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Currently it looks like almost all of the collective funds are given to other people in the established copyright system (ie. to friends and associates of the people who decide on the distribution of the collective funds).
 
Currently it looks like almost all of the collective funds are given to other people in the established copyright system (ie. to friends and associates of the people who decide on the distribution of the collective funds).
  
So there is not just a problem for professional users. The problem exists for everybody who create cultural works. Because the levies increase their cost of creating and distributing new cultural works, the copyright levy system works to limit cultural development.
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So there is not just a problem for professional users. The problem exists for everybody who create cultural works. Because the levies increase their cost of creating and distributing new cultural works, the copyright levy system works to limit cultural development. To ensure that cultural development in Europe is not limited by the copyright levy system, the Commission should work to ensure that levies do not apply for goods purchased with the intent of creating or distributing cultural works.
  
 
==== The grey market ====
 
==== The grey market ====

Revision as of 19:57, 30 March 2008

The European Commission has started a consultation with questionnaire on levies for private copying. We decided to give them a joint response. This page is there to draft our response which should be done until April 4th. 2008. Please discuss things on the discussion page.

The EC consultation page with background documents and questionnaire can be found here


Contents

Draft

This ist still a draft. If you don't agree to some of the responses or know better formulations, just edit it!

Cover letter

The pirate party is an international movement initially founded in Sweden to work on a copyright reform to stop the criminalization of file sharers. Until now pirate parties have been founded in many different countries and the focus has expanded from copyright to patent and civil liberties issues. The pirate parties are composed of many different individuals among them musicians, songwriters, writers, graphical artists, software developers and many copyright-related professional groups which are and could be legitimate stakeholders for levies. Because of her background history, the pirate movement has of course developed a special point of view to copyright issues and levies.

General

FIXME: General discussion about the levy system. Needed as we cannot support the premises of the questionairy.

An basic question about levies

A question that has be answered when considering copyright levies is:

Why is who going to be compensated for what, and how?

Unless this can be clearly answered in a way that is fair to all parties, a copyright levy system will be taking money from someone and giving it to others without a clear rationale. Although a copyright levy system is not formally a tax because the money does not go to the state, it works just like a tax for those paying it, and should therefore be subject to the same scrutiny as taxes.

The above question can be divided into several questions:

Why compensate?
  • [FIXME: Discuss]
What is the compensation for?
  • Unless the compensation is for some kind of real financial loss, a financial compensation is unjust. As shown in the next section, we believe that the premise that private copying is causing copyright holders economic harm is untrue.
Who should be compensated?
  • Just answering 'the copyright holders' to this question is not enough to fully answer it. We have to consider which copyright holders should be compensated, and how much of the levies the different copyright holders should allocated. And we have to remember that the cultural world is in constant flux, so if we simply answer the previous consideration the allocation of the levies will probably be unjust after just a few years. Instead we have to find a process that can reliably measure which works are used for private copying, and how much each work is used for private copying. It is only possible to fairly distribute the levies to the copyright holders if such a reliable process is found.
How should the compensation work?
  • This question includes the questions of which media and equipment a levy should be placed on, how much the levy should be for different types of media and equipment, who should administrate the levy system and who should audit the levy system to ensure it stays fair and that levies are distributed according to the rules set up for the levy system.

The premise of copyright levies

A 'private copying levy' is a form of compensation for rightholders based on the premise that an act of private copying cannot be licensed for practical purposes and thus causes economic harm to the relevant rightholders.

All copyright levy schemes are based on the above premise. But is this premise really true? If the premise is not true, copyright levies is nothing but money-grapping by copyright holders who are too good at lobbying.

Unfortunately there is no credible scientific research that shows the premise to be true. On the contrary, we know of a lot of credible scientific research on both legal and illegal private copying that indicates that the premise of economic harm to the copyright holders could be wrong. [FIXME: Examples]

The inner market

As the background document states, a total of over 6 percent of all intra-EU imports and exports are subject to copyright levy systems. As the intra-EU imports of these goods are subject to national import restrictions (payment of levy fees), the inner market does not work for these goods. This is simply unacceptable.

