Pakistan Lifts YouTube Ban... Hopes Internet Stays In One Piece This Time

Why A Music Download Tax Is A Bad Idea

from the unintended-consequences dept

Tue, Feb 26th 2008 12:21pm — Mike Masnick

In the last few weeks, a lot of folks have been submitting the story about the Songwriters Association of Canada (SAC) proposing a $5/month "tax" on ISP connections, which could then be used to reimburse songwriters and musicians for downloading. I've resisted writing about it, because it's been discussed at length in the past when it's been suggested. The one difference here is that a group of musicians is actually supporting it. However, Michael Geist does an excellent job explaining why it's not a very good idea. Beyond pissing off those who don't feel they should subsidize the rest of the industry, it's not at all clear it's necessary. There are plenty of other business models that the music industry can use to support musicians and songwriters that don't require a special tax. However, the biggest reason, as Geist points out, is the second you do this, plenty of other industries will come out of the woodwork demanding a special fee get applied to internet connections as well. Newspapers that think Google and Craigslist are "stealing" from them will demand a special "news tax." And then think of all those other industries who claim they're being impacted by the internet. You'll have a special auto-mechanic's tax, to pay for mechanics who are upset about the DIY info found online. The "knitting tax" for all the free knitting patterns online. I understand that AAA may be upset about Google maps. Travel agents want that "travel tax" to pay for all that business that Expedia has cost them. Where does it stop?

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Filed Under: canada, downloads, isp tax

53 Comments

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Kilroy, 26 Feb 2008 @ 12:44pm

not to mention that
Anyone who does not download and chooses to buy their music in a retail environment (like ... oh maybe me) is going to get taxed on something that they never use. Hmmmm, maybe the governments of the world would go for an idea like that .... I need to patent that " a tax on what you didn't buy" I smell a huge win-fall!
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Corey, 26 Feb 2008 @ 12:52pm

Dumb analogies
I agree that the tax is bad idea, although unlike you I don't think everything digital should be free - there's nothing wrong with people be paid for the product they actually produce by the consumers who use the product.

The reason for my post is that those might be the dumbest analogies you have ever used. Every one on them is about something on the internet that competes with another product by offering a similar service or information. But in the music case, we're talking about people having to compete with their very own product which is being given away for free.

Do you really think the newspapers to google/craigslist is at all the same thing? You might have a point if Craigslist was copying the complete content from newspapers and putting it on their site.
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Anonymous Coward, 26 Feb 2008 @ 12:53pm

Re: Dumb analogies
Sorry, i meant to make that a new post - its obviously in response to Mike, not Kilroy.
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matt, 26 Feb 2008 @ 1:10pm

Re: Dumb analogies
You make no sense here, buddy.

What he's saying is people don't deserve compensation for some proposed form of theft (That really isn't) or else that definition will get perverted by law and lawyers alike. You really want to have a tax on XYZ item added because its supposedly stolen in some instances, even if it's not?

I've got a great idea. Let's take it even further, and add a "religion charge", because anyone who's not in one person's selected religion should be charged extra to go back to the "victim religion" for "stealing its members".

Sound good? No? You don't say.
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James, 26 Feb 2008 @ 1:17pm

Completely rediculous
So those who don't download music would still pay?? You know the recording industry might find that if it actually offered a competing product with proper value that most music lovers would jump all over it.

My guess is an all you can download/share non-restricted, high-quality music format available for a fixed (affordable) fee per month would sell to so many people that they wouldn't know what to do with all of the money.
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Mark, 26 Feb 2008 @ 1:28pm

Dumb analogies pt. 2
I have to agree with Corey. The analogies in the blog post are kinda weak because all of the examples are legal alternatives. The tax is to compensate SAC members (or whoever they deem worthy) for their work being used (downloaded, uploaded, whatever) illegally. With the examples cited there is no illegal activity.

Not that this makes the tax just in my opinion...
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Anonymous Coward, 26 Feb 2008 @ 1:33pm

Re: Dumb analogies pt. 2
NO, you are absolutely wrong, the analogy does not matter. People are going to be taxed on the fact that some people will do something illegal with their internet connection.

