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Will the Government Take Action Against the Memory Card Tax?

ACTRA is in Ottawa this week for a two-day lobby campaign on issues such as cultural funding and copyright. The group will undoubtedly focus on extending the private copying levy to iPods, an issue it has raised in the past. While there is seemingly no prospect of extending the levy to iPods, the question now is whether the government is prepared to take action against the plan to extend it to memory cards.

The Copyright Board of Canada recently established the timing for the hearing on extending the private copying levy to electronic memory storage devices such as SD cards. The hearing will not start until October 2012, but the time for the government to act is now. Given its opposition to the “iPod tax”, it is hard to see how it can possibly support extending the levy to SD cards and other storage devices. In fact, last year Canadian Heritage Minister James Moore specifically referenced memory cards in a debate on extending the levy:

This idea of imposing a new tax on iPods and MP3 players is not a new idea because there are very few new ideas, unfortunately, that come from the opposition on the issues of copyright and taxes. However, this idea is really toxic and, frankly, really dumb. This would punish consumers if we were to put in place a tax of up to $75 on iPods, Blackberries, cell phones, laptops, computers, memory sticks and automobiles, anything that is capable of playing digital music.

It turns out the Canadian Private Copying Collective provided the government with a roadmap for how to stop the memory card tax. As part of its submission to the Bill C-32 committee, the CPCC stated:

No Basis for Fear of a Levy on All Devices with a Hard Drive or on Any Inappropriate Device

The Act also makes provision for the Governor in Council to limit the scope of qualifying “devices” by regulation. Specifically, the definition of “audio recording medium” at section 79 of the Act permits the Governor in Council to prescribe by regulation that a particular type of “recording medium” is not an “audio recording medium”.

The process set out in the Act is one that would provide advance notice of any medium or device on which the CPCC wished to collect a levy. The CPCC must file a proposed tariff by March 31st of the year prior to the year in which the levy would come into effect. If the CPCC sought a tariff on a device deemed inappropriate, the Governor in Council could issue a regulation that prevented the Copyright Board from considering such a request. There is, therefore, no legitimate basis for fear that a levy would be imposed on all devices with a hard drive or on any device to which a levy should not apply.

Moore is already on record in describing extending the levy to memory cards as a “toxic” and “dumb” idea. The issue is now whether – as the CPCC suggests – the Governor in Council will issue a regulation preventing the Copyright Board from considering the request.

30 Comments

  1. Never mind a new tax, lets get rid of the old levy.

    I am not sure why rock stars are being paid because I choose to use Linux.

  2. Does it matter what Moore is on record saying? He doesn’t exactly stick to his promises does he!?

  3. SD cards are for digital cameras
    SD card are for digital cameras. I looked at one point for a music player that took SD card as storage and couldn’t find any on the market.
    Phones use MicroSD and their use a music player is marginal… unless it is an iPhone that actually do not use removable storage.

    In short even if a levy on medium used for storing music was fair (it is not) a levy on SD card (or Compact Flash) is not because it does not even cover the use the claim.

  4. $75?
    As much as I think the idea of a memory card levy is crazy, I have to point out the $75 was on iPod was never a number based in reality. I’m against FUD whatever the source.

    Still, the idea of a memory card tax is still well outside realm of reasonableness. A medium that is used 99% of the time for storing private photos in digital cameras has no place being charged an ‘infringement’ tax. Even the iPod tax makes more sense.

    The only place I can see such media being used to store IP is in the expansion slot of some smart phones. Though many phones today come with 16GB+ of internal memory, how many songs could you possibly want on your cell phone anyway?

    The levy concept is fundamentally flawed in today’s multi use device/medium world. Instead of pushing stale solutions, there has to be fresh ideas and a willingness to pursue them both on the IP owner and consumer side.

  5. SD Cards and the Raspberry Pi
    SD cards are widely used on small, rugged computers, such as the upcoming Raspberry Pi device (a $25/$35 computer aimed at the educational and experimenter markets – see RaspberryPi.org). Extending the levy to include SD cards will have a huge impact on the cost of setting up such a device, crippling it as an inexpensive tool for introducing young people to computer programming.

