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The Music Tax

Via Mark Kleiman, an op-ed arguing for a new form of music compensation:

Turning to the arts, we find the British have recently reduced museum admission prices to zero. There's been no mass closing of museums, curators are not enslaved, the maintenance people still get paid for their work and paintings are bought from artists and collectors just as before, because the government pays everyone's "admission price." (Note that this principle does not lead to free symphony tickets. If I'm in a gallery and it's not packed, you can be there, too. But if I sit in seat 2, row F tonight, you can't.) . . .

What we need for music is analogous: a reasonably good assessment of how much play a given recording gets and a mechanism to steer public funds mostly to the ones people are listening to a lot. No amount of suing downloaders, or yelling about whether file-sharing is theft or music "wants to be free," nor any court proceeding, can create such a system. Congress must legislate public machinery that: 1) observes music use without compromising listeners' privacy and 2) bureaucratically steers a public royalty fund to creators according to how much their work is listened to.

Mark describes this as "an important idea here, which could be adapted to cover text and film as well." I'd prefer this to the RIAA's techno-dystopia where any technology that could conceivably be used by anyone, anywhere to listen to a song they haven't paid for (say I buy a copy of a CD, burn a duplicate to store in my car, and lend my car to my buddy who listens to the CD while driving and at the same time I listen to the original at home -- piracy!) is banned. But I'm not convinced we need to implement it, either. I think before we contemplate any departure from the status quo (which, I believe, includes the idea that Grokster, BitTorrent, etc. are legal) I would like to see something resembling evidence that the availability of P2P technology is leading to a decline in the number of people writing songs, forming bands, etc.

As I've noted in the past, the RIAA doesn't even try to argue that this is happening, instead offering questionable evidence that album sales by RIAA members have gone down as a result of P2P. This may be true or it may be false (the evidence, as I say, is ambiguous) but it's completely irrelevant one way or the other. In light of the very large number of people who form bands and play songs without any reasonable prospect of ever making money doing so, the opportunities for money-making by selling tickets and merchandise, and various other factors, I'm highly dubious that the spread of P2P will ever have an averse impact on the availability of music.

Film is another matter. Here it really is the case that unless it's possible for at least some movies to earn massive profits, an awful lot of the movies made nowadays simply couldn't be produced. On the other hand, buying a ticket to see a movie in a theater was already an extraordinary uneconomical mode of cinema-consumption before downloading became a possibility. It's something people (myself included) engage in as a social experience and because (duh) movie theaters have really big screens that don't fit in normal peoples' living rooms. It also seems to me that there's a large possibility for cable (or other telecommunications) companies to turn large On Demand libraries into profit centers.

But I'll happily concede that I may be proven wrong about these speculations. If evidence emerges that trends are pointing in a bad direction, then something like this model seems like a reasonable thing to move toward.

May 17, 2005 | Permalink

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» Michael O'Hare's Fuzzy Math from Electoral Math
Before this gets out of hand, I feel the need to burst some balloons. Also, subsidizing small artists is the urban version of subsidizing small farmers. Discuss. [Read More]

Tracked on May 18, 2005 3:12:01 AM

» PAY TO PLAY from Begging To Differ
Mark Cuban and Michael O'Hare would like the RIAA to stop suing us, please. Sounds good to me. Well, until you get into the specifics. First up: Cuban, arguing that Yahoo's $5/month all-you-can-eat music pricing model will put a cap... [Read More]

Tracked on May 18, 2005 11:49:58 AM

» PAY TO PLAY from Begging To Differ
Mark Cuban and Michael O'Hare would like the RIAA to stop suing us, please. Sounds good to me. Well, until you get into the specifics. First up: Cuban, arguing that Yahoo's $5/month all-you-can-eat music pricing model will put a cap... [Read More]

Tracked on May 18, 2005 11:52:35 AM

» Cuban makes the "5 buck" argument from bennellibrothers.com
Although I obviously dont think it would work, the debate over IP and copyright in this digital world is an interesting one. I love when people try to stick it to the RIAA since i think they have done a good job of ripping off both the artists and the ... [Read More]

