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High tech sector sounds alarm over Canada CD levy
By Susan Taylor

OTTAWA, Dec 17 (Reuters) - A new surcharge to be levied on on blank recording tapes and CDs is sweet music to the ears of Canadian performers, but the high tech sector, a heavy user of compact discs, is sounding the alarm.

The fees will reimburse Canadian artists who do not receive royalties for music that is privately recorded. The levy is expected to raise C$9 million (US$6.1 million) for performers in 2000.

Canada's Copyright Board ruled on Friday that manufacturers and importers will now pay a levy of 5.2 Canadian cents on recordable compact discs, 23.3 Canadian cents on audio cassettes, and 60.8 Canadian cents on mini discs and recordable audio CDs. Audio cassettes under 40 minutes in length are exempt.

The surcharge is dramatically lower than earlier proposals, but the decision is still discouraging, said John Reid, president of the Canadian Advanced Technology Alliance (CATA). That group unsuccessfully rallied for an exemption from the levy for the software industry.

"As a public policy tool it just is the wrong direction for Canada to take," Reid said. "It really goes in the face of...the government's move to basically lower the cost of business. It's bad public policy."

Based on 17 days of public hearings in August and September, the decision follows the federal government's allowance in 1997 of an amendment to the Copyright Act. That opened the door to levies on manufacturers and importers of digital media.

It's expected that consumers will buy 88 million recordable CDs, 18.5 million audio cassettes, and 500,000 mini-discs and recordable audio CDs in 2000, the board said.

"It's just a very bad precedent to again add to the set of user fees which the consumer has to face," Reid said.

Some recording media, such as digital audio tapes, are exempt from the levy because they are not typically used for private copying.

The Canadian Private Copying Collective will collect and distribute the levy to authors and performers.

"(The board) set a levy which it feels is fair and equitable, appropriately compensates owners of copyright, but that will not unduly disrupt the marketplace," said Claude Majeau, board secretary, in a statement.

($1=$1.48 Canadian)

((Susan Taylor, Reuters Ottawa Newsroom, 613-235-6745, fax 613-235-5890)

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