Internet music tax, a bad idea

Warner Music's plan amounts to one of the oldest Mafia businesses in existence: a protection racket

In the IT world it is amazing how often you'll be presented with an idea that sounds good, seems reasonable and appears to fix a problem but in reality is a bad idea. I say this because a proposal that sounds good is being developed to address the "problem" of online music piracy, and not only is the idea bad for consumers, it also could be particularly problematic for enterprise networks.

If you believe the spin from the Recording Industry Association of America, online music piracy (aka illegal file sharing) is the fifth Horseman of the Apocalypse, and central to the association's argument is that piracy costs the RIAA's 1,600 member labels several gazillion dollars per second and has reduced industry revenues by around 30% over the last decade to about US$10 billion annually.

So, if you consider the fact that industry revenue is down and CD sales are in the toilet, and combine that with estimates like the one from BigChampagne that says one billion illegal files are transferred every month, then it is obvious SOMETHING MUST BE DONE.

That something could turn out to be a plan being promoted by Warner Music Group. Here's the deal: Because ISPs and other large network operators are the vehicles for illegal file sharing, the service providers should charge each user a $5-per-month tax. This money would go into a pot to be distributed to artists and copyright holders, and users would be free to do as they pleased regarding music downloads.

That way it sounds reasonable, doesn't it? The plan eradicates the problem of piracy, gets rid of litigation issues, and compensates the artists and music labels that are, at least in theory, financially harmed by the current situation.

Will the tax fill the financial deficit? Warner Music is claiming that the tax will generate around $20 billion per year. Exactly how the math works isn't clear, but if it does that's double the current revenue of the entire US music industry!

ISPs and other large networks -- including enterprise networks -- that don't levy the tax on their users will not be indemnified should user abuses result in copyright infringement lawsuits. This means service providers and networks with less in their coffers than the RIAA has to spend on legal fun will be highly "incentivised" to sign up.

Which ISPs and networks will be targeted first? That's obvious: colleges and universities, entities that have a huge motivation not to get embroiled in lawsuits. Then will come smaller ISPs and enterprise networks. After that it will only take one big ISP, a Comcast or an AT&T, to roll over and the rest will follow and the strategy will have worked.

How might this affect you? Well, if you run a large corporate network and your upstream ISP decides to sign up, it might hit you with a great charge based on some estimate of your user population. If your ISP doesn't sign up you could find yourself under significant internal pressure to indemnify your organization by paying the tax. Either way, whose budget will the cost come out of? IT's? Legal?

What really outrages me is that the Warner plan amounts to one of the oldest Mafia businesses in existence: a protection racket.

Now, if the plan was to let individual users buy an annual license that allowed them to download any online music without charge, I'd buy one tomorrow, as would all of my friends. Hell, I bet we'd all pay 10 times that to buy into the ability to access more music than we ever dreamed of.

I wonder if Warner has the maturity and sophistication to rethink its plan and turn what is really a bad, unethical idea into what could possibly be a good one?

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Mark Gibbs

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