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Search engines may face ad tax

12 January 2010 15:45 (UTC +04:00)

Baku- APA-Economics. The French government is considering taxing search engines such as Google and Yahoo and internet service providers as a way to support the production of music, films and journalism in the digital age, euobserver reported.
A report commissioned by the country’s culture ministry issued this week proposed a tax on online advertising that could then be put toward subsidies or vouchers for artistic and other cultural works.
Just one of 22 measures in the report, the levy is described by its authors as a "Google tax" but would also be applied to the likes of Yahoo, Microsoft and Facebook, as well as the telecommunications companies that hook up households and businesses to the internet.
The precise form and amount of the tax was not outlined, but the report’s authors suggested that the tax be "reasonable" and could initially bring in around â‚¬30 million a year.
They hoped that such measures could be constituted not just in France, but across Europe.
The document, drafted by Patrick Zelnik, the head of Impala, the European federation of independent record labels, former culture minister Jacques Toubon and Guillaume Ceruttie, the director of Sotheby’s France, argues that such companies have received "enrichment without any limit" on the backs of cultural producers.
Other proposals in the report, long awaited by the music, cinema and book world, include a music voucher system for young people dubbed "Music Online" that would see the sale of cards allowing those aged 15-24 to buy tracks and albums at a discount. The cards would cost from â‚¬20 to â‚¬25 but be worth â‚¬50 in digital downloads. The government would back the scheme up to â‚¬20 per card, with record companies financing the remaining cost.
Similar platforms could be developed for films via subsidised video-on-demand subscriptions and ultimately digital books as well.
In another recommendation, music and video streaming sites such as Deezer, YouTube and Daily Motion would be treated in a similar way to radio, with the institution of a licence they would have to purchase that would allow unlimited access to content catalogues.
The Zelnik report also suggested that a commission be constituted to consider methods of compensating journalists for their work provided free on the internet. Newspapers have been some of the hardest hit cultural products as their advertising revenues have plummeted in the wake of the advent of the online world.
French President Nicholas Sarkozy backed the report in a speech on Thursday, although he did not explicitly endorse the Google tax.
He did say however "the possibly dominant position Google has acquired in the online advertising market" should be investigated by competition authorities.
The report was delivered to the Culture Ministry this week, which must now consider its recommendations, although Mr Sarkozy said that he hopes the music card scheme could be up and running by the summer.
The SACD society of authors and composers welcomed the document while Google France for its part emphasised the need for cultural producers to develop new business models rather than depend on taxation for support.
"There is an opportunity here to promote innovative solutions, rather than extending the attitude of opposition between the internet world and the cultural world, for example through the approach of taxation," said spokesman Olivier Esper, according to AFP.