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Music Industry Seeks 'Piracy Tax'

Monday, March 17, 2008
From Wired.com:

"In recent months, some of the major labels have warmed to a pitch by Jim Griffin...to seek an extra fee on broadband connections and to use the money to compensate rights holders for music that's shared online...Griffin's idea is to collect a fee from internet service providers -- something like $5 per user per month -- and put it into a pool that would be used to compensate songwriters, performers, publishers and music labels. A collecting agency would divvy up the money according to artists' popularity on P2P sites, just as ASCAP and BMI pay songwriters for broadcasts and live performances of their work."
[Full story]

Like most people, I share Mr. Griffin's concern for musicians and other creative artists receiving financial recompense for their work. However, his "pitch" strikes me as an extraordinarily bad idea. Ostensibly, as internet users, we would not be punished for our misdeeds in such a scenario. Instead, ISPs will be charged a few dollars each month for not preventing us from downloading music (and, I would assume, other media) illegally. Now ISPs, as money-making enterprises, would have to find a way to minimize the fiscal blow such a fee would entail. So far, so good. The next logical step, of course, would be for the ISPs in question to increase advertising rates and/or our monthly subscription costs.

Assuming that ISPs pass at least some of the monthly charges onto internet users via increased subscription rates, I would imagine that we will see several different reactions among consumers, including: A) people who dismiss the fee as "nominal"; B) people who, having spent money downloading music through iTunes and similar services, will resent paying "extra" for music they have already purchased; C) people who will view the charge as license to download music with impunity; and D) people who have no interest in downloading music and feel "punished" for the behavior of total strangers, folks who feel adding such a fee would almost be like asking someone buying a blank audio cassette to record his or her newborn's first words to pay extra for someone dubbing a Sheila E. record.

There is the very real possibility that people falling into groups B and D would respond to added fees by canceling their internet service (an admittedly unlikely scenario) or, at the very least, ceasing to purchase music (and other media) through established, legitimate channels. Whether or not such concerns will affect the choices record companies make regarding the dissemination of music and the payment of royalties, a surcharge will undoubtedly alienate consumers already skeptical about the business practices of companies widely considered avaricious. The way I see it, quite a few people willingly pay a dollar or two for a song download through companies like iTunes or Amazon. I, for instance, often spend several times the proposed "piracy surcharge" each month purchasing legitimate downloads--and I know of many, many other people who do the same. That five dollar add-on, I suspect, will push many of us away from "legal" channels, thereby weakening the cash flow record companies currently enjoy.

Of course, I am not an economist. I do suspect, however, that if such a surcharge is universally adopted by ISPs, record companies would earn more money than if we all kept buying music. Otherwise, why would anyone want to risk angering consumers? I mean, seriously, if record companies really want to go in that direction, they had better be certain that five bucks per internet user per month will bring more revenue than all other modes of music distribution combined because, once the "pirate tax" is implemented, they can kiss all that other revenue goodbye. After all, who would willingly give money to someone taking it against our will?

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