Friday, April 29, 2005

How to gut a market in one easy step

Blindly tax it to death for the sake of an unseen and ill defined problem
A Netherlands proposed tax on MP3 players could devastate sales of hard disk players, and set up international waves over copyright legislation.

The tax is being proposed by the Stichting Thuiskopie foundation, and is set to become law in the Netherlands in a few short months unless the European Commission finds a reason to intervene. It is unlikely that will happen, as it has failed to come up with a policy for levy taxation so far.

The idea of all levy based legislation is that some form of copyright collections agency collects tax by imposing a surcharge at the point of sale for any storage devices that could possibly be used to store pirated works. This certainly extends to the iPod which has up to 60 GB of storage, and which can store MP3 files.
So because they possibly could be used for something they will be fined in the form of a punishment tax.

Now I had no idea what a Stichting Thuiskopie foundation was so I looked it up.
According to the 1912 Copyright Act (Auteurswet) and the 1993 Law on Related Rights (Wet op de Naburige Rechten), everyone who imports or manufactures blank recording media is required to pay a levy. The levy is collected by the Stichting Thuiskopie (Private Copy Foundation). The levy is compensation for the reproduction at home – for strictly non-commercial purposes – of music and moving images.

The Private Copy Foundation divides the money amongst authors (composers, scriptwriters, poets, photographers and visual artists) and owners of neighboring rights (performing artists and producers of audiovisual works).

Individual artists only receive compensation if they are member of a Collecting Society
Now I an almost see the logic here. They know copyrighted material will be copied so put a small tax on it to reimburse the creators and such. But that is when you notice that you have to be a member of there society to get a single Euro.

Here are the levies on some basic items
Compensation for private copies on blank (non-professional) recording media are as follows: (2003 same level as 2002)

· blank analogue audio tape : 0.23Euro per hour;

· blank analogue video tape : 0.33Euro per hour;

· blank digital minidisc : 0.32Euro per hour;

· blank digital audio CD-R/RW : 0.42Euro per hour;

· blank digital data CD-R/RW : 0.14Euro per disk.

New levy on DVDs (fees valid through to December 2004):

· blank DVD-R/RW: 1.00Euro per 4.7 Gigabyte;

· blank DVD+R/RW : 0.50Euro per 4.7 Gigabyte;

· blank DVD-RAM : no levy
Now this does not look horrible until you realize that the music industry has been fighting a war against the digital revolution that has occurred. The new market on electronic devices that can hold 100 cd's plus on a small chip is frightening to them. So the RIAA has been fighting it here with DRM technology.

This is simply another front on that war, plus add in the desire that all governments have to tax and you end up with this.
If this legislation comes into play, the surcharge will be as much as Euro3.28 ($4.3) per gigabyte. This might put 180Euro ($235) to the price of a top end iPod.

Already in Germany there is a levy on PC hard drives, that will soon become larger than the entire PC industry revenue if it is left in place. Within two years, as disk drive sizes move to terabyte class on notebooks, and petabyte levels on home DVRs, the tax will come to far outweigh not just the cost of the drive, but the cost of the device. Under this Netherlands law, if it were extended to the PC, the cost of 1,000 GB would be Euro3,280 ($4,300) and yet drives of this size will be delivered by 2007.
So here we have a government that is going to tax a market so much that it may retreat from some fields and research.

The joys of living under the socialist European system where they know what is best for you. Prepare for it here one day people. The paternal government is not your friend.

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