Techdirt. Stories filed under "levies"

Austrian Rights Holder Group Wants To Hit Cloud Services With A 'You Must Be A Pirate' Tax

Tim Cushing — Thu, 13 Dec 2012 08:23:00 PST

Another "YOU ARE ALL PIRATES" levy is being proposed by Austrian rights holders group Autoren. In addition to the fees already paid by consumers on blank CDs and DVDs, IG Autoren is pushing even further. And it's not just interested in physical media.

Consumers in Austria already pay levies on blank CDs and DVDs. Rights holders have been advocating to expand these kinds of fees to hard drives and other forms of storage media as well, and apparently aren’t just thinking about local storage. In its newspaper, IG Autoren wrote:

“We not only want a hard disc levy, we also want a levy for the usage of the cloud.”

Hardware makers have pushed back, calling these proposed levies what they really are: double dipping. Consumers already pay the levy on blank media and now, Autoren wants to tax the computer, the hard drive and the cloud it connects to. With the dropoff in sales of blank media, IG Autoren's got to make up the income somewhere, right? This is what passes for "fairness" in the eyes of rights holders. If one form of media dies out, along with its associated fees, it must be replaced with another. Rather than face the fact that a business model that predicates itself on the assumption that piracy is the main reason people purchase CDs, DVDs, hard drives and cloud storage is a thoroughly flawed model, IG Autoren would rather push for additional levies -- all in the name of the artists, of course.

One would think that if levying taxes on storage was such a money maker, artists would be better off selling blank CDs at their merch tables if they could collect the levy directly, rather than through a third party. In fact, for those further down on the sales chart, it just might be, considering the "trickle down" effect continues to rain dollars on the most successful artists while leaving the other 95% with mere pennies.

Not that IG Autoren is interested in approaching this logically. To defend its rent-seeking, it points to Germany, the country with some of the most screwed up concessions to rights holders' demands.

Rights holders on the other hand point to Germany, where levies are already in effect. German consumers currently pay €13.65 ($17.66) for every PC and between €7 and €9 for external hard drives. However, there is no fee for cloud storage services in Germany.

The European Commission is currently considering reforms to copyright law to better apply it to the digital age. IG Autoren apparently believes means this means it should be able to apply its levies, ones that began back in the analog age of cassettes, to cloud services and any other technology that could conceivably hold an mp3. And it's not just IG Autoren. As reported back in October, a coalition of rights holders sent a submission stating that they were "entitled" to remuneration for personal copies. Fortunately, the commission's paper pointed out that cloud services actually reduced the number of copies made, making a private copy levy "less appropriate."

If the past is any indication, these rights holders will likely be granted a levy on hard drives and other storage devices, but cloud services may be a tougher battle. Considering many services offer limited free accounts and are likely unwilling to foot the bill for a €7-9 levy, this means these services won't be available (at least not the free option) in countries collecting this fee. The end result of this rent-seeking is fewer options for the public simply because a handful of rights holding organizations feel they're "owed" a cut from anything that can conceivably hold copied files.

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EU Copyright Holders Cling To Old Levies, As New Ones Start To Appear On Cloud Storage

Glyn Moody — Mon, 1 Oct 2012 03:16:30 PDT

Levies on blank storage media are a relic of older times when copying was a new possibility for copyright works. You no longer needed an LP pressing plant, say, you could copy music in the comfort of your own home, first on analog cassette tapes, then later on digital media like CDs and MP3 players. At that time, it was easy to see each of those copies as somehow replacing purchases, and so the argument for levies was born: people should pay indirectly for the "lost" sales their copying caused.

Fast forward to the Internet age, when everything online is copied multiple times as it traverses the nodes of the network, and where everyone is constantly copying files, regardless of copyright law -- with a potential annual liability of around $4.5 billion, according to a well-known study by John Tehranian. Basically, the idea that every copy of a digital file must be paid for is dead, which makes levies on storage media -- currently being pushed to absurd levels in some countries -- look even more unjustifiable.

Even the copyright holders are aware of this. A new "Declaration on Private Copying Remuneration" (pdf), pointed out to us by an article in Intellectual Property Watch, tries to convince people that levies are fair:

Private copying is becoming a more and more frequent subject of debate. The companies which market copying devices are systematically attacking the system through European and national courts, lobbying and through the press. On behalf of hundreds of thousands of creators we, the undersigned organisations representing authors, performers and producers of musical, audiovisual, literary and visual arts works, feel the need to give a reminder of why private copying combined with fair remuneration remains essential.

But its attempted justification fails right at the start: Over 50 years ago, the first commercially available recording devices created a dilemma. Copyright as it stood at the time required permission for each act of copying of protected works. It was practically impossible for private users to get permission whenever they wanted to copy something. At the same time, rightsholders were clearly entitled to remuneration for such use of their works.

To resolve this, the vast majority of European countries allowed private copying as long as remuneration was paid to the rightsholders. These national pieces of legislation were brought together at European level in 2001, reiterating the necessity of rightholder remuneration.
Well, no: they are not "clearly" entitled at all. When people pay for music or videos, they pay for the ability to enjoy them, possibly on a range of different devices. Making copies of CD tracks to an MP3 player, or of DVDs to a tablet does not entitle copyright holders to any more money, since they have done nothing extra to deserve additional remuneration. They produced the work, they were paid for the work, end of the story. The fact that copyright does not allow such reasonable, everyday actions without "exceptions" just shows that it is unfit for the modern world, where personal copies are ubiquitous.

Against this background of increasing irrelevance for copyright levies, it's a shame to see the European Commission meekly accepting their imposition on cloud-based storage systems. Here's what it writes in one of the documents (pdf) accompanying its new strategy for "Unleashing the potential of cloud computing in Europe":

Currently, depending on the national private copy levy system, private copy levies are being asked for the storage media and the hard ware used by consumers in the context of cloudservices.

But trying to impose a complicated set of differing national levies on cloud computing services will simply reproduce the huge problems that a fragmented copyright licensing market is causing for startups in the EU. Moreover, cloud computing actually reduces the need for levies altogether, as the same paper points out: Some of the technologies applied in the digital context, such as streaming, have the potential of reducing the number of copies which are actually made on consumer devices. Cloud computing services, where end-users are actually replicating less on their personal local devices have been seen as a game changer, making the private copy levy concept less appropriate, as digital technology advances.
Rather than permit an outdated system to throttle innovative cloud services in Europe, the Commission should use the shift to this technology to kill off the private copying levy once and for all.

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Absurdity Of Copyright Policy Leaves Dutch Supreme Court Confused

Ben Zevenbergen — Tue, 25 Sep 2012 10:33:00 PDT

The Dutch Supreme Court (Hoge Raad) has posed some pre-judicial questions to the Court of Justice of the EU regarding the home-copying exception in European copyright legislation -- raising significant questions about what is legal under EU rules and how it meshes with how people actually consume music. Of course, all it really seems to demonstrate is just how messy the copyright system is today. When the top judges of a country cannot figure out the seemingly simple question of whether downloading music and films is legal or not -- mainly due to a huge patchwork of amendments to copyright law over the years -- something needs to change. Drastically. Let's see if we can make some sense of it:

In essence, the home-copying exception allows people to make copies for non-commercial home uses. Such an exception makes a lot of sense, because these private copies are largely impossible to enforce anyway. A levy is imposed on manufacturers of blank media to compensate rights holders for the supposed "losses" from foregone license fees.

The case in question concerns a group of these blank media manufacturers, who refuse to pay the full levies imposed by the collecting society in charge of the compensation for the home-copying exception. The collecting society considers it fair to charge for "losses" that stem from people downloading unauthorized uploads. You see, in the Dutch system, there is a chicken and the egg problem where you may download copyright protected content, but you may not upload (not unlike its policy for marijuana where buying and selling is tolerated, but growing is not). Any uploaded material is therefore often considered to stem from an illegal source. There is a huge political debate about the desirability of this construction in the Parliament.

