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Government Panel Decides Against Levying 'iPod Tax' for Now

Posted on: Thursday, 1 December 2005, 15:00 CST

By Kyodo News International, Tokyo

Dec. 1--TOKYO -- A government panel on Thursday decided against expanding the existing royalty payment on the retail prices of digital music recording devices to cover iPods and an increasing number of similar new gadgets that use flash memory and hard disks.

The royalty, introduced in 1993, currently extends to disk-based devices, namely MD, CD and digital audio tape players. Surcharges of around 400 yen per MD recorder and of 4 yen per minidisk, for instance, are imposed and paid chiefly to performers and other copyright owners.

The decision was included in a report adopted by a subcommittee on copyright issues of the Council for Cultural Affairs, which advises the Ministry of Education, Culture, Sports, Science and Technology, government officials said.

Reproducing music for private use is legal under the Copyright Law.

The panel started deliberations on the issue in February after growing calls from the recording industry and other copyright owners who argued that devices such as Apple Computer Inc.'s iPod have far larger capacities than MD and their sales are rapidly increasing.

Device manufacturers, meanwhile, called for an overhaul of the royalty levy, overseen by the Society for Administration of Remuneration for Audio Home Recording, citing changes in technology since the introduction of the levy.

The panel's report said, "A radical review should be conducted including the abolition of the system and introduction of other measures." The panel reached the decision that it is not advisable to include iPod-like devices in the levy coverage, citing problems of the existing system.

It noted surcharges are imposed on those people who buy devices but do not themselves record music privately. It also mentioned the difficulty of determining the sums for distribution of the levy among copyright owners. The aggregate of the levy came to around 2.3 billion yen for music players in fiscal 2003.

The panel also said not enough effort has been made to make the system known to the public.

"There are views that technological advances are beginning to make it possible to control private recording, and they are eroding justification of the existing system," it said.

Hard disk-based devices accounted for less than 10 percent of the portable audio device market in Japan in 2002, with the remainder chalked up by MD players, according to a media estimate used by the panel during the course of deliberations.

The market share of iPod-type devices is projected to rise to 60 percent in 2005.

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Copyright (c) 2005, Kyodo News International, Tokyo

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Source: Kyodo News International, Tokyo

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