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Canada May Tax Legal Music Downloads

Posted by Zonk on Sat Oct 20, 2007 08:42 PM
from the more-like-a-half-pounder-of-flesh dept.
FuriousBalancing writes "MacNN is reporting that Canadians may soon pay a small tax on every legal music store download. This fee is the work of a measure proposed by the Copyright Board of Canada. About two cents would be added to every song downloaded, with 1.5 cents being added to album downloads. Streaming services and subscriptions would also be taxed, to the tune of about 6% of the monthly fee. Most interesting - the tax would be retroactively applied to every transaction processed since 1996. '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 full text of the measure is available in PDF format."
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[+] News: Study Says P2P Downloaders Buy More Music 158 comments
An anonymous reader writes "Michael Geist posts to his site about a study commissioned by the Canadian government intended to look into the buying habits of music fans. What the study found is that 'there is a positive correlation between peer-to-peer downloading and CD purchasing.' The report is entitled The Impact of Music Downloads and P2P File-Sharing on the Purchase of Music: A Study For Industry Canada, and it was 'conducted collaboratively by two professors from the University of London, Industry Canada, and Decima Research, who surveyed over 2,000 Canadians on their music downloading and purchasing habits. The authors believe this is the first ever empirical study to employ representative microeconomic data.'"
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  • WTF? (Score:5, Insightful)

    by rm999 (775449) on Saturday October 20 2007, @08:45PM (#21059563)
    "The surcharge would help compensate artists for piracy"

    So now we are taxing law-abiding citizens to make up for those who break the law? Is it just me, or does this *promote* piracy?
    • So now we are taxing law-abiding citizens to make up for those who break the law? Is it just me, or does this *promote* piracy?
      It's the same "punish the actual customer" attitude that's resulted in anti-piracy previews in the movie theater.
    • Re:WTF? (Score:5, Insightful)

      by rsmith-mac (639075) on Saturday October 20 2007, @08:52PM (#21059599)

      It doesn't even immediately make sense. Until very recently major label music was DRM'd, which effectively prevented most casual piracy. I could potentially see streaming radio used as a piracy source, but that's only for MP3 streams, and then those guys do a number of things to discourage piracy.

      Is there something I'm missing here? How can you tax someone for piracy when they're unable to use the taxed items to reasonably commit it?

      • Re:WTF? (Score:5, Informative)

        by monkaru (927718) on Saturday October 20 2007, @09:00PM (#21059629)
        In theory there is no reason to DRM music in the Canadian market as copying is legal when a levy is paid on media and downloaded music from on-line stores would also be legal to copy hence the tax. It's a case of a much larger country having Draconian copyright laws while a smaller neighbour goes at the issue in an entirely different way. Obviously, American labels aren't about to make an easy to copy version for the Canadian market.
    • by John Jamieson (890438) on Saturday October 20 2007, @09:35PM (#21059787)
      I have mod points I would love to use, but I have no chance because no one is correcting the Myth of Piracy.

      In Canada it is NOT piracy to copy a song for personal use. It is not stealing, it is not copyright infrigement. It is a right granted by law, a law that was encouraged by the music industry back in the Audio Cassette days. Yes, they now regret it... too bad!
      • by monkaru (927718) on Saturday October 20 2007, @09:53PM (#21059883)
        Yes, you are exactly right. I'm not too happy with the spokesperson the copyright board used for this annoucement because the did a very bad job of explaining exactly what is meant by "copying" in Canada. As you say, copying music to levied media is not piracy but legal copying and the levy on on-line music would allow the copying of downloaded files more than once. Giving a copy to your mom for example. However, DRM routines may make most downloads not easily copied anyway but might make an interesting court case should someone purchase levied music on-line and discover the files are altered in a manner that prohibits or makes very difficult legal copying. Legal copying they have paid for. Could get interesting.
      • Yes, they now regret it... too bad!

        But they don't regret it. They're endorsing the principle by asking for it to be applied more broadly.

