NRCC Update
FIC Granted Full Intervener Status by the Copyright Board of Canada
Fitness Industry Canada (FIC) now has the right to formally challenge Tariff No: 6 from the Neighbouring Rights Collective of Canada (NRCC) with respect to the royalties it proposes to collect from the Canadian fitness industry. FIC was granted full “intervener status” in the matter in February.
The proposed Tariff, which would be retroactive to January 1, 2008, is proposed as follows:
- for group exercise classes, the royalty payable would be $3 per class
- an additional 5 per cent of the venue’s gross monthly receipts would also be charged
The potential impact of this Tariff to our industry would be devastating. For example, a small club with 500 members could pay an additional $18,000 per year; a facility with 5,000 members could pay an additional $150,000 per year. The total impact on the industry is estimated to be over $150 million per year.
FIC is seeking the support of every club in Canada to build a Tariff defense fund. We are requesting that every club in Canada contribute 25 cents per member ($250 per 1,000 members). The International Health Racquet & Sportsclub Association (IHRSA) has already contributed $60,000. We are soliciting other supporters and suppliers to contribute to this worthy cause.
| Industry Gross Revenue Tariff | |
| estimated number of Canadian commercial clubs | 3,000 |
| average revenue per club | $1,000,000 |
| estimated industry revenue | $3,000,000,000 |
| proposed tariff: 5% | $150,000,000 |
| Fitness Class Tariff | ||
| Low Range | High Range | |
| estimated # of clubs with group exercise per million people | 20 | 30 |
| estimated # of clubs with group exercise | 600 | 900 |
| average # of classes per week per club | 20 | 20 |
| total # of classes per week per year | 624,000 | 936,000 |
| total industry Tariff per year @ $3 per class | $1,872,000 | $2,808,000 |
| Estimated Impact by Club Size | |||
| Gross Revenue Tariff | Small Club | Medium Club | Large Club |
| number of members | 500 | 1,500 | 5,000 |
| estimated revenue (@ average $600/member) | $300,000 | $900,000 | $3,000,000 |
| tariff on gross sales (5%) | $15,000 | $45,000 | $150,000 |
| Group Exercise Tariff | |||
| number of members | 500 | 1500 | 5000 |
| number of classes 20 | $3,120 | $3,120 | $3,120 |
| percentage of revenue | 1.0% | 0.3% | 0.1% |
| Total new tariffs | $18,120 | $48,120 | $153,120 |
| Current Estimated SOCAN Fees | |||
| Average 15 people per class | $300 | $642 | $642 |
| $2.14 per person based on 1 week | |||
| percentage of revenue | 0.21% | 0.07% | 0.02% |
| % NRCC Increase over current SOCAN fees | 2822% | 7495% | 23850% |
Background
In accordance with copyright law, the Copyright Board of Canada published the proposed NRCC Tariff in The Canada Gazette on January 2, 2007. Once amendments are published by the Copyright Board in The Gazette, objectors have a 60-day period to file written objections. This formal period ended August 1, 2007 with no formal objections. The Canada Gazette is not a widely read publication.
FIC only learned of the proposed Tariff after a meeting with Lauretta Stace, CEO of Fitness Australia.
FIC immediately took action and retained the law firm of Fraser Milner Casgrain and drafted a letter to the secretary general of the Copyright Board on May 30, 2008, formally requesting intervener status. This was granted in February, 2009; seven other organizations were also awarded intervener status. FIC also informed all parties who could be affected by the proposed Tariff and offered them the opportunity to join the legal battle against it.
Now the real battle begins. FIC can only protect our industry with your support. It is essential that FIC raise at least $400,000 before June to employ the necessary experts to present the best defense possible. Without this support, club owners can expect to pay the current proposed Tariff in its current form.
In addition, if the NRCC is successful, it is expected that The Society of Composers, Authors and Music Publishers of Canada (SOCAN) will file for an increase to its existing Tariff.
To pledge your support, visit www.ficdn.ca or contact FIC association manager Brian Gilbank at bgilbank@ficdn.ca or call 1-866 402 - FICC (3422) ext 2.
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