Canadian Copyright Levy Group Wants New iPod Tax... But It's Not Really For The Artists

from the doing-the-math dept

Last week, a few folks submitted the news that the Canadian Private Copying Collective, who collects a tax (levy) on every blank CD sold in Canada is now, once again, pushing for a tax on every iPod sold. They try to do this pretty much every year. A few years ago, Canadian courts struck down an attempt to do so. Then there was another try which, again, was struck down with the court pointing out that they'd covered this in the past.

But they're back at it again. And it's really no wonder. Already the cost of a blank CD in Canada has an astounding 90% of the price go to this levy. But what happens to all that money? Well, the CPCC claims that it needs this levy to sustain the livelihood of artists. That's also its reasoning for extending it to iPods. But, Howard Knopf dug into the numbers a bit and notes how laughable that claim is. First, CPCC claims that its brought in over $150 million from the blank CD levy, and handed it out to 97,000 rights holders "most of whom would not be able to continue their careers without this revenue."

That's quite a claim, isn't it? But if you just do the most basic division, you'll find that it makes no sense at all. At $150 million over ten years for 97,000 rights holders, you're talking about $160 per year on average. And, of course, the truth is that it's significantly less for most, and much bigger for a very small number. I think it's safe to conclude that "most" of the 97,000 rightsholders aren't relying on CPCC money for any kind of career. Oh, but you know who did get a lot of money to play with? CPCC. Knopf notes that:

About $22 million has gone to the costs of pursuing Copyright Board tariffs (lawyers, consultants, surveys, etc.), collection and enforcement (e.g. lawyers and auditors), and other causes such as "communications and government relations - $1,272,000." And that's only the end of 2007.

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Gag Order Clause Comes Back To Bite Apple In 'Exploding' iPod Case

from the ah-the-legalese dept

We've been getting a bunch of submissions from people about a Times Online story concerning Apple's supposed attempt at "gagging" someone who had their iPod explode. The company agreed to give a replacement, but the terms of the deal made them agree never to talk about it. While this may seem draconian, I'm going to give Apple the benefit of the doubt here: this is pretty standard legal language on such things. I had a laptop whose hard drive died 5 times in six months a few years back, and when the manufacturer finally agreed to replace the laptop (after multiple escalations of the issue), it had a nearly identical clause. But, it was pretty straightforward. Before faxing the agreement back to the company, I just crossed out the clause that said I was barred from ever talking about it, and the guy from the company called me immediately and said: "I see you crossed it out -- our lawyers won't like it, but that's fine, I just want to get you a new machine." Who knows if Apple would be so accommodating, but I think this story is blown a bit out of proportion. This kind of language is standard legalese, rather than some nefarious attempt by Apple to shut up those who have had their iPods explode. Still, the fact that this clause is suddenly generating press attention should put corporate lawyers on warning. These standard clauses are PR nightmares waiting to happen. Take them out of such "replacement" agreements, or be ready to see a similar story appear in the press soon...

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Canadian Copyright Expert On Levy Proposals: Today's Quickie Legislative Solutions Are Tomorrow's Absurdities

from the $2500-iPod dept

Howard Knopf, a well known Canadian copyright expert, recently took a look at some of the failed copyright levy proposals in Canada. The Canadian Private Copying Collective (CPCC) administers the tax levy on blank CDs, which now accounts for almost 90% of the price. In 2002, similar proposals to extend the levy to DVDs and digital audio players were shot down. It's a good thing they were! Knopf notes that the $2.27 levy proposed in 2002 is now about 10 times the retail price of a blank DVD, and the $21/GB levy proposed for digital audio players would have left a 120 GB iPod (<$300 CAD) with a $2520 tax. You might think the CPCC would have decreased the levies over time, but the blank CD levy was just increased this past December (blank CDs cost more in Canada than blank DVDs). Even if the levies were lowered, it would be because they had already become unbearable. Imagine the bureaucracy and battles at the Copyright Board, and imagine the effect on Canadian consumers, tech companies in the meantime (what if the Blackberry was classified as a digital audio device?).

The point is that these quick solutions aren't solutions at all. Setting up "you're a criminal" taxes to collect money for companies that can't figure out how to adjust their business models is bound to block innovative new technologies, and you can't predict what technologies will drive new business models. As Knopf puts it, "all of this shows that today's quickie proposed legislative solutions and oft inflated tariff proposals to deal with supposedly serious crises arising from copyright and new technology are potentially tomorrows' absurdities or even nightmares."

