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Japanese record industry wants to tax DAP's


Christopher

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A little late on this one, but a good read nonetheless. From the New York Times:

TOKYO - In the United States, recording labels want a bigger slice of Apple's success in digital music by seeking higher prices on downloaded songs. Japan's music industry has a different idea: putting a fee on iPods.

The industry has asked the Japanese government to charge a royalty, to be added to the retail price of portable digital music players like Apple's iPod, which has been explosively popular here. Money earned from the fee, which will be probably be 2 to 5 percent of the retail price, would go to recording companies, songwriters and artists as compensation for revenue lost from home copying.

It is a familiar story of vested interests feeling threatened by new technologies. Like their counterparts in the United States, Japanese recording companies are struggling to catch up with the Internet and the advances in digital recording technology that are transforming their industry.

But in Japan, the proposed fee has also touched off an unusual public battle over the influence that industry groups here still wield over the government and economy.

As a powerful political lobby, Japan's recording industry expected to get its way when it first asked for the fee last fall. Instead, its proposal remains stalled in one of Japan's government committees. The news media, meanwhile, mock the fee as the "iPod tax."

"This is typical of how industry groups try to manipulate government at the expense of consumers," said Hiroko Mizuhara, head of the Consumers Union of Japan. "A lot of things in Japan have changed, but this hasn't."

The recording industry has already succeeded in slowing the arrival of Apple's iTunes music download service to Japan through its reluctance to negotiate licensing deals, people in the industry said.

Apple opened a Japanese version of iTunes in August, two years after its introduction in the United States, but without songs from the major Japanese labels like Sony Music Entertainment and Warner Music Japan, which still have not signed licensing agreements.

ITunes received a warmer welcome from Japanese consumers, who bought one million songs in the first four days, according to Apple, which declined to comment for this article.

The proposed fees in Japan come as the music industry in the United States appears to be jealously looking at Apple, whose iPod and iTunes dominate their respective global markets. Record executives in the United States have recently said that they wanted to renegotiate and raise prices of songs sold by iTunes when licensing agreements expire next spring.

"Recording industries on both sides of the Pacific are trying to find all kinds of schemes to make more money," said Tim Bajarin, an analyst at the Creative Strategies consulting firm in Campbell, Calif. "They have this alternative commercial channel, and they're just trying to block it or tax it."

The proposed fee would affect portable digital players that store data on internal hard-disk drives and flash memory computer chips - which include not only iPods but rivals like the Sony Walkman and other portable devices.

A fee of 2 percent is already imposed on devices using earlier digital recording technologies, like compact disc and minidisc recorders. Japanese manufacturers have been longtime opponents of such fees. The fees are similar to a 2 percent surcharge imposed by the United States government in 1992 on sales of digital tape recorders, the first generation of digital home recording equipment, also to compensate for copying.

The current fight in Japan has particular political significance because it is taking place in a government advisory committee, which helps the powerful bureaucracies set policy. These committees are usually tame panels that reflect vested interests because they are packed with insiders from the industries being regulated.

The committee, under the Agency for Cultural Affairs, is split over the issue of whether royalties included in the price of music at online stores allow users to copy songs to portable players. The recording industry says the royalties only cover transmission to the listener's personal computer, not for copying from there to a player like an iPod. Opponents counter that consumers copying to a player for their personal use should not be forced to pay twice to get a song from iTunes to their iPod.

"It's like charging riders when they board the bus, and then again when they get off," said Naoki Koizumi, a law professor in Tokyo at Keio University who serves on the committee.

The Japanese recording industry complains that the sudden rise of the portable digital players is robbing it of the revenue that used to come from the fees on CD and MD recorders. Earnings from fees have fallen last year to 2.2 billion yen ($20 million) from 3.8 billion yen in 2000, according to the Japanese Society for Rights of Authors, Composers and Publishers. "Now everyone who used to be using CD's and MD's are using iPods," said Koichi Numamura, head of the society's recording rights department. "We can't just sit by silently while we lose money."

I think this is a fair proposition, simply because the artists deserve a premium considering most of the music put on DAP's are obtained in a manner that is not benefical to the musician in the first place. I'm not stereotyping, but we all know that most music is not obtained legally in this day and age.

