The Canadian Federal Court of Appeals has said online music services do not owe performance royalties for 30-second samples meant to offer customers a preview of tracks they may later purchase. The Copyright Board of Canada came to the same conclusion in early 2009. Both decisions were losses for the Society of Composers, Authors and Music Publishers of Canada (SOCAN).

Last week, explains IP attorney and blogger Barry Sookman, the Federal Court of Appeals ruled that online music services’ use of 30-second samples qualifies as a fair dealing under the Canadian Copyright Act. Fair dealing is a set of limitations and exceptions to copyright law. It is similar to fair use doctrine of U.S. copyright law.

The decision in what is known as “The Tariff 22 Case” centered around the word “research” in the Copyright Act. Research is one of the fair dealing exceptions outlined by the Copyright Act. SOCAN argued “research” meant formal scientific and analytic activities, not informal window shopping by potential customers. The court disagreed, saying “research” includes activities when a “consumer is searching for an object of copyright that he or she desires and is attempting to locate and wishes to ensure its authenticity and quality before obtaining it.”

The issue of 30-second preview royalties may eventually become a bigger issue in the U.S. In 2009, A report at CNET said U.S. publishers and performing rights organizations had started pushing for performance royalties for 30-second previews as well as digital downloads. Quoted in that article was an Encore interview with David Renzer, Chairman and CEO of Universal Music Publishing Group. Users "go on iTunes and can do lots of things other than download a mechanical (track),” he said. “You can stream radio, and you can preview (tracks), things that we should be getting paid performance income for.”

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