France expected to cut iPod levy in time for Christmas

French authorities will reduce a copyright levy imposed on music players containing flash memory, perhaps as early as next week, according to a source familiar with the plan. The move will reduce the levy on a 4G-byte iPod nano from over €50 (US$59) to about €8, the source said.

Apple Computer Inc. cannot yet say how this will affect the retail price of the iPod nano in France, a spokeswoman for the company said.

In France, as in some other European countries including Germany and Italy, it is legal to copy music for private use -- but in return the law imposes copyright levies on blank media, including cassettes, CDs, DVDs, hard disk drives and flash memory devices. The copyright levy is intended to compensate composers, performers and producers for revenue opportunities lost due to private copying of music.

Last week, the French Commission on Private Copying adopted a proposal to reduce the levy on flash memory devices, aligning it with the levy on hard disk drives, the source familiar with the plans said. The decision is widely expected to be published Dec. 1 in the Official Journal, where French laws and regulations must appear before they take effect.

The French laws and levies have been revised several times before to deal with advances in technology, but the levy on flash memory devices dates from 2001, when flash storage devices typically had capacities of under 64M bytes. In the case of the 4G-byte iPod nano, though, the French copyright levy adds up to a whopping €51.44, or 16 percent of its €309 retail price, according to Apple's French online store. Proportionally, the copyright levy for music players with a hard disk drive is much lower: €23.92 for the 60G-byte iPod.

The 4G-byte iPod nano costs €60 more in France than it does just a few kilometers away over the German border, in part due to the copyright levy. Another factor is the difference in the rates of value-added tax (VAT), a form of sales tax, between the two countries: the rate is 19.6 percent in France, and 16 percent in Germany.

One of the cheapest places to buy the 4G-byte iPod nano is Germany, where the €249.01 retail price includes a copyright levy of €2.74 and value-added tax (VAT) of €34.35, according to Apple's German online store.

Apple's online stores won't let French shoppers dodge national taxes and levies by buying from the store for a neighboring country. But even though German stores are just a short drive away, it appears French shoppers in border areas would rather buy at home or wait for the levy to be reduced, according to one German Apple dealer.

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