Archive for March, 2009

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Hare-brained idea of the month: The cable company charges me for music I didn’t consume?

March 9, 2009

I recently was a panelist at the Digital Music Forum East, and was struck by how many digerati proposed – with perfectly straight faces – a scheme where your Internet Service Provider would charge you extra each month (a modest sum, like $2 a month) for your music consumption. If the majors got their wish, the proposal went, all internet users would pay this $24 a year extra. This $24 for each of the hundreds of millions of users would be put in a big giant pot, and be divvied up among the labels according to whose music was pirated the most. In fact, there were representatives there from Isle of Man who are testing just such a scheme on their tiny British protectorate, and they were virtually hailed as saviors of the music industry.

 

And while the industry is fawning over this great concept I wonder “am I the only one who thinks this emperor has no clothes?” I mean, c’mon people.

 

A welfare program for the labels

Hundreds of millions are collected, and distributed to labels for music they didn’t sell? Sounds like a welfare program for the largest labels in the industry. No wonder the labels love it (in fact, they’re big boosters of this scheme, which should tell you something). But will indies get any money from this kitty? I’m sure all the experts will say we will, but what’s the mechanism for tracking independent music traffic online? And for distributing the royalties to independent artists? In this feeding frenzy of elephants, the mice will surely get trampled.

 

This concept – essentially a tax on a product or service that allows for illegal consumption of intellectual property – has been tried before. Remember the discussion about taxing blank cassettes, blank video cassettes, blank CD-Rs and DVD-Rs, all tools that also allowed for unauthorized copying? Yet every time these initiatives failed. So will this internet music “tax.”

 

Sure, the ISPs will fall right in line. Right.

Then there’s the minor detail that we still live in a competitive marketplace, with multiple ISPs serving each market. No ISP is going to want to price themselves out of the market by charging substantially more than the competition. Sure, they can raise the rate even more and make themselves a profit on this music “tax,” but inevitably some ISPs won’t participate, trying to grab market share, and basically killing this program.

 

Honest consumers subsidizing IP thieves?

The difference between a tax on CD-Rs and this internet music “tax” is this: with a CD-R you can only do one thing: copy content on it. Much of that content is legal, and some of it isn’t, but copy you must. (And even the CD-R tax scheme failed.) But your internet service allows you to do many things besides download music. In fact, most internet users don’t download music at all. They just use email and surf the web. When the music fee gets applied to your internet service and you’re not a music downloader, you’re not going to be happy. ISPs don’t want to piss off the majority of their customers, I can assure you. (Oh, and did I mention this is not the ISPs’ problem to begin with? The labels have the problem, and they’d love to make it the ISPs’ problem.)

 

A license to steal

What happens to the psyche of the basically honest music consumer who buys most of their music from iTunes or Amazon when they now start paying this internet music “tax” for music they didn’t download? They turn into pirates! Take me, for example. Since I make my living in the music industry, I pay for all the downloads I acquire. However, if I need to start paying my ISP for music consumption, you can rest assured I’ll start looking for free downloads. And hence, in one fell swoop do the labels assure that the whole country will stop buying music online, and will instead start looking for free music. That’s not good for iTunes. Or Amazon. Or the industry in general.

 

So let’s get past this hare-brained idea for once and for all. In case the labels hadn’t figured it out, the internet is here to stay. You can’t get this download genie back into the bottle. All you can do is offer enough value to your customers that they’ll want to pay for what you have to offer them. And for the slow-moving labels, this is a concept they’ve only recently begun to grasp.