Europe’s tech companies are beginning to sweat.
A few weeks ago, a group of lobbyists backed by Google, Apple, Samsung and Microsoft handed a letter to European Commissioner Günther Oettinger, urging him to press on with reforms that will overhaul how authors, musicians and performers get paid for their work.
The system remains fragmented among member countries. Germany demands the most while Britain, in typical fashion, is an outlier and is more business friendly.
“This has not only had a detrimental impact on the free movement of goods and services but has caused significant tension within the market,” according to a the three-page letter obtained by POLITICO.
The Commission is exploring ways to reform the rampant practice of private copying, or making your own copy of someone else’s work. A proposal is expected by the end of summer.
The overhaul is part of the Commission’s aim to deliver a digital single market where platforms can be watched without geographic restrictions.
Currently device manufactures, like Huawei and Amazon, have a government-imposed levy on their products to help compensate authors for the harm caused by private copying, like a song or e-book, onto a smartphone, hard drive or other electronic device.
The battle is fraught with contradictions. It pits two of the world’s most creative industries against each other despite a relationship that requires both to prosper. Technology companies compete to offer the best sound and screen quality for movies, books and music, while an array of electronic devices now help artists reach a wider audience.
The overhaul is part of the Commission’s wider aim to deliver a digital single market where platforms like Netflix and content such as sports broadcasts can be watched without geographic restrictions.
The strategy, which is spearheaded by Commission Vice President Andrus Ansip and Commissioner Oettinger, also seeks to reform the European Union’s telecoms market and make it easier to buy online.
The private copy levy varies wildly across the European Union. In Croatia, a 16 gigabyte tablet came with a €1.31 tariff last year compared with €10.13 in neighboring Hungary, according to the World Intellectual Property Organization. Germany has among the highest, with €15.19 charged for the same tablet compared with a European average of €6.36.
“This is a stealth tax on devices that have nothing to do with original purpose and that the scale of it is now enormous,” said John Higgins, director general of Digital Europe, which represents the tech industry. The industry association argues the removal of the levies would add €2 billion annually to the European Union’s economy.
The problem for the consumer is a lack of transparency. Tech lobbyists argue that the consumers aren’t aware of the levy and that they can pay for it more than once, while creative arts industry asserts that the manufacturers won’t pass on the saving to customers.
“It’s quite cheap for the tech industry. If a government scraps the levy, the price of the device doesn’t fall. There is no obligation to reduce the price of device. It’s a pure gift to the industry,” said Cécile Despringre, executive director of the Society of Audiovisual Authors, which represents some 120,000 European screenwriters and directors.
In the U.K., for example, there’s no exemption in copyright law for private copying, while Spain scrapped the levy for manufacturers altogether in 2012. The amount collected by Spanish rights holders was €115 million in 2011 but was when capped by the government at €5 million for successive years.
Despringre’s opponents argue tariffs need to be consistent across the European Union and the harm caused by private copying is an speculative. While many smart phones and tablet users listen to music and watch films they’ve copied, not everyone does. Yet everyone pays the levy.
Removal of the levy would be damaging to the creative industry as artists could lose as much as 10 percent of their income.
“You can have a device that can allow the copying of protected workers and you cannot control that. We’re not sure if there’s a need for reform,” said Véronique Desbrosses, general manager at the European Grouping of Societies of Authors and Composers.
Consumers also unwittingly pay levy and, sometimes, several times. Most sales taxes are displayed on a receipt, but the private copy levy isn’t itemized. The consumer also pays for the content, then pays the levy when purchasing a device to play it on and then again when they buy other devices.
The European imaging and printing industry won a landmark case last November when the European Court of Justice ruled the Belgium’s “reprography” levy collection system — the fees collected reproducing documents — was illegal. The court decided the compensation should be paid only to authors, not publishers.
Removal of the levy would be damaging to the creative industry as artists could lose as much as 10 percent of their income, according to the Society of Audiovisual Authors.
“In the cultural sector, the passion of the people is a big driver of creativity and development of the industry, but in the end if these people cant make a living of their work, they’ll need another job,” said Despringre of SAA. “They need to sell their rights and make a living, most of it is royalties from copyright.”