News

The False Link Between Locks and Levies

The Bill C-32 legislative committee meets for the first time tomorrow with hearings likely to begin later this week.  The digital lock provisions will undoubtedly be a major focus of discussion with all three opposition parties calling for changes to the current approach. Industry lobby groups will continue their effort to keep the C-32 lock provisions, one of the world’s most restrictive implementations of anti-circumvention legislation, unchanged.

While their support has not wavered, the lobby group rationale for supporting the existing digital lock approach continues to evolve.  Some have tried to argue that the approach is required by the World Intellectual Property Organization Internet treaties, a position that the legislative history and international practice conclusively demonstrates is wrong.  Others have suggested that Bill C-32 is consistent with other countries, only to find that many other countries adopt less restrictive approaches (e.g. New Zealand and Switzerland) with even the U.S. implementing exceptions on DVDs and jailbreaking phones not found in Canada.  Those that hoped that ACTA would provide a reason to keep the C-32 digital lock provisions have been also disappointed, as the ACTA text retains international flexibility with the EU’s interpretation providing firm evidence that C-32 goes beyond what is required (the same will presumably be true for CETA).

With these lines of argument lost, the industry lobby groups now appear set to argue that the opposition to extending the private copying levy provides a strong rationale for strict anti-circumvention rules. 

While it surprised some MPs this past spring that groups like CRIA oppose extending the levy, the same groups now want to argue that if creators are not compensated via the extended levy they oppose, they instead need stronger legal protection for locking down their content.

This argument is wrong again.  First, the attempt to link locks and levies provides a useful reminder that Bill C-32 prohibits circumvention even with the existence of the levy.  In other words, consumers are asked to pay twice – first for the CD and second for the levy on the blank CD – and yet are labeled infringers if they seek to make the personal copy they’ve effectively paid for.  If CRIA’s supporters believe in the link between locks and levies, they surely should be arguing for the right to circumvent where the levy is in place (but don’t).

Further, experience demonstrates there is no link between locks and levies. Countries such as New Zealand have adopted flexible anti-circumvention rules and do not have a levy.  There is also limited overlap in terms of coverage with restrictive locks applying to everything (CDs, DVDs, e-books, etc.), while the levy only applies to sound recordings.  Yet the best rationale for understanding why there is no link came last week from Canadian Heritage Minister James Moore.  As I blogged, last week he told the CBC:

When I buy a movie, I’ve paid for the movie. To ask me to pay for it a second time through another device – and to assume that I’m doing illegal copying, to assume that I’m being a pirate, to assume that I’m thieving from people because I happen to own an MP3 player or a BluRay player or a laptop, I think treats consumers unfairly.

Moore is right – consumers should not be asked to pay twice and the law should not start from the assumption that consumers are violating the law.  That is a powerful argument against the levy, but it also applies to anti-circumvention rules that attempt to force consumers to pay multiple times for the same content and start from the presumption that consumers are infringers.  The right approach is to adopt anti-circumvention rules that target the infringers, but ensure that consumers are not treaty unfairly by maintaining their rights even with the presence of a digital lock.

28 Comments

  1. I think common sense may be gaining ground on the hill …
    There has always been a disconnect between the position of the media industry on levies and locks, seeming to want their cake and eat it too. As far as I know the levy on CD continues to remain, but the prospect of extending it looks remote. Now the lobby groups are trying to walk a wobbling tightrope of saying one thing and doing another, a common practice for them seems.

    I am pleased to see the opposition parties take a stand, of course they have the freedom to court public opinion while the sitting government is encumbered by ‘other’ interests. But even there I sense the tone changing and at least on the digital locks issue I predict some softening.

    Actually, I am not completely against TPM. In some cases I can see the need for it, especially when using a subscription service, if nothing else to verify you are the subscriber. Other than that though, TPM serves to mostly inconvenience the customer and does nothing to deter an infringer. Passing laws that say otherwise will not change anything, it only takes one determined hacker and any media is then out in the wild. Shuttering websites or trolling protocol types will only give rise to other methods. It’s an unwinnable battle, it would be more productive of the media industries time and resources to fight for the hearts and minds of their customers by providing better service and value. I think creators would benefit much more from good will and loyal customers than a few cents from an ill conceived tax and overarching controls.

