TRANSPARENCY 2014 ANNUAL REPORT contents A Message from SOCAN CEO Eric Baptiste 1 A message from SOCAN President Stan Meissner 3 2014 Key Highlights 5 Transparency 6 Overview 9 2014 Financial Report 9 Socan Financial Statements 19 membership report 37 Licensing Report 40 Distribution Report 42 International Relations Report 44 Canadian Songwriters hall of fame Report 46 Foundation Report 48 kudos 50 major accomplishments by socan members in 2014 50 25th anniversary SOCAN Awards 55 Socan No.1 Awards 58 The 2014 SOCAN Songwriting Prize 65 About Socan 67 Who we are 67 Governance 68 Culture, community and charity 71 A Message from SOCAN CEO Eric Baptiste SOCAN is one of the most transparent – if not the most transparent – performing rights organization (PRO) in the world. That’s a bold statement to make, but we believe it’s true. By intent and by design, SOCAN has always worked to ensure that our members, licensees and the public have a clear and thorough understanding of what we do, and how and why we do it. We embrace transparency and share our information both because it’s the right thing to do, and because it better serves our stakeholders, encourages their engagement with us, and – if information is power – can even foster improvement in our Eric Baptiste Chief Executive Officer members’ careers. Nowhere is this more evident than in the way we work with our members. We pride ourselves on allowing our members maximum, transparent access to the information they want and need most. Our online royalty statements can be searched right down to the exact TV or radio station or network that aired the member’s music. The only limit is the information that is available to SOCAN itself. Online, our members have access to so-called “drill-down” tools that enable them to understand at a granular level how their royalties were generated. They can preview their performance royalties for the next quarterly payment date, which allows them to plan accordingly. We provide an online calculator tool that allows members to calculate potential performance royalties, depending on the kind of performance. Members can read, in plain English or French, the distribution rules that explain exactly where the royalty revenue is coming from. We live-stream our Annual General Meeting, so that any SOCAN members, wherever they happen to be on that day, can attend online, and even ask questions via e-mail. SOCAN is the only PRO in the world to offer all of these services to its members and we have been doing it for years, with new initiatives being considered for the near future. We’re similarly transparent with businesses that license music. SOCAN is also the only PRO to provide businesses with an online tool and report forms that allow them to calculate their potential licence amounts, based specifically on how they’re using the music. On socan.ca, we explain music uses to businesses in plain language, including new media. We also provide eSOCAN services that allow licensees to view their statements, their reports (if submitted online), and records of online payment. Our user-friendly Information Centre was created specifically to answer any questions that members, licensees, or the public might have about SOCAN. 1 SOCAN 2014 Annual Report And we’re transparent with the general public, too. We publish an audited financial statement every year at socan.ca, and detailed biographies of our executives and our Board of Directors. SOCAN prides itself on a policy of access and open communication with news media, with whom we’re ready and willing to discuss even the most sensitive topics. Our blog (socanblog.ca) and social media (SOCANmusic) are open forums for comment. SOCAN has been, is, and will always remain transparent and open to our more than 125,000 member songwriters, composers, lyricists, film & TV scorers and music publishers; more than 125,000 businesses using music that are Licensed to Play by SOCAN ; and to the public at large. It’s clear to me: SOCAN is the most transparent performing rights organization in the world. 2 SOCAN 2014 Annual Report A message from SOCAN President Stan Meissner The year 2014 was an exciting one for SOCAN, celebrating our 25th year as a performing rights organization (PRO) in Canada. Continuing down SOCAN’s path of reinvention, there were many changes and innovations throughout 2014. Among them was the unveiling, at our 25th annual SOCAN Award Gala, of the new award to celebrate major special achievements of our members. SOCAN’s tagline is “Music. People. Connected.,” and that simple phrase really captures what SOCAN is all about. Connecting people to music, and ensuring that we’re all fairly compensated Stan Meissner for its use, is something that we’re passionate about, and it’s a President, Songwriter concept we fight diligently to protect. It’s no coincidence that the first thing SOCAN is about is music, and what could be more appropriate than to have the world’s first music