The idea got rolling in the U.S. in February and recently jumped the border into Canada with the full support of the Songwriters Association of Canada: charge all broadband internet users a flat monthly fee of $5 and legalize the trade of music through peer to peer (P2P) services. Internet Service Providers (ISPs), like Telus and Shaw in Whistler, would track the songs that are being traded and make payments to recording companies based on traffic statistics.
The music industry has tried going after the downloaders directly, but there are just too many people out there using P2P programs, and each case costs too much in time and resources to prosecute. They’ve tried to lobby governments to create new laws that would make ISPs responsible for all illegal downloading, but governments have been unwilling to shoot the messenger. The industry has even tried to embed CDs with digital rights management software that prevents buyers from copying songs on their computers, but that turned into a fiasco when the software functioned like a virus.
But while other approaches have failed, I really believe the $5 plan is a good idea with a few negative points. The most obvious is that the tax would be applied across the board, and many people who don’t currently steal music would end up paying for those that do. Obviously the ISPs can snoop on their customers and apply the charge when they detect P2P activity, but that complicates the situation — it’s far easier just to apply the charge with no exceptions, and encourage everyone to trade music.
Another negative is the impact on Apple shareholders by killing the iTunes Music Store, although judging by the speed in which the company is moving into movies and television I think Apple already sees the writing on the wall.
The $5 fee also props up a failing industry that would rather litigate than innovate, and that is in large part responsible for its own financial woes because of its unwillingness to change and embrace technology. At a time when Trent Reznor of Nine Inch Nails and Radiohead are showing the way, bypassing the music industry to release music directly to the web, the fee would secure the music industry’s future at a time when it seems destined to fail.
Although $5 seems like a bargain to me — I used to spend $30 to $50 a month on music when we had a CD store in town — it adds up. As of last July, roughly 53 per cent of 116 million American households were broadband subscribers, which means roughly 61 million homes would be on the hook for the $5 charge. That’s more than $305 million in revenue per month, and $3.66 billion per year.
By 2012, the number of broadband subscribers is expected to jump another 20 per cent, creating annual revues of $5.22 billion.
The American music industry currently generates around $11.5 billion a year, but the majority of revenues still come from CD sales. Digital music sales are a growing sector of the market, and are projected to reach about $5.34 billion in 2012 — conveniently close to what the industry would earn with a $5 surcharge.
People would still buy CDs and pay to download music if the files were of far higher quality than they currently are. There could also be an emphasis on rare, unreleased, and live tracks from popular bands that are available online only, the same way vinyl stores used to charge extra for imports.
For the $5 plan to become a reality, it would have to be imposed by governments on ISPs as part of their licensing agreements. Naturally the ISPs will be opposed — it’s a hassle for them to collect the fee, and they might worry that raising prices could cost them customers. It also opens the floodgates for new fees for other downloads like movie torrents and hacked software.
That said, the alternative of holding the ISPs accountable for their customers is not the best situation either, and it’s only a matter of time before a judge sides with the recording industry. I think $5 is a compromise we all could live with.
Speaking of judges…
The issue of antitrust and copyright in the high tech industry has always been bad, but recently things are getting out of control.
Gibson Guitars is suing the companies responsible for Guitar Hero video games, claiming that it violates a 1999 patent for an interactive music game that is actually nothing like Guitar Hero.
A professor at Columbia University is claiming that more than 30 companies — including Sony, LG, Hitachi, Toshiba, Panasonic, Motorola, Samsung, etc. — are infringing on her patent for laser and light-emitting diodes (LEDs), and she’s asked that these companies be banned from selling their goods in the U.S. until the issue can be resolved.
And Apple, which is considering allowing customers to subscribe to iTunes to get all of their music for a monthly fee, is being threatened with antitrust charges by another subscription service that is accusing Apple of having a monopoly on digital music.
The question we have to ask ourselves is can you really patent an idea when that idea is just the next logical progression of a technology or a service? When does an idea cease being original and start being logical? It’s one thing to steal a technology wholesale, it’s completely another to develop a parallel technology that has some similarities to the original patent.
Hopefully the judges see it the same way.
