Why A Music Download Tax Is A Bad Idea

from the unintended-consequences dept

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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Comments on “Why A Music Download Tax Is A Bad Idea”

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53 Comments
Kilroy says:

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!

Corey says:

Re: 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.

matt says:

Re: 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.

Mike (profile) says:

Re: 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.

Corey says:

Re: 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.

James says:

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.

Mark says:

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…

krsd says:

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.

Anonymous Coward says:

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.

Mark says:

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.

Anonymous Coward says:

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.

Anonymous Coward says:

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.

Iron Chef says:

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

Anonymous Coward says:

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.

John (profile) says:

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?

Mike (profile) says:

Re: 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.

Ben Robinson says:

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.

John says:

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 ?

Rose M. Welch says:

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?

Anonymous Coward says:

Re: 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.

Anonymous Coward says:

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.

Anonymous Coward says:

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.

MasterOod says:

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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