Home > Corporate World > RIAA: “Hmm. Suing Customers Didn’t Seem to Work. Let’s Try Forcing Everyone to Pay Us Lots of Money!”

RIAA: “Hmm. Suing Customers Didn’t Seem to Work. Let’s Try Forcing Everyone to Pay Us Lots of Money!”

March 14th, 2008

The latest display of unfettered greed from the RIAA:

Having failed to stop piracy by suing internet users, the music industry is for the first time seriously considering a file sharing surcharge that internet service providers would collect from users. …

[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. …

“If ISPs do not cooperate voluntarily,” [U2 manager Paul] McGuinness declared, “there will need to be legislation to force them to cooperate,” McGuinness said.

Um, right. Good idea.

Preface: the reports I have seen say nothing about this idea including the legalization of music file-sharing. I would presume that if the RIAA were suggesting that the $5 fee would allow everyone to legally download all the music they want for no extra cost, it would be a huge story and everyone would be covering that angle. From what I have read, they seem to be suggesting that the $5 surcharge only compensates them for what pirates steal, and nothing more; people would still have to pay for their music in addition to this surcharge. Under that assumption:

So many problems, where to start? Oh yeah: the idea of a blanket fee. Unable to target individuals efficiently, and tired of shooting in the dark, the RIAA now says, effectively, “kill them all and let god sort them out.” Charge everyone for the music, whether they download or not; essentially, the RIAA will get their very own federal tax.

Now, you could argue that stuff like this already happens; you pay more for items at stores as a way to cover losses to shoplifting. But at least the stores do this in-house; they don’t ask the oil companies to add a surcharge to gasoline sales on the idea that shoplifters use their cars to get to the stores. A more consistent model would be to add to the price of music sales to offset losses to piracy. Maybe the RIAA doesn’t want to do this because they know that the music they sell is already vastly overpriced. Just as likely is that they know it would dampen sales, whereas a surcharge on ISP services would only dampen the ISPs’ sales.

And we’re talking about huge fees generated. At $5 per ISP contract per month, with about 90 million U.S. households online, the RIAA would get a nice $5.4 billion bonus on top of all the music they sell each year. Cover most industrialized nations, and we’re talking many tens of billions of dollars the RIAA “earns” just for waking up in the morning. Brilliant! And all this without any evidence that they’re actually losing any money to file sharing–and actually some evidence that file sharing is actually generating revenue for them. Even if you believe they do lose money, it can’t even come close to that much money.

The Wired article actually legitimizes this approach somewhat:

The idea is controversial but — as Griffin and Jenner point out — hardly without precedent. The concept of collecting a fee for unauthorized use of music was developed in France in 1851 as a way of reimbursing composers whose work was being performed without their permission in cafes and the like.

The practice spread to the United States in 1914 and currently applies to radio airplay and webcasts in addition to live performances. In a 2004 white paper, the Electronic Frontier Foundation called for it to be applied to file sharing, but the Recording Industry Association of America immediately dismissed the proposal.

Either the writer of the story was just regurgitating what the RIAA was feeding him without checking it out, or he was simply poorly informed. The EFF white paper suggested something somewhat different from what is being suggested by the RIAA today. That 2004 white paper proposed a system in which individual file sharers could pony up $5 a month and in return, they could continue their file-sharing ways unabated. Having ISPs voluntarily buy into the system was one means of doing this–but the key point was that in return for the fee, all customers could then legally download all the music they wanted. As I mentioned above, I see no reference to this in the RIAA’s current proposal; instead, they simply push their idea as an additional compensation for pirated music only, not a blanket subscription-fee service. As for the radio fees, those were applied only to specific businesses who used the product–it was not applied indiscriminately as a tax. Unless I am mistaken, radio stations that do not broadcast music don’t pay the fee. (Could someone confirm that, please?)

The idea of having ISPs collect revenue for the RIAA seems a bit much to ask. Music is not all that is downloaded; if enforced by law, you would have the movie and TV producers, software developers, e-book vendors, and may other parties suddenly claiming they were losing billions to pirating and demanding additional fees be added to the ISPs’ prices until the fees became ridiculously high.

There is one precedent I can think of for this kind of idea: in Canada, a surcharge is added to media players and blank recording media and the money distributed to the music industry and artists; in fact, Canada has recently started to consider the $5/mo. ISP fee, but in exchange for making file-sharing legal.

The actual precedent in making up for revenues lost to theft is crystal clear: costs are added to the specific product stolen, or else added to the prices in the specific vendor’s venue. If the RIAA wants to jack up their own prices to compensate for this, then fine. If the RIAA wants to offer everyone a $5 per month subscription fee for accessing all the music they want, also fine. But to force every user of the Internet to pony up $5 a month, indefinitely, on the unfounded basis that the music industry is losing money it cannot even come close to proving it is actually losing, and to do so while insisting that these same people still pay full price for their music on top of this… like I said, that would be a fantastic deal for the music industry. But realistically, it is a stupid idea with little precedent and no rational justification.

Here’s a different view, by the way:

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  1. Brad
    March 22nd, 2008 at 08:39 | #1

    Incredible. No way could anything like this be legalised, surely? It’s just ludicrous.

    Enjoyed watching the Mike Moore piece too.

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