Canada to tax legal digital music downloads

Canadians may soon pay a small tax on every legal music store download, says a new measure sanctioned by the Copyright Board of Canada. Requested by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the tax would apply at least 2.1 cents to every individual song download and 1.5 cents per track for complete albums. Subscription download and streaming services would themselves be charged between 5.7 and 6.8 percent of a user's monthly fees. Minimum fees would also apply for every larger download or subscription. The surcharge would help compensate artists for piracy, according to SOCAN's reasoning. The publishing group draws similarities between this and a 21-cent fee already applied to blank CDs in the country; the right to copy a song from an online store demands the same sort of levy applied to copying a retail CD, SOCAN argues.

The tax may have a significant impact for online stores such as iTunes and Canada-based Puretracks, which will have to factor the amount both into future and past sales. The new tax would be retroactive to January 1st, 1996 and would effectively cover all sales and subscriptions from such services since their beginnings, which typically followed shortly after those in the US. Free services are not currently subject to the added cost.

While no public responses have been made, the Copyright Board report notes that both Apple and the RIAA-equivalent Canadian Recording Industry Association were heavily involved in resisting proposed rates. Higher rates that had been initially suggested, as well as minimum fees, would "handicap" a digital music business that already has to compete with pirated tracks that users can find for free, both Apple and the CRIA said.

The decision has not set a fixed date for when stores would begin paying the fee, but said it would roll out any tariffs "gradually" to soften the immediate blow.

This decision follows a related move in July, in which the Copyright Board had tentatively approved a media player and memory levy that would add to the price of iPods and removable flash storage under the assumption that the devices were being used to carry copyrighted material.

Well the US CONgress, did the same thing to audiotape. We all pay extra to compensate record companies for piracy from people recording from their radios was the theory. This tax started in the 90’s, I believe.

Efforts to get a cd or dvd tax have not been successful yet in the US, now that audiotape is rarely used. But they keep trying.

I found it on google.
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))

Would you like to know which congresscritters voted for and against the bill? So would I, but I guess we won’t find out. It was passed by voice vote, so there is no record. Why do we let them do this?

Why the federal government should act as an agent for Michael Jackson and Madonna is beyond my comprehension. Aren’t they able to look out for themselves? Copyright law already addressed the issue in a much more reasonable manner.

If any people are getting screwed by music piracy, they are the obscure independent artists who won’t benefit at all from this legislation. In fact, the new law actually screws them worse, because now they have to pay substantially more money to buy “professional” DAT recorders in order to make digital copies of their own music. And they have to pay a 3% tax on the blank tape they use to record themselves!

The law does have one benefit to the consumer. It explicitly makes it legal (or more precisely, non-actionable) for you to copy audio works for your own use ( section 1008). That’s right, it is now perfectly legitimate for you to borrow the latest Madonna album from a friend and make yourself a copy, despite the copyright. Pretty neat, huh?

But now that you have a legal right to copy music, the same law requires that equipment have SCMS, to make it difficult for you to exercise that right (section 1002(a)). What kind of sense does that make? And of course the law prohibits the manufacture or sale of devices whose primary purpose is to circumvent SCMS (section 1002(c)).

It is claimed that the purpose of SCMS is to eliminate large-scale piracy, but there is no evidence to suggest that it does so. In reality it only serves to frustrate the consumer.

That is a most informative post. I didn't realize that Americans were subject to a tax under a similar theory--perhaps because I have never had a DAT recording device.

Of course, this does nothing to justify Canada's "piracy" tax. It just illuminates the fact that it is not alone in this idiocy.

The voice vote is shameful and cowardly. It should be abolished. (Of course, I am not holding my breath until that actually happens.)

Canadians are famous for letting their socialist governments stick it to them. Good little Canadians don’t question it or lodge any complaints. We know that if our government needs more money, it must be for a good reason. After all, they know more about what we need than we do. So we just lie back and take it. We are among the most heavily taxed and over-governed people in the world...and we’re used to it, like lost little sheep.

Instead of our politicians working to be more efficient and less of a burden, they scheme to squeeze more money out of us. Their philosophy is exactly 180 degrees out of phase.

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