[Infowarrior] - Music Industry Proposes a Piracy Surcharge on ISPs

[Richard Forno]

Music Industry Proposes a Piracy Surcharge on ISPs
By Frank Rose Email 03.13.08 | 12:00 AM

http://www.wired.com/entertainment/music/news/2008/03/music_levy?

Having failed to stop piracy by suing internet users, the music industry is
for the first time seriously considering a file sharing surcharge that
internet service providers would collect from users.

In recent months, some of the major labels have warmed to a pitch by Jim
Griffin, one of the idea's chief proponents, to seek an extra fee on
broadband connections and to use the money to compensate rights holders for
music that's shared online. Griffin, who consults on digital strategy for
three of the four majors, will argue his case at what promises to be a
heated discussion Friday at South by Southwest.

"It's monetizing the anarchy," says Peter Jenner, head of the International
Music Manager's Forum, who plans to join Griffin on the panel.

Griffin's idea is to collect a fee from internet service providers --
something like $5 per user per month -- and put it into a pool that would be
used to compensate songwriters, performers, publishers and music labels. A
collecting agency would divvy up the money according to artists' popularity
on P2P sites, just as ASCAP and BMI pay songwriters for broadcasts and live
performances of their work.

The idea is controversial but -- as Griffin and Jenner point out -- hardly
without precedent. The concept of collecting a fee for unauthorized use of
music was developed in France in 1851 as a way of reimbursing composers
whose work was being performed without their permission in cafes and the
like.

The practice spread to the United States in 1914 and currently applies to
radio airplay and webcasts in addition to live performances. In a 2004 white
paper, the Electronic Frontier Foundation called for it to be applied to
file sharing, but the Recording Industry Association of America immediately
dismissed the proposal.

Things are different now. "The labels are beginning to like the idea of an
access-to-music charge," says Jenner, who once managed Pink Floyd and the
Clash, "because they're increasingly aware that their current model is
broken." U.S. music sales, which peaked in 1999 at nearly $15 billion,
dropped to $11.5 billion in 2006. Last year's figures are still being
tallied, but with CD sales cratering and online sales overwhelmingly
dominated by singles, the only question is how far they'll fall.

Meanwhile, the industry's antipiracy efforts appear more and more futile.
Digital rights management, long touted as a solution, has been all but
abandoned. And though the RIAA is said to have threatened or taken action
against some 20,000 suspected file sharers, the market-research firm NPD
Group reports that nearly 20 percent of U.S. internet users downloaded music
illegally last year. The score to date: 0.02 million alleged P2P users down,
40.98 million to go.

At the music industry trade show MIDEM last year, John Kennedy, the head of
IFPI -- the RIAA's international affiliate organization -- offered modest
support for the kind of licensing fee Griffin and Jenner propose. "It's a
model worth looking at," he said at a press conference. "If the ISPs want to
come to us and look for a blanket license for an amount per month, let's
engage in that discussion."

The tone at the January 2008 MIDEM in Cannes, France, was more combative.
Longtime U2 manager Paul McGuinness said in a widely reported speech that it
was time to hold ISPs responsible for the file sharing deluge. McGuinness
wants network operators to cut off those the industry deems offenders -- an
approach France's Sarkozy government is already pushing in that country. "If
ISPs do not cooperate voluntarily," McGuinness declared, "there will need to
be legislation to force them to cooperate," McGuinness said.

Behind closed doors, however, MIDEM attendees discussed the prospect of
collecting money from ISPs instead. An invitation-only meeting on the
subject drew about 50 people, including representatives of IFPI, Sony BMG,
T-Mobile, the giant European ISP and mobile-carrier Orange, and
performing-rights organizations like BMI. The response, according to Jenner,
"ranged from 'What do we do now?' to 'It sounds good, but can it possibly
work?' A lot of people are like rabbits in the headlights: They're terrified
they're going to lose their jobs. No one dares to feel that this might be
the solution."

Even so, notes Shira Perlmutter, IFPI¹s head of legal policy, ³none of our
members are ruling anything out. These companies are all very open to
creative new ideas that would allow customers to do things they want --
including using file sharing technologies.²

Not everyone sees the two approaches as an either-or situation. "I love Paul
McGuinness' idea," says another scheduled SXSW panelist, Dina LaPolt, a Los
Angeles attorney who represents Mötley Crüe and the estate of Tupac Shakur.
"And I love the idea of trying to make ISPs pay artists and make up for all
the free crap that's going on. I support both, so long as artists are
getting paid for their work."

Whether ISPs will be willing to ante up remains far from clear, especially
since many users can be expected to protest the extra charge. One option
would be to introduce different service tiers and impose the surcharge only
on customers who buy enough bandwidth to make file sharing feasible. But for
ISPs, other music-industry demands could be far more onerous.

In the weeks since MIDEM, antipiracy zealots have been using McGuinness's
speech as a rallying cry. Last month the British media reported that a
government white paper was about to call for legislation to force ISPs to
move against suspected file sharers. As it turned out, the white paper
merely included a vague call for "voluntary, preferably commercial
solutions" by April 2009.

Just Monday, the four majors sued the largest ISP in Ireland in an attempt
to force it to block illicit downloads. Attorneys for Eircom retorted that
it was not legally obligated to monitor its network traffic.

AT&T has been looking into content-sniffing technology that could turn it
into a spy agency for music labels and film studios, but most ISPs seem
distinctly unenthusiastic about the idea. They have good reason to be.

Technology experts say it would be impossible to reliably inspect trillions
of packets for pirated material, especially if file sharing networks resort
to encryption mechanisms. Legal experts point out that any attempt by an ISP
to monitor its traffic in this way would jeopardize its status as a common
carrier. It could also leave the ISP open to lawsuits from subscribers who
get cut off without good reason. And financial experts say it would cost a
bundle to implement.

But the bottom line is, it simply won¹t work. ³Ultimately there is no real
hope of eradicating copyright-infringing technology,² says another SXSW
panelist, Eric Garland, CEO of BigChampagne, which tracks the popularity of
music online. ³You can push piracy around, discourage people from doing it
in this or that venue, but I don¹t think in even the most Orwellian scenario
you could reduce massive infringement in a comprehensive way.²

So, which will it be: A last-gasp assault on piracy, or a truce that would
bring in money and benefit everyone except the lawyers?

At this point, the music industry seems too dazed to decide -- and several
nights in Austin probably won't help. Though Jenner and McGuinness are on
opposite sides of the debate, their good cop-bad cop routine could
ultimately prove synergistic. Pay up, the music people are telling internet
providers, or we'll sic Washington on you -- and London and Paris and
anybody else we can find.