It's not a lot of money, but today, the Copyright Board of Canada agreed to allow new fees to be collected for some digital storage media. Canadian consumers will start to pay a new fee whenver they buy an MP3 player. The money collected through this fee will go to pay music copyright holders, members of the Canadian Private Copying Collective (CPCC). Canadians already send a chunk of money to this group each year through a levy or tariff collected on the sale of each blank audiocassette or CD. Canadians pay 29 cents per cassette (if the cassette holds more than 40 minutes of recordings) and up to 77 cents on each CD-R, CD-RW, and MiniDisc. Now, a new levy will be collected: $2 (all figure Canadian, by the way) for each digital audio recorder, including MP3 palyers, with a non-removable memory capacity up to 1 gigabyte; $15 for the same thing when there's storage of between 1 and 10 gigabytes; and $25 for every device with more than 10 gigabytes. Music rights holders in Canada say they'll get a combined $28-million this year from all those levies. Last year, they received about $21-million. The Copyright board has published a fact sheet on the tariff. It could have been much worse. The CPCC had asked for a much greater levy and wanted to apply it to all digital media, including flash memory, blank DVDs, removable hard drives and so on. Had the CPCC's request been granted, the cost of a some iPods in Canada migth have doubled and every computer would have cost $300 or more -- just in new taxes. Legal experts tell me there will likely be appeals by the collective about this decision. The CPCC will hold a press conference this afternoon and I hope to attend. I reported on this issue for The Globe and Mail in March, 2002. Here's a longer version of the story that appeared in the paper that puts some background on today's decision.

March 22, 2002 - A box of blank CDs could cost an extra $3 and some MP3 players could cost an extra $100, if the Copyright Board of Canada approves a new royalty scheme that that aids Canada's music makers. The royalty scheme compensates musicians and other artists for income lost when consumers copy sound recordings on to blank audiocassettes, compact discs and other digital media. But the plan to increase the rates and increase the number of products eligible for the tariff has drawn criticism from a host of groups who say the tariff is a tax paid by people who use digital media to store non-music content, such as data, movies, and software. "This isn't a good thing," said Gaylen Duncan, president of the Information Technology Association of Canada. "We've crossed the line here. It's time we re-opened the debate about trying to collect royalties on blanks." The Copyright Board, a federal government agency, has not approved the new royalty plan, known as the Private Copying Tariff. It will hold hearings on the issue beginning on May 23. "What you have here is a significant increase in existing rates and also some significant rates on a wide variety of new products," said Randall Hofley, a lawyer who represents the Canadian Storage Media Alliance, an industry group that represents makers of CDs, cassettes, and other storage media. "In the past, the [Alliance] has vigorously opposed these levies and I expect they will do so again." The group pushing for the increased rates is called the Canadian Private Copying Collective (CPCC), a non-profit group that represents copyright holders of sound recordings. In addition to an increase of the existing tariffs, the CPCC also wants royalties collected on a broad range of new products including blank DVDs, flash memory cards, MP3 players with internal hard drives, and other media which could be used to store music. "The amount we receive from the royalty is still too low," said Brian Chater, special consultant to the Canadian Private Copying Collective. The CPCC says that in 2001, more than 100 million blank CDs were sold in Canada. Of those, two-thirds were purchased by home users and nearly two-thirds of those were used to copy music. "Consumers in Canada could find themselves paying for the CD to play on their audio system, paying for the digital version to play on their computer or MP3 player and paying for the right to play it on their computer or MP3 player," said Michael Geist, a University of Ottawa law professor who specializes in information technology issues. The Copyright Board collects the tariff from manufacturers of storage media and then turns the money over to the CPCC. The CPCC in turn re-distributes that money to those who hold copyrights over sound recordings in Canada. Last year, about $22-million was redistributed in this way to copyright holders. Those who hold copyrights for computer programs, literary works, and movies - other types of content frequently stored on CDs, DVDs, and other digital media -- will not share any of the proceeds from this tariff. Manufacturers of audio cassette tapes currently pay a tariff of 29 cents per cassette. The CPCC wants that tariff to be increased to 60 cents per cassette. The CPCC proposal contains some other increases. Manufacturers of CD-R, CD-RW discs or mini-discs would pay 59 cents per disc, up from 21 cents per disc. Makers of CD-R and CD-RW media would pay $1.23 per disc, up from 77 cents. CD stands for compact disc. The R stands for Read-Only and RW stands for Re-Writable. The CPCC estimates that just over half of the blank CDs sold in Canada last year were used to record music. Dave Paterson, executive director of the Canadian Advanced Technology Association, said that's precisely why the royalty is unfair: It taxes those who use digital media for other uses. "There is a huge number of CDs sold in this country to record data for businesses and this has nothing to do with sound recordings," said Mr. Paterson. The CPCC is also calling for tariffs on a range of new products. Makers of removable flash memory chips or removable electronic memory cards would pay 0.8 cents per megabyte. These cards are increasingly used in a variety of consumer electronic devices including handheld computers such as the Palm or the PocketPC. Flash memory chips are also commonly used with digital cameras. Makers of blank DVD discs would pay $2.27 per unit compared to nothing right now. Companies that make MP3 players would also face some new costs, including 2.1 cents per megabyte of memory in non-removable memory cards and $21 for each gigabyte of memory on an internal hard drive of a device that is used primarily to play music. So, for example, Apple Computer Corp., which makes the iPod, a portable MP3 player with a 5-gigabyte hard drive, would be required to pay more than $100 for every unit it sold. The devices are sold in Canadian stores for around $600. "Without the music industry, it would not be worth anything, would it?," said Mr. Chater. A representative of Apple could not be reached. The Copyright Board will hold its first hearing on the issue on May 23 in Ottawa. At that time, the board will decide on a timetable to resolve the issue and accept initial arguments. Those who object to the proposed tariff must file their complaints by May 8. The CPCC has been asked to state its position in writing by March 19. The proposed levy would be charged beginning next year and running through until the end of 2004. The CPCC is a non-profit group that includes the Canadian Musical Reproduction Rights Agency; Society of Composers, Authors and Music Publishers of Canada; Society for Reproduction Rights of Authors, Composers and Publishers in Canada; and the Neighbouring Rights Collective of Canada.