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Privacy & Private Copying Levies

posted by:Jeremy deBeer // 11:59 PM // August 08, 2006 // ID TRAIL MIX


Levies are a way of compensating copyrights holders for the fact that people copy music for non-commercial purposes in their homes, a phenomenon known as “private copying.” For reasons I’ll discuss in a minute, licensing or preventing private copying is problematic. So instead of allowing copyrights holders to extract licence fees from actual private copiers, some countries authorize a tax on blank media and/or recording devices to generate compensatory revenues. As the internet and p2p are transforming private copying into public sharing, many commentators have advocated a greater role for levies.

The levitation of copyright can be a heavy topic. I want to offer a little grounding on one aspect of the debate—the relationship between privacy and private copying levies. Private copying has never been a purely private activity. Decades ago people were making mixed tapes for their friends, families and sweethearts. Still, privacy issues are deeply entwined with levies. Concerns about privacy are among the primary reasons for replacing current copyright laws, digital locks, end user licenses and litigation practices with broader levy schemes. But levies are not a privacy panacea. They could create an equally troubling set of privacy-related problems.

It is often believed that levies were simply a response to the practical difficulty of preventing or licensing private copying. Simple, cheap and popular home audio recording equipment made private copying impossible to prevent. Transaction and enforcement costs made private copying impossible to license. Moreover, laws were often ambiguous about whether private copying should or could be controlled. Policymakers have addressed these problems by expressly legalizing private copying and generating revenues to compensate copyrights holders by allowing them to tax blank media and/or recording devices.

In fact, however, policymakers were concerned not just with the interests of copyright holders but also with the privacy rights of private copiers. A copyright does not entitle its holder to control all possible uses of a work. Reading books, watching movies, viewing artwork or listening to music are not things that copyrights holders may legally prohibit, especially when these activities take place in private. Reproducing works for private non-commercial purposes is allowable on similar grounds.

These activities are permitted not only because they interfere minimally with copyrights holders’ legitimate economic interests, but more importantly because they occur within the individual user’s private sphere. The liberty to experience works in private is important for personal development and effective participation in a democratic society. The inviolability of one’s private sphere requires freedom from copyright holders’ claims of infringement for private copying. Controlling private copying with locks, licenses or litigation threatens to put individuals’ privacy at risk and undermine privacy as a social value. Levies, therefore, are as much about the principles of privacy as they are about the pragmatics of licensing.

However, despite the fact that levies were used historically to balance copyrights holders’ economic interests with individuals’ privacy rights, and the potential of levies to alleviate worries about the privacy impact of locks, licensing and litigation, levies give rise to a new set of privacy issues. Although it is not necessary to gather or monitor data about consumers’ preferences in order to generate revenues under levy schemes, such information is necessary to distribute those revenues to creators appropriately.

Under most private copying schemes, levy revenues are collected by an organization representing a large number of copyrights holders who have designated the organization to act on their behalf. Distributing revenues to the creators and companies entitled to receive remuneration is a long, complex and controversial process. In free market capitalist societies, popularity as measured by consumer demand is generally seen as the fairest way to allocate levy revenues. Techniques for measuring consumer demand are, however, imprecise. Revenues collected under Canada’s existing levy scheme are distributed on the basis of samples of other samples of two supposed proxies for consumers’ private copying of music: radio airplay and retail sales. These are unreliable indicators of consumer preferences, especially in a digital environment driven by p2p file sharing. Current sampling practices can skew distribution patterns generating windfalls for some copyright owners and nothing for others.

Consequently, most proponents of levies as alternative compensation schemes suggest using tracking mechanisms or other technologies to improve the accuracy of revenue distribution. Information embedded into digital files can be used to facilitate monitoring of consumers’ consumption of music. There are distinctions between the type of metering necessary for pay-per-use copyright licensing as compared to levy revenue distributions. For instance, the latter requires information only about whether digital content was consumed, not about who consumed it (although both kinds of data might be collected from the same person). Also, in the levy scenario, the entity collecting information could perhaps be a public administrative agency, not a private enterprise (although I’m not sure which is worse).

The bottom line is that monitoring consumption to distribute levy revenues has the potential to completely undermine any privacy gains achieved by the introduction of levies in the first place. This problem must be adequately studied and safeguarded against before levies could be a truly viable alternative compensation scheme.

Jeremy deBeer is an Assistant Professor at the Faculty of Law, University of Ottawa.


Is "levitation" the correct term? I thought that the verbing of levy produced the word "levying".

Thanks for the analysis; I really hadn't considered the possibility of privacy concerns being a historical (even recently historical) impetus behind levies, but you make a good argument.

I think you're right on about the difficulty of measuring market demand for individual copyrighted works, and that monitoring through "legal" downloading services is one of the ways that this will be done. In fact, we know for certain that some record labels use private enterprises to monitor P2P music traffic to get an idea of where market demand is at the moment (unfortunately, the name of the major company that provides that service is eluding me at the moment). You put your finger on the brass ring: the ability to track the downloads and, yea, subsequent usage of copyrighted works acquired from so-called legitimate or legal download services. No doubt this is already being done on some scale, but to my mind it is not only attractive to the levy distributors and the copyright content producers, but is a very compelling revenue stream for the download services themselves to those aforementioned parties. We can expect to see the download service providers to push this kind of data mining to the content producers and levy distributors.

Posted by: Shawn Abel at August 9, 2006 04:07 PM

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