Copyright Board puts freeze on blank media levy

In a long-awaited decision, Copyright Board of Canada on Friday froze all existing private copying levies on recording devices, eliciting mixed feelings from the technology industry and a more negative reaction from the group representing

many artists, Canadian Private Copying Collective.

Under the decision, the following tariffs will hold in 2003-2004: 29 cents on audio cassette tapes of 40 minutes or longer; 21 cents on CD-Rs and CD-RWs; and 77 cents on CD-R Audio, CD-RW Audio and MiniDiscs.

The Board also set for the first time charges on non-removable memory permanently embedded in digital audio recorders: $2 for recorders with a memory capacity of more than 1GB; $15 for recorders with memory capacity of more than 1GB and up to 10GB; and $25 for each recorder with memory capacity of more than 10GB.

“”The freeze on the rates is generally positive news,”” said Bill Munson, executive director of policy and planning at Information Technology Association of Canada in Mississauga, Ont. Although he said taxes on cassette tapes are largely irrelevant to tech companies, additional levies on devices like MP3 players increase costs.

The Board also denied the CPCC’s request to set a levy on blank DVDs, removable memory cards and removable micro hard drives because it had no evidence that they are used to copy music, a decision which ITAC also favoured.

Lucie Beauchemin, vice-president of the CPCC, described today’s news as a “”somewhat disappointing and perplexing decision.””

The CPCC, which has no immediate intention to appeal the decision, has two options, added Paul Audley, the organization’s policy adviser and president of Paul Audley & Associates Ltd.: rightsholders either receive nothing at all for copying of their albums or receive payment through the private copying tax.

In 1997, Canadian Parliament had created private copying legislation, which imposed a levy on blank audio recording media to compensate authors, performers and makers who own copyright in eligible sound recordings that are being copied for private use.

The CPCC, which was created the following year to administer the levy, has so far collected $59.3 million in revenues through this tax, and earmarked $54.4 million for the artists’ collectives it represents. Distribution began this year.

Yet the issue that most affects the tech industry — and primarily the reason it became embroiled in the recording-industry levy issue in the first place — is the CPCC’s zero-rating program, under which manufacturers and importers of blank audio recording media can sell media that’s levy-free to religious organizations and other groups, said Munson. The Board has ruled illegal the zero-rating practice.

Several months ago, “”A similar program was offered to the Canadian software industry because one of the main media it uses for selling software is, of course, disks,”” Munson said. “”So they would buy hundreds of thousands of blanks.””

ITAC today vowed to continue its advocacy efforts around the levy exemption with the Minister of Industry. When it made a submission to the Copyright Board, ITAC had also told the minister that he, not the Board, has the right to exempt companies and groups from the levy, Munson explained, adding that the Board has agreed.

“”The fact that the minister is going to have to look at this closely rather than just duck and let the Copyright Board take care of it means that a longer term solution is likely.””

It seems the CPCC, however, is not putting its faith in the government. It has consulted legal advisers and believes there is “”no basis in fact or law”” for the ruling, said Beauchemin. “”We intend to respect our contractual obligations. We intend to continue implementing”” the zero-rating rule.

The Ottawa-based Canadian Advanced Technology Association, which praised the freezing of rates, noted new Prime Minister Paul Martin intended to examine the role of crown corporations like the Copyright Board. “”I think there will be a critical review of all these types of charges,”” not only those applied to CD-ROMs, said CATA president John Reid.

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