COPYCENSE

“Internet shoppers accustomed to tax-free purchases from Apple Computer’s iTunes Music Store soon may be in for an unpleasant surprise.

“State legislatures and tax officials, eager to find new ways to boost government spending and curb budget shortfalls, are eyeing the burgeoning market for digital downloads as a potentially lucrative source of revenue. Digital sales of music tripled from 2004 to 2005, leaping from $400 million to $1.1 billion worldwide, according to the International Federation of the Phonographic Industry, a trade association known as IFPI. The U.S. recording industry estimates that domestic sales totaled $503 million last year, but that figure doesn’t include movies, e-books, online video games and other forms of digital media.

“A CNET News.com analysis shows that 15 states and the District of Columbia now tax downloads of music, movies and electronic books. Some high-tax states such as California do not levy the same charge on iTunes downloads, but that could soon change.”

Declan McCullagh and Anne Broache. The Tax Man Cometh After iTunes. News.com. April 13, 2006.

See also:

Arik Hesseldahl. Apple Takes Its Bankroll to Reno. BusinessWeek Online. April 5, 2006.

CopyCense™: K. Matthew Dames on the law, business, and technology of digital content. A business venture of Seso Digital LLC.1