That sounds like being guilty without a trial and free money to the artists for having to do nothing.
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Phillip, 26 Feb 2008 @ 1:35pm

License to Pirate
Another reason its dumb is if I'm paying 5.00/month for downloading music I might as well use the service I'm paying for.
Since I'm paying this money and have no choices or anything I would feel I'm allowed to download music from then on since I'm already paying for in a mandatory fee.
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Luke, 26 Feb 2008 @ 1:35pm

I love it when my lawmakers tell me that the Free School Lunch Program is actually free, and they don't tell me how much it COSTS.

I love it when they think I was born yesterday, I just didn't know they could tell.
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Anonymous Coward, 26 Feb 2008 @ 1:36pm

So, everybody has to pay a music fee on their internet access bill, whether they use it or not? Yeah, that's intelligent.

A couple visits a hotel. When they prepare to leave and go to settle up the bill, there's a $50 charge for the swimming pool listed. They demanded to speak with the manager.

Man: Why is this charge on my bill? We never used the swimming pool.

Manager : Well, it was available.

Man: Well I'm going to give you a bill of $500 for sleeping with my wife.

Manager: I never slept with your wife!

Man: No, but she was available.

I think the punchline applies to this stupid tax idea as well. You cannot fairly tax people for something that they never use or receive any benefit from. Things like fuel taxes for road maintenance make sense, because everybody who uses fuel uses the roads. A music tax does not make sense, because there are bound to be lots of people who never download music.

On a related note, there are people like farmers and construction workers who use diesel fuel in offroad machinery that is rarely, if ever, on the roads. They are exempt from the tax, and the diesel they buy for their equipment is dyed red. If the red diesel is found in trucks on the road, whoever is caught with it is in serious trouble. You could say the red dye is a watermark for determining whether the fuel is legal or not.

The watermarking idea for non-DRM music files creates a win-win situation for all. Consumers can freely play their music anywhere they like under fair use terms, and agencies that enforce copyright laws can police file sharing networks looking for people sharing watermarked music files, which will enable them to track down and stop illegal file sharing in a sensible manner. Trying to implement a stupid tax will not solve any problems, but rather put more of the consumers' money in the wrong pockets, and the pirating problem will still exist.
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Ben Robinson, 26 Feb 2008 @ 1:37pm

Why not license instead
I can understand why people might not like a compulsory tax, a good example would be my parents, i don't think they have ever downloaded a song in their lives and I’m not sure they would know what to do with it if they did.

Instead why not have an optional licence. Pay an annual fee, download whatever you want from wherever you want and it's all legal and the money gets distributed to the copyright holders. Of course this would mean some kind of tracking but public performance royalties get distributed in this manner and it would be much easier to track downloads than it is to track performances in every bar, club, venue and radio station round the world.

If the recording industry realised they are no longer in the business of distribution, and are in the business of producing and promoting content then it all seems wonderfully simple. It could set up a global database of music, issue licenses to consumers and say to online service providers give our music away for free so long as you make sure that the consumer has a licence and tell us what they download. It would change the fortunes of the music industry over night. Many online services would pop up delivering music to consumers using whatever business model they could think of to make their money, this would drive demand for the music and thus the licenses.

You wouldn't eliminate piracy because there is always going to be the hardcore pirate bay/bit torrent crowd, but the plain fact is that all content industries have for years lived with the 80/20 model where so long as 80% of the content is purchased they can cope with the 20% that is pirated.

Of course this is not going to happen any time soon. The recording industry is desperately trying to cling to an outdated business model that is centred around controlling distribution and extracting a per copy royalty. The idea that they should throw this out of the window for digital downloads and concentrate on what they are good at making and promoting music terrifies them, but I firmly believe if they do not embrace this then they will surely die.

