The Copyright Board Once Again Rubber Stamps the Zombie Blank Audio Recording Media Levy

 

On November 7, 2025 three members of the Copyright Board of Canada, including its Chair,  have once again “approved” a levy on blank CD-Rs and CD-RWs of $0.29 each for the period of 2025-2027.

The revenues will go the Canadian Private Copying Collective (CPCC) – which has not posted any financial information about its revenues since 2017.

At least, the Board expressed a scintilla of scepticism this time about the unopposed so-called “evidence” put forward by the CPCC and its veteran perennial expert. But it didn’t stop the rubber stamp. Here is some of the “reasoning”:

·       [5] For the reasons below, we conclude that the evidence, while not strong, supports our conclusion that blank CDs will be ordinarily used to copy music during the years 2025, 2026, and 2027. 

·       [19] Mr. Gauthier states that 1.438 million units of blank CDs were sold in 2024 and projects sales to decline to 1.274 million units in 2025, to 1.129 million in 2026, and to 1.001 million in 2027

·       [23] Results from the Internet-based Music Monitor Survey conducted in 2019 and 2021 showed a level of 30% and 27% of blank CDs used to copy music respectively in those years. Mr. Gauthier concludes that the proportion of blank CDs used to copy music has remained constant since 2019. He asserts that this behaviour is unlikely to change within the next three years. As such, he projects that the proportion of blank CDs used to copy music will remain stable at 29% for the years 2025, 2026, and 2027.

·       [25] Nevertheless, the Board considers that, even with a gradual decline, the proportion of blank CDs used to copy music is unlikely to have reached a point of marginality.

Here are the key dates and details for this rubber stamping effort. Note that the filing date was October 10, 2023 – more than two years ago. This proceeding was unopposed, as have been previous CPCC efforts after 2012. As the result of court decisions and intelligent regulations, virtually all “memory” media and devices have been excluded from the levy, leaving only blank CD-Rs and CD-RWs that are supposedly “ordinarily used” according to the Board’s contorted and bizarre logic to copy music. It hasn’t been worth anyone’s time and expense to oppose the blank CD-R and CD-RW levy since 2012, because the market for them is so small.  

I am proud to have been active in the past at the Copyright Board and to have successfully argued in the Federal Court of Appeal on behalf of major retailers that there should be no levies on memory used in devices such digital audio recorders, cell phones, iPods (remember those?), or computers. See Apple Canada Inc. v. Canadian Private Copying Collective, 2008 FCA 9 (CanLII), <https://canlii.ca/t/1vcx1>. The then Chairman of the Board, William Vancise, was very upset with this result and very inappropriately, IMHO, publicly explicit about this and other issues even while he was serving as Chair of the Copyright Board. For example, here’s the text of his outspoken 2009 speech. Fortunately, subsequent Chairs of the Copyright Board have been more circumspect and judicious. Here are my 2023 comments about Vancise’s 2018 paper presented at Columbia Law School in 2017, after he had retired but while he was still deliberating his last decision, which took him four years. This comment also deals with more general issues regarding the Board. To  Justice Vancise’s credit, he did, in his 2016 speech,  explicitly castigate Music Canada for its “completely unacceptable and totally inappropriate” lobbying attempts aimed at his successor Chair of the Copyright Board.

I was also active in arguing that intelligent regulations were needed to prevent the Board from imposing levies on MicroSD media and other type computer memory. Regarding regulations,  former Minister of Canadian Heritage James Moore was also helpful and transcended the usual bureaucratic and legal fog in that department that protects collectives.

But, like a zombie, the CD-R and CD-RW levy still persists and lurks amongst us more than a dozen years after the last opposed hearing. The untested “evidence” looks frankly very flimsy, or at least counterintuitive.  Does anyone actually know anyone who has actually bought blank CDs in recent years, and in turn used them to record music?

·       When is the last time anyone has seen a desktop or laptop computer being sold with a built in CD player/recorder?

·       Why would any rational person use a blank CD anymore to record music, unless for example they own an old car with a CD player that can somehow play or store music loaded on CDs?

·       For anyone wanting to move MP3 music files around for whatever reason, a flash drive is much more useful and cheaper to use. They are easily available for less than $10 for 64 GB of memory.

I suspect that the only reason the CPCC continues to exist and that the Copyright Board continues to rubber stamp its miniscule levies is to keep the CPCC on life support while it waits for better days under a potentially gullible government. Levies were all the rage for a while in the early days. But the music levy bandwagon has long since imploded. The music industry is now all about streaming, amidst allegations of much mischief and manipulation within the music business itself. What else is new?

