French government urged to tax online ad revenue
- — 08 January, 2010 03:51
A report commissioned by the French Minister of Culture Frédéric Mitterrand urges the introduction of a tax on online advertising such as that carried by Google, which would be used to pay the creators of artistic and other works who lose out to online piracy.
The tax, a small percentage of revenue from online advertising shown to French Internet users, would be honor based, with advertising network operators such as Google, Microsoft, AOL or Yahoo required to declare how much they make.
Such a tax could raise €10 million ($14.3 million) a year for creators, estimated the authors of the report, Creation and Internet.
The authors recognize that France could never introduce such a tax in isolation, noting that ideally the government should encourage other European countries where creators face similar economic challenges to introduce such a tax.
The report was written by Patrick Zelnik, Guillaume Cerutti and Jacques Toubon. Zelnik is president of Impala, a network of independent record companies, Cerutti is a former head of the French consumer protection directorate and Toubon a former Minister of Culture and Minister of Justice known for championing a law enforcing the use of the French language in advertising.
Mitterrand asked the three to report on whether the range of music, films, books and other cultural products offered for legal download is attractive and reasonably priced, and on whether the creators of such products receive a reasonable proportion of the revenue derived from them.
With a significant proportion of online content offered free to consumers, supported by advertising, it was inevitable that the authors would turn their attention to the services by which that advertising is sold and delivered, with Google chief among them.
In their report, the authors also called on the French antitrust regulator, the Authorité de la Concurrence, to look at whether Google has a monopoly on search engine and search advertising services in France, and whether the problems faced by online publishers could in any way be related to Google's business methods.
Comments
Jimmetry
Fri 08/01/2010 - 22:34
What the?
Here we go again... the recording industry trying to grasp at whatever money they can by playing victim. What do online ads have to do with privacy? What the hell do they think they're going to achieve? Why can't they stop trying to be so damn authoritarian and embrace technology? As an owner of an iPhone/iPod, JUST LIKE EVERYONE ELSE, my requirement is this: If all music is available on iTunes from the moment it is released for ~$1 each at CD quality, old or new, I will say goodbye to file sharing. They're too busy trying to play 'who deserves what marketshare' and in the process creating a generation of people disinterested in using official methods of acquiring media. If the industry embraced the web years ago like they should've, file sharing never would've exploded from its niche status because the risks outweigh the benefits. THIS IS THE NATURE OF HUMANS. Few people will try to steal from a store because the risk of getting caught outweighs the few dollars saved. Most people will happily steal from a broken vending machine giving away free soft drink because they feel ripped off having to pay $3 for it normally and because the risks are miniscule.
Anonymous
Fri 08/01/2010 - 23:18
Everyone wants free and open except when it comes to them!
This is an old story. Everyone is an advocate of FREE and OPEN SOURCE except when it comes to them. This is just a way for France to try and suck some money out of successful U.S. companies. I mean everyone knows the French are lazy. I live in the EU and everyone here knows this fact. Also as another person said what does piracy have to do with Online adds? The answer is nothing again I say this is just lazy French trying to squeeze a few bucks out of successful companies. I am surprised they don't try to tax Germany for the World War II invasion because it has effected them for generations and no one can work and make money!
Anonymous
Sat 09/01/2010 - 00:45
What a smart comment !!!!
Hi,
I'm a french boy and i'm so laaaaaazyyyyyy....
And u're so smart, so openminded ...
Anonymous
Sat 09/01/2010 - 01:34
How would they atempt to do that?
I'm just wondering how they would even attempt to do that, with an international internet? They couldn't tax based on the reciever of the advertising, because that would cause problems with taxing products from other contries. They would have to: 1) tax based on the originating contract, which would give a major advantage to international companies who can just get the contract outside the country. 2) Tax google itself for operating in france, which again would bring juristictional problems, what if a company doesn't pay? would all the french ISP's be ordered not to show their site? I just don't see how this can be done logistically unless this is a U.N. type measure.
Anonymouse Penguista
Sat 09/01/2010 - 02:54
check the paper trail
The bimbo wife of Sarkozy is a model cum 'singer' and guess who the founder of her record label is?
Patrick Zelnik who wrote the report.
But let's not act like the entertainment industry doesnt own our politicians who are the best money can buy after,
Anonymous
Fri 08/01/2010 - 22:17
Good for the US, bad for Europe
The cost of such a tax wouldn't be the tax itself... it would be the cumulative effect of the higher cost structure for all businesses that rely on online advertising. Even if costs rise by a percent, this will result in enough CAPEX contraction to cost thousands, if not tens of thousands, of jobs.
Furthermore, any measure to restrict the natural monopoly that Google is in the process of achieving won't help anything, as their pricing is already controlled purely by advertisers via the bidding system. By requiring the provider of the most efficient platform to yield to less efficient platforms, consumers won't benefit - the less efficient companies will. Anyone involved in online advertising knows that a natural monopoly by Google is desirable, as it makes each advertising dollar go further and lowers overhead involved in utilizing several providers instead of one. Should Google do anything to diminish the appeal of their platform, advertisers would simply lower bids in reaction to the lesser returns. No reason to regulate.
In summary, any of the changes being proposed would hurt Google, hurt consumers, and hurt jobs. However, this would happen in Europe only, and give the US, which would lack the tax (and also lacks many other online taxes) an edge by giving it a relative advantage to other countries for doing business online.