Tracked on May 18, 2005 5:41:38 PM

» PAY TO PLAY from Begging To Differ
Mark Cuban and Michael O'Hare would like the RIAA to stop suing us, please. Sounds good to me. Well, until you get into the specifics. First up: Cuban, arguing that Yahoo's $5/month all-you-can-eat music pricing model will put a cap... [Read More]

Tracked on May 19, 2005 2:04:08 PM

Comments

"In light of the very large number of people who form bands and play songs without any reasonable prospect of ever making money doing so, the opportunities for money-making by selling tickets and merchandise, and various other factors, I'm highly dubious that the spread of P2P will ever have an averse impact on the availability of music."

Huh? I know people here in Nashville who do quirky, well-respected-by-their-peers music on the fringes--doing club dates with iffy audiences, lacking well-established names that sell merchandise, etc.--and who depend on such royalties as they can get from their songwriting to stay in the business. Lots of people want to do what they love; they also want to eat and clothe themselves--maybe have kids and get them through college, even. If people respond to what they've created, the creators deserve support. To say that you don't have to support them because they'll do it for free anyway may or may not stem the flow of creativity, but it's still a nasty, spoiled-brat attitude--not unlike the common argument that teachers shouldn't expect decent pay because the joy of teaching should be enough for them. If you depend on someone else's work for your goods and refuse to compensate them for their labor, you're as much an exploiter as any robber baron.

Posted by: David | May 17, 2005 11:50:54 PM

What's wrong with the system as it is?

Posted by: epistemology | May 18, 2005 12:00:00 AM

Ok. I'm turning Republican.

First of all. You don't have any *RIGHT* to listen to other people's music. It's a *LUXURY*. They choose to record their music and make it available for a small fee.

If you don't like the small fee, you can choose to do what consumers of luxury goods for ages have done. You can choose to not buy it. Or you can do what I did in college, you can tape the song off the radio. Yep, it's a crappy recording, but you know what... it's nearly free. That's your tradeoff buckaroo.

And I *ESPECIALLY* have a problem with all the con artists out there(you know who you are Shawn Fanning, et. al) who take other peoples music and then make it available without permission with the expression purpose of making their own fortune off of it. You know what... that was someone elses work. You *DO NOT* have the right to go make money off of someone elses labor without permission or paying recompense.

This BS is going too far. As someone who works in an industry which is fundamentally protected by intellectual property rights(software), I am extremely worried by the attitudes of entitlement. computers, music, video... these are all luxuries.

If you're having trouble obtaining food, clothing and shelter, let me know. I want to help. I want to help you get to a job so you can help to support yourself, so I'm willing to help pay for public transportation. Plus I'm selfish. I love my car, and I'm tired of wearing it out by just driving to work.

But enough with this bullshit Government should pay artists, programmers or writers because they are entitled to it because the people who ought to be buying their work product are fucking leeching off society. There's an answer to this issue, and that's to start reminding people that living in an informational society means that commerce behaves differently and copyrights and patents have to mean something.

That doesn't mean sometimes the companies and Government don't go too far. They do. I'm appalled at the copyright bit, copyright extensions and other things. But completely abandoning the Rule of Law is not the answer.


Unless this was just a snarky bizarre proposal intended to make people think. In which case I'll apologize for my attack and instead write one about how utterly stupid you guys are for reinforcing the stereotype that Democrats just want Government to handle all of our money. Why not just buy our houses too? Developers can make houses, and the ones which people like and move into, the govenrment can give them more money for. Bizarre.

Posted by: J. Caesar | May 18, 2005 12:18:49 AM

Y'know, I agree with you on about 95% of the political issues you write about, Matthew. That is what makes your blind spot on IP so glaring.

Given your family background, one ends up wondering if your distaste for intellectual property rights has some kind of Freudian component...

-----

"...instead offering questionable evidence that album sales by RIAA members have gone down as a result of P2P. This may be true or it may be false (the evidence, as I say, is ambiguous)"

It's really not ambiguous at all. Music sales went up in basically a straight line path through boom and bust from the 50's through the introduction of Napster. They then suddenly went into their first sustained slump in 45 years, and remain today below their pre-Napster peak.