    The whole idea of TPM being a tool to combat ‘piracy’ is a red herring and I fail to understand why so many people just swallow the line, hook and sinker. I yearn for the day when politicking and lobbying actually lays the facts out for consideration rather than spinning half truths into tangled yarns, yet I know that day is awaiting a cold spell down under ๐Ÿ˜‰

    I do hope though that as this issue becomes higher profile in the news and collective consciousness of the nation that the facts and realistic pro/con discussions will trump the avarice of self interest.

  2. biggest ever.
    “the levy on CD continues to remain, but the prospect of extending it looks remote.”

    well, except on students for (hypothetical) xeroxing.
    blocking objectors based on a industry letter for advances, yet.
    no protection for students/profs making ‘other’ xeroxs.

    welcome to the biggest landgrab EVER, in all it’s glory.
    packrat

  3. Russell McOrmond says:

    Inherently dishonest.
    “Actually, I am not completely against TPM.”

    For me the concern is how it is regulated, not its existance. If a TPM is protecting a contractual or e-commerce relationship (such as a subscription service), then the legal protection for TPMs must be in contract and/or e-commerce law.

    Most DRM systems could be made fair if regulated by the right laws, and all the relationships were transparent and accountable (adequately regulated). I consider it inherently dishonest to claim it is a matter of “copyright”, effectively distracting policy makers and the legal system to the real relationships and legal issues involved.

    http://billc32.ca/faq#legaltpm

  4. The ‘Russian’ front …
    On the topic of fighting for the hearts and minds of their customers by providing better service and value.

    I hear things like this from commentator’s on John Degens blog … “I see somebody mentioned that they bought a movie. Wow! That’s quite an investment. After all, most mainstream movies cost many millions of dollars to make and distribute. Oh, they didn’t actually buy a movie?
    They purchased a license to use the selected content in the form it was provided in? Ah, I understand now.”

    Now regardless of the legality of what your are actually agreeing to when you purchase media, this attitude is very disconnected from what consumers are actually expecting when they lay down their cash. Now you can make all the rules you want, but if your customer base finds your demands too far outside what they consider to be fair then the value they place on your products decreases. This, in fact, leads to lower sales and greater infringement. Once this dissatisfaction reaches a certain tipping point (which I already think it has) then no matter how much control you try to implement it is too little too late.

    Personally, I enjoy being entertained and the products that can assist in that and I am quite willing to pay for it. But in return I, and most everyone else, expect to get fair value in exchange. As much as the media industry would like to determine what the level of value is, it’s really determined by the customer in a free market. When government, at the prodding of industry, steps in to legislate value that then slews the landscape and leads to further dissatisfaction. This approach has been possible in the past but with the Internet being a kind of free market equalizer the ability to legislate and control has greatly diminished.

    The media industry needs to realize and adjust to this and move back into providing value and service as a means to maintain sales and profits. This is a difficult proposition for them, not necessarily as it is going to mean lower profits for creators (it may in fact lead to the opposite), but because it will result in less control for the distribution structure and the associated take they receive. It is unfortunate that they use creators as the foot soldiers to push this agenda, as they may just be marching them to the front lines to take the fall.

  5. I bought it I own it!
    When I buy a DVD movie or a CD that now becomes my property! I have the right to back it up on any media I want to! I think a levy is occurring on DVD blanks now because for some reason in the past two years both Zellers and Wal-mart have up the cost to purchase blank media. A CD blank still cost more than a DVD blank, but I have noticed a 10.00 increase in late of 2009. If a levy had to go on computers and storage devices then that is the biggest type of theft to occur. Damn these rich actors. At the end of the year they profit more than the average slave laborer working dead end job’s! The Government better start listening to the majority of Canadians, the real tax payers that make up more than these big corporate industries! Look at their houses compared to the working middle class….look actors houses and then look at where we live! F**k the movie and music Industry!

  6. Cue Degen…
    …in 3,2,1…no doubt with some tired argument of obfuscation or falsely accusing Geist of not upholding the values of ‘creators’ in his tax payer funded Canada Reseach Chair role. Broken record, John, broken record. Or should I say broken business model?!?

  7. ^ previous post – a little colorful in content, but illustrative of the anger out there. In a free market there is nothing wrong in profiting from your work, and if you are greatly talented then even more so. But this only works up to a certain degree, and by the evidence of the amount of dissatisfaction and infringement out there, we have already likely exceeded.

