SoundTempest

Major record label Warner Music Group (WMG) has recently proposed a mandatory fee to be built into the monthly service charges for a home internet connection. This “music tax” would be collected by a new, independent organization which Warner hopes to form.

Warner has recently employed the services of Jim Griffin, a music business consultant whose company (OneHouse, LLC) is “dedicated to the future of music and entertainment delivery”. The vision for the mandatory fee system, according to Warner, is a market where consumers do not buy music in physical or digital form at all; the fee would replace any existing payment systems. Consumers would instead be allowed to freely (and legally) download any music they want.

WMG, which is currently the third largest record company in the world, reported a revenue of $3.385 billion in 2007, and a net loss of $21 million. In comparison, the company believes the mandatory fee would result in collections of up to $20 billion that would be dispersed throughout the industry.

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Hmm… sound familiar? ;) As expected, more companies in the business are thinking about music taxes and/or point-of-connection fees as a serious alternative to existing models, including large and powerful conglomerates like WMG. Unfortunately, the concept isn’t any more appealing, even on paper, since I last wrote about it in January.

To reiterate the underlying problem: the basic premise of a point-of-connection charge, mandatory or not, in and of itself is not a bad idea. It ensures a very large revenue stream, one larger than any in the current recording industry, it eliminates the entire problem of piracy and file-sharing, and vastly improves consumer value-for-money, as $1-5 a month gets them unlimited music downloads.

So, once all the money from the point-of-connection charges are collected, how is it going to be distributed? Clearly, if WMG wants to be the one founding the new collection and distribution agency, there is a special interest at work already. In fact, given their track record, I’m pretty sure that ANY major label involved in the creation or operation of such an agency would do their very best to create a system that siphons the most money to their pockets - maybe giving a slight cut to their artists, and a pittance to anybody else. The ideal collection agency would need to be truly independent of special interests, or at least evaluate them all equally, via board members and employees collected from majors and true independents alike, as well as distributors like CD Baby.

The other issue is monitoring. How can you even track what people are downloading? People send me music on internet relay chat (IRC) all the time. It’s a different protocol than simple HTTP downloads, so that would have to be tracked. But do I really want people to be tracking every file someone is sending (or trying to send) to me? What if they name the file or tag the MP3 wrong? What if it isn’t an MP3 to begin with? If someone sends me “track01.mp3″ and it’s actually a Jonathan Coulton song, how will any sort of monitoring system know? There are probably hundreds if not thousands of other situations I can think of where even a well-designed system of tracking downloads would fail.

Without monitoring, it’s not possible to figure out fair payments to begin with. Some significant technological advances will have to be made before WMG’s idea will be of interest to unsigned, independent artists like me, who comprise the bulk of the recordingd industry.