Canadian Music Industry Pitches 'You Must Be A Pirate' Tax On Smartphones

from the physical-tax-for-a-non-physical-age dept

Every electronic device capable of storing data is just another tool in the pirate’s chest. If you think your phone or mp3 player or hard drive is just something for storing data and perhaps even purchased software, movies, and music, think again. The simple fact you’ve decided to purchase any of these devices pretty much ensures content creators everywhere will go bankrupt.

The “you must be a pirate” tax is being pitched again. The senseless fee tacked on to blank plastic discs for so many years continues to migrate to electronic devices, including the tiny chips stashed away inside smartphones. Apparently, the Canadian music industry needs something to replace the revenue stream that dried up when people stopped buying blank CDs. Michael Geist, working with documents secured through a public records request, reports the Canadian music industry is looking for a hefty payout from the government.

According to documents released under the Access to Information Act, the collective arrived with a startling demand, asking the federal government to pay $160 million over the next four years to compensate for music copying.

The demand, which now forms part of the platform of demands from the Canadian music industry, is based on a $40 million annual handout. While the industry has not provided details on how it arrived at its figure, notes (likely from Graham Flack) reveal the basis of the demand.

This apparently breaks down to $3.50 a device, according to the cocktail napkin math handed in by the industry.

But the industry isn’t willing to wait around for devices to be sold. The CPCC (Canadian Private Copying Collective) wants the government to just hand it $40 million a year and assume it all adds up in the end. So, it’s a much broader “you must be a pirate tax” that calls all Canadians pirates, whether or not they’ve actually purchased a new piratephone during the fiscal year.

What’s more, the document [PDF] makes it clear the CPCC wants a new revenue stream just because an old one has vanished. It points out revenues from “pirate” taxes have dropped from a high of $38 million back in the heyday of blank media to an expected $2 million in 2017. It also notes that streaming services are replacing music sales, accelerating this decline in “pirate” taxes.

However, the report carefully does not point out revenues from streaming services have increased from $3.4 million in 2013 to $49.3 million in 2017. It also ignores the fact that much less copying — authorized or unauthorized — is taking place.

The business model this “pirate” tax depended on — copying of music to media or devices — is slowly being eliminated. That doesn’t mean taxpayers owe CPCC a living. It just means sales are being replaced with “rentals.” If the CPCC failed to capitalize on the shift to streaming, it shouldn’t be allowed to make up its “lost” revenue by taxing smartphones just because that’s where most music streaming takes place. It makes as much sense as envelope manufacturers demanding a per-device tax because email and instant messaging has replaced snail mail as a means of communication.

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Comments on “Canadian Music Industry Pitches 'You Must Be A Pirate' Tax On Smartphones”

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Anonymous Coward says:


In my youth I used to be able to sell my used CDs. Now that I can stream whatever I need, surely I’m entitled to a payout from the government to make up for loss of revenue from re-selling the CDs I no longer purchase.

Makes about as much sense as what these clowns are suggesting.

Honestly, I’m glad this is being suggested in Canada. Otherwise, I’d have to cancel my Spotify account, hoist the black flag, and begin pirating my weaselly, black guts out. After all, if I pay a tax to make up for piracy they assume I’m going to use my phone to engage in, you better bet your ass that I’m going to engage in said piracy since I’ve already paid for it upfront.

If they can have their cake (profits from streaming) and eat it too (declining taxes on assumed piracy tools, which would only decline if the tools are no longer used) then so can I.

Chris Brand says:

Re: Re: Eh, not so much socialistic, just pragmatic.

“how can they claim you’ve stolen anything?”
Well they don’t. “Private Copying”, defined broadly as “making a copy of an audio recording onto media on which the levy has been paid” is expressly legal (section 80 of the Copyright Act).

The tricky part is that copying to other media (e.g. a hard drive) isn’t subject to the levy and therefore isn’t “private copying” but I suspect that your average Canadian doesn’t know the difference (then again, is your average Canadian making piracy decisions based on the levy anyway?)

David says:

Re: Re: Re: Eh, not so much socialistic, just pragmatic.

I thought it was more like “making a copy of an audio recording onto media” is expressly legal, with blank media being levied to compensate for the legality of what cannot sensibly be criminalized without breaking constitutional guarantees of privacy. The levies, which are not invasive of privacy, are occasionally adjusted to reflect actual or extrapolated or guessed amounts of private copying.

This is not a “you must be a pirate tax” but rather a compensation for perfectly legal copying. Now the media industries have a vested interest in keeping up the “pirate” narrative as it helps boosting their profits. It also reduces the amount of private copying, thus reducing the levels of proportionate levies. This reduction is unwanted, so the media industries also maintain a narrative of “there is wagonloads of unauthorized copying and we must be compensated for it”.

Since their narrative involves lots and lots of “piracy”, namely not merely copying without specific authorization but rather copying without legitimization, they try to suggest that the levies are also supposed to compensate for that. They aren’t. You cannot hold people jointly accountable for criminal statistics, but you can levy them for collective legal behavior.

PaulT (profile) says:

Re: Re: Re:2 Eh, not so much socialistic, just pragmatic.

“This is not a “you must be a pirate tax” but rather a compensation for perfectly legal copying”

No, it’s still such a tax because the media being taxed can be used for many purposes other than copying music. Use a CD to back up your own data, record a home video or even record your own composition? You still get charged a tax to the music industry because it’s assumed you must be using it to copy music.

Anonymous Coward says:

Re: Wait a second...