Blaise Alleyne is an expert at the Insight Community. To get insight and analysis from Blaise Alleyne and other experts on challenges your company faces, click here.

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Latest iPod Suggests that Apple Still Loves DMCA-Assisted Lock-in

from the all-about-control dept

Back in January, we noted that despite Steve Jobs's posturing on the music DRM front, Apple remains a big supporter and user of DRM and DRM-like schemes throughout their product lines. Over at the EFF blog, Fred von Lohmann suggests another potential example. The new iPod Shuffle has no buttons; the controls are on the included headphones. And if these folks are right (and there seem to be some doubts), the new shuffles won't work with the remote controls of any existing third-party headphones because the iPod looks for a special "authentication chip" that so far is only embedded in the headphones Apple bundles with the shuffle. This would be irritating to me personally because I hate earbuds and so if I bought a shuffle the first thing I'd want to do is swap out the Apple-supplied earbuds with third-party headphones.

Fred suggests that the purpose of this "authentication chip" is to trigger liability under the DMCA if anyone tries to reverse-engineer the chip. That's possible, but it's far from clear that that's what's going on. We don't know exactly what the chip does, but it seems unlikely that they'd embed enough computing power in the chip to do real crypto. And if there's no crypto, it becomes harder—although certainly not impossible—to invoke the DMCA's anti-circumvention provisions. Unfortunately, there's so little case law on the DMCA's anti-circumvention rules that we don't really know how it would apply in a case like this. And that uncertainty may be all Apple needs to discourage third parties from building unauthorized accessories. b>Update: It looks like we were right to be skeptical about the DRM angle. Fred updates to point to a Boing Boing report that there's no authentication in the new headphones. Which means that a DMCA claim probably wouldn't apply to third-party headphone makers.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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In Some Relatively Rare Cases, iPod Headphones May Have Some Impact On Pacemakers

from the struck-by-lightning-twice dept

There have been numerous studies done over the impact various portable electronics devices have on pacemakers, and they often make headlines blown way out of proportion compared to the actual issue. A year and a half ago, for example, we wrote about a report that found that iPods could interfere with pacemakers under some very specific (and somewhat unlikely) circumstances. And now there's a new study making the rounds about how iPod headphones could, maybe interfere with pacemakers, again in some very specific circumstances. As the folks behind the report note, it's so minor that it's not worth causing a big stir about it, but when the headphones are very close to the device, the magnets in them may impact how the device runs. It was a pretty small sample size, but in experiments it happened in 4 out of 27 tests with pacemakers. Slightly more troubling is in cases with defibrillators, where the headphones got in the way 10 out of 33 times. Though, with the pacemakers, it didn't sound as if the interference was all that serious in most cases, and with defibrillators, it seems likely that technicians are likely to notice and remove iPod headphones from getting in the way. While it's good to be aware of the potential for interference, but the actual risk of danger seems pretty minor.

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In Case You're An Idiot: Canada Wants To Make It Illegal To Play Video Games While Driving

from the who-writes-this-stuff? dept

In the past, we've pointed out how silly it was for various politicians to go about banning very specific actions for drivers. There are a ton of distractions for drivers, and you're never going to successfully outlaw all of them. But it doesn't stop politicians from trying. Earlier this year, we asked for suggestions on what else politicians might try to ban while driving (beyond earlier bills that were put forth in various legislatures trying to ban using a laptop, using OnStar, faxing and (everyone's favorite) having sex while driving.

The latest is up in Canada, where a bill on driver distractions includes a ban on playing portable video game systems. While my first thought was whether or not this means it would still be legal to hook up a console gaming system and play it, that thought was quickly erased by the most basic question of all: who doesn't already recognize that you should not be playing a handheld video game while driving? I mean, if we're going to start banning totally theoretical dangerous driving activities, I'd like to throw juggling while driving onto the list. That's gotta be distracting. We must ban it. To save our children, of course.

Of course, to highlight how ridiculous this law is, it says it's okay for you to change stations on the radio while driving -- but you would be fined for skipping a song on your iPod. Why the distinction? Who knows. Reporters, sensing the ridiculousness of the situation, questioned a supporter of the new bill, asking him if it would be illegal to change songs on your iPod if the iPod were taped to the dash, like a radio. His response? "I would have to look at that one," while then noting "the proposed law is fairly general with details to come." Ah, so let's rush into passing a law, and then we'll work out the details of what the law actually means later?

