The European Commission is starting to move forward with a directive to EU countries to roll back levies on hardware devices. The recommendation could be finalized and released as early as this year.
This news should come as welcome relief to consumer electronics companies, which face an increasing mountain of levies in European countries (not to mention those outside of Europe, notably Canada) that are as bewildering as they are baseless and as baseless as they are onerous. One estimate claims that the aggregate levies paid to EU collecting societies has more than doubled -- to over EUR 1 Billion -- in the last five years. We heard one consumer device company executive complain that his company now pays more in levies to collecting societies than it does in taxes to the governments of the countries in which it operates.
Collecting societies have worked through their national governments to impose levies to compensate rights holders for private copying, which is allowed under most EU copyright law, as well as some measure of implied copyright infringement that is possible with various types of electronic devices. Levies date back about 40 years, when Germany first imposed them on photocopiers. They have been extended to all manner of devices that handle content in electronic form.
Levies are a kludge. They are antithetical to DRM, which (in theory, at least) is a far more precise way of measuring content use than the various rationales used to calculate levies -- rationales which are often poorly justified and result in levies on the same devices that diverge widely from one country to another. The wide divergence between high-levy countries (e.g., Germany, France, and Sweden) and no-levy countries (e.g., Luxembourg) even results in "levy arbitrage," wherein gray marketeers will purchase goods in one of the latter countries and drive them to one of the former countries for resale at a profit.
Although levies -- along with the purportedly statistical methods used to calculate them -- may have been better than nothing as a way of compensating rights holders for unmeasurable content use many years ago, many (though not all) levies have outlived their usefulness or are based on dubious rationales.
The EC claims, quite properly, that there would be no end in sight if levies continue to spread like weeds throughout Europe -- collecting societies would seek them for broadband services, Internet access hardware, mobile phones and phone service, and who knows what else.
Alas, the EC may have its work cut out for it. As if to underscore this point, the Spanish Congress voted to adopt a levy (admittedly a small one) last week on blank digital media such as CDs, DVDs, and flash memory. This means that CEDRO, SGAE, and other rights collecting societies in Spain have yet again leveraged the cozy lobbying relationships with national governments that are typical of collecting societies.
Collecting societies have a vital role to play in ensuring accuracy and fairness in compensating content rights holders, but the way they play that role now is increasingly outmoded. Instead, they should be building and promoting DRM and other rights management services. One model for this is RightsLink, the sophisticated online rights licensing supported by CCC (Copyright Clearance Center) in the US, which works with periodical, scientific, academic, and other types of publishers. RightsLink generally handles "business-to-business" licensing (e.g., of periodical content for use on websites or in classrooms) rather than B-to-C usage metering, but the infrastructure that CCC has built gives a good idea of what can be done.
In forcing European collecting societies out of the levy business, the EC will effectively be pushing them into new types of services that will require new infrastructure and expertise but will better serve all of their constituents in the long run.
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