European Copyrights Hamper High-Tech Innovation, Groups Say
The world copyright levy system needs drastic change, an alliance of technology policy leaders said Thurs. Assessing the global copyright levy mechanism for high- tech and consumer electronics products, alliance members urged industry-driven, voluntary efforts to dovetail with emerging and improving content protection technologies like digital rights management applications (DRM). Signatories CEA, the European Information & Communications Technology Industry Assn. (EICTA) and the Japan Electronics & Information Technology Industries Assn. (JEITA) issued the statement at a Brussels summit on DRM.
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Royalty levies typically are imposed on recording devices and media to compensate rights owners for unauthorized copies. The U.S. applies royalty levies to digital audio tape and recorders, and audio CDs and recorders -- but not recordable CDs and DVDs and burners for PCs. Germany does levy those products, along with PC scanners and printers, boosting gear prices by about $260. Trade groups and allies claim DRM is making levies obsolete, as more recording products protect against unauthorized copying.
EU nations use “wildly disparate” methods to levy fees on behalf of copyright holders, CEA Tax & Trade Counsel Elizabeth Hyman told us. European levy-setting remains “very non-transparent,” prompting CEA, EICTA and JEITA to wonder how EU members set fees, Hyman said. A 40GB iPod for example carries a 30 levy in Austria, 20 in France, 2.56 in Germany and a whopping 144.6 in Spain, CEA said. Though still substantial, charges for iPods of lesser storage capacity are considerably less. “The levies are distorting trade and sales in these countries, particularly when Apple and other companies are trying to innovate and come up with DRM technologies,” Hyman said: “They're getting penalized for innovating.”
Countries should freeze further extension of levies and eventually phase them out, the alliance said. Members want: (1) A rational and justifiable fee structure and a limited universe of products levied. (2) A more modern, open and transparent levy-setting process that engages content owners, equipment manufacturers and consumers and explains how levies are calculated. (3) More openness and transparency on the part of collecting societies that includes publishing accounts to give a true and fair view of their activities.
“Copyright levies are not the solution for protecting the rights of copyright holders,” CEA Pres. Gary Shapiro said: “If indiscriminate and non-transparent fees continue to be set by collecting societies, digital devices will soon be so heavily taxed that the consumer will be forced to pay unfair and inflated prices.” Likewise, manufacturers will have no reason to develop DRM technologies, he said.
Worldwide use of copyright levies came under scrutiny at the Wed. forum, sponsored by the Business Software Alliance (BSA) and the European-American Business Council (EABC). European Comr.-Internal Market & Services Charlie McCreevy’s keynote was especially pertinent, with the European Commission now reviewing Europe’s copyright levy system for electronics products, CEA said.
Data released Thurs. by BSA illustrate the growing market for DRM-enabled online content, underscoring the incongruity of “rising private copy levies” on digital gear in Europe, the group said. The DRM-enabled online music market in the U.S. and Europe will be about 1.86 billion in 2008, a rise of 7-fold from about 235 million in 2004. W. European online music sales are forecast to grow more than 500% by 2008 to 559.1 million, from 106.4 million in 2005, BSA said. “With DRM technology’s expanding role in the market, levies have become a superfluous double tax on consumers,” Francisco Mingorance, dir. of European public policy for BSA, said: “Levies were designed to compensate for unpoliceable private copying, but with DRMs the rationale for levies disappears.” The EU Copyright Directive foresaw the gradual phasing out of copyright levies as DRM technology use spread, BSA said. But few European countries have followed through on the clause in a way that bars copyright levies on digital devices.
The recording industry has long preferred DRMs to levies, which it considers inadequate to compensate music creators, said an International Federation of the Phonograph Industry (IFPI) spokeswoman. “The future lies in DRM-enabled systems that allow us to provide consumers with high quality music when they want it and pay only for what they use,” she said. While DRMs are evolving, the market isn’t ripe, according to IPFI -- an outlook at odds with BSA’s. “When DRMs are more widely applied in the marketplace, levies should be appropriately adapted to take that into account,” the spokeswoman said.