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Japanese Culture Agency drops plan for an `iPod tax'

Japan yesterday abandoned a planned revision to copyright laws -- dubbed the "iPod tax" -- that would have imposed a royalty payment on purchases of digital music players, after a government panel failed to agree on how to police violations.

The Cultural Agency committee's decision followed a yearlong debate over how to update the nation's system for levying extra copyright fees on gadgets, given dramatic changes in recent years in the digital content business, government official Hiroyuki Suzuki said.

Under the current system, the charge -- generally 3 percent of the product's wholesale price -- is included in the price of recording devices and other gadgets that can be used to duplicate copyrighted material, and most shoppers aren't even aware they're paying it.

Since last year, recording companies and other lobbyists have said the same system should be applied to recording devices with hard drives, including music players like Apple Computer Inc's iPod, as well as flash-memory players.

The panel's members, including academics and consumer-rights activists, have been so divided on where to draw the line on what constitutes copyright infringement that many had speculated they would not be able to agree by the December deadline.

Although the media here calls the system the ``iPod tax,'' the money goes to recording firms, composers and artists so it's technically not a tax. Similar systems exist in some European nations.

Opponents say the current system is an obsolete way of monitoring digital music purchases, while others contend that consumers would be doubly charged under the proposed change because they often already pay royalties on digital purchases.

Apple in Japan had no comment yesterday on the decision.

Apple's iPod, controls about 70 percent of the global market, with its market share in Japan growing to 60 percent recently.
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