The Copyright Board should put away its rubber stamp that it uses for this zombie levy. If the Board is going to continue to exist, this file is a real embarrassment.

And when the Copyright Act is opened for serious revision, the blank audio recording media levy scheme should be repealed.

HPK

 

 

Milestones in Canada’s Music Levy - The Journey to Extinction

September 30, 2013 was the deadline for the Canadian Private Copyright Collective (“CPCC”) to file a Notice of Application for judicial review (in layperson’s terms, an “appeal”) of the Copyright Board’s decision of August 30, 2013 not to proceed with a hearing process that could have resulted in a retroactive levy for the first 10 months or so of 2012 on microSDs. That deadline came and went, with nothing from the CPCC.

This effectively means that that, absent some extremely unlikely legislation, the CPCC’s only source of revenues henceforth will be from the sale of blank CDs, which are falling off very quickly. Indeed, the last publicly reported revenue figures for CPCC are for 2012, and were less than $10 million, presumably virtually all of which was from the sale of blank CDs, and falling fast. Blank CDs are a legacy medium that will soon be an obsolete and virtually unavailable medium. One of the ironies of the private copying scheme is that these CD products now often cost much more than blank DVDs, which hold about 7 times more data – but which are not encumbered with a $0.29 a piece levy. And hardly anyone uses blank CDs anymore because they only make any sense if one has a very old computer that doesn’t even have a DVD burner.  Moreover, storage in the cloud, on internal or external hard drives, thumb drives, SD or microSD cards, or on smart phones is either free or incredibly cheap and vastly more convenient for almost all purposes than the awkward and clunky CD format.

This Government has made is abundantly clear that it will not impose any new “tax” on storage devices. As Minister Moore said on September 22, 2010 when he was Heritage Minister:

This idea of imposing a new tax on iPods and MP3 players is not a new idea because there are very few new ideas, unfortunately, that come from the opposition on the issues of copyright and taxes. However, this idea is really toxic and, frankly, really dumb. This would punish consumers if we were to put in place a tax of up to $75 on iPods, Blackberries, cell phones, laptops, computers, memory sticks and automobiles, anything that is capable of playing digital music. (Emphasis added)

Here's a link to the whole exchange with BQ member Carolyn Lavallée.

Also and by interesting coincidence, David Basskin retired as President and CEO of the Canadian Musical Reproduction Rights Agency Ltd. (CMRRA) on the same date, September 30, 2013.  Mr. Basskin had been a key driving force and spokesperson for the levy scheme from its very beginning.

It will be interesting to see what happens now to the CPCC, as its revenues rapidly evaporate with no new source in sight. The private copying levy scheme was established by its own special sui generis scheme set out in a completely self-standing and easily severable part of the Copyright Act. But technology and economics have made that scheme obsolete and rendered it all but extinct. Moreover, the scheme became highly problematic and divisive even within the music industry when it was realized – and confirmed by the Copyright Board and the Courts – that it rendered private copying based upon downloading, even from “illegal” sources on the internet, perfectly legal as long as it was done onto an “audio recording medium” and regardless of whether a levy had been sought for such medium. Both the Court and the Government have made it clear that the scheme cannot be extended by the Board to cover unintended products, such as iPods, smartphones, etc. that don’t qualify as an “audio recording medium”.

Other collectives also now face an uncertain future as users begin to realize that, in light of recent technological change, legislation and Supreme Court of Canada jurisprudence, it is no longer necessary to obtain licenses that are based on non-existent rights or rights that are greatly over-priced and which can be cleared more efficiently in other ways than through a blanket license – whether or not that license is in the form of a certified tariff. We will no doubt hear much more on this subject in the weeks and months to come.

I should disclose that I have been involved as counsel acting for various opponents of the CPCC since approximately 1999.

HPK

Levy on blank CDs to continue – but Board Says “No” to microSD levy

The Copyright Board has decided to continue the levy on blank CDs until 2014 at the current rate of $0.29 per CD. This will provide a small amount of revenue to the CPCC, as long as blank CDs are being sold in Canada in any quantities, which may not be for very long. CPCC's latest disclosed revenues are for 2011, and were less than $13 million and declining rapidly as the medium becomes obsolete.

