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Canadian blank audio recording Media Levy

(tax at manufacturers or importers level). Jan. 22/1999

April 18/2002 Update. In March of 2002 the government announced it's intentions to once again raise the blank audio media levy starting Jan. 1/2003, with objection submissions to be filed by May 23, 2002 at 10:00 a.m. at the Copyright Board in Ottawa. This time the CPCC wants to raise the levies to a ridiculous amount (CD-R from $0.21 to $0.59 per disc) & they intent to include blank VIDEO media (DVD-R) even though there are few if any players that can actually use DVD video media to play audio from. I am starting to use a lot of blank DVD-Rs for their intended purpose of recording the videos I make for my clients & I have a very strong objection to paying a levy of $2.27 per DVD-R on the assumption that I & others are using the media to record stolen music. This levy isn't funneled back to video producers like me, it's funneled back to music artists. If they are allowed to put a levy on video media & even certain types of hard drives & memory sticks, where will the government try to expand this levy to next? The levy was originally intended to be on "blank audio media", but now it is expanding to include anything that can record audio, even if that media's intended primary use is not for audio. To read more current sites, please go to http://www.asap-cdsolutions.ca/website/levy/levy-links.html

 
My original article written early Jan. 1999
Recently there has been a lot of confusion in Canada with regard to the immanent levy tax (bill C-32) on blank audio cassettes & CD-ROM media. Apparently the law was passed in early 1998 & the levy is to take effect Jan. 1, 1999. Unfortunately our Canadian government won't even start discussing how much the levy will be until May 1999 & won't have it passed into law until the fall of 1999, BUT they intend it to be retroactive to Jan. 1, 1999. So there are a lot of rumors going around & manufacturers aren't certain what price to sell their product at because they don't know how much the tax will be & whether it will really be enforced retroactively. Consequently some manufacturers of blank audio cassettes & CD-ROMs are refusing to import or manufacture these products into Canada until the situation becomes clarified. Some resellers are taking advantage of the shortages by raising the price on their remaining stock. The result is that this proposed law is starting to hurt the very people it was designed to help (the music artists). Only Canadian politicians could bungle things this badly (well maybe some other countries could come close). In an effort to help direct people to find out the truth, I am reprinting a letter (way below) from Mario Bouchard. You can also check the following link if you want to read all the legal mumbo jumbo detailshttp://www.pch.gc.ca/wn-qdn/copyright/english.htm   At this link, you should also find information about how you can provide your opinion at the hearings scheduled for May 1999. This levy will come into effect & it seems to me that it is based on the assumption that everyone is pirating music anyway, so let's put an additional tax (at the manufacturing level) on all blank music recording media & feed that tax back to the recording artists. I think it will be a nightmare to administer the resulting taxes in a fair & equitable way to musicians & it taxes the rest of us who are using these blank media for legitimate purposes. While we can't stop it now, we can file petitions for the May 1999 hearing to keep the levy low enough that it doesn't hurt producers & others who use blank CD-ROMs for other data purposes than music. If our politicians are unchallenged in this area, the next thing you know they'll be trying to put a levy on other types of recordable media (such as video tape). By the way, this ill conceived levy tariff (tax) was the brainchild (read brainfart) of Sheila Copps phone 613-995-2772min_copps@pch.gc.ca (Liberal candidate for Hamilton East riding) & John Manley 613-992-3269 john.manley@dfait-maeci.gc.ca (Liberal candidate for Ottawa South riding). If they are your member of parliament in the next federal election, remember who's fault this was when you cast your vote.

For more info contact Doug Hembruff        

 

Jan. 19/99 update. My wife heard on the radio this morning that the media levy will be postponed until Jan. 1/2000. I emailed Mario Bouchard bouchardm@smtp.gc.ca for further clarification & he promptly sent me the following update below (nice to know there are some government officials who are efficient).

Dec. 17/99 update. The blank media levy was passed today & goes into affect Jan. 1/2000. You can read about it at http://www.cb-cda.gc.ca/certified-e.html   The amount of levy for audio cassettes over 40 minutes in length is $0.233 (under 40 minutes is free). Levy on blank CD-Rs & CR-RW (rewritable) is $0.052 (that's just over a nickel) . Mini Discs carry a levy of of $0.608 . I find it strange that there would be a levy charge on blank rewritable CD-RW discs since they will not play from a normal audio CD player (they will only play from a computer CD player).

Jan. 2/2001 update letter I wrote to the government.
Copyright Board of Canada January 2/2001

I just learned today that on Dec. 16/2000 your board authorized the CPCC (Canadian Private Copying Collective) to increase it's levy tariffs on blank audio media for "private copying". The CD-R & CD-RW rates were raised from $0.052 per disc to $0.21 per disc (a 403% increase). The new rates can be viewed at http://www.cpcc.ca or at http://www.cb-cda.gc.ca/tariffs/c16122000-b.pdf

As a small video producer I use lots of blank CD-R & CD-RW media for my business clients, but none of the blank media is used for personal use "private copying" of music CDs, yet I am forced to pay the levy each time I purchase blank media & there is no exception for CD-R & CD-RW media. Most of the time these CD-R discs are used to record video data, or computer archival data, not music & audio. When a client does ask me to produce an audio CD-R, it is of audio (usually speeches) that I created for them (I'm the artist), not "private copying" of someone else's music creations.

