Canadian copyright law empowers that nation's educational institutions to copy and use certain radio and television programs for free, paying royalties for some programs to the ERCC with the tariff being formally certified by the Copyright Board of Canada (broadly equivalent to the Copyright Tribunal in Australia under under s 138 of the Copyright Act 1968 (Cth)). Certification reflects s 66.52 of the Canadian Copyright Act.
The ERCC has indicated that
Royalties received by ERCC pursuant to its tariffs have always been modest; in recent years, they have not exceeded $10,000 on average. These amounts never came close to covering the collective’s obligations; it continues to carry significant payables dating back to the hearing into the 1999-2002 tariff.
Royalty receipts have been supplemented by loans in the amount of $20,000 from each of its six founding member collectives [ie the leading Canadian rights administration bodies]. These loans have never been paid back.
Costs have continued to exceed revenues, and debts have always largely exceeded any amount available to the collective. As a result, nothing has ever been distributed to rights holders.
Recent amendments to the Act have made it increasingly unlikely that ERCC’s costs would ever be covered by royalty receipts.
Unable to sustain continued losses, ERCC’s board of directors, comprised of one representative of each founding member collective, has recently voted to recommend to the five remaining members (one member having left ERCC a few years back) to dissolve ERCC and to write off the $20,000 loans as well as any accumulated interest. The five members are in the process of signing the required special resolution to commence the dissolution procedure. Accordingly, within approximately 120 days of November 4, 2013, there will be no entity to administer the receipt of any royalties pursuant to the 2012- 2016 tariff.The ERCC has formally sought a variation to the current tariff "as part of the process to have an orderly winding down of its affairs".
The Board notes [PDF] that
The ERCC argues that the variance it seeks will not prejudice the interest of any rights holders, whether or not they are represented by ERCC or its member collectives. ERCC has never had any money to distribute to royalty claimants and never will. Outstanding debts, including founding member loans, stand at approximately $830,000. Funds in hand currently are less than $40,000. Founding members’ loans will not be refunded. Once windup fees of approximately $15,000 are paid, other creditors will receive less than five per cent of what they are entitled to receive. Any additional royalties that ERCC might receive would serve to pay first the balance of these debts and second the member loans before any payment could be made to royalty claimants.
ERCC’s unstated conclusion appears to be that since the cost of receiving royalties is expected to always exceed the amounts that may be so received, especially now given recent amendments to the Act, it is in the best interest of all concerned that the tariff be terminated and the collective dissolved.
ERCC states that it cannot be wound up until arrangements have been entered into with its debtors and creditors, which it expects will occur shortly after the Board’s decision is received. The application ends with an expression of “hope that the Board recognizes the futility of the situation ERCC and its members find themselves in and hope that the Board will approve the requested variance as expeditiously as possible.”
