While the substantive shortcomings of the latest attempt to add a levy to the Apple iPod and SD cards are important (not to mention legal questions of res judicata and political questions surrounding the Conservatives policy commitment to eliminate the levy), there is a bigger story at work. Ten years ago, the music industry's vision of what the market would look like today focused on two things – DRM and the private copying levy. DRM formed the key provisions in the WIPO Internet Treaties that were concluded in 1996, while CRIA celebrated the culmination of a 15 year lobbying effort to create a levy on blank media in 1997.
Fast forward to 2007 and it is clear that the industry got it completely wrong. DRM faces a consumer and regulatory backlash, with a growing number of leading digital music vendors – Yahoo, Real, and Apple – all calling on the industry to drop the restrictions. They are joined by independent labels who are successfully promoting their music through eMusic, the number two online music seller, and by the artists themselves. With the rumours of EMI dropping DRM, it looks like it is only a matter of time before the DRM-focused strategy is abandoned.
The private copying levy has gone through similar challenges. The levy has succeeded in generating an enormous amount of income (over $150 million), yet some believe it has become a roadblock to WIPO ratification (national treatment concerns associated with the levy), it is far more market distorting that its advocates anticipated, and much to CRIA's dismay, it has provided peer-to-peer file sharers with a legitimate argument that downloading for personal, non-commercial purposes is lawful in Canada.
At the same time, the emerging view worldwide is that some of the copying it compensates – device shifting from CDs to iPods – should not be compensated. For example: