A remarkable week in music that started with the Steve Jobs call to drop DRM, followed by speculation that EMI will drop DRM, concluded with another critically important development – the Canadian Private Copying Collective, which administers the private copying levy, has asked the Copyright Board to increase the levy on blank CDs and add levies to electronic media cards (storage media) such as SD cards as well as digital audio players such as the Apple iPod.  There is much to consider here, which I will divide between the specific issues raised by the tariff application and the bigger story that is at work.

On the specific tariff application, I think the CPCC is going to have a tough time convincing the Copyright Board (and almost certainly the federal court) that the levy increases and extensions to other media are warranted.  The blank CD increase represents an astonishing request as the CPCC is now openly asking that more than half of the retail price of blank CDs to be comprised of levy costs.  A backgrounder on the CPCC notes that blank CDs cost about 50 cents and that the levy currently comprises 21 cents of that cost.  That is an enormous cost – 42 percent – and the collective wants to increase that by an additional 28 percent.  This is a staggering market distortion that will obviously face very stiff opposition.

The proposal to extend the levy to storage media and Apple iPods also face an uphill climb. The storage media usage data simply does not come close to supporting a levy.  The CPCC's FAQ says that its surveys suggest that 25 percent of content copied onto these cards is music and that 20 percent of people say that the last time they copied onto an electronic memory card, the content was music.   Put another way, 75 percent of content copied onto these cards is not music and 80 percent of people say that the content they last copied onto these cards was not music.  These results are obvious to anyone who owns a digital camera, but apparently not to the CPCC.  While the Copyright Board's definition of ordinary use opens the door to considering storage media, this represents bad, market-distorting policy that (if approved) would force the 80 percent of non-music copiers to subsidize the 20 percent of music copiers.

The attempt to extend the levy to Apple iPods is similarly flawed.  

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