Dutch Music Biz Scores Added Blank-disc Tax

AMSTERDAM-The Dutch music industry, concerned about sales lost to home CD copying, has won an additional levy on the blank-disc media increasingly used in the Netherlands to make unauthorized copies of existing records.
The new tax could generate up to 6 million guilders ($2.8 million) per year for ultimate distribution to rights holders and other uses to benefit music creators.
A Home Copying Commission, appointed by the Dutch ministry of justice, has ruled that from Sept. 1, manufacturers of the "data" or "professional" version of blank CD-Rs and CD-RWs (rerecordable CDs) must pay the government a levy of 20 Dutch cents (9.5 cents) per unit sold (BillboardBulletin, June 14). The levy-which follows similar legislation in Spain, Austria, Finland, and Hungary-will be reviewed at the end of next year.
On Jan. 1, the commission imposed a tax of 1.08 guilders (51 cents) per hour of playing time on the "audio" or "consumer" version of the discs, of which an estimated 2 million are sold annually in the Netherlands.
Delegations from publishers' and authors' organizations then pointed out that consumers are increasingly copying music onto the cheaper "data" CD-Rs, despite their supposed unsuitability for this use. Manufacturers estimate that some 30 million of the data discs are sold each year in the country. "Audio" blank discs cost about 9.5 guilders ($4.50), while the "data" version sells for 1.9-2.5 guilders (90 cents-$1.20).
"Rights owners-both the artists and record companies-have heavily lobbied within the Home Copying Commission for this new levy on blank CDs, as lots of their work is illegally copied this way," says Michael van Ginkel, account manager at the the Home Copying Bureau within authors' rights body BUMA/STEMRA. "We attribute the serious recent drop in CD sales in the Netherlands [down 11% in the first five months of 1999, according to Dutch International Federation of the Phonographic Industry body NVPI] to this "cloning' of CDs."
The move follows lobbying of the Home Copying Commission in the Hague in early May by NVPI and BUMA/STEMRA. "It was an attempt to come up with a European rule seen through Dutch eyes," says van Ginkel. "Other countries do the same. Eventually in Brussels all these recommendations should be combined to one workable European rule. But that will take years."
BUMA/STEMRA already collects revenues of around 28 million guilders ($13.1 million) a year from home copying levies, applied initially to cassettes in 1991, and has a complex system to distribute the income to authors, phonographic producers, and musicians. It has yet to decide how to divide the income from blank CD sales.
Paul Solleveld, managing director of NVPI, who represented labels in the May talks with the Home Copying Commission, says, "Twenty cents is better than nothing, but compared to the 1.08 guilders per hour of music on the other CDs, it's way too low."
Philips, as a Netherlands-based manufacturer of the discs and copying hardware, is especially sensitive to the levy issue. Spokeswoman Marijke van Hoorn says, "The 20-cent tax on data CDs is much lower than the tax on audio CDs, which is good. However, we think it is unfair to tax data CDs when you don't know what people actually use them for."