The Board has also decided that it will not proceed with Phase II of the process of setting a levy for microSD cards. It will be recalled that the Government published a regulation on November 7, 2012 prescribing that microSD cards are excluded from the definition of “audio recording medium”.

While the Board concluded that it still had the jurisdiction to proceed with the process of awarding a retroactive tariff for approximately 10 months in 2012, it chose not to do so. In the Board’s words:

[86] Private parties are free to litigate even when this makes no economic sense. An application before the Board is not a civil cause of action. We must balance competing interests, some of which are not represented. As an economic regulator, we must heed economic considerations. Any “friction” that may result from the retroactive collection of royalties is a relevant consideration in deciding whether it is possible to certify a fair and equitable tariff in the first place. A new tariff (or a rate increase) can be phased in to make it more acceptable. A completely retroactive tariff cannot be phased in.

…

[89] When taken as a whole, the circumstances of this case make any attempt at certifying a fair and equitable tariff for microSD cards impossible. The determination, implementation and enforcement of any potential tariff will almost inevitably be largely futile, certainly unfair and considerably disruptive. This is an exceptional situation, one that lends itself to the proper exercise of our discretion to refuse to certify a tariff not because of a lack of evidence, but because any tariff we would set would be, under these very special circumstances, manifestly unfair and inequitable.

HPK

(I should point out that I acted for the Retail Council of Canada in this matter. However, my comments are solely my own.)

UK to Liberalize and Widen Copyright Exceptions - including Private Copying Exception with No Levy and No Memory Card Tax

The UK will expand the scope of copyright exceptions as follows: 

The Government will bring forward proposals for a
substantial opening up of the UK’s copyright exceptions
regime, including a wide non-commercial research
exception covering text and data mining, limited private
copying exception, parody and library archiving. We will
consult widely on the basis of sound evidence.

Here's the full Government report.

Here's an excerpt below, with some reasoning of particular interest to Canadian policy makers - especially the proposal to legalize private copying with no levy. (Meanwhile, back in Canada, the CPCC is trying to rush through its controvesial "memory card tax" at the Copyright Board with extraordinary and undue haste and to start this process going at warp speed in the middle of the summer).

**********

6. “Copying should be lawful where it is for private purposes, or does not damage the underlying aims of copyright…”

There is a fundamental role for copyright in providing appropriate incentives for the creation of valuable works. The Government has no intention of prejudicing this role, on which much value for the UK depends. We nonetheless believe the Review is right to identify activities that copyright currently over-regulates to the detriment of the UK, and to propose changes to tackle the problem (Recommendation 5).

The Government sees the areas where copyright restricts activity to no direct commercial benefit as doubly wasteful: neither new opportunities nor incentive to invest in copyright works result from them. Nor does the Government regard it as appropriate for certain activities of public benefit such as medical research obtained through text mining to be in effect subject to veto by the owners of copyrights in the reports of such research, where access to the reports was obtained lawfully. We recognise that some publishers view licensing of text mining as a legitimate commercial opportunity; however we are not persuaded that restricting this transformative use of copyright material is necessary or in the UK’s overall economic interest. We also share the Review’s concern that a widespread flouting of copyright through private copying in particular brings the law into disrepute: it is not appropriate simply to tolerate unlawful private copying where it is not commercially damaging. For these reasons, the Government agrees with the Review’s central thesis that the widest possible exceptions to copyright within the existing EU framework are likely to be beneficial to the UK, subject to three important factors:

·         That the amount of harm to rights holders that would result in “fair compensation” under EU law is minimal, and hence the amount of fair compensation provided would be zero. This avoids market distortion and the need for a copyright levy system, which the Government opposes on the basis that it is likely to have adverse impacts on growth and inconsistent with its wider policy on tax. [footnote omitted] 

·         Adherence with EU law and international treaties.

·         That unnecessary restrictions removed by copyright exceptions are not re-imposed by other means, such as contractual terms, in such a way as to undermine the benefits of the exception.

The Government will therefore bring forward proposals in autumn 2011 for a substantial opening up of the UK’s copyright exceptions regime on this basis. This will include proposals for a limited private copying exception; to widen the exception for non-commercial research, which should also cover both text- and data-mining to the extent permissible under EU law; to widen the exception for library archiving; and to introduce an exception for parody. We are committed to doing so in ways that do not prejudice the provision of appropriate incentives for creation of works through the copyright system and will consult widely on the basis of sound evidence.


