South by Southwest–or any occasion when industry types and hanger-ons get together–can be the source of a number of bad ideas, but the most buzzed idea to circulate post-Austin this year seems to be the flat fee to download whatever music you please legally. Like most completely implausible concepts, this one has its ups and downs, but no one actually believes this is ever going to happen, right? Well, Washington Post blogger Kim Hart actually sees some future in the idea.
The new idea on the table: Internet service providers would tack a small fee ($5 for example) onto monthly bills for broadband connections. The money would then go to the music industry to help compensate labels, performers, song-writers and other artists for music shared online.
It is aimed at the people who illegally download free songs through peer-to-peer file-sharing services, like BitTorrent and Kazaa. Similar ideas have been floating around for a couple of years now, but it seems the music industry may be starting to see it as a viable option.
I don’t think anyone actually associated with the “music industry” thinks this is likely, no matter how far down the sales totals for discs sink. Why on earth would Edgar Bronfman or Doug Morris trade in the possibility of selling music at full list price or even 99 cents a track in exchange for a paltry sixty bucks a year? For that matter, would the RIAA give up the potential lawsuit earnings from anyone who would purchase this imaginary download license created from pixie dust? It’s certainly a great idea for the consumer…like a Sizzler for music, minus the potential for food poisoning or civil trials. However, there’s no upside for anyone else. Internet service providers would be hit by the surge in torrent traffic, artists would be forced to bicker over who gets what share of the new limited revenue stream, and labels would have little to no incentive to actually release music. This entire scenario assumes that people would even pay the five bucks. With the entire recorded history of music closer to being available via Rapidshare everyday, it’s a difficult proposition to convince someone that $5 is a better deal than free.
But, hey, what’s more fun that discussing solutions to the industry’s problems that lack any viability whatsoever, right?
Would You Pay a Fee for Legal Music File Sharing? [Washington Post]
I think it would work. Maybe it’s $5, maybe $10, who knows — but market research would take care of that. In any case, at the right price, it’s hard to imagine anyone with Broadband or Cable NOT paying $5 (or whatever price) for the service. It’s anything you want, whenever you want it! Why bother with annoying torrents and trackers and questionable quality, etc, when you can pay $5 a month and have it easily?
Lots of folks who don’t pay $60 a year in music right now would not download $60 worth of music (by today’s standards) in a year. The labels would make money on these folks. And of course lots of folks would download way more than their $60 share. But it would even out.
If you actually look at the economics, it’s very alluring. 150 million cable subscribers in the US x $5 (or $10) each? Do the math. It’s a hell of a lot of money.
-VN
@Vince Neilstein: No, 750 million a year is not “a hell of a lot of money.” 1.5 billion isn’t much better, either. The music industry made 12 billion dollars domestically last year, and that’s with sales of physical media falling constantly.
Actually, this idea is being taken very seriously, by folks in the industry who have been circling these issues for about 10 years. Wired has a recent article on this topic, though it’s off the mark in places.
Overall, the idea makes sense, but only if it’s comprehensive enough to cover ALL music (not just the voluntary participants in the program) and is fair and transparent in the distributions (as opposed to existing royalty pools). I don’t want another webcaster rate-setting panel disaster, but less than 100% participation fails to resolve the risk of continued litigation.
It appears you assume acquisitions via P2P would replace every other legal purchase. I don’t think that would happen. Some people will still prefer iTunes (out of habit, out of loyalty to Apple), some will prefer services like Rhapsody (well organized, well curated) and some people will still buy CDs.
Labels would have no incentive to release music? That’s absurd (if the fee is more like a tax…see below). The only reason they would have no incentive to release music is if they had no chance to receive part of the pooled money. The method of tracking or sampling downloads in order to disburse the money will have to be accurate enough that even the smallest of labels are adequately compensated. That will be the main challenge.
A key point is that this sort of plan is not based on voluntary participation. Yes, the EFF outlines a voluntary plan (as pointed out in the WaPo post), but the plan content owners are likely to support would be a compulsory tax. Nobody would choose to pay $5 per month…it would be added to your broadband bill like it or not. This is the proposal being discussed in Canada. I really doubt content owners would get behind a plan that allows people to choose between paying $60 a year to use P2P (the proposal) or paying nothing to use P2P (the current situation). There would be too few takers for the plan to make sense.
check your math. it would be $750 million *per month* based on the the 150 million subscribers and $5 per month (given above). that’s $9 billion per year.
@coolfer: Labels would be substituting a larger income pool for a smaller one if the plan were voluntary, and thus have diminished incentive to release large volumes of music. I don’t see how that’s “absurd” exactly, but you’re certainly entitled to your opinion.
If the plan is mandatory as a user-tax, the consumer base (as well as those who sell music on a per unit basis) is likely to riot, and if somehow that idea actually came to fruition, I think there would end up being users dodging the tax via some sort of work-around.
I’m certainly aware the idea isn’t “new”, but its age doesn’t really make it automatically “good” either.
Voluntary would be the only way, because all the lobbyists in the world couldn’t get Congress, the CRB or any other rulemaking body to approve a compulsory tax. Someone would bring up somebody’s poor Granny who has broadband to e-mail pictures to her grandkids, but never listens to music beyond that one AM religious station. Wh should she have to pay so Johnny Freetard can keep torrenting the night away?
Have you heard about Sandy Pearlman’s (now abandoned) “Five Cent Solution?” He and his brainiacs at McGill crunched some numbers and found that if all of the world’s music were digitized and sold online at half-a-dime, the revenue earned would, in short order, dwarf the combined take from all royalty and licensing payouts combined.
He’s since abandoned the idea, however. Now he believes that Moore’s Law (and other exponential technological advances) will result in “The Paradise of Infinite Storage,” in which your pocket device will be able to hold all of the world’s music (shared off-network and device-to-device), rendering any attempt at IP protection moot. The end of copyright; the end of the music industry. People would, of course, continue to create art, but only for personal, expressive and tribal reasons – not for moolah.
Suffice it to say, people do NOT like his theory. I think he’s the Ray Kurzweil of music. Plus he invented Blue Oyster Cult!
sizzler sells music?
I think by “voluntary,” they mean the ISPs would have to agree to it, not the consumers.
@ coolfer – “The only reason they would have no incentive to release music is if they had no chance to receive part of the pooled money. The method of tracking or sampling downloads in order to disburse the money will have to be accurate enough that even the smallest of labels are adequately compensated. That will be the main challenge.”
Sub “challenge” in that last sentence with “impossibility,” and you’re right on. The people with the resources to institute said “tracking” system would be the big RIAA players, who would gladly leave small indies (many of whom now do fine business) in the dust.
@ The Contrarian – “People would, of course, continue to create art, but only for personal, expressive and tribal reasons – not for moolah.”
Sure, and if you get tired of your family’s ’round-the-piano repertoire, you’re SOL.
Another problem with this idea is that it prioritises the copyright claims of the music industry without any regard to all the many other copyright infringements that the internet perpetrates in other sectors – TV & film, porn, photography, and so on. What would the ISPs say when the porn industry puts in a claim for lost revenue and wants to add a $5 per month tax too… (then the “somebody’s poor Granny” story gets put into even sharper relief). Where does it stop?