Private copying levy under the scrutiny of experts

The digital world has opened up new opportunities for creators, entrepreneurs, and consumers to enjoy cultural goods and access knowledge, books, movies, or music on an unprecedented scale. However, it raises questions about the regulatory framework for the distribution of these goods. How to strike a balance while safeguarding the interests of consumers, but also of entrepreneurs and authors? Participants in the debate, “Culture 2.0: authors, business, and consumers in a digital reality,” sought answers to this question.

Czytaj więcej

Forum Ekonomiczne

Opłata reprograficzna pod lupą ekspertów

Zdaniem części panelistów przyniesie ona wzrost cen sprzętu.

Two important regulations are in play today: the Professional Artists Act and the Directive on Copyright in the Digital Single Market. The attention of the panellists focused on the draft of the first one, which is currently being processed. It has a noble aim – to help artists in hardship and fund their pensions. However, there is controversy over where the money will come from. In the draft, the private copying levy is back extended to electronic devices, such as televisions, tablets, e-books or laptops, and perhaps smartphones. It is expected to range from 1–4% of the gross price of the equipment, with 4% being more likely in most cases.

A blow to Poland’s electronics distribution sector

Michał Kanownik, President of Związek Cyfrowa Polska [Digital Poland Association], warned that the introduction of the law and the levy in its current form will result in higher prices for electronics in Poland. According to him, the margins of manufacturers and distributors are already so low that they will not be able to take the additional levy on themselves. M. Kanownik cited evidence of this, i.e. the large companies in this sector make only 2% margin on notebook production and only 0.5–0.8% on distribution in Poland.

According to Tomasz Wróblewski, President of the Warsaw Enterprise Institute, there is no way that costs will rise and no one will pay for it, there is no such miracle in the market. Also according to him, prices in Germany and even in the US are the same as in Poland.

– If it were otherwise, people would be buying abroad by now, said Wróblewski. – This draft is wishful thinking and will end up in losses for the budget. The money, instead of going to the budget in the form of taxes paid by Polish companies, will flow to foreign companies.

He mentioned the concerns of the Ministry of Finance, which pointed out during consultations that in such a situation it would be difficult to enforce the levy against foreign entities distributing electronics. The Ministry of Culture and National Heritage, on the other hand, indicated, in the assumed effects of the law, that it did not consider the effects on Polish companies and the Polish economy.

Private copying levy is a solution for the analogue era, not the digital era

Dr Rafał Sikorski, a professor at the Adam Mickiewicz University in Poznań, pointed out that the private copying levy is an archaic solution from the 1960s, related to copying works on, for example, cassette tapes, while today, in the era of streaming, copying is a thing of the past. – This is a fundamental problem. No studies have been presented to justify such a drastic increase in compensation for copying when this copying is practically disappearing, the expert explained.

However, Paweł Lewandowski, Undersecretary of State at the Digital Affairs – Chancellery of the Prime Minister, argued that when streaming occurs, buffering (copying of the song) to the user’s device takes place, and it is for this copying that compensation is due. However, Dr Sikorski explained that 2001 EU directive has determined that buffering does not fall under the concept of private copying and no compensation is due.

The consumer will pay

Monika Kosińska-Pyter, acting President of the Consumer Federation, recalled the effects of the sugar levy. While being justifiable as a measure against obesity and many diseases, it has caused the price of products on the shelves to increase or, for the same price, the volume of the bottles to be reduced. – That’s why I don’t believe distributors or retailers won’t want to pass on the cost increase to consumers, she said.

She also stressed that consumers decide what they spend their money on, or at least they should. When they buy a creative work, they choose which author they support; the same is true for all other goods. The private copying levy will cause them to be deprived of this right.

– We are not sure how the funds will be distributed, to which artists they will go and for what purpose. The levy is detached from the purpose of buying the product, said Monika Kosińska-Pyter.

At the same time, she recalled that at the time of the pandemic, the Consumer Federation warned that the private copying levy would increase digital exclusion, which is already very high in Poland as compared to other European countries. And now, she noted, the idea is coming back when we have high inflation.

Questions about distribution of the levy funds

According to the Ministry of Culture, the fee is expected to bring in about PLN 600 million a year. Half is to go to the Artists Support Fund, and the other is to be distributed to eligible artists.

Professor Sikorski assessed that the algorithms to help allocate money are based on outdated data. – There is another problem; these few hundred million are a huge amount and foreign authors’ organisations will definitely want to claim some of that. Do we really want that? he asked rhetorically. – While the intentions to support authors are good, the idea that half of the compensation for personal use copying should go into some kind of fund through which it will go to authors is heading for a head-on collision with the EU law. There is nothing in this act that can be upheld, the expert added.

Tomasz Wróblewski recalled that according to the New York Times, we are the eighth country in the world in terms of cultural spending. – I don’t understand why artists can’t save for retirement from this and we have to treat them like children, he said.

Michał Kanownik noted that we admire the culture of the US and the UK. – What do these countries have in common? There is no public copying levy there. So, the claim that it is necessary for culture to develop is false. In Poland, we spend 0.7% of GDP on culture; the EU average is 0.5%. So, it is not true that we spend little. The question is about the efficiency of this spending, he concluded.