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Everybody Is Jumping on the Levy Bandwagon

Appeared in the Toronto Star on March 10, 2008 as Everybody is Jumping on the Levy Bandwagon

From levies on blank CDs to tariffs on background music played in dental offices, Canada has long held the reputation of being a haven for policies that support cultural and creator groups through levies, tariffs, and other fees.  In recent months, this love of levies has grown dramatically as a number of new proposals have emerged that could significantly increase the costs to consumers for Internet, television, and new media services.  

While cultural and creator groups are the primary proponents of these new funding schemes, they are by no means alone as broadcasters, cable companies, and Internet service providers have jumped into the levy and tariff game.

The cultural group proposals have focused primarily on Internet services.  The best-known is the Songwriters Association of Canada plan to fully legalize peer-to-peer file sharing of music by adding a $5 monthly charge to the cost of Internet access.  That proposal has generated considerable debate, with many consumers expressing concern about a plan that would hit all Internet users, without regard for whether they engage in peer-to-peer file sharing.

Joining the SAC plan is a recent proposal that has garnered support from a handful of creator groups that includes the Canadian Film and Television Production Association, the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA), the Directors Guild of Canada, and Writers Guild of Canada.  The proposal envisions the CRTC establishing a new mandatory ISP contribution of 2.5 percent of broadband revenue to help fund Canadian new media content creation.  

Late last month, the groups released the results of a public opinion survey which they said found that "69 percent of Canadians believe that ISPs should be required to help fund the production of Canadian digital media content in the same way that cable and satellite TV providers are required to contribute a small percentage of their revenues to the production of Canadian television programs."

The proposals do not end there.  Last week, ACTRA also called on the CRTC to require broadcasters to spend seven percent of their revenues on Canadian English-language drama programs.  Moreover, the Creators Copyright Coalition, which is comprised of 16 associations and collectives, recently recommended that the government extend the private copying levy to all technologies that permit private copying.

Yet cultural groups are the not only ones clamouring for new levies and tariffs.  Canada's broadcasters have been busy lobbying the CRTC to require cable and satellite companies to add a fee to their subscribers' bills for carriage of over-the-air broadcast signals.  That would mean that advertiser supported networks such as CTV and Global would receive additional revenues from millions of Canadian television subscribers.

The cable companies unsurprisingly oppose the broadcaster proposal; however, they are also looking new tariffs of their own.  In late 2006, Videotron proposed a new Internet transmission tariff that would allow ISPs to charge content creators for transmitting their work over the Internet.  This proposal is viewed as part of the larger ISP push for a two-tiered Internet in which creators and websites would pay for the privilege of having their content transmitted on the "fast track," while consigning everyone else to a slow lane.

Although it is unlikely that all of these proposals will be implemented in the short term, it would be a mistake to dismiss them out-of-hand.  Indeed, the CRTC has already received submissions on the fee for carriage proposal and it is expected to conduct hearings that could address the 2.5 percent broadband fee and the Internet transmission tariff later this year.  

As these plans make their way through the legislative and regulatory process, one thing seems certain.  While cultural groups, broadcasters, and ISPs battle it out, Canadian consumers will ultimately be left footing the bill.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at or online at


  1. Oh, I so hope this doesn’t happen. Levies and extra fees on Internet connections are absolutely the wrong way to go. For one thing the list on groups wanting in on this will be endless. Everyone who owns the rights to anything that is illegally traded over the Internet will have their hand out – music organizations, TV and movie producers, and even software companies are going to want their share. There’s really no end in sight.

    I especially fail to see why the consumer must pay for the failings of the movie and music industries to come up with a comprehensive plan to deal with the Internet years ago. For example the movie industry is desperately trying to save a method of doing business that was in place since the very first movies were released. It’s time for them to find a new model that works with current technology.

    In some cases, it may simply be that the Internet has made some of these organizations obsolete. When an artist no longer requires the music industry machine to put out music to their fans – plenty of new musicians are making a good living selling their music directly – perhaps the huge corporate structure created to market and distribute music is no longer required. Why should we keep them alive on a sort of corporate welfare system?

    We already have fairly good evidence that the levy system doesn’t work. Look at the blank media system currently in place in Canada. It’s a mess. The organization in charge of managing it didn’t distribute any money for years, yet they kept coming back to the Copyright Board in order to try and raise the amount they collected. Even when they finally realized that maybe it was time to actually get around to releasing some of their cash, they came up with a terribly convoluted method of doing it. And pity the small business trying to get an exemption from to use blank media in their daily operations. Every company I have ever worked with ends up paying this tariff unnecessarily because, even though in theory they should be exempt, the methods for acquiring that exemption are virtually impossible and horribly intrusive.

