The Blank Media Levy - Not
In The Interests of Artists or Record Companies
A number of interest groups,
including some groups representing copyright owners, have recently
urged the Federal Government to introduce a blank media levy - in
effect, an additional fee added to the price of various forms of blank
recording media (such as CDRs) which would be paid to copyright owners
as compensation for the copying of copyright material (such as music)
for private and domestic purposes. This proposal is strongly
opposed by the record industry, both here in Australia and internationally.
The fundamental propositions
on which the blank media levy proposal appear to be based are:
- That private copying is occurring in any event;
- That there is little that can be done to control or prevent that
copying given current technology; and
- That, irrespective of the rights of copyright owners and creators,
the only effective "solution" is to compulsorily license the activity
in return for the payment of some form of levy or royalty.
As a matter of principle, the
record industry does not accept that the rights of copyright owners
and creators should be compromised on these grounds. This is
why the record industry believes that copyright policy makers internationally
should continue to focus their efforts on finding ways to improve
copyright laws to better deal with the challenges presented by new
In any event, the record industry
sees many practical problems with the proposal, which would make it
very difficult to devise a scheme that would operate equitably.
In our view, implementing this proposal would be contrary to the interests
of all relevant stakeholders including record companies, recording
artists and consumers.
The industry's practical concerns
in relation to such a scheme include the following:
Variety of uses
Unlike cassette tapes (which
were, in a practical sense, the only storage media for music up until
the mid-1990s), digital storage media are used to store many different
types of copyright material (not just music, but also films, software,
publications and the like). In addition, they are used by consumers
for many non-infringing purposes (such as personal photo libraries
and general data storage or back up).
Our understanding of the proposal
submitted to government is that a consumer who purchased a digital
storage medium for non-infringing uses would be entitled to obtain
a refund on application to the body collecting the levy. This
appears to us to be a cumbersome approach to protecting the rights
of non-infringing consumers. In practice, given the time and
cost involved, it is likely that many consumers who are legitimately
entitled to the refund will be discouraged from applying for it.
As to the wide variety of relevant
copyright holders who would be entitled to a share of the levy, it
is not clear how a meaningful allocation of a levy would be made between
the various copyright interest groups. Any scheme that is used
(such as some form of survey evidence) would at best be a gross approximation,
but could conceivably bear no relationship whatsoever to the nature
of use of the various blank recording media by consumers. Further,
any attempt to survey end consumers may be unreasonably intrusive,
and may raise privacy concerns.
Diverse media and formats
There are many forms of recordable
media. Apart from a variety of portable media (such as recordable
CDs and DVDs, memory sticks and external storage devices), there is
also a wide range of non-portable recordable media such as, most obviously,
hard drives in personal computers. In addition, there is a
growing range of portable media players (such as the Apple iPod) that
are used to store and play thousands of recordings.
In order to ensure that the
levy did not have an anti-competitive effect (by creating either a
competitive disadvantage or a competitive advantage for particular
forms of recordable media), it would have to be applied to all possible
recordable media, both fixed and portable. The levy may also
have to be applied at different rates, in recognition of the most
common uses of the various forms of recordable media (ie. some media
are more likely than others to be used for the reproduction and storage
of copyright protected works). That said, it would seem to
the record industry to be impossible, at a practical level, to devise
a levy scheme that could be applied across all current (and future)
recordable media in a fair and equitable manner.
The amount of any levy received
in respect of the private copying of sound recordings (including the
recording artist's share) is likely to be relatively low. Given
the substantial investment typically required to make and market commercial
sound recordings, it is unlikely that the amount of the levy would
even approach a fair measure of compensation for the almost unfettered
and prejudicial use of such recordings.
It is relevant in this context
to note one of the key findings from the ARIA research study of 2003
 . That survey found
that 82% of those who had received a burnt CD reported that they either
never or very rarely went on to buy a copy of the original recording.
One of the key conclusions to be drawn from that finding is
that, in the minds of consumers, a "burnt" CD is an effective substitute
for a legitimate copy of the recording (unlike the position with cassette
tapes a decade or more ago). As such, the extent of the substitution
effect, whilst very unlikely to be one for one, is nonetheless likely
to be substantial. It would simply not be feasible to impose
a levy that compensated copyright owners and recording artists for
this substitution effect.
No credible basis for
One of the record industry's
key concerns in relation to a blank media levy relates to the difficulty
of developing a credible basis for distributing the levy income to
sound recording copyright owners and recording artists. Even
if it were possible to develop a justifiable basis for allocating
a proportion of the levy to sound recording interests (as distinct
from the interests of other copyright based industries, such as software
companies, film producers and computer game developers), it is clear
that no information could be gathered as to the actual recordings
being copied and how many times each was copied. As such, any
distribution of income to those entitled would be, at best, an educated
guess. The industry considers this to be an extremely unsatisfactory
outcome, particularly given advances in technology in the last 10-15
One of the benefits of supporting
and encouraging the use by consumers of legitimate download services
is that income received can be linked directly to the copies being
made. As such, in respect of each track downloaded, income
can be specifically attributed to the relevant copyright owner and
recording artist. A blank media levy would, by definition,
be incapable of providing any sort of meaningful distribution data
and, in those circumstances, is likely to be highly prejudicial to
both copyright owners and recording artists who would be otherwise
entitled to receive income.
The introduction of a blank
media levy scheme would be at odds with the contractual relationships
between consumers and those companies selling licensed downloads.
Typically, consumers who
purchase licensed downloads from such services are authorised to make
a limited number of copies of the recording on to other devices and
other media such as blank recordable CDs. In short, the purchase
price paid by the consumer includes a licence to make a certain number
of copies. On that basis, there could be no justification for
the consumer having to pay a levy on blank recordable media to exercise
a right already granted to them under contract from the online retailer.
Infringing source copies
Proposals for a blank media
levy are typically predicated on the explicit or implicit proposition
that the source copy (from which the private copy is made) is a legitimate
or authorised copy. Of course, given current technology and,
in particular, the enormous number of unauthorised copies of recordings
which are currently sourced from the internet, that proposition is
simply untrue in many cases.
Given the substantial concerns
expressed by the record industry in relation to the adverse impact
of file sharing services, the industry would be strongly opposed to
any measure which sought to legitimise the copying of infringing copies
Of course, any legislation
could be expressed in terms that only allowed private copies to be
made from authorised copies of recordings. However, any provision
that seeks to distinguish between infringing and non-infringing sources
would be almost impossible to enforce, and would be likely to create
uncertainty amongst consumers and rightsholders alike.
It is important to note that
the industry acknowledges and confirms the extent and effect of private
copying (being the underlying premise of the proposal submitted by
those advocating the introduction of a blank media levy scheme).
As such, where we differ from them is not in the identification of
the problem. Rather, our difference with them is in relation
to the best method of addressing that problem. In short, we
regard the proposal for the introduction of a blank media levy as
being a flawed, cumbersome and very unsatisfactory "solution" which,
in all likelihood, could exacerbate the very problem that it is seeking
The record industry is committed
to addressing this problem through a combination of the following
- the use of technology to prevent or inhibit the making of unauthorised
copies and/or to control the making of licensed copies.
- the continued support of legitimate online businesses which enable
consumers to make copies of recordings under licence (ensuring that
revenues are received by those whose recordings are actually copied).
- education programs to highlight the fact that unauthorised copying
is an infringement of copyright and that such copying is not a "victimless"
activity (given that it denies revenue to the creators of music).