Warner Music Latest To Jump On The Music Tax Bandwagon

from the please,-gov't,-save-our-business-model! dept

Fri, Mar 28th 2008 10:09am — Mike Masnick

Remember earlier this month how there was a story about a guy going around pitching a required tax on ISPs for music sharing as a good idea? Well the main guy who was pushing that proposal has now been hired by Warner Brothers to make it a reality. While the idea is gaining some momentum, it doesn't change the extremely questionable nature of this proposal. It's a proposal based on the laziness of industry execs, who want others to go out and collect money for them, which they'll then get to "distribute" (by which we mean not actually distribute) to musicians.

The fact is that there is simply no reason for this proposal to go ahead. It treats everyone as a criminal first. In the article, one supporter of the plan even admits this:

"At this point, 96 percent of the population is guilty of some sort of infringement, whether they're streaming or downloading or sharing. What we have here is the widespread use of technology that declares all of the population to be illegal."

While that 96% number is made up and pure bunk, it's a bizarre world in which someone claims that nearly everyone is breaking the law and therefore we should punish everyone, rather than get rid of the law. Considering that more and more musicians are showing that there are perfectly good business models that don't require treating everyone as a criminal, can someone explain why this "music tax" should be put in place? And can they then explain what will happen when every other industry wants its own "you're a criminal" tax included on internet connectivity?

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Filed Under: copyright, jim griffin, music, subscriptions
Companies: warner music group

36 Comments

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JB, 28 Mar 2008 @ 10:23am

Deal Me Out
My computer does not have speakers, I refuse to pay this tax!
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Chronno S. Trigger, 28 Mar 2008 @ 10:26am

No, no, bad RIAA lackey
*Smacks on nose with rolled up newspaper

If this tax goes threw, I hope it makes them enough money to live off of because I'm never going to purchase another CD, iTunes/Napster download again. And I won't be hindered by the "it may be wrong" thought ether. I'll even teach my mother how to use emule or something like that. Sounds like my music file is about to get much bigger. I still have 250G free.
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Crosbie Fitch (profile), 28 Mar 2008 @ 10:28am

Voluntary, if you mean dragged kicking and screami
That it's called 'voluntary' when in fact it's quite compulsory should be a big clue that this comes from the same deceitful mindset as copyright (which is a privilege not a right).

When suspending the public's liberty fails, it's not surprising that taxation appeals as a fallback option.

Of course a dying industry will eagerly grasp at this last straw, but it won't be tolerated.

"Griffin says those fees could create a pool as large as $20 billion annually to pay artists and copyright holders".

Hmmm. It sounds like there's quite a few marble floors in this plan. And if the record industry is happy about it, they've no doubt been reassured that the same 99:1 split can be achieved, thus keeping them in the lion's share to which they've become accustomed.

I always knew the recording industry would eventually go for this idea, as no doubt did the astute Jim Griffin, however, I think the public might not be too keen.

Copyright suspended the public's liberty (given as a privilege to publishers), and the Internet restored it. And the public are supposed to be wringing their hands over this as a tragedy? Will the people gladly vote to reward the restoration of their freedom with a selfless tax for the benefit of publishers?

I think we've got a little wiser since copyright's enactment around 300 years ago. I think the people will say "We'll have our liberty back thanks, and because it was ours to begin with, no you can't tax us instead - do you think we were born yesterday or something?"

Let's try a free market instead. No monopolies. No taxation.

It's a very simple deal in which both sides come together willingly, and set a mutually agreeable price:
Art for money, money for art.

I wonder who sets the price for music in 'voluntary collective licensing'?

At least with CDs punters can decide whether to buy or not buy, and thus vote on the price with their feet.

With VCL, some central committee decides how much music is worth - in other words, how long the yachts should be for various record label execs.

And if the pot is divvied according to popularity, we can look forward to the lowest common denominator tripe that the recording industry is so skilled at producing.
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indemnity_R_us, 28 Mar 2008 @ 10:38am

Why be specific
Great idea as long as it indemnifies me from all copyright infringement for personal use. Books, music, newpapers, everything.
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BTR1701, 28 Mar 2008 @ 11:14am

Fine
If they want to treat me like a criminal and make me pay the fine upfront, that's cool. But I sure as hell better be able to download and share music to my heart's content without being threatened with a lawsuit from RIAA.

