It's not a lot of money, but today, the Copyright Board
of Canada agreed to allow new fees to be collected for some digital storage
media. Canadian consumers will start to pay a new fee whenver they buy
an MP3 player.
The money collected through this fee will go to pay music copyright holders,
members of the Canadian Private Copying Collective (CPCC). Canadians already
send a chunk of money to this group each year through a levy or tariff
collected on the sale of each blank audiocassette or CD.
Canadians pay 29 cents per cassette (if the cassette holds more than 40
minutes of recordings) and up to 77 cents on each CD-R, CD-RW, and MiniDisc.
Now, a new levy will be collected: $2 (all figure Canadian, by the way) for
each digital audio recorder, including MP3 palyers, with a non-removable
memory capacity up to 1 gigabyte; $15 for the same thing when there's
storage of between 1 and 10 gigabytes; and $25 for every device with more
than 10 gigabytes.
Music rights holders in Canada say they'll get a combined $28-million this
year from all those levies. Last year, they received about $21-million.
The Copyright board has published a fact sheet on the
tariff.
It could have been much worse.
The CPCC had asked for a much greater levy and wanted to apply it to all
digital media, including flash memory, blank DVDs, removable hard drives and
so on. Had the CPCC's request been granted, the cost of a some iPods in
Canada migth have doubled and every computer would have cost $300 or more —
just in new taxes.
Legal experts tell me there will likely be appeals by the collective about
this decision. The CPCC will hold a press conference this afternoon and I
hope to attend.
I reported on this issue for The Globe
and Mail in March, 2002. Here's a longer version of the story that
appeared in the paper that puts some background on today's decision.
March 22, 2002 – A box of blank CDs could cost an extra $3 and some MP3 players could cost an
extra $100, if the Copyright Board of Canada approves a new royalty scheme
that that aids Canada's music makers.
The royalty scheme compensates musicians and other artists for income lost
when consumers copy sound recordings on to blank audiocassettes, compact
discs and other digital media.
But the plan to increase the rates and increase the number of products
eligible for the tariff has drawn criticism from a host of groups who say
the tariff is a tax paid by people who use digital media to store non-music
content, such as data, movies, and software.
“This isn't a good thing,” said Gaylen Duncan, president of the Information
Technology Association of Canada. “We've crossed the line here. It's time we
re-opened the debate about trying to collect royalties on blanks.”
The Copyright Board, a federal government agency, has not approved the new
royalty plan, known as the Private Copying Tariff. It will hold hearings on
the issue beginning on May 23.
“What you have here is a significant increase in existing rates and also
some significant rates on a wide variety of new products,” said Randall
Hofley, a lawyer who represents the Canadian Storage Media Alliance, an
industry group that represents makers of CDs, cassettes, and other storage
media. “In the past, the [Alliance] has vigorously opposed these levies and
I expect they will do so again.”
The group pushing for the increased rates is called the Canadian Private
Copying Collective (CPCC), a non-profit group that represents copyright
holders of sound recordings.
In addition to an increase of the existing tariffs, the CPCC also wants
royalties collected on a broad range of new products including blank DVDs,
flash memory cards, MP3 players with internal hard drives, and other media
which could be used to store music.
“The amount we receive from the royalty is still too low,” said Brian
Chater, special consultant to the Canadian Private Copying Collective.
The CPCC says that in 2001, more than 100 million blank CDs were sold in
Canada. Of those, two-thirds were purchased by home users and nearly
two-thirds of those were used to copy music.
“Consumers in Canada could find themselves paying for the CD to play on
their audio system, paying for the digital version to play on their computer
or MP3 player and paying for the right to play it on their computer or MP3
player,” said Michael Geist, a University of Ottawa law professor who
specializes in information technology issues.
The Copyright Board collects the tariff from manufacturers of storage media
and then turns the money over to the CPCC. The CPCC in turn re-distributes
that money to those who hold copyrights over sound recordings in Canada.
Last year, about $22-million was redistributed in this way to copyright
holders.
Those who hold copyrights for computer programs, literary works, and movies
– other types of content frequently stored on CDs, DVDs, and other digital
media — will not share any of the proceeds from this tariff.
Manufacturers of audio cassette tapes currently pay a tariff of 29 cents per
cassette. The CPCC wants that tariff to be increased to 60 cents per
cassette.
The CPCC proposal contains some other increases. Manufacturers of CD-R,
CD-RW discs or mini-discs would pay 59 cents per disc, up from 21 cents per
disc. Makers of CD-R and CD-RW media would pay $1.23 per disc, up from 77
cents.
CD stands for compact disc. The R stands for Read-Only and RW stands for
Re-Writable.
The CPCC estimates that just over half of the blank CDs sold in Canada last
year were used to record music.
Dave Paterson, executive director of the Canadian Advanced Technology
Association, said that's precisely why the royalty is unfair: It taxes those
who use digital media for other uses.
“There is a huge number of CDs sold in this country to record data for
businesses and this has nothing to do with sound recordings,” said Mr.
Paterson.
The CPCC is also calling for tariffs on a range of new products.
Makers of removable flash memory chips or removable electronic memory cards
would pay 0.8 cents per megabyte. These cards are increasingly used in a
variety of consumer electronic devices including handheld computers such as
the Palm or the PocketPC.
Flash memory chips are also commonly used with digital cameras.
Makers of blank DVD discs would pay $2.27 per unit compared to nothing right
now.
Companies that make MP3 players would also face some new costs, including
2.1 cents per megabyte of memory in non-removable memory cards and $21 for
each gigabyte of memory on an internal hard drive of a device that is used
primarily to play music.
So, for example, Apple Computer Corp., which makes the iPod, a portable MP3
player with a 5-gigabyte hard drive, would be required to pay more than $100
for every unit it sold. The devices are sold in Canadian stores for around
$600.
“Without the music industry, it would not be worth anything, would it?,”
said Mr. Chater.
A representative of Apple could not be reached.
The Copyright Board will hold its first hearing on the issue on May 23 in
Ottawa. At that time, the board will decide on a timetable to resolve the
issue and accept initial arguments.
Those who object to the proposed tariff must file their complaints by May 8.
The CPCC has been asked to state its position in writing by March 19.
The proposed levy would be charged beginning next year and running through
until the end of 2004.
The CPCC is a non-profit group that includes the Canadian Musical
Reproduction Rights Agency; Society of Composers, Authors and Music
Publishers of Canada; Society for Reproduction Rights of Authors, Composers
and Publishers in Canada; and the Neighbouring Rights Collective of
Canada.