Tuesday, 9 September 2003

Eugene Volokh on the download tax

Eugene Volokh criticizes a Slate proposal for compulsory licensing of music for sharing on the internet. A tax on recordable media (blank CDs, hard drives, MP3 players, etc.) would be paid to some organization like ASCAP and BMI, which would then distribute the money (minus administrative expenses, of course) to the artists, based on estimated share of downloads.

In return, consumers could freely share music on the internet, without fear of RIAA lawsuits.

Eugene points out how easy it would be to game the system, by any organization able to marshall enough volunteers to download the song over and over. He imagines the NRA recording “Second Amendment Blues”. Loyal NRA members might download the song over and over again in order to increase the NRA’s share of the royalties, with the more technologically sophisticated writing scripts to facilitate this. Other interest groups get in on the game as well. The net result (no pun intended) would be a massive waste of bandwidth, with no real incentive to compose good music.

But as Eugene says, “In the radio context, it’s much harder to play this sort of game—ASCAP and BMI, the royalty collection and distribution bodies, rely on sources of data about sales that aren’t as easy to dramatically throw off.”

So why not use the same sources of data that ASCAP and BMI rely on for distribution of their royalties? As I understand it, ASCAP and BMI rely on the frequency of radio play to determine the share of royalties that an artist will receive, even for those royalties that come from live performance venues and the DAT tax. Why not use frequency of radio play to determine the share of royalties under this new proposed system?