If I have to do the time, then I damn well better be allowed to do the crime.
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Anonymous Coward, 28 Mar 2008 @ 11:18am

A few questions
Would this tax be applicable to all ISP accounts, including dialup ?
Would your local library have to pay it also ?
And I'm sure that business owners would be just fine with it.
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sonofdot, 28 Mar 2008 @ 11:23am

Wonder what's next?
A tax on paper, because I might print a book I might have scanned? Maybe we can pass a tax on eyes and ears, because those, too, might be used to view or hear some copyrighted material? If the recording/publishing industries think that 96% of every is violating copyright in some way, shape or form, then the problem is with the laws, not the public. Maybe we should be able to tax the publishing industry back, for every time they subject our eyes and ears to material we don't wish to see or hear.
If Congress even considers this, like many others, I'll never buy another CD, movie or book again (not that I buy CDs or movies now, for all of the reasons discussed in these forums in the past). I'll start getting the material illegally. Might as well, if I'm already a criminal.
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by Letting the Gov't Run Your Business, 28 Mar 2008 @ 11:26am

Stifle Innovation
TechCrunch has a great piece on this Music Tax proposal. I like this part:

Music Taxes Will Kill Music Innovation

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.

http://www.techcrunch.com/2008/03/27/the-music-industrys-new-extortion-scheme/
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chris (profile), 28 Mar 2008 @ 11:27am

Re: No, no, bad RIAA lackey
I still have 250G free.

feh, newb. :-)
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Dean Landolt, 28 Mar 2008 @ 11:27am

"that 96% number is made up and pure bunk"

I'm sure it's made up, but it's certainly not bunk. You of all people should know that given a literal reading of our ridiculous laws, it's certainly 100%. It's not hard to empirically prove that even the most casual internet user is no doubt guilty of "millions of dollars" of infringement in a given week -- and that's the real crime!
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Douglas Gresham, 28 Mar 2008 @ 11:39am

If I could take this as a serious plan . . .
I wouldn't even know how to begin attacking it, it's so ridiculous. The reason I can't is it's basically the labels' death rattle - they can't make money how we used to, they can't be bothered making it in new ways - it's extortion or extinction.

Rest in peace guys.
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SomeGuy, 28 Mar 2008 @ 11:59am

Re: Deal Me Out
You can still download the songs, which consitutes a lost sale, so you're a thief. Whether you actually listen to the music you steal, burn it to a CD, stream it to your TV, or whatever is of no consequence; the Content Owners will get their pound of flesh.
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anonymous frogman, 28 Mar 2008 @ 12:03pm

Just another bad tax
Yes, it would be a bad tax, but so are many other taxes. In France, we have a TV tax paid each year by every TV set owner in order to fund public TV channels. You pay whether or not you watch those channels, which are either regular channels with subsidies, or elitist channels directed at a very small audience, which means that everybody pays to enable a small minority to watch ballets and propaganda documentaries. So it is a bad tax and I wish we got rid of it.
But then again, I prefer one more bad tax to the current situation where people can go to jail (in theory) or have to pay life-ruining fines for doing what "96%" or so of the population does. At least, the tax system puts an end to the current legal insecurity.
It is a bad tax, but we live in a world full of bad taxes.
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Anonymous Coward, 28 Mar 2008 @ 12:09pm

Re: Re: No, no, bad RIAA lackey
>terabyte, more then most radio stations.

ha
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bored now, 28 Mar 2008 @ 12:16pm

terrible idea
for very many reasons. I'm one of those who defends copyright, in part on the grounds that it's a beneficial intervention in the market.

But ideas like this spell the death of the market and eventually end up with the state (often through its sock puppets) rigging the distribution to support art that promotes ideas it likes and suppress art that it disagrees with.

And then we get to be called "New China" or the USSR or something. Oddly enough, ISTM that these are the same reasons that many on the left love the idea.
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Anonymous Coward, 28 Mar 2008 @ 12:23pm

Hear that? If 96% of the population commits murder then we should get rid of that law. Well, shoot, I am sure at one point 100% of the drivers in America have broken the speed limit. Lets get rid of that law too. Laws are stupid. We are just going to break them. Smear the black and white into gray until there is no reason for laws. Sounds good to me.
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Grady, 28 Mar 2008 @ 12:30pm

Bring it on
Let them tax. Pirating will sky rocket, and if they sue, we'll simply respond: "I'm paying for it now, remember the tax I pay every month. Though that was to make for the losses I create by doing this."
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DanC, 28 Mar 2008 @ 1:15pm

Re: Re: Deal Me Out
which consitutes a lost sale, so you're a thief. Whether you actually listen to the music you steal, burn it to a CD, stream it to your TV, or whatever is of no consequence

I hope this was meant as sarcasm, because it's completely wrong. Infringement isn't the same thing as theft, and not every instance of infringement equates to a lost sale.
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Chronno S. Trigger, 28 Mar 2008 @ 1:16pm

Re:
"If 96% of the population commits murder then we should get rid of that law."