  8. The Trick
    The trick is that they’re trying to muddy the link between the levy and the locks. They’ve finally realized, all to late, how much the levy is worth and are now trying to backpedal. They’ve changed their mind and decided they don’t want to give up the levy, likely due to pressure from “actual” creators. This puts everything in to a muddled situation. Levies make private copying legal, locks make private copying illegal. Which one supercedes the other? If both exist, do only those who choose not to use lock get to collect the levy? After all, if locks trump all, then those who used locks and collect the levy are collecting funds based on an expressly illegal activity…i.e. money laundering. The presence of both makes everything incredibly convoluted.

    The alternative funding stream as seen in the US and UK are law suits, but that doesn’t seem to have been as lucretive as the industry had anticipated. Such paths generally end up costing the industry vastly more than what is actually collected and greatly adds to the industry’s bad name, ultimately hurting sales and increasing piracy. The notable exception here is perhaps the p0rn industry, where there is a stigma attached and people are much more likely to settle rather than risk public litegation by ignoring it.

    So, with no other viable taxation stream in sight, of course the CRIA is going to backpedal. I don’t know what they were thinking to being with, the levy was the so-called golden goose. Basically free money on the assumption that everyone is copying. They were just sucking up the rhetoric being spewed by the RIAA/MPAA…and now they’re saying, WHOLEY S@%T!!!

  9. IamMe

    You are on the money, the collectives are equaly opposed to fair use and to individual copyright contracts for the simplest of reasons; there is no management action in either. There is for them no money in individual copyright or in fair use.

    As far as locks go provided you know what you are buying, before you buy, fair enough. Personally I would tend to pay less for less, or look elsewhere.

  10. Mr.
    If this passes we are officially Americans. Where has all of our freedom gone?


  11. Why doesn’t “the industry” stop using computer compatible media for distribution?

    C’mon guys come up with some new media, patent it heavily, license it only to yourself, manufacture it under strict control (with individual serial number), and stop whining.

    This is ridiculous. They intentionally distribute their stuff on computer media so they can ask levies from all computer buyers. Go back to vinyl!!!! And ask for levies for blank vinyl discs!!!

    Nap.

  12. If C32 were to pass as currently worded, the government would be legally required to discard the levy for any digital technology, as the levy is supposedly for private use copying, which becomes illegal under C32 whenever digital locks are being used – which would mean that the only technologies they could reasonably leave the levy on are analog technologies where digital locks cannot apply (and are largely obsolete, so the whole levy would probably simply be discarded).

    Leaving the levy in place after passing C32, and still applying it to digital blank works would be irrefutably taxation without representation, as one would typically not even be legally permitted to engage in the very activity that the levy supposedly permits. The notion that copying is only forbidden in the absence of “technological protection measures” is a feeble argument as in this day and age, as an increasing volume of material is being stored digitally anyways, and the consumer has absolutely no choice about whether the works that they want to get will have such locks on them, simply because there are no alternatives being produced.

    Back when the conservatives first voiced opposition to the levy, it was plainly obvious to me that by reasoning similar to what I’ve described above, the only reason they did so was because I suspected that they were hoping to pass an extension to the copyright act which would essentially outlaw private copying. I had remained hopeful that I was wrong at the time, but those hopes were dashed when C32 was first mentioned a few months after that.

    Of course, it does not logically follow from any of the above that the levies should logically be extended if digital locks are not given legal protection – that is a wholly separate argument. Personally, I believe that it is entirely possible to simultaneously reinforce the validity of private copying privileges for consumers in all cases and eliminate the levy entirely through the introduction of laws which would explicitly limit the scope of what can legally be considered private use, defining a very clear boundary that one cannot legally cross. In light of my repeated disillusionment in what our government does with regards to copyright, however, I find myself holding very little hope that my concerns are going to be abated by the decisions made in parliament on this matter.

  13. RE: Why doesn’t “the industry” stop using computer compatible media for distribution?
    I know you said that tongue in check, but there are those that believe such a solution IS the solution.

