p2pnet news | Music:- A couple of posts back we did a story on the fact Warner Music has hired Jim Griffin in the hope he’ll be able to, “to pull at least one rabbit out of the hat to help keep the company alive in the 21st digital century”.

But TechCrunch’s Michael Arrington isn’t impressed.

Far from it, in fact.

“Musicians themselves may just be crazy, but the music labels are dangerously stupid, and need to be stopped before they can do any further damage to the music industry,” he writes, going on >>>

Case in point: Warner Music, fully aware that the days of charging for recorded music are coming to an end, is now pushing for a music tax.

This isn’t the first time someone has called for a music tax. Peter Jenner argued for it in Europe in 2006. Trent Reznor said the same thing last year (as did the Songwriters Association of Canada). Mathew Ingram has other examples.

But Warner Music is doing more than just talking about a music tax. They’ve hired industry veteran Jim Griffin to create a new entity that would create a pool of money from user fees to be distributed to artists and copyright holders. Lawsuits against their customers aren’t working (The RIAA sent out 5,400 letters in the last year, says Portfolio, settling with 2,300 of those individuals and suing 2,465 who didn’t respond).

The goal? $5 per month from everyone, or fees of $20 billion per year. That’s double the current size of the recorded music industry ($10 billion).

$5? That seems familiar. Oh Yeh! That’s what the EFF was proposing in RIAA v The People - four years later.

“The concept is simple,” said the EFF: the music industry forms one or more collecting societies, which then offer file sharing music fans the opportunity to “get legit” in exchange for a, “reasonable regular payment, say $5 per month.”

It continued >>>

So long as they pay, the fans are free to keep doing what they are going to do anyway - share the music they love using whatever software they like on whatever computer platform they prefer - without fear of lawsuits. The money collected gets divided among rightsholders based on the popularity of their music. In exchange, file sharing music fans who pay (or have their ISP or software provider or other intermediary pay on their behalf) will be free to download whatever they like, using whatever software works best for them. The more people share, the more money goes to rights-holders. The more competition in P2P software, the more rapid the innovation and improvement. The more freedom for fans to upload what they care about, the deeper the catalog.

And didn’t Canadian musicians in the Songwriters’ Association of Canada (SAC) and Canadian Music Creators Coalition (CMCC) have a similar idea?

We propose a licence fee of $5.00 per internet subscription, per month. Payment of this fee would remove the stigma of illegality from file sharing. In addition, it would represent excellent value to the consumer, since this fee would grant access to the majority of the world’s repertoire of music. Existing download subscription services generally charge considerably more than $5.00 per month, while offering a mere fraction of the file-sharing repertoire.

At first blush, it looks like it might be good thinking.

But wait!

In Canada, at least, it’s perfectly legitimate anyone to download any piece of music they want so long as it’s for personal use.

Warner Music, EMI, Vivendi Universal and Sony BMG are desperately lobbying to have that changed so they can start trying to sue Canadians into becoming compliant corporate customers, just like they do in America.

‘Classic protection racket’

Akamai’s David Barrett has an interesting angle on the $5 plan, says TechCrunch. He calls it “tantamount to extortion, because it forces everyone to join,” and “It’s too late to charge people for what they’re already getting for free.”

“I agree - the music tax is little more than a classic protection racket,” says Arrington, going on to quote an earlier TechCrunch piece, to wit >>>

Forcing people to buy music whether they want to or not is not a solution to this problem. The incentives created by such a system are perverse - guaranteed revenue and guaranteed profits will remove any incentive to innovate and serve niche markets. It will be the death of music.

Music industry revenues will be a set size, regardless of the quality or type of music they release. Incentives to innovate will evaporate. There will only be competition for market share, with no attempt to build the size of market or serve less-popular niches. Forget labels building new brands and encouraging early artists to succeed - they’ll bleed existing big names for all they are worth and work hard to keep anything new - labels, artists, and songwriters - out of the market. New entrants just means more competition for a static amount of money. Collusion by existing players will run rampant.

Soon labels will complain that revenues aren’t high enough to sustain their businesses, and demand a higher tax. It will go up, but it will never go down.

As I said before, Asking the government to prop up a dying industry is always (always) a bad idea. In this case, it is a monumentally stupid, dangerous, and bad idea.

If this happens, it’ll, “put an end to the endless creative/destructive energy that is reshaping the music industry today,” says TechCrunch, adding:

“Good musicians will always find a way to make money. Others may have to follow their passion as a hobby and (shudder) get a day job to pay the bills. But if a music tax is put in place, that innovation will die, and with guaranteed revenues and profits, the need to innovate, market and compete will also die. A music tax is a sure fire way to destroy an industry that is just beginning to really blossom.

“Yes, blossom. As terrifying as these days must be for music industry players, it’s clear that a golden age of creativity and innovation is ahead of us, all led by the Internet as a nearly perfect distribution mechanism for their product. Music labels must die. Hopefully, before they do any more damage.”

[Note: - the 5,400 letters Arrington and Portfolio refer to were to American students alone. Only the RIAA knows how many subpoenas they’ve fired at men, women and children they accuse of being “massive online distributors of copyrighted music’.]

Stay tuned, as ever.

[The picture of Arrrington in the upper right is from a Boris Veldhuijzen van Zanten Flickr post.]

Slashdot it!

keep the company alive - Warner Music hires Jim Griffin, March 28, 2008
TechCrunch - The Music Industry’s New Extortion Scheme, March 27, 2008
similar idea - Canadian musicians’ file sharing plan, December 5, 2007

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This entry was posted on Friday, March 28th, 2008 at 8:06 am and is filed under Music. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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