A license fee for an unrestricted access to music
The Digital Milenium Copyright Act (DMCA) was adapted in most of the countries under the pressure of the majors and the distributors of music. Even if everybody could easily have an access to the Culture in all its variety, laws and technical restrictions make it impossible. Recently, the Songwriters Association of Canada (SAC) proposed a licence fee for an unrestricted access to music. At the same time, a mission for the French government was detailing the best approach to prevent and dissuade Internet users from illegally downloading music. Isn't the SAC's proposal applicable to France/your country?
On November 16th, the Songwriters Association of Canada (SAC) officially proposed to legalize the online sharing of music in exchange for a remuneration of the artists through a monthly tax on the Internet subscriptions:
We believe that implementing a fair way of compensating Canada's music creators for the online sharing of their music will usher in a new Golden Age of creativity.
One week later in France, Denis Olivennes (CEO of the leading distributor of cultural products in Europe), back from a governmental mission, delivered his report detailing the best approach to prevent and dissuade French citizens from freely downloading music: a flexible response ranging from a suspension of the Internet access to jail, the Internet providers agreeing to systematically delete every freely available copyrighted content, etc. Following this report, the SACEM (the French professional association collecting payments of artists' rights) is now officially authorized to collect the IP addresses of P2P users in order to sue them.
Isn't the SAC's proposal financially applicable to the country of the Human Rights? Would the licence fee be too high?
Here is what, in the proposal, pertains to its economic viability:
(...) this would present a major financial improvement for the music industry. Since the license fee would be paid by all internet and wireless accounts, the amount of income generated annually could adequately compensate the industry for years of declining sales and lost revenues, and would dramatically enhance current legal digital music income. Sales of physical product would continue to earn substantial amounts, albeit gradually decreasing. Masters would continue to be licensed to movies and television. Radio would continue to sell advertising and pay royalties on music.
Well... The slow abandon of material supports makes the evaluation of the licence fee rather difficult. Let's greatly simplify the problem (in disfavor of the SAC's proposal) and imagine that, from tomorrow, every French household connected to Internet freely acquires all its music through Internet (no more CDs). What monthly tax would it have to pay to balance the costs of production of the music industry?
In 2006, the French music industry made significant benefits with 819 millions euro sales of CDs. One third of these sales goes to the fabrication and the distribution of the CDs. Abandoning the physical support, the tax must raise 819 * 2/3 = 546 millions of euros. Indeed, the fabrication costs disappear and the distribution costs are almost null (no intermediaries and dematerialization) and could be largely compensated by incomes from advertising on the online platforms proposing the download of millions of titles (in a much more comfortable way than mining piles of CDs for a title the store does not have).
In 2005 (the last official figures), there were 25.7 million households in France. This figure constantly increases of 1.24%/year since 1975. As a consequence, today, there must be a bit more than 26.3 million households in France. 49% of them are connected to Internet. This makes more than 13.1 millions French households which monthly pay a subscription to an Internet provider.
Sharing out the sales of the music industry between these households (which would directly benefit from the availability of a comprehensive repertoire of titles from their computer), we find 546 / 26.3 = 41.7 euros per household and per year, i.e., less than 3.5 euros (5 US dollars) a month. I do not think someone would refuse to pay such a small fee if it means an uncontrolled and unlimited access to all the music from home. Furthermore, this licence fee is bound to decrease since both the number of French households and the proportion of them connected to Internet (which would be boosted by the legal and comprehensive availability of music through it) increase. Assuming that, within two years, the equipment rate reaches 84% (the one of Iceland today) of the 27 millions households, the same calculus leads to exactly 2 euros (2.9 US dollars) per month and per household. This amount would provide the same incomes as in 2006 to all the actors of the music industry. Well... all but the CD makers and the classical distributors which refuse to adapt their business model to the technological advances of the last decade. Denis Olivennes is clearly among them.
An alternative exists. The Canadian artists recently argued for it. France was closed to apply it two years ago when the DADVSI law (French equivalent to the DMCA that the Olivennes commission aimed at refining) was discussed at the Parliament. At that time, Pascal Nègre (CEO of the major Universal Music France) did not agree. He made the minister of Culture understand it: the amendment was rejected. In most of the countries, the same lobbying occurs. The majors and the distributors influence the legislation, the consuming process is reversed: the Offer dictates its law to the market.
Clearly, these companies value more their shareholders than the Freedom and the Culture of the citizens. As a result, the P2P users are hounded, sharing Culture with friends is both legally (DMCA & co.) and technically (DRMs, trusted/treacherous computing, technical protections on Blue Ray Disks/HD DVDs) impossible. More and more, the condemnations of whom they call "pirates" (i.e., people sharing files with their friends) and new dissuasive techniques (legally downloadable files will soon be watermarked with the name or the credit card number of the customer) may succeed in preventing the citizens from being friendly although the technological progress makes it easy.
What would be the licence fee if the SAC's proposal was followed in your country? Please, adapt my calculus to your country and post the result as a comment.
Note: This article was born from a thread on the Gentoo French Forum.
Comments
Not a wrokable solution
There is a serious issue with this plan. Let's say we can get it passed, and get the tax collected. In addition to the challenge of how much to collect (does it go per person, per household, per public IP, how do you handle public hotspots at coffee shops, etc) we still don't know how to distribute it.
Who gets the money and how much? You can't just give it to the major labels. Even if you could, how much goes to Metalica, and how much goes to Blake Lewis? Do you really want the government deciding who gets to make a living in the music business?
The current model of pay for what you want is not easy to enforce in the world of file sharing, but it is the best model we have so far. I think we need to completely rethink the music industry. Maybe the big labels are over. With the digital age, maybe recorded music needs to be viewed as advertising, and the money needs to be made at concerts and off of merchandise. The real challenge with this is paying the expense of recording the music, the distribution costs are nothing, and the artists and songwriters already don't get much of the CD sales. A few pennies per unit for the songwriter, and usually nothing for the musicians. They get their money from concerts, merchandise, and record company bonuses already. The rest of the money goes to overhead, and paying signing bonuses to artists who never sell 10 CD's, and the studio time and production costs on those who don't sell.
Remember, studio time costs $60/hour and up, and it takes about two hours of studio time for every minute on the CD.
Measuring the popularity
I believe that measuring the popularity of an artist is not a real issue.
If the sharing of music was legalized, the quantity of music obtained from P2P networks (which are indeed impossible to monitor) would drastically decrease in favor of big Web platforms (living from advertisement) proposing millions of titles for free. As far as our Internet connections are asymmetric, this is even more certain. Notice also that the sharing of music through these sites would be much more comfortable than P2P: a search engine (using the lyrics) would greatly simplify the searches, the users could comment on each title, the platform could present you artists in the vicinity of what you have recently downloaded, high quality (flac?) music would be available, etc.
These platforms could then be legally forced to log their activities (what titles were downloaded, how many times and from which country the users were downloading them) and communicate them to the different states through a multinational organism (which would also control them).
Then money distribution is a matter of choosing a curve function of the popularity. Today this function is a simple proportionality: the more CDs an artist sell, the more money it yields. As a consequence, all the marketing effort is focused on the superstars. The (legally defined) redistribution of the license fee could be more in favor of cultural diversity. Some kind of logarithmic curve...
Who pay the tax? I think that a per connection tax is the simplest way to go. That is why I why I considered the number of households with an Internet connection. Anyway, this is, I believe, a minor point.
Regarding the repartition of music production costs, this is not my point. The license fees I calculated cover them all but the fabrication and distribution costs (one third of the duty-free price of a disk).