Germany's Copyright Levy
Based on the recommendation of its Patent Office and following fierce
lobbying by VG Wort, an association of German composers, authors and
publishers, Germany is poised to enforce a three years old law and impose a
copyright levy of $13 plus 16 percent in value added tax per new computer
sold in the country.
The money will be used to reimburse copyright holders - artists, performers,
recording companies, publishers and movie studios - for unauthorized copying
thought to adversely weigh on sales.
This is the nonbinding outcome of a one year mediation effort by the Patent
Office between VG Wort, Fujitsu Siemens Computers, Germany's largest
computer manufacturer and other makers. VG Wort initially sought a levy of
$33 per unit sold.
But Fujitsu and the German Association for Information Technology,
Telecommunications and New Media (Bitkom) - including Microsoft, IBM,
Alcatel, Nokia, Siemens and 1300 other member firms - intend to challenge
even the more modest fee in court.
They claim that it will add close to $80 million to the cost of purchasing
computers without conferring real benefits on the levy's intended
beneficiaries. They repeated similar assertions in a letter they have
recently dispatched to the European Commission.
The problems of peer-to-peer file sharing, file swapping, the cracking and
hacking of software, music and, lately, even e-books - are serious.
Bundesverband Phono, Germany's recording industry trade association,
reported that music sales plunged for the fifth consecutive year - this
time, by more than by 11 percent.
According to figures offered by the, admittedly biased, group, 55 percent of
the 486 million blank CDs sold in Germany last year - c. 267 million - were
used for illicit purposes. For every "legal" music CD sold - there are 1.7
Efforts by the industries effected are underway to extend the levy to
computer peripherals and, where not yet implemented, photocopying machines.
Similar charges are applied today by many European countries to other types
of equipment: tape recorders, photocopiers, video-cassettes and scanners,
for instance. Blank magnetic and optical media, especially recordable CDs,
are - or were - taxed in more than 40 countries, including Canada and the
Nor is Germany alone in this attempt to ameliorate the pernicious effects of
piracy by taxing the hardware used to affect it.
The European Union's Directive on the Harmonisation of Certain Aspects of
Copyright and Related Rights in the Information Society, passed in 2001, is
strenuous, though not prescriptive. It demands that member states ensure
"fair compensation" to copyright holders for copies made by means of digital
equipment - but fails to specify or proscribe how. It has been incorporated
into local law only by Greece and Denmark hitherto.
In Austria, Literar-Mechana, the copyright fees collection agency,
negotiated with hardware manufacturers and importers the introduction of a
levy on personal computers and printers. The Swiss are pushing through an
amendment to the copyright law to collect a levy on PCs sold within their
territory. The Belgian, Finnish, Spanish and French authorities are still
debating the issue. So do Luxemburg and Norway.
According to Wired, the Canadian Private Copying Collective, the music
industry trade group, has proposed "new levies to be applied to any device
that can store music, such as removable hard drives, recordable DVDs,
Compact Flash memory cards and MP3 players".
Precedent is hardly encouraging.
The aforementioned Canadian Collective has yet to distribute to its members
even one tax dollar of the tens of millions it inexplicably hoards. In
Greece, a 2 percent levy on all manner of computer equipment provoked a hail
of legal challenges, still to be sorted out in the courts. The amounts
collected hardly cover the government's legal expenses hitherto.
The United Kingdom, Ireland, Sweden and Denmark are against the levy,
claiming, correctly, that hardware is used for purposes other than pilfering
intellectual property digitally. The Italians, Portuguese and Dutch haven't
even considered the option.
Hardware manufacturers are livid. In a buyers' market, their razor-thin
profit margins on the commoditized goods they are peddling are bound to be
erased by a copyright levy. The European Information and Communications
Trade Association (EICTA) implausibly threatens to pass on such extra costs
to consumers and recommends to stick to technological means of prevention,
collectively known as Digital Rights Management (DRM) systems, or to novel
CD copy protection measures.
Moreover, the fuzzy nature of the surcharge leaves a lot to be desired.
Peter Suber, a prominent advocate of free online scholarship, analyzed the
various post-levy scenarios in his FOS blog:
"What I can't tell is whether the copyright levy on hardware will come with
universal permission to copy. If so, that's a big gain for a small cost...
If the levy does not imply permission to copy, then which copying does it
cover? If it covers copying without prior permission, then users will simply
stop asking for permission, and convert all copying to pre-paid copying. If
it covers copying without pre-payment, then that begs the question: what
does the levy pre-pay? (It's not clear) how the plan would continue to
distinguish authorized from unauthorized copying."
Yet, at this stage, it is difficult to see how to avoid the kind of rough
justice meted out by Germany. Even the most advanced DRM systems lack a
reliable model of remunerating copyright holders. Hence the conspicuous
absence of DRM in the EU's Copyright Directive.
Suber raises some practical concerns, though he broadly supports a copyright
levy on hardware:
"To make the system fair, we would need reasonably accurate measurements of
the amount of copying. Otherwise we wouldn't know whether to bump up the
price of a computer $35 or $350 or whether to give Elsevier 1% or 10%.
Download counters wouldn't catch the peer-to-peer traffic. So would you put
up with packet sniffers or other eavesdropping technologies to take random
samples of the copy traffic, as long as your identity was not recorded?"
Even what constitutes copyrighted work is not entirely clear. The European
Court of Justice heard arguments last week in a case pitting two American
companies, IMS Health and NDCHealth, against each other. IMS Health vends
aggregated German data pertaining to the sales of pharmaceuticals.
NDCHealth tried to emulate an organizational element of the IMS Health
database. The Court is faced with seemingly intractable questions: Can IMS
Health be compelled to license its database to a potential competitor? Is
the structure of the database - the way Germany is divided to 1860 reporting
zones - protected in any way?
In essence, copyright is a temporary monopoly on creative work granted to
the authors, publishers and distributors of such products. It is intended to
compensate them for their efforts and to encourage them to continue to
originate in future. Yet, the disintermediation brought on by digital
technologies threatens to link author and public directly, cutting out
traditional content brokers such as record companies or publishers.
This is the crux of the battle royal. The middlemen are attempting - in
vain - to sustain their dying and increasingly parasitic industries and
refusing to adapt and re-invent themselves. Everyone else watches in
amazement and dismay the consequences of this grand folly: innovation is
thwarted, consumers penalized, access to works of art, literature and
Sam Vaknin ( samvak.tripod.com ) is the author of Malignant Self
Love - Narcissism Revisited and After the Rain - How the West Lost the East.
He served as a columnist for Global Politician, Central Europe Review,
PopMatters, Bellaonline, and eBookWeb, a United Press International (UPI)
Senior Business Correspondent, and the editor of mental health and Central
East Europe categories in The Open Directory and Suite101.