Technology moved on 10 years ago, come on recording industry, at least try and catch up.
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Ken, 26 Feb 2008 @ 1:47pm

Why A Music Download Tax Is A Bad Idea
Also if I am paying a tax to support the music industry why would I pay an online service. I am no longer stealing music if I have paid for it through a tax. The courts have agreed with this logic.
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Anonymous Coward, 26 Feb 2008 @ 1:54pm

Yeeeah! Government Subsidies for a failing industry!

Man we fooled them good! Let's break out the Champaign, Cigars, and Streamers!
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4-80-sicks, 26 Feb 2008 @ 1:58pm

Re: hotels and diesel fuel
The watermarking idea for non-DRM music files creates a win-win situation for all.
Interesting idea--how can this be done? You can't take dye out of gasoline, but it's quite simple to change the tags on an MP3 file. Does anybody have any ideas?
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Anonymous Coward, 26 Feb 2008 @ 1:59pm

Re: Dumb analogies pt. 2
The analogies are fine. Distribution of digital content creates infinite goods which would in a fair economy tend towards being free; therefore Big Content need to come up with different ways of monetising as discussed ad infinitum on TechDirt. Comparing this industry which has to change it's business model to others which already have seems apt to me.
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Anonymous Coward, 26 Feb 2008 @ 2:06pm

My grandfather made buggy whips. All cars should be taxed to compensate my family for loss of business.
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Iron Chef, 26 Feb 2008 @ 2:08pm

Re: Re: hotels and diesel fuel
Microsoft has been researching that tech for years. I remember coming across an article that stated the watermark could be extracted from a song, even in the presence of other music.

But like anything that people say "can't be broken", well, it attracts a lot of attention, and usually is broken.

http://crypto.stanford.edu/DRM2002/drm.pdf

Again, just a temporary solution. This is a social problem that will only be answered with a social solution. Tech is only going to aggrivate the problem.

Check out Darylxxx's suggestion from last week- http://tinyurl.com/26buuc
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John, 26 Feb 2008 @ 2:13pm

Distribution
Remember that in addition to people who dont download, who buy their music from other channels, who pay for content from other providers (which one would think would incur a tax soon thereafter)... The distribution costs to them are nothing and the people paying (for their outdated business model) would also be the people potentially providing the service they get paid for.

I dont download music illegally, but whats odd is that when i do buy songs online, theyre .99. I dont average 5 a month (riaa cant keep up with that anyway producing Good music). But i could see the value in freeing the (existing and new) content so they stop their whining.

Does that tax then make it legal to download or 'make available' contents from their members, or will they continue to double dip and suit a potential down/uploader for $700,000 ?
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Anonymous Coward, 26 Feb 2008 @ 2:18pm

Re: Re: hotels and diesel fuel
The watermark is not just a simple tag, like the artist or song title. It would be a tiny datastream encoded throughout the whole file, which would make it very difficult to filter out. Could it be done? Probably. The key to good security is not to try to make something 100% foolproof, because that's impossible. The key is to make it hard enough to crack that most people won't bother trying, unless they're serious about pirating in the first place. The idea here is to eliminate casual file-sharing, not stomp out real pirates who profit from mass-producing and selling illegal music.

I think the fact that watermarking can allow the consumer to use his music however he chooses while still providing law enforcement with a tracking method is a great idea, not because it can't be cracked, but because most consumers won't have to bother cracking it because they can use their music the way they want. If you can freely listen to music you purchase on any device you own, you have absolutely no reason to crack the watermark protection unless you are intentionally trying to pirate the music without getting caught.
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Rose M. Welch, 26 Feb 2008 @ 2:21pm

I propose a tax...
...on all jewelry sales everywhere because sometimes jewelry is stolen, sold to jewelers, and resold to the public, and that hurts the victims of the thefts.

Not.

There are very clear laws that concern theft. It starts with the victim filing a civil suit against the thief, and is handled in that court thereafter. I am so, so tired of these music companies trying to buck the system and make the public pay for thier legal fees in the way of taxes and shitty guidelines and so on.