Posted by: Petey | May 18, 2005 12:32:34 AM

As to O'Hare's proposal:

It's politically impossible, and thus won't happen. But it's a nice utopian solution to the problem.

Posted by: Petey | May 18, 2005 12:36:49 AM

You're wrong, Matt, and I'm living proof of it. We had a band, pretty good band -- maybe if you live in the tri-county area you've heard of us? The Union of Nepalese Birdmen? Anyway, we had a deal set up for a MAJOR release with Slightly Scratched records -- major promo, national tour, appearances on Meet The Press, the works. As a tie-in, we were even gonna get a guest shot on Law & Order as a gang of blackmailing child-rapist pregnant teenage cop killers.

But then I got to thinking, about copyrights. This was before the Sonny Bono act, copyright reform, so my songs would've gone into the public domain a crummy 50 years after I die... I'm 30 now so say I live to be 80... that means that if I write a song, in like 100 years it goes public and any la-di-da busker or common street rover can perform it for free. For FREE.

Well, f*** that. It just wasn't worth the effort. I'm not going to all that trouble for nothing. So I broke up the band and now I work as an actuary for a gang of drug-addled incest-victim kidnappers.

Sure they passed the Bono Act but it's too late for me. I'm lost to the arts. The world will never hear my compositions... "Stalin Paid My Visa Bill", "Let's Fuck", "World Made Of Lobsters", all the rest.

Your loss.

Posted by: herostratus | May 18, 2005 12:40:16 AM

"As someone who works in an industry which is fundamentally protected by intellectual property rights(software), I am extremely worried by the attitudes of entitlement."

The irony is to look at the industry Matthew's father works in...

Posted by: Petey | May 18, 2005 12:44:17 AM

"...so my songs would've gone into the public domain a crummy 50 years after I die"

I believe the correct position is to simultaneously be in favor of weaker copyright law and stronger anti-piracy law. The two are not the same thing.

Posted by: Petey | May 18, 2005 12:46:41 AM

Perhaps now musicians will return to the status they had back in the pre-recording days; a few hard-touring acts will be popular, and the rest will get by, or play part time while holding down day jobs. No more mega-wealthy, self-indulgent, spoiled rock stars. Just people drawn to a calling.

Sounds good to me.

Posted by: Scott Free | May 18, 2005 12:55:13 AM

Matthew writes: "say I buy a copy of a CD, burn a duplicate to store in my car, and lend my car to my buddy who listens to the CD while driving and at the same time I listen to the original at home -- piracy!"

No, that's not piracy.

And while if you had given the copied CD to your friend, that would indeed have been piracy, everyone knows the real problem is the combination of perfect digital reproduction and anonymous mass-distribution over the internet.

Why is this the one issue where you have to resort to straw men?

Posted by: Petey | May 18, 2005 12:59:00 AM

Whoa. Calm down Petey. Matt's actually absolutely right.

This isn't about spoiled kids on the internet welching on their obligation to musicians. This is about whether we want to spend precious public resources on draconian measures to enforce one particular business model for a handful of recording giants. "Sense of entitlement" cuts both ways.

To start with, nobody has actually shown that filesharing is doing any harm. The RIAA claims that their member's sales have dipped, but the numbers they release are pretty fishy, e.g., they report a decline because they got a better handle on their supply chain and shipped less surplus to retailers. Whatever decline there has been *might* correlate with the advent of Napster, or just *maybe* it corresponds to an economic recession, the toll of 20 years of steady increases in album prices (plus price fixing!), and increasing competition for scarce after-school-job paychecks (think cell phones, video games, movies, hydraulics for the Honda...). There's also the possibility that the decline in RIAA member sales has been more than made up by smaller labels.

AFAIK, the only independent study into the matter found only a weak correlation between file sharing and album sales, and what little effect there was was *positive*. This makes a lot of sense: CDs and MP3s are not direct substitutes, and file sharing is a very efficient mechanism for listeners to find music they like - substantial numbers than go out and *buy it*. Studios are apparently willing to go to great lengths to get their records played on the radio for the same reason, they produce promotional music videos at great cost and give them away, there are at least a couple of stories already of unknown, unsigned musicians riding to success on a wave of filesharing popularity. Why isn't the internet viewed as just another promotional medium?

