iPod tax debate – Who should tell Canadians about the levy? Part 2 of 3

At a round table hosted by ITBusiness.ca, David Basskin defended his organization against claims it was not doing enough to advertise the levy it collects on behalf of Canada’s music industry. The CPCC operates as a public body and offers information about the levy – 29 cents on CDS and minidiscs, 24 cents on cassette tapes – for media buyers to research if they choose.

“People have an obligation to at least find out about the subject” Basskin says. “We don’t hide what we’re doing. Our Web site is very comprehensive.”

But other round table participants disagreed with that assessment.

Most Canadians are clueless about the levy and what it means for their private copying rights, critics say. Labels should be placed on packaging to make sure the public is better informed.

With the ongoing government-run copyright consultation, the door is open to reform Canada’s Copyright Act. Music industry groups are proposing that the CPCC levy could be extended to cover new types of media that Canadians are using to copy music – such as iPods and other mp3 players.

Others say that such a system would need to ensure copyright holders are paid in a timely and fair fashion by the collective. Also, many Canadians may still think making a private copy is a violation of copyright.

“Where do people have an obligation” to find out about the levy?, asks David Allsebrook, an intellectual property lawyer with Toronto-based Ludlow Law. “They go to the store, they pay their money for a CD and there’s nothing on the receipt” to show the levy.

“You say they should find your Web site to find out where their money is going?” he adds. “How about spending a little bit of your royalty income to just put a message out there, saying ‘thank you for your money, we appreciate your encouragement of the arts.’”

Allsebrook proposed slapping a label on blank media packages in his written submission to the copyright consultation. The public’s lack of awareness about the subject is “at the least unfair, and at the most, fraud,” he writes.

A label is a good idea, agrees Justin Williams, secretary with the Canadian Alliance of Student Associations.

“When there is a public consultation, but people don’t know about even the concept of the levy, it’s hard to ask people for feedback,” he says. “If you don’t know you’re paying a fee, it’s hard to take on the burden to actually go out and find out about the fee.”

But press attention will widely advertise any new levy on iPods, Basskin argues. Also, there is nothing stopping retailers from posting signage about the levy, or manufacturers and importers from putting labels on their discs. In Western Canada, the London Drugs chain does have a sign explaining the levy in each of its stores.

“Why don’t you spend some money saying ‘thank you for allowing me to make copies legally’?” he asks Allseborok.

Basskin also explained how the CPCC distributes the funds it collects to its members. It is next to impossible to ask people to fill out forms on what music they are copying, he says, so the collective assumes that there’s a correlation between music that is popular and music people are copying.

That popularity is determined in part by sales information and in part by air play data.

“We pool that data and since it’s impossible to say whether airplay or sales has a greater influence on what is copied, we take half the proceeds and distribute them on the basis of what gets sold, and the other half on the basis of air play,” Basskin says.

But the collective takes a long time to distribute the money to its members, Allsebrook says. Reading from a CPCC financial statement, he points out the collective was holding about $50 million.

“If I were a member of your collective, I’d want to know why there’s such a time lag,” he says. “Why is it not possible to forecast what your income is going to be, and give out 80 percent as you go along?”

The CPCC has been regulated by the Copyright Board in how it sets its rates, Allsebrook writes in his consultation submission. But it hasn’t been regulated in how and when it distributes funds to copyright holders. It is currently holding more than a quarter of its revenues over eight years.

But Basskin says it is too hard to predict the music industry, and the time is needed to dole out the money appropriately.

“Did you know that 12 months ago that Lady Gaga would be a hit? I didn’t,” he says. “As Ray Charles said, ‘ain’t no one can predict a hit.’”

The government’s consultations are continuing until Sept. 13 and the public is invited to make comments on a Web forum.

Check back at ITBusiness.ca for the final part of our round table discussion.