        • by ceoyoyo (59147) on Sunday October 21 2007, @12:42AM (#21060689)
          Actually they've been demanding that the copyright law be changed to prohibit copying. They were even willing to scale back the levy to get it, but the copyright board still told them where to go. So now they're trying the next best thing -- more levies!
  • by Anonymous Coward on Saturday October 20 2007, @08:46PM (#21059565)
    Because of the health costs of tobbaco, Canada is proposing a new tax on non-smokers.
    • Re: (Score:2, Interesting)

      by Anonymous Coward
      Because of the health costs of tobbaco, Canada is proposing a new tax on non-smokers.

      Actually, that could make sense. Smokers die much sooner; as a result, they are much less likely to receive the same benefits from their pension plan that a non-smoker would receive. Every smoker who dies at 60 or 65 saves the government and their employer a lot in pensions.

      It is often said that smokers cost the health care system more - I'm not sure that is true. Since everyone dies, are smokers just running up their healt
      • Re: (Score:3, Informative)

        Treatment of a smoker is even more expensive then the longer life of the average non-smoker, and there are plenty of sources to back it up. Google pulled up these articles:
        http://www.cdc.gov/MMWR/preview/mmwrhtml/mm5114a2.htm [cdc.gov]
        http://www.bera.com/smoking.htm [bera.com]
        • by BlueStrat (756137) on Saturday October 20 2007, @11:07PM (#21060267)
          Treatment of a smoker is even more expensive then the longer life of the average non-smoker, and there are plenty of sources to back it up. Google pulled up these articles:
          http://www.cdc.gov/MMWR/preview/mmwrhtml/mm5114a2.htm [cdc.gov]
          http://www.bera.com/smoking.htm [bera.com]


          Diamondmagic, this isn't aimed at you personally, but I feel I have to say a few things here.

          ~rant on

          This is what I hate about strident anti-smoking groups and individuals. You could say the same about a multitude of perfectly legal accepted behaviors.

          What about over-eaters? Those that participate in risky sports? People who work really hard at their jobs? Explorers? Astronauts? Scuba divers? Mountain climbers? Consumers of alcohol? Those that choose to live in high-crime areas? What about those irresponsible people that go outside in cold weather without a hat and heavy enough coat? Those that don't have an exercise regimen? Meat eaters? Those that (in someone elses' opinion) spend too much time at a computer/surfing the net/playing games that some may consider harmful?

          How about people who deliberately expose themselves to harmful ultraviolet radiation to get a tan? Driving or traveling by automobile is one of the riskiest common behaviors, and far surpasses the costs to society of tobacco, even considering the insurance required of drivers in most states.

          I flatly refuse to believe all these 'secondary-smoke' alarmist advertisements, stories, and studies. They fly in the face of common sense, and I believe they are constructed as a reason to further regulate and legislate behaviors for the sake of politics power and money. They rarely work as "intended", witness Prohibition and the "War On Drugs", but usually succeed at expanding government power and reducing individual rights.

          It is the nature of humans to engage in risky behaviors, even those that they know are harmful to themselves. The only way to stop it is to put everyone in a Matrix-type tube of goo for their entire lives.

          Sure, by all means make sure people understand the risks, and try to place minimal, well-reasoned, and practical restrictions that are agreed to by the majority on the extremes, but drop the idea that you can or should try to regulate through law and taxes every behavior that someone thinks may be harmful, for it may be something that matters to *you* that may be the next crusade of the behavior-gestapo.

          ~rant off

          Strat
            • Re: (Score:3, Insightful)

              I can't say for myself so much, as I am a non-smoker, and always have been... however, smokers tend to take more regular breaks throughout the work day, and are less likely to get burnt out at a job... and could potentially be more productive overall.... However, I don't believe that socializing medicine is a good idea, and as such, smokers would have to pay more for themselves, so it is their own choice... Time may change this, however smokers already pay huge taxes on each pack of cigarettes in this cou
          • Re: (Score:3, Insightful)

            Great grandparent only asked about medical costs, this is a nice article about the bigger picture: http://www.cato.org/pubs/regulation/reg20n3c.html [cato.org]
            It says the government probably is making more off taxes then the cost of smoking, and that it is stupid to say that its purpose is to fix the social/medical cost when it is really about bureaucrats making money, kinda like the music industry.
  • Well, I can't think of anything particularly witty other than 'FUCK THEM'.
  • by ChromaticDragon (1034458) on Saturday October 20 2007, @08:48PM (#21059577)
    Just how do we get connected to this gravy train?

