Many states are pushing for taxes on digital products. In a recent article written by published on April 15, 2008 on CNET News.com, Broache writes:
“Two years ago, a CNET News.com special report found that 15 states and the District of Columbia said that their laws and regulations meant that digital downloads should be taxed. A few months later, New Jersey joined that list.
Since then, more states have become tax-inclined. In 2008 alone, Indiana, Utah, and South Dakota have enacted laws reiterating their commitments to collect taxes on digital downloads, while Nebraska recently voted to send its governor a bill (PDF) that would tax downloads of books, movies, and music starting October 1. Others, including Wisconsin and Massachusetts, have formed groups to “study” new i Tunes taxes.” (Politicians push for new iTunes sales taxes).
Although this sounds tedious it, puts more pressure on the entertainment industry and opens doors for Independent artists. Don’t thank your state government officials just yet. They did not do it for their native aspiring artists, nevertheless they have opened a door.
Right about now some of you are saying isn’t this bad for me? I sell my music on my web page and MySpace. Doesn’t this take money out of my pocket? NO!! If you sell you music on MySpace , Snocap is the one paying the taxes. For those who are unaware, Snocap is the company MySpace uses to allow users to sell their music on their MySpace page. What about your web page? More than likely you are using a company or other service such as cdbaby, e-junkie, amazon, or itunes to sell your music on your web page. Companies such as these are responsible for charging the digital tax.
So does this mean I will be charged more by the company that sells my music? No, there will be a flat tax on your song. Think about when you go the the gas station and buy a $.99 cup of cofee what’s your grand total? Probably $1.07 depending on which state you’re in. Customers don’t think twice about it. The same will be true of a .99 cent song.
The greatest outcome of the proposed state tax is the financial hit to the major record labels. Many record labels are already in battles with itunes and other digital distribution companies over the pricing of their music catalogs. Universal threatened to cancel their catalog deal with itunes last year. How will labels be taxed? Rest assure those catalogs are going to cost a pretty penny. Major Record labels cannot afford to loose one dime ($.10) right now. They can barely afford to pay for their star recording artists. That precious $.07 tax is more than they give each artists per album sale!