award that is also a musical instrument. As both a trophy and an instrument, “The SOCAN” is truly a thing of beauty. Another major activity during the year was all of the work undertaken in transforming the SOCAN Montreal office, both in preparation for moving to its new premises in early 2015, and in some reorganization and staffing changes. We were pleased to see Geneviéve Côté, a former publisher Board member from Montreal, come aboard as SOCAN’s first Chief Quebec Affairs Officer. Replacing Geneviève on the board, according to our previous election results, we were happy to welcome Patrick Curley from Third Eye Music. SOCAN has seen a year of activity on the copyright front, both with the Copyright Board of Canada and the U.S. Department of Justice (DOJ), who have been busy with actions that affect us as songwriters and publishers in the performing rights organization world. In Canada, the Copyright Board issued rulings on Tariff 22.D regarding audio-visual (AV) works on the Internet, which had a very positive impact for SOCAN. For T-22.D.1, regarding online AV services, tariffs were confirmed at 1.7 percent for 2007-2010 and 1.9 percent for 2011 to 2013. These tariffs, in addition to other parts of Tariff 22, brought in more than $12-million in 2014. As a result, throughout 2014, our Tariff, Licensing and Distribution committee and Board approved a new audio-visual internet distribution pool to facilitate distributing these new online AV revenues. In the U.S., we’ve been closely monitoring the situation with ASCAP and BMI, who have to work within the decades-old consent decrees, set by the DOJ, to attempt to protect the market from potential anti-trust concerns. These consent decrees and recent court decisions have been 3 SOCAN 2014 Annual Report creating problems for publishers and the PROs, with regard to publishers’ abilities to withdraw certain rights and negotiate direct deals, with the rate courts insisting on “all or nothing” relationships between the publishers and the U.S. PROs. This is an evolving situation, and while we continue to actively investigate the potential impact of these actions on SOCAN, we’ve also been examining opportunities for us to be able to thrive in the changing landscape. Throughout 2014, SOCAN continued down its path of innovation and modernization by further developing our BEST (Business Enterprise Solution for Tomorrow) computer system in order to deal with the explosive data requirements necessary to track the billions of performances in the digital world. The first parts of the system, the Financial and Issue Tracking modules, were deployed in 2014. Ongoing work will see Licensing, Repertoire and Performance information functions handled by BEST in the near future, with the entire system being fully operational by the end of 2016. In addition to these activities, as part of the ongoing annual work of the Board of Directors and its standing committees: Executive Governance; Risk Identification & Management; Tariff, Licensing and Distribution; and Membership, we engaged in a multitude of tasks, including monitoring and reviewing budgets and forecasts; managing SOCAN’s investments and other financial activities; conducting a 360-degree evaluation of the CEO’s performance; engaging in a thorough Board and peer assessment; overseeing our many member events, including our AGM and awards ceremonies; and reviewing our communication strategies, policies and activities. Finally, through its affiliation with SOCAN, the Canadian Songwriters Hall of Fame (CSHF) saw its footprint increase with its new website launch as well as the rollout of music education content, in association with Magic Lantern Media, based on the songs already inducted into the CSHF. This initiative will teach the value and cultural significance of Canadian music and, specifically, the impact of songs and songwriters. The CSHF also announced a new partnership with CBC Music allowing for monthly song inductions with original new videos of contemporary artists performing inducted songs, beginning in 2015. All in all, SOCAN, its Board and staff, had a very active and transformative 2014 and through our efforts and many changes, we continue to shine as a leading performing rights organization in the world. 4 SOCAN 2014 Annual Report 2014 Key Highlights 5 SOCAN 2014 Annual Report Transparency SOCAN is one of the most transparent performing rights organizations in the world. As always, we strive to provide access to the information that our stakeholders want and need to know, clearly, concisely and collaboratively. Whether it’s a member’s ability to see which radio stations played their song and how much each of those plays earned, a licensed music user’s ability to find out how much their licence fee will be for playing background music in their business, or anybody’s ability to read our annual financial statement online, SOCAN makes it very easy to see what we’re doing and how we do it.