Blank media levies: record once, pay thrice

Levy, content, royalty

Where it all began

First, though, we have to understand how this solution came about. European collections agencies began several 100 years ago, taking royalties for the great composers of Europe. Mostly back then it was for rights to perform a work, the simplest form of reproduction; then later for making copies on records and later still for playing music and video over the airwaves.

So now it appears to those societies that the idea of its collecting and distributing a blank digital media levy, is the same age old solution moving onwards into a new age. Globally there are well over 100 such collecting societies. They get their work from content owners who request collection of royalties in a particular country or region. Radio and TV broadcasters publish their airplays, etc, and pay out royalties. Whenever anyone performs live, the same applies. When someone wants to make a record, the same again. In each case the number of times a song or play is repeated, and how many people watch or enjoy it, are matters of record.

But when allocating royalties which come from levies, these collections agencies must guess how much each piece of art is worth - what percentage of the total pie they should allocate. There can be only two guiding principles: the number of separate works owned by a publisher or content owner; or their respective revenues in other areas of royalty collection. A band selling lots of records should have lots of the levy money. The question is, will a band making lots of records - which no-one wants to listen to - get just as much?

It comes down partly to guesswork, but also to preference. The collection agencies do not say how they divide up levy collections. But isn’t it reasonable that they might give more to a content source they know well, and which has a history of content provision, than to one they have only just acquired the collection rights for?

If that is the case then levies are a force for maintaining the status quo (no, not the band), which is not such a good idea in digital media.

Something we have said many times before is that in Faultline technologies, where media is transforming from analog into digital, new patterns of behaviour emerge every day.

Home movies

For instance, people may begin recording their own voice for fun and amusement, trying to make their own music demo tape, or begin to record and store home movie material. Each time this happens the blank media levy is being paid, but not for the reason for which it was implimented.

What about a band which decides it will give a certain amount of music away for free using peer to peer networking and then charge for perhaps only merchandising - this is clearly copyright-free material available to millions. At some stage a rock band is going to emerge which will enjoy huge success over the Internet without record company involvement and therefore without the collecting societies' support. If such a thing happens, then all the levies on media that is used to record their songs will be paid to their competitors. Somehow galling.

And what about the local football team that decides to invest in a few cameras and offers its games to the local community for free. Or the "made-for-broadband" films that are sold online?

Or the DVR which is levied but which mostly offers time-shifted viewing. There are many new business ideas that the digital age is bringing, but each of them will get punished by levying, as there is no choice in whether to levy or not.

But of course the true contradiction in levies is that it is not yet and not likely to be global any time soon. As a result, the only protection that the dominant US content producers will accept, at the very minimum, is copy protection, and at the very best, a full digital rights regime.

Double whammy

If content owners use copy protection AND get levies they will always get paid twice. And the thing about DRM regimes is that they are indiscriminate. They don’t care what country you are in, or whether or not you have already paid over the odds for the blank media that the content is recorded on. You have to obey its rules and that will mean that as DRM extends, customers will be paying twice.

Actually it’s more than that since customers will pay for the content, pay for the media and pay levies on the media. Potentially it's payment in triplicate. And given that almost 100 per cent of DVDs on film have copy protection, this is already happening in Europe. Also if customers have paid a levy and are aware of it, they may well begin to feel more justified in piracy, and the whole stupid cycle repeats and continues.

There is also some profiteering already going on. Blank writeable DVDs and CDs cost just the same in the parts of Europe which do not exact levies as they do in parts that do. Here the money goes to the blank media makers. Perhaps they feel that the price cuts that they have to offer in the levy counties to make their products appear reasonably priced, need to be paid for by making extra profits in other countries.

And even if the world adopted levies across the board, as well as music and film companies no longer having to try too hard (as they would get paid anyway), there would be another form of piracy - grey blank media imports that have no levies paid on them.

4bn industry

We have seen that levies could easily become a global $4bn industry with the current level of levies, but there is also pressure from the collection societies to raise those levies. Back in 1965 when levies were first invented, they were supposed to counter the losses from making personal copies of music on analogue tapes. Piracy was not a factor, but it is today and many people think that levies should be raised to take it into account.

So, most European politicians, and especially those lobbied by the collecting societies, are in favor of raising the existing levies.