Warner Music Pitches Music Tax To Universities: You Pay, We Stop Suing

from the pay-us-not-to-sue dept

Back in March, we noted that Warner Music Group had hired Jim Griffin, a music industry guy who has been pushing the concept of a "blanket license" for file sharing. The idea would be to get various ISPs to simply add an additional fee to everyone's internet access, have that money go into a pool that the recording industry would be responsible for paying out -- and then let people have free reign for file sharing. This is a bad idea for a variety of reasons. It's basically a music tax -- allowing the record industry to be lazy. Someone else gets to go out and collect all this money and hand it over to the industry to distribute (or, actually, not distribute). It effectively sets the business model of the recording industry in stone, and harms better, more innovative business models by inserting the recording industry (and not the musicians) into a role where they don't belong.

We hadn't heard much about this music tax lately, but apparently Griffin has been focused on getting universities to buy into the plan first. An anonymous reader passed on some details, saying that Columbia, Stanford, University of Chicago, University of Washington, MIT, University of Colorado, University of Michigan, Cornell, Penn State, University of California at Berkeley and University of Virginia have expressed interest and talks are under way. A basic presentation that's being given to these universities is below (if you're reading via another site, click through to see it):
There's obviously something appealing about ending the lawsuits and letting people file share freely. But, it's quite problematic to add an effective "tax" when none is necessary. Plenty of other business models, such as those we've outlined here and elsewhere can suffice to fund the creation of music. On top of that, giving the proceeds of this tax to the very industry that has so badly mismanaged musicians for so many years is a travesty -- sort of like bailing out the failed auto industry or banking industry. The presentation says that a nonprofit has been set up to handle the money, claiming that it's "to be clear we intend to operate with good intentions and not profit as a motive," but given the way the industry has acted in the past, that's difficult to take at face value. Also, this isn't really a license. It's a "covenant not to sue" -- meaning that lawsuits could still result.

Of course, while the introduction frames this as a "voluntary" blanket licensing program, the presentation also mentions that they'll need some way to get all ISPs and universities to buy into the plan, or they'll have to work out a way to "avoid massive leakage." So, basically, it's not voluntary at all. It's either join, or get saddled with significant limitations. In other words: all ISPs and universities need to agree to pay a huge tax to the very industry that hasn't been able to adapt, and then trust them to distribute the funds fairly.

Update: Warner Music got in touch and sent us a statement concerning this presentation from Jim Griffin:
"This presentation belongs to someone outside our company and represents that individual's interpretation of issues discussed at meetings held several months ago. It was not made by me or anyone at Warner Music Group. Of course, we are actively engaged with universities and other parties to seek a constructive resolution to a complex issue - how to assure artists appropriate compensation while enabling the widespread dissemination of their work among fans. Therefore, we are undertaking an effort to develop new voluntary business models that seek something other than - and we believe, better than - a litigation-based approach. This is exactly the type of solution that several universities and their associations have been asking for. We recognize that there are many different potential solutions to this issue, and we are determined to continue to think creatively and cooperatively with other parties in order to find the best ones. At this early stage, many ideas may be discussed and discarded, but efforts to prematurely label or criticize the process only hinder achievement of constructive solutions."

Filed Under: jim griffin, music tax, universities
Companies: warner music group

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  1. icon
    Mike (profile), 4 Dec 2008 @ 6:41pm

    Re: Re: Re:

    The first "model", from Trent Reznor, isn't particularly useful, as several commenters pointed out. It boils down to:

    1. Let a giant multinational spend millions of dollars on marketing to turn you into a star
    2. Give away music to maintain demand for the lucrative touring business that only exists because of step 1.

    That's simply not true either. We've pointed to plenty of "less well known" bands that have made very similar business models and it worked for them.

    Works great for Radiohead too with "pay what you want." Not so useful for anyone who isn't already a star.

    As we've been clear (again, you seem to be suggesting we're saying something we haven't) we don't support the "give it away and pray" model. But that's NOT what Reznor has done (it is what Radiohead did). Reznor offered a variety of *scarce* goods for sale, and knew that the free music would make those more valuable. That's a great business model and it works for small bands as well as big bands.

    Smaller bands can give away their music to build up a good following, that will pay for concerts and other "scarcities" such as access to the band.

    The second model, involving fan "sponsorship," is definitely more promising, and I know a few indie artists who have attempted it. In my experience they can cover their recording costs and that's about it. I haven't seen any musician make a living that way.

    Then you should look more. :) Jill Sobule made the $70k she set out to make in a little over a month. She didn't need all of that to record the album, so there was some profit baked in, and then she ends up making good money on touring in addition.

    The band Marillion has used the sponsorship model for years to support them and it's worked great.

    I believe musicians should be able to make a living. I'm not saying every wannabe with a guitar should get free rent, but the ones who really dedicate to their craft and build their fanbase should be able to afford an apartment and health insurance, for god's sake.

    And, uh, who exactly is saying anything different?!? We've shown that the models we talk about have helped bands make MORE MONEY than in the past.

    I've been in music circles for over fifteen years and right now, the musicians I know - the indie ones, not the major label ones - have been really hurt by the disappearance of CD sales as a reliable source of revenue.

    Sure. If they relied on CD sales then that's what they get. Because they didn't adapt to the changing market. Yet, as we've seen time and time again, the musicians who HAVE adapted, have been able to profit nicely.

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