(highlight & underline added)

HK

CPCC Makes a Virtue of Necessity & How We "really don't know clouds at all"

(my fav "cloud" song)

 

A little ray of light has momentarily pierced the cloud of confusion about cloud music in Canada.

The CPCC (which is seeking a "tax" on memory cards and still "taxes" blank CDs and has tried without success to "tax" iPods) has announced that:

It is not our position that cloud-based music distribution systems should be subject to a private copying levy under the Copyright Act, and the CPCC will not seek to obtain levies for private copies of music made with cloud storage services.

It’s good to actually read this, even though it would seem incongruous that even the CPCC could regard “the cloud” as a “blank audio recording medium”. Here is their press release.   

But, then again, the CPCC tried and failed twice in the Courts to have iPods and other digital audio recorders - which are “devices” - treated as a “medium” so that they could be taxed. (Disclosure - I was involved in these battles both at the Board and in the Courts).

So, today’s announcement may be simply making a virtue of necessity.
       
But don't exhale just yet. One has little doubt that many of the stakeholders in CPCC will be thinking about seeking pieces of the “cloud” action through tariffs on performance, communication and reproduction - and not just for music but for sound recordings and performers’ performances as well. The thought of endless and expensive Copyright Board hearings is doubtless music to the ears of many lawyers.

Of course the Supreme Court of Canada and Parliament in the next copyright bill may have some things to say that could have a major effect on all of this. We’ll very likely know for sure by this time next year, more or less, on both fronts.

Whether the “cloud” brings a gentle, nurturing shower of innovation and music or a torrential and destructive typhoon of Copyright Board and judicial review proceedings to Canada remains to be seen.

 

One thing is for sure. Well have to look at music in the cloud "from both sides now".

HK

Now SOCAN Seeks Interim Internet Tariff. Who’s Next? Will CPCC Seek Interim Tariff for its Proposed "Memory Tax"?

When the Copyright Board - just hours before Christmas of 2010 when Christmas came early to Access Copyright - awarded Access Copyright an interim tariff worth about $48 million over three years, it was perfectly predictable that this would be a precedent that - even if not strictly speaking a legal precedent because the Board is not a Court - would be a loose canon. The fact that AUCC - with its enormous budget for the current board hearing - and others with less but still substantial means - did nothing by way of an apparently easily successful and relatively (compared to the Board proceedings) very inexpensive judicial review application was very disappointing, to put it mildly, to many.


Well, the next broadside shot has now been fired by SOCAN, which wants its turn at an interim tariff. See here and here SOCAN’s application) and here (SOCAN’s pres release). This interim tariff follow up comes even sooner than expected. Naturally, it relies on the Access Copyright Christmas decision.


I’m sure that the CPCC also is now getting big ideas about an interim tariff for its proposed memory tax proceeding, if that goes forward.


In its Tariff 22 proceeding that goes back to 1995, SOCAN is now suddenly asking for an interim tariff on the parts of it that now supposedly relate to audiovisual webcasts and user generated content ("UGC").


SOCAN's proposed interim application appears at first blush to be even less reasoned and substantiated than Access Copyright's controversial interim tariff application that was approved on December 23, 2010 - just 18 hours before Christmas - on the basis of no actual “evidence”, such as an affidavit not based on hearsay, that would pass muster in a court. That said, the absence of evidence and other major gaps in its case did not hurt Access Copyright - and no judicial review was sought, as I keep saying. See my blog around that time for numerous comments.


In this case, there could also be substantial legal issues involving jurisdiction and extraterritoriality, not to mention liability. And the expected legislation that will likely receive fast passage in this majority Government in the next year could profoundly affect this tariff - at least re re UGC. This potentially and explicitly targets such entities as Netflix, Apple TV, Sony. Facebook, and last - but hardly least - YouTube - which is owned by Google. These are potentially fierce foes that may not be amenable to the vicissitudes of the Copyright Board process, which often include notoriously unnecessary and intrusive but still mandatory interrogatories and time frames that unpredictably range from delays of several years to extremely tight deadlines of a few days. They may not welcome an interim tariff on the basis that it “would give businesses some assessment of the royalty payments necessary to run their operations” as SOCAN’s press release suggests.


It will be fascinating to see how these entities - or the associations of which they are members - respond to this. I suspect that they will not be pleased.