The Commission should work to ensure that private citizens of the EC can freely buy these goods in any other member country. And the commission should work to ensure that professional wholesale traders can import there goods from other member countries where a levy has already been paid without paying a levy again in the member country they import the goods to. This would make the free market forces work for harmonization of the size of the levies across member countries.

Professional users

The background document notes a problem with regard to professional users of goods subject to copyright levies, and we agree that there is also a problem here. The problem is that if people who create culture are subject to the levies, the free market is disturbed because these cultural creators are paying a levy to their competition. This problem does not only exist for professional creators, but also for non-professional cultural creators.

For example, think of a group of young independent (without a recording contract) musicians who record a music album. With the low cost of recording this is possible today even if the young musicians do not have a lot of money. But if the equipment (for example computers) they use to create their album is subject to copyright levies, they pay the levies to the existing music industry (their direct competition) but gets no part of the levies. This disturbs and biases the free market. If the young musicians think that selling copies of digital content is not the way to make money in the information age (as many young creators of cultural works think today), they might want to spread their album for free as widely as possible so they get popular and can make money from doing concerts. But if they copy their album to a large number of CD-recordables to send to radio stations to get publicity, they again pay levies that goes to their direct competition (the existing music industry). Thus the system of levies work to protect the existing music industry against competition from new and creative musicians.

Some may argue that allocating part of the levies for collective purposes could help this problem, as the young musicians in the example could ask for part of the collective funds.

We do not think so, for several reasons: The distribution of collective funds is rarely widely announced in member countries that allocate part of the levies for collective purposes, so the young musicians in our example would not know of this possibility. And even if they knew, the procedure for asking for part of the collective funds is not often announced, so they would not know how. If they knew how to ask for part of the collective funds, the decision on who should have parts of the collective funds is often done in a secretive committee controlled by older established copyright holders. Is it likely that copyright holders who make their earning from selling copies of music would give money to somebody who wants to compete with them by giving every customer who wants it free copies of their music? We do not think so.

Currently it looks like almost all of the collective funds are given to other people in the established copyright system (ie. to friends and associates of the people who decide on the distribution of the collective funds).

So there is not just a problem for professional users. The problem exists for everybody who create cultural works. Because the levies increase their cost of creating and distributing new cultural works, the copyright levy system works to limit cultural development. To ensure that cultural development in Europe is not limited by the copyright levy system, the Commission should work to ensure that levies do not apply for goods purchased with the intent of creating or distributing cultural works.

The grey market

[FIXME: Discuss problems with grey market.]

Paying the levies multiple times

[FIXME: Discuss problems when a levy is paid several times (ie. on computer, CD-recorder, and CD media, or when importing from other EU-countries where a levy has already been paid.]

Collection issues

[FIXME: Discuss issues on which goods to put a levy on, and how much the levy should be.]

Distribution issues

Fair distribution of the funds collected by the levies is a prerequisite for a copyright levy system. If the funds are not fairly distributed, the levy system will just be money grapping by those who are best at getting part of the funds.

An example: In Denmark a levy has to be paid for digital cameras with a removable memory module. The rationale for this is that the memory module can be removed and used in a mp3 player. Although it is obvious that such a memory module is meant to be used for storing photographs, no photographers get any of these funds. Instead most of the funds goes to the music industry.

This is an example of the music industry being better of getting a part of the funds than the photographers. In fact the photographers is not even represented in the organization that distributes the levies in Denmark. And their only way of getting representation is if they can pressure the danish government to put enough pressure on the organization (Copydan Båndkopi) to make them accept a new member. Most likely the danish photographers do not think it is fair for them to get funds from a levy on a camera, as this obviously is not for their pictures, but for pictures the purchasers of the cameras make. We thing that levies should be avoided on all equipment used to create new cultural works, as such levies would only work to restrict cultural development in Europe.