The Netherlands is one of the few countries that has a system like this, where the end-user is partly taken out of the equation for copyright infringement. This is due to a particularity in European copyright, which is a headache to comprehend, but necessary to understand the confusion of the Court. Here’s a quick summary:

The EU legislator adopted the so called "Copyright in the Information Society" Directive in the year 2001, which was supposed to "adapt legislation on copyright and related rights to reflect technological developments" and make sure all 27 copyright systems in the EU would become more or less uniform. The hope was that this would knock out some of the problems of very different systems, and create a better "single market" for European content.

Of course, no copyright law is complete without the important exceptions and limitations, like the fair-use doctrine in the US. However, in the case of the copyright directive, the exceptions and limitations were optional for Member States, thereby effectively eliminating any chance for a uniform (or "harmonized") copyright legislation in the EU and thus missing the point completely. Information activist Smari McCarthy explains the resulting chaos well:

The directive outlines 21 different optional exceptions or limitations to the right of reproduction of copyrighted works. Each country implementing the directive can choose to either include or leave out the exception clause. This gives us 2,097,152 different ways to implement the directive.

Now repeat this for the 27 Member States, and you see where this fragmentation exercise is going. Since only a few countries have also implemented this home-copying exception and there has not yet been a legal conflict about it, no jurisprudence exists on which the Dutch court can rely. The exception reads as follows:

Member States may provide for exceptions or limitations to the reproduction right provided for in Article 2 in the following cases: [...]

[...] in respect of reproductions on any medium made by a natural person for private use and for ends that are neither directly nor indirectly commercial, on condition that the rightholders receive fair compensation which takes account of the application or non-application of technological measures referred to in Article 6 to the work or subject matter concerned;

As you see, this text does not include any information on whether the fair compensation should be based on only foregone license fees (implying only copies from legal sources), or whether all copying on blank media carriers should be included.

When the collecting society proposed to start charging for copies from illegal sources in 2008, the manufacturers of blank media went to court hoping for a ruling that levies should only be payable for copies which are allowed under the copyright directive, thus only from legal sources (as this would decrease the levy significantly).

If you read through the lines of the courts’ analysis (and if you understand Dutch), I think you can see quite clearly that the judges tried their utmost to find a way to reconcile this copyright exception with the way people share and use works online. The Court states it would like to give rights holders a fair compensation via a levy system for losses from piracy, but it is unsure if EU law allows this. In its questions, the Court proposes some ways of establishing the mechanism for fair compensation and asks the European court whether this would be permissible under law. The questions asked by the Court are rather technical in nature, but here’s a quick summary of the main points (my interpretation, not a literal translation!):

1. Can the home-copying exception be interpreted so that the exception applies to all copies, regardless of whether the original was an authorized source? Or does the exception only apply to copies, which are derived from an original, which does not infringe copyright itself?
2a. Can the three-step test be used to expand the scope of the exception to include all copies?
2b. Is the Dutch construct – where downloading from any source is legal – in conflict with EU law? Would it help to mention that feasible technical tools to counter the making of private copies is not yet available, which may influence your decision regarding the three-step test? [...]

Dutch internet lawyer Christiaan Alberdingk Thijm is confused about the Courts’ deliberations:

I find it remarkable that Court contemplates a compensation paid for downloading copyright protected works from an illegal source, but that this does entail that the act of copying of this content is permissible under law. In my opinion, there are simply just two options: either it is permissible to make private copies from an illegal source and we pay the levy, or it is illegal and we don’t pay the levy. I do not agree with the current system either, though, where downloading from illegal sources is permissible but no levies are charged over this.

The court misses some important points here, indeed. First, if people are paying levies for unauthorized downloads, society will perceive their actions to be justified. Second, people mainly use phones, computers and portable devices for music and films. Hardly anyone uses blank media any more. Therefore, levies on CD’s, for example, miss the objective. Third, if a levy is imposed, we get into the sticky situation where actual losses from downloading unauthorized content needs to be determined, which is a seemingly impossible task. Finally, the Court may not have been informed about this, but there’s been a fierce quarrel on the amount charged for levies at the EU level, which has raged on for the past 15 to 20 years. Recently a mediator had to be hired to find a way out of this mess.

