The Canadian Copyright Board’s recent decision to compensate pirated musicians by way of a federal levy on all recording media is unfair and a potential invitation for Canadian-based software manufacturers and distributors to ship CD reproduction south.

That’s what the CATAAlliance – a national trade association comprised of over 1,000 “new economy” enterprises – warned both the Board and anyone else who was willing to listen last December. But CATA’s pleas for fair play evidently fell on deaf ears during the Board’s hearings. In CATA’s view, it is wrong to charge the IT industry, in the form of software producers and distributors, in order to compensate the entertainment industry.

“We did as well as we could (at the hearings) but it’s in legislation now and there’s no way you can dodge that bullet,” said David Paterson, executive director of CATA. “We have to look at where the music industry wanted the levy started at ($2.50 per medium) and the Board set it at 5.2 cents which we feel is reasonable.

“There’s still the point of view from our membership that they don’t use CDs for recording music…therefore they shouldn’t be subject to it.”

december decision

Despite this, the Board chose on Dec. 17 to set a per-disc rate of 60.8 cents on MiniDiscs, CD-R Audio and CD-RW Audio, and 5.2 cents on CD-R and CD-RW until the end of 2000.

Audio cassette tapes were dinged with a 23.3 cent per unit rate. Manufacturers and importers of blank media sold in Canada will pay the fee to the Canadian Private Copying Collective (CPCC) – a non-profit organization established in 1998 by three musical societies. The CPCC will distribute the monies collected from the Board’s fee to Canadian authors, performers and musicians.

“We imprint all of our software on CD…it’s all financial software, certainly not music,” said Dave DeRosa, director of marketing communications for FreeBalance Inc., an Ottawa-based software producer. “I’m not surprised that the Canadian government would try to over-tax or impose a levy on people -anytime they can, they will.”

DeRosa said the levy will only have a minimal impact on his company but he further criticized the Copyright Board’s decision by citing the evolution of e-commerce as an easy means of side-stepping the Copyright Act’s antiquated rules.

“With the e-commerce solutions most organizations have in place nowadays, it’s not a big deal to order direct from the United States,” he said.

The Board estimated the levy will raise almost $9 million in 2000 for Canada’s pilfered artists. The amending of the Copyright Act in 1997 opened the door for the Board to introduce what CATA considers a hidden tax.

musicians benefit

“It’s basically to create a fund that will support music industry performers to compensate for supposed losses they have with people illegally recording their content,” John Reid, president of CATA, told ComputerWorld Canada last February. “They flatly ruled against this in the U.S. which is the largest entertainment industry in the world, so we’re again creating another price differential between Canada and the U.S.”

Although the IT industry uses millions of CD-Rs annually to distribute software and for data storage, none of these uses involve the copying of musical works, argued CATA. Recognizing the principal but rejecting the argument, the Board estimated only 20 per cent of CD-Rs and CD-RWs are used to record music, ergo the lower 5.2 cent levy.

“The Board had to put a levy at an appropriate level, which we feel we did, to represent the value we feel is equitable,” said Claude Majeau, secretary to the Board. “How do you know what people do with the disks?”

Initial public reaction to the announcement of a possible levy in 1998 drew an overwhelming response, according to the Board’s Copying For Private Use report. However, the 3,000 objections and letters the Board received dwindled to a lowly nine parties that participated in the hearings in Ottawa to voice their concerns. Majeau said the majority of comments received were from individuals who wished to register their opinion on the matter but not actually partake in the hearings.

“Most people didn’t object, they just didn’t know much about it,” he said. “Most people didn’t want to participate.”

industry fallout

Majeau added the tariff will not damage the Canadian software market. “This decision will not disrupt the market, if it does, we will render a new decision based on the evidence brought before us (by the public),” he explained.

Paterson said the 5.2 cent levy tacked onto recordable CD-R and CD-RW media is unlikely to inspire a mass exodus of software producers and distributors. However, he echoed DeRosa by pointing out that manufacturers could import the blank disks direct from the U.S. and bypass paying the levy.

The music industry may have won round one of the recordable media battle, but before the wounds can heal the Board will reopen the issue by mid-2000.

In Paterson’s view, the whole affair could be effectively resolved if the federal government was willing to amend the Copyright Act – something he highly doubts will happen. “Amending the Act is invariably a major battle between producers and users of intellectual property,” he said. “The whole process is so difficult and distasteful that the players are reluctant to engage, so the Act is always out of date.”

