October 10, 2005

If You Can't Beat 'Em, Tax 'Em

According to this International Herald Tribune article, the Japanese record labels are calling for a 2%-5% tax on portable digital music players, such as, the category-killing American-made iPod. These record companies claim that "the sudden rise of the portable digital players is robbing it of revenue that used to come from the fees on digital recorders," which seems hard to believe since the industry was already in major, major decline before the iPod really caught on in the Japanese market. Also, total CD, cassette, and vinyl sales only make up about 1/4 of all industry profits, and the general decline of the entire industry suggests that consumers have not just stopped buying the physical media but have lost an overall interest in the basic products offered - songs and artists.

But hey, an import quota on the iPod will slow down the market and buy the labels some more stalling time. Deep in these industry wonks' hearts, they hope and pray that Japanese consumers will reject digital files and go return to a CD lifestyle sometime in the near future. Oh, how we miss the glorious 90s!

Posted by marxy at October 10, 2005 1:13 PM
Comments

Hmmmm. I'm with you up to a certain point, here. To my mind, though, there's something faintly appealing about the traditional music industry/home recording industry accord in Japan. "Yes," the bigwigs say; "we know that those DVD burners aren't just for backing-up data, and you don't use that MD player purely for making field recordings, so why don't we just agree that you'll pay a little bit extra, and then you can have all the fun you want?" Mighty patronising stuff, perhaps, but it seems a bit more savvy than the Western music industries' approach - vacillating between chants of "every time you copy an album, a little fairy dies" and slapping lawsuits onto any unfortunate who happens to cross their radar.

Oh, and one other thing: some of the digital music players on the market here are - gosh! - made by domestic manufacturers. It's inaccurate to portray a blanket tax on such players as an "import quota on the iPod".

Posted by: Jrim at October 10, 2005 1:56 PM

Seeing that the main Japanese conglomerates did not really develop a digital player until faced with the threat of the iPod AND that the market is primarily held by the iPod family, I think it's fair to say that Apple has much more to lose from the tax than the Japanese companies.

And maybe you haven't seen them yet, but there are equally dumb Japanese piracy ads around. The one with the black teardrop against film copying that opened Star Wars was hilarious.

Posted by: marxy at October 10, 2005 2:18 PM

What's Sony's official stance on this? They've got fingers in all the pies, but which is the most delicious?

Posted by: Carl at October 10, 2005 2:18 PM

Sony stance is probably, if we can't run the digital market, we want it destroyed.

Posted by: marxy at October 10, 2005 2:19 PM

Oh man, that Star War KAIZOKUBAN commercial was priceless. A classic for our time, like the heroin addict who smashed her kitchen to explain what drugs are like.

Posted by: Carl at October 10, 2005 2:21 PM

in france, i heard apple's been pressuring French government to lower the tax on ipods so that their prince align on the rest of europe (even though these taxes are the same that on CD-Rs, that is, for artists' compensations)... and the union of French independent labels (they're gathered as a big useless force called UPFI, and mostly breed ideas) keeps coming up with crazy ideas to give money back to the artists, and are basically against repressive measures again downloading. yet i love to see people with good ol' cassette walkmans in the metro. it happens more often than you'd think around here.

Posted by: odot at October 10, 2005 4:55 PM

sony and other recording companies have been lobbying lately in the US for the right to decide the fate of things like the ipod before they even get close to market. That's the big thrust of the "revised broadcast flag" legislation before the House of Reps.

Posted by: nate at October 10, 2005 6:02 PM

Where do you get the figure that CD, cassette and vinyl only make up 25% of industry profits? Where do the rest come from? Downloads make up maybe 2% of sales, less in Japan. Tax on recording devices, and CD rental, are already well established, this is not anything new. Also it is difficult to see this as anti-American, as Japan is home to many of the world's largest electronic goods makers. And it seems unlikely that 2-5% tax on iPods is going to have any significant impact on their sales in Japan.

Posted by: OT at October 10, 2005 8:15 PM

Where do you get the figure that CD, cassette and vinyl only make up 25% of industry profits?

From a pie-graph in a book I own called "Ongaku Gyoukai Urawaza." The book says that 40% comes from karaoke, which is probably not true anymore. 10% is DVDs, concerts are 10%, etc., but I get a sense that labels - without publishing rights or master rights on the big jimusho artists - only make money from the actual production and sales of cds.

2%-5% is not going to change much in the long run, but there does seem to be a pattern where the labels want to delay thinking seriously about digital downloads as long as possible. That may be true in the US too, but there has been much more grassroots demand over there thanks to college networks etc. American students got into mp3s before magazines told them how to rip CDs etc. In Japan, there's been a lot less spontaneous movement towards going digital from the consumer side, which gave labels (tied to their parent electronics firms) the chance to stall. The iPod took two years to get to Japan, but I doubt there was enough computer culture to bring them over earlier anyway.

I would guess though that jimushos don't really care either way about digital downloads, because most of their money is made from things other than physical media sources. If they play their cards right, they're the ones to make spilloff money from a band getting big from file trading, where the labels just have everything to lose.

Posted by: marxy at October 10, 2005 9:25 PM

Marxy:

Any idea what the tax rate is for things like MD recorders or even cassette recorders? Is there a similar music tax on computers? The quesion then becomes, does the tax apply to all playback units as well since the iPod is playback only.

Posted by: Chris_B at October 10, 2005 10:51 PM