This article is part of our special report Innovation and the Digital Economy.
Talks between right-holders and makers of electronic goods will restart at the beginning of 2012 to try and find a solution to the sensitive issue of levies to compensate artists for the copying of their works.
Existing EU rules on copyright date back to 2001 and envisage a “fair compensation” for right-holders to offset the potential financial losses that authors are likely to suffer from the copying of their works – whether books, films or music.
This vague provision allowed EU countries to introduce various copyright laws or levies to compensate right-holders (see background).
As a result, prices of electronic goods used to make duplication of these works vary widely across borders due to different levies and methods to calculate them.
“The fact that authors and other right-holders must receive fair compensation for the use of their work is not an issue. The issue is that all schemes used for the collection of this compensation should be organised in the most efficient way possible,” underlined the EU Commissioner, appointing Portuguese politician and former EU commissioner António Vitorino as a mediator on the issue.
A well-reputed mediator
Vitorino was EU commissioner in charge of Justice and Home Affairs under the Prodi Executive between 1999 and 2004. He had previously been deputy prime minister and defence minister in Portugal.
He is a socialist politician with close links to the private sector. Between his government role in Portugal, which ended in 1997, and his appointment as EU commissioner in 1999, he was the deputy president of Portugal Telecom Internacional and president of the Portuguese branch of Banco Santander.
His high-level profile and his legal experience (he has also been a judge of the Portuguese Constitutional Court) seems appreciated by the contenders in the battle for copying levies, who tend to refrain from making early declarations. Contacted by EURACTIV, Vitorino declined to comment.
Taxing the works, not the devices
Vitorino is perceived as an objective and level-headed kind of person. But he might be tempted to lend his ear the loudest voices in the debate, which are coming from manufacturers of music players and other electronic devices such as printers, which can be used to copy artistic works.
Recognising that right-holders must be compensated for potential copying of their work, manufacturers are proposing to shift the taxation burden form the device to the copyrighted material itself.
An influential report issued in Great Britain by Ian Hargreaves, under the auspices of the British Prime Minister David Cameron, made this point clear: “The UK has a thriving market for personal media devices which rely on private copying. We see no economic argument for adding an extra charge to these devices in order to authorise reasonable private acts which are part of the normal use of devices,” says the report, published last May.
“Indeed, without that copying, normal use of those devices would be largely restricted to playing music or films bought online. We are not aware of strong evidence of harm to rights holders done by this kind of private copying in the normal course of using digital equipment to play works,” reads the influential report.
Manufacturers of electronic goods immediately jumped on the report. “We recommend to the EU Commission to take into account the newly published Hargreaves study that presents alternative systems to compensate rights holders,” said Irena Bednarich, chair of Eurimag, which represents the printing and imaging industry.
They argue that, on average, for each single euro that consumers spend on electronic goods in Europe, 51.2 eurocents go in levies. They therefore propose a new system which would directly charge copyrighted works, such as books or films. According to device makers, this would lower levies on electronic goods up to just 19 eurocents per euro collected. But it would not have an enormous effect on copyrighted goods.
“A mere 1.11% – 1.19% increase in the price of the book, equivalent to 13-15 cents of euro per book, would suffice to secure a compensation higher than the one pretended to be collected by levies, with a significant reduction of the adverse impact to the economy,” argued Bednarich just after the publication of the Hargreaves report.
Right-holders obviously oppose this argument and underline that the sale of their products have already dropped due to piracy. Increasing the prices of books or music, they argue, would further lower consumers’ appetite for legal access to copyrighted works.
In this context, and despite the appointment of a mediator, the EU's internal market commissioner, Michel Barnier, might be tempted to propose new legislation covering only the consensual issues, passing the hot potato to his successor.
This is the outcome that is feared by many – to avoid displeasing anyone, it would leave all unhappy with the current standstill.