I buy all kinds of music on-line at Amazon.com, because it's sheap, it's easy, and it's DRM-free. However, I find myself unable to buy all the music I want because lots of companies won't sell it without that shitful DRM. So in those cases I buy or borrow a used CD, which nets the company zero in revenue, and I make copies until my hearts content.

It's a lose-lose situation for those companies, esp. those who are trying to create laws that force the public to stick with thier outdated business models, when the public is very obviously past that.

Amazon.com got over one hundred bucks from e last month... But I havn't purchased a new CD in years, and I will never step foot in an over-priced CD store again in this lifetime. How about y'all?
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Evil Mike, 26 Feb 2008 @ 2:27pm

Itemized $5 ISP2Other Businesses Compensatory Tax (I2OBCT):

$2.00 RIAA Administrative Overhead
$0.50 Delivery Surcharge
$1.55 I2OBCT Correctness Propaganda Program
$0.90 Wired Transaction Surcharge
$0.05 Musicians "Relief" Fund
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Anonymous Coward, 26 Feb 2008 @ 2:34pm

Re:
You forgot the $2.00 CD Destruction Fee.

I don't know what it does, but it sounds official, no?
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Anonymous Coward, 26 Feb 2008 @ 2:41pm

Dont forget the ISP tax: for all those other ISPs that you go to because they give a better deal online.
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Anonymous Coward, 26 Feb 2008 @ 2:47pm

Re: Re:
That's the fund that the music industry started in late 1987 when the Soundblaster was invented. Coffers are 1/8th full.

"CD Destruction Fee": When they get on the bandwagon, and realize this internet thing isn't going away, the Recording Industry will sent men in suits to your house to destroy your CD collection. The CD Destruction Fee will cover the labor costs involved for this effort.
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Anonymous Coward, 26 Feb 2008 @ 3:14pm

Why collect taxes? Bring the GTA/Sims expansion pack based on the RIAA story. Instant hit.
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krsd, 26 Feb 2008 @ 3:23pm

Re: Re: Dumb analogies pt. 2
As I recall there is already a similar tax in the US for blank CD media. This being on the basis that people will use blank cd's to copy and pirate music. Myself I use blank CD's (or DVD's these days) for one of two things. To back up data, or to make copies of the CD's I have bought so that I won't scratch the originals or have them get melted in my car in the summer (which is common in AZ). Still regardless of what you use it for you pay the tax, and in most cases never know it.

We have enough of these sorts of things, and need less.
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John, 26 Feb 2008 @ 4:03pm

Microsoft Tax
Yes we the richest corporation in the world would like to impose a M$Tax on our OS which may or may not be misappropriated, so therefore we demand $5 too especially if you use mac, unix, or linux.
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meoip, 26 Feb 2008 @ 4:11pm

Built in
Don't several places including Itunes collect tax already?
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John (profile), 26 Feb 2008 @ 4:35pm

Re: hotel tax
Actually, a story about this was done on 20/20 a few weeks ago: yes, hotels commonly add on a "resort tax", even for features you don't use.
The 20/20 story was about hotels who offer low room-rates, but then add in "resort fees", for such things as massages, pool towel usage, and more.
If you complain (and that's a big IF), they might give you your money back. But how many people will complain?

However, back to this story- I agree with the other posters than a "tax" like this will just open the doors for anyone else who wants to get subsidies from the government.
Today, it's the musicians/ RIAA relief tax. Then it's the actors/ MPAA relief tax. Next it's the AAA/ map-makers tax. Before long, you'll be paying twice as much for internet service simply because of these "relief taxes"... which we've all come to realize simply pay for supporting an obsolete business model.
But, hey, why innovate when you can get the government to charge taxes on your behalf?
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Mike (profile), 26 Feb 2008 @ 4:37pm

Re: Dumb analogies
Every one on them is about something on the internet that competes with another product by offering a similar service or information.

Oh really? Every one of those examples was based on actual complaints.

Newspapers have insisted that Google is "stealing" from them and have said that Google should pay.

Knitting companies have been filing lawsuits against those posting patterns online.

Automechanics have been filing lawsuits against DIY info online.

So... why are they different?

