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Canada's labels slam proposed digital 'tax'

A revolutionary plan that would effectively legitimize file-sharing here has been slammed as “a pipe dream” by Canadian labels. The Songwriters Assn. of Canada proposes to allow domestic consumers access to all recorded music available online in return for adding a $5 Canadian ($4.96) monthly fee to every wireless and Internet account in the country.

The SAC claims that the proposal, which has been presented to labels’ bodies the Canadian Record Industry Assn. (CRIA) and Canadian Independent Record Production Assn. as well as publishers’ groups, would raise approximately $1 billion Canadian ($993 million) annually. Although the SAC does not detail how revenue would be collected and distributed, it says it would go to artists, labels and publishers.

The idea doesn’t strike a chord with everyone. The SAC proposal “would signal the death of paid music services in Canada,” said Alistair Mitchell, CEO of Canadian music service Puretracks. “It would be saying we’re just giving up on developing new models. The concept is so flawed, I don’t know where to start.”

“This proposal is incredibly well thought out and well constructed,” acting SAC president Eddie Schwartz said.

Producer/songwriter Schwartz, whose songs have been performed by Joe Cocker, Pat Benatar and Donna Summer, says the scheme would “allow people to gain access to the entire repertoire of Western music” for only $60 Canadian per year.

That, he added, “amounts to $0.16 ($0.159) per day. (Which) seems like a pretty good deal.” Schwartz said it’s unlikely that users with both a wireless phone and an Internet account would have to pay twice for access.


The Canadian Wireless Telecommunications Assn. estimates that Canada had 18.5 million wireless phone users and 7 million residential Internet users at the end of 2006. In 2006, according to the International Federation of the Phonographic Industry, the trade value of recorded music fell 9.1 percent to $598.7 million Canadian ($529.8 million); CDs accounted for 85 percent of that total.

CRIA president Graham Henderson said he has discussed the plan with Schwartz, but his organization is reluctant to become involved. “We don’t want to pursue what amounts to a pipe dream that is presented as a quick fix,” he said. “We’ll lose focus on the real issues that will help us resolve the industry’s problems.”

Schwartz said he has received positive feedback from consumer groups. But he noted that the plan would require clearance from the Copyright Board of Canada, and the SAC has not yet taken the concept to the regulatory body.

The SAC also has yet to present its proposal to Canadian Internet service providers, although some are dismissive of the plan.

“It appears (the SAC) would ask wireless carriers and ISPs to collect this surcharge on their behalf,” said a spokesman for Bell Canada, one of the country’s largest telecommunications companies and the majority owner of Puretracks. “(That) would not go over well with our client base, especially with the large number already signed up for our (legal) mobile and online music services.”

The Supreme Court of Canada ruled in 2004 that ISPs are not responsible for the actions of clients using their Internet services. One senior source at a Canadian ISP said, “ISPs are not required to — nor would they — police this kind of usage.

Nor would they charge, collect and remit what is in essence a tax.”

However, the proposal has received support from the Canadian Music Creators Coalition, a group of 187 acts, including the Barenaked Ladies and Avril Lavigne.

Artist Andrew Cash described the SAC suggestion in a statement on behalf of the CMCC as “the first progressive proposal we’ve seen in Canada to address file-sharing.”

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