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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