Wednesday, December 5, 2007

Nokia and Universal’s Proposed Music Tax

It’s good to highlight inventions that, while flawed, show where things may be headed. One worth watching is the “Comes With Music” program just announced by Nokia.
The idea is that some cellphones will be bundled with the right to download an unlimited number of songs for a year. The big flaw is that right now, only songs from Universal Music Group, the biggest record label, are offered.
Nokia isn’t saying yet what phones the service will be offered on, how much extra they will cost, and so on. It did say that the service will allow people to download songs and play them on their computers as well, and that it hopes to bring in other labels before it introduces the service in the second half of 2008.
More broadly, this is one step toward an idea that Universal has been pushing called Total Music. In that scheme, a range of consumer products could include the right to download and listen to music: computers, phones, Internet service, MP3 players. Universal is talking to some big companies, including Microsoft, and some other record labels, according to a record industry executive, but doing anything in the music business is slow, and this idea is more complicated than most. Terms haven’t been set but the manufacturer or service provider might pay a few dollars per month per user.
Total Music has been ridiculed by a number of bloggers, but I think it might be a savvy way to solve the music paradox: Artists (and the labels that fund their work) deserve to earn something for their work. But since the CD format makes it so easy to copy and exchange music files, it’s almost impossible to get many people to pay for their music directly.
I’ve always thought that the logical answer is to create some sort of pooled fund of royalties. Those would come from various places including through ASCAP and BMI, which license public performances, through the compulsory license that pays songwriters for radio play, and the Audio Home Recording Act, which pays both music labels and composers from a tax on some home recording devices and blank media.
Getting all the various parties and Congress to agree on some sort of tax scheme may be downright impossible. So Universal is trying to build what amounts to a private sector tax into other products and services consumers buy. This might be easier than going to Washington, but I’m not sure how much easier.
There are all sorts of things wrong with this idea: If the tax is linked to something general, like Internet service or a computer, it makes people who don’t listen to much music pa as much as music addicts. And it requires copy protection software to control what devices can play songs and to prevent them from being played if a user doesn’t renew the music service after the initial free period.
But there are lots of things wrong with every other business model for music. Who is happy with today’s system, in which labels charge money for music but lots of people don’t pay? And there are inequities in the favorite scheme of the digerati– give music away free and have artists make money on concerts and t-shirts.
To my mind the best answer is to let consumers do what they want to do and get the money worked out on the back end.

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