. Having made the calculation myself, I now find it hard to believe how disproportionate it is. I think most other writers will think the same.
10. Footnote 7 is where the figures on the Cultural Foundation may be found. I have had numerous specific requests to find these figures. There is $4.3 million in these funds. Had the board distributed these amounts, writer payments would have more than doubled.
11. Let me show you a comparison of Total Revenue versus Total Expenses.
2007 2008 2009 2010
Total Revenue 37.3Mil 36.8 34.8 33.8
Total Expenses 7.1 Mil 6.7 8.2 8.7
Percentage 19.0 18.2 23.6 25.7
Here is the point: revenue is dropping and expenses are rising. And expenses have risen 22.5% in four years. And, as I mentioned above, if we add the $491K sent to the Foundation rather than distributed to writers, expenses were $9.19 million. or 27.2% of total revenue.
These are big figures and illustrate once more that writers could use some advice from a lawyer and an accountant telling them what is in their best interests.
Monday, June 20, 2011
Saturday, June 18, 2011
Don Meredith’s point of when is the right time to address issues with AC makes sense. If the new bill that replaces Bill C-32 is essentially the same bill as before then it will have big consequences for AC. My read on this is that AC as we know it will simply collapse if such a bill goes through, and that’s one of the scenarios for which writers need to prepare. Now, as never before, writers need information they can trust, they need to share that information and then they need to come to a conclusion. These are very good reasons for signatories coming together at this time in a joint committee. This should have happened years ago when writers agitated for the Friedland Report.
I think the chances of a new bill going through are pretty high. But saying that collapse of the current reprographic mechanism is likely does not mean that it will disappear entirely. (And in case you did not know there are other reprographic mechanisms out there for collective licensing). I am just being practical here, and for the moment, thinking through what it would mean for writers if AC did not survive in its present formulation. We all believe in collective licensing, but we need collective licensing that meets a writer’s needs.
In the likely collapse outcome, AC will not cease to exist. But what will happen is that a remnant of revenue will remain, but it will be so low that the highly paid staff will leave because their salaries – likely in the $150,000 to $300,000 range – as well as benefits, pension contributions and severance can no longer be supported. (If I had been working there when Bill C-32 came out, I would have immediately begun looking for another job - that’s what bureaucrats do).
How much revenue will remain? Well, if we accept, for the moment, AC’s estimate of what it gets from education – it says 85% - that means that 15% of revenue, or $5.06 million will still be coming in. My historical perspective on this is that education revenue is more like 75% of total revenue. So the upper boundary on revenue remaining could be higher, more like $8.4 million. This top level is 221% of what writers received this year under Payback – and so a writer may actually get a higher cheque under the new copyright bill, perhaps even double what you got this year. In this scenario, writers will have to pick up the pieces and re-establish the original purpose of AC, so the promise it held for us may actually occur for the first time.
In the beginning, the reprography bylaws were drafted in the belief that only writers would be part of the program – visit Flora MacDonald’s speeches in Hansard and make your own judgement. A decision was made early by writers that the cultural publishers, essentially the regional presses that publish our non-fiction, fiction and poetry, would be let into the system to share with us. But now, when our baseline payment of $175 is less than a copyright lawyer makes in an hour, we creators need to come together, talk over what will be done to resolve the situation and make it happen.
You should know that there is quite a lot of off operating budget money that has not been distributed. The balance sheet shows $104.2 million in assets – we would like this protected. Then there is the invested money - between $24 and $63.7 million - that we would like distributed. And there is the Tariff under appeal that AC has billed and thus counts as an asset, under Accounts Receivable in its financial statement as $56.9 million (Footnote 4). In addition, there is the Cultural Fund of $4.5 million. I was not interested in such a fund, and I would like that money returned. It represents more than doubling the payment you received last year.
So, there are many subjects that writers need to talk over, and to do this we need some specialized advice. We have always needed legal and financial advice because we are volunteers who work late nights to figure reprography things out after our day jobs have ended. What is required is a pot of money created for us at AC so that we can seek arms-length, independent advice regarding the many questions that will come out of our joint committee of signatories. Writers need to think through many questions: do we want the publishers in with us? Or do we want our money separate, as is done in the UK, and is included as so in the TWUC motion? There are many other subjects that writers need to talk about a great deal to establish where we will go.
Regarding the invested money between $24 million and $63.7 million, I will be asking an accountant to give me his best estimate of that money. When I have it, then I will let writers know. This is another example that suggests writers need advice, so it will inform the talks we have with one another. Writers have always needed some independent advice: we need a lawyer and an accountant. People who work for us and give advice from the perspective of a writer.
We tend to forget that law is not about truth. Law is about making your best argument. What we have had in AC is lawyers who give advice mainly for the interests of the large educational publishers. Writers don’t need money spent on this, as many writers have been reduced to fee for service, and thus lost their copyright due to the disparity of power between an educational publisher and a writer. We need the advice of some technical people and should have had it from the beginning in 1988.