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Think Tank Says iPods Are To Blame For Crime Wave, Despite Little Evidence

from the correlation-not-causation... dept

About a year ago, we saw UK politicians complaining that the iPod's white earbuds made it an attractive target for criminals. They even went so far as to suggest that gadget makers should design their products in a way that would not encourage such crime. We may start to see similar suggestions after a DC think tank has started claiming that the rise in crime over the last few years can be attributed to iPods. It makes for a compelling headline, but there seems to be little evidence to support it -- other than the fact that violent crime has increased over the same period that iPods have grown in popularity. Other than that, the actual evidence put forth by the think tank seems rather weak. At best there's a correlation, but that's hardly proof that the iPod is to blame. As the AP reporter notes, while there certainly have been more reports of iPod theft, that may often be larceny rather than violent crime. Also, while most of the reports of iPod theft shows up in urban areas in places like crowded subways, the increase in violent crime appears to be coming from small and mid-sized cities. In other words, there's nothing to see here, other than a catchy headline.

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Yet Another Report Of Free Label Music That Isn't

from the details,-details dept

Last week, we noted that the press couldn't stop talking about Last.fm's supposed effort to offer "free" music, when the details showed it was a lot less than the press made it out to be. You'd think that maybe they would be more careful the next time around. However, when you combine the words "free" and "music" it appears that some folks in the press just can't help themselves. Thus, when a company named Qtrax announced "free" file sharing, with the backing of all four major labels, plus iPod compatibility, the press ran with it. The Associated Press and Reuters both ran with it... though, at least the Associated Press has quickly started backtracking after the various record labels all started denying any kind of deal with Qtrax. They admit they're talking, but no deals have been signed -- meaning that Qtrax jumped the gun, as did the reporters who ran with the announcement. Even if the labels do come around on this one, it's a plan that will go nowhere fast. It involves crippling DRM and annoying advertising that won't even be close to effective. This is a non-story turned into a story by the use of two words: "free" and "music."

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Canadian Courts Strike Down 'You Must Be A Criminal' iPod Tax Again

from the haven't-we-been-through-this-before? dept

A few years back, we noted that a Canadian court had ruled that the "private copying levy" (better known as "you must be a criminal tax") for blank media such as CDs and DVDs could not be extended to iPods. However, the Canadian Copyright Board seemed to think that such a decision didn't preclude it from going back and adding the levy to iPods at a later date -- and this year it tried to do so, sending the whole issue back to court again. Once again, the courts have said that the Copyright Board is wrong and it cannot put the levy on iPods. Apparently, it took all of about 24 hours to make this decision, pointing out that much of this stuff was covered in the earlier decision a few years back. It's worth noting, by the way, that the recording industry probably wasn't on the side you'd expect in this case. It was so afraid that a private copying levy would "legalize" file sharing, that it came out against the proposal as well. Now it can keep on suing people. Of course, it makes you wonder how it feels about the private copying levy that is still used on blank CDs and DVDs, which seem even less likely to be used for private copying purposes than an iPod.

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Canadian Recording Industry Suddenly Against Private Copying Levy It Fought So Hard For

from the suing-is-more-lucrative dept

For many years, the recording industry has been able to convince the Canadian government that it needs to add a "private copying levy" to various forms of blank media, to reimburse the industry for any "private copying" that happens on that media. This is pretty questionable for a number of reasons -- basically amounting to a government tax to support a private industry and its inability to adapt its business model to the market. At times, this private copying levy can be an astounding 70% of the cost of blank CDs. Once mp3 players (specifically the iPod) started to become popular, the recording industry fought to have the private levy attached to those players as well. In late 2003, the industry got its wish -- but with a catch. A ruling found that the devices could be taxed, but if they were, then downloading unauthorized content would be seen as legal (uploading unauthorized content would still be illegal). A judge later overturned the iPod levy, but some in the industry have kept fighting for it, and the Copyright Board of Canada supports extending the levy to iPods.

However, in a surprise move, the Canadian Recording Industry Association (basically, Canada's version of the RIAA -- controlled by American record labels, of course) has come out against extending the private copying levy to mp3 players, admitting that if the levy is extended (even though it will send millions of dollars directly into recording industry bank accounts), Canadians may (incorrectly, in the view of the CRIA) start to believe that downloading is legal. Of course, some people pointed out this loophole in the recording industry's efforts to extend the private copying levy years ago -- but it seems that it just occurred to the powers that be. Once again, it's a case for the industry to be careful what it wishes for. The private copying levy makes the industry a ton of money, but does so at the expense of anger from purchasers of any blank media. Still, that anger is probably better than the anger generated by thousands of lawsuits against file sharers based on flimsy evidence.

