With the recent Copyright Board preliminary decision which incorporates digital recorders as an audio recording medium[1]; you would think that the CRIA would be jumping for joy as the inclusion of digital recorders would generate more revenue. Furthermore, the CRIA has been lobbying for a private copying levy for years. However, this was not the case. This reaction is not as shocking as one may instinctively believe. The CRIA had acknowledged the rapid development of new technologies and have stated that “private copying will have to be brought under market disciplines in the future” and that the private copying levy was an interim solution [2]. They hoped that in the future they would have an unequivocal legal right to authorize or prohibit copying of their products, even for personal use. Over a decade later they realized that they cannot get everything they want. Perhaps now is the right time to bring the industry under market discipline. They were so focused and overly reliant in utilizing the Copyright Act in their business model that they turned a blind eye as to the long-term consequences of a private copying levy on the industry.
Such consequences are not hard to grapple. For instance, s. 80(1) of the Copyright Act (CA) which exempts copying for personal use does not mention the source of the musical work. It is therefore unsurprising that Justice Sexton stated (with regards to the lower court finding that there was no evidence that there was illegal downloading); “The danger in reaching such conclusions at the preliminary stages of an action without the availability of evidence nor consideration of all applicable legal principles are obvious”[3]. Thus, with enough evidence, placing a file on a shared folder may or may not be an infringement of a copyright. This argument may be further strengthened with the recent ruling in CCH case in which the SCC acknowledged that “User rights are not just loopholes. Both owner rights and user rights should therefore be given the fair and balanced reading that befits remedial legislation”.[4] This is important as the word “rights” connotes something that is enduring; whereas a loophole connotes a transient privilege conferred by a certain body.
What troubles the CRIA is that the public may perceive the private copying levy as a justification of ‘illegal file sharing’. The personal use exemption, accompanied by the lack of source mentioned in s. 80(1) and the classification of digital recorders as audio recording media means that it would be easier for persons to share files in a grand scale which would in turn lower CD sales even further. But how did the CRIA expect the public to react? One of the basic principles in contract law is that in order for there to be a valid contract, there must be consideration exchanged. The consideration from the consumer is the $0.21 levy on the CD-R. Of course, some may digress; however the woes of private copying levy does not end there. It can also be argued that it is bad for innovation as it relies on regulatory schemes in order for the business to survive, rather than letting the market forces decide. As well, it may be detrimental to small artists who may benefit from open sharing of their music.
It can therefore be seen that a private copying levy is problematic as it is not user friendly, is against innovation and is possibly detrimental to independent artists. The question now is how the CRIA should proceed forward. One alternative is to proceed the U.S. way and ratify the WIPO Treaty and create something similar to the DMCA. However, this is a non-user friendly legislation that could create a lot of backlash. They could lobby the government to change the CA to grant rightholder’s an exclusive legal right to authorize or prohibit copying. However, this would go against S.C.C.’s acknowledgement of the existence of user’s right. Thus, a reasonable alternative is to innovate and abandon their over reliance on the CA to control use in order to increase profit margins. It seems that the recording industry would benefit from following the basic business principle of letting the market decide. They need to anticipate or create user’s wants and then provide it. This seems to be a more promising endeavor than enacting limitations to consumers. People want new and better things. Sadly, the recording industry, instead of innovating is sitting on their laurels waging a war with their consumers.
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[1] Private Copying 2008 – 2009 < http://www.cb-cda.gc.ca/decisions/c19072007-b.pdf>
[2] Mr. G. Ken Thompson (Vice-President and General Counsel, Canadian Recording Industry Association) < http://www.parl.gc.ca/35/Archives/committees352/heri/evidence/26_96-10-22/heri26_blk101.html>
[3] BMG Canada Inc. v. John Doe (F.C.A.), 2005 FCA 193, [2005] 4 F.C.R. 81 para 48.
[4] CCH Canadian Ltd. v. Law Society of Upper Canada, 2004 SCC 13, [2004] 1 S.C.R. 339. para 48.
One Response
Although I’ve been critical of the recording industry (see my comment), I’d like to play devil’s advocate and argue that the recording industry’s shift on this issue is a positive response to the changing market.
The first and most obvious benefit to the recording industry from their shift in position is that it is in-line with consumer opinion. The recording industry has recently antagonized consumers with its actions and this will prevent further wounds. Secondly, this position allows the recording industry to deal with the issue of illegal downloading. By opposing the levy, the downloading of content would not be seen as legal and would allow the recording industry to address this issue (hopefully they will find a solution that doesn’t further alienate consumers). The third, and most important, reason for the opposition stems from the recording industry’s recognition that the future of music distribution is the internet. Although the increase in digital downloads has caused some recording companies to lose money, I believe these are short-term transitional losses caused by the slow change of their business models. As these recording companies re-evaluate their costs in light of these changes, they will return to profitability. By opposing the levy, the recording industry can encourage the growth in sales of MP3 players, which should have the effect of increasing the demand for digital music.
While it’s easy to slam the recording industry for sticking to an outdated business model, their position on this issue is what’s needed for future success.
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