Canadian Copyright Levy Group Wants New iPod Tax... But It's Not Really For The Artists

from the doing-the-math dept

Last week, a few folks submitted the news that the Canadian Private Copying Collective, who collects a tax (levy) on every blank CD sold in Canada is now, once again, pushing for a tax on every iPod sold. They try to do this pretty much every year. A few years ago, Canadian courts struck down an attempt to do so. Then there was another try which, again, was struck down with the court pointing out that they'd covered this in the past.

But they're back at it again. And it's really no wonder. Already the cost of a blank CD in Canada has an astounding 90% of the price go to this levy. But what happens to all that money? Well, the CPCC claims that it needs this levy to sustain the livelihood of artists. That's also its reasoning for extending it to iPods. But, Howard Knopf dug into the numbers a bit and notes how laughable that claim is. First, CPCC claims that its brought in over $150 million from the blank CD levy, and handed it out to 97,000 rights holders "most of whom would not be able to continue their careers without this revenue."

That's quite a claim, isn't it? But if you just do the most basic division, you'll find that it makes no sense at all. At $150 million over ten years for 97,000 rights holders, you're talking about $160 per year on average. And, of course, the truth is that it's significantly less for most, and much bigger for a very small number. I think it's safe to conclude that "most" of the 97,000 rightsholders aren't relying on CPCC money for any kind of career. Oh, but you know who did get a lot of money to play with? CPCC. Knopf notes that:

About $22 million has gone to the costs of pursuing Copyright Board tariffs (lawyers, consultants, surveys, etc.), collection and enforcement (e.g. lawyers and auditors), and other causes such as "communications and government relations - $1,272,000." And that's only the end of 2007.

28 Comments | Leave a Comment..

Canadian Copyright Expert On Levy Proposals: Today's Quickie Legislative Solutions Are Tomorrow's Absurdities

from the $2500-iPod dept

Howard Knopf, a well known Canadian copyright expert, recently took a look at some of the failed copyright levy proposals in Canada. The Canadian Private Copying Collective (CPCC) administers the tax levy on blank CDs, which now accounts for almost 90% of the price. In 2002, similar proposals to extend the levy to DVDs and digital audio players were shot down. It's a good thing they were! Knopf notes that the $2.27 levy proposed in 2002 is now about 10 times the retail price of a blank DVD, and the $21/GB levy proposed for digital audio players would have left a 120 GB iPod (<$300 CAD) with a $2520 tax. You might think the CPCC would have decreased the levies over time, but the blank CD levy was just increased this past December (blank CDs cost more in Canada than blank DVDs). Even if the levies were lowered, it would be because they had already become unbearable. Imagine the bureaucracy and battles at the Copyright Board, and imagine the effect on Canadian consumers, tech companies in the meantime (what if the Blackberry was classified as a digital audio device?).

The point is that these quick solutions aren't solutions at all. Setting up "you're a criminal" taxes to collect money for companies that can't figure out how to adjust their business models is bound to block innovative new technologies, and you can't predict what technologies will drive new business models. As Knopf puts it, "all of this shows that today's quickie proposed legislative solutions and oft inflated tariff proposals to deal with supposedly serious crises arising from copyright and new technology are potentially tomorrows' absurdities or even nightmares."

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

22 Comments | Leave a Comment..

Canadian Blank CD Levy To Increase By Another 38%

from the you're-a-criminal dept

The Copyright Board of Canada has decided to increase the levy on blank CDs from 21 cents to 29 cents each. The levy is a sort of "you're a criminal tax" that assumes blank CDs are going to be used for unauthorized copying. Blank CDs in Canada are now often more expensive than blank DVDs (which have no levy and hold more data), and most of that cost goes directly to the record industry. In 2006, about 70% went to the labels, but it seems like even more now, with actual price of CD-Rs dropping. With a 21 cent levy, a pack of 50 CD-Rs sells for about $12 before tax. That's 24 cents per CD-R -- 87.5% of the price goes to the record industry. And that's before the 8 cent increase.

The board notes that sales of blank CDs are declining, but justifies the increase by arguing that compression allows people to store more songs on a CD. Meanwhile, there's no levy on digital audio players (the Canadian record industry was worried it would legalize downloading and seemed to prefer to push for tougher copyright legislation instead). What's going to happen when the Copyright Board realizes that blank CD sales are likely declining, not because everyone is using compression, but because less people are using CDs? This "you're a criminal tax" has always been a short-term band-aid solution that's not going to fix the record industry's problem. Do Canadians really need to pay the record industry $30 million a year for the right to burn a few songs onto a CD every now and then? Luckily, the current government has expressed a desire to cancel the levy, though we'll have to wait and see if they can follow through.

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

36 Comments | Leave a Comment..

Japanese Gov't Says No (Again) To An iPod Tax

from the how-many-times? dept

Back in 2005, the recording industry in Japan urged the government to create an iPod tax, adding a tax to every iPod (or other digital music player) sold. The idea was that the recording industry wanted to assume that every iPod owner was obviously "stealing" music, and this tax would help pay for the supposedly "lost" revenue. Of course, as we all know, that's a very questionable assumption. An iPod can often make people buy more music, but the recording industry has never been willing to even consider that idea. Luckily, a few months later, the Japanese government rejected the idea.