This maybe be another illustration of why it's little wonder that Canada is deprived of innovative internet roll-outs due to multiple and highly redundant layers of rights imposed by the Copyright Act and implemented by the Copyright Board, which takes pains to value each of them separately and make them cumulative. And, except for occasional “consolidation”, each of these rights gets a separate hearing. And, unlike the USA, Canada has “neighbouring rights”, which means more or less doubling and duplicating everything that SOCAN does. A consolidated hearing is not necessarily a simpler or cheaper hearing. They can become very complicated and not always save money for all parties. In some cases, consolidation can create considerable additional costs for a party with a very narrow issue and interest.


Canada - as an economic unit - is not obviously any larger or economically more enticing to these giant foreign companies than California, which has a population of 4 million or so more than Canada. The marginal regulatory cost of entry into California for these companies is zero. In Canada, it's enormous - at best - and could obvious be deal breaker at worst. There is even talk of forcing Netflix to face the CRTC.


Why would any rationale entity pay potentially millions of dollars in legal fees and disbursements to be required years from now to pay large tariffs retroactively for rights that that don't even exist in the USA - and now maybe have to pay an “interim tariff’ in the meantime that may not ever be effectively refundable?


Why bother?


Michael Geist makes a similar point about Apple’s iCloud service. I’m sure that the Canadian collectives are salivating at the prospect of the clouds coming to Canada. Even if it turns out that there are good jurisdictional and other arguments to keep the collectives and the Copyright Board at bay, these services may have to potentially spend six or seven figures to do so. It’s easier and likely  more economically rationale to just block Canada, as Pandora, Hulu, etc.  have done to date.  And doubtless many others more to come.


With:
• legislation that is already far more generous in most ways to copyright owners and more costly to users than American legislation;
• bandwidth caps;
• throttling; 
• enormous Copyright Board and even potentially CRTC hearing costs; and,
• now the prospect of interim tariffs at the Copyright Board -


It's no wonder that Canada is slipping quickly into the internet and innovation rearguard.


HK

Attacks on the Memory Tax

There are already serious attacks on the CPCC’s proposed memory tax.

Here’s a good a good take from Techdirt.

There are several others.

Here’s a well researched article in Canada’s WireReport, which is a hot new publication I highly recommend to anyone in the media, communications or copyright business.

The article confirms that my client, the Retail Council of Canada, will fight hard against this tax and to repeal the levy scheme outright.

The article quotes CPCC spokesperson David Basskin as saying:

“That would mean that every copy people made would go back to being an infringement,” he said.
“The thing about Part VIII is that it legalizes the private copies in exchange for a levy. If the government wants to recriminalize making private copies, it sure doesn’t sound to me like a good idea.”

This is seriously misleading and just plain wrong for many reasons. For example,

• Graham Henderson of CRIA, the main spokesperson for the big four record major companies, which are among of the main stakeholders in the CPCC, and to whom Mr. Basskin must answer in their huge publishing capacity, has specifically encouraged the making of private copies of legitimately owned recordings onto non-levied hard drives and iPods under the existing law. If such copying is OK on unlevied iPods (which have an obvious connection with music) and unlevied hard drives (which many consumers use for music), then why try to tax memory cards, any use of which for music is  minimal if not negligible?

• One cannot "recriminalize" something that was never "criminal" to in the first place. Under no circumstances has the mere making of private copies ever been a criminal offence under existing law.   Nor was there anything in Bill C-32 that would have made it an offence.

• In fact, Bill C-32 would have legalized format shifting of copies already owned by consumers. It goes without saying that it would not be “fair and equitable”, as required by the Copyright Act, to levy or tax activity that is expressly legal. How many times must a consumer pay for the same music?

• And what about the downloading of unauthorized copies?  If Mr. Basskin is admitting that Part VIII of the Copyright Act makes this legal at least with respect to any audio recording medium, many including me would agree with him. But he has colleagues in the music industry who won’t admit that the levy legalizes copying irrespective of the source, although they are happy to cash the resulting cheques.

If this matter proceeds to a hearing at the Copyright Board, it will be expensive not only for objectors but for CPCC members. As the end game is now being played out on levies in Canada, is it really worthwhile for the supposed beneficiaries of the existing levies to spend a fortune on a Hail Mary baseless attempt to expand the levy to memory cards?

Rather than go through a very expensive hearing  to prove the very obvious point that any use of memory cards for recording music is truly minimal if not negligible,  the Government should make a regulation that excludes memory cards as recording medium. The Copyright Act expressly and wisely provides for just this possibility. This can be done in a matter of weeks. As I’ve explained before, there is ample precedent for precisely such interference in a pending proceeding - including interference by content owners to stop JumpTV before it could get started.

