Copyright groups in a spin over levies

Date: 04/07/02

By Laurence Frost

HI-TECH firms are heading for a showdown with powerful copyright societies that are demanding blanket levies on computer equipment to compensate artists for the explosion in music copying over the internet.

Collecting societies, which pursue artists' royalties, want to extend existing levies on stereo equipment and blank CDs and cassettes to hardware such as computer memory devices, CD-writers and mobile phones.

But manufacturers say the levies would have to be passed on in their equipment prices - hitting both their sales and their customers unfairly.

The copyright holders argue that broadband internet and file-swapping sites modelled on Napster - the pioneer of the genre that succumbed to record company lawsuits and then bankruptcy - pose a serious threat to artists' livelihoods.

'The only way to compensate artists remains a system of charges,' said Isabelle Prost, legal advisor to the collecting societies' European association, GESAC. Collecting societies are currently pressing their demands in government-brokered negotiations with manufacturers in several EU member states.

The hi-tech industry believes a new generation of copyright protection devices and software - known to initiates as TPMs (technical protection mechanisms) and DRMs (digital rights management) - has removed the justification for levies.

Some of the devices enable downloaded files containing copyrighted music or film to 'communicate' with computer software or hardware to allow only limited copying, or prevent it altogether. Others work by 'confusing' the equipment: the latest album by singer Celine Dion released by Sony contains a defective data track that makes it impossible to read with a computer CD-ROM drive.

With the protection technology now ready to roll, European hi-tech lobby EICTA says it is now up to the artists and music companies to determine the pace of its uptake - so far slow, but growing.

'We don't think we should have to wait for every last right holder to elect to use DRMs before we relieve consumers of having to pay levies for content they often can't copy anyway,' said EICTA spokeswoman Townsend Feehan.

Industry Commissioner Erkki Liikanen is also keen to promote the use of DRM technology, and is launching a series of consultations this month in a bid to encourage industry cooperation to develop compatible protection systems.

But while technology already exists to prevent illegal copying from new CDs and record companies' own internet sites, GESAC says there is still no 'magic bullet' to control the welter of independent file-swapping sites.

'With the internet, the consumer is used to having free access to content and isn't ready to pay,' said Prost. 'This is the economic and cultural reality.'

This diagnosis is borne out by the fortunes of MusicNet, a subscription file-sharing site launched last December by AOL Time Warner, EMI Group, Bertelsmann and RealNetworks Inc. Within weeks it was clear that the venture would not work, and CEO Alan McGlade told the board that the 'current version of this service is not viable'.

However, there is still deep disagreement over whether internet file swapping damages artists' and record firms' revenues.

A report by US market research firm Jupiter last month suggested the availability of music to 'taste' online had actually increased sales of new discs. Broadband file sharing had increased spending on new CDs among 47 of regular users, it said, compared with 36 who had decreased spending.

'It's simplistic, frankly, to say that making music available on the internet turns everyone into a pirate,' said Chris Ffinch, a lawyer for Panasonic. 'It simply doesn't stand up to analysis.'

Hi-tech firms are heading for a showdown with powerful copyright societies that are demanding blanket levies on computer equipment to compensate artists for the explosion in music copying over the internet.