Blank CD-R tax to increase 38 percent in Canada

Wednesday, 17 December 2008

The Canadian Copyright Board has announced that it will raise the tax on blank compact discs to 29¢ (US$0.23), a 38% increase. Previously the tariff on blank recordable CDs was 21¢ (US$0.1679), according to Billboard.biz. Blank CD manufacturer Brad Yeager, senior product manager optical media for Memorex, toldOne to One that this decision pretty much kills the CD-R business in Canada.

The tariff is collected on behalf of the Canadian Private Copying Collective, an organisation formed in 1999 and created to collect money that compensates musicians and stakeholders for having their music copied by individuals. The board says there were two reasons for the increase.

Billboard quotes the report. "First, increased mechanical licence royalties, coupled with the elimination of container deductions and free goods allowances in the calculation of the performers' and makers' remuneration, greatly add to our estimation of the total remuneration per pre-recorded CD," the board said in a report. "Second, the use of compression technology raises from 15 to 18.4 the average number of tracks copied on a blank CD used to copy music." Using the new royalty rate, blank CD sales would have generated $29 million (US$23 million) in revenue in 2008, the board said, adding that despite the rate increase, the total amount collected would remain consistent with past years due to falling blank CD sales. "Should this forecast not materialise, the estimated amount of royalties would be adjusted accordingly," the board said.

The increase of 8 cents will lead "most consumers to use blank DVDs or flash-based products. The CD-R business has been decreasing by about 15-20% per year over the past three years. A 50 pack will cost about $15.00 less in the United States. Paying an additional $10.50 for a 50 pack was a stretch, but paying $14.50 Canadian is mind boggling," says Yeager.

"The Canadian Copyright Board should find a way to target users of CD-R that are actually copying music. This "shot gun" approach to collecting money for musicians unfairly penalises nearly all of MAM-A's Canadian customers. A very small percentage of MAM-A discs sold into the Canadian market are used for music," said Joe Weisenbach of MAM-A Inc (pictured).

The decision leaves the rate for audio cassettes at 24¢

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New business models for music

Wednesday, 21 January 2009

According to the IFPI's Digital Music Report 2009, which gives a comprehensive overview of trends in the music business internationally, the industry has shifted its approach from one based only on unit sales of music to 'monetising' access to music across a multitude of channels and platforms.

John Kennedy (pictured), chairman and chief executive of IFPI, said: "The recorded music industry is reinventing itself and its business models. Music companies have changed their whole approach to doing business, reshaped their operations and responded to the dramatic transformation in the way music is distributed and consumed." However, while music companies are embracing new revenue models, and offering consumers more choice, the download model still has its own headaches: an estimated 95% of music downloads are unauthorised, with no payment to artists and producers.

"The music industry has transformed its business models, offering consumers an increasing range of new services with leading technology partners," says the report. "Yet generating value in an environment where 95% of music downloads are illegal and unpaid for is still the biggest challenge for music companies and their commercial partners."

The digital music business internationally saw a sixth year of expansion in 2008, growing by an estimated 25% to $3.7 billion in trade value. Digital platforms now account for around 20% of recorded music sales, up from 15% in 2007. Recorded music is at the forefront of the online and mobile revolution, generating more revenue in percentage terms through digital platforms than the newspaper (4%), magazine (1%) and film industries (4%) combined.