When people go to a store, including an online store, and buy a smartphone, computer or, for example, an external hard drive from an Estonian company, they may notice that in addition to value-added tax, the price of the device also includes the so-called private copying levy.

The private copying levy is intended for Estonia's music and film sector — that is, for authors, performers and producers. It serves as a kind of compensation to creators when, for example, a computer user downloads a song or film from the internet or goes to a concert and records a musician's performance.

Even recording a short five-second clip on a phone to post on social media counts, according to a representative of the Ministry of Justice.

At present, every newly purchased smartphone or computer includes €3.50 in its price for this fee. However, representatives of authors wrote to the justice minister two years ago arguing that the payments made to creators are too low and should be increased.

The Ministry of Justice has now prepared a concrete plan under which the fees could rise starting July 1. For example, the levy added to the price of a smartphone bought in Estonia could increase from €3.50 to €6. In that way, authors would collect an additional €900,000 each year, bringing the total to €2.3 million annually.

According to the Estonian Association of Information Technology and Telecommunications, the entire private copying levy system is currently unfair and distorts the market.

Keilin Tammepärg, the association's head of policy and legal, told ERR that creators must receive fair compensation for the use of their work, but that the money should be collected where people actually consume music or films.

"This system is unfair because a person buys a phone, but we assume they are using it to make copies for personal use. Even if they make the occasional copy — for example, they go to a concert and record a song as a keepsake — they are not going to listen to it again later from that recording. If they want to hear the song, they will still go to YouTube or some other paid service. This fee is essentially a relic from the old days when people really did make copies onto cassette tapes to keep on a shelf," Tammepärg said.

Estonian authors receive nothing on smartphones ordered from China

Tammepärg pointed out that the current system is unfair to Estonian businesses because if a person buys a phone from, for example, a Chinese online retailer, the smartphone's price does not include such a fee.

In a letter to the state, the association notes that, from the consumer's perspective, the private copying levy on a smartphone would amount to nearly €7.50 including value-added tax, which is significant in the consumer electronics market.

According to the Estonian E-commerce Association, 65 percent of all ordered parcels come from Estonia, while as much as 35 percent come from abroad. Of the different product categories, consumer electronics is one of the most popular, accounting for approximately 30 percent of online purchases.

The association points out that because of inadequate oversight, the obligation to pay the levy falls disproportionately on local merchants, while international online sellers and many smaller web stores do not pay it.

"We have proposed that, because the actual use is so marginal, fair compensation for authors could be paid from the state budget. In other words, all Estonian taxpayers would pay this compensation, rather than collecting it from people who buy devices and, in all likelihood, do not use them for copying," Tammepärg said.

Study: Every sixth person downloads music

Adviser at the Ministry of Justice Alex Luik said it is not known how much people record concerts. However, a study commissioned last year from pollster Turu-uuringute AS found that one in six people had downloaded music from the internet for free at least once during the past year.

"The reason the smartphone fee is being increased from €3.50 to €6 is based on the findings of the study. Consumers were asked how much they use different devices for private copying and it turned out that the use of smartphones for that purpose has risen significantly," Luik said.

What should be done, however, in situations where a smartphone or computer is ordered from China and Estonian authors receive no compensation, while the fee is also not reflected in the product's price?

"That is a difficult question. If a consumer goes to an online store and orders a device, for example from China, the private copying levy may not reach the organization collecting the fee. It is open for discussion whether the system could be made more effective and uniform for devices that enter Estonia in this way as well. This issue still requires further consideration," Luik said.

According to the government's plan, the levy would be €4 per device for laptops, tablets and desktop computers, €6 for smartphones, €4.50 for televisions with recording functions, €3.50 for external hard drives and €0.50 for USB flash drives and memory cards.

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