In the somewhat longer term, the next Copyright bill should simply repeal the tax scheme in Part VIII of the Copyright Act. The scheme was already obsolete in the good old mostly analogue days of 1997. It is no longer defensible or sustainable.

HK

No Thanks for the Memory Tax: Stopping It Before It Gets Started

It may not be long before folks start referring to the proposed levy on electronic memory cards not as a “memory card tax” but simply as a “memory tax”. That’s exactly what it would be. It has been quickly mocked outside of Canada.

A tax on memory is a tax on technology.  Just as Minister James Moore said about the CPCC’s proposed iPod tax, “this idea is really toxic and, frankly, really dumb.”

It makes even less sense than iPod tax because iPods, after all, are actually used for music - whereas memory cards are rarely if ever used for this purpose by most Canadians.

Of course, such a levy has to be certified by the Copyright Board. Unlike an iPod, which is a “device” from which memory cannot be removed and are therefore not subject to the existing legislation, memory cards are arguably a “recording medium” that could be subject to a levy, if the Board finds that they are “ordinarily used by individual consumers” to make private copies of sound recordings.

The case for opposing this “tax” should be readily winnable at the Copyright Board, and/or if necessary in the Federal Court of Appeal - albeit at considerable expense to all concerned.  It may have to go to the Court because the Board has an extremely low threshold for what it considers to be “ordinarily used” and has shown itself to be very sympathetic to CPCC’s attempts to expand the levy to iPods, despite that fact that the Federal Court of Appeal had said and had to indeed say twice that the legislation doesn’t allow such a levy. (I was heavily involved in all of this for the Retail Council of Canada - but this blog, as always, reflects my own views).

The Federal Court of Appeal in 2000 upheld the Copyright Board’s first finding that blank CDs were “ordinarily used” for private copying of sound recordings. However, only about two years later, the Court took the very unusual step of explicitly indicating that its earlier ruling on CDs had been decided on the wrong “standard of review” basis. The case for memory cards is almost certainly going to be even weaker than for CDs  - but it could cost lots of money to establish this at the Copyright Board stage and, if as likely would be necessary,in the Federal Court of Appeal and possibly beyond.

Much as it pains me to potentially work myself and others out of a lucrative Copyright Board and Court proceeding, this matter really should, in the interests of public policy, be stopped before it ever gets that far and I predict that this will be the case, given the obvious disconnect between memory cards and music.

The Government has the clear and explicit authority under the current legislation to enact a regulation specifying that electronic memory cards are a “kind of recording medium” that is to be excluded by the legislation. If Ministers Clement and Moore are reappointed (or like-minded Ministers take their place), quick enactment of such a regulation would be consistent with their decisive and virtually instant rejection via Twitter and more officially on several occasions thereafter  of an “iPod tax”.  A “tax” on memory cards, even if allowable in theory under the current law, would disrupt the markets for cameras, smart phone and other technologies ranging from medical to GPS devices. It would be a huge administrative and financial headache for importers, distributors and retailers of these ubiquitous cards.  A regulation can generally be enacted much more easily and quickly than legislation, if there is political will.

Morever, these cards lend themselves perfectly to cross border shopping - either in person or via the internet. Revenue loss for Canadian distributors and retailers and HST loss for governments would be very significant. One does not have to be too cynical to wonder how many Canadians would forget to “remember” to declare the purchase of these tiny and increasingly high capacity cards at the border, since they are meant to be inserted in cameras, laptops, Blackberries, and tablets and other devices that will be rarely used for music and will be used primarily for some other unrelated purpose. While it’s not worth making a cross border trip to buy a new card to save $3.00, no doubt many Canadians would buy one or more when they are in the USA for other reasons. A much valuable “traffic” could be lost by Canadian retailers as a result.

Furthermore, the CPCC has learned to start small. The first levy on CDs was 5.2¢ for each CD-R or CD-RW in 1999 when these products sold for about $3.00 each. The Board eventually raised that amount to $0.29 per CD when the retail price would otherwise have been about half that amount. The “tax” currently sought of $3.00 on a $13 card could easily become a $6.00 tax on a $3.00 card in very short order, based upon past experience with the CPCC and the Board.