It's also important not conflate the interests of the recording studios with the musicians themselves. My impression is that, after percentages, promotional fees, etc., very few artists see much of the revenue from their record sales. Even many seemingly successful artists have decided to walk out on their studio contracts in frustration. Most of the money an average band makes comes from concert sales and merchandise - which isn't controlled by the studio.

This leads me to conclude that if file sharing were legalized completely, most artists probably wouldn't be much affected. They could release recordings on the internet as a promotional tool (as many do already!), and make an honest living performing and selling merchandise. In fact, artists and small record labels could probably still do a brisk business selling CDs, which fans buy as much for the cover art and the chance to own a piece of their favorite band as they do for the bits burned onto the disk.

This all seems like a much better alternative than asking that the government force the world to pay whatever the RIAA member studios think they're entitled to.

Posted by: Jack Lecou | May 18, 2005 3:26:03 AM

"Whatever decline there has been *might* correlate with the advent of Napster."

If you want to look at the data without any intellectual honesty, you can reach any conclusion you please. If I hit you over the head with a wrench and steal all your money, that *might* correlate with your inability to buy food. Who knows? Life is full of mysteries.

I hear global warming *might* just be a big coincidence too.

"This leads me to conclude that if file sharing were legalized completely, most artists probably wouldn't be much affected."

Well, after the boatload of canards and falsehoods you've tossed up, I'm not surprised you reach that conclusion.

- The labels rip off the artists, so piracy is OK.
- We'll ignore the clear evidence of the impact of file-sharing on sales, so piracy is OK.
- "Substantial numbers" of people who pirate music then buy the same music (ha!), so piracy is OK.
- Piracy is good for bands, even if they don't realize it, so piracy is OK.

You may find it OK to live in a world where an artist cannot charge for a audio recording or a movie, but I think anyone who has bothered to think it out would not.

"This is about whether we want to spend precious public resources on draconian measures to enforce one particular business model..."

I have no real affection for O'Hare's suggestion. I'd be perfectly happy with simple draconian anti-piracy enforcement methods.

"Whoa. Calm down Petey."

Sorry, buddy. I know too many people in bands and elsewhere in the music industry who've been hurt by piracy. I know too many people in the film & TV industries who are very worried about the future. And I've seen the real damage done to the availability of new music.

It is not your right to take commercially produced art and entertainment for free just because enforcement hasn't caught up with the technology. People work to produce that art and entertainment, and if you take their work without paying their listed price, you ought to go to jail.

Posted by: Petey | May 18, 2005 4:24:39 AM

You say that the film industry is different, because they rely on a few blockbusters to finance the rest, but this is because films are still very expensive to make. This need not always be the case. Look at the way the cost of producing a CD has come down for a small, clubbing artist - all you need it a Mac! When I was a lad, you needed to hire a studio, hire THEIR engineer, hire someone to press the records, etc. etc. The cost of making movies is already coming down in a similar way, so small groups of students can make a classy movie, and money is becoming less of an issue than creativity in many genres. FX-heavy movies are still the big exception, but how long before the movie studio program on your Mac (whatever it is called) comes with a "fly through the air" plug-in, in the same way that photoshop comes with a "turn this photo into an impressionist dabby-thing" plug-in. [Forgive the non-technical language, but you get the idea...]

Posted by: Syd | May 18, 2005 4:42:21 AM

ok, lets take this slow, seems this debat makes people go crazy. First off, I know americans has this great fascination with property and feel this right falls like mana from heaven. With IP this is especially not true. Copyright started as censorship in Tudor England, it applied to books and was an attempt to control the disemination of new ideas though that devils instrument, the printing press (which I am sure most monks thought was a bad idea, as it grabed the fruits of their 700+ years of work preserving great works and used it).

