Cria Calls For End Of Blank-media Levy

TORONTO—The head of the Canadian Recording Industry Assn. is calling for an end to the country's levy on blank recording media.

"We don't want a private copying levy that, in effect, sanctions online theft," CRIA president Graham Henderson says. CRIA is in talks with the recently elected Conservative Party government about overhauling Canada's copyright laws.

Henderson's comments—a departure from CRIA's past public position on the levy—follow IFPI chairman/CEO John Kennedy's recent warning that Canada risks being left behind in the digital music business worldwide due to slow progress on adapting its copyright legislation for the online world (billboard.biz, March 2).

Under 1998 revisions to Canada's Copyright Act, copying music on blank recording media for personal use is legal and does not require authorization from the copyright holder. In return, Canadians pay a levy of 21 cents Canadian (18 cents) on each blank CD-R and 29 cents Canadian (25 cents) on a blank audiotape.

Manufacturers and importers of blank media pay the levy to the appropriate collecting societies representing music publishers, songwriters, recording artists and labels through the Canadian Private Copying Collective.

Levy rates are annually set by the Canadian Copyright Board, an independent tribunal set up by the federal government.

On Feb. 16, the CPCC filed a 2007 tariff proposal with the Copyright Board that would leave the current levy unchanged. "[It] is the only available means of obtaining payment for the use of intellectual property," says CPCC director David Basskin, president of authors' body the Canadian Music Reproduction Rights Agency.

However, CRIA's Henderson says a private copying levy confuses consumers. "It suggests, in effect, that it is a license to steal [music]," he says.

The CPCC says more than $60 million Canadian ($52 million) has been distributed to music copyright holders since the levy took effect in 2003. The levy has remained unchanged for several years, although CD-R prices have dropped, and it now accounts for a significant percentage of the purchase price.

The average retail price of 100 blank CD-Rs in Canada ranges from $59.99 to $69.99 Canadian ($52-$61). At that rate, the 21-cent levy can amount to as much as one-third of an individual disc's price.

Critics of the levy argue that it is unfair because blank media purchasers must pay whether or not they plan to record copyrighted music. The Copyright Board insists that issue is taken into account when setting rates.

Henderson says improved digital rights management and the availability of legal online music services mean copyright holders are in a better position than before to receive proper compensation.

"We are moving into an environment where everything will be either copy-protected or mostly copy-protected," Henderson says. Barbara Caplan, co-chair of the Canadian Coalition for Fair Digital Access, agrees. She says the levy is "outdated" and should be repealed.

The CCFDA represents local computer firms such as Hewlett-Packard Canada, Dell Canada and Apple Canada, plus retailers including Costco, Future Shop/Best Buy Canada and Wal-Mart Canada.

"Get rid of the levy and let the marketplace fairly compensate copyright holders through the use of DRM and technical protection measures," Caplan says.

However, parts of the Canadian music industry still back the levy.

Solange Drouin, director general of Quebec-based French-Canadian music industry body ADISQ—whose members include labels and artist managers—says: "We want to keep the levy as it is. Even with [DRM and other] measures, it will still be hard to control illegal reproductions of our works."

The levy debate is heating up at a time when music sales in Canada continue to slide. Earlier this month (billboard.biz, March 2), CRIA reported a 4% trade shipments decline in 2005 to $608.7 million Canadian ($527.5 million).

CRIA also estimates that 1.6 billion music files were illegally shared online in Canada during 2005.

To coincide with the publication of CRIA's 2005 market figures, IFPI issued a statement about Canada March 2. In it, Kennedy said: "It's astonishing that Canada has dragged its feet for so long while the rest of the world has adapted its copyright laws to the digital age."

Henderson says Kennedy's timing was "perfect" and that his statement has helped CRIA in its copyright talks with government. Those talks include pushing for the ratification of two 1997 World Intellectual Property Organization treaties (the Performances and Phonogram Treaty and the Copyright Treaty), dealing with copyright protection in the digital age.

In February, IFPI's Digital Music Report claimed Canada suffers in comparison to other international markets by not updating its copyright laws. The report shows that since the United Kingdom and Germany implemented digital copyright reforms, the number of legal buyers has risen and now exceeds that of illegal file-swappers. ••••