Canadian Court Won’t Overrule Scrapping MP3 Levy
Canada’s recording industry embraced the country’s high court decision Thurs. not to hear a case involving imposition of extra fees on MP3 players. The justices decided Apple iPods and the like aren’t subject to a private copying levy because their embedded hard drives are “devices” rather than audio recording media. This means unauthorized file sharing to any hard drive -- including those on home computers -- is illegal, the Canadian Recording Industry Assn. (CRIA) said. Critics disagree, saying that debate is not over.
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The decision follows an update of Canada’s copyright law, providing certainty for legitimate digital downloading services. The Canadian Coalition for Fair Digital Access (CCFDA) wanted the Supreme Court to strike down a Federal Appeals Court ruling that codified the country’s Copyright Act as validly enacted legislation. The Canadian Private Copying Collective (CPCC) said the CCFDA argument had already been rejected twice by the govt. Copyright Board.
The Supreme Court and federal legislators aligned with a “silent majority” of Canadians who view file sharing as an illegal activity, CRIA Pres. Graham Henderson said: “Together, they are bringing certainty to the legal system. With certainty comes trust, and with trust comes investment, laying the groundwork for a robust legal market place.” The decision means artists will not get compensation for music obtained through unauthorized file sharing, but Henderson pointed out that the country’s Private Copying Levy never has compensated them properly for this black market activity.
The hidden charge now gets rights holders about C2.8 cents per “lost sale” for copies made to blank CDs, and nothing for copies made to PCs or, after last week’s decision, to digital audio recorders. According to the Canadian Coalition for Fair Digital Access, the levy raises data CD prices C21 cents and raises audio CD-R and CD-RW prices C77 cents. “Artists will more than make up for any curtailment of the levy system as a result of increased sales in the legal market place,” Henderson said: “The legal marketplace is far more efficient and compensatory than scraping nickels and dimes through a levy.” CPCC still claims a levy on memory permanently embedded in digital audio recorders complies with the Copyright Act’s definition of an “audio recording medium.” The group will consider options for reviving the levy, officials said.
The Retail Council of Canada (RCC) and a coalition of 6 major electronics retailers said the decision pleased them. RCC Pres. Diane Brisebois said consumers will save millions of dollars and Parliament will face more pressure to get rid of the controversial levy. She urged lawmakers to deal with the legislation soon: “It isn’t working for anyone.” The levy has caused economic distortions in the N. American market, since the U.S. put no levy on blank data CDs or MP3 players. If the Canadian govt. ratifies World Intellectual Property Organization treaties -- which the music industry wants -- without repealing the levy scheme, “we will see the costs literally double as a result of international law requirements, with all the extra money leaving the country,” Brisebois predicted: “This could quickly cost Canadians hundreds of millions of dollars and that would simply be unacceptable.”
Canadian law professor Michael Geist said Thurs. CRIA’s statement amounts to “going to war not only with its customers, but now also with its artists.” The past year has seen hints of this, such as CRIA opposition to artists on ring tone compensation and on satellite radio. “But opposing the artists on private copying takes this strategy to new heights,” Geist wrote on his blog. Geist said CRIA’s claim that artists will make up private copying levy losses through the marketplace is wishful thinking. He said the ruling cost artists and rights holders C$4 million -- “the amount collected from the iPod and digital audio recorders during a fairly brief period.” Long term, they lost tens of millions in potential compensation, he said: “These are not the nickels and dimes that CRIA derides. If anything, for Canadian artists the levy represents a potentially important revenue stream that will not be easily recouped.”
Geist also called the decision a “serious blow” to the iPod. Copying CDs onto iPods -- which CRIA’s Henderson has supported -- now may be illegal in Canada, since it’s hard to find an exception in the country’s Copyright Act that would protect it, he said. While some in the industry argue the ruling is good because it moves users toward buying the same music again, as MP3 files from services like iTunes, Geist said it ultimately will devalue music for consumers. The recording industry says the court signaled that unauthorized file sharing to hard drives of any kind is illegal, but Geist said that’s not true: “A good argument can be made that computer hard drives are not the equivalent of the hard drives embedded in digital audio players. I don’t think anyone knows for sure, and I doubt CRIA will try to test the issue. There is high risk and higher risk, but that lawsuit would involve perhaps the highest risk.”