Apart from total confusion about the copyright system and how it should be applied to the internet, the Court may have also chosen to sidestep the current and hostile politicized debate in the Netherlands, which was met with opposition from many sectors of society. The Court has not given a conclusive ruling in this debate, so now the European Court may rule on whether the Dutch construction is legal. Expect an update in a few years time!

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Portuguese Artists Association Struggled To Get Even 100 Members On List In Favor Of Exorbitant New Private Copying Levies

Glyn Moody — Thu, 16 Feb 2012 16:05:24 PST

Few ideas display a sense of entitlement better than that of private copying levies. For they assume, by definition, that artists' representatives have a right to money from the public simply because there is some kind of storage that could be used to hold digital copies of copyright files, and that every time such a file is copied, money must be paid (never mind if you are just making backups or transferring your holdings to bigger storage sizes.)

This is based on the outmoded idea that the public are simply consumers, and ignores the fact that today they are also creators. Take digital photos, for example: since there is no cost involved in taking as many pictures as you wish -- unlike in the world of analog photography, where film and processing expenses act as a brake on creativity -- a typical collection of family snaps can easily run to many gigabytes. Moreover, most digital cameras also allow videos to be shot, and these generate even larger quantities of data. As a result, an increasing proportion of the data stored on devices has nothing to do with commercial works, and yet the full levy must still be paid.

A further problem is that the capacities of hard disks are now so large that even relatively low per-gigabyte rates generate significant additional costs when applied to disks with terabyte capacities, say. A case in point is the amended scale for Portugal's private copying levies, announced last month. According to an article in Exame Informatica (original in Portuguese), a 1 terabyte hard disk currently priced around $90 will cost $120 under the new scheme, while a 2 terabyte hard drive that costs $130 now will go up to $200. But this isn't just about hard drives. USBs, smartphones and even multifunction printers will all be subject to the new levy.

Naturally, the prospect of these surcharges is proving unpopular with the Portuguese public. And so the SPA (Sociedade Portuguesa de Autores -- Portuguese Society of Authors), which represents Portuguese artists in all areas -- music, audiovisual, dance, plastic arts and cinema -- decided to show how the country's creators really backed the move. The Portuguese blogger ~~Miguel Caetano~~ Carlos Martins describes what happened:

SPA has tried to validate their point by presenting a list of one hundred authors and artists that support this PL118 law. There's no denying that some author might think its a good idea... even though it might look suspicious that they could get only a hundred of them among their 25k+ registered members; and even though that roughly 20% of those 100 are the association board members; the really horrendous part is that we now found that some of those names were put there without any consent from the authors!

[Update: there are now apparently 200 names on the list - still rather a poor showing for such a large association.] If even a national organization for all categories of artists can't muster genuine support for such measures, it's clearly time to get rid of the whole antiquated approach. Inflated prices for digital devices will be a real drag on innovation in Portugal at a time when it is trying to modernize itself. Moreover, the manifest lack of enthusiasm for the SPA's attempt to mobilize support for the higher levies suggests that the creators themselves derive little benefit from the scheme.

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Dear Sweden: Will You Tax Hard Drives And Give Me A Cut Every Time Someone Visits Techdirt?

Mike Masnick — Thu, 1 Sep 2011 12:12:33 PDT

We've discussed in the past the ridiculousness of attempts by various countries to put a levy on blank media just in case you might copy something onto it that was covered by copyright. Apparently Sweden is now gearing up to go through this same fight, as the entertainment industry is demanding a blank media levy. As Rick Falkvinge points out at the link above, this is not (as some believe) a blanket license to infringe. The fee people pay is only supposed to cover legal copying. But, of course, if it's legal, then that probably means the work was already paid for. Why should the person who paid for it have to pay again? And, that doesn't even get into the fact that many people buy storage devices that are never used for such copying. But they still have to pay the tax.

The whole thing sounds like a joke, but I feel like I should demand my cut, just to point out the ridiculousness of it all. After all, every time someone in Sweden opens up a page on Techdirt, they're making a "legal copy" on their hard drive. So, where's my cut? According to Google Analytics, last month we had over 12,000 page views from Sweden. Clearly, I deserve a cut for each of those.