    So why not do it? Because NO ONE would buy it!! …and the industry knows it. LOL You can’t sell someone something they don’t want. Aside from that we’d find ways to make it compatible. Multimedia, by it’s very nature, is inherantly computer compatible, it’s the locks and/or technology used that’s the issue. Look at HDMI, even as strong as the encryprtion is on that, someone figured out how to crack it. HDMI was supposed to be the white knight who was going to come along and give control back to the media giants…guess not.

    What I’d like to know is what happened to the DVD format. I have an original Little Mermaid Limited Issue DVD from 1989. To this day, it’s the only disk I’ve ever encountered that I could not rip. In general I don’t rip my DVDs simply because I don’t have nearly the storage space for 1200 DVD images or the time to do it, but of those I’ve tried, the Little Mermaid is the only one I could not rip. At one point I was doing to do all the kid’s movies for convenience, but never really got around to it. In any case, it would play fine, but I could not see any of the files in the folders using a file browser, hance could not rip it. This might be different now, with Windows 7, a better machine and better ripping software as I haven’t tried this in several years, but still interesting. Was this an early attempt at copy protection I wonder? Back in those days, I would have need the actual files as I would re-encode to AVI, these days I would simply make a disk image.


  14. @IanME: “I know you said that tongue in check, but there are those that believe such a solution IS the solution.
    So why not do it? Because NO ONE would buy it!! …and the industry knows it. ”

    You guessed me right. But the really funny thing is that such media already exists – like SACD and DVD Audio. They’re both recorded on a DVD-like support, except the physical recording is different than what a computer DVD writer could ever read/write. In case of SACD, the engraved “pits” are modulated in width, and there is data written in areas of the disc where a standard DVD unit has no access (read or write).

    Of course, both formats failed in the mainstream market, exactly because they don’t play on computers. So “the industry” went back to using computer compatible formats. And then they have the audacity to ask for levies.

    I say that either they stop whining or they stop producing computer compatible media. Both at same time looks stupid – like in intentionally banging your head into the wall then asking for levies on walls because they hurt.

    Nap.

  15. In summary…
    … “the industry” doesn’t want to use really effective “locks” because the product won’t sell. So they use weak ones that can be easily bypassed, and then they sue their customers for doing so and create “additional revenue stream”.

    Very nice.

    Nap.

  16. @nap “In summary…… “the industry” doesn’t want to use really effective “locks” because the product won’t sell. So they use weak ones that can be easily bypassed, and then they sue their customers for doing so and create “additional revenue stream”. ”

    basically they are pushing people to re-evaluate the relationship in this contract. As before I have now got the family signed up for NetFlix….guess what. No more need for Cable or renting movies at Rogers. Saves almost $100 a month including the $25 cap for over bandwidth usage. Since it is all legal and you are paying only 8$+25$ for bandwidth a month compared to 130$ for HDTV and Rogers Movie rentals…it is a no brainer…are we seeing the end to cable andland line phone companies?

  17. I should have said…I am all for blanket fees for content consumption…as long as they are reasonable…at $8 for netflix that is reasonable.


  18. @CndCitizen: We all love to hate $ony but you have to check a Playstation 3 one of these days. You can rent movies (downloaded via Playstation Network) from Sony with no monthly fee. And there’s Netflix too.

    As for the Sony downloads, they are good quality (not as much compression as with other sources). Available in standard or high def. Many new releases there. The only issue would be that most of the time they don’t have captions/subtitles available.

    Netflix I didn’t try yet.

    Oh, and it plays bluray movies and games too ๐Ÿ™‚

    Nap.

  19. Levies
    BTW. Copies of my very arteestec and creative posts here were made and stored by your browser on your hard drive. Since this looks to me like fair use copying I have no objections, but I want my share of the hard drive levies too!!!

    ๐Ÿ™‚ ๐Ÿ™‚ ๐Ÿ™‚

    Now seriously. If we enact levies, to whom do we distribute the money and in what proportions?

    Nap.


  20. Now to be more precise… Your network card had a copy of my messages in its memory buffer, from there it was transferred to a buffer in the memory space used by the card driver, and from there another copy was made in the memory used by the browser. And one copy on your hard drive since I guess you didn’t disable browser caching. Let’s see that makes about 3 copies in RAM and one on hard drive. I suspect RAM should be subjected to levies too.

