A lengthy political debate in the Netherlands has resulted in rejection of a law banning illegal downloads in that country, as the Dutch parliament finally voted against the law yesterday.  This development paves the way for enactment of a private copying levy of up to €5 per device on devices such as PCs, smartphones, tablets, and set-top boxes.

Without a law against downloading infringing content, it will be impossible for the Netherlands to adopt the kind of graduated response scheme that France has implemented and that shows promising early results.  Instead, the country will go down a path that has led to unfairness, confusion, and inaccuracies in compensating rights holders according to actual use of content.

Levies on consumer electronics have their origins in German taxes on photocopiers.  Under EU copyright law, people have the right to make copies of content for their personal use, but rights holders have the right to be compensated for those copies.  Levy schemes were enacted in order to compensate rights holders according to formulas for estimating the value of copies likely to be made by each owner of consumer electronics.  These schemes vary widely from one country to the next and have been the source of unnecessary complexity in European content licensing as well as gray-market consumer electronics sales in high-levy countries.

(A notable exception to this is the UK, which has neither levies nor private copying rights, though the latter, at least, is about to change.)

The European Commission has been working for years to eliminate — or if not possible, at least harmonize — the unfathomable levy system in the EU.  This step in the Netherlands works against the EU’s efforts.  It is, admittedly, politically expedient: given the choice, politicians would rather be seen adding a tax onto consumer electronics purchases (thereby motivating Dutch people to drive the short distance to Luxembourg, where consumer electronics are levy-free) than passing a law that criminalizes online infringement.  Media companies also find levies desirable because they create more stable and predictable revenue streams.

Yet this is a retrograde move.  Levies are blunt, unfair instruments in an age where fairness and accuracy — at least relatively speaking — are available through technology.  Everyone has to pay the same levy regardless of how many copies of files they make or whether those files are infringing or not.   It’s not even clear whether the levy is meant to compensate rights holders for infringement or for private copies (of anything).  It is especially disappointing to see levies spread in the home country of Europe’s leading authority on levy chaos, Prof. Bernt Hugenholtz of the University of Amsterdam.

The new levies are set to take effect in the new year.  Yet this issue may not be resolved after all, as several makers of consumer electronics have filed suit against the Dutch government over the levies.