In Denmark and Spain (and possibly other member countries) the regulations for the levies say that the state can audit the collection and distribution of funds from the levies. But in neither Denmark nor Spain this has ever happened. We fear that the governments refuse to audit because they know that their local copyright levy systems are so unfair that any audit would expose serious irregularities and make the people responsible for the distribution of the levies (who are usually very influential in the media) enemies of the government that audits.

A fair distribution of the funds from the levies is only possible if it accurately reflects how the goods the levy is put on is used for private copying of various copyrighted works. But this can only be accurately known if independent research is done. We know of no such credible independent research.

Media convergence

[FIXME: Discuss the problem that digital media can be used for all works in digital form.]

Transaction costs

[FIXME: Discuss the financial cost of maintaining the levies. In Denmark it is generally 8-15 percent of the levies for each copyright holder organization the money is passing through. Also note that the levy creates a new kind of organization that only exists to collect and distribute the levy, and that part of their "cost" of distributing the levy is for political lobbying for even more unbalanced copyright.]

Questionnaire

A. Main characteristics of the private copying levy systems

1) Does Table 1 on equipment and blank media levies reflect the situation correctly? Is the information contained in Table 1 still correct?
2) How could the legal uncertainties as to which equipment is levied in different jurisdictions be dealt with?
3) What would be the fairest method to determine the private copying levy rate that applies to digital equipment and blank media?
4) Have new levies on either equipment or media have been introduced or abolished since 2006?

B. Economic, social and cultural dimension of private copying levies

5) Can you provide updated figures for 2007 on the amount of levies collected in those jurisdictions that apply a levy scheme?
6) Are you aware of further economic studies on the topics discussed in the Document?
7) Table 5 reflects the percentage of private copying levies and the resulting amounts that are allocated to cultural and social funds. Does this table summarise the situation correctly? Could you provide updated figures for 2007?
8) What kind of events are funded by the sums set aside for cultural funds in the different jurisdictions? Who are the main beneficiaries of these monies?
9) What percentages of cultural funds are spent on cultural events and what percentages on pensions or social payments?
10) Should there be a Community-wide (binding or indicative) threshold for cultural fund deductions?
11) What share of individual rightholders' revenues do private copying levies represent?

C. Cross-border trade and e-commerce issues

12) Is there a refund system available in your jurisdictions when particular equipment or media is exported to another Member State? If so, are there limitations as to the category of traders or individuals who are entitled to such a refund upon exportation?
13) What is the most suitable system of refunds upon exportation? Who is the most suitable party to claim those refunds?
14) Does Table 6 on national refund and exemption systems reflect the situation correctly? Please complete and update the table.
15) Who is the most suitable party to pay private copying levies? Should private endconsumers be exempt to self-report intra-community purchases of blank media and equipment?

D. Professional users of ICT equipment

16) How do private copying levies affect professional users (SMEs, others)?
17) How should collecting societies take into account professional users? Should professional users be exempted from payments in the first place or should such users be entitled to a refund after payment?

E. Grey market

18) Has the size of the grey market increased since 2006?
19) What are the measures Member States, collecting societies and the ICT industry are taking to reduce the size of grey market in their jurisdictions?

F. Consumer issues

20) Are you aware of consumer surveys on private copying behaviour which are used as a basis for setting the levy rates? And consumer surveys on the main sources of works or sound recordings that are privately copied?
21) How should private copying levy schemes evolve to take into account convergence in consumer electronics?

They shouldn't.

G. Double payment

22) What are the main issues that consumers face when paying for digital downloads?
23) Should licensing practices be adopted to account for contractually authorised copies?

H. Alternative licensing

24) If rightholders decide that their works can be disseminated for free, how should this be taken into account when collecting private copying levies?

I. Distribution issues

25) What is the typical frequency and schedule of levy payouts?
26) What are the main issues encountered with respect to cross-border distribution?
27) What are the average administrative costs in levy administration (in per cent of collected revenue)?

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