    Now if your ISP is using some transparent caching proxy (mine does), apart from the copies in various router/computer memory buffers they copied them on a hard drive too. And that definitely not for “personal use”, since the purpose is to serve other customers from that copy. Infringement!!!! They distribute copies of my creative arteestec work!

    ๐Ÿ™‚

    Nap.

  21. RE: Crockett
    “Actually, I am not completely against TPM. In some cases I can see the need for it, especially when using a subscription service, if nothing else to verify you are the subscriber.”

    You don’t need a TPM to do that…

  22. @NAP
    “Now if your ISP is using some transparent caching proxy (mine does), apart from the copies in various router/computer memory buffers they copied them on a hard drive too. And that definitely not for “personal use”, since the purpose is to serve other customers from that copy. Infringement!!!! They distribute copies of my creative arteestec work!”

    So does mine, by default, but I had them turn it off for me. It was interfering with my VPN to work for some reason that they couldn’t explain and between us couldn’t get fixed. I guess their proxy is safe if I decide to become a roving pirate. ๐Ÿ˜›

    CndCitizen said:
    “basically they are pushing people to re-evaluate the relationship in this contract.”

    They have for years, ever since the early 2000’s when they started going after file sharers and implementing useless copy protection on music CDs. It was around this point that I specifically started looking outside North America for media, since then most of what I listen to has become European or South American with only a few US/Canadian exceptions.

    As for Netflix, I’ve looked at it and for TV it has very little of what’s on my “like-to-see” list. I looked up well over 4 dozen shows, currently running and ended/cancelled (Some long ended like Lexx, Jericho, Outer Limits (80s), and Twilight Zone (80s)). The only ones on my list that had anything available in Canada were “Red Dwarf” and “Primeval”…not the cream of the crop. Most or everything I looked up was either no longer running or is in its second season or later. I don’t expect new stuff to be on there. The only redeaming factor seems that it looks like it has a decent selection of anime.

  23. On another front, If C-32 ratifies the WIPO treaties, does the National Treatment article of WPPT essentially mean that foreign artists, publishers, labels, etc. now have a legal right to a portion of the copying levy, which until now was strictly for Canadian artists/copyright holders only? Would this mean that Canadian artists/copyright holders would now get less a share of the levy or would it mean that the levy would have to be raised to maintain the compensation level that Canadian artists/copyright holders currently have? Either way, how would the Canadian Government explain that to the masses (we’re taxing you to subsidizes foreign artists)?

  24. @MikeB
    It’s my understanding that if C-32 passes in its current form, the levy would go away entirely (Even for Canadian artists) so compensating foreign artists would be an non-issue. The irony is that, initially, the CRIA pushed to have the levy killed in favor of TPMs and anti-circumvention legislation. More recently, and likely due to the wide lack of support for anti-circumvention legislation, they have been backpedeling with a change of heart in regards to extending the levy. At last count, neither the Conservatives nor the Librals were in favor of keeping or extending the levy, so C-32 likely means the end of the levy. NDP and the Bloc were in favor, but they’re obviously in the minority. In contrast all the opposition parties, NDP, Bloc and Librals had issues with the anti-circumvention provisions.

    In regards to the CRIA, this truely is a case of “Be careful what you wish for.”


  25. MikeB: “Either way, how would the Canadian Government explain that to the masses (we’re taxing you to subsidizes foreign artists)? ”

    How can they explain that if Intelectual Property is really property, it doesn’t get taxed?

    I pay property taxes, why the IP holders shouldn’t?

    So get rid of the levy and tax “the industry” for property, use the result for helping starving artists.

    In fact it actually makes a lot of sense. We already complained about out of print, older works that the copyright holders don’t want to reprint or to otherwise license or make available, god forbid to place them in public domain. An annual property tax on IP would create the incentive for “the industry” to either reprint/distribute or release to public domain.

    Nap.

  26. @IamME “It’s my understanding that if C-32 passes in its current form, the levy would go away entirely”.

    I would be interested to confirm that this is the case, anyone have an official link for this?


  27. Likewise I would like to know more definitavely on this. Dr. Geist, do you know more about whether C-32 kills the levy altogether? The conservatives seem pretty intent on it.

  28. Michael Geist says:

    Levy under C-32
    Bill C-32 does not kill the levy altogether. It remains unchanged and continues to apply as it has for over 10 years.

    MG