European Taxes On Music-Copying Devices To Rise - Study
Friday September 12, 12:20 pm ET
BRUSSELS -(Dow Jones)- Taxes in some European countries on digital technology capable of copying recorded music will skyrocket in coming years in a response to music piracy, an industry-financed study published Friday said.
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The study, by intellectual-property consultancy Rightscom Ltd. in London, said taxes in Europe on digital-video-disc burners, MP3 recorders and other copying devices will rise sharply.
It said money collected in five European countries to compensate artists for private copying of films and music will jump five-fold to EUR1.5 billion in 2006 from EUR309 million last year.
Hardware-makers say the levies hurt sales and evaporate their razor-thin margins on personal computers and digital devices.
"How will Europe plan on being the No. 1 knowledge-based economy in 10 years if we sandbag the tech sector?" said Francisco Mingorance, European director at the Business Software Alliance. The Washington-based trade group represents Cisco Systems Inc. (NasdaqNM:CSCO - News) , International Business Machines Corp. (NYSE:IBM - News) , Intel Corp. (NasdaqNM:INTC - News) , Apple Computer Inc. (NasdaqNM:AAPL - News) and Microsoft Corp. (NasdaqNM:MSFT - News) , among other software makers.
Organizations that collect money on behalf of artists support the new levies. Ever since the development of the tape recorder in the 1960s, European countries have taxed recording devices.
"If a country decides to put levies on copying equipment, it has to extend that to PCs," says Frank Thoms, an official at VG Wort, which represents more than 300,000 authors and 7,000 publishers in Germany. VG Wort is trying to impose a EUR12 tax on new PCs - a proposed tax contested in court by PC makers.
The tussle comes at a troubled time for the music industry. Shipments of recorded music are down 26% from 1999, and revenue is down 14%. The industry blames rampant Internet piracy for eroding music sales.
The debate shows how Europe's approach to online piracy differs from the U.S.'s, where the preferred solution is technology: software that allows legitimate copying - and catches those who cheat. Apple's iTunes Music Store, launched in April, is a prime example. The computer maker's online music service lets users download songs, burn them on CDs and keep them as long as they want, for 99 U.S. cents a song.
The film industry is making similar moves. Movielink, an online joint venture of five Hollywood studios, rents movies to users' computers for a fee between $ 1.95 to $4.99 and then deletes them after a time.
Under European Union law, governments are supposed to take new "technical protection measures" used by iTunes and Movielink into account when setting new taxes. But in the Rightscom study, none of the countries surveyed - France, Germany, Italy, the Netherlands and Spain - followed these rules.
-By Matthew Newman, Dow Jones Newswires; 322-285-0133; matthew.newman@dowjones.com
