The Music Industry’s New Extortion Scheme

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1. Adam
   

   March 27th, 2008 at 10:10 pm

   What industry wants to be associated with taxes? Yea, they do want to die.

2. Sujoy
   

   March 27th, 2008 at 10:22 pm

   Rightly said Michael,
   “Music Taxes Will Kill Music Innovation”.

3. Christopher Sisk
   

   March 27th, 2008 at 10:22 pm

   Haha… what happened to “Die, Music Labels, Just Die”?

4. Stefano
   

   March 27th, 2008 at 10:30 pm

   That’s crazy but, well, in Italy we already pay a similar tax.

   We pay a commission to S.I.A.E., the italian intellectual property rights agency, for every writeable DVD (or other storage) that we buy.

5. ineedhits Australia
   

   March 27th, 2008 at 10:31 pm

   @chris… I saw that post title too, its what compelled me to read this

6. Ghostface Dinosaur Killah
   

   March 27th, 2008 at 10:35 pm

   Pathetic. Once again, if the music industry is allowed a tax, the movie industry should be allowed a tax. If the movie industry is allowed a tax, the porn industry should be allowed a tax. If porn can tax everyone, so can the software companies, book publishers, open source programmers, indie musicians and on and on and on… until everyone is paying hundreds of dollars per month for services and products they don’t even want or use.

   There’s no rule that says that the music industry or music executives are special. For decades, artists have served at the pleasure of fat cat music businessmen who did nothing but squeeze everyone and everything they could for profit. The music industry deserves to die and be reborn in some other form and the suits kicked off their pedestals and few who are allowed to keep their jobs made to serve the artists who make the music and fans - the only people in the music industry who truly matter.

7. Bob
   

   March 27th, 2008 at 10:48 pm

   In a way though…it’s a shame that the music industry is being crippled. I certainly don’t support the RIAA or the other ridiculous actions of music industries and labels alike, and I download music myself; but I must admit that if I were an artist, and my songs were being freely downloaded merely because nobody could stop the activity, I would be quite upset. I know you talk about (shudder) the fact that musicians could just get day jobs, but understand that making music IS the job of a musician. I am sure that the quality of music would drop significantly should we stop paying musicians. I guess what I’m saying is…man! I accept that we’re moving into a new technological period, where things are going to be different…but doesn’t something about this feel…wrong? There have got to be some new and innovative money-making ideas around the corner; otherwise, I truly think the quality of “mainstream” music will lessen, and we’ll be listening to podcast and Myspace artists for the rest of our lives.

8. Keith
   

   March 27th, 2008 at 10:51 pm

   Well if Obama or Hillary (or both, God forbid) are elected president, this is the type of crazy crap that could be a reality. Remember- democrats want to RAISE YOUR TAXES, republicans -as much as you may hate Bush and his cronies- want to keep your taxes low.

9. other
   

   March 27th, 2008 at 10:53 pm

   Bob - “logic” is not welcome at techcrunch. Please take your “sensible and cogent arguments” and go elsewhere. You don’t want to upset Matthew Harrington!

10. greggman
    

    March 27th, 2008 at 10:55 pm

    I hate the idea of a music tax as well but just playing devil’s advocate. Aren’t some of the most loved TV series from the BBC which are effectively funded through a tax? I think that would argue that funding by tax doesn’t neccessary mean the death of innovation.

    I loath the idea of taxes for music but I think you’re going to have to find a better arguement than “Music Taxes Will Kill Music Innovation”

11. Shawn Fanning
    

    March 27th, 2008 at 10:56 pm

    One of the many reasons I do not miss the music industry..

12. MrCashyCash
    

    March 27th, 2008 at 10:58 pm

    Won’t happen.

    The music industry had a monopoly on distribution. They could collude with radio to force certain artists into popularity - and sell millions of CDs.

    The industry will still succeed, but the margins will be smaller.

    Americans love terrible music (ex. Brittney & American Idol).

13. Denis Mars
    

    March 27th, 2008 at 10:59 pm

    The day the USA adopts a music tax system is the day the fat lady will sing.

    This idea is the lowest of low’s and if implemented will send the music industry back to the Stone Age. This is not in the interest of the artists and composers - only the exploiters who want to continue exploiting.

    Music is a relationship between the artists/composers and their audiences and never before has the opportunity to connect the two been more efficient and interactive between them. A capitalistic solution can and will be found.

    There are companies in stealth mode working on a solution and if successful will provide a model for all to benefit without the need for a music tax.