  6. The levy’s (current) purpose is to compensate artists for private use copying of audio works… an activity that is actually entirely legal (and explicitly so). Under C-11, the private copying privilege is actually extended to all types of copyrighted works, so the levy would naturally extend to them as well. However, if a work is protected by a digital lock, a person won’t be able to legally privately copy it if doing so requires breaking that lock, and in an age where most new works are created and stored digitally anyways, the percentage of works with such locks is only liable to increase, meaning the consumer won’t be able to (legally) exercise private copying privileges in the first place.

    Under C-11, the levy would be taxing people on activities that they aren’t even generally allowed to lawfully practice. I think even the conservatives realize this, and because they are such strong proponents of C-11, they are probably considering the levy as superfluous to their intent.

    I’m not a fan of the levy by any stretch… but I still see it as the far lesser of two evils, between it and the extreme digital lock circumvention prohibition measures of C-11. Under C-11, Canadians are effectively turned into closet criminals simply by engaging in any fair dealing practices such as private copying or format shifting for personal use. It doesn’t really matter to me that people won’t typically get caught or pay any penalty for it when it’s being done for personal use, the plain truth of it is that it will still be illegal, and creates nothing but a pathway to an ethical quagmire.

  7. On this issue of a NEED for a memory card levy in the first place …
    http://arstechnica.com/tech-policy/news/2011/11/piracy-problems-us-copyright-industries-show-terrific-health.ars

    Cue the starving executives … I mean artists.

  8. YES – $75
    QUOTE
    “I have to point out the $75 was on iPod was never a number based in reality.”
    ENDQUOTE

    The CPCC tariff proposed for the years 2008-2009 included the following:

    “(e) for digital audio recorders, $5 for each recorder with no more than 1 Gigabyte (GB) of memory, $25 for each recorder with more than 1 GB and no more than 10 GB of memory, $50 for each recorder with more than 10 GB and no more than 30 GB of memory, and $75 for each recorder with more than 30 GB of memory.”

  9. The problem…
    …is perhaps that CD-R/CD-RW sales have steadily declined; this is from personal observation only as I don’t have time to search for sales data, but you have perhaps seen the same thing in your environment. People now use DVD+-R(W) and a slow adaption of BD-R for optical media. External HDs are popular as well. The sign on the wall is that, unless they find something else to levy, their source of income is going to dry out.

    @Mark: “I’m not a fan of the levy by any stretch… but I still see it as the far lesser of two evils, between it and the extreme digital lock circumvention prohibition measures of C-11”

    Haven’t you ever heard of “none of the above?”. NO to levies and NO to digital lock circumvention in non-infringing circumstances. There.

    The epic battle “Rights Holders c.s. versus Everyone Else” continues…

  10. The way I see it is that a levy on SD cards is insane. When was the last time anyones seen anyone they know use a SD crads to store more music on their MP3 player, even better when was the last time you saw a MP3 player that has SD support.

    SD cards are for cameras, that is their market space nothing else. The way to fight this is to inform the hardware manufacturers like camera and computer manufacturers and let them know you wont be buying any hardware that supports SD cards when the levy is introduced. The current gov doesn’t listen to its citizens but they do seem to bend over for corporations.

  11. Byte: As a copyright holder, I’m not personally offended by the notion that copyright holders could reasonably be partially compensated for private use copying… any more than I am offended that I must pay a fee to renew my drivers license every few years. It’s an inconsequential fee that grants far more benefits than the money it costs could otherwise give me.


  12. “SD cards are for cameras, that is their market space nothing else. The way to fight this is to inform the hardware manufacturers like camera and computer manufacturers and let them know you wont be buying any hardware that supports SD cards when the levy is introduced. The current gov doesn’t listen to its citizens but they do seem to bend over for corporations.”

    The hell with that. I’ll just buy my SD cards from US sellers on eBay. Haven’t you heard? “Buy American” extends in to Canada through asinine regulations that will make it vastly cheaper in the US than in Canada. Many things, even after years of parity currency, are still 20-40% cheaper in the US…even after shipping. Printed materials and sporting equipment top the list for me.

    The other day, I came across a book at Chapters, a trade paper back of a comic (Hellblazer, I think). It had the usual US/Canada prices as follows, $21.99US/$24.99CAD. THEN there was a stuck on price tag of $26.99. So not only is the SRP $3 more expensive, it’s marked up a further $2 above SRP. Makes me sick and certainly not a proud Canadian and then local stores get incensed when I say I shop primarily mail order.

