updated 10:55 am EDT, Fri October 19, 2007
Canada Taxing Music Sales
Canadians may soon pay a small tax on every legal music store download, says a new measure (PDF) sanctioned by the Copyright Board of Canada. Requested by the Society of Composers, Authors and Music Publishers of Canada (SOCAN), the tax would apply at least 2.1 cents to every individual song download and 1.5 cents per track for complete albums. Subscription download and streaming services would themselves be charged between 5.7 and 6.8 percent of a user's monthly fees. Minimum fees would also apply for every larger download or subscription.
The surcharge would help compensate artists for piracy, according to SOCAN's reasoning. The publishing group draws similarities between this and a 21-cent fee already applied to blank CDs in the country; the right to copy a song from an online store demands the same sort of levy applied to copying a retail CD, SOCAN argues.
The tax may have a significant impact for online stores such as iTunes and Canada-based Puretracks, which will have to factor the amount both into future and past sales. The new tax would be retroactive to January 1st, 1996 and would effectively cover all sales and subscriptions from such services since their beginnings, which typically followed shortly after those in the US. Free services are not currently subject to the added cost.
While no public responses have been made, the Copyright Board report notes that both Apple and the RIAA-equivalent Canadian Recording Industry Association were heavily involved in resisting proposed rates. Higher rates that had been initially suggested, as well as minimum fees, would "handicap" a digital music business that already has to compete with pirated tracks that users can find for free, both Apple and the CRIA said.
The decision has not set a fixed date for when stores would begin paying the fee, but said it would roll out any tariffs "gradually" to soften the immediate blow.
This decision follows a related move in July, in which the Copyright Board had tentatively approved a media player and memory levy that would add to the price of iPods and removable flash storage under the assumption that the devices were being used to carry copyrighted material.