While my claim above is obviously silly, it's no less silly than the claims of others. Why should one particular set of content providers get to set up a system like this, and how is the distribution manged? How much do we think will actually go to content creators? And where does it stop? If music and movie companies get a cut, what about book publishers? And news organizations? And blogs? Where do you draw the line? The problem is that as soon as you draw any line in such a case, you're setting up a system that others will demand to be a part of. It's just a bad idea all around.

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Dutch Court Says That Copyright Owners Are Better Off When People Are Downloading From Unauthorized Sources

Mike Masnick — Wed, 24 Nov 2010 04:38:07 PST

Here's a bit of a surprise. According to this report, beyond just the FTD ruling we wrote about last week, there was another copyright case decision in the Dutch appeals court of The Hague, which stated that "since downloading from illegal sources for private use was permitted under Dutch law," it's actually to the advantage of copyright owners that such sites exist.

Of course, part of the reasoning for this is that there's a private copying levy, and the court was arguing that unauthorized downloads should be taken into account when calculating that levy. So, this could mean higher subsidies and "you must be a criminal" taxes in the Netherlands. Still, the argument is somewhat striking:

With reference to statements made by the Minister of Justice, the Court argued that the legitimate interest of the right holders is more adequately protected in a regime that allows downloading from illegal sources. In view of the Dutch government's statements, such a levy system better ensures that compensation is due to right holders for the use of their work.

I'm not convinced that's actually true, but it's still quite surprising to hear a court say it like that. I would imagine entertainment industry lobbyists are banging down Dutch doors right now...

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Austrian Collection Societies Want A 'You Must Be A Criminal' Tax On Hard Drives

Mike Masnick — Wed, 22 Sep 2010 11:28:00 PDT

techflaws.org points us to the news that seven different collection societies in Austria are demanding a private copying levy on all hard drives (Google translation of the original German). Since seven different collection societies are involved, and each needs to get a cut, when you add all their fees up -- it means that all hard drives under 500 GB have 21.60 euros added to the bill, while hard drives over 750 GB get a whopping 43.74 euros added (it's not clear what happens between 500 to 750 GB). There's also some weirdness where hardware vendors who give up their right to sue can have the levy reduced by 2/3 -- which makes the whole thing seem even more sketchy. Apparently, similar plans have been rejected in the past, but the collection societies have claimed "times have changed." And, the response should be: so it's about time you learned to change as well.

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People Aren't Buying Blank CDs Any More, So Collection Agency Demands Media Levy Expanded To Mobile Phones

Mike Masnick — Wed, 21 Jul 2010 09:09:22 PDT

We've always found the concept of blank media "levies" to be strange. They're a kind of "you must be a criminal" tax, that aims to shoehorn in an unworkable business model in a way that highly distorts an actual market. But, of course, then people become reliant on that distorted market as well. So I find it somewhat amusing to see an article pointing out that content creators in Sweden are now "losing out" on revenue from blank CD levies, because people no longer buy blank CDs and DVDs (who needs 'em any more?). The article, of course, was pushed by the organization that collects and distributes the levy, Copyswede, as part of its effort to expand the levy to internet connections and hard drives and such:

We don't currently receive any revenue from hard drives or telephones despite legislation decreeing that fees should apply to any products that are particularly suitable for piracy. The pattern we think we're seeing is one of piracy moving to external hard drives and USB flash drives while telephones are being used for storage...

And what makes you think you should automatically get free money from people using these technologies when the content creators you represent fail to adjust or adapt at all? But rather than adapt, Copyswede is just taking the position that more technologies should be taxed and the market should be distorted further. The plan is to tax mobile phones 100 kronor (about $14), because having the government step in and force people to give you money is, you know, a lot easier than actually having to work for a living.