One of the scenarios to be talked over, when writers are properly informed, is to consider what we want in return for our support for AC. As mentioned in the TWUC motion, writers want: more money, more control and lower administrative costs. We want to move toward 50% of revenue. It makes a lot of sense to move right now, and to offer our support to the present reprographic mechanism in return for moving from the very small 11.3% of revenue we currently receive. The new bill represents a big change. And now is the best time to secure 50%, when AC needs our support. We can all support that kind of collective licensing.
Thursday, June 16, 2011
Wednesday, June 15, 2011
The League of Canadian Poets voted to join the new joint committee established by TWUC AGM’s motion to look into increased revenue, increased control and decreased administrative cost for writers at Canada’s reprographic mechanism, currently Access Copyright (AC) (See League motion post).
League members considered a lot of information before voting to join with other writers’ organizations to seek change in the current system. The new Payback system, introduced this past year has taken what was already a modest sum of $612 for repertoire writers and reduced it to a $176 base payment. Anything above this figure is considered a ‘supplementary’ payment.
After 23 years of waiting for a program designed to reward writers for their copyright, members receiving the base payment watched their income drop 71.3%. Overall, almost 80% of writers got less this year under Payback than last year. Looked at from another perspective: baseline poets and writers received less this year than a copyright lawyer makes in an hour.
It has been widely disseminated that AC staff are highly paid, for example, that the salary and annualized benefits of the executive Director, Maureen Cavan, are reported in the $300,000 range. An income of this category typically carries an additional severance package of $300,000 to $450,000. That means that the ED salary is equivalent to 1704.5 baseline poets, or virtually all the poets in Canada. League members received this information soberly.
What writers want is 50% of revenue. Other systems deliver this. The United Kingdom does and this is why the TWUC motion mentions working toward instituting their system here in Canada. Were the UK system in place in Canada, writers would have received $16.9 million in 2010. This represents an increase of 444.7% in creator Payback cheques, or a base payment of $782.74. Writers would like this money.
While revenue for writers has been disappointing, there is another side to the story. Administrative costs have been equally disappointing. AC spent $8.7 million on itself last year. Its estimate of what it gave to writers is $3.8 million. That means that for every dollar sent to a creator, AC spent $2.28 on itself. Writers find that pretty annoying. As AC has refused to give out administrative salaries, an observer has to estimate them by considering Australia, where their system is far more transparent. Read what is public knowledge there: http://www.theaustralian.com.au/news/arts/copyright-staff-get-more-than-they-give-to-authors-and-artists/story-e6frg8n6-1225831556653.
Comparable systems have much lower cost. The UK for instance has a 9% rate; Copibec in Quebec has a 13% rate. But AC’s ratio of cost to total revenue is 25.8%. This is another reason for changing the reprographic system here. If costs were cut in half to $4.35 million, that could more than double what writers receive - 114.5% more money.
The League vote was unanimous, with zero nays and one abstemption. League members voted to work with other writers’ organizations, and those writers with no AC representation for a better financial deal, more control and reduced costs. The League and its members strongly support collective licensing, but the AGM mood was that the current system needs change.
The benefit of working together is better information for all members of the signatory groups. There has been little independent information revealed to AC members. In fact, the information revealed has been quite the opposite. The annual report for 2010 has a section where one Payback author reports how great the new system is: http://www.accesscopyright.ca/media/6371/2010_annual_report.pdf.
But the report does not contain any direct information on Payback payments – the $3.8 million figure, for example. This figure was derived from the Creator Co-chair Penney Komb, mentioning it in an information dialogue sometime later, along with a series of bar graphs that illustrate what writers received from Payback. They were not included in the Annual Report; nor were writers informed that they receive only 11.3% of revenue. There is good reason for this because such information does not reflect positively on AC. But they are examples of what independent, arms-length, writer-centred research turns up, and information that will be in a future post. It is also the kind of information that joint committee members would share in their decision-making process.
In summary, the main reason for joining the joint committee for writers and their organizations is: more money, more control and reduced costs.
I am a bit puzzled by the timing of this TWUC motion. Although I agree with much of what it says (to a point), I find it difficult to muster much energy to pursue the matter when on the horizon the federal government is about to reintroduce its amendments to the Copyright Act. If those amendments include placing educational copying under 'fair use' then that bill could render the TWUC motion moot. Educational copying provides the bulk of revenue to AC. Without it, an argument over how revenue is distributed will be quite different, especially considering how AC's clout on the legal front will be diminished. Perhaps we writers should be more careful in picking our battles and when to fight them.A. I can't speak for all the members of the Writers' Union (or of the League of Canadian Poets) who voted for this measure. Questions like yours were raised and discussed. But the motion was supported by writers who have been among the leading voices and most prominent creators in the legislative fight to defend copyright and collectives, last year and for many years.
