The British Phonographic Industry may be
celebrating a
victory of sorts now that it has persuaded six Internet service providers to threaten customers known to have illegally shared music files, and perhaps even to charge a so-called "
music tax" that will funnel surcharges on Internet connections back to the music industry to cover losses due to file-sharing. But might that victory be more
Pyrrhic than anyone is willing to admit, or might it set a dangerous precedent that the industry could come to regret?
The BPI faced considerable
hostility from at least one ISP a few months back, when it formally requested that connectivity providers threaten their own customers if they don't stop sharing music files. That ISP, a property of The Carphone Warehouse plc, has now
agreed to participate in the BPI's plan, alongside Virgin Media Inc. [
VMED],
British Sky Broadcasting Ltd., BT Group plc, France Télécom's Orange and Tiscali SpA. Beyond "educational" letter-writing -- and are they
serious about doing this through the
Royal Mail? -- the subsequent steps the ISPs are expected to take aren't clear, but they apparently may include filtering or canceling user accounts. Compared to rampant, unchecked file-sharing, that's a victory.
But more worrisome, and more paradoxical, is the idea that
all of an ISP's customers could be "taxed" to pay for the transgressions of
some customers who illegally trade files. Reports have suggested that an annual surcharge of
£20 to £30 could be levied on all Internet customers, with the fees returned to record labels to compensate them for their losses.
Here, it seems, is where the labels admit defeat and not victory: After years of insisting that file-sharing is a menace and is strictly illegal, the labels are attempting to make money off it. And monetizing theft, or any other illegal activity, is conferring legitimacy on it, and opening a Pandora's box to boot. Would an ISP attempt to capitalize on the kiddie-porn trade by surcharging all its customers? And will the movie and TV industries be the next ones to ask for a surcharge to cover use of their copyrighted material, since it cuts into DVD sales? What about bloggers who think they deserve to be paid for their copyrighted work?
Labels are already known to use file-sharing as a market research tool, although they tend to keep quiet about just how useful it is. But asking consumers to pay for something the labels have so widely denounced for ten years is another matter, especially when they'd be asking a nation of Internet subscribers to pay for the activities of the worst offenders. And everyone involved -- including labels, ISPs, regulators, and consumers -- is likely to wonder whether there's a better way than that.
BSkyB has taken a step in the right direction by
introducing a paid subscription service that includes both streams and
DRM-free downloads, although only one major label, Universal Music Group, is on board thus far. If all six ISPs can introduce such plans, or even combine forces for a formidable joint venture, they could create an environment wherein artists and labels are properly compensated by known music consumers, while avoiding a government-regulated situation where everybody pays. (The royalty negotiations for a joint venture, one imagines, would be exceedingly difficult for four major labels and six ISPs, not to mention independents, but the government
mandate of finding a solution by April 2009 or facing legislation could spur them to an agreement.)
Although U.S.-based subscription services such as RealNetworks Inc.'s
Rhapsody [
RNWK] and
Napster Inc. [
NAPS] have been slow to catch on, ISPs could offer greater exposure and convenience for customers. My cable company already provides commercial-free digital music through my TV set, and adding a music subscription to my Internet service could be as seamless from a consumer standpoint as adding HDTV service to an existing cable connection. I suspect a "music tax" would provoke an unpleasant outcry from consumers everywhere, so if the British ISPs can come up with a paid subscription service (or several discrete services) that satisfies consumers, regulators and the BPI, perhaps they'll serve as a model for at least one way consumers will enjoy digital music outside the U.K.
-- Paul BonanosSee July 23 Tech Confidential posts on
BSkyB's subscription service and
the ISPs' agreement to work with the BPIFor more see
Billboard,
The Independent and
The Guardian
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