Vendors and retailers will consider dropping MP3 players, digital cameras and CD/DVD media if a recording industry-backed media levy is ratified, according to a new coalition.
The Canadian Coalition for Fair Digital Access (CCFDA) was created by the Retail Council of Canada and consists of vendors
such as AMD, Apple, Creative Labs, Hewlett-Packard Canada, Motorola Canada, Sony Canada and Intel Canada. The group also has prominent retailers such as Best Buy/Future Shop, Costco, Radio Shack, London Drugs and Staples/Business Depot.
The CCFDA is working with Industry Canada and Heritage Canada to stop the newly proposed levy that would see the cost of a pack of 100 blank CDs soar 181 per cent. Currently, a pack of 100 blank CDs includes a levy of $21 on a retail price that averages $50. If the Canadian Private Copying Collective’s (CPCC) proposal is approved, this levy could average $59 per pack at an average retail price of $88 plus tax, said Diane Brisebois, president and CEO of the Retail Council of Canada.
Both ministries have asked Parliament to review the private copying provisions of the Copyright Act, she said. However, the coalition warned that if the proposed levy is approved, retailers and vendors will be forced to reconsider offering products that the levy affects.
Brian Levy, president and CEO of InterTan/Radio Shack, said he did not know of any vendors who were at the point of pulling products from the Canadian market, but he said MP3 players would be the first to go. Again, if the proposed levy is approved the price of MP3 players will increase $112 or more on average, Brisebois said.
“”There is a real concern,”” Levy said. “”Certainly firms will be concerned about those products, but retailers such as ourselves will be taking a gamble to bring products in when the prices are out of kilter to what the U.S. prices are. At some point it will drive demand to the point where it will not make sense to carry these products.””
Paul Tsaparis, president and CEO of Hewlett-Packard Canada Ltd., said his company is not at the point of pulling product out of the Canadian market, but added that there is always a risk of that happening.
“”If ultimately the price point that we end up establishing in the local marketplace is out of scope to what consumers are willing to pay, we would have to take a long hard look at it before HP would consider releasing that product,”” Tsaparis said.
Since Canada is the only country that has such a levy, consumers may choose to shop U.S.-based Web sites, cross-border shop or purchase products in the grey and black markets, the CCFDA warns.
In an attempt to create more awareness, retailers in the CCFDA will inform consumers how much levy they paid on their bills, with in-store displays and on their Web sites.
“”Our job is to tell customers where their money is going. If we can bring the price of these products down we will do it. It is in our best interest to have the best prices in town,”” said Kevin Layden, president of Best Buy/Future Shop Canada.
Brisebois said that the CPCC does not want to promote the levy in any way. “”They know that awareness will lead to outrage,”” she said. Both Levy and Layden anticipate a lot of angry shoppers this holiday season when they look at their bills.
Rob Black, executive director of the Toronto branch of the Canadian Information Processing Society (CIPS), said a hike in the levy for certain electronic products would be harmful to businesses and other organizations that use blank CDs and DVDs for legitimate business purposes that have nothing to do with recording music.
“”The U.S. does not apply this levy to their electronic products; therefore this places Canada at a disadvantage in terms of our competitiveness and productivity. When a levy is applied that is higher than the cost of production of a CDR, then we are tipping the playing field in favour of the U.S.,”” Black said.
He added that CPCC does exempt some businesses and organizations from the levy such as churches, but the onus is on the businesses to prove they should be exempt. Businesses or organizations would have to register with CPCC, describe how they plan to use CDs and DVDs, apply for a certificate number, and pay an annual registration fee of $60 for businesses and $15 for non-profit organizations.
“”Because businesses must prove they are exempt from the levy, this is equivalent to negative billing,”” Black said.
Also the coalition believes it is unfair to those people who legitimately purchase music on the Internet to pay twice for the same music. “”This is a double tax,”” Tsaparis said. “”It is collected by a private organization that is not accountable to the public; it is only accountable to its members — the recording industry,”” Tsaparis added. The CPCC has collected more than $28 million over two and half years. The CPCC has conceded to the CCFDA that none of this money has been paid to the composers or performers, which it was initially intended to benefit.
Independent band Datson Four from Montreal, who performed for the media at the CCFDA event, said it creates its own music CDs; 42 per cent of the band’s costs are in levies. Payment is made despite knowing they will never get that money back.
“”The current levy scheme will not help young band like the Datson Four. It will only be a win-fall for established artists and their foreign-owned record publishing companies,”” Brisebois said.