A copyright fee collected by the ISPs will help support the creative community while simplifying and encouraging innovation for online businesses that use music. But not everyone will applaud the new fee. Some consumers will undoubtedly complain for reasons such as, “I don’t like music,” or “I don’t listen to music online.”
Harvard Law Professor William W. Fisher III offers some compelling points in his book, Promises To Keep: Technology, Law and the Future of Entertainment (Stanford University Press, 2004). Fisher compares the dire internet-caused circumstances facing today’s musical intellectual property owners with other historical precedents that have effected what he refers to as “public goods.” Throughout history he asserts, governments have taken steps to, “counteract the danger that public goods will be underproduced.”
“A small number of socially valuable products and services have the following two related characteristics,” says Fisher. “First, they are ‘nonrivalrous.’ In other words, enjoyment of them by one person does not prevent enjoyment of them by other persons. Second, they are ‘nonexcludable.’ In other words, once they have been made available to one person, it is impossible or at least difficult to prevent other people from gaining access to them. [Public] Goods that share these features are likely to be produced at socially suboptimal levels.”
Fisher’s eloquent description is economic-speak for saying that once a song, movie or book is released online it becomes difficult and likely impossible to keep it from being shared and enjoyed by an unlimited number of users, many of whom will not pay for the experience. Taken to the extreme, creators would no longer be compensated for their work and many would likely be forced to produce other less socially valuable products to earn a living.
Expressed differently, one could say intellectual property and its creators benefit society in a way similar to other public goods. However, because online technology has made music nonrivalrous and nonexcludable (according to Fisher) it can not be supported by individuals alone. The South Carolina Department of Revenue succinctly explains this idea on its website as quoted below.
“There are many services offered to citizens that could not be managed effectively under any other system. The federal government uses your tax dollars to support Social Security, health care, national defense and social services such as food stamps and housing… The city or county where you live provides water and garbage service, police and fire protection and also contributes to public schools. We can all admit that these services are necessary… Why shouldn’t we just pay individually for what we use? The answer is simple: Because no one could afford it.”
In the groundbreaking music manual, The Future of Music written by David Kusek and Gerd Leonhard (Berklee Press 2005) the authors also suggest a Pay On The Way Into The Store approach. “Another option is to institute a small fee in the form of a ‘utility license’ or—dare we say it—tax that would allow people to download any and all music online,” says Kusek and Leonhard. “If the involved industries cannot voluntarily agree on and create such a legal structure themselves—and do so soon—then maybe the governments should do it…” A few paragraphs later the co-writers conclude, “This ‘content tax’ seems like a reasonable solution to the current, rather ridiculous environment in which each piece of music must be individually licensed from each rights owner, on a track-by-track basis. This new tax could be a form of insurance against online piracy, and rather than trying to sue everyone to force an overall change in consumer attitudes and behavior, the industry would simply ‘tax’ them.”
Under The Digital Solution plan we call the payment a fee (not a tax) because it never goes into government coffers. After being collected it is passed on directly to the StreamCollect Fund.
Internet Porous DNA
The Internet and its unique properties dictate that information, once uploaded, is impossible to protect or segregate. This basic understanding about the porous nature inherent in the DNA of the Internet is the reason why paying on the way into the store is the best (and perhaps only) way to insure compliance and fairness for both users and creators. In return for paying the fee, consumers get rewarded with a ‘feels like free’ compulsory license that both encourages technological innovation and compensates creators.
Volker Grassmuck wrote an excellent paper for the 2011 Rethinking Music Briefing Book designed to help frame some of the copyright issues to be discussed during that year’s annual music conference. In the article Grassmuck advances, “A Proposal For Balancing User Freedom and Author Renumeration in the Brazilian/Copyright Law Reform” that has key similarities with the ISP fee concept. In discussing why a new copyright approach is necessary for the digital domain, Grassmuck notes, “The digital revolution has fundamentally changed the media/technological basis of the production, distribution and consumption of cultural goods. Private persons, whose actions have until recently been outside the scope of copyright law, can now be producers and global distributors of creative works.” Dismissing the effect of DRM as “unproven” Grassmuck states, “Repression predictably calls in the next round of the technological arms race… If cultural reality cannot be made to conform to copyright law, then copyright law has to be adapted to reality by legalizing what can not be prevented anyway and at the same time ensuring an equitable renumeration to authors.”
Grassmuck is talking about a Pay On The Way Into The Store plan which he sees as necessary because, “individual private internet users owe the creators of the works they share.” He adds, “Likewise ISPs and mobile phone companies that provide internet access to private homes are the logical parties to add the file-sharing levy to their monthly customer bills and transfer the money to the CMOs (Collective Rights Management Organizations).”
Onehouse’s Jim Griffin together with Warner Music group experimented with ISP payment models around 2008. Their company Choruss, started talking with colleges about licensing student music usage with a flat fee. “We were oversubscribed by schools willing to pay $5 per student a month,” says Griffin. “ISPs like the compulsory license, their main concern is, will be a level playing field? If they know their competitors are also paying, then it is of little consequence. The schools by the way are ISPs for their own students. Ironically, all of these same schools have mandatory cable fees now. If you live in the dorms then you pay for cable whether you want to or not and that money goes to the TV, movie companies and sports teams whether you watch or not. I’d like to see something similar happen with music because music is a part of the culture just like TV and movie are. I don’t see a huge problem with assessing these fees.”
Intellectual property has always been an important part of our society’s cultural and spiritual growth. Music is everywhere. It is used in religious ceremonies, as part of public gatherings and in so many additional ways. Our world would be a different place without the songs and singers that inspire us so often in our daily lives. What has changed in the digital age is that music no longer needs a physical medium to access it. Hold-in-your-hand formats like vinyl, cassettes and 8-tracks have been replaced by the MP3 file which has no physical shape or form.
The last decade has clearly shown that the music industry is adrift in search of a business model which can satisfy and create value for both consumers and creators. Pay On The Way Into The Store is not a new economic concept, but a growing number of voices are suggesting that it may be the best approach for digital music in general and streaming specifically. This writer called for it in an open letter published in Nashville’s music trade magazine, MusicRow, on Jan., 10, 2003. Professor William Fisher’s book quoted in this chapter suggested a similar plan in 2004, and Kusek and Leonhard’s Future of Music echoed the need for a “utility license”solution in 2005.
The magic of evolving music technology allows us to experience new wonders. But technology, without great content to elevate it, can be reduced to a mere parlor trick. Pay On The Way Into The Store ensures that the exchange between creators and users is balanced and fair and therefore it is most assuredly in the public’s best interest.
Read on to see how the money will get divided among rights holders…
Chapter 7: Distributing The StreamCollect Fund.
The Digital Solution by David M. Ross ©2014 BossRoss Media All Rights Reserved