In answer to the inevitable complaint from the music industry that such a regulation would preempt a pending proceeding, history and precedent is totally against such as position. The entertainment industries were extremely voluble and successful in cutting JumpTV (the spiritual successor to iCrave TV) off at the knees while a Copyright Board proceeding was pending. This was done with quickie special purpose legislation in 2002, namely Bill C-48. There are lots of other precedents, including the use of regulation to permit the importation of used text books.

The CPCC’s proposed levy on memory is a desperate and unfounded attempt to remain viable - even though the notion of a private copying "tax" on such products has become obsolete. Memory cards clearly have little if any connection to the private copying of music. Such a “tax” would simply be a cash grab by the music industry. If a tax on iPods made no sense, then a tax on memory cards is simply nonsense.

The longer term fate of the private copying levy mechanism may well be decided in the course of the next copyright bill. However, the current legislation wisely foresaw the potential need and provided the mechanism to stop an undesirable levy,  such as this now proposed "memory tax", by quick regulation. It is time to do just that.

HK

"Taxing" Canadians' Patience & Pocketbooks

 
The CPCC collects "levies" on blank CDs and has desperately tried but failed twice in the Courts and recently with the Government and the Bill C-32 Committee to get an "iPod" tax. It has a new surprise that will create yet more enemies. It has now resurrected its efforts for a “levy” - or a “tax” as Ministers call it - on memory cards, such as Compact Flash - i.e.:

(b) 50¢ for each electronic memory card with 1 gigabyte of

memory or less, $1.00 for each electronic memory card with

more than one gigabyte of memory but less than 8 gigabytes of

memory, and $3.00 for each electronic memory card with

8 gigabytes of memory or more.

It’s easy to buy  8 GB cards for about $13 - so this is about a 23% “tax”.

These ubiquitous cards are commonly used in Blackberries, cameras and other devices that have nothing to do with music. Does anyone seriously think that they are “ordinarily” used for music?

The CPCC tried this on for size in 2003-2004 in the context of several other items but the Board wisely ruled then that there was insufficient evidence that “electronic memory cards” were ordinarily used to copy music.

With widespread use now of solid state or hard drive embedded memory in iPod and similar devices, and the clearly predominant use of electronic memory cards for Blackberries, cameras, and other devices, the CPCC case for a “tax” on memory cards seems even weaker now than it was then.

By the way, at the time in 2003,  the CPCC wanted “ 0.8¢ for each megabyte of memory in each removable electronic memory card, each removable flash memory storage medium of any type, or each removable micro-hard drive”.  On today’s typical 16 GB card that sells for about $30 or less, that would be a “tax” of $128 - or about 400% - which shows the CPCC’s foresight and the application of Moore’s Law.

Unfortunately, the way the Copyright Board works, it seems inevitable that one or more parties are going to have to spend a lot of money to convince the Board not to impose this levy - or “tax” as most will call it. The CPCC will spend a lot of money - which it  has from undistributed levies - to line up its usual expensive experts to provide evidence of its entitlement to this “tax”. One or more parties will have to provide evidence and experts at great expense to refute this - even though it seems so obviously wrong. But that’s the way the Copyright Board mechanism works in this and other instances where a collective is entitled to file a proposed tariff.

This is a perfect example of why the next copyright bill should simply put the “levy” or “tax” mechanism out of its misery. The government should also deal with the provisions in the Act that give collectives such an upper hand in Copyright Board proceedings by allowing them to force expensive hearings using other peoples’ money that include invasive, deterring and frequently unnecessary interrogatories. Many potential objectors are not in the “copyright” business and can’t rationally spend what it takes to participate in these hearings in the way that the Board has come to demand, i.e. massive expenditures on surveys, experts, etc. The result is often more examples of substantial costs being imposed and passed along to Canadian business, consumers, students, etc. where such costs simply don’t exist in the USA and the other countries with which Canada needs to compete.

HK

A CPC Dedicated Anti "iPod Tax" Election website.

The Conservative Party of Canada has launched an election website devoted to the "iPod tax" issue.

I make no comment on the contents of the website other than to anticipate the misleading comments that will surely issue yet again from certain quarters that the amount sought would not be $75. It is a matter of record that the last - even if ill-fated - attempt by the Canadian Private Copying Collective ("CPCC")  to get the Copyright Board to impose such a "tax" indeed asked for $75 as follows:

 ...for digital audio recorders, $5 for each recorder with no
more than 1 Gigabyte (GB) of memory, $25 for each recorder
with more than 1 GB and no more than 10 GB of memory, $50
for each recorder with more than 10 GB and no more than
30 GB of memory, and $75 for each recorder with more than
30 GB of memory.