However, with the recording industry, these things always seem to have a way of popping back up again. And, indeed, there's been another big push this year for Japan to add an iPod tax. Luckily, however, the consumer electronics lobby in Japan is a lot more powerful than the recording industry lobby, and it appears that the iPod tax proposal is dead once again. Of course, it will likely be suggested again next year, but as we start to see more and more business models built on a base of free music, perhaps more people will recognize how unfair (and damaging to the market) an iPod tax would be. It would lower the incentives for people to buy these devices, decrease music consumption habits, and hurt all these other business models.

16 Comments | Leave a Comment..

RIAA Now Open To 'You Must Be A Criminal' Tax On ISP Fees

from the not-the-answer dept

This certainly isn't the first time it's been proposed, but it appears that the RIAA is potentially warming up to the idea of a "music surcharge" that would have ISPs pay $5/month in order to allow anyone to share music online. Just a month ago, we were discussing why this is a bad idea. First, it's effectively treating everyone as a criminal, and forcing those who don't download or share music to subsidize everyone who does. Second, and much more importantly, it's not necessary. If there's anything that the past five years (and the past year especially) has taught us, it's that there are many different ways for musicians to make money without requiring the government to step in and set up a business model for them. In other words, there's no compelling need for such a mandated system. Third, once you do this, it opens up additional questions from other industries. Will the government need to set up laws that prop up their business models as well?

Some people are comparing this new RIAA proposal to the one that the EFF proposed four years ago. However, that one was quite different, in that it was a voluntary licensing system, rather than a mandatory one. In that system, anyone who wanted to could voluntarily pay $5/month to have free reign to share and download music. This new proposal would mandate that ISPs pay the fee (meaning that ISPs would quickly pass the costs on to everyone). That's quite different. It also might be a different story if ISPs voluntarily offered this as a feature for customers -- where they would license the music so anyone could freely share it. That's a case where the ISP would effectively be paying for the creation of music and using its free nature as a promotional good for its service. However, that rationale goes away if it's mandatory. So, while it's nice that the RIAA has woken up (about a decade too late) to the idea that new business models are needed, this proposal isn't a very good idea.

59 Comments | Leave a Comment..

Canadian Courts Strike Down 'You Must Be A Criminal' iPod Tax Again

from the haven't-we-been-through-this-before? dept

A few years back, we noted that a Canadian court had ruled that the "private copying levy" (better known as "you must be a criminal tax") for blank media such as CDs and DVDs could not be extended to iPods. However, the Canadian Copyright Board seemed to think that such a decision didn't preclude it from going back and adding the levy to iPods at a later date -- and this year it tried to do so, sending the whole issue back to court again. Once again, the courts have said that the Copyright Board is wrong and it cannot put the levy on iPods. Apparently, it took all of about 24 hours to make this decision, pointing out that much of this stuff was covered in the earlier decision a few years back. It's worth noting, by the way, that the recording industry probably wasn't on the side you'd expect in this case. It was so afraid that a private copying levy would "legalize" file sharing, that it came out against the proposal as well. Now it can keep on suing people. Of course, it makes you wonder how it feels about the private copying levy that is still used on blank CDs and DVDs, which seem even less likely to be used for private copying purposes than an iPod.

14 Comments | Leave a Comment..

Canadian Recording Industry Suddenly Against Private Copying Levy It Fought So Hard For

from the suing-is-more-lucrative dept

For many years, the recording industry has been able to convince the Canadian government that it needs to add a "private copying levy" to various forms of blank media, to reimburse the industry for any "private copying" that happens on that media. This is pretty questionable for a number of reasons -- basically amounting to a government tax to support a private industry and its inability to adapt its business model to the market. At times, this private copying levy can be an astounding 70% of the cost of blank CDs. Once mp3 players (specifically the iPod) started to become popular, the recording industry fought to have the private levy attached to those players as well. In late 2003, the industry got its wish -- but with a catch. A ruling found that the devices could be taxed, but if they were, then downloading unauthorized content would be seen as legal (uploading unauthorized content would still be illegal). A judge later overturned the iPod levy, but some in the industry have kept fighting for it, and the Copyright Board of Canada supports extending the levy to iPods.

However, in a surprise move, the Canadian Recording Industry Association (basically, Canada's version of the RIAA -- controlled by American record labels, of course) has come out against extending the private copying levy to mp3 players, admitting that if the levy is extended (even though it will send millions of dollars directly into recording industry bank accounts), Canadians may (incorrectly, in the view of the CRIA) start to believe that downloading is legal. Of course, some people pointed out this loophole in the recording industry's efforts to extend the private copying levy years ago -- but it seems that it just occurred to the powers that be. Once again, it's a case for the industry to be careful what it wishes for. The private copying levy makes the industry a ton of money, but does so at the expense of anger from purchasers of any blank media. Still, that anger is probably better than the anger generated by thousands of lawsuits against file sharers based on flimsy evidence.

17 Comments | Leave a Comment..