BusinessWeek : Proposed Levy Could Increase iPod Price By US$100

by , 3:15 PM EST, February 14th, 2003

The RIAA's assault on Fair Use rights has been unprecedented in its scope, and much of the recording industry trade group's arguments has centered around the notion that piracy is killing sales. TMO strongly denounces piracy, but has taken issue with the RIAA's efforts to reduce and eliminate the Fair Use rights of people who buy their music legally. Others, too, have taken up that call, including some who have specifically challenged some of the evidence thrown up by the RIAA in support of their claims of falling sales.

For instance, while CD sales have fallen in the last couple of years, the RIAA leaves out such tidbits as the fact that they released 20% fewer titles in 2001 than 1999 (according to conservative estimates by Nielsen SoundScans), and raised prices while doing it. BusinessWeek has published an article concerning just these issues, and it included a very interesting mention of something that could affect Apple. According to the article, a proposed levy on CDs and MP3 player hard drives in Canada could dramatically increase the cost of products, specifically the iPod. The RIAA, and brother organizations in other countries, has asked for levies such as these because, they say, the devices are used to store and trade illegal copies of music. That all would have to pay for the sins of the few is apparently immaterial. From the article:

And consider what drove Ziemann to do all this research on the industry's figures. Last autumn, he tried to sell his band's new CD through Yahoo! and Amazon auctions. Because the music was burned onto recordable CDs [CD-Rs], however, he was turned away.

Yahoo and Amazon refuse to let users hawk CD-Rs at their auction sites. Yahoo says it's part of an effort to work with the RIAA to prevent piracy. eBay, the Web's largest auctioneer, does allow the sale of CD-Rs if sellers expressly state they own the copyright to the material.

HEAVY LEVY. Sound draconian? It is. Recordable CDs can contain music from an indie band, open-source software, or uncopyrighted video clips, among many other things. "I was being punished because of my chosen medium, because I didn't want to shell out the money to press 1,000 copies of a CD before I knew that 20 would sell," Ziemann says.

Things could get worse. The Canadian Copyright Board is weighing a plan to raise a levy on every CD-R sold from 21 cents to 59 cents, as well as on the hard drives found in MP3 players, where, theoretically anyway, stolen music is stored. That's a huge tax, especially when you consider that blank CDs usually sell for less than $1.

There's more. The price of Apple's popular iPod MP3 player would increase by 33%, from $300 to $400, if the levy is imposed. A 60-gigabyte car stereo from MP3 maker Rio would face a $1,260 tax. Twenty five countries, including most of the European Union, have introduced similar plans. The U.S. already imposes levies on digital media, including digital audio tapes and recordable CDs designed especially for audio.

It should be noted that the proposed levies specifically cited are Canadian, but the prices being quoted for the iPod seem to be US prices. There is much more information on this issue in the full story, and we recommend it as a very important read.

The Mac Observer Spin:

We utterly reject efforts by the RIAA to make everyone, regardless of whether they are pirates, pay for the thievery of the few, even if it is a sizable few. There is nothing fair or reasonable in that whatsoever. As the article points out, everyone that buys blank CDs, and blank tapes for that matter, are already paying a tax that goes to copyright owners, but the proposed levies mentioned above are simply outrageous.

The more the RIAA attempts to cling to its outdated business model, the faster the entire music industry is going to slip out of its control. There is a massive amount of irony dancing merrily in the face of their offensive actions, but the people in charge seem incapable of recognizing it.

In some ways, we wish we could skip ahead 5-10 years, when we fully expect artists to sell direct to the consumer, without seeing the lion's share of the revenue line the pockets of secondhander label Suits.

BusinessWeek Story