Ipod Levy May Yet Face The Music

My weekly Law Bytes column (Toronto Star version, Ottawa Citizen version, homepage version) focuses on last month's Copyright Board decision that re-opens the door to placing a levy of up to $75 on iPods as part of the private copying levy.  I note that the case may create a sense of déjà vu, since it marks the second time that the Canadian Private Copying Collective, the collective that has pocketed more than $150 million from the levy since 2000, has sought to include iPods within the levy system.  It first introduced an iPod levy in 2003, only to have the Federal Court of Appeal strike it down as the court declared that "it is for Parliament to decide whether digital audio recorders such as MP3 players are to be brought within the class of items that can be levied. . .as [the law] now reads, there is no authority for certifying a levy on such devices or the memory embedded therein."

Notwithstanding the Court's unambiguous language, the CPCC reintroduced the iPod levy earlier this year, arguing that the MP3 player comments were "obiter"(a legal reference to a passing remark that does not form a necessary part of the court's decision). Canadian retailers and storage media companies unsurprisingly challenged that interpretation, leading to last month's ruling that sided with the CPCC. The Copyright Board did not mince words, suggesting that the levy could also be applied to cellphones and personal computers, and warning that excluding the iPod from the levy system would "instantly makes the conduct of millions of Canadians illegal, and even possibly criminal."

The decision will presumably be appealed, virtually guaranteeing years of litigation that promises to divert millions of dollars earmarked for artists to lawyers instead. While the legal challenges are important, the political repercussions carry greater significance since they may lead to dramatic changes to both the levy and the Copyright Board.
The levy is likely to be on the chopping block, a victim of political promises – the Conservative party pledged to eliminate it in its 2005 policy declaration – and a global trend toward private copying without compensation.

The Recording Industry Association of America has acknowledged that transferring music between devices (such as from a CD to an iPod) is lawful, while Australia recently enacted legislation that legalizes format shifting of content such as music, newspapers and books.  Similar laws are planned for the United Kingdom (which is planning a consultation this fall on format shifting without compensation) and New Zealand (which has a bill to address the issue currently before its Parliament).  All of these countries have adapted their laws to meet consumer expectation that they are entitled to listen to the music they purchase on the device of their choice, while allowing the music industry to account for such copying within the retail purchase price.

Changes to the private copying levy may be unavoidable; however, the bigger question will be whether Industry Minister Maxime Bernier and Canadian Heritage Minister Bev Oda will wade into the broader question of reform of the Copyright Board and Canada's emphasis on the copyright collective system. Canadian policy has for years relied the use of copyright collectives to efficiently license the use of copyrighted works such as music and books.  However, the private copying decision highlights the growing dissatisfaction with the system.  The Copyright Board's willingness to dismiss the federal court while characterizing millions of Canadians as criminals for copying CDs onto their iPods suggests that the institution may need reform.  

Moreover, the copyright collectives are increasingly finding themselves on the wrong side of public opinion.  In addition to the iPod levy issue, SOCAN recently sent hundreds of demand letters to Canadian hair salons seeking compensation for background music, while Access Copyright, an authors' collective, has established a financial reserve of more than two million dollars to be used for expenses in obtaining copying fees from Canadian schools.

The copyright collective system was designed to pave the way for paying creators and facilitating access to copyrighted works.  With 34 Canadian copyright collectives, a prohibitively expensive litigation process that excludes many interested parties, price-distorting fees such as the private copying levy, questions about the fairness of royalty distribution, and a Copyright Board that seemingly places its views above the courts, changes to the system appear to be long overdue


  1. I’ve said this before, I’ll say it again: read Jane Jacobs’ “Systems of Survival”. Read it with your Copyright Wars goggles on. The collectives, which should be bound by the commercial syndrome, have become guardians. That’s bad.

  2. Hey, USA!
    With a comparable Cdn$ making the retail landscape between 2 countries relatively even, anyone can obtain their necessary iPods and media blanks due south and truck them home… to save $75? You bettcha!

  3. a isgn of things to come here. says:

    According to the band’s web site, Pearl Jam’s Lollapalooza webcast was censored by sponsor/webcaster AT&T:

    When asked about the missing performance, AT&T informed Lollapalooza that portions of the show were in fact missing from the webcast, and that their content monitor had made a mistake in cutting them.

    During the performance of “Daughter” the following lyrics were sung to the tune of Pink Floyd’s “Another Brick in the Wall” but were cut from the webcast:

    * “George Bush, leave this world alone.” (the second time it was sung); and
    * “George Bush find yourself another home.”

    But really, who cares, right? Just a bunch of DFHs whining about the fact that the world is at the mercy of the worst president in American history. Boo hoo!

    But yes, there are larger implications. Even for you. Clean-cut American, working-class hero that you are:

    AT&T’s actions strike at the heart of the public’s concerns over the power that corporations have when it comes to determining what the public sees and hears through communications media.

    Aspects of censorship, consolidation, and preferential treatment of the internet are now being debated under the umbrella of “NetNeutrality.” Check out The Future of Music or Save the Internet for more information on this issue.

    Most telecommunications companies oppose “net neutrality” and argue that the public can trust them not to censor.

    That’s right. AT&T, like other telcos who say you can “just trust them” not to censor content in the absence of mandatory net neutrality, just did exactly what everyone who’s worried about net neutrality always believe they would do.

    What’d that take? About ten seconds?

    Why don’t people just laugh in the faces of industries that claim they can self-regulate?

    [ link ]

  4. BAND!!!
    The levy is a joke!!!! I have been an artist for 20 years with a reasonable amount of success with digital distributions… I have paid many dollars to the “levy” in order to distribute my music to listeners. Since i’m not in maistream media I can’t get any levy money for my hard work but Avril Lavigne and Chad Kroeger get money for my hard work everytim I buy a stack of blanks from Future Shop!!! The Levy should be used to help emerging artists instead of paying successful ones who do not need the money!

    I think to assume that blanks are only purchased to “copy” copyrighted material is guilty before innocent and the public is being punished for the change of medium that the industry initiated when CD’s were invented!

    Why should my mom have to pay the levy for hard done by canadaian artists such as Avril and Nickelback when all she wants to do is save photo’s of the family she took when visiting? In fact not many people these days buy cd’s to copy Avril’s or Chads Crap anymore… So the levy is not needed and I could only support the levy if it supported good things. A good thing : Helping propagate new talent. A bad thing : helping Avril or Chad get richer!