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A little late on this one, but a good read nonetheless. From the New York Times:

I think this is a fair proposition, simply because the artists deserve a premium considering most of the music put on DAP's are obtained in a manner that is not benefical to the musician in the first place. I'm not stereotyping, but we all know that most music is not obtained legally in this day and age.

I like it when they said they are "loosing money." If they ARE actually loosing money, they'll be out of business already. They are NOT loosing money, they are just not making as MUCH money as before because they failed to advance their business strategy to cope with technology. They complained that people are not using CDs and MDs anymore, but they already making profits from legal music downloads also. This is like taxing every VCR, DVD player, DVD recorder, etc.

Problem is, will the revenues actually go to the artists, or the music execs? My guess is the later. I'm all for supporting the artist, but most of the times, things like this only benefit the music execs. Plus, I only want to support artists that I like. By paying this tax, that means I'll be supporting crap junk artists that I would never listen to. Oh, and what if I already bought the CDs. Also, if tax are put in, does that mean it's OK to pirate/download illegal music? IMO it sends that message to he consumer.

"Well, I paid tax for it, so the artists are compensated already. That measn it's ok for me to pirate or download MP3s instead of paying for legal downloads."

I don't think that's the message you want to send to the consumers.

Also, the government is supposed to work for the people, NOT for a specific business entity, especially to increase the business' profit. What's next? Tax on every possible devices that can play music? Tax on PCs? Tax on hard-drives since they can be used to store music? Tax on your ears since they are used to liten to music? How about put a tax on air since it can trasmit sound?

http://www.geekculture.com/joyoftech/joyarchives/736.html

Unfortunately, it IS probably inevitable.

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  • 8 months later...

All i know is, such a method (tax on the equipment) has sucessfully worked in one market sector - aka Digital Camcorders.

If you check a breakdown of prices of digi-camcorders, the ones that allow you to upload/playback only over the Firewire connection (aka DV-OUT capable) aint had an additional levy put on them at source.

However, DV-IN/DV-OUT equipped kit (the expensive stuff) which allows you to also use the the camcorders as cloning decks and quite a few other variantions of use of bi-directional DV connection use, have a levy added at source.

If you note prices, you'll find that typically DV-in/DV-out capable units are almost double the price of DV-OUT units. If you compare that to lesser vs more technical analog or even Digital-8 units, the diff in price is substantially less since (and it's my speculation) those 'lesser' units dont allow for RAW or lossless recording/video encoding and hence 'dups' and recordings subsequently take from recordings are deteriorated.

So if they want to make it work, 'tax on equipment', they can make it work..., particularly in a region where digital and micro-electronic gadgets are kinda big time sellers to the nth degree.

On the reverse side, the alternative 'tax the media' (like they did with recordable cassettes, video and audio) approach that could be translated (in music download/publishing terms) as comparable to 'taxing the content' simply is not likely to work too well, a limited result at best.

It certainly didn't (in the UK anyway) work, taxing the recording media, when it got introduced here - that said, it was too little and too late really as this was the time when CD was becoming accessible and for some this meant they could eventually ween themselves off their home-recorded copies of their highly (in portable terms) vinyl and proper tape collection.

This was, in case anyone wonders, the transisitional time around the late popular walkman days and the early Discman days in the mid/late 80's.

People still bought cassette blanks en-mass, regardless, where they were still using mag media (and VCR's became the main focus of where bulk cheap recording media was wanted more) - the only thing that really changed was that, in audio cassette terms, was the days of popping into your big name high-street outlet and buying TDK D and AD range cassettes at the old prices of bugger all for twenty (which when you do the figures, it was not unusual to see at sale times, that people would come in with a large cardboard shipping box and literally buy and fill it with off-the-shelf bulk packs of TDK's). All that happened was, that largest bulk individual pack size came down to say max pack sizes of 10 cassettes and a price hike to boot.

And a few brands also dissapeared off the shelf..

Whether the logic of taxing the kit is any better than taxing the media or content distrib, is something i guess we could argue til the cows come home (and for sure, i bet many meeting hours in the various businesses with interest, have burnt up some serious midnight and midday oil over this stuff).

It'll be resolved by the 'vote with the feet' outcome i suspect, and that will kill or prove the logic of what is implemented in the end.

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