Define: Blank Media Tax

UK Accounting Glossary

Definition: Blank Media Tax



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Full Definition of Blank Media Tax


A blank media tax (or blank media levy) is a government-mandated scheme in which a special tax or levy (additional to any general sales tax) is charged on purchases of recordable media. Such taxes are in place in various countries and the income is typically allocated to the developers of “content”. (A distinction is sometimes made between “tax” and “levy” based on the recipient of the accumulated funds; taxes are received by a government, while levies are received by a private body.)

Such a tax may be linked to a corresponding relaxation of copyright law, by permitting the recording of copyrighted works on media for which the tax has been paid. It may operate in principle as a system of collectivisation, partially replacing a property approach of sale of individual units.

A difficulty that immediately arises is the practical impossibility of devising a mechanism for distributing the proceeds to copyright holders that is considered “fair” by all copyright holders. Implemented systems are typically restricted to music and may distribute the proceeds proportionally to a measurement of sales of CDs in music shops or amount of air-play on the radio or the like. This will ignore other distribution channels such as the Internet. Fairer methods would arguably involve extensive sampling of purchasers to determine actual recording behaviour or alternatively paying all musicians at a simple flat-rate (the preferred method will depend on one’s political views).

An implementation question that arises is whether the tax applies to any type of copyrighted work or is restricted to a limited field such as music. If it is restricted then the issue arises of how to collect the tax on media which can also be used for other purposes. The options include:

  • Collecting the tax on all media, regardless of the end use, and ignoring the injustice to purchasers with non-covered uses
  • Allowing taxed and untaxed media to be sold, but with only the taxed media providing the copyright-relaxation benefits.
  • Collecting the tax on all media but allowing purchasers to claim a refund for media applied to non-covered uses.

Examples of countries operating such schemes:

Canada

A blank media levy was introduced in Canada in 1997, by the addition of Part VII, “Private Copying”, to the Canadian Copyright Act. The power to set rates and distribute the returns is vested in the Copyright Board of Canada. The Copyright Board has handed the task of distributing the funds to the Canadian Private Copying Collective, which is a private organisation. The Copyright Board has retained the task of setting the rate of the levy.

In Canada:

  • The levy applies to “blank audio recording media”, such as CD-Rs.
  • The levy is paid by importers and manufacturers of such media sold within Canada (and typically passed on to the retailer, and passed on to the purchaser).
  • The levy is collected regardless of the purchaser’s end use of the media.
  • Only copyright holders of sound recordings of musical works are entitled to a share of the proceeds. (Note that these copyright holders may be separate persons from the holders of the copyright in the musical works themselves; ie. the composer or performer. Holders of copyrights in sound recordings are those who record or authorise the recording of a song; often this is a recording label.)
  • The Canadian Private Copying Collective has devised a scheme by which the proceeds are to be allocated to registered sound recording copyright holders. AS of July 30th, 2004 none of the collected funds had yet been disbursed.
  • In conjunction with the levy, the Copyright Act allows individuals to make copies of sound recordings for their own private, non-commercial use. They may not distribute the copy.
  • On December 17th, 2004, a Canadian judge ruled that the blank media tax no longer applied to MP3 players such as Apple Computer’s iPod. Before this, the rates were $2 for players with less than 1 GB of capacity, $15 for players up to 15 GB, and $25 for players 15 GB and over.

United States

Audio home recording in general

17 USC 1008, from the Audio Home Recording Act of 1992, says that noncommercial copying by consumers of digital and analogue musical recordings is not copyright infringement. Non-commercial includes such things as resale not in the course of business, perhaps of normal use working copies which are no longer wanted. It’s unlikely to include resale of copies in bulk and Napster tried to use the Section 1008 defence but was rejected because it was a business.
From House Report No. 102-873(I), September 17, 1992: “In the case of home taping, the [Section 1008] exemption protects all noncommercial copying by consumers of digital and analogue musical recordings”.

From House Report No. 102-780(I), August 4, 1992: “In short, the reported legislation [Section 1008] would clearly establish that consumers cannot be sued for making analogue or digital audio copies for private non-commercial use”.

Blank music CDs

17 USC 1008 bars copyright infringement action and 17 USC 1003 provides for a royalty of 3% of the initial transfer price. The royalty rate in Section 1004 was established by the Fairness in Music Licensing Act of 1998. This only applies to CDs which are labelled and sold for music use, not to blank computer CDs.


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Definition Sources


Definitions for Blank Media Tax are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 13th February 2020.