Frankly I resent having to pay an audio levy tariff (tax) on blank media that isn't even being used for audio or for copying someone else's artistic music creation. Even if I were given an exemption (which there is no provision for), it would limit where I could shop for my blank media. There are thousands of Canadian businesses just like mine who are having to pay a "private copying" levy to support an industry (the music industry) on the ASSUMPTION that all blank media is being used to copy their copyright intellectual properties.

As you are no doubt aware, CD burners have come way down in price & even for the average consumer, CD burning has become the vehicle of choice to transfer large blocks of non music data to other computers, or as archival data backup. Nobody using CD-R technology should be held ransom for a "private copying" music industry levy charge on blank media when they aren't even using the media to copy music. The whole premise of your department allowing a "private copying" levy in the first place on an item where you cannot guarantee what it's intended use will be for, is inappropriate. At least when there are levy taxes at the retail gasoline pump, you know that 100% of the purchases will be for automobiles, so a road tax levy is appropriate & practical in application.

It is also clear that both your department & the CPCC haven't done your homework because you are now allowing a $0.21 levy on each CD-RW sold. In case you never bothered to try it, CD-RW (rewriteable CDs) do not work in nearly all CD audio players (because of the lower reflectivity of a CD-RW, it won't work on the low powered lasers in CD audio players). CD-RW discs will only work in some CD-ROM players built in computers. It seems most inappropriate for your department to allow a audio levy tax like this on a blank CD-RW media which wasn't even designed to work in standard CD audio players (non computer types).

This time last year when you first put this levy into affect, it caused huge confusion & interruptions in the marketplace & likewise the year before that because manufacturers didn't know if the levy would be retroactive (so they wouldn't stock CD-Rs). Now once again your department is going to cause an upset in the marketplace.

It is my position that if music producers (artists) & distributors feel that they are being ripped off by consumers illegally copying their work, then they should implement "sell through" pricing strategies like the movie & other industries have done. Instead of selling a music CD at a retail price of about $18. CDN each, they should find a retail price point (perhaps $6 to $9. CDN) where the average consumer won't be bothered trying to make their own copies. Like the movie industry found out, they can make more money selling each unit at a lower price point because sales volume increases so dramatically. Alternatively, music creators (artists) could bypass distributors & retailers entirely by selling a CDs worth of music over the internet for the $2 to $3. CDN range (or a little higher price if they involved distributors) & let the consumers burn their own CDs, thereby making more money per disc for the artist. In a day & age when the marketplace almost always has an answer to the artists problem, I'm really astonished that our Canadian government would have taken such a backwards step as allowing levies last year & to substantially increase them for this year. This kind of legislative complication & expense is entirely the wrong direction to be going in a free enterprise marketplace. All you've managed to do by allowing this kind of legislation is to teach the music industry NOT to bother finding a marketplace solution, at the expense of those who use blank media for other purposes than audio.

Doug Hembruff

 

 

Canadian Private Copying Collective

FOR IMMEDIATE RELEASE NEWLY FORMED CPCC ANNOUNCES DELAY IN COLLECTING LEVY ON BLANK AUDIO RECORDING MEDIA

18 January, 1999

In a letter to the Copyright Board of Canada released today (attached), the five collectives that have filed tariffs for a proposed levy on blank audio recording media announced the creation of the Canadian Private Copying Collective (CPCC). The CPCC brings together the Canadian Musical Reproduction Rights Agency (CMRRA), Neighbouring Rights Collective of Canada (NRCC), Society of Composers, Authors and Music Publishers of Canada (SOCAN), Société du droit de reproduction des auteurs, compositeurs et éditeurs au Canada (SODRAC), and Société de gestion des droits des artistes-musiciens (SOGEDAM).

The letter also advises the Copyright Board that all members of the CPCC have agreed to delay collecting the levy on blank audio recording media until the Board renders its decision on the proposed levy or until December 31, 1999, whichever is earlier.

The Government of Canada passed amendments to the Copyright Act in 1997 that made it legal for individuals to make copies of sound recordings and musical works for their own use while also permitting eligible authors, performers and producers of sound recordings to collect a levy on the sale of blank audio recording media of a kind ordinarily used by individual consumers to copy sound recordings. The Act provides for eligible rightsholders to collect the levy retroactively to January 1, 1999. Without the levy Canadian musicians, singers, songwriters, composers, music publishers and record companies would be paid nothing when their work is copied.

Speaking on behalf of the collectives, Claudette Fortier, Chair of the CPCC, said “The decision to postpone collection of the levy will avoid uncertainty. It reflects a recognition that until the Board reaches its decision, the importers and manufacturers who are subject to the levy do not know to what categories of blank audio recording media the levy will apply, or whether special provisions will be implemented”.

The Copyright Board, which has responsibility for approving the levy on blank audio recording media, will hold a hearing in May. The hearing will consider the arguments of the CPCC and of individuals and organizations that filed objections to the proposed levy.

