Of all the reactions to today's SCC decision to skip the appeal of the private copying decision, I thought the Canadian Recording Industry Association's was the most remarkable. I've obviously commented regularly on its high risk strategy of suing individual file sharers. I think this is a bad strategy for many reasons. Suing your customers (and we should be clear, file sharers are the industry's best customers) is never a good idea. Further, the immense energy devoted to fighting file sharing, despite ample evidence that any industry woes have little do with the practice, is wasted time that could be spent actually responding to the market.
Today's response represents an even higher risk strategy. CRIA is now going to war not only with its customers, but now also with its artists. There have been several indications of this in the past year, namely CRIA's opposition to artists on ringtone compensation and on satellite radio.
But opposing the artists on private copying takes this strategy to new heights. CRIA today claimed that artists will make up private copying levy losses through the marketplace. The truth is that artists and rights holders lost $4 million today, the amount collected from the iPod and digital audio recorders during a fairly brief period. Longer term, they lost tens of millions of dollars of potential compensation. These are not the nickels and dimes that CRIA derides. If anything, for Canadian artists the levy represents a potentially important revenue stream that will not be easily recouped.
Today's decision also likely means the end of a private copying levy that CRIA spent 15 years fighting to get. The system is clearly broken and policy makers will either drop it completely (perhaps supplemented by a fair use doctrine that will permit copying such as store bought CDs to personal iPods) or expand the levy so that it resembles a European approach that extends to both audio and video, while providing even greater compensation.
Further, today's decision represents a serious blow to the iPod, which has been an incredible boon to the music industry. Simply put, copying store bought CDs onto iPods, as CRIA's own Graham Henderson has supported, may now be unlawful in Canada since it is difficult to find an exception within the Copyright Act that would permit that form of copying. While perhaps some in the industry may think this is a good thing as it transitions users to re-purchase the same music yet again as MP3 files from services such as iTunes, I think it will ultimately lower the value that consumers associate with music to the detriment of everyone in the industry.
Finally, it is worth noting what this decision does not mean. While CRIA claims yet again that this means that file sharing is unlawful in Canada, the issue is still unsettled. They argue that "unauthorized file sharing to hard drives of any kind, including those on home computers, is illegal." Not so. A good argument can be made that computer hard drives are not the equivalent of the hard drives embedded in digital audio players. I don't think anyone knows for sure and I doubt CRIA will try to test the issue. There is high risk and higher risk but that lawsuit would involve perhaps the highest risk.