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After its so-called “iPod tax” was panned by the current Conservative government in their election campaign earlier this year, the Canadian Private Copying Collective (CPCC) has targeted microSD memory cards for a levy.

Canadian importers of microSD cards will have to start counting the number of units they bring into the country to prepare for the possibility they will need to pay a new tariff designed to pay musicians for their songs copied to the medium as of Jan. 1. The Copyright Board of Canada will decide on whether the levy will be implemented in a hearing scheduled for October. But if deemed valid, the tariff will be collected retroactively by the CPCC, the organization says.

The CPCC, which collects levy funds and distributes them to Canadian musicians, had originally requested a levy on all electronic memory cards in its proposal filed with the Copyright Board in March. But it has revised its request to only microSD cards (not Compact Flash cards or full-sized SD cards, for example) after the results of market research by a private polling company it hired, according to David Basskin, a CPCC board member.

In 2008, the Copyright Board agreed to a levy on iPods and similar devices. But that decision was overturned by the Federal Court of Appeal after challenge by industry groups that included Apple, Dell, Sony, Verbatim, Memorex, Samsung, and more.

“The courts have concluded that memory that is fixed inside an iPod or a similar device is not properly the subject of a levy, but they have said nothing about removable memory,” he says. “It’s grossly unfair to have a business based on copying music without having compensation for people who provided music in the first place.”

The new levy is a “cash grab” similar to the “iPod tax,” says Karen Proud, vice-president of federal government relations for the Retail Council of Canada. The council is an official objector to CPCC’s proposed tariffs and will take part in presentations to the Copyright Board on the matter.

“It amounts to another across-the-board tax on microSD cars, the majority of which aren’t used for downloading and storing music,” she says. “These cards are used in cameras, and in washing machines potentially.”

While iPhones and iPods use internal, non-removable storage for music and other data, many smartphones rely on microSD cards for the bulk of storage duties.

But imposing a levy on microSD cards is “ludicrous,” says Michael Geist, the Canada Research Chair in Internet and e-commerce law at the University of Ottawa. The government that campaigned against an “iPod tax” in the Spring should take action and declare microSD cards can’t be levied sooner rather than later, he says.

“It might as well save everybody the time and money by declaring it out of bounds now,” he tells ITBusiness.ca. “They have the power to do it.”

CPCC suggests a levy of $0.50 for cards with 1 GB of memory or less, $1 for cards with between 1 GB to 8 GB of memory, and $3 for cards with 8 GB of memory or more. The current levy on CD-Rs of $0.29 per disc will remain unchanged. Levies were previously collected on MiniDiscs and microcassette tapes, but have been abandoned after the technologies fell out of use.

Importers of microSD cards would cut the cheque for the CPCC, but likely would pass on the costs to consumers.

The levy on storage media used mostly for music is based on a value-for-value proposition, Basskin says.

“Was the blank CD free? Was the SD card free? Was the iPod free? Nope. Everybody else gets paid,” Basskin says. “So why should musicians give it up for free? … The reality is that musicians only want the same treatment that ordinary expect for what they do. They want to be paid for things that are consumed by people.”

But Geist counters that the CPCC’s model for valuing copies of music is outdated. Instead, musicians should charge for their music expecting that consumers will make various copies for their smartphones, computers, and a mix CD for the car.

“The music industry has obviously faced some real challenges,” Geist says. “The extent to which we’re seeing consumers willing to buy music, it’s with the express belief they have the right to copy music to the device of their choosing.”

CPCC expects there will be opposition to the levy presented at the Copyright Board hearing by those that sell microSD cards.

The Retail Council is requesting the government provide an exemption to microSD cards against a levy, Proud says.

Brian JacksonBrian Jackson is the Associate Editor at ITBusiness.ca. Follow him on Twitter, read his blog, and check out the IT Business Facebook Page.

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