The Canadian Copyright Board’s recent decision to compensate pirated musicians by way of a federal levy on all recording media is unfair and a potential invitation for Canadian-based software manufacturers and distributors to ship CD reproduction south.

That’s what the CATAAlliance – a national trade association comprised of over 1,000 “new economy” enterprises – warned both the Board and anyone else who was willing to listen last December. But CATA’s pleas for fair play evidently fell on deaf ears during the Board’s hearings. In CATA’s view, it is wrong to charge the IT industry, in the form of software producers and distributors, in order to compensate the entertainment industry.

“We did as well as we could (at the hearings) but it’s in legislation now and there’s no way you can dodge that bullet,” said David Paterson, executive director of CATA. “We have to look at where the music industry wanted the levy started at ($2.50 per medium) and the Board set it at 5.2 cents which we feel is reasonable.

“There’s still the point of view from our membership that they don’t use CDs for recording music…therefore they shouldn’t be subject to it.”

december decision

Despite this, the Board chose on Dec. 17 to set a per-disc rate of 60.8 cents on MiniDiscs, CD-R Audio and CD-RW Audio, and 5.2 cents on CD-R and CD-RW until the end of 2000.

Audio cassette tapes were dinged with a 23.3 cent per unit rate. Manufacturers and importers of blank media sold in Canada will pay the fee to the Canadian Private Copying Collective (CPCC) – a non-profit organization established in 1998 by three musical societies. The CPCC will distribute the monies collected from the Board’s fee to Canadian authors, performers and musicians.

“We imprint all of our software on CD…it’s all financial software, certainly not music,” said Dave DeRosa, director of marketing communications for FreeBalance Inc., an Ottawa-based software producer. “I’m not surprised that the Canadian government would try to over-tax or impose a levy on people -anytime they can, they will.”

DeRosa said the levy will only have a minimal impact on his company but he further criticized the Copyright Board’s decision by citing the evolution of e-commerce as an easy means of side-stepping the Copyright Act’s antiquated rules.

“With the e-commerce solutions most organizations have in place nowadays, it’s not a big deal to order direct from the United States,” he said.

The Board estimated the levy will raise almost $9 million in 2000 for Canada’s pilfered artists. The amending of the Copyright Act in 1997 opened the door for the Board to introduce what CATA considers a hidden tax.

musicians benefit

“It’s basically to create a fund that will support music industry performers to compensate for supposed losses they have with people illegally recording their content,” John Reid, president of CATA, told ComputerWorld Canada last February. “They flatly ruled against this in the U.S. which is the largest entertainment industry in the world, so we’re again creating another price differential between Canada and the U.S.”

Although the IT industry uses millions of CD-Rs annually to distribute software and for data storage, none of these uses involve the copying of musical works, argued CATA. Recognizing the principal but rejecting the argument, the Board estimated only 20 per cent of CD-Rs and CD-RWs are used to record music, ergo the lower 5.2 cent levy.

“The Board had to put a levy at an appropriate level, which we feel we did, to represent the value we feel is equitable,” said Claude Majeau, secretary to the Board. “How do you know what people do with the disks?”

Initial public reaction to the announcement of a possible levy in 1998 drew an overwhelming response, according to the Board’s Copying For Private Use report. However, the 3,000 objections and letters the Board received dwindled to a lowly nine parties that participated in the hearings in Ottawa to voice their concerns. Majeau said the majority of comments received were from individuals who wished to register their opinion on the matter but not actually partake in the hearings.

“Most people didn’t object, they just didn’t know much about it,” he said. “Most people didn’t want to participate.”

industry fallout

Majeau added the tariff will not damage the Canadian software market. “This decision will not disrupt the market, if it does, we will render a new decision based on the evidence brought before us (by the public),” he explained.

Paterson said the 5.2 cent levy tacked onto recordable CD-R and CD-RW media is unlikely to inspire a mass exodus of software producers and distributors. However, he echoed DeRosa by pointing out that manufacturers could import the blank disks direct from the U.S. and bypass paying the levy.

The music industry may have won round one of the recordable media battle, but before the wounds can heal the Board will reopen the issue by mid-2000.

In Paterson’s view, the whole affair could be effectively resolved if the federal government was willing to amend the Copyright Act – something he highly doubts will happen. “Amending the Act is invariably a major battle between producers and users of intellectual property,” he said. “The whole process is so difficult and distasteful that the players are reluctant to engage, so the Act is always out of date.”



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