The music industry may soon be singing a new tune: “Blame Canada.”
The nation to the north already tempts Hollywood studios with lower production costs and senior citizens with cheap prescription drugs. Now it could start luring music fans with free -- and legal -- downloads.
The Canadian Copyright Board said Friday that downloading pirated music and burning it onto CDs was legal under Canadian law. Uploading songs onto file-sharing networks remains taboo.
The board’s opinion won’t necessarily hold up in court, the Canadian Recording Industry Assn. was quick to point out.
But Canadians are likely to be encouraged to download songs from networks like Kazaa instead of buying them online or in stores, said Evan R. Cox, a San Francisco-based attorney at Covington & Burling who specializes in copyright law.
“For people who were self-regulating and said, ‘I know this is not proper; I’m not going to do it,’ now they’ve been told it’s proper -- they’re going to do it,” Cox said.
Canadian law gives copyright holders an exclusive right to copy and distribute their works. In 1998, however, Canadian lawmakers legalized some forms of personal or “private” copying -- in particular, copying onto audio recording media like CDs and cassette tapes -- and applied a sales tax to those media to compensate copyright holders.
The Copyright Board’s job is to decide which “audio recording media” qualify for the private copying exemption and how much tax to levy.
On Friday, the board said it believed the exemption applied to downloaded songs “as long as two conditions are met: The copy must be for the private use of the person making it, and it must be made onto an audio recording medium.” And the board extended the exemption to some portable music players, such as Apple Computer Inc.'s iPod.
The exemption also apparently applies to computer hard drives, which are not taxed because copyright holders haven’t asked that they be. The levy on other media ranges from 16 cents for a recordable CD to $19 for a portable device with at least 10 gigabytes of storage capacity.
The Recording Industry Assn. of America declined to comment. Its Canadian counterpart wasn’t so reticent.
“The issue of whether downloading is illegal or not is an issue for Canadian courts,” said Richard Pfohl, general counsel of the Toronto-based Canadian Recording Industry Assn. “The Copyright Board has no place to opine on the matter.”
Pfohl added that it was nonsensical to argue, as the board does, that a song uploaded illegally becomes perfectly legal once downloaded. The board could confuse music fans, he said, making it harder for the CRIA to convince the public that file-sharing is wrong.
The Copyright Board’s levy generated $45.7 million in its first three years and is expected to produce an additional $21.3 million this year, said Paul Audley, policy advisor to the Canadian Private Copying Collective, which collects and distributes the money. About two-thirds goes to songwriters and music publishers, and the rest is split between performers and labels.
Pfohl said the music industry would have been a lot better off if people had just paid for all that music instead of copying it: Sales have declined a total of $323.5 million since the tax went into effect in 1999.
Attorney Fred von Lohmann of the Electronic Frontier Foundation, which advocates civil liberties in cyberspace, said the Canadian board’s levy had glitches but was a more promising way to address file sharing than the RIAA’s tactic of suing users.
“The levy approach puts money in the pockets of artists,” he said, “something the litigation approach doesn’t appear to be doing.”