Warner Music is proposing a plan to charge a $5 monthly fee on your Internet Service Provider (ISP) bill for unlimited access to music...whether you want it or not. Don't worry, it is very unlikely this plan will actually succeed. All the major recording labels would need to agree to participate...and they can't agree on anything.
Mike Arrington at TechCrunch calls it "The Music Industry's New Extortion Scheme". Portfolio calls it "Fee For All". The music industry has been in a steep decline since the advent of Napster. Most of you know I was a VP at the original Napster back in the early days. You can read this post about my experiences at Napster, and conclusions about the music industry.
Warner Music tax versus The NFL Network? All of us in the Napster generation can get angry and indignant about the proposed Warner Music monthly fee. But, isn't it the same concept as the NFL Network trying to force the cable TV providers to pay a fee for EVERY subscriber to carry the NFL Network? The crux of the issue is should it be a premium channel that subscribers choose to add, or should it be a mandatory channel that everyone pays for whether they want it or not. If the NFL Network was available as a premium channel I would subscribe in a minute, and I'm sure lots of football fans would. It is all about economics. Here is a hypothetical example. If you were the NFL which would you prefer? A premium channel at, say $30 a month for the NFL season, that 10 million people might buy, or a $3 per month surtax that 200 million subscribers would pay.
The cable TV networks have mostly resisted the NFL Network demands. I think the Dish Network carries it, but most do not. The ISPs will resist the Warner Music plan too, unless the fees are reduced significantly. Competition maintains a level playing field. The ISPs know that if one of them adds the music service and raises their monthly subscription fee, that their competitor may choose not to...and customers may flock to the lower priced ISP.
It is all about the money. Today consumers have lots of choices for their Internet service, ranging from free ad supported services, to low monthly fees, to all you can eat broadband for $50 a month. Cable TV subscribers have fewer choices; cable, satellite, or phone company. Competition creates choices. The marketplace determines the appropriate price and distribution despite what Warner Music or the NFL Network might like. That is what capitalism and free enterprise is all about.
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The fundamental stupidity of a flat-fee tax on Internet connections for music (and it is stupid), is that why should or would it be limited to music?
As soon as the record labels got their deal, the TV production companies would be right in there, and since they have vastly larger revenue streams, they'll want a larger tax too, $30 a month for downloadable TV whether you want it or not?
And authors of course, because people copy books online, maybe 50 cents each for them.
And comedians, when they create a joke and it gets repeated online, that could be a breach of copyright, so they should have their own tax too, maybe 1 cent a month for the right to post the joke you heard in a bar onto facebook.
When someone posts a photo to flickr, you shouldn't have to chase down any companies that take your work and use it in an unlicensed ad-campaign, you need to be protected too, maybe you can have 0.01 cents per month as your photo tax. Of course, we'll all be paying that one as well as receiving it.
The list goes on and on.
Hey if someone takes this comment and posts it somewhere else I could miss out on my cut too, so I want a tax to pay for my output. I'll settle for 0.001 cent per Internet subscriber per month, forever (with rate of inflation increases of course), and you can all copy my content freely in exchange.
Posted by: Ewan | March 28, 2008 at 11:50 AM