Counting the Costs of Expanding Copyright Levies to Cloud Computing.

The question whether copyright levies should be applied to cloud computing has been raised multiple times in different EU Member States, as well as at the pan European level; however no definite policy decision has been taken so far.

The copyright levy system war born over fifty years ago out of a concern that private copies enabled by novel technologies may cause harm to rightholders. However, its practical application has been subject to much critique. Tariffs remain by and large undisclosed to end users and professional users find it difficult to claim back unduly paid fees. Some countries have a levy system, others don’t, each collecting society applies different levy rates, and cross border transactions are shackled with transaction costs.

Given these multitude of challenges, what would be the cost of expanding copyright levies to the cloud? This study finds that in eight EU countries alone direct costs associated with doing so, could be well over 2.4. Billion Euro over the next five years in a sample of eight European countries. The estimates further suggest that potential extra costs significantly outweigh potential revenues. It would thus be unlikely that cloud storage providers would be in a position to internalise extra costs and would likely pass on those costs to users. This could potentially lead to an increase of the digital divide.