  13. @Mark
    “I’m not personally offended by the notion that copyright holders could reasonably be partially compensated for private use copying”

    ONLY if the media is solely, or even majorly used for the purpose of copying copyrighted materials. That argument could easily be made for blank CDs…even iPods and dedicated media players. SD/CF/MiniSD/MicroSD and other memory cards are almost exclusively used for digital photography. There is no justification for a copyright levy on such media for the fraction of a percentage that might use such media to store music or movies. It’s nothing more than a greedy money grab and if it comes to pass I will refuse to pay it and take my business south.

    Mind you, I don’t agree with the levy system at all and think private copying in my own home should be free, as long as I purchased the original content. Private copies, to me, are nothing more than disposable and have no value. I toss them in the garbage or delete them when I’m done with them. The only constant and the thing of any value is the original.

  14. Mark said: As a copyright holder, I’m not personally offended by the notion that copyright holders could reasonably be partially compensated for private use copying… any more than I am offended that I must pay a fee to renew my drivers license every few years. It’s an inconsequential fee that grants far more benefits than the money it costs could otherwise give me. 3

    Really so since I’m a copyright holder off al my photos that a posted in a gallery on a photo forum where is my compensation for people using those photos for private viewing.

    How come as a photographer I have to compensatge a musician when I make copies of my photos for backup or for giving away to someone.

    SD cards are used in about 99.5% of new cameras and there are some mp3 players that have SD card slots (very very few). So how the hell do you have no problems with a levy on a memory card which usage for music storage is miniscule and really non excistant compared to its usage in photo cameras.

    So why the HELL do musicians get to reel in money from memory cards that a strictly used in the photo industry. Please show me where photographers are pirating music when taking their own copyrighted photos with their own cameras.

    So whay benefit would people get from a levy on SD cards? Please educate us.


  15. @end user: “I’m not personally offended by the notion that copyright holders could reasonably be partially compensated for private use copying… any more than I am offended that I must pay a fee to renew my drivers license every few years”

    You don’t need a driver’s license in order to drive a car on your private property.

  16. So, Mark, “as a copyright holder” you’re not offended by compensating copyright holders? At least you admit your position is potentially self-serving. Why should you (and other copyright holders) be “compensated” for my liking to go on long trips and take digital photographs? Your justification could be used for any and all fees.

    If the current levy stands under C-11, then any IP protected by digital locks should not be eligible, since the IP owners are not permitting such uses and thus should get no compensation.

  17. @Mark
    The problem is that the levy system has been surpassed by technology, which was of course to be expected. Moore’s law (no, not that one, the smart one: http://en.wikipedia.org/wiki/Moore's_law) that applies to transistors has an equivalent in magnetic storage media. For around $100.00 you can get an external hard drive that holds about 2TB. For a CD-DA that’s filled to the rim but within spec we can assume 700MiB of data, and we’ll ignore lossless encoders like FLAC. A 2 TB external HD will allow about 2 * 1000 * 1000 * 1000 / 700 * 1024 = 2,790 full length Audio CD images to be stored on it.

    How high of a levy would you have liked? Even one that doubles the price to $200 would only allow for $100/2790 = 3.6 cents per possible stored CD. The reality is that people often accept a lossy compression like mp3 or .m4a which would put the levy at below a penny per possible stored CD.

    CD-DA is still the preferred “classic” physical medium for distribution of music, which will remain at the ~700MiB I talked about, but the higher end of external HDs is currently 3TB and will be 3.5TB before we know it.

  18. …continued…
    Note that the battle right now is about memory cards, but that’s just the first step. If memory cards qualify, magnetic media is next. As stated above, the relationship between “work” and “medium” is completely lost for high capacity storage media. For SD Cards, SDXC cards are available up to 128GB; the SDXC allows up to 2TB so that’s just a matter of time.
    See here for examples:
    http://en.wikipedia.org/wiki/Private_copying_levy#Regulations

  19. It’s not that I’m particularly defending the levy… I just don’t have any personal problems with it… largely because I firmly advocate the notion that copyright holders deserve to be compensated. This really isn’t that self-serving because although I am a copyright holder, I am not represented by any label or major publisher, so I don’t receive any compensation from the levies.

