New tax on digital players delayed

Prices for MP3 players and other digital formats will not include an extra copyright tax for the time being Keystone

The Federal Court has suspended the introduction of a controversial tax on digital music players, which was due to come into force on March 1.

It follows an appeal last month by producers and distributors of MP3 players and iPods who claimed the new tariffs for authors’ rights were unfair.

The Swiss Association for Information, Communications and Organization Technology (Swico), which had sought a 60-day postponement, said on Wednesday that it was both delighted and surprised by the court’s ruling.

“We were not very confident of getting this decision because our lawyers told us we only had a limited chance,” Swico president Jürg Stutz told swissinfo. “But we are more than happy. This is good news for the industry and consumers.”

The decision to introduce the new tax was taken by a federal arbitration commission on January 17. It followed a demand by a group of collecting societies including Suisa, the organisation responsible for administering music rights.

The tax targets three different product categories: digital music players with flash memory (MP3s); hard drive-based music players (iPods); and audio/video recorders with a built-in hard drive.

Unjustified

Swico, whose 400 members include Apple, IBM and Sony, says the tariffs are too high, discriminatory and unjustified. Apple declined to comment on the decision to delay introduction of the tax.

Under the planned tariff structure, the tax on a four-gigabyte MP3 player with flash memory would be almost SFr19 ($15), while that on a four-gigabyte iPod would be around SFr2. A 400-gigabyte DVD recorder would incur an extra SFr138 charge.

Swico is also unhappy with the speed at which the federal arbitration commission proceeded.

According to Stutz, the organisation cannot properly challenge the new tax until full details of the commission’s decision are published in May.

Disappointment

Suisa’s senior licensing manager Andreas Wegelin said he was disappointed with the Federal Court’s decision, adding that “everything is now on hold”.

He said both parties would now have to wait for the arbitration commission’s written decision, which will then be the subject of a further legal challenge by Swico.

“For the moment we cannot commence this tax and we will have to wait for a definitive decision from the Federal Court,” Wegelin told swissinfo.

“This will not be before the end of the year and it’s not clear what the court will eventually decide.”

Suisa maintains that musicians are entitled to remuneration for every copy made of their work. This includes copies recorded on a blank CD, downloaded onto a computer’s hard drive or transferred onto an iPod or MP3 player.

The organisation said in a statement last month that consumers would barely notice the increase as the prices of recording devices were continually falling due to competition and mass production.

“In setting the levy, the arbitration commission also took into account the fact that consumers already pay to download music from legal websites,” it said.

swissinfo, Adam Beaumont

In brief

Suisa, which represents the interests of over 20,000 composers, writers and music publishers in Switzerland and Liechtenstein, estimates that the new tax will bring in around SFr2.5 million a year.

Opponents of the tax claim consumers will effectively be hit three times for authors’ rights if the latest tax comes into force: when they download music from the internet, when they buy a blank CD and when they buy an MP3 player or iPod.