There is no slackening in the Union's commitment to strong and effective copyright legislation or in its opposition to wholesale exemptions for schools, universities, and other institutions whose work depends on our copyrights. The Union works closely with Access Copyright on copyright legislation matters and will surely do so as long as Access Copyright holds the franchise for our copyright and collective licensing interests.
Last year's battles in Ottawa confirmed just how central creators are to the defence of copyright and of collective licensing. Creators were front and centre throughout the debate, and Access Copyright depended heavily on creators to make the case for its survival.
I think it is fair to say that many writers found themselves asking why it is that Access Copyright depends so much on creators to provide its legitimacy -- and yet leaves so many creators deeply dissatisfied with the way it represents our interests. For many of us, I think, the fight for effective copyright legislation and the fight for effective collective licensing processes go hand in hand. It is because we are serious about the one that we are serious about the other. This is the right time to do both. If we withheld action awaiting the end of copyright debates, we would surely wait forever.
In any case, the Ottawa officialdom has long said that once the "first" stage of copyright legislation is done, one of the next things it plans is a review of how collectives fulfill the mandate they have been given. If we are not prepped for that, we risk being ignored in that process again.
Just my opinion, Don, but it reflects what I have heard.
Monday, June 13, 2011
Regarding the TWUC Motion on Creator Copyright:
a) Support for TWUC motion on creator copyright: Whereas the Writers' Union of Canada strongly approved the following motion at its 2011 Annual General Meeting:
"Recognizing that collective licensing of copyright is a vital interest of the creator community, but that creators receive an inadequate share of the revenues of Access Copyright and are unable to control how the copyright income raised in their name is managed
And Recognizing that key differences in the copyright interests of publishers and creators will always prevent Access Copyright from fully and effectively representing creators' copyright interests,
Moved that one solution is an operational separation of creators' and publishers' interests in collective licensing, for instance, by the British model of a creator-run distribution collective that controls and distributes the half of collective revenues that belong to creators,
And Moved that National Council direct an investigation as to how a significant reform of collective licensing in
can be brought about at the earliest possible moment." Canada
BIRT the League of Canadian Poets supports this motion and will send a representative to the joint signatory committee investigating creator copyright.
b) Contribution of material to creator copyright committee: Whereas members of the LCP, notably Cathy Ford and Dennis Reid, have undertaken considerable research over the last five years into creator copyright at Access Copyright:
BIRT the League representative to the joint-signatory investigative committee on creator copyright present research and recommendations from the League to that committee for consideration; in addition, the League recommends that the committee consult with Dennis Reid and Cathy Ford as appropriate.
Friday, June 3, 2011
In the statement, Access Copyright defends its revenue distributions with its usually bewildering explanations of its policies. It even claims to have implemented the Friedland Report of 2007, which recommended sweeping changes to distribution processes -- and which the publishers' caucus vetoed even before the final text of the report had been received.
Interestingly Access Copyright makes no response to the other half of the Writers' Union's declaration: that key differences in the copyright interests of publishers and creators will always prevent Access Copyright from fully and effectively representing creators’ copyright interests. More on that to follow.
Update, June 13: My friend Penney Kome, who is Co-Chair of the Board of Directors of Access Copyright, sent the following comment some days ago. I regret the delay in publishing it, as we are still working out comment procedures for the website.
How bizarre to say the publishers "vetoed" the 2007 Friedland report when in fact Friedland did submit the final version and the Board spent two years working through the report's 23 recommendations and dealing with every one of them. The contract override is gone, all the splits are now 50-50 or 100-0. The Board did reject Friedland's recommendation to split royalties on Out-of-Print works 50-50, and voted unanimously that the creator should receive 100% as is current practice. Friedland recommended that distribution of creator repertoire should be weighted so that those who publish more should receive more, and Access adapted the CLA Payback system to Canada. Access posted the Board's response to every recommendation online. The result may not have been what you wanted or anticipated, but the report was neither vetoed nor ignored. Why would you post information that is demonstrably untrue?Penney is mistaken in suggesting I have knowingly posted untruths. The world is a complicated place (as Access Copyright often demonstrates), and well-meaning people frequently disagree without untruths being the cause. In this case, her account of the board's work does not show mine to be untrue. The publishers' caucus did reject Friedland's report as soon as they saw the draft report, and two years of the board's subsequent work did not change that. Professor Friedland's Report called for a fundamental reorientation of distribution policies, but the changes actually made (some of which Penney lists above) included only those that publishers and staff were willing to accept. Those fell far short of significantly reorienting the division of revenues between publishers and creators. At a recent Writers Union workshop, Access Copyright lawyer Roanie Levy said Access Copyright implemented as much of the Friedland Report as was possible, and that seems an accurate statement -- given what was possible.