    Can we just churn out some simple recordings, demonstrate it's theoretical pirating rates and call up somewhere to get some dough?

    • Re: (Score:2, Funny)

      by Anonymous Coward
      I find your idea intriguing and would like to subscribe to your newsletter.
      • I too would like to subscribe, retroactively.

        I will pay a small extra fee if I can be subscriber number 000001.

  • That would suck (Score:5, Insightful)

    by CastrTroy (595695) on Saturday October 20 2007, @08:48PM (#21059583) Homepage
    If they started implementing this, I would probably just have to stop buying music altogether. It's getting way too annoying for me to buy music without being ripped off by the industry. I use eMusic to buy my music, and if I had to pay this extra fee, I would cancel my account, and let them know exactly why. If enough online music stores had enough customers quit, then I think that the backlash from these companies would make the government change their mind about this kind of stuff. Also, trying to make things like this retroactive, would make it even worse. The industry complains that people are pirating music, and then hits their customers with crap like this. I've gone completely legit for the last few years, because I feel that it's right to support the artists, but stuff like this makes me want to go back to downloading everything over IRC. If they are just going to assume that we are pirating all their content, we might as well do it, because they certainly don't deserve our money.
    • Re: (Score:2, Interesting)

      by Anonymous Coward
      I for one hope this goes through.

      It's the law of unintended consequences. Due to the Levy on blank media, I can copy/download as much as I please, all completely legal in Canada

      Add another Levy and I'll have even more protection from the lawsuit insanity going on in the US.

      And I wonder how this works to the CRIA's advantage as that they are attempting to get rid of the levy on blank media for the afore mentioned reason.

      I don't pay to download music now, Why would I start?
      • Re: (Score:3, Interesting)

        If I remember well (being Canadian too), its actually not "legal" in Canada to download and copy as much as you want, BUT there is ONE (I beleive just one) precedent of a judge letting someone off when they used as a defence that the levy paid for their piracy... so you most likely can get away with it, but its not written black on white that its "completly legal". its just a gray area that plays heavily in our favor.
        • Re: (Score:3, Interesting)

          Not quite. It's in black and white that it's legal to make a copy of music someone else has purchased for your own personal use. It's in the act.

          There's one detail that can potentially be argued, and that's whether SHARING (or uploading) music is the other guy making a copy for himself (legal), or you making a copy for him (which is illegal). The precedent is that this too is the other guy making a copy for himself, and therefore legal.
  • by QuietLagoon (813062) on Saturday October 20 2007, @08:55PM (#21059611)
    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

    Has anyone ever followed up to see just how much of the 21-cent fee actually makes it back to the artists, and how much is sucked up by the record company cartel?

  • the right to copy a song from an online store demands the same sort of levy applied to copying a retail CD
    So does that mean that the Canadian government is going to require that online stores abandon DRM since CDs work fine without it?
  • Except . . . (Score:5, Insightful)

    by SquareOfS (578820) on Saturday October 20 2007, @08:58PM (#21059625)
    The analogy is to the levy on blank CDs? The tax is because the downloaded music can be burned to a blank CD on which you've already paid a tax because you might burn music to it?

    In related news, Canada proposed a tax on blank paper, by analogy to the sales tax which applies to books. "Someone might read what's written on the paper someday, and we won't then have the opportunity to collect the tax."

  • tax legal? (Score:5, Funny)

    by Anonymous Coward on Saturday October 20 2007, @09:04PM (#21059637)
    They should tax the illegal downloads, that is where the money is!
  • Ex Post Facto Laws (Score:5, Interesting)

    by kalidasa (577403) on Saturday October 20 2007, @09:15PM (#21059687) Journal
    A retroactive tax an ex-post-facto law. If this were the US, that part of the law would be unconstitutional on its face, article I, section 9, paragraph 3: "No bill of attainder or ex post facto Law shall be passed." But of course, it's Canada, and the Charter of Rights and Freedoms only affects criminal retrospective laws (and section 33 can be used to obtain a 5 year mulligan if it is). BUT I AM NOT A LAWYER, so maybe I'm wrong (but I may be right).
    • Re: (Score:2, Informative)