So lets just make something clear: Copyrights is a form of regulation made by government. It is meant to be leaky, it is a priviledge afforded to "promote the growth of science and arts" (quoted from memory from the american constitution) and making the trade-off between greater incentive to produce new ideas and art and greater disemination.

Copyrights has been expanded and expanded, from the original 14 years to lifetime + 70 year and to cover more and more things. It is a old institution fitting to a different technological and institutional envionment

From an economists view its important to remember this point, and i cannot be stated too many times...Digital music has become a non-rival good with very imperfect excludability, that means it becoming more like a public good.

Im not so afraid for lack of progress of the arts due to lack of incentive for creators. I am afraid for it due to the rampant expropriation of culture for the sake of profit, protected by govermentally granted monopolies.

Sorry for the rant, its early here.

Posted by: Tomas | May 18, 2005 4:57:14 AM

"So lets just make something clear: Copyrights is a form of regulation made by government."

As is true with all private property.

Government makes laws protecting both physical and intellectual property because society benefits by having both physical and intellectual property protected.

"Copyrights has been expanded and expanded, from the original 14 years to lifetime + 70 year"

Copyright terms have been grossly over-expanded. I'd say something like 35 years would be more than sufficient for recorded audio/visual material. But whatever copyright terms are set should be enforced.

Posted by: Petey | May 18, 2005 5:13:03 AM

Society benefits from private property under two conditions:
1) The good held privately is rival (I eat you cake, you cant eat it.)
2) It is possible (with low cost) to exclude people from using the good

if these two does not hold, it is not a good idea to have privat property. Now since there is an incentive problem for creators SOME form of regulation is needed, tax and distribute can do that.

Posted by: Tomas | May 18, 2005 5:20:58 AM

"Copyright started as censorship in Tudor England, it applied to books and was an attempt to control the disemination of new ideas though that devils instrument, the printing press"

Half true, half false. Intellectual property protection did indeed originate soon after the printing press, but it was not about censorship. Instead, much like today, it was about protecting the publisher's rights.

And it is no coincidence that it originated soon after the printing press, which was the first technology of mass mechanical reproduction. The situation for the text publishers in the age of the printing press was almost identical to that of audio/visual publishers in the age of the internet: without regulation and enforcement of intellectual property, mechanical reproduction threatens to remove all profit from publishing.

Posted by: Petey | May 18, 2005 5:25:13 AM

"Society benefits from private property under two conditions ... if these two does not hold, it is not a good idea to have privat property."

Well, Tomas, the first condition you list (rival goods only) precludes any intellectual property protection at all. And, of course, that would mean that there would be no profit in publishing anything that could be cheaply reproduced.

No profit in books, film, recorded music, software, or drugs.

I see a societal benefit in protecting investment in the creation of those things.

Posted by: Petey | May 18, 2005 5:33:28 AM

"Half true, half false. Intellectual property protection did indeed originate soon after the printing press, but it was not about censorship. Instead, much like today, it was about protecting the publisher's rights"

Well, the statute of Anne in 1709 was about weighting the claims of publishers and authors to the public interest in the spread of ideas through cheap books.
But before this there was already established copyrights in england.

In 1557 Mary Tudor instituted a exclusive monopoly of printing in order to control it, which gave printers a licensed monopoly as long as their did not print unwanted books. (Vaidhyanathan "Copyrights and copywrongs" 2001)

Vaidhyanathan´s book it very refreshing and interesting and i would encourage all who are interested in this topic to read it.

Im also sorry if I seem a little muttled, but i need to finish a term paper on this topic and my head is in "danish academic writing" mode

Posted by: Tomas | May 18, 2005 5:40:09 AM

Two points that don't seem to have been covered:

1) Unlike physical goods, the most beneficial (in terms of utility to The World As A Whole) way of distributing existing IP is to make it universally available at zero cost. If you've any utilitarian instincts, this should be a serious consideration.

2) Pirate movies don't compete with movie theatres, they compete with DVDs - just as the markets for DVDs and movie theatre tickets are entirely separate. This provides a theoretical funding mechanism for expensive movies even if DVD sales are wiped out (which is unlikely).

