Business, Legal & Accounting Glossary
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:
Examples of countries operating such schemes:
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.
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”.
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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This glossary post was last updated: 13th February, 2020