    No, for the sake of keeping Canada ahead of the curve in this age of Information we need to keep the Internet as free and open as possible. We are already falling behind the US and Europe in available connection speeds, costs, and available bandwidth. Increasing the costs of content and connection in order to prop up any organization’s failure to engage in the new media market would be a significant step backwards in my opinion.

  2. Blogger
    I fully agree with Steve.

    The internet has had a profound impact on the way we learn, communicate and conduct business. Rather than supporting outdated business models by gouging consumers universally, we should be encouraging businesses to adapt to the new reality.

    On a personal level, I object to the idea that I should pay a fee for a service I have never used and am unlikely to ever use – music file sharing. I feel the same way about the other features. I do not copy music CDs. I do not copy DVDs or download them. I do not violate copyright. I resent the implication that I would. These companies need to figure out how to secure their products against theft, not throw up their hands and beg for money from the public.

    Continuing to offer corporate welfare to failing industries (creative or otherwise) including those that refuse to adapt, will not help them to survive – it will just prolong the inevitable.

  3. Law Student
    $5 fee for unlimited P2P: best idea ever. The Copyright holders will stop complaining becuase they will be making enough $$$ from the levy, and we get all access without fear of reprisal. Works for everyone. And as for people who don’t use P2P, once it becomes legal, I’m sure people will start using P2P in droves.

  4. The problem with a $5 fee for “unlimited P2P” is it will never fly past the big monster to the south of us. Legalizing P2P in Canada would just make us the next “terrorist haven” … isn’t the whole push to update the copyright laws because of the big $$ companies with powerful lobbying groups?

  5. The audio media levy system has successfully screwed Canadians out of millions of dollars so that music creators can be “compensated” for “lost” sales even though most of those sales never actually existed.

    This program appears to be so successful that apparently every Canadian “content creator” group with a failing business model is now clamouring for their piece of the pie.

    The problem is NOT that people won’t pay for content. It’s that the much of the content produced by the music and movie industries is not worth paying for because it’s garbage — “edgy” (artsy buzzword for substandard mindless ultra violent and/or perverse and/or profane “entertainment” that lacks merit and has no commercial potential) or simple-minded formulaic crap. I don’t pay for garbage. Nevertheless, these industries now want to charge me (via every levy du jour that they can think of) for the garbage content that I don’t want, didn’t ask for, and don’t use — how is this even legal?

    It’s bad enough that Canadian taxpayers have to subsidize (aka prop up) the frequently substandard “Canadian content” produced by this country’s entertainment industry. To ask consumers (who are generally the same people as the taxpayers) to further subsidize them through an apparently endless number of levies is ridiculous. Canadians should be outraged by this never ending corporate and cultural welfare. I know I am.

  6. never fly in the states? how come on buzz out loud (cnet podcast) they were talking about an american somebody proposing the $5 tax in the states?

  7. Works for everyone
    I am a big proponent of the flat-fee on Internet services for P2P. Let’s face it, the P2P genie will not willingly go back into her bottle. Content creators need to be paid. If they aren’t, one of two things will happen; a) nobody will make content, or b) said creators will push for even more draconian copyright laws in the fleeting hope that they can use said law to leverage us into paying for content (ala the RIAA in the US).

    Frankly, I’d be happy with a $10 fee that encompasses both music and television/movies. Then we could all download whatever we want without any fear of legal reprisal. It would also legitimize the mechanism and usher in a new age in media distribution.

    And yes, there are people pushing for this in the US as well. The music industry is rapidly coming to the conclusion that they can’t keep operating the way they have in the past. The traditional business model is gone. This is not a bad thing per se, it’s just the way society and more specifically, technology, works.

    An interesting article relating to the shifting mindset of the music industry… [ link ]

  8. You spend your money, I’ll spend mine
    ChrisL, whilst you may be happy to be forced to cough up $10 each month for a rather inefficient and corrupt industry, not all of us are. Feel free to fritter away your own money on such whims, but give everyone else the liberty of deciding how they wish to spend their money.

    You have demonstrated you’re willing to front up some money for artists (‘content creators’ as you put it), so why do you doubt that you are a typical member of artists’ audiences? I suspect the majority of art lovers would love to pay their $10 (or however much they want to spend) directly to the artists of their choice (rather than a label’s choice with the label keeping 99%). So, really, even if everyone has their freedom restored such that they are once again able to share and build upon published works, they, as you, will still want to pay artists for the great art that they publish.

    You don’t need to create monopolies or institute taxes to force people to fund the cultural wealth they so enjoy. They will do it willingly, just as they willingly fund the producers of material goods.

    Let the artists and their audiences deal directly and voluntarily: art for money, money for art.