Posted by: john b | May 18, 2005 5:42:55 AM

Rival goods does not exclude all IP. Drugs are rival, physical books are also rival (you can make more efficient use of them through libraries), seats in movie theathers are rival. But yes, copyrights are very problematic in this respect. As we already have agreed, the state creates private property as a means to create social welfare. Private property is thus a social mechanism of regulation, a form of policy.
If it has high social cost to create a private property system system (which it does if the resource is nonrival), then a public policy solution is needed.
Note that this doesnt mean that goverment has to control and produce art, only that it has to insure some kind of payout for artists.

Posted by: Tomas | May 18, 2005 5:52:08 AM

Tomas,

My understanding is that for 200 years after the invention of the printing press, copyright had nothing to do with censorship. Then for a period of about 20 years in the 17th century, copyright was tied to censorship before it was untied again.

If my understanding is correct, saying that "Copyright started as censorship" is a pretty inaccurate representation.

Posted by: Petey | May 18, 2005 5:53:22 AM

Petey, control the kneejerk and open your mind for a minute.

The end goal here is to induce artists to make lots of high quality recordings and performances available to the public and enrich our culture. The specifics of how we accomplish that don't really matter. Paying musicians for the privelige of listening to recordings of their past performances is not an end unto itself.

Our economy is not based on the Labor Theory of Value. Nobody is actually *entitled* to anything more for the product of their labor than the market will bear, or society wishes to tolerate.

*ONE* scheme we have found fruitful is to make laws granting temporary monopolies so that non-rival goods like musical recordings have a positive price. This isn't an entitlement, it's an inducement, and it should be the minimum required to meet our goal. The level of protection required may sometimes turn out to be zero. If it does, that's not bad, it's *good*.

To reach the conclusion that internet file sharing (of music) needs to be heavily regulated, you have to answer in the affirmative to at least two questions:

Is file sharing actually doing any harm, even to the status quo?

This is not anywhere near as clear cut as you seem to think it is. RIAA started reporting declining sales around the time they went apeshit over Napster, but that's just post hoc ergo propter hoc. I gave at least 4 other equally plausible explanations for a decline, any combination of which is fully capable of explaining the relatively minor dip we're talking about. None of them has been adequately addressed by RIAA or anyone else. The only study to apply any degree of rigor to the question found only a very small *positive* correlation. Internet exposure may well *help* sales, just as radio airtime and music videos do.

Assuming file sharing negatively affects record sales, is that actually impacting the incentives for musicians to produce music?

If the vast majority of musicians don't see any real money from their recording contracts, what purpose are the record companies serving? The studios are just middlemen, and if they're not actually facilitating the process of rewarding artists and producing music, there's no social need to keep them around.

If it is the case that most musicians already make their livings from touring and selling things like T-shirts and autographed CDs not mass record sales then perhaps recorded music can just be a happy side effect, and musicians would produce all the goods we want without an artificial monopoly.

Posted by: Jack Lecou | May 18, 2005 5:58:47 AM

"Rival goods does not exclude all IP. Drugs are rival."

The manufactured pill itself is rival, but the intellectual property that would allow for copying the drug is non-rival.

"If it has high social cost to create a private property system system (which it does if the resource is nonrival)"

Huh? Protecting intellectual property is no more expensive than protecting physical property, and probably considerably less expensive. Communities spend considerable resources on police and prisons to protect physical property.

Posted by: Petey | May 18, 2005 5:58:57 AM

"This is not anywhere near as clear cut as you seem to think it is. RIAA started reporting declining sales around the time they went apeshit over Napster, but that's just post hoc ergo propter hoc."

SoundScan is run by Nielsen, which has a multi-decade record of being a reputable and independent company. The numbers come from Nielsen, not the RIAA.

The numbers are out there in the public view, and are very much as clear cut as I've portrayed.

Like I said, if you have no intellectual honesty, you can try to spin black as white. You can claim warmer temperatures aren't connected to global warming. You can claim tax cuts aren't connected to the budget deficit. Go wild!

"Internet exposure may well *help* sales"

Anything you say, Jack.

Posted by: Petey | May 18, 2005 6:13:22 AM

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