If 96% of the population committed murder than that law is already gone along with the government.

"I am sure at one point 100% of the drivers in America have broken the speed limit. Lets get rid of that law too"

I agree 100% We have reckless driving laws that would cover it just fine. Same with those dumb ass cell phone laws.

Stupid laws should be broken. Ever hear of the Boston tea party or maybe the American revolution?
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John (profile), 28 Mar 2008 @ 1:32pm

The 96% figure
What does "96% of the population"? It can't be the population of the world, since nowhere near 96% of the people even have computers.
It can't be 96% of the population of the US for the same reason.
It can't be 96% of the population of people who have computers, since there are WAY more than 4% who don't know how to do anything beyond e-mail. (Some Senators come to mind.)

So where does this number come from and why isn't anyone calling foul?
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MD, 28 Mar 2008 @ 2:32pm

Be Careful What You Wish For...
Canada has a levy on blank media to reimburse artists for copied songs. This was originally imposed for cassettes back in the "mix tape" days. Today it is on blank CD's, DVD's etc. Some bozo even suggested putting the levy on iPods. (Duh!! How often do people say, "here, take my iPod and copy what you want"?)

One Canadian version of the RIAA fileshare lawsuits foundered on the implicit assumption "If you already charge money for consumers to copy songs, then you are already consenting to and being recompensed for it - case dismissed."
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Anonymous Coward, 28 Mar 2008 @ 4:34pm

96 % of what ? Oh only the 4% consists of politicans, lawyers, RIAA, MPAA staff etc....

What a crock of SHIT
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Anonymous Coward, 28 Mar 2008 @ 5:04pm

"96 percent of the population is guilty of some sort of infringement"

I take offense at that statement.
This asshat is calling me a criminal.

I suppose he would tell you that he is one of the 4%
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Anonymous Coward, 28 Mar 2008 @ 7:27pm

And in related News
56% of all quoted statistics are made up on the spot.
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chris (profile), 28 Mar 2008 @ 8:33pm

Re: Re:
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Gerd Leonhard, 29 Mar 2008 @ 1:12am

I am the guy you quoted above (96%...)... more on
Mike, you say: "While that 96% number is made up and pure bunk, it's a bizarre world in which someone claims that nearly everyone is breaking the law and therefore we should punish everyone.." which is a quote from a comment I made on the Jim Griffin idea of the music flat rate. 2 things on that: 1) It is bizarre to call it PUNISHMENT when this idea will actually allow people to get 'feels-like-free music' because the ISPs, telcos, operators, search engines or social networks can actually be licensed to provide it.

You may not see this quite yet but I think the flat rate will roll out in 2 stages: a) users (or their ISPs) can pay the $5 per month to get the all-you-can-eat unprotected music service b) the networks i.e. music service providers will bundle the charge and develop smart and unobtrusive 'advertising2.0' models around the music to make it de-facto free for the users. Paying with attention. If that reminds you of radio I wouldn't be surprised

b) research has shown that almost 100% of active internet users in western countries are indeed using their net connections to listen to or download music that is not deemed 'licensed' (as currently defined) - because these licenses don't exist (see: widgets, on-demand streams, sharing applications etc etc)

I just published a new book about all this stuff btw, and it's available as 'free' i.e. pay-what-you-like pdf see http://www.mediafuturist.com/music20_book/index.html

Finally, Mike, I do wish you would get off this TAX thing - it's just a cheap label to use when you don't have time for proper research and real journalism.

While I grant you that it's tough to trust any of the big labels to actually come up with solutions that are not just self-serving, I think this idea DOES merit real investigation and more neutral coverage. It may take more time to fully emerge but this is not a tax - IT'S A LICENSE. Read http://www.mediafuturist.com/2008/01/the-end-of-co-1.html if you want to know more
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Crosbie Fitch (profile), 29 Mar 2008 @ 6:12am

If it even quacks like a tax, it is a tax!
Calling it voluntary when it is compulsory, doesn't magically stop it being compulsory.

