legal p2p

The Isle of Man’s e-commerce minister says he wants to legalise P2P music file sharing – taking just one Euro a year from broadband subscribers.

Tim Craine told us today that such a scheme would be voluntary. The Manx government is hopeful that blanket P2P schemes would be rolled out in other countries – including the UK.

“If you take a Euro a year from millions, then that’s a lot of revenue,” Craine told us.

“There is an opt-out for people who don’t want a compulsory charge. We would envisage an opt-out – there would be a public reaction against it,” he explained. “But you have to compete with free.”

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Put yourself in these hypothetical shoes for a moment. My goal is to make as much money as possible by doing as little work as possible. I have no creative talent except for generating and recycling marketing buzzwords. I have no technical knowledge or ability – but I can get my head around a Twitter feed. It doesn’t sound promising, but you’ll want in, I promise.

Now let’s imagine a business that can achieve our goals.

The natural place to start this business is on the internet – where one can harness the labour of millions of people and pay them sod all for their work. Under the smokescreen of “collective intelligence” or harnessing “the wisdom of the crowd”, we can keep our supply costs at zero. And if we can keep reminding these rubes that “power lies at the edge of the network” or “in the Long Tail”, they’ll produce lots of stuff for us for nothing, without complaining.

That’s the supply side sorted out. However, we need to attract an audience.

We know that the traditional vices – gambling and porn – will drive substantial traffic to our service. But gambling has regulatory issues – and porn takes us away from the mainstream. That leaves music – the stuff of life, and proven crowd-puller. So let’s make music the main feature of our service.

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What happens when you put three economists from the internet, telecomms, and the music businesses in a room and don’t let them out until they’ve agreed on something useful?

A paper published by the research unit of the British composers’ collection society today gives us a clue. The first results of a “knocking heads together” exercise, entitled Shadow pricing P2P’s economic impact, doesn’t offer any ready policy proposals – partly as a result of compromise – but it does offer a framework that’s better thought out than most attempts so far.

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In Pynchon’s novel Gravity’s Rainbow, set in WW2 London, a character called Slothrop begins to realize that everywhere he has sex, a V2 rocket subsequently lands on the same spot, obliterating the area. If you dig a little, you may notice something spookily similar with the idea of a Music Tax in the media.

Back in March, talk of a Music Tax suddenly exploded at the SxSW music conference in Austin. WiReD‘s blog ran a story by Frank Rose, entitled Music Industry Proposes a Piracy Surcharge on ISPs.

“[The] idea is to collect a fee from internet service providers – something like $5 per user per month – and put it into a pool that would be used to compensate songwriters, performers, publishers and music labels.” Apparently this was the brainwave of Jim Griffin, a collective licensing advocate hired by Warners to think the unthinkable. Here’s an interview with him from 2004, where he dismisses the idea that collective license should be compulsory, should penalise non-participants, or be imposed by the government. “Government has an after the fact role, as it does with Antitrust legislation. The arguments should be voluntary,” he said then, and sources indicated he hadn’t changed his mind.

A pool, yes, but not a tax.

Coincidentally, the International Music Managers’ Forum happened to be meeting in Austin, and its former head (and now Emeritus President) Peter Jenner was quoted in the article.

Last week, another screaming came across the sky, and another Tax Bomb fell to earth, this time in London.

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Legal broadband subscription services that permit file sharing may appear on the market by the year’s end, according to music industry sources – after government intervention brought both music suppliers and ISPs to the table.

The UK would become the second country after South Korea where the music business has agreed to offer licenses to file sharing services in a bid to reverse declining revenues. The co-operation follows the intervention of “Brown’s Fist”, the former advisor and Parliamentary Under-Secretary at BERR (the Department for Business, Enterprise & Regulatory Reform) Baroness Shriti Vadera. Vadera is understood to have threatened both the ISP and music businesses with reform and policy intervention, threats which encouraged both parties to open negotiations.

The government is understood to be extremely reluctant to intervene with legislation as it threatened to do earlier this year, and cross-industry agreement to offer attractive consumer broadband music services would mean it wouldn’t have to.

No deals have been signed yet and significant details have yet to be addressed. These include the royalty share between mechanical, sound recording and publishing rights holders, and administration issues. A significant amount of music released has never been licensed digitally – so should a music service provider ignore it, or attempt to pay the owners? As for price, this will be determined by the ISPs. However, sources are confident that Q4 2008 or Q1 2009 will see such the first of these offered to the public.

The move would represent the most radical supply-side reform ever considered by the music business in the modern era.

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