Copyright body may slap levy on digital music players
Would boost price of storage media
Economy will suffer, retailers say
That 20-gigabyte MP3 player going under the Christmas tree this season could soon cost 20 per cent more if the Copyright Board approves a proposed levy tomorrow on the sale of digital music devices.
It could also mean new levies on recordable DVDs, removable flash memory and micro hard drives, as well as increased tariff rates on blank cassettes and recordable CDs, assuming a music-industry group called the Canadian Private Copying Collective, or CPCC, gets its way.
Claude Majeau, secretary-general of the Copyright Board, confirmed yesterday that a decision on the controversial levy is to come out Friday morning.
Both the CPCC and a group of electronics manufacturers and retailers aggressively fighting the levy have been arguing their respective views since the Copyright Board began formal hearings on the matter in January.
"It's the kind of decision that's likely to leave everybody unhappy," said Michael Geist, a professor of Internet law at the University of Ottawa and technology counsel for Osler, Hoskin & Harcourt LLP.
"The retailers won't like it because they don't like the levy, period. Consumers won't like it because they won't be paying a fair price for the product. And copyright holders will probably feel they're not getting enough."
The CPCC already collects a levy on blank cassettes, recordable CDs and Sony minidiscs, but in May, 2002, the organization, which collects and redistributes the levy on behalf of the Canadian music industry, proposed that existing tariffs be substantially hiked and expanded to cover M3P players and other digital-memory products that carry music files.
The original purpose of the levy was to compensate artists for the widespread activity of making personal copies of music that an individual already owns.
But the growing popularity of CD burners and free Internet music-swapping services changed the nature and magnitude of "copying." Increasing and expanding the levy is a small yet symbolic attempt at compensating artists and record companies for widespread piracy, the CPCC argues.
"Everybody in the private copying collective is hoping we'll get the levy extended to devices like iPods and other MP3 players with internal memory," said Paul Audley, policy advisor at the CPCC.
But Audley said hope and expectation are two different things, adding that the Copyright Board will likely stick with tradition and aim for a compromise.
"It will come down somewhere in the middle," he said. "And that certainly wouldn't reflect what people think (music) rights are worth."
CPCC plans to hold a news conference tomorrow at the Fairmont Royal York to discuss the impact of the decision.
Meanwhile, a group called the Canadian Coalition for Fair Digital Access, or CCFDA, is preparing for the worst. Members include big-name retailers, such as Wal-Mart, CostCo and Staples Business Depot, and high-tech powerhouses such as Intel Corp., Dell Computer Corp., Apple Computer Corp. and Hewlett-Packard Co.
"It's a significant potential hit," said Kevin Evans, vice-president with the Retail Council of Canada and CCFDA co-chair. If the levy does get approved, "we believe it's going to be the (retail) sales clerk that's going to get the full blasting from consumers."
Under the proposed levies, a pack of 50 recordable CDs that have 700 megabytes of capacity will have a 49-cent levy on each disc. Today, that pack costs $29.99, but the levy would impose an additional financial burden of $24.50 if approved.
The general argument against the levy is that it subsidizes the Canadian music industry by treating anyone who buys blank recording media as a potential music pirate, when in fact these same products can be used to store computer files, backup data, software and self-created music and video content.
"What you've got here is a levy that does not sufficiently target its purpose," said Geist.
The retail group, which insists it support the rights of artists and wants to open dialogue toward a better option, argues the levy is too broad and the method of tariff collection and distribution doesn't work.
Members also hold the levy will increase prices on products and tempt consumers to buy in the United States, where a levy does not exist. This punishes Canadian businesses, they argue, and will have an impact on the Canadian economy.
"We've got a levy regime that's way out of date and inefficient," Evans said.
So far, the organization has distributed $11 million back to Canadian artists since it began collecting the levy in 2000. It is expected to issue another $17 million to $18 million between next week and the end of January.
The Copyright Board decision comes as the Supreme Court of Canada begins a landmark copyright case that will determine whether Internet service providers must pay a tariff for being a conduit for the rampant downloading of free music.
That case, being followed by music companies and servie providers around the world, is expected to last six months.