    However, there are copyright holders who do… and I don’t have a problem compensating them for private use copying, because the benefits of private copying *FAR* outweigh the modest cost that is being asked for.

    Which, not so coincidentally, is the EXACT same reason that I’m opposed to the digital lock circumvention prohibition in C-11… because it leaves the end user with *NO* legal recourse to exercise perfectly reasonable actions. While they may be able to go right on ahead and break the law to do it anyways, as I mentioned above, adopting that sort of policy creates a veritable maelstrom of ethical issues… one that I am not particularly thrilled about facing.


  20. @Mark: “I firmly advocate the notion that copyright holders deserve to be compensated.”

    Mark, please compensate me too. Any time you buy some product, please send me 1% of the price you paid. I’m looking forward for you buying a new car.

  21. Mark said:I firmly advocate the notion that copyright holders deserve to be compensated

    So you have no problems with book, software , movie, photpgraphy, graphic arts rights holders receiving part of the levy? I’m mean they are copyright holders. Which is kinda strange that none of those get compensated from the cd levy.

    Again please clarify for us stupids why there should be a levy on a technology which has a maybe .05% chance of being used to store music and is mostly used for image storage.

  22. @Mark
    In your answer, please also elaborate on the levy in relation to “amount of storage levied”. An image of a Bluray Disc is say 50GB, an image of a CD-DA is say 700MB. This is a ratio of about 73:1, should the movie people get 73 cents for every 1 cent the musicians’ group receives? E-books are miniscule in size in comparison, I wonder what the authors’ guild (by any other name) will be getting.
    If one cannot establish this direct relationship, it’s more of a tax than compensation for anything (since the latter is no longer being determined).

  23. I appreciate the conundrum that Mark is in. When it comes to a levy on media, I am in a similar position.

    The only way I see a levy will work, is if we legalise all file copying and sharing. Remember the state of affairs when the original levy was put in place, as a recognition of the actual activities at the time (devices were either tape or CD). Keep in mind this was before multi-device format shifting and media servers were commonplace. The most common reason for “making a copy” was to share it. The levy was intended as compensation for these mutually shared copies, and the CD was the most obvious place to apply it. In effect, the levy was a targeted “tax” on the activity at the time. A stopgap measure, that would eventually be superseded by advancing technology.
    (Yes, I know the argument put forward by many is that the levy wasn’t about file sharing, but simply “any copying”. Society, technology, and the times, have changed well beyond such an argument being relevant today.)

    Technology has advanced (perhaps in unforeseen ways). The original situation is no longer true. The original reasoning behind a levy, is no longer valid.

    I too would like to see ways the copyright holder can be fairly compensated. Likewise the public needs to be able to use the copyrighted works in honest and fair ways.
    Advancing technology changes everything. “Distribution” used to be the major issue, now it is almost irrelevant. Technology now allows *anyone* to become a “distributor” for very little “cost”.

    All in all, I feel that copyright holder “taxes” in the form of a levy are no longer appropriate. If we (as a society) want to develop some other mechanism, that is fair game. But the reasoning, and tradeoffs, can no longer be based on the same rationale as was used for the CD levy.

  24. robecocktail says:

    re
    thx for your sharing
    http://www.robedebal.allmyblog.com/

  25. The Levy
    You know, I compare this proposed levy to the art tax they have in Europe, and I know they were pushing for it here. This is the tax that if you bought a piece of art from and artist and then resold it, then a portion of that resale profit would go back to the artist. It’s one of the most ridiculous things I’ve ever heard. If I buy a painting for a $100 and all of a sudden that artist becomes very famous, should I decide to sell the painting, now I have to pay the artist for that right. It’s obscene….just like this proposed tax on memory cards.

    Anyone know if it ever came in to law here?

  26. I get the impression that people here are misunderstanding my actual position.

    Understand that I don’t particularly believe the levy to be actually necessary, or even desirable, but the primary reason that I find the levy tolerable is that I believe it to be wholly unrealistic to actually hope to get it repealed without effectively removing any and all private copying privileges from the picture, which is something I would be categorically against.