You say they're legitimate alternatives... but there's always an industry that feels slighted.

In fact, I'd argue that in the music situation you'd say it's a legitimate alternative if you only shifted your perspective slightly. You just need to recognize that the "alternative" that's showing up here is the *distribution* mechanism.
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Mike (profile), 26 Feb 2008 @ 4:40pm

Re:
The watermarking idea for non-DRM music files creates a win-win situation for all.

Ugh, no it does not. There are lots of problems with watermarks:

http://www.techdirt.com/articles/20080113/165009.shtml

They degrade the quality. They can be removed. You'll get in trouble if you accidentally lose you music collection. It *discourages* the active promotion of music. It's hardly a win-win. It's yet another artificial limitation.
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Anonymous Coward, 26 Feb 2008 @ 5:56pm

Hmm....
I don't like the implications and assumptions made by such a law.

1) The obvious, which is that it essentially treats every internet user as a criminal with no evidence. If I buy a car, I don't have to pay a $200 tax in case it's used in a bank robbery get away. This is the most morally offensive idea behind it, to me.

2) It kinda proves that the whole "crusade against piracy" thing is purely about the money. This has absolutely nothing to do with stopping piracy, it's just a scheme to grab as much money as possible. And I also doubt that they'll stop suing people they find with illegal downloads, either, so they'll make lots of cash.

3) They're essentially admitting that they can't find and/or stop the majority of illegal music sharers, so they're just punishing everyone in an attempt to recoup losses. It's as if there has been a riot in a town that has caused property damage, the police couldn't catch any of the rioters, so every town member is fined $100 to pay for it.
It also points to them not being confidant at all in any DRM pursuits, so the fact that they continue to insist that DRM is useful etc... is even more annoying.

All in all, this entire thing is annoying. The fact that someone thought it was a good idea in the first place is actually offensive. That other people agreed with it and support it is even worse. It actually offends my common sense.
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Anonymous Coward, 26 Feb 2008 @ 5:58pm

Goose and Golden Egg
Don't kill it ...
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Corey, 26 Feb 2008 @ 6:05pm

Re: Re: Dumb analogies
The alternative is not simply a distribution mechanism. If the sites where music is being "shared" had a deal with the record companies where they were compensated, then you'd have a point - but the owners of these file sharing sites can keep all the profits for themselves while "distributing" someone else's product.

If you can't see the difference between that and your analogies, I can't help you.
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Corey, 26 Feb 2008 @ 6:09pm

Re: Re:
How on earth does it discourage active promotion of music? If you're selling music downloads, don't you need to promote that so people hear about your music?
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Anonymous Coward, 26 Feb 2008 @ 6:23pm

Dumb analogies
As the above poster said, this article is terribly written and contains bad analogies. How is Google News in any way illegal? They link directly to the sites of articles and contain no advertising on their own site. How is AAA any way related to Google Maps/Earth? Google bought the GIS companies that ran surveys and digitized features. Google did not take AAA maps and put them on the Internet. Do mechanics own the intellectual rights to knowing how to fix a car? Stop confusing a company outcompeting your product to the lose of revenue to piracy and illegal distribution of illegal property. The music tax is a really stupid idea especially since you would be charging every user for a crime they did not commit, but don't go around making a completely ridiculous argument.
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Overcast, 26 Feb 2008 @ 6:50pm

Kinda just like the other million reasons the government taxes the hell out of us.

So basically we are just adding 'Recording Industry Welfare' into the mix now.
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Overcast, 26 Feb 2008 @ 6:54pm

My grandfather made buggy whips. All cars should be taxed to compensate my family for loss of business.

