Montreal, QC, Top Stories

Mtl: Geist and the Proposed Blank Media Tax

Joseph Sannicandro / June 8, 2011

Canadian law professor and copyright expert Michael Geist comments on Canada’s proposed blank media tax with his usual clarity and ability to present complicated problems in understandable ways.

In a May 14th post titled “Forget the iPod Tax, Canadian Copyright Collective Demanding Memory Card Tax,” Geist wrote on his blog:

During the most recent election campaign, there was no shortage of debate over the so-called iPod Tax, a proposed levy on iPods and similar devices to compensate for copies of sound recordings. While the prospect of an iPod tax in Canada died with the Conservative majority, the existing private copying system remains unchanged. Canadians currently pay levies on blank CDs (and cassettes) and now the Canadian Private Copying Collective, which collects the private copying revenues, would like to establish a new levy on blank memory cards used in a wide range of devices such as smartphones and digital cameras. 

As Howard Knopf notes, the CPCC has just filed for the following levy:

50¢ for each electronic memory card with 1 gigabyte of memory or less, $1.00 for each electronic memory card with more than one gigabyte of memory but less than 8 gigabytes of  memory, and $3.00 for each electronic memory card with 8 gigabytes of memory or more

The financial impact of the levy would be significant. A 2GB SD card currently sells for about $6.00 and this would add an additional dollar or almost 15% to the cost. Given that the levy would remain static (or even increase) but the costs of SD cards are dropping by roughly 30% annually, the percentage of levy in the overall cost would likely gradually increase over time. Moreover, music plays a small role in the use of memory cards. A recent report indicates that digital cameras are the primary market for SD cards with smartphones the second biggest (and fastest growing) market. Music is a small part of the equation, yet the CPCC is demanding payment for every memory card sold in Canada regardless of its intended or actual use.

 

Read more here.

A bill seeking to amend the Canadian Copyright Act  and create a more balanced copyright policy, called C-32, drawing on the failed amendment C-61 from 2008, was tabled last year, though its future under the new Conservative majority leaves its future unclear. Geist was critical of the bill for taking such a hardline on DRM (Digital Rights Management). He and other critics basically claimed that this sort of American-style reaction is both impractical and ineffective, and is being pushed by corporate interest more than any desire for balanced protection. Since the future of that bill is in question, proposed taxes such as the one discussed above represent alternative means of remunerating artists (or labels and publishers, more realistically). Of course Geist is right to point that this proposal makes little sense, not only because distributing the royalties would be impossible to do in a reasonable way, but also because memory cards are primarily used for digital photography! Still, it’s interesting to see alternative ideas popping up. Additionally, this concept isn’t entirely unprecedented in Canada, as they maintain a private copying levy on blank media (CD-Rs, audio-cassettes, even MiniDiscs…). There have been various (failed) attempts to create a tax on MP3 players, which of course was opposed by the makers of the hardware, notably Apple.  Similar ideas have been proposed in the US but never got any momentum.

I’m not going to come out one way or the other in regards to a levy on digital audio players, but at least in such a case it would be possible to track and therefore properly distribute royalties properly.  Think about this example: the online music service Rhapsody has an app for smart phones and iPods etc, and when synched with the user’s computer sends the played track data to Rhapsody, so that royalties can be paid. Rhapsody is a paid service (an account is something like $10/month), but one can imagine how such services could operate for free if a tax levied on hardware was then distributed based on user-usage in this way might. Since services such as Spotify are currently unavailable in North America (though of course it is easy to set up a proxy) it’s worth thinking creatively about alternatives. Now the labels are supposedly even considering the so-called  5 cent solution, though I’d argue it should be clear that charging for digital files will never bring back the golden days of the booming ’90s.

In such policy issues, the Canadians historically wait for the Americans to act before making up their minds, and usually follow suit due to the pressure of a population 10 times greater to the south.  (Look at the digital television transfer, for instance.) In this case, however, the Canadians, despite accusations of American interference, are at least proposing more imaginative solutions. Despite the problematic aspects of C-32, such as the DRM previsions which have been much criticized by educators, librarians, and many others, there were a lot of important and potentially progressive changes, which makes the development of such copyright activities in Canada worth paying attention to.

What do you think about the proposed levy?

 

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