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. identicon
    Twinrova, 5 Dec 2008 @ 5:18am

    A flat fee is already in use... they're called taxes.

    "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"
    Explain to us how it's a bad idea.

    If done properly, imagine the further growth digital delivery could expand. Imagine a world without DRM. Imagine people not fearing copyright infringement lawsuits because they shared their music, given the person is also paying the "tax".

    This "tax" would also open up a new avenue to people who don't download now due to the extortion prices set by stores like iTunes and Amazon. $0.99/song is outrageous and having a "flat tax" means consumers could potentially save thousands by freely downloading music.

    Personally, I'm all for it. I would love to be able to download all the songs I want for a small fee. It's a fantastic model and I see no problems with it should it be implemented within reasonable bounds (low cost, unlimited downloads, unrestricted music).

    It's no different than paying property taxes which pays for schools (I don't attend), police and fire (I don't use, but feel safe knowing I can).

    Explain to us how it's a bad idea, please.

    I also don't believe this will hinder innovation at all. Musicians will still have the ability to implement a model based on their needs if they aren't getting compensated by the music industry's plans.

    In fact, I believe we'd all see a growth in digital distribution which is no longer bound by the rules of "copyright infringement" due to the "music tax". New sites and software would pop up giving consumers flexibility on how to acquire the music. New MP3 sites would rise, since the restrictions are lifted.

    Damn, the more I think about it, the more reasonable it becomes. Encapsulate the movie industry in the same tax, and for the first time ever, the internet does become a place of sharing.

    When the average cost of broadband is $50/mo for cable subscribers, I don't see how an additional $10/mo would hurt with the benefit anyone can download anything without fear of prosecution.

    I can also see a growth in new potential consumers who will go online to download their favorite song/movie and conceivably be open to buying other products in relation to the song/movie. Damn, the potential is endless.

    "But the music/movie industry is running a bad business model to begin with and thus the tax isn't justified."
    You know how I can't stand the current business model, but maybe this tax will help them finally move into the future. While I know you don't agree with the tax, I also don't feel we consumers should have to pay for the current model and wait until these industries do move forward.

    Because until they do, we'll continue to get bombarded with DRM, legal issues, IP conflicts, and every other damn consumer inconvenience they can think up.

    Which is better? A step forward with a "one cost does all" or the continuing fight? I'm sorry, but the "tax" benefits outweigh the current (and continuing for years) situation.

    I'd also like to point out in your "freeconomics" discussions regarding the industries that you rarely give them alternatives to which they can distribute freely, but make money elsewhere.

    If the overall "product" consumers want is the music and movie, do you really think they'll rush out to buy a limited edition tshirt, CD/DVD, book, or other things? Sure, a few will (based on your article about focusing on the few vs. the all), but will these few actually be strong buyers to continue the industry?

    I think not, in this context. It takes sales to generate the content. The movie you purchased today goes into the pool of the current/future movie to be produced.

    Take the movie "The Dark Knight". 2nd best in history. Hundreds of millions made. I see another movie in the series coming out and other projects which may now have a "green light" for production due to the sales which may otherwise not have happened.

    Think the "few" can support this with the "freeconimics" model? I don't. Not when you're talking millions to make just one movie.

    We're all already paying a tax on our internet connection as it is.

    So I ask once again, how is this "tax" a bad idea?

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