Canada Proposes Smartphone Music Piracy Tax

[Len]

In a rather archaic approach to battling piracy has once again been proposed by the Canadian music industry in the form of "smartphone tax" aimed at recouping alleged potential revenue lost at the hands of piracy.

Every electronic device capable of storing data is just another tool in the pirate's chest. If you think your phone or mp3 player or hard drive is just something for storing data and perhaps even purchased software, movies, and music, think again. The simple fact you've decided to purchase any of these devices pretty much ensures content creators everywhere will go bankrupt.

The "you must be a pirate" tax is being pitched again. The senseless fee tacked on to blank plastic discs for so many years continues to migrate to electronic devices, including the tiny chips stashed away inside smartphones. Apparently, the Canadian music industry needs something to replace the revenue stream that dried up when people stopped buying blank CDs. Michael Geist, working with documents secured through a public records request, reports the Canadian music industry is looking for a hefty payout from the government.

According to documents released under the Access to Information Act, the collective arrived with a startling demand, asking the federal government to pay $160 million over the next four years to compensate for music copying.

The demand, which now forms part of the platform of demands from the Canadian music industry, is based on a $40 million annual handout. While the industry has not provided details on how it arrived at its figure, notes (likely from Graham Flack) reveal the basis of the demand.

This apparently breaks down to $3.50 a device, according to the cocktail napkin math handed in by the industry.



But the industry isn't willing to wait around for devices to be sold. The CPCC (Canadian Private Copying Collective) wants the government to just hand it $40 million a year and assume it all adds up in the end. So, it's a much broader "you must be a pirate tax" that calls all Canadians pirates, whether or not they've actually purchased a new piratephone during the fiscal year.

What's more, the document [PDF] makes it clear the CPCC wants a new revenue stream just because an old one has vanished. It points out revenues from "pirate" taxes have dropped from a high of $38 million back in the heyday of blank media to an expected $2 million in 2017. It also notes that streaming services are replacing music sales, accelerating this decline in "pirate" taxes.

However, the report carefully does not point out revenues from streaming services have increased from $3.4 million in 2013 to $49.3 million in 2017. It also ignores the fact that much less copying -- authorized or unauthorized -- is taking place.

The business model this "pirate" tax depended on -- copying of music to media or devices -- is slowly being eliminated. That doesn't mean taxpayers owe CPCC a living. It just means sales are being replaced with "rentals." If the CPCC failed to capitalize on the shift to streaming, it shouldn't be allowed to make up its "lost" revenue by taxing smartphones just because that's where most music streaming takes place. It makes as much sense as envelope manufacturers demanding a per-device tax because email and instant messaging has replaced snail mail as a means of communication.