Canadians may end up paying 20% tax on MP3 players

[Durandal]

Copyright body may slap levy on digital music players
Would boost price of storage media
Economy will suffer, retailers say

TYLER HAMILTON
TECHNOLOGY REPORTER

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.

If the tax is an attempt to compensate artists, then why would piracy remain illegal? The pirates would be paying their dues, after all.

[Psycho Smiley]

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.

FUCK THIS! That's an 81% increase in price! Not only will this do fuck all to combat piracy (Hello! Half the people just keep the damned things on their 160GB hard drives!) but it fucks everyone else up the ass with a pile driver!

And, as Durandal said, if I'm going to be paying what amounts to a fucking fine whether I copy music or not, guess what? I just might be tempted to get something out of it!

[Darth Wong]

If this goes through, I am going to start pirating everything I can find, just for the sake of doing so. What are they going to do? Charge me with an action for which I've already paid fines? I'll sue the fuckers if they come after me.

[Col. Crackpot]

it would be more than worth a drive across the border into Quebec if i can copy anything i want afterwards. How would the law be applied to non-Canadians who enter Canada, buy an mp3 player and pay the tax?

[Sebastin]

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.

Is that a typical price for rec. CDs? It seems awfully expensive to me. I pay 25 euro for a pack of 100 CDs over here.

[Stravo]

What's to stop Canadians from ordering MP3 players from Amazon or another US merchant unless the law will impose this surcharge on online orders as well. This just sucks and mark my words people, if this passes in Canada I see a similar move coming in the US. The RIAA wil say "Instead of sueing 12 yo's and the like we'll just slap a 20% surcharge on all recording devices."

God why won't they just FUCKING DIE already instead of making us all suffer in their desperate flailings to stay afloat.

[SirNitram]

The worst part is... Americans already pay a similar levy on recordable CD's and the equipment to burn them. But it doesn't stop the RIAA.

[aerius]

Fucking hell, we already pay a tax on our recordable media and now they want to bump the taxes up to extortion levels? Fuck them, goddamn pukes must be taking lessons from the RIAA.

Here's the thing, I was in the bookstore a couple days ago reading through the music magazines, one of them had an interview with the SOCAN president (Songwriter's Organization of Canada) where they discussed piracy issues and the RIAA. The gist of the interview is that recording artists do not feel that MP3's and piracy are anywhere close to being a major problem, they're just a mild inconvenience. They're also satisfied with the current taxes on recordable media and do not feel that there's a need to put new taxes or restrictions into effect. Instead, they believe the solution is to make music affordable and accessible to customers, and to provide them with incentives for buying music instead of punishing them for piracy.

Given this information, it's fair to say that this proposed tax is just a money grab by a bunch of greedy, filthy rich music industry assholes.

[phongn]

Is that a typical price for rec. CDs? It seems awfully expensive to me. I pay 25 euro for a pack of 100 CDs over here.

A 50-pack of good-quality CD-Rs cost me $18 the other day. Cheap packs may cost much less.

[MKSheppard]

[sarcasm]
Yes, only Americans have to worry about evil corporations and their Republican
underlings fucking the customer in the ass - We're safe in Canada from
all their bullshit
[/sarcasm]

[Darth Wong]

[sarcasm]Yes, only Americans have to worry about evil corporations and their Republican underlings fucking the customer in the ass - We're safe in Canada from all their bullshit[/sarcasm]

I don't have to go to prison if I discuss copy protection technology and methods of circumventing it, and I don't get sued for downloading music. Worst-case scenario is that I pay this stupid surtax, which I'd rather risk than prison or a personal lawsuit. So yes, we're somewhat insulated from the bullshit; the only problem we're having is the government using it as an excuse to tax us; something they're all too fond of.

[aerius]

Just read in today's paper that the tax got passed, but a bunch of things were changed. The best part, there will be no changes to taxes on recordable media, CDRs and memory sticks are not affected and they'll cost the same. The tax on MP3 players will be capped at $25 for a 40GB(?) or larger device, and the tax will drop in proportion to the capacity of the device. A 1GB device will get taxed $2 or less, and some smaller devices may get off free or be taxed only pennies.

Overall it's a hell of a lot better than what the industry fuckers wanted, but IMO this new tax shouldn't have gotten anywhere in the first place. The existing system works and I don't hear recording artists bitching about piracy and lost royalties. All I see is rich media companies making a fucking cash grab.

[C.S.Strowbridge]

At least our copyright board said downloading music is legal. Woo hoo.

[muse]

I don't have to go to prison if I discuss copy protection technology and methods of circumventing it, and I don't get sued for downloading music. Worst-case scenario is that I pay this stupid surtax, which I'd rather risk than prison or a personal lawsuit.

If what I just saw on a MuchMusic newsflash is correct this may soon change. The Canadian recording industry asshole-ciation is thinking about following the lead of the RIAA in suing music downloaders. As I understand it there's still some legal issues to be resolved before they can do so, and hopefully the courts rule against the CRIA and tell them to go fuck themselves.