Calling it a license when it is an unavoidable tax, doesn't magically stop it being a tax.

If you have an Internet connection and the ISP provides an OPTIONAL $5 licence to permit unlimited copying/mixing of music among licence holders, then this is a license. If it isn't optional, if it's compulsory, no matter whether you want to copy/mix music or not, then it's a tax.

http://en.wikipedia.org/wiki/PlayLouder is an example of an ISP that effectively gives its users the option of voluntarily paying a license fee. If this voluntary collective licensing idea is so attractive then more ISPs will become like PlayLouder, but punters will retain the choice between a licensed ISP or an unlicensed ISP. When you make it compulsory for ISPs to be like PlayLouder and thus make it compulsory for their users to bear the costs of the license fee, then it's a tax.

If a tax is such a great idea then call it a tax, but let's not use weasel words and call it a voluntary license when it's nothing of the sort.
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Anonymous Coward, 29 Mar 2008 @ 7:25am

Re: I am the guy you quoted above (96%...)... more
Gerd Leonhard (corp tool) said:
"b) research has shown that almost 100% of active internet users in western countries are indeed using their net connections to listen to or download music"

Care to provide a reference for that ?
Who paid for that "research" ?
Seems you have a vested interest, no ?
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Arthur Dent, 29 Mar 2008 @ 7:29am

Re:
AC said:
"Hear that? If 96% of the population commits murder ..."

How could that happen ?
One would think that if 50% of the population committed murder then everyone would be dead.

And one more thing, why would someone using dialup be required to pay this tax/fee/whatever ?
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Mike (profile), 29 Mar 2008 @ 10:34am

Re: I am the guy you quoted above (96%...)... more
1) It is bizarre to call it PUNISHMENT when this idea will actually allow people to get 'feels-like-free music' because the ISPs, telcos, operators, search engines or social networks can actually be licensed to provide it.

Forcing people to pay at least $5/month when there are plenty of business models to support real-free, not "feels-like-free" seems like punishment to me.

You may not see this quite yet but I think the flat rate will roll out in 2 stages: a) users (or their ISPs) can pay the $5 per month to get the all-you-can-eat unprotected music service b) the networks i.e. music service providers will bundle the charge and develop smart and unobtrusive 'advertising2.0' models around the music to make it de-facto free for the users.

You forgot stage c) the movie industry wants it cut, and so another $5 gets add. and stage d) the newspaper industry wants its cut so another $5 gets added and stage e) the knitting industry (knitting patterns are traded freely online) so another $5 gets added. and stage f) auto mechanics wants its cut (they're complaining about diy auto repair info) so another $5 gets added...

You also totally leave out the mess that this causes in terms of figuring out who gets paid.

This is a model to prop up a dead and dying set of businesses, let's be frank.

If that reminds you of radio I wouldn't be surprised

Are you seriously suggesting that radio is the model we should emulate here?

b) research has shown that almost 100% of active internet users in western countries are indeed using their net connections to listen to or download music that is not deemed 'licensed' (as currently defined) - because these licenses don't exist (see: widgets, on-demand streams, sharing applications etc etc)

Again, I'm curious as to how having 100% of the population (and I note, no citation) doing something that you consider to be illegal doesn't mean that maybe the law is wrong, not the people?

Finally, Mike, I do wish you would get off this TAX thing - it's just a cheap label to use when you don't have time for proper research and real journalism.

If you could explain why it's not a tax, I'd appreciate it. Because no matter how I look at it, it acts very much like a tax.

Again, there are perfectly good business models that don't require compulsory licenses. Why muck up the entire system and create a huge bureaucratic nightmare?
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Nasch, 29 Mar 2008 @ 8:22pm

Re: Bring it on
It sounds like they wouldn't be able to sue: "Warner's plan would have consumers pay an additional fee—maybe $5 a month—bundled into their monthly internet-access bill in exchange for the right to freely download, upload, copy, and share music without restrictions." Others are complaining about the fee being mandatory, which is a terrible, terrible idea, but the article doesn't have any quotes from Warner acknowledging that it would be.