Yes. As Chris Brand noted, it’s legal, making the word “pirate” (and “illicit”) even less applicable than usual. Don’t expect the music industry to trumpet the distinction: when it suits them they’ll say copying is wrong because it’s illegal; if it’s legal, they’ll still say it’s wrong but for some other reason.

AudioHomeRecordingActof1992 says:


Reminders of U.S. law on Cassette, VHS tapes from decades ago.

In 1992 congress passed legislation ( The Audio Home Recording Act of 1992 ) that amends the Copyright Act of 1976 to do the following:

imposes a “royalty” tax on DAT recorders (section 1004(a))
imposes a “royalty” tax on blank DAT media (section 1004(b))
establishes a complicated procedure for distributing the collected “royalty” tax to artists, performers, writers, and publishers (sections 1006 and 1007)
requires DAT recorders to use the Serial Copy Management System (SCMS), which prevents digital dubbing beyond one generation (section 1002(a))
prohibits manufacture and sale of devices whose primary purpose is to circumvent SCMS (section 1002(c))

Wyrm (profile) says:

Copyright Maths

Doesn’t that remind anyone of the "Copyright Maths" presentation with "the 8-billion dollar iPhone"?

Here it is…

The copyright lobby has used such obvious fallacies to claim money they never deserved.

There was also a french report claiming 10,000 jobs lost to piracy… by claiming stupid things like "value of a pair of eyes: 0.60 euro". (That’s pretty cheap. This report killed the black market for human organs there.)

It’s time to make the politicians understand how outrageous these lobbies are. Sadly, their ears are stuffed with enough dollars to pave the way to Mars…

Anonymous Coward says:

Canada Has A Music Industry?

I live here and I’m sure one exists. Almost everything is published and distributed from Sony and other multi-national record labels. Unless that means this is being pitched by a company who thinks they represent production companies.

Is there a pirate tax for companies that steal other companies’ soap boxes?

Anonymous Canuckard says:

Re: Canada Has A Music Industry?

IIRC, we have a music industry, and local artists, but most have created their own labels or signed to a small label some other local artist created. There was a mass exodus from US companies a while back when they last tried this sort of thing. Artists were outraged that a) their label was implying all their fans were pirates, and b) some org was collecting this fee, allegedly to compensate for piracy losses, but NONE of the money ever made it to artists.

If I’m paying the fine, damn straight I’m doing the crime.

Iggy says:

The You Are All Pirates tax actually doesn’t seem like such a bad idea on first sight. The revenue could go to support American artists. In return, we could drop copyrights on music and movies so there would be no “piracy”, and music and movies would become a public good. Korea and Japan have publicly supported pop music as a way to export culture abroad so there is some precedent.

The only problem? Most of “American Music” is just a bunch of jingles was written by a handful of Swedes.

ECA (profile) says:

Format and advancement in tech

I had an idea long ago, in late 1999..
Part and 1/2 that idea has been created, but still Not utilized..
How much Room would physical Data take for ..
Games and SAMPLES??
Back in that time there was a NEat device called a Jukebox, where you coulkd store 100’s of DVD’s and reference them with your computer to Load/run/play anything..
NOW we have 12tb hard drives..

Create a Box/device to store all of these data formats..And put it in a 4’x4′ box.. Insted of taking up an Entire store for all the media, you have 1 Big box, FULL of Music from Every time and place, or Movies, or games..

Sell movies at $5 each..You dont need to return them, AS RED BOX DOES..
You could sell Songs and albums LIKE CRAZY, if the industry had done it, for CHEAP AS HELL, insted of relying on 3rd party sales that need to profit even more..

Games or Samples of games..TONS OF THE NEW AND and free, to add to sales..

AND YOU DONT NEED THE INTERNET.. You can be Poor and still afford to buy all of it..

The Avg price of STOCK ON HAND AND STORAGE is over $1 per box per day…and thats why STORES SELL AT 2-3 times Their cost.

WHy could they NOT do the work themselves??
They only like profit, and doing things 1 times..
They made 1 master, and thats ALL they want. It gives them SOME control. But that also means that it CAN BE LOST..there is only 1, maybe 2 masters..

That One Guy (profile) says:

From the masters of projection

As always the naked entitlement on display from groups like this is just stunning. One of their sources of ill-gotten profit is drying up so they simply demand that another be created, because of course they are owed free money, and to suggest otherwise could only be the result of the most heinous of motivations.

And they have the gall to say that copyright infringers ‘just want things for free’.

Anonymous Coward says:

Here at Pirate Central, Techdirt, you ARE pirates!

Everyone knows, kids.

A better scheme, though, is to use Google’s trove of information on you — nearly all of even pirate sites let Google use javascript, many even Google for captchas — because they get money from it even though Mansick used to claim was no money in piracy — anyhoo, Google should be put to good use: locating pirates to directly bill. That. Is. Coming. SOON.

Anonymous Coward says:

Re: Re:

You’re here at Pirate Central. That means you are a pirate too, blue.

You don’t need Google to “directly bill”, but let’s say you do have a system in place, it wouldn’t last off the ground for long. Because your heroes in publishing would demand money from Google for setting up that system for them, at their behest. Then Google pulls out and you’re left gnashing your teeth. Nice going, jackass!

Jeremy Lyman (profile) says:

When you're used to blaming others for failure

They’re just used to it being someone else’s fault for their decline into irrelevance. We’re making less money, so SOMEONE needs to make up the difference…

Isn’t the streaming activity that’s supplanting disc sales by definition not “piracy” but legally rented content? Taxing mobile devices because that’s where streaming happens is literally taxing a legal competitive format, not penalizing illegal copyright infringement or devices where that infringement happens.

It makes as little sense as taxing reusable bags because people are buying less soda.

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