TOKYO - A Japanese government committee is mulling a copyright law revision to charge royalties on digital music players, but the opinion is so divided on the so-called "iPod tax" that it isn't likely to be imposed, officials said Wednesday.
Japan already levies an extra fee for copyrights on gadgets sold in stores such as mini disk recorders that consumers can use for home copying of music. That charge, generally 3 percent of the product's wholesale price, is included in the price tag so most shoppers aren't even aware they're paying it.
The money from such copyright royalties, totaling some 2.2 billion yen, or $19 million, is collected by an organization set up especially for that purpose and doled out to intermediary groups who in turn pass along the money to recording companies, composers and other artists.
Since it's impossible to really know what tunes were copied in homes, the groups hand out an estimated payment according to a sample survey on how music sold that year, says Toru Takeda, a copyright official at the Cultural Agency, which set up the committee.
Since last year, recording companies and other lobbies here have been grumbling that the same system should be applied to recording devices with hard-drives, including MP3 players like Apple Computer Inc.'s iPods as well as possibly flash-memory players.
In January, a committee was set up to debate the issue, Takeda said.
But the panel, made up of academics, consumer-rights activists and other experts, is so divided on where to draw the line on what constitutes copyright infringement, it is highly unlikely to come up with an agreement by the December deadline.
The possible new charge has been dubbed the "iPod tax" by the Japanese media, although the money doesn't go to the government.
Apple in Japan said it was not in a position to comment on government committee discussions.
The iPod has been a big hit in Japan, with the trademark white earphones rapidly becoming a fashion statement on trains and streets everywhere. Japanese downloaded 1 million songs in the first four days after the iTunes online music store opened in Japan — the fastest pace for the service's launch in any of the 20 nations it's become available, including the U.S.
Katsuro Yamaji, head of the Software Information Center, who sits on the Cultural Agency committee, says the copyright royalty system is obsolete in an age where technological innovations are available to more fairly monitor the purchase of digital content.
"There is a basic problem with the system," said Yamaji. "It doesn't really work."
But Taizo Shinya, spokesman for the Recording Industry Association of Japan, also represented on the committee, is just as adamantly determined to impose the iPod tax.
"We are strongly pushing for charging the iPod," Shinya said.
The Japanese idea of collecting copyright fees indirectly through machine sales isn't as far-fetched as it seems. Some European nations have versions of such systems, and it is especially advanced in Germany, Takeda said.
But opponents — like the Japan Electronics and Information Technology Industries Association, a trade group whose members include electronics makers Sony Corp (NYSE:SNE - news). and Toshiba Corp. — say making consumers pay extra for buying a gadget is unfair.
Some people are purchasing tunes from online music stores, where copyright fees are figured into the price, and are in effect getting doubly charged, they say.
The iPod is encouraging people to listen to music outside the home, on commuter trains and jogs, and it's not necessarily a tool to avoid paying for music, said Yamaji, the software expert.
"The recording industry should be welcoming the iPod," he said.