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Blaming MP3s And iPods For Ruining Music

from the gotta-love-the-audiophiles dept

It seems that with every new generation of music delivery, there are going to be people who complain that the quality just isn't up to par with what came before. Remember when CDs first came out, there were quite a few upturned noses who insisted the sound quality just couldn't compete with vinyl LPs. And now that mp3s are becoming the standard, folks are complaining that the quality simply can't live up to CDs. This has certainly gone on for a while, as we've noted there are even online stores that cater to audiophiles who believe that compressed mp3s just aren't worth listening to. However, now it's going even further, as the WSJ claims that some audio engineers are saying that the popularity of mp3s and iPods is ruining music. The theory is that audio engineers are using iPods and mp3s as the lowest common denominator for recordings. Since they know that so many people are going to end up hearing the song just through the cheap white earbuds of an iPod, that they don't bother to make a high quality recording that would sound better on high end stereo equipment. Thus, the claim goes, pretty much all music is sounding somewhat crappy, and it's turning people off from the latest crop of new songs. In other words, music is less popular today, because the songs are engineered to sound like crap. This seems silly. It's certainly a different argument than the industry's typical claim that downloads are killing the music business -- but it's equally ridiculous. Sure, there may be some engineers who are doing a cruddy job in engineering the music, but as one audio engineer in the story notes, there's no reason to ever engineer a song "down" to mp3 levels. Instead, you should just engineer it to a higher level and it'll sound fine on a CD as well on an iPod. However, to put the whole thing in perspective: songs compressed to mp3 level certainly do lose some quality at the margin, but there's only a small group of audiophiles who really care or will notice on a regular basis. At the same time, compare that to how much more music is being produced today thanks to cheaper production tools and easier distribution of music through the internet, and I think you could make the case that the mp3 and the iPod has done a lot more to improve music than to hurt it.

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40,000 Explanations For Why The Recording Industry Is Wrong About Business Models

from the start-counting dept

Among Apple's new iPod announcements was the inclusion of a 160Gb iPod Classic. As Steve Jobs noted, that means you could carry around 40,000 songs in your pocket. Forty thousand songs. Leave it to Bob Lefsetz to use this fact to point out how wrong the recording industry has been about music business models. He points out that this highlights how people want music -- in fact, they want lots of music -- and they want it conveniently and reasonably priced. That means at much cheaper prices (are you going to carry around $40,000 worth of music purchases in your pocket?) and without DRM.

He also highlights how the idiotic focus on getting more per song just as everything else about music and technology gets cheaper is hurting the record labels much more than it helps them. He compares the situation to how expensive it was to use mobile phones a dozen years ago. People were scared to use mobile phones because the charges were ridiculously high. You only used it in special circumstances. Today, however, the rates are much, much lower and that's massively grown the market for mobile services. Do you think the mobile operators would prefer to go back to $1/minute charges? Yet, why does the recording industry insist on $1/song charges when the infrastructure can support an entirely different model. Instead, make the music cheap and easily accessible. Take advantage of the infrastructure that allows people to carry around 40,000 songs in their pocket. Sell iPods that are pre-loaded with all kinds of music and watch them fly off the shelves. The record labels (and their supporters) will claim that it doesn't make sense to sell music for less when people are clearly willing to pay $1/song, but that's misunderstanding the market potential. People were willing to pay $1/minute for mobile phone calls too. And they were willing to pay $150/month for broadband access. But as all of those things got much, much cheaper it opened the markets up much wider, provided all sorts of new applications and services that made them more and more valuable -- and helped make the companies much richer by providing better services at cheaper prices. Why can't the recording industry understand that?

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Canada One Step Closer To Adding The 'You're A Criminal Tax' To iPods

from the automatically-guilty dept

Remember two years ago when Canada's Supreme Court said that iPods shouldn't be subject to the blank media levy that the entertainment industry had convinced Canada to put on blank media like recordable CDs? Well, apparently the Supreme Court isn't the last word on the matter. Earlier this year, we noted that the Canadian Private Copying Collective, the group that administers this "you must be a criminal" tax on media was pushing to get the levy included on iPods anyway. Now, the Copyright Board of Canada appears to be supporting that position, saying that it's clearly within the law to tax iPods and other such devices. As Michael Geist notes, the ruling could also apply to such things as personal computers as well, as the entertainment industry may now start to claim that it needs a tax on anything that can store recordable content, even as it continues to fight piracy in Canada. So, at what point do people realize that the entertainment industry is getting paid twice here? First when they get the "you must be a criminal" tax and then again when people buy legitimately purchased content.

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