If it is mandatory, and becomes reality I would expect lawsuits, and if they try a mandatory fee, and still put DRM on the music downloaded, I hope there would be a major consumer backlash. If they make it a mandatory fee, and then sue people for downloading music after paying the fee... I'm sorry, I think my head might explode if I contemplate that possibility too long.
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Brandon, 31 Mar 2008 @ 12:49pm

Not a tax?
According to an article/editorial on PC Magazine's website, this fee would be opt-in, not mandatory. But still, even they beg the question of whether this would be DRM-free or not and what happens when Sony BMG wants in? Is that another fee? Are we able to freely opt out later and not incur a penalty such as the music we downloaded suddenly being erased? It might not be a bad idea if it's not mandatory and depending on how those other questions are answered.
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Anonymous Coward, 31 Mar 2008 @ 2:05pm

Re: And in related News
Wrong wrong wrong....its 62%
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Music industry guy, 1 Apr 2008 @ 8:40pm

Wow......don't talk if you have no idea what you'r
OK let me explain this further for people who are just blurting out that they don't want to pay this tax and that it's a dumb idea....

In the music industry, the revenue earned from sales of sound recordings, digital files, what have you is split amongst the artist (artist royalty), the producer (producer royalty), and the songwriter and music publisher (mechanical royalty) and the label gets a good chunk as well. If this tax goes through, it could be one of the best things for the music business and also for the consumer. Realistically, they can't charge much for this tax, maybe 5-10% at most of your current ISP bill....so like 3 bucks. If everyone with an internet connection (regardless if you have speakers or not [PS you can get speakers for 10 bucks at staples]) opts-in for this, this means that not only will the artist be able to recoup his or her advance from the label quicker and start making money off of royalties, the royalty rates will probably increase, thus giving your favorite artists more money and making them able to record and produce more music. I don't know...I think it's a good idea because everyone wins, but at a very low cost. The music industry not only will build up again but will also get its money it's been crying poverty for and the consumer will be able to get more for less. Simple economics.
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Mike (profile), 2 Apr 2008 @ 3:25am

Re: Wow......don't talk if you have no idea what y
In the music industry, the revenue earned from sales of sound recordings, digital files, what have you is split amongst the artist (artist royalty), the producer (producer royalty), and the songwriter and music publisher (mechanical royalty) and the label gets a good chunk as well. If this tax goes through, it could be one of the best things for the music business and also for the consumer.

Um. No, not quite.

Realistically, they can't charge much for this tax, maybe 5-10% at most of your current ISP bill....so like 3 bucks.

Actually, the discussions start at $5 and have been talked about up to $15.

If everyone with an internet connection (regardless if you have speakers or not [PS you can get speakers for 10 bucks at staples]) opts-in for this, this means that not only will the artist be able to recoup his or her advance from the label quicker and start making money off of royalties, the royalty rates will probably increase, thus giving your favorite artists more money and making them able to record and produce more music.

That assumes it's better than the old model, but doesn't recognize that there are better models for the artists to make more money faster. We've discussed them in great detail here. This solution would take most of those business models off the table.

On top of that, it would create a huge bureaucracy, and it would be quite difficult to determine how to actually split up the pie.

There would be plenty of funny accounting and the royalties wouldn't be delivered quickly or in the amounts you imagine.

I don't know...I think it's a good idea because everyone wins, but at a very low cost.

Not at all. Not everyone wins. Consumers are forced to spend more than the market price of a product (monopoly rents!), a huge bureaucracy is created and it stifles creativity in business models. Ouch.

The music industry not only will build up again but will also get its money it's been crying poverty for and the consumer will be able to get more for less

The *music* industry doesn't need to be built up again. More music than ever before in history is being produced. More musicians than ever before in history are earning money from their musical activities. More concerts are making more money than ever before in history.

The only part of the business that is struggling are the companies making plastic discs.

And the idea that "consumers get more for less" is incorrect. Some consumers will get more for less, but many others will end up subsidizing those consumers. That's not fair or just or necessary.
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Anonymous Coward, 24 Mar 2009 @ 5:05pm

Re: Re: I am the guy you quoted above (96%...)... more
You forgot stage c) the movie industry wants it cut, and so another $5 gets add. and stage d) the newspaper industry wants its cut so another $5 gets added and stage e) the knitting industry (knitting patterns are traded freely online) so another $5 gets added. and stage f) auto mechanics wants its cut (they're complaining about diy auto repair info) so another $5 gets added...

auto mechanics's work cannot be digitally copied..
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