Post Tagged with: "cpcc"

Copyright Board Gives Go Ahead to iPod Levy

The Copyright Board of Canada has released its decision on a series of motions contesting the latest attempt by the Canadian Private Copyright Collective to apply the private copying levy to iPods and removable memory storage cards. The proposed levy was challenged by the Canadian Storage Media Alliance and the Retail Council of Canada, who argued that the Federal Court had already struck down a previous levy on iPods (or more accurately digital audio recorders) as outside the Copyright Act. The CSMA and RCC argued that the Board had no jurisdiction to consider or approve the levy or alternatively that the CPCC should be prevented from proposing it.

The Board conducted hearings on the motions last month and has responded quickly with an emphatic rejection of the CSMA and RCC. Siding consistently with the CPCC, the Board has left little doubt that it believes that the earlier decision has not foreclosed the possibility of a levy on devices such as the iPod. In fact, the Board provides the clearest statement yet that it believes that the levy could be applied to any device, including cellphones and computers. At paragraph 70, the decision states:

July 19, 2007 — 43 comments — News

Canadians Overpay Millions on Private Copying Levy

The Copyright Board of Canada issued its latest private copying decision [pdf] on Friday. The fourth major decision from the board on private copying, the decision addresses the levy for 2005 – 2007 (the Canadian Private Copying Collective attempt to extend the levy to iPods and SD cards would commence in 2008).

Interestingly, the levy will decrease slightly as a result of this decision, though the Copyright Board was actually inclined to increase the rate (note that all opposing parties dropped out of the proceedings, leaving only the CPCC to present evidence). The Board felt that 29 cents would be the appropriate levy for blank CDs, yet kept the levy at 21 cents since that is what the CPCC requested. At the same, it reduced the levy for other blank media – cassette tapes dropped by five cents to 24 cents per tape, while CD-R Audio, CD-RW Audio, and MiniDiscs all dropped from 77 cents to 21 cents.

The reduction in the levy leaves a significant surplus with the Board estimating that the CPCC will need to return $2.5 million in overpayment for the past three years. The CPCC has expressed disappointment at this result and indicated that it will develop a plan to reimburse importers and manufacturers for the higher levies that were collected from 2005 – 2007. Of course, assuming that the price of the levy was passed along to consumers, it is not the importers and manufacturers that should receive the reimbursement – it is Canadian consumers. The Board absolves itself of this issue by stating that "it is not for us to determine who, in the supply chain leading to the final consumer, will be the ultimate beneficiary of these refunds." In other words, Canadians have overpaid millions of dollars over the past three years for the private copying levy, yet that money will go into the pockets of importers, manufacturers, and possibly retailers (sounds like a class action lawsuit waiting to happen).

In addition to the overpayment issue, the decision contains several interesting revelations.

May 15, 2007 — 19 comments — News

The Recording Industry’s Digital Strategy Out of Tune

My weekly Law Bytes column (Toronto Star version, homepage version) begins with the following:

Ten years ago, as the Internet began to mushroom in popularity and emerging technologies enabled consumers to make near-perfect copies of digital content, the recording industry emphasized a two-pronged strategy in response to the changing business environment. First, it focused on copy-control technologies, often referred to as digital rights management (DRM), that many in the industry believed would allow it re-assert control over music copying. Second, it lobbied the Canadian government for a private copying levy to compensate for the music copying that it could not control.

While the industry’s approach proved successful on the legal front – the 1996 World Intellectual Property Organization’s Internet Treaties established legal protections for DRM and Ottawa introduced a private copying levy on blank media such as cassettes and CDs in 1997 – the strategy’s effectiveness has long been subject to debate. The week of February 5th may ultimately be viewed as the beginning of the end of that debate. That week, which began with Apple CEO Steve Jobs calling on the industry to drop DRM and concluded with the Canadian Private Copying Collective (CPCC), the collective that administers the private copying levy, applying for its dramatic expansion, leaves little doubt that the recording industry got it wrong.

The column proceeds to discuss the failure of DRM and the mounting pressure on the industry to drop it.

February 19, 2007 — 5 comments — Columns

CPCC Goes For Broke, Part Two

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:

February 12, 2007 — 6 comments — News

CPCC Goes For Broke, Part One

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.

February 11, 2007 — 14 comments — News