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Blank media levies: record once, pay thrice

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Opinion We have often heard that the idea of charging levies for empty digital media is a way around having to bother solving all those complex digital rights management (DRM) problems.

In fact we’ve even heard people express as radical an opinion that perhaps what we should all do is leave ALL entertainment content without any form of copy protection and just have a series of collection societies and performing rights organizations collect all our dues, including levies.

Personal copies and piracy would be paid for simply by calculating how much the content that was copied onto them was likely to be worth, and adding that, as an aggregate price hike to every piece of persistent memory, including hard disk drives and flash memory, that could feasibly be used to store music or films. In fact, why not add a levy to the playing platforms also?

The levy model would then have us give all that collected money to a collection society and they would fairly distribute it among all the companies that made content. Sounds crazy, but it’s something that is not only happening, but happening increasingly, led by Canada and Europe.

And that’s what’s at the heart of the spat that Apple finds itself in over sales in France of the iPod, with French collections agency Sacem threatening to sue Apple over unpaid music levies on iPod disk drives. The story broke about five weeks ago and little has been heard about a resolution yet, mostly because US businesses, Apple included, think the system is ludicrous.

And after some thought, we agree. But the levy model is not about to go away and right now it is increasing at a rate of knots. A report from DRM consulting group Rightscom in London last year estimated that levies in just five countries in Europe would reach €230m ($274m) this year and as much as €451m ($538m) in two years' time.

But the report was written over a year ago and even since then the emergence of massively more dense flash memory cards, means that its predictions may be slightly on the low side. The estimates were made taking in only Germany, France, Italy, The Netherlands and Spain, and it assumed that levies on blank media would remain static. However, Austria, Belgium and Greece have joined these five in charging levies and the new members of Europe who joined the EU last week - Poland, Hungary, Latvia, Slovenia, Lithuania, Slovakia, the Czech Republic, Estonia, Cyprus and Malta - have all agreed that they plan to attack the piracy problem with levies.

These previously unfactored nations add a further 40 per cent by population to the five countries that Rightscom measured, so perhaps that €451m will become more like €631m ($753m) in 2006 - and that’s without notable members of Europe still not buying the levy ticket, including the UK.

If you bring in Canada, it’s more still. And what if someone convinces China that it’s the way to get rid of the DRM issue? Then that might make this a $4bn global collections business overnight.

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