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| Music industry digs deep into your pocket—again |
July 14, 2003 |
By Jim Harris
Not many Canadians know it but when you back up data to a CD you’re subsidizing the music industry. A spindle of 50 blank CR-Rs costs as little as $25, about 50 cents per CD. Of that the music industry currently receives a levy of 21 cents. Back up your data or burn a photo CD to send to Grandma and you’re subsidizing the music industry.
And if the Canadian recording industry gets its way, that levy will rise to 59 cents per CD-R—a 280 per cent increase—almost doubling the unit price to 90 cents.
The music industry also wants new hidden levies on DVDs ($2.27 per disk), micro drives for MP3 players ($11.10 on each of the first 20 gigabytes and $1.99 after the 20th) and flash storage products (up to 2.1 cents per megabyte). This will increase the price of Apple’s iPod by more than $100. All of this will drive Canadians to buy digital products from U.S. retailers.
Amendments to the Copyright Act in 1997 made it legal for Canadians to copy music for personal use, and established levies to compensate copyright holders.
The Canadian Private Copying Collective (CPCC), comprised of representatives of the music industry, was created to administer levies, which are set by the Copyright Board of Canada, an independent quasi-judicial tribunal.
The CPCC argued the levies should extend to all technologies with storage media: TV set top boxes, mobile phones, personal video recorders, PDAs. I predict the CPCC will propose a levy on all hard disks in the future. If the Copyright Board approves this your mother’s mammogram might become prohibitively expensive.
As Canadian consumers, we are paying for the recording industry’s inability to adapt to new technology.We pay for their incompetence and laziness.
It’s like horse breeders in the 1900s demanding a levy on all cars because consumers no longer wanted horses. The music industry is behaving as though it has an inalienable right to maintain its profits forever. Instead of innovating it’s running to regulators to secretly force digital media makers to subsidize it.
Granted, these are challenging times for the music industry. Globally, file sharing will leach more than $4.5 billion in music revenue in 2003 alone. At its peak in February 2001, Napster facilitated 2.79 billion file transfers. The Recording Industry Association of America fought back by killing Napster in court, and 90 new file-sharing services subsequently sprung up. By September 2001 the top four services were facilitating three billion file transfers a month.
And the new file-sharing services aren’t easy to shut down. Many aren’t based in the U.S. and most are decentralized, so there is no one server to target with legal action.
Artists should be paid for their work, but hidden levies aren’t the way to do it.
Napster was released in 1999 and four years later the industry still doesn’t have a comprehensive, easy to use and legitimate service for consumers to download and pay for digital music.
In January, RealNetworks introduced Helix, a system that allows music to be transferred legally from a PC to an MP3 player. And Apple has made headlines recently with its online music service.
Why are computer companies leading the way instead of the recording industry?
The music industry today reminds me of Hollywood’s battle of 1976. Universal and Disney tried to kill the VCR in court, and eight years later the Supreme Court ruled five to four in Sony’s favour. Today more than 70 per cent of Hollywood’s revenue comes from the rental market, the very market the VCR created.
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