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Canadian Writers Guild Wants 'You Must Be A Criminal' Tax On Both Distribution And Storage Of Content

Mike Masnick — Fri, 7 May 2010 04:16:27 PDT

Canada has long had a blank media levy on things like blank CDs, which is a sort of "you must be a criminal" tax on things. Of course, what it really does is drive down the usage of blank CDs by making them ridiculously expensive -- such that, in some cases, it accounts for 90% of the price of a blank CD. There have been failed efforts to extend such a levy to things like iPods, and Michael Geist alerts us to the news that the Writers Guild of Canada is proposing extending levies to all distribution and storage -- including things like DVRs. Yes, because when you time shift that TV program, you're a thief and should have to pay extra for it. Beyond just being a "you must be a criminal" tax, this really seems like a way of double, triple or quadruple charging people for the same media. Say you buy a song on iTunes, which you've paid for. But then you also need to pay the levy to the ISP for distribution. So now you've paid twice. But then you need to pay a levy for your hard drive to store it. So that's three times. Oh, and then another levy on your iPod to transfer the song to that. So you've paid four times for the same song. That makes so much sense, doesn't it?

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Consumer Electronics Firms Fighting Against Copyright Levies In Europe

Mike Masnick — Wed, 13 Jan 2010 21:21:00 PST

While US copyright law has its problems, one path we have not gone down that many other countries have is the concept of copyright levies on various technologies. These taxes on various technologies, consumer electronics and media storage devices are supposed to "compensate" for any copyright infringement that is done on that equipment (though, it should be noted that, even with these levies, such infringement is still illegal). Think of it as a "you simply must be a criminal" tax. In the US, the entertainment industry has mostly fought against these levies fearing (perhaps reasonably) that they would lead people to think that such copying was, in fact, legal -- or much, much worse, convince a court of that fact (by saying "hey, I paid for it via this levy, thus I should be able to do it.") Still, they do exist in many places, and they generally serve to harm the consumer electronics players by making their devices significantly more expensive. In some cases, the vast majority of the price of certain products is made up of the levy, rather than the price of the product.

Over in Europe, they've been fighting about this for years. Back in 2006 there was a proposal to get rid of these levies, but it got shot down due to intense pressure from the collections societies who make a ton of money from them. In 2008, there was even an effort to expand these levies. Copycense points us to the news that in the latest "negotiations" around these levies in Europe, the consumer electronics companies have given up trying to reason with the collections societies, and instead are looking to the EU to put in place some regulations to at least get rid of the worst abuses of such levies that massively hold back the ability of consumer electronics companies to sell products at a reasonable price.

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Digital Britain: Few Surprises As It Looks To Prop Up Content Industries

Carlo Longino — Tue, 16 Jun 2009 14:21:29 PDT

The final version of the UK government's Digital Britain report, its blueprint for updating the country's tech-related laws and infrastructure, has been released today, and it doesn't look like it holds too many surprises. Like the interim report that was released earlier this year, it's full of a lot of vague language, and as the UK's opposition party points out, seems most interested in propping up failing old-media business models. Two aspects of the report are grabbing the most attention. First, the government will start a 50p (about 80 cents) monthly tax on landline phones in order to build out broadband networks in rural and other unserved areas. Second, and more controversially, the report says the UK's communications regulator must cut file-sharing by 70%, and calls for ISPs to help accomplish this by keeping tabs on their users, sending them notification letters when they download infringing material, and giving up their details to content companies (with a court order) so they can be sued. It stops short of creating a rights agency run by the copyright cartel, as had been rumored, and while it doesn't endorse the use of a three-strikes policy, it does say that regulators will have the power to force ISPs to use other technical means (such as throttling connections, traffic shaping, and even blocking certain sites, services and protocols) to try and stop persistent infringers.

The report pays a lot of lip service to the fact that content businesses need to update their business models to the changing digital environment, but it really does very little to help facilitate this, instead preferring to make stopping piracy the central focus. The government seems to have fully bought into the entertainment industry's propaganda -- that it can't do anything until piracy stops, that it can't move forward as long as there's file-sharing. The reality isn't that the industry can't move forward, but rather that it won't. And, after all, if the government is willing to get involved and offer the industry special protection to prop up its ailing business models, why should it?

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