The New York TimesThe New York Times TechnologyMay 16, 2002  

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Broad Tax Sought on Music Storage in Canada

By IAN AUSTEN

OTTAWA -- IN the United States, the recording industry has dealt with music copying mostly through legal action and the development of anti-copying technology. In Canada, however, the industry is going after cash.

If a group representing musicians, composers and record companies has its way, Canadian buyers of MP3 music players will be in for an unwanted surprise next year. The group, the Canadian Private Copying Collective, has asked the Copyright Board of Canada to impose a fee that would add to the cost of storage media and devices.

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The fee, based on storage capacity, would add $132 (210 Canadian dollars) to the $500 price of a 10-gigabyte Apple iPod, for example. The collective is also asking the board to introduce a $1.43 copying fee on recordable DVD's and to triple, to 39 cents, a fee imposed two years ago on recordable CD's. The fees are intended to compensate members of the music industry for the use of recordings.

"People say it's unfair to pay a levy at all," said David Basskin, president of the Canadian Mechanical Reproductions Rights Agency, one of the groups seeking the fee. "But I don't think people would want to give up copying music. They just don't want to pay."

A 1998 change in Canada's copyright law made it legal to copy music for personal use. But the change also required makers of recording media to charge a fee, called the Private Copying Tariff, that is handed over to the music industry.

Several recording devices are currently exempt from the fee, notably computer hard drives and microcassettes mostly used for dictation. But Mr. Basskin said that increased consumer use of MP3 players, recordable DVD's and microdrives — tiny, removable hard drives — for recording music means that they should now carry the surcharge.

The Canadian system for compensating musicians and recording companies differs from that of the United States, where the federal Copyright Office collects fees based on the manufactured or imported cost of a recording medium or device — 3 percent for recording media like blank tapes, for example, and 2 percent for recording devices like MiniDisc players and tape decks (with a maximum fee of $12). The United States fee does not apply to common recordable CD's but is imposed on rarely used "audio CD's" — CD-R's with special formatting to prevent further copying of the disc.

In Canada, fees are based on the storage capacity of a medium and are adjusted to reflect, at least by the Copyright Board's estimate, how often a particular medium is used to record music as well as the overall rate of private music copying.

The Copyright Board, which plans to begin hearings on the fee request this fall, estimates that about $20.5 million (about 32 million Canadian dollars) will be collected this year under the current fee system.

A system for distributing the money is still being worked out, but since the United States and Britain do not have a reciprocal fee system with Canada, American and British record companies and performers will not share in the wealth. But recording artists from France, which has a similar fee system, will receive a share of money.

Randall Hoffley, a lawyer for a business group, the Canadian Storage Media Alliance, argues that the main impact of the levy on discs has been an increase in disc smuggling.

People who use blank discs exclusively for data are also unhappy. "We don't believe that innocent people should be paying for the sins of others," said David Paterson, executive director of the Canadian Advanced Technology Alliance, a trade group based in Ottawa. The fee on CD's, he said, is higher than what it costs to make them. "This is absolutely ridiculous," he said.

Even Mr. Basskin said he would prefer a world without fees. "It doesn't go a fraction toward covering the damage that's been done," he said. "We would prefer people not copy privately."

If the fee request is approved, Canadian music lovers will have a loophole. MP3 players — and blank discs and tapes — could be bought in the United States or elsewhere for personal use and taken into Canada without a special fee being tacked on.





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