(emphasis added)

This is from the Copyright Board's website which simply republished the Canada Gazette of February 10, 2007.

An iPod "Classic" has 160 GB and many other devices well over 30 GB.The proposed tariff did not distinguish between solid state and hard drive memory - nor do the recent attempts to re-float the "iPod tax".

For those with a sense of nostalgia about past unsuccessful CPCC attempts to impose an iPod "tax", consider what I've said in the past:

Now, if you think that’s bad, go back only five years to 2002 for the proposed 2003-2004 tariff that would have imposed $21 per GB. Here’s the exact proposal from the Canada Gazette:

(g) $21 for each gigabyte of memory in each non-removable hard drive incorporated into each MP3 player or into each similar device with an internal hard drive that is intended for use primarily to record and play music.

Now, for those who can’t or won’t do simple arithmetic, I’ll do it for you.

A $21 per GB tariff (“tax”) on a 160 GB iPod “Classic” that now sells for about $270 would be - get ready for this -$3,360.00.

On a one Terabyte eternal hard drive that sells for as low as $69 in Canada, the “tax” would be $21,000.00.

On a three Terabyte terabyte eternal hard drive that now sells for about $220 in Canada, the tariff (“tax”) would now be $63,000.00. This is NOT a misprint.

So much for the forward thinking capacity of the Canadian Private Copying Collective.

This shows the fallacy of taxing technology. And why Minister Moore was right to call the proposed iPod tax "really toxic and, frankly, really dumb". 

BTW, those prices for hard drives are now much less. One can buy a 3 TB external HD for about $179 at at least one big box store in Canada.

By way of disclosure, I should point out that I have long acted for the Retail Council of Canada in successful opposition to an iPod "tax" before the Copyright Board, the Federal Court of  Appeal and the Supreme Court of Canada (where leave to appeal was denied to all parties). 

HK

On Canadian Facts, Fiction, Lobbyists and Levies

Ministers Clement and Moore did the right thing yesterday by saying that no means no.

The levy lobbyists did the wrong thing by denying the incontrovertible truth.

It is absolutely false - as ACTRA boldly states that:

“The $75 dollar figure is pure fiction. The CPCC has not put a price on the levy.”

Do facts not matter any more?

The levy lobbyists are in deep denial about their own collective’ recent demand for a “tax”of $75 per iPod.

Has ACTRA lost its ability to read? Does the truth not matter any more?

The fact is that the Canadian Private Copyright Collective asked the Copyright Board for a tariff of $75.00 per iPod in 2007 for the period 2008-2009. Here’s the precise request from the proposed tariff published in the Canada Gazette:

(e) for digital audio recorders, $5 for each recorder with no more than 1 Gigabyte (GB) of memory, $25 for each recorder with more than 1 GB and no more than 10 GB of memory, $50 for each recorder with more than 10 GB and no more than 30 GB of memory, and $75 for each recorder with more than 30 GB of memory. (emphasis added)

Now, if you think that’s bad, go back only five years to 2002 for the proposed 2003-2004 tariff that would have imposed $21 per GB. Here’s the exact proposal from the Canada Gazette:

(g) $21 for each gigabyte of memory in each non-removable hard drive incorporated into each MP3 player or into each similar device with an internal hard drive that is intended for use primarily to record and play music.

Now, for those who can’t or won’t do simple arithmetic, I’ll do it for you.

A $21 per GB tariff (“tax”) on a 160 GB iPod “Classic” that now sells for about $270 would be - get ready for this - $3,360.00.

On a one Terabyte eternal hard drive that sells for as low as $69 in Canada, the “tax” would be $$21,000.00.

On a three Terabyte terabyte eternal hard drive that now sells for about $220 in Canada, the tariff (“tax”) would now be $63,000.00. This is NOT a misprint.

So much for the forward thinking capacity of the Canadian Private Copying Collective.


This shows the fallacy of taxing technology. And why Minister Moore was right to call the proposed iPod tax "really toxic and, frankly, really dumb".

QED.

Thank goodness we shot these proposals down. (I acted for the Retail Council of Canada - which really does stand up for consumers).

Bravo, Ministers Clement and Moore for yeseterday’s announcement.

The CPCC should start planning for winding up. It should distribute its many remaining millions to artists - and not to lawyers, lobbyists and consultants. They have had their day on this file.

HK