      Yes, you are right. It's the same in Canada as the States. Your Constitution probits that sort of thing and our Charter of Rights and Freedoms does the same. They will have to rethink that part of it because it would be a slam dunk for the retailers in court.
    • Re: (Score:3, Informative)

      Retroactive taxes are legal in the United States (most recently decided with a retroactive income tax increase during the Clinton administration). The Ex Post Facto law provision hasn't applied to taxes since Calder v. Bull in the 18th centry, and since the Gun Control Act of 1968 and the various "Megan's laws" it really doesn't apply to much anymore. Probably the final nail was Kansas v Hendricks, the decision to allow those who had finished serving their sentences for certain crimes to be indefinitely c
  • What other taxes? (Score:4, Insightful)

    by mkiwi (585287) on Saturday October 20 2007, @09:22PM (#21059723)

    [sarcasm]Will there be a Tax on earbuds too? How about we have a per child tax of $50/year to account for music piracy, starting from birth, of course.[/sarcasm]

    What is this crap? Canada needs to get their priorities in order. People are more important than lobbyist groups. I hope Canadians are voting for the right politicians, because if this continues any industry could just come up and say "People are downloading/using our material illegally, we need to be compensated." Poof, another tax! With so many copies of Windows pirated, I'm surprised that Microsoft hasn't been trying to get a piece of this cake.

    • Re: (Score:3, Funny)

      How about we have a per child tax of $50/year to account for music piracy, starting from birth, of course.

      Don't worry, you don't have to pay the tax if you're deaf, and tone-deaf get half off.
  • $0.02 (Score:4, Funny)

    by Anonymous Coward on Saturday October 20 2007, @09:24PM (#21059739)
    So now they want my two cents worth as well, eh?
  • This seems like utter crap. First you tax blank media for artist compensation. Now you're going to tax legit web stores as well to protect artist compensation. This smacks of corporate welfare. Why should the people of Canada compensate companies for not being smart enough to make money and adjust to the market? There is always going to be music and entertainment in our lives whether there is a record company or media company behind it or not. It's part of our tribal heritage. The business plan they
  • ... but more evil.

    The music industry is trying to come to terms with the fact that they can't make money the way that they used to. Seeing that their traditional business model is approaching collapse, they need to either protect it or find a new business model. In this case the new business model is to get the government to tax citizens and give the tax revenue to the music industry. By encouraging more piracy, they will be able to demand more tax payer money down the road.

    If you think that this is an implausible business model, just look the business of agriculture in most rich countries. Their business is to depend on government enforced price supports and subsidies, and very little about actual farming.
  • If you go to imeem.com you can listen to practically any track ever recorded without actually paying anything directly to the site, instead the site is making money of advertising and has deals with the record labels to pay them a cut of thise. So I wonder if this would be taxed? No transaction is taking place in Canada, well except when canadian artists get paid their share I guess, but that's probably well beyond the scope of the law.
  • Illegal downloads are still free, right?

    If you really want to make it fair, then if the tax is, e.g., 1%, just download one illegal song for every 100 you buy. Then you're paying for your own piracy, right?
  • by seanthenerd (678349) on Saturday October 20 2007, @09:45PM (#21059837) Journal
    So until now, we could assume that when we bought music from iTunes et al., a certain amount went to that company and a certain amount went to the artist. According to a record-producing-artist friend of mine, he actually gets a very decent cut as an indie artist with iTunes (especially considering the lack of material+hosting costs). Now, with this tax (considering that it goes to SOCAN, I'm not sure if that is even the right word), iTunes will get the same cut, SOCAN will get 3% or so, and the artist will get the rest - which is less going to the artist than before (assuming that iTunes doesn't up their prices, but if they do, the same holds true because less people will buy, meaning still less for the artists.) By applying this, isn't SOCAN stealing from the artists?! As in *money* stealing. SOCAN is supposed to represent Canadian artists (by collecting radio royalties and so forth). How on earth does this help their members?! Ludricrous.