14. Ruslan
    

    March 27th, 2008 at 11:01 pm

    It’s especially funny to read in light of persistent statements of hypocritical American goverment that this society is the most democratic and fair

15. The Magnate
    

    March 27th, 2008 at 11:01 pm

    MagNet is coming….

16. greggman
    

    March 27th, 2008 at 11:03 pm

    @7

    Making horse drawn carriages is the job of a horse drawn carriage maker. Should we prop up that industry when there is no more market for it? We used to pay for mail as well but now 99% of all communication is email which is effectively free. I guess we should keep paying the postman though.

    Yea, I know those aren’t perfect analogies, maybe with a little thought we would think of some other job that no longer exists as a paid job, at least not by royalties. There will always be jobs for musicians to make music for things that need original music (ads, movies, presentations, …) as well as for performance but there may no longer be jobs for musicians to sell recordings of music. Maybe the postman analogy fits a little. There’s argubly no job for the postman to carry letters but there’s still carrying packages. That’s 1/100th of the letters they used to carry but such is progress.

17. adam
    

    March 27th, 2008 at 11:05 pm

    If the music industry would listen to it’s customers they would realize they have a good product. A product that is not priced correctly. The CD has not been adjusted for current market value. Make it to comparable to downloading, $3.99-$5.99, and you’d have a backup source that can be used with any platform. Lower the price and we will buy again.

    The tax will not pass, If people are informed.

18. Dave Q
    

    March 27th, 2008 at 11:05 pm

    Mike, that was a very nice title “Die, Music Labels, Just Die”. C’mon. Put it back.

19. Aaron
    

    March 27th, 2008 at 11:18 pm

    @Bob:

    ” I know you talk about (shudder) the fact that musicians could just get day jobs, but understand that making music IS the job of a musician.”

    Uh huh, and where do they apply for that job? Who’s their boss?

    No, this is not true. It’s a myth, a legend.

    If you say that making music is their job, then you have to ask what defines a musician. If anyone who fancies themselves a musician is entitled to have the “job” of making music, then we owe a lot of money for their services.

    Being a musician or being in a band is more like running a small business. You have to figure out what your strength is, and what you’re going to make money off of and what you can afford to give away. Some want to do it for a living, and most of them will fail - just like an actual business, just like people who try to make movies, write books, mold clay, draw pictures, and write blogs. If you’re doing it for fun, you have no “right” to make money off of it.

    You can charge, true, but declaring yourself a musician gives you no more right to earn a living than declaring yourself to be a pilot allows you to fly an airplane.

20. Bob
    

    March 27th, 2008 at 11:21 pm

    See, I understand what you all are saying about “obsolete” jobs - postmen, switchboard operators, elevator attendants - but music doesn’t really fall into the same category. Humans, as far as we know, have been making music ever since we began to evolve. We used to do it to communicate, to survive, to celebrate. Now we do it purely for pleasure–but think about it: is it right that one of our most fundamental instincts could be going down the drain?

    To the gentleman who stated that CD prices are too high, here I quite agree with you.

    And to the gentleman who tells me to take my logic elsewhere…I’ve no idea what you mean - is it a commendation or a condemnation?

21. Josh
    

    March 27th, 2008 at 11:24 pm

    @7 Bob: if anything it would make music better because people who are only in it because they think they’re going to be rich will swan off to do other things, leaving actual musicians to their craft.

    @8 Keith: pull your head out of your ass; every republican government since the 70s has increased the US national debt, and the current government is the sole reason that the US as a superpower is now facing decline.

22. Aaron
    

    March 27th, 2008 at 11:30 pm

    @Josh - no use arguing with Keith. I would just say that the idea of democrats raising taxes to pay for education or health care is a bit different from raising taxes to pay music companies… Unless of course he thinks “liberal = stupid”, but then it’s not even a discussion anymore.

    The internet will shield us all from accountability for our outrageous opinions!

23. Bob
    

    March 27th, 2008 at 11:36 pm

    This is my last word on this, but I truly believe those who claim that musicians don’t have a “right” to make money are people who are either jealous or people who haven’t made it. Of course musicians have a right to make money! The entertainment industry is massive, enormous. If nobody liked it, it would dissolve. But the fact is that people DO like top 40; they DO watch American Idol; they DO listen to Spears and Aguluera. I do…not because some radio station foisted them upon me…but guys, TOP 40 is TOP 40 for a reason…it’s the most popular kind of music, hence it ranks “top”! I seriously don’t think podcast, myspