Private copying levy

A private copying levy (also known as blank media tax or levy) is a government-mandated scheme in which a special tax or levy (additional to any general sales tax) is charged on purchases of recordable media. Such taxes are in place in various countries and the income is typically allocated to the developers of "content". (A distinction is sometimes made between "tax" and "levy" based on the recipient of the accumulated funds; taxes are received by a government, while levies are received by a private body, such as a copyright collective.)
Levy system may operate in principle as a system of collectivisation, partially replacing a property approach of sale of individual units.
History.
Such levies were first introduced in Germany in the 1960s. With the advent of the audio cassette, legislators were persuaded that cassette recorders would decimate sales of records as friend after friend would then make copies of only one purchased album. Levies today are assessed on recordable compact discs, a form of media that did not exist when levies were first conceived. Although the bulk of unrecorded compact discs are actually used in the computing industry, they are still "taxed" to provide a revenue stream to the recording industry.
Levies are often considered a compensation for illegal file sharing. This is debatable, however: levies could be seen as not being an advance for fines, but rather, only intended to compensate for copies in the private sphere that are legally allowed in many jurisdictions. A notable exception in Europe is the UK, that does not allow private copies. But generally legislators allow private copies for two reasons: firstly, because otherwise the enforcement would be unfeasible for private reasons, and secondly because the administrative burden would be disproportionate.
European Union review.
On 2015-07-09 the European Parliament approved a non-binding resolution (Reda Report) asking a review of the levy in the European Union, building on previous resolutions and studies.
Questions on fairness.
A difficulty that immediately arises is the practical impossibility of devising a mechanism for distributing the proceeds to copyright holders that is considered "fair" by all copyright holders and consumers. Implemented systems are typically restricted to music and may distribute the proceeds proportionally to a measurement of sales of CDs in music shops or amount of air-play on radio or the like. This ignores other distribution channels such as the Internet, and it disproportionally benefits popular artists and publishers of the related products. Fairer methods would arguably involve extensive sampling of purchasers to determine actual recording behaviour, or alternatively paying all musicians at a simple flat-rate (the preferred method will depend on one's political views).
While the prime purpose of levy systems is to compensate authors, some part of the collected money is also used for general cultural funding purposes. In Germany this is even required by law. It acknowledges the purpose of cultural diversity - which is not necessarily identical to free market effects. This funding is usually executed by the same entities (collecting societies) that distribute the levy money to individual authors. One may question however whether these entities are properly qualified to make culture policy.
Levy systems assume that all authors want to exploit their work for money. However this is not always true, especially on the internet. Many authors do not write to entertain, but to inform readers, listeners and viewers. Often their purpose is to reach the widest possible audience rather than make the maximum profit from the copyrighted work by itself. The discrepancy between reality and the assumption underlying a levy system is growing as "web 2.0" matures, with pervasive user-supplied content, from Wikipedia to YouTube.
A further problem is to find a proper tariff base for levies. Conceivably the levy may be a percentage of storage media sales price (e.g. 3% in the US). The implication of such a scheme is however that the author gets ever less as technology proceeds and becomes less expensive. But a price based on units of information (bits, or megabits) is not fair either, as for instance a DVD can be used to store a film, a computer game, a large amount of documents, or measurement data. The cost of producing a certain amount of bits widely varies by type of information. Measurement data is even not copyrighted at all. Yet in today's world of converging technology, storage media can be used for a wide range of purposes.
An implementation question that arises is whether the tax applies to any type of copyrighted work or is restricted to a limited field such as music. If it is restricted then the issue arises of how to collect the tax on media which can also be used for other purposes. The options include:
Contrary Fairness arguments
Legal effects.
It is theorized that such levy may be linked to a corresponding relaxation of copyright law, by permitting the recording of copyrighted works on media for which the tax has been paid. However, there is little evidence to support this theory. On the contrary, lobbyists representing publishers and copyright holders have increased pressures to implement more restrictive laws, even on countries that have implemented private copying levy. In 2007, it was reported that International Intellectual Property Alliance put 23 of the world's 30 most populous countries into Priority Watch List, even though the United States, which was not in the list, has laws that are more liberal than the laws from the countries within the list.
Even when restricting levy system to devices that primarily play music, this itself creates loopholes that prevents collecting levies from cellphones, PDAs, and other all-in-one portable electronic devices. As a result, copyright holders will have to rely on even more laws to collect levy, and to increase rates of already levied product to recover perceived losses, which run against the political trends toward eliminating levy systems.
Regulations.
Examples of countries operating such schemes:
Australia.
Australia had a public levy on cassette tapes. The legislation establishing the levy was passed in 1989, challenged in the High Court of Australia in "Australian Tape Manufacturers Association Ltd v Commonwealth". The court found the tax legal even though it went to private sources because it served a public purpose.
Copyright Amendment Act 1989 (Cth) introduced the Levy on blank tapes but was later repealed by Copyright Amendment (Re-Enactment) Act 1993 following the "blank tapes levy case" in the HCA in 1993.
Belgium.
In Belgium a fee is charged on both blank media and recording equipment which is passed on to "Auvibel", which is in charge of distributing the funds. As of 1 February 2010, these fees are applicable for the following:
Canada.
A blank media levy was introduced in Canada in 1997, by the addition of Part VIII, "Private Copying", to the Canadian Copyright Act. The power to set rates and to set the distribution allocation is vested in the Copyright Board of Canada. The Copyright Board has handed the task of collecting and distributing the funds to the Canadian Private Copying Collective, which is a non-profit private organization.
