“Fair compensation” for Private Copying – In Finland levy scheme exists since 1984

(IPRinfo 1/2008)

Heikki Jokinen
Master of Social Sciences, freelance journalist

In the member states of the European Union, there are different ways of handling the issue of “fair compensation” which the authors or rightholders should receive for the private copying of their works. One system is to include a levy on the retail prices of recording equipment.

In Finland, a remuneration system has been in use since 1984. Before the digital age “a blank cassette levy” was collected on the prices of C-cassettes and VHS-tapes. Later it was extended to devices or media which are “suitable for recording”.

In the revised Copyright Act (2005) the applicable media was defined to be “to a significant extent” used for private copying. The meaning of this definition is constantly under discussion both among equipment manufacturers and citizens.

Ministry of Education is the key actor
In the implementation of this system, the key role is played by the Ministry of Education. After consulting other ministries, it decides annually the remuneration fees. Furthermore, it prepares a list for the Council of State to decide what recording devices and media the remuneration will apply to. Every fifth year, the Ministry appoints the organisation that will collect these remunerations on behalf of all parties involved.

The body to collect and administrate the private copying remuneration has long been Teosto, The Finnish Composers’ Copyright Society, whose current period continues until 2011.

The fees are collected by the private copying unit of Teosto from the importers and retailers of the relevant equipment and media. In 2007, the amount distributed paid to the right holders and other purposes as indicated by the Ministry of Education was 11,4 million euro, of which 6,4 million EUR was allocated to individual right holders in audiovisual branch. The rest was mainly forwarded to other collective societies, which distribute it to artists, production grants or for supporting the export of Finnish audiovisual productions.

Collective societies make careful calculations
In many cases it would be difficult, if not impossible, to trace the individual share of remuneration. There are various methods to measure the fair amount of remuneration paid to the right owner.

The Copyright Organisation for Authors, Publishers and Performing Artists, Kopiosto, for instance, distributes yearly more than 2 million euro to makers and performers of TV programmes. The 7000 people entitled to compensation need not to apply for it, but receive it automatically on their bank accounts. In 2006, the average amount for one person was some 300 euro.

Kopiosto receives a full report of every TV programme shown on the four main Finnish channels with the names and tasks of all people involved in the creative work. The individual remunerations are calculated applying several criteria. The length and the genre of the programme bring a certain number of points, which make up the total compensation for every programme.

The individual shares of makers and performers are then calculated using a specific key based on the evaluation of the creative input of every profession. The composers and performers of music of broadcast programs are similarly treated by Teosto and Gramex, respectively.

Teosto has no agreement with US collective organisations
In the same way, Teosto receives a full report of the music played e.g. on radio channels and the sales statistics by digital music sellers. In 2007, Teosto received 1,7 million euro for individual remunerations.

This amount will be distributed to makers of music broadcasted in television and radio and sold as recordings. The evident basis for remuneration calculations is: the more music is sold and played on the air, the more it is probably copied.

Surveys suggest that people copy music increasingly from recordings instead of broadcast programs. Therefore, 40 % of the remuneration fee will be distributed on the basis of broadcasting and 60 % based the basis of recording sales, exactly contrary to the ratio used until now.

About 300 000 euro of the sum goes abroad. It is allocated to the nearly 10 collective societies that have a mutual agreement with Teosto. Remuneration is paid even to Great Britain, though there is no similar system.

The share of foreign composers is calculated on the basis of broadcasting. Teosto counts the percentages of all broadcasted music by the country of origin. The respective share of the total amount is then reserved to be sent there.

The share of foreign receivers sounds relatively small. There are at least two reasons: in Finland, the domestic music is exceptionally popular and Teosto has no agreement with any organisation from the USA.

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Remuneration prices in Finland in 2008

For recordable CD-, DVD -, Blu-Ray-, HD-DVD – and Minidisc discs, the remuneration is either 20 cent (for storage capacity of max 1 GB), 60 cent (1-10 GB), 1,20 e (10-25 GB) or 1,80 e (over 25 GB).
For digital recorders with integrated storage capacity, e.g. mp3 recorders and set-top-boxes with hard disks, the remuneration range is from 4 e(storage capacity max 512 MB) to 21 e(over 250 GB). So far, there is no private copying remuneration on mobile phones, computers or usb-memories.
On C-cassettes, the remuneration is 0,005 e/min and on VHS cassettes, S-VHS cassettes and Beta cassettes 0,0076 e/min.
The digital devices with a high storage capacity were included in the list in 2008. Otherwise, the fees are the same as in 2007. (Decree of the Ministry of Education N:o1357/20.12.2007)

Private copying remuneration in the member states of the European Union

Most member states of the European Union allow private copying of copyright works. The InfoSoc Directive (2001/29/EC), however, stipulates that the authors or rightholders should receive “fair compensation” for it. It leaves, however, it to the member states to decide how remuneration for private copying is arranged.
The practices in the EU Member States vary a lot. One of the most common systems is to include a levy on the retail prices of recording equipment and/or of blank media used to copy audiovisual works.
The following EU countries allow private copying and have established a remuneration system: Austria, Belgium, The Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, The Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain and Sweden.
Luxembourg and Malta allow private copying, but have no remuneration system. In Cyprus, private copying is restricted. In Ireland and Great Britain only copies of broadcast programs are allowed for time-shifting purposes, and there is no system for remuneration. In Greece a scheme was suspended in 2003 due to a controversy about its administration.
In January 2008, the European Commission launched a new consultation concerning the functioning of private copying levy schemes set up at national level. Comments are requested by by 18 April 2008.