A levy on blank audio recording media already exists in more than 25 countries. Its purpose is to ensure some compensation to creators and producers of sound recordings for the loss of revenue resulting from the copying of their works for private use. The issue now before the Copyright Board is how best to implement the levy now that Parliament has recognized the right to be compensated.

For more information, contact Paul Audley (416-485-3550).

 

 

 

Dec. 1998 from Mario Bouchard bouchardm@smtp.gc.ca

Here is the information you requested on the issue.

I hope this answers your questions. If you want more information, please do not hesitate to call me. I can be reached at (613) 954-6470.

Mario Bouchard

INFORMATION ABOUT THE HOME TAPING REGIME

1) Until recently, individuals who taped songs off the radio or made copies of CDs they had purchased, say, for use in the tape deck in their car, infringed copyright. The home taping regime, which is now in force as the result of an Act of Parliament, changed this. Individuals are now allowed to copy a sound recording of a musical work onto an audio recording medium (e.g. an audiocassette) for their own private use.

2) Those who own the rights associated to those sound recordings (composers, authors, performers and producers) are entitled to be remunerated for the copies that are being made under it. This means that

a) the remuneration is solely on account of private copying taping for one’s own personal use;

b) only persons who own rights in sound recordings of musical works are entitled to share in the remuneration. Owners of rights in other works (computer programs, movies, literary works) are not.

3) The remuneration must be paid by manufacturers and importers of “blank audio recording media”, in the form of a levy to be imposed on those media, to be collected when they are sold or otherwise disposed of by the manufacturer or importer. Media that are exported from Canada are not subject to the levy. This means that:

a) the Board must certify a tariff and set a levy, although the final content of the tariff and amount of the levy could be quite different from that the collective societies have asked for;

b) the levy cannot be imposed on anyone else, nor can it be set “at the retail level”, as many persons proposed;

c) the levy is payable by the importer or manufacturer without regard to its end use. That remains true even if the end user is licensed to reproduce the works or is able to establish that a qualifying medium will not be used to copy sound recordings of musical works. The Act makes no provision for a refund mechanism of any sort, except in the case of societies that represent persons with perceptual disabilities. However, the fact that some qualifying media may be used for purposes other than reproducing sound recordings of musical works could be taken into account in setting the amount of the levy;

d) the Act exempts from the levies recording media that are sold to a society, association or corporation that represents persons with perceptual disabilities. There can be no other exemption.

4) The Copyright Act orders that levies be set and determines how this is to be done. Those who are entitled to receive a remuneration must first associate themselves into one or more collective societies. The societies must file proposed tariffs with the Copyright Board and the Board must publish the proposals in the Canada Gazette as it received them. Anyone is allowed to file an objection. The date to file objections was August 12, 1998.

5) Those who ask for the levy and those who object to it will now have the opportunity to file evidence and argument for or against the proposals. Because parties require time to prepare, hearings will not be held until some time in May, 1999. A decision will not be issued until the Fall. The Board is specifically required to set fair and equitable levies.

6) The law specifically states that any qualifying medium that is sold by an importer or manufacturer on January 1, 1999 or thereafter will be subject to the levy. This means that:

a) once the Board’s decision has been issued, the person entitled to collect the levy will be able to ask for payment on account of sales going back to the start of 1999;

b) retailers who raise their prices on stock that they purchased before 1999 will not be required to forward that money to copyright owners.

7) The levy will be collected by a single collecting body. That body will be a private organization. What it collects will be paid to the collective societies representing rights owners in the proportions set out by the Board. Once the Board has determined the share each collective society will get, those societies are free to distribute what they receive as they wish. As far as the Board knows, collective societies have not decided whether some or all of the levies will in fact be distributed based on the amount of air play received by each recording.

8) Only “blank audio recording media” are subject to the levy. To meet the definition, a medium must (a) be of a kind that can be used to reproduce a sound recording, (b) be “of a kind ordinarily used by individual consumers for that purpose” AND (c) have never had sounds fixed onto it.

a) The levy can only be applied to qualifying media, which must be blank media. The levy could not, as one person suggested, be imposed on recorded media so that the cost of further recordings is paid for when purchasing the original.

b) Whether a kind of medium is “ordinarily used by individual consumers” will in turn raise two questions. First, what is an individual consumer? Second, at what point does a use become “ordinary”? Thus, it may be certain users are not individual consumers, that certain types of media are not “ordinarily used by individual consumers” or that individual consumers do not use them to reproduce sound recordings. Determining which media qualify for the purposes of the home taping regime, and which do not, is still an open question and will be an important part of the Board’s job in this matter. More specifically, whether recordable CDs or voice grade (normal bias) audio cassettes qualify is still very much an open issue.

9) The conditions outlined above are set out in the Copyright Act. The Copyright Board cannot add to, nor subtract from, any of these provisions. Only another Act of Parliament can do that. Mario Bouchard bouchardm@smtp.gc.ca

Mario Bouchard bouchardm@smtp.gc.ca

Last updated Jan. 2/2000

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