    It would be comparable, I guess, to SOCAN collecting a tax on CD purchases. The whole beauty of internet distribution is getting rid of (or reducing the number of) middlemen. This is destroying every incentive people have to *support the artist*, which seems completely against what the whole point of SOCAN was. So if I make a band and sell my music using paypal, do I have to write cheques giving 3% of my profits to SOCAN? What am I getting from them? How does this help the artists? How does this help the industry? *

    Down with middlemen.

    * "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."

    So even the CRIA's against it. Who the heck is SOCAN representing?
  • by Jugalator (259273) on Saturday October 20 2007, @09:51PM (#21059879) Journal
    So you get taxed for not supporting the music industry if you do support the music industry?
    And you don't get taxed for not supporting the musics industry if you don't support the music industry?

    Yes, this makes perfect sense! Thanks for this proposal.
    I wholeheartedly support it. I can now much easier choose my proper action here and whether I should purchase legal music or not.
  • by metoc (224422) on Saturday October 20 2007, @10:10PM (#21059957)
    Although I am no fan of SOCAN, this definitely sticks it to the record companies. As long as these fees are in place, music piracy will remain untested in court. The current theory is that as long as the artists are compensated for illegally obtained music (aka burning a copy for you friends) they are not loosing anything when piracy happens. This reduces the real losses to artists, which is what piracy is all about (can you say someone stole from you if they are paid a mutually agreeable price through SOCAN, which SOCAN oddly decides is fair). CRIA/RIAA will not risk loosing in court and would prefer it stay a legal grey area.
  • Tax evasion (Score:3, Insightful)

    by SleepyHappyDoc (813919) on Saturday October 20 2007, @10:24PM (#21060023)
    I bet the sneaky idea behind this is to bust torrent users for evading this new tax.
  • More and more ... (Score:3, Interesting)

    by ScrewMaster (602015) on Saturday October 20 2007, @10:37PM (#21060077)
    I'm thinking that, when future generations look back on this period of time, it will be known as "The Age of Unreason". Perhaps, given the number of attorneys involved in the ongoing fall of Western civilization it will be known as the "Shark Ages". Either way, it's really remarkable.
  • Pure corruption. (Score:4, Insightful)

    by BlueParrot (965239) on Saturday October 20 2007, @10:43PM (#21060089)
    The proposed tax will tax companies like emusic, Amazon etc, and give the money to Sony BMG, Universal etc...

    In short, a large cartel is trying to screw over the competition by lobbying politicians to create bad laws. This is pure corruption, and nothing else.
  • by mark-t (151149) <(markt) (at) (lynx.bc.ca)> on Saturday October 20 2007, @10:53PM (#21060143) Journal
    So they want to tax blank media _AND_ tax downloads?

    Why am I reminded of the notion of charging a tax to have a meal and another tax to take a dump?

  • by Bloater (12932) on Sunday October 21 2007, @09:01AM (#21062661) Homepage Journal
    Why don't the record labels just add 2 cents to their wholesale download prices?
  • Why a *TAX*? (Score:4, Informative)

    by pla (258480) on Sunday October 21 2007, @09:40AM (#21062901) Journal
    For blank recordable media, the CRIA has no ability to affect pricing directly, thus the tax on them.

    For legally purchased music, the CRIA defines the price, via their contracts with individual distribution channels.

    Thus, if they see the need for an extra $0.02, they could just, y'know, raise prices by that much per download. No need to go through the government and needlessly complicate the issue.



    So, why phrase this as a tax?

    Scarily obvious answer: This has more to do with Radiohead than with piracy. Piracy scares the music industry, but not nearly as much as artists like Radiohead, Issa (née Jane Siberry), and NIN finally figuring out a viable way to escape the industry's evil clutches.

    ...Or should I say "almost escape", since the CRIA has evidently returned fire.
    • Well, I'd hope that privacy was sanctioned by governments, but with governments being what they are these days...

      Wait a sec, did you mean *piracy*?
      • Wow, thanks for the correction. I even proof-read the message before I posted it. So much for listening to [non-pirated] tunes while I type.
    • Re: (Score:2, Interesting)

      I very much doubt a retroactive tax would fly in court. Our Charter of Rights and Freedoms prohibits that sort of thing.
    • I will soon sound like a broken record, but I must point out that downloading from another individual is legit in Canada.