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2001 NAPSTER AND THE IRS

One night, while writing my usual Intellectual Property appeals to the public to realize how many lives are impacted each time a song is "stolen" in use (unpaid), a crazy thought occurred to me. I wrote it up as an "exercise" in view, trying to illustrate that our copyrights are WORTH something. I don't advocate this as a policy, I know that it's not practical nor applicable, it was simply a "new view" at an old topic.

When a major online corporate site published the article, I was sent literally hundreds of letters, and I was called every name in the book, including Liberal, Capitalist, Communist, RIAA Stooge, Republican, Democrat, Hollywood Moron, Record Company Greedy Bi***, and even more colorful names I won't repeat here. I was contacted by everyone from high school kids to IRS agents. For every letter of support, I had fifty that were personal attacks. (As a simple songwriter, who's pretty much a pacifist that basically just wishes for morality and fairness when assessing "art", this was somewhat hard for me to cope with.) However, call me what you will, I will always believe that Intellectual Property has VALUE, and that the laws in place apply until changed. Here's the article, followed by an update.

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IRS should deal with Napster users
By Janet Fisher, Managing Director of Goodnight Kiss Music (BMI)

Many of you have read my pleas in the corporate-level forums to respect and protect copyright laws when it comes to file sharing. In particular, my pleas in regard to sites specifically set up to infringe on our system and laws. I love file sharing and its potential, but hate theft, so I have tried to appeal to those offenders' ethics, reasonability, legal responsibility and human sensitivity. Obviously, that's not working. So let's go to a new place.

Hello, IRS, welcome to my huge deposit of "gain" collected in the 25,000+ files I did not pay for, nor pay any income tax on.

YOU CAN'T DO THAT! You are right -- I can't do that -- but the IRS might be able to. In our country, bartering from whence one gains -- is another form of income -- and therefore, it is "taxable."

Let's let that thought sink in for just a moment, ok? Let's say that we value a CD at $12.99-$19.99. If a certain song is available only on that CD, it could be that you would be responsible for the entire CD cost if you have taken the song. Or, even at a value per song, say $2.00, you are gaining. Those of you downloading thousands of CDs could be responsible for thousands of dollars of "profit from gain". And the sites allowing and encouraging the cheating of the IRS (as to their providing NO tax considerations) are quite possibly liable for every file swapped, as they are the ones actually "taking in" and "giving out" the songs.

Ah! That brings us to another area -- "state" sales tax. Is it possible that the state should be collecting on these gains and profits also? After all, sales tax is the responsibility of the "seller/vendor". Actually there is no enforceable Internet Tax rule written at the current time, but you take the point. (I have noticed as a California resident, the state could care less where one's money comes from, if payment for a product or service comes INTO California, they want to tax it.)

If you keep up an "evil" activity (stealing what is not yours), then the forces of good will simply have to find a bigger defense system. The IRS might be a pretty good one!

Just my opinion.

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So ended the article, and so began the onslaught of letters. As a footnote, according to the information given me by IRS representatives, past and/or present:

First, the following two points are not "rulings", as the IRS has not issued any rulings on subjects related to Napster or similar types of e-business.

Second, barter income is taxable income. Generally barter is exchanging one thing of value for another between two or more entities. The income is computed at the fair market value of the item received, and is taxable for the recipient.

Third, gifts are generally not taxable to the recipient. However generally a gift requires a willing donor who has no expectation of receiving anything in exchange for the gift. Something is NOT a gift if it has a price tag... ("I'll give you this, but you have to give me that.") These are the general, traditional views. I was also told the normal approach would be a case by case basis.

I do not advocate the end of technology, file sharing or any other type, nor using the IRS for policing copyright infringement. I am only against piracy of Intellectual Property content... and I still reserve the right to philosophize.

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(C)2001, 2002, 2003, 2004 Janet Fisher, Goodnight Kiss Music, no reprints without permission, all rights reserved world wide.

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