In an unexpected move, the Canadian Recording Industry Association (CRIA) has come out against a levy on blank media in a court filing, arguing the fees paid appear to allow for the justification of free downloading on peer-to-peer networks.

CRIA, which represents Canada's major recording companies, said in a filing to Federal Court of Appeal made public late last week that a proposed levy on MP3 players that has the support of the Canadian Copyright Board could result in more free file sharing.

The MP3 levy, "broadens the scope of the private copying exception to avoid making illegal file sharers liable for infringement," CRIA said in its filing. Graham Henderson, the president of CRIA, was not available for comment. Duncan McKie, the president of the Canadian Independent Record Production Association, which represents labels like Nettwork Records and Arts & Crafts Records, said the concern of the record industry is that levy can be used to legally justify the free sharing of music on peer-to-peer networks.

"In our view, the private copying levy was not created to justify widespread unauthorized file sharing," said McKie. "If an individual participates in any way in the widespread sharing of files, with the intention of not paying for materials he or she would otherwise have to buy, that is an infringement of copyright in our view, and is destructive to the financial welfare of the music industry and the artists. The private copying regime was not intended to justify this type of behavior. We also feel that this so-called 'debate' is being fueled by a copyright regime that is outdated, and needs serious review. On that we agree with CRIA and others."

Canadian record companies have been fighting for an update of Canada's Copyright Act for several years, arguing it is unable to deal with the realities of the Internet and file sharing.

The blank media levy, which was initially designed to compensate copyright holders for the personal copying of albums onto cassettes, has been controversial in past years, especially as the tax was moved to blank compact discs. In 2003, the Canadian Private Copying Collective, which collects the levy on behalf of various sectors of the music industry, including publishers and recording companies, sought to have the levy extended to MP3 players. The CPCC has asked the Copyright Board for a levy of between $5 (CDN) to $75 be applied to each MP3 player sale depending on the device's memory. The CPCC has collected $199 million through the levy since 1999 and distributed $178 million.

However, there have been critics of the levy throughout the Canadian recording industry. Some in the recording side of the business have quietly made their position known that they feel they haven't been compensated fairly through the levy for lost CD sales due to peer-to-peer file sharing. The recording industry has been concerned the levy has been used as a justification for free downloading in Canada, especially after CRIA lost a lawsuit against file sharers in 2004. However, others in the music industry support the fees, with many music publishing organizations, like the Society of Composers, Authors and Music Publishers of Canada pushing for additional levies.