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Viewing cable 08TOKYO1779, JAPAN REACHES COMPROMISES ON COPY LEVIES AND

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Reference ID Created Released Classification Origin
08TOKYO1779 2008-06-27 09:57 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tokyo
VZCZCXRO4779
PP RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHNAG RUEHPB
DE RUEHKO #1779/01 1790957
ZNR UUUUU ZZH
P 270957Z JUN 08
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC PRIORITY 5464
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION PRIORITY
RUEHFK/AMCONSUL FUKUOKA PRIORITY 8635
RUEHNAG/AMCONSUL NAGOYA PRIORITY 6867
RUEHNH/AMCONSUL NAHA PRIORITY 1011
RUEHOK/AMCONSUL OSAKA KOBE PRIORITY 2364
RUEHKSO/AMCONSUL SAPPORO PRIORITY 9220
RUEHBS/USEU BRUSSELS PRIORITY
UNCLAS SECTION 01 OF 02 TOKYO 001779 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/J, EEB 
STATE PASS USTR FOR JMCHALE, EHOLLOWAY, JRAGLAND 
STATE PASS DOC FOR DLEE, CDICKSON 
 
E.O. 12958: N/A 
TAGS: ETRD KIPR PGOV JA
SUBJECT: JAPAN REACHES COMPROMISES ON COPY LEVIES AND 
DUBBING 
 
TOKYO 00001779  001.2 OF 002 
 
 
1. (SBU) Summary: The Cultural Affairs Agency (Bunkacho) and 
the Ministry of Economy, Trade and Industry (METI) announced 
June 17 a compromise on the contentious issue of copy levies. 
 The agencies decided not to wait for the conclusions of a 
study group that had become deadlocked over the differing 
views of intellectual property (IP) rights holders, consumer 
electronic device makers, and content providers.  This 
agreement allowed another compromise, announced June 19, to 
adopt the "dubbing 10" proposal to loosen current constraints 
on copying content for personal use within the home. 
Broadcasters announced June 23 they will launch a new 
"dubbing 10" system July 4, in time to allow time-shifted 
viewing of the Olympic Games.  End summary. 
 
2. (SBU) Bunkacho and METI announced June 17 a compromise 
agreement to expand modestly the scope of Japan's copy levy 
system.  The new copy levy system will add blu-ray recorders 
and media to the list of covered products, but will not 
include devices with integrated or non-detachable storage 
media such as MP3 players, IPods, and HDD players.  Device 
makers had resisted expanding the levy system, while IP 
rights holders had argued they needed the expansion, 
especially if Japan moves to loosen current rules to allow 
consumers to record more than one copy. 
 
1992 Copy Levy System Needs Changing 
------------------------------------ 
 
3. (SBU) Copy levies are a quasi-tax on select audio and 
audio-visual devices and media to remunerate rights holders 
for anticipated infringement.  Proponents for expanding the 
system, established in 1992, argued it is outdated and 
inadequate.  Levy collections dropped steadily over the past 
several years, in part because migration to newer 
technologies gradually eroded the scope of covered products. 
However, over the same period, risks of online infringement 
and piracy grew. 
 
4. (SBU) Critics argue the current system is neither 
market-based nor effective, and feeds a bureaucracy built on 
the collections.  Critics object as well to a plan they see 
expanding and further entrenching the system.  They argue 
efforts should be made to improve TPMs (technical protection 
measures) and DRM (digital rights management) systems that 
would support sustainable business models to capture revenue 
based on consumption of content. 
 
5. (SBU) The scope of products covered was also contentious. 
Makers of devices such as MP3 players and IPods opposed 
Bunkacho's plan to impose levies on those devices, but not on 
cell phones.  A recent study of Japan's market showed net 
music industry revenues for distribution over the internet to 
PCs were USD 330 million in 2006, while distribution to 
mobile phones was valued at USD 1602 million.  Industry is 
also concerned about a proposed "evaluation organization" 
that would review and revise the scope each year, making the 
entire system less predictable. 
 
6. (SBU) Analysts note levies, while offering modest 
remuneration, do not establish incentives to promote 
development of TPMs.  Rather, they can impede their 
advancement and adoption.  One GOJ official commented Japan 
faces a pivotal decision:  "whether to follow an EU model by 
expanding and further entrenching the levy system, or rely on 
an approach like that of the U.S. by promoting market 
mechanisms and seeking technical solutions. 
 
Japan's "Dubbing 10" Proposal 
----------------------------- 
 
7. (SBU) The "dubbing 10" proposal would loosen rules that 
currently allow only a single copy of digital content, 
supported by technical copy-protections on Japanese broadcast 
digital content.  These rules do not accommodate the 
principle of "fair use" and inhibit legal copying for 
personal use on distributed devices within a home or family. 
The proposal to allow up to nine additional copies is 
intended to approximate fair use and accommodate the 
widespread demand for content on distributed electronic 
devices. 
 
TOKYO 00001779  002.2 OF 002 
 
 
 
8. (SBU) The "dubbing 10" proposal has been under study for 
some time but was held up by IP rights holders' concerns that 
their rights and IPR enforcement were being eroded.  Revising 
levies therefore was a move to overcome objections to 
introducing "dubbing 10." 
 
9. (SBU) The push to reach a compromise now reportedly 
resulted from the need to deal with time-shifted viewing of 
broadcasts before the start of the Beijing Olympics.  The 
ministries' compromises break the deadlock and give Japanese 
consumers additional flexibility in handling digital content. 
 However, they are not likely to satisfy fully any of the 
concerned stakeholders.  The horse trading required to 
achieve even this fairly minor compromise may be a sign of 
what to expect as the GOJ works to consolidate 
telecommunications and broadcasting laws over the next few 
years. 
SCHIEFFER