Bad economics.

Canadians pay a levy on blank recording media like tapes and recordable CDs that goes to the record companies, because Canadians are assumed by default to be criminals who steal music. Despite the fact that you buy those CDs solely to back up your computer, you still are forced to pay the record companies.

But the levy is not a percentage; it’s a fixed price per unit. As the price of CDs plummets, you just end up paying a larger percentage to the record companies. Michael Geist points out just how ridiculous this has become, with consumers now paying twice as much for the levy as they do for the CDs:

The numbers remain unchanged: 21 cents per CD-R. As prices have dropped, however, the levy now frequently comprises a significant percentage of the retail price. Consider the purchase of 100 blank Maxell CDs. Future Shop retails the 100 CDs for $69.99. The breakdown of this sale is $48.99 for the CDs and $21.00 for the levy (even worse is a current Future Shop deal of 200 blank CD-Rs from HP, which retails for $59.99. The levy alone on this sale is $42.00 (200 CDs x 21 cents/CD) which leaves the consumers paying $17.99 for the CDs and $42.00 for the levy).

Tip of the hat to Digital Copyright Canada.

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