    Another thing I am adamantly against is the notion that the levy should *EVER* in any way legitimize the so-called noncommercial intent public sharing of copyrighted content without permission, because the distribution potential of even a single person without any alleged “commercial intent” publicly sharing a work can easily be just as damaging to the value of a copyrighted work as one that actually was commercial. In particular, it could (and would) open the doorway to non-commercial “fronts” where there easily could be an underlying commercial intent that cannot ever be proven by anyone else. For example, an employee of company A “noncommercially” shares a product of competitor company B’s product, with the unstated intent of undermining B’s own distribution, and potentially strangles them out of the market. If B happened to be a much smaller company than A, without as much distribution bandwidth as A (or A’s employee, for that matter), this activity could easily succeed, to A’s commercial benefit. To prevent this, I don’t think it is reasonable to create exceptions for “noncommercial” public sharing of copyrighted works without permission, even though I can admittedly understand the underlying intent behind the suggestion. There’s just no way to keep it from being abused (and it would be).

    As I’ve alluded to above, I *DO* most strongly advocate the notion of anyone being able to freely make copies of any copyrighted content for a person’s own personal and private use, however (this would include making personal backups, or format or time-shifting copyrighted content), because they would already have had real access to the content in question to make a copy of it at all, there is no net effect upon anything for such activities. My position is that if a person distributes their copy of the content to other people, however, they are violating the notion of private use, and thereby reasonably ought to be infringing if they did not otherwise have permission to have made the copy in the first place.

    That’s my position… as a copyright holder, I strongly value copyright, and recognize that infringing on any copyright only diminishes the merits of utilizing copyright in the first place, which is damaging to all copyright holders, including myself. I also, however, firmly uphold personal consumer freedoms to do with one’s own property whatever they wish, to the extent that the copyright holder’s interests (which is to maintain exclusive control the creation of copies as it pertains to distribution) are upheld for the duration of the copyright.

  27. SD cards are for cameras
    Photographers and graphic artists contribute ten billion dollars to the economy annually, and yet the vast majority of photographs and other graphic artwork are being viewed without anyone paying to do so.

    And since it would be effectively impossible to get anyone to pay for something first, before even seeing what it is that they are paying for, the only way to compensate the artists is with this levy.

    Otherwise people would just look at the photograph and then, instead of paying for it, they would say, “But officer, I was in a hurry.”

    So now we are going to have to maintain a database of everything that everybody looks at, because some of MG’s best friends are flooding the world with illegal microchips.

    OK, I’m going to bed now.

  28. @Mark
    …”the primary reason that I find the levy tolerable is that I believe it to be wholly unrealistic to actually hope to get it repealed without effectively removing any and all private copying privileges from the picture”

    That sentiment is very politically pragmatic, but I don’t see any real danger of “removing any and all private copying from the picture”. The real world has changed far too much for that to be a politically smart move. Too many people (including politicians) under the age of 40, that don’t even remember those “good old days”.

    C-11 does manage to recognise realities, even if it then turns around and overrides that recognition by re-introducing the same restrictions under the guise of TPM restrictions.

  29. @oldguy: C-11 effectively *DOES* remove private copying privileges from the consumer, because the decision on whether or not to permit it passed on to the publisher, who can decide to legally prohibit it simply by putting a digital lock on it.

    If C-11 passes, I expect that it is quite likely the levy will also be dropped… if for no other reason than the fact that consumers would be paying levies for a privilege that they can’t generally even carry out (legally speaking, at least). Owing to the fact that charging levies for illegal activities is, itself, actually illegal, I can’t see how the levy could remain long after C-11 passes unless C-11 is modified to include exceptions to the prohibitions against circumvention that are consistent with its otherwise expanded fair dealing clauses that cover all types of copyrighted works, and not just audio (in which case I could admittedly see the levy also being expanded to include all forms of digital storage media, which I’m not particularly fond of, but I still vastly prefer even that to C-11’s provisions, which put perfectly honest people exercising alleged fair dealing privileges in the ethically compromised position of being closet lawbreakers).

  30. Moore is already on record in describing extending the levy to memory cards as a “toxic” and “dumb” idea.
    Yes, but that was before the cheque cleared.