Blank CD/MP3 player levy admittedly an “imperfect system”: CPCC president

An informal poll of lawyers familiar with Canada’s blank tape levy indicates that it’s unlikely a proposed $21 per gigabyte (Gb) tax on hard-drive-based MP3 players will stand as presented to the Copyright Board of Canada. However, most observers believe some form of tariff will apply to a broad new class of devices for MP3 playback. On March 11, the Canadian Private Copying Collective (CPCC) submitted its proposed tariffs for 2003-2004 to the board, asking it for the first time to include devices that use either flash memory or internal hard drives to store music in digital form (CNM Update, March 11/02). The CPCC has also proposed dramatically higher rates for recordable compact discs (CD-R and CD-RW). In its preliminary statement of position filed with the Copyright Board and published March 19, the CPCC sets out its request for the higher fees and argues that MP3 players are now common enough to begin taxing. It adds that a greater proportion of blank CDs are being sold to copy music and that longer 80-minute discs require a higher copyright royalty. To date, no public release has been made of the CPCC’s market research on private copying. However, Benoit Gauthier of Réseau Circum Inc. of Gatineau QC, which was contracted to do previous studies, has confirmed that he’s updated his last numbers and a more up-to-date survey will be introduced into evidence this fall when hearings begin (CNM, Nov. 15/00) According to the CPCC’s position statement, it believes that the current levy on CD-R and CD-RW should be increased from $0.21 to $0.59 since the proportion sold to individual Canadians as opposed to businesses has risen from 45 per cent to 70 per cent, and those purchasing them are now more likely to copy music to the blank media, the number doing so having risen from 56 per cent to 62 per cent. The new rates also reflect a change in how the CPCC views the assumed "secondary value" to the copier of the private copy. Since fewer of the copies being made are from legally owned copies (only 10 per cent), the copyright collective argues that it is "clearly inappropriate to refer to a ‘second copy’ and to assume that the newly made recording should have less value than an original recording." Thus, the rate should only be discounted by five per cent, it argues, to account for legitimate second copies, and not 37.5 per cent as was previously set. Though the proposed levies have already come under serious fire in the mainstream media, CPCC president Brian Chater says he stands by the mechanism for ensuring artists and labels receive rightful royalty revenues. "Yes, it’s an imperfect system but it’s, unfortunately at the moment, the best we’ve got. Could it be better? Sure as hell it could be better. Could it be more targeted? Yes, it could. Maybe the technology will get to that but in the short term, it’s just one of these ongoing problems." Informed by CNM of the proposed tariffs, initial optimism by the CATA Alliance’s executive director quickly turned to pessimism as he pondered the result of higher levies for blank CDs on businesses that buy small quantities for burning presentations or sales material and the potentially negative impact on the software and chip design communities of taxing MP3 players. First pondering the fees, David Paterson told CNM, "so long as it is limited to devices intended for the recording of music or playing of music, we’ll be alright. But if they go after computers simply because they are able to do this stuff, we are not alright." He says some European jurisdictions have already begun taxing computer hard drives on the assumption music is being recorded to them. His initial relief that computer hard drives were not being taxed was dampened, however, when told the proposed levy on CDs would double the rate. He has no doubt new levies on memory and MP3 hard drives would stand. "This is insulting but it’s the way the artistic community seems to work," he says.

Blank CD/MP3 player levy admittedly an “imperfect system”: CPCC president

News | 03/27/2002 5:00 am EST

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