October 5, 2006

José Manuel Barroso President of the Rue de la Loi 200 B-1049 Brussels

Subject: European Commission’s innovation strategy and imminent reform of copyright levies

Dear President Barroso,

I am writing on behalf of a substantial section of Europe’s technology and creative industries, to offer our appreciation and support for the European Commission’s call for Member State and EU-level action on ten priority areas to achieve a broadbroad----basedbased innovation strategy for the European UUnionnion .

We were particularly heartened to see you single out the need for reform of Europe’s outdated and unjust system of copyright levies, in existence in 20 Member States to supposedly compensate rightholders for legal acts of private copying. A review by the Commission services shows that most of the Member States have not properly implemented the 2001 Copyright Directive, and are not tackling the unjustified actions of collecting societies that place an ever-greater financial burden on both consumers and industry.

It is essential to the successful completion of the Single Market that the Commission not stand by and ignore resistance to essential reforms. As the executive body of the EU, the Commission clearly cannot condone inertia or rearguard action in the Member States when it comes to the essential and urgent task of implementing the revised Lisbon Strategy for growth and jobs.

As regards implementation of European policy, industry – an essential partner in growth and jobs agenda -, is entitled to expect leadership and courage, but also consistency from the Member States and from the Commission itself, when it comes to confronting the vested interests that oppose reform, in this case the pressing reform of the copyright levy system. The prevailing myth that establishing transparency and fairness in the copyright levy system is a zero-sum game, endangering the dissemination of culture and proper compensation for Europe’s authors and artists is yet another reactionary untruth designed and echoed in order to build resistance to essential reform.

The imposition of varying levels of copyright levies depending on product and Member State is anathema to the Single Market, and directly counters the Commission’s own decision to pursue policy that puts the citizen first. Levies not only severely penalise the competitiveness of Europe’s technology industry, but they also mean that consumers are often paying twice and sometimes more to compensate for private copying.

Furthermore, Europe’s creative industries require a more political commitment if they are to become the bedrock of future European economic competitiveness, but instead are also losing out as a result of the levies system. Levies hurt European culture. Artists pay copyright levies on the very equipment they use to record their music – for small bands the costs can be significant. And artists lose on digital sales of their works when consumers are priced out of the market for devices used to play online music.

We therefore respectfully call upon the entire Collège to implement the policy outlined in your Communication, and accept the need to reform an outdated system that is penalising consumers and innovation. We trust that we can count on the Commission to agree on a sound and effective Recommendation for reform of the levy system in the coming weeks, and we remain at the disposal of you and your colleagues to assist in any way that we can.

Yours faithfully,

Mark MacGann Director General, EICTA On behalf of the Copyright Levies Reform Alliance 1

CC: Günter Verheugen, Vice President, Commissioner for Enterprise and Industry Charlie McCreevy, Commissioner for Internal Market and Service , Commissioner for Information Society and Media Ján Figel’, Commissioner for Education, Training, Culture and Multilingualism Markos Kyprianou, Commissioner for Health and Consumer Protection

1 European Information and Communications Technology and Consumer Electronics Industry Association (EICTA), Business Software Alliance (BSA), European Digital Media Association (EDiMA), European-American Business Council (EABC), and Recording-media Industry Association of Europe (RIAE)

2