In Canada:
Canada's current private copying levies are as follows: $0.29 per unit for CD-R, CD-RW, CD-R Audio, CD-RW Audio disks. The Pirate Party of Canada, or the PPCA, has called for the scrapping the levy, as there are plenty of non-piracy related uses for CDs and it is unjust to punish Canadians who don't use them for these purposes.
Finland.
Finland had a blank media levy 1984-2015. From 2015 on the funds come directly from the state budget.
As of beginning of 2012, the fees were (in Euros):
There was no levy fee on mobile phones, computers, memory cards, game consoles, USB flash drives and CDs/DVDs. VAT of 9% is added to the levies.
Germany.
The world's first private copying system was created in Germany in 1965. It was a result of earlier successful litigation by GEMA against an audio equipment manufacturer in GEMA v. Grundig.
Luxembourg.
Luxembourg is the only EU member state on the continent without a private copying levy, making it a popular "copying levy haven" for blank media buyers from countries such as France and Germany.
Netherlands.
In the Netherlands a fee is charged on blank media which is passed on to "Stichting Thuiskopie" (Foundation Homecopy), which is in charge of distributing the funds. Fees for January 1, 2021 until December 31, 2023 are as follows:
Portugal.
Portugal established a levy on cds and DVDs in 1998.
Russian Federation.
Article 1245 of Civil Code of Russian Federation "Remuneration for free reproduction of phonograms and audiovisual products for private purposes" ("Вознаграждение за свободное воспроизведение фонограмм и аудиовизуальных произведений в личных целях") mandates a fee, which is to be distributed in the following proportion: 40% to the authors, 30% to the singers, 30% to the manufacturers of the media. In practice, this fee had not been charged until after the Regulation of the Government of Russian Federation 829 from October 14, 2010, which mandated a uniform 1% tax on computers, blank optical disks, memory sticks, TVs, video and audio recorders, radios, mobile phones, etc. The controversial decision of the government to award the collected funds to the for further distribution was criticized by the public and disputed in a lawsuit.
Sweden.
In Sweden there is a fee called "privatkopieringsersättning" (private copy remuneration) earlier called "kassettersättning" (cassette tape remuneration) on storage media. The levy is handled by Copyswede. The extent of what is included in the copy levy has changed several times the past decade. In September 2019 the copy levy looks as follows https://www.copyswede.se/elektronikbranschen/produkter-och-ersattningsnivaer/:
United States.
Audio home recording in general.
, as legislated by the Audio Home Recording Act of 1992, says that non-commercial copying by consumers of digital and analog musical recordings is not copyright infringement. Non-commercial includes such things as resale not in the course of business, perhaps of normal use working copies which are no longer wanted. It is unlikely to include resale of copies in bulk; Napster tried to use the Section 1008 defense but was rejected because it was a business.
From House Report No. 102-873(I), September 17, 1992: "In the case of home taping, the [Section 1008] exemption protects all noncommercial copying by consumers of digital and analog musical recordings" .
From House Report No. 102-780(I), August 4, 1992: "In short, the reported legislation [Section 1008] would clearly establish that consumers cannot be sued for making analog or digital audio copies for private noncommercial use".
The United States music industry administers the Audio Home Recording Act and foreign hometaping royalties for artists on US sound recordings as well as US record labels. These royalties are administered by The Alliance of Artists and Recording Companies for featured artists and copyright owners, ASCAP/BMI/SESAC for writers, Harry Fox Agency for publishers, and The AFM/AFTRA Intellectual Property Rights Distribution Fund (Joint venture of AFM and AFTRA ) for non-featured artists. All societies also collect foreign remuneration for their respective funds.
Blank music CDs and recorders.
 bars copyright infringement action and provides for a royalty of 2% of the initial transfer price for devices and 3% for media. The royalty rate in was established by the Fairness in Music Licensing Act of 1998. This only applies to CDs which are labeled and sold for music use; they do not apply to blank computer CDs, even though they can be (and often are) used to record or "burn" music from the computer to CD. The royalty also applies to stand-alone CD recorders, but not to CD burners used with computers. Most recently, portable satellite radio recording devices contribute to this royalty fund.
Thanks to a precedent established in a 1998 lawsuit involving the Rio PMP300 player, most MP3 players are deemed "computer peripherals" and are not subject to a royalty of this type in the U.S.
Currently, private copy royalties are generated in the US by the sale of "blank CDs and personal audio devices, media centers, satellite radio devices, and car audio systems that have recording capabilities."
United Kingdom.
Currently there is no proper private copy exception in the United Kingdom, there is only a narrow exception regarding broadcast time-shifting (s70(1) of the Copyright, Designs and Patents Act 1988 (CDPA)).
On 1 June 2014, the UK implemented art. 5(2)b of the Infosoc Directive via the Copyright and Rights in Performance (Personal Copies for Private Use) Regulations 2014. This provided an exception limited to the personal use, to the owners of a personal copy and with the exclusion of indirectly commercial uses. It did not provide for compensation. The UK Government's view was that "levies or other compensation are neither required nor desirable in the context of a narrow provision that causes minimal harm. Levies are an unnecessary and inefficient tax on consumers. They are unfair to consumers in that they are payable regardless of the use to which a levied device (for example a hard disk) is put and regardless of whether a user has already paid for the copies they store on a device. Furthermore, particularly in the current economic climate, it is not right to extract more money from the pockets of hard pressed consumers." The British Academy of Songwriters, Composers and Authors (BASCA), the Musicians' Union, and UK Music challenged the introduction of these regulations, and brought an application for judicial review. Their application succeeded when, in June 2015, the High Court ruled that the regulations were unlawful because of a flawed impact assessment.