Yeah, really - you know.. Phonograph makers, instrument makers, and the like need to sue the RIAA for the same reasons.
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Kevin, 26 Feb 2008 @ 8:27pm

Like the author said....
... as soon as a taxation like that is passed and enforced, other types of business will jump on the bandwagon and claim they need special recognition/tax because of the alternative ways to acquire information/data/materials.
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Mark, 27 Feb 2008 @ 4:28am

Re: Re: Dumb analogies pt. 2
I'm sorry, but you are absolutely retarded if you missed the meaning of my post.
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Mark, 27 Feb 2008 @ 4:34am

Re: Re: Dumb analogies pt. 2
Yeah, in a "fair economy", which apparently isn't what the US is? Yeah, massive distribution of your work, without your permission, illegally, is fair for someone who makes his living on said model? You can hem and haw about how they should focus on adapting their business model, but *legally* they are within their rights. Until copyright law changes then a download tax wouldn't make sense.
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MasterOod, 27 Feb 2008 @ 6:53am

Verizon Rejects Hollywood’s Call to Aid Piracy F
There's an interesting article at NyTimes regarding Verizon's stance against assisting hollywood.

Three cheers for Verizon, but I really, really hope it isn't just lip service to the people who want the bandwidth.

http://bits.blogs.nytimes.com/2008/02/05/verizon-rejects-hollywoods-call-to-aid-piracy -fight/
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Anonymous Coward, 27 Feb 2008 @ 7:14am

Re: Re: Re: Dumb analogies pt. 2
A download tax (which would be placed on every internet connection) doesn't make sense because people like me would be paying out because *other* people are stealing. In the most generous case, this is a presumption of guilt and summary judgment. More to the point, it's making the innocent pay for the crimes of the guilty simply because it's too much work for you to find the guilty.

Until copyright law changes, civil suits make sense. A download tax never makes sense.
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Anonymous Coward, 27 Feb 2008 @ 7:19am

Re: Re: Re: hotels and diesel fuel
This fails, though, because ONE successful crack spoils the whole pot: the un-marked file gets out on the network and multiplies to infinity. Now what?
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Anonymous Coward, 27 Feb 2008 @ 7:26am

A nice idea, but I wonder:
How do you know who pays the fee? Once I get the song, is it MINE? If I give it to my buddy who hasn't paid the fee, have I committed a crime? How will you know? How will you enforce it? If I stop paying the fee, do I need to give back/delete all my music?
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Anonymous Coward, 27 Feb 2008 @ 7:32am

Re: Built in
If you're stealing music, you aren't using iTunes.
If you're stealing music, you ARE using an internet connection.

We have to make sure we punish the thieves, no matter how much it hurts our legitimate customers.
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Anonymous Coward, 27 Feb 2008 @ 10:08am

Re: Re: Built in
How does stealing music imply you're using an internet connection? Last time I checked stealing only takes place when physical goods go missing.
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another mike, 27 Feb 2008 @ 2:42pm

subsidy
Where do I send the form to be paid from this subsidy? Oh, I don't make music. I'll need help paying for the SAN I'll need to store all this music I'm now licensed to download.
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Mark, 27 Feb 2008 @ 10:00pm

Re: Re: Re: Re: Dumb analogies pt. 2
Ok, listen.... I'm not saying that the download tax makes sense.. I'm commenting on the analogy. FFS, people have a reading problem on here..
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emmalin dautovic, 28 May 2008 @ 11:01am

Re: Re: Dumb analogies
i think that you all are dumb. I download music all the time. Between getting arrested and making a big commotion about downloading is just stupid.

xoxoxox
im only 15 by thw way and i have a very strong oppinion.
LOVE EMMALIN MUTHA f*****G dAUTOVIC
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emmalin dautovic, 28 May 2008 @ 11:04am

Re: Re: Re: Dumb analogies pt. 2
no no no no no...what is wrong with america these days. Dont you pigs have anything better to worry about other than yourselves and what you believe is right. What you all need to do is go to church. Get saved. CUZ God knows you need his help!

Emmalin
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Niggerguy, 22 Jun 2008 @ 5:02pm

Keep paying for shitty music you silly fuckers.
EPIC LOL
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Avi (Israel), 17 Feb 2009 @ 8:51am

I am speechless
Really stupid!
Why try saving the fat ass dinosaurs from the music industry? How will they split the money among the artists?
I bet artists will see tiny bits of it.
This is a prescription for perpetual corruption.
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