The financial impact of Bill C-32 has been one of the key issues throughout the recent rounds of the copyright reform hearings. Numbers have been bandied about, but when challenged by MPs such as Dean Del Mastro and Mike Lake, the evidence for claimed losses has been lacking. The Canadian Conference of the Arts recently attempted to address the issue by floating a figure of $126 million that is says is “at serious risk of disappearing” for artists and rights holders as a result of Bill C-32. While it is good to see the CCA effort to quantify a number, the $126 million does not stand up to even mild scrutiny.

So how does it arrive the $126 million? Start with the two elements that appear to be accurate. First, the CCA says that changes to the ephemeral recordings provisions will mean that broadcasters will save $29.8 million in payments (while this may be correct, the broadcasters now claim that the savings are needed to “save local radio” and the cost does not speak to the issue of whether radio station format shifting merits nearly $30 million in compensation).

Second, the elimination of $25 million for public performance of videos in Canadian schools is likely accurate. These licensing revenues are collected by Audio CinÃ© Film (ACF) and Criterion, which primarily promote U.S. films. U.S. schools are exempt from similar payments due to an exception in their Copyright Act. Given that the dollars flow primarily to U.S. studios (though not exclusively – there is some revenue that goes to Canadian films) and that U.S. schools are exempt from similar payments, this seems like good policy.

Nevertheless, there is no reason to question the CCA claim that the combined value of these two sources of revenue is $54.8 million and that both are at risk if C-32 is passed in its current form.

The two other key sources of “losses” are simply fabrications. The CCA says that the failure to extend the private copying levy to digital devices such as iPods results in a $30 million loss. It arrives at this figure by calculating the average amount generated by the levy from 2001 – 2009. It should be obvious to anyone that the $30 million figure is a guess since the average amount generated by the levy over the past decade is an irrelevant number when trying to calculate the cost of an iPod levy.

If the CCA was serious about generating an estimated cost, it would identify the number of digital devices subject to the levy that are sold in Canada each year and then multiply that by the proposed levy amount. While that approach would provide a more realistic figure, those lobbying for an extension of the levy have been evasive about how broadly it would apply and how much the levy would cost. Developing a realistic figure would require the CCA to come clean on these issues.

The CCA also says that the extension of fair dealing to include education as a category puts $41.4 million at risk, the overwhelming majority of which stems from collective licensing for copying and course packs. This number is a massive exaggeration. First, there is no one that realistically argues that the education exception will cover all copying such that schools could rely on fair dealing to avoid any further payments. As has been discussed repeatedly, any fair dealing claim is subject to the Supreme Court of Canada’s six factor test.

Second, while collective licensing revenues may indeed decline in the years ahead – I have argued universities should consider walking away from Access Copyright – fair dealing reform will have very little to do with it. Instead, it is the emergence of open access, open educational resources, and licenced databases that provide alternative access to materials. Note that the licenced databases create a significant new stream of revenue for creators – over $100 million from the Canadian Knowledge Research Network alone – that is rarely discussed as part of the overall financial picture.

Third, even if there are some small reductions in payments owing to fair dealing, it is very likely that the savings will be used to pay for increased database access or to acquire new books since libraries will seek to ensure that there are no reductions in their overall budgets. In other words, even the prospect of a small reduction in the collectives revenues due to fair dealing will be offset by new revenues that go to authors and publishers. The net effect is a wash, not the irresponsible claims of a $41 million dollar loss.

Not only is over half of the CCA $126 million estimate inaccurate, but it fails to account for revenue increases that will be generated for artists by new rights that are included in Bill C-32. For example, new photographer rights could generate millions of dollars for those creators. During the 2009 copyright consultation, photographer groups claimed that the changes that later made their way into the bill could be worth between $50,000 to $100,000 per photographer based on new revenues from the sale of stock photography images worldwide (it cited survey data that found that 40% of photographers earned income from stock photography in that range).

Given the 14,000 professional photographers in Canada, this suggests gains of hundreds of millions of dollars. Even assuming that the photographers may have been exaggerating, if only 20% of photographers are able to generate half of the low end of the estimate, the provisions are worth $70 million in new revenue (2,800 photographers generating an average of $25,000 in additional revenue per year). In addition to the photographer provisions, there is a new making available right of sound recordings for performers that will undoubtedly be the subject of a future tariff before the Copyright Board as well as new performers rights that address term of protection and moral rights.

All of these new rights should be included in any estimate of the “costs” of Bill C-32. For the CCA to have excluded this information – as well as to have relied on questionable data with respect to private copying and fair dealing – renders their estimate little better than Del Mastro’s proverbial wheel of fortune.