MUSIC TAX FOR THE INTERNET?

EDITORS' NOTE: I have shared many a lunch at group meetings with Jim Griffen, all spent talking about music and the internet, problems and hopefully, solutions. Here's one theory, well-explained by David Ticoll.

A Taxing Proposal To Solve The Music Download Dilemma
By DAVID TICOLL -
Naked Corporation

Canada has recently become the world's test case for an alternative model of dealing with music downloads.

In the United States, the recording industry, the federal government and various computer companies continue to collude in their ham-fisted and futile approach to addressing the issue.

Meanwhile, the Canadian-style solution could look very much like a quasi-socialized industry whereby we fund music sharing though a surcharge on our Internet fees. Or how about this modest proposal: just do it through the tax system.

I've been a skeptic about such ideas for a long time. Why should my aunt in Montreal, who isn't interested in downloading music, subsidize the rest of us? And, for that matter, why should I subsidize my daughter's university friends who download by the hour?

I debated the subject with Jim Griffen, a Los Angeles-based music industry consultant. Mr. Griffen spoke at Canada's Music Week this month, and he ran the technology department at Geffen Records for five years before launching out on his own. He won me over.

What principles lie behind the wacky idea of putting on a collective surcharge to pay the creators of downloadable music? Let's agree that any music that people want to hear, be it Britney Spears's Toxic or jazz master Dave Holland's Extended Play, qualifies as culture. Just go with it, okay? Social patronage and support of the musical arts is a thousands-year-old tradition. Canadians provide it in countless ways, subsidizing the CBC, local symphonies and operas, the Rolling Stones SARS benefit and myriad other cultural programs. The principle is nothing new.

Mr. Griffen points out that as technology changes, societies invent new ways to pool and distribute assets in order to compensate those who invest their capital and talents. Seventeenth-century merchants, ship owners and bankers got together to form trading companies such as Hudson's Bay and insurance pools such as Lloyd's of London. In the 1920s, the radio industry created pools of money to compensate musicians and producers. In Canada, we recently earmarked a surcharge on recordable compact discs for the music industry -- even though only some customers put music on CDs. Just last week, the Copyright Board of Canada added a surcharge of up to $19.20 to the retail price of MP3 players, though you can also use them for computer data storage. So the principle is not new.

What's the state of play?

In the United States, uploading and downloading music are both illegal thanks to the Digital Millennium Copyright Act, passed by Congress at the behest of the music industry. No similar legislation exists in Canada. Here, it's probably illegal to upload, but probably not illegal to download.

The Copyright Board says uploading music from your computer to the Internet is illegal. This is one reason why the Canadian Recording Industry Association (CRIA) wants to sue consumers who upload music from their computers to the Net.

Opinions differ on whether downloading music from the Internet to your computer is illegal in Canada. Some, including the Copyright Board, say it's okay. Others say it's not clear. CRIA is among the few that argue that downloading is against the law.

Meanwhile, the idea of sharing copyrighted information is gaining traction in other areas. Last week, the Supreme Court ruled that the Law Society of Canada can photocopy copyrighted case materials from legal publishers and give the copies to its members. Society lawyer Scott Joliffe commented that the judgment means that anyone can now make a single copy of any copyrighted material for research purposes and not pay a licence fee to its creators.

Compared with the United States, the industry's legal defences are looking a bit frayed.

Another key event, last December, was a hearing before the Supreme Court that pitted Canada's songwriters against the big Internet service providers. Note that these are the songwriters (represented by the Society of Composers, Authors and Music Publishers of Canada -- SOCAN), not the record companies (represented by the aforementioned CRIA). Give credit to SOCAN for taking on someone its own size -- the Canadian Association of Internet Providers (CAIP) -- rather than the individual consumers CRIA targets.

The SOCAN-CAIP lawsuit is important precisely because it tests our premise, that there should be a form of collective payment to cover the cost of music sharing. SOCAN wants Internet service providers (ISPs) to collect a surcharge -- say 10 per cent of their monthly fees -- to create a pool for the benefit of music creators. SOCAN argues that ISPs promote the joys of music and other multimedia downloads, and in so doing implicitly authorize use of their networks to infringe on copyright. Rather than halt this behaviour, the songwriters just want to get paid.

The role of CRIA -- the record company association -- in this case is interesting. CRIA intervened to support aspects of the songwriters' argument. But, it seems, the record companies are less than enthusiastic about the songwriters' idea of an ISP surcharge. For the songwriters, the idea is pure upside, money that they otherwise don't get. But such a scheme would pound a big stake in the business model of record companies. In a world of instant digital music sharing, who needs manufacturers, distributors and retailers of plastic CDs? Just pay the artists (and
songwriters) and be done with it!

Michael Geist, a University of Ottawa law professor, has proposed an Internet surcharge for Canada's 750,000 university students and 600,000 heavy home users. He sees it as a "blanket licence for file sharing." Of course, once such a concept becomes available, legitimate and easy, many more users (like me) will come on board -- soon there'd be millions. Then, why not return to my first principle, and add a few bucks for music (and inevitably other copyright-protected) downloads to our income tax. Surely it would be a pittance in the grand scheme of things.

# # # #

David Ticoll's new book is


The Naked Corporation: How the Age of Transparency Will Revolutionize Business
, written with Don Tapscott.



Write to Mr. Ticoll at: dticoll@globeandmail.ca

2004 Bell Globemedia Publishing Inc. All Rights Reserved.

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