According to a recent survey of 2,000 computer users conducted for Austrian copyright holders, the average hard drive in Austria holds over 6,300 songs and roughly 100 copies of movies that are all subject to copyright. “Based on this, we can say that hard drives are used to store a substantial quantity of copyrighted material,” said Sandra Csillag, managing director of Literar-Mechana on Friday at a press conference in Vienna.
The Austrian copyright holders feel that a resolution to the dispute about the hard drive tax will soon be reached. The refinement and adaptation of the existing device tax (tax on blank cassettes) to hard drives to pay for private copies is a logical step, said Franz Medwenitsch, managing director of LSG, which represents the rights of artists and producers of audio recordings and music videos.
Representatives of Austrian copyright holders feel that two recent court decisions in Austria that would in principle support an obligatory tax on multifunctional storage media bolster their position. (Supreme Court, Vienna Higher Regional Court) The copyright holders are also taking the statement of the designated minister of culture Josef Ostermayer (SPÖ) last week to the effect that a hard drive tax would be “the most realistic solution” at present as a positive sign.
“There are enough places to find private copies”
When asked about the fact that private copies, for example of DVDs and e-books, can often no longer be made because this would require the user to circumvent copyright protection, which is not allowed by law, Csillag replied, “There are more than enough places to find private copies.”
According to Paul Fischer, head of the department for compensation for private copies at austro mechana, the limitations imposed by copy protection are taken into account in the price negotiations. It is legal to make copies of copyrighted material for private use, but technical copy protection measures may not be circumvented to do this: “There is no right to private copies.”
Opposition against a household tax
A proposal from Plattform für ein modernes Urheberrecht, an initiative of numerous electronics and retail companies pushing for the adoption of modern copyright law, at the end of January that a household tax of 50 cents per month should be adopted instead of copyright taxes on storage and copying media was rejected by the copyright holders. “That would be a mass tax,” Medwenitsch said. This would shift the responsibility of roughly 160 companies in the electronics and retail industries – which generate billions in revenue every year – to 3.5 million households. The copyright holders also feel that it is important to have a direct relationship between the purchase of empty media and paying for private copies.
Another issue for the copyright holders is that users are moving more and more to the cloud, using streaming services and online storage instead of storing content locally. “Arrangements have to be made here with cloud providers,” Medwenitsch said.
Revenues from the empty cassette tax that is used to compensate artists for private copies and that applies to CDs, DVDs, MP3 players and USB sticks have declined steadily over the past years from EUR 17 million in 2005 to EUR 6.5 million last year. The copyright holders expect that a hard drive tax would generate EUR 20 to 30 million in revenue every year. According to Csillag, the point is not only to offset the decline in revenue. Artists need to receive appropriate remuneration for content that is saved on hard drives, she said.
And how are the amounts for the empty media tax determined? According to Fischer, the playback time of the empty media is taken into account. This is converted for digital storage media. This means that a DVD with 4.7 gigabytes of space has a playback time of roughly two hours, but this is not converted at a 1:1 ratio. The fees are then negotiated with the Economic Chamber. “This has worked very well,” Medwenitsch said. The copyright holders reject the determination of fees by an independent authority as is demanded by opponents to the tax: “The system works.”
In 2010, the copyright holder austro mechana applied fees of between EUR 12 and EUR 36 (without VAT) for hard drives depending on their size. Since then, a court dispute has been waged over the hard drive tax. Interest groups have also been at loggerheads.
For and against
The Chamber of Labor and Federal Economic Chamber are opposed to the tax, as are retailers, manufacturers and representatives of Internet users. The Chamber of Labor, retailers and the industry support a flat-rate cultural tax as compensation for private copies: “Consumers simply do not understand another tax on even more storage media and other devices,” it said in a statement released by the Chamber of Labor. The Federal Economic Chamber warned about a “flood of financial burdens” and fears that consumers will turn to online merchants in other countries. Representatives of artists and publishers as well as from the film and music industry are speaking out in favor of the tax.
The positions of the different political parties vary. While the SPÖ recently expressed clear support for the tax, the ÖVP is skeptical. The FPÖ feels that the hard drive tax is “not good.” The Greens want to see a broadband tax. The NEOS are still discussing copyright issues, but are tending towards the household tax. It will likely be some time before a consensus is reached. On Monday, the Economic Chamber and electronics retailers want to hold a press conference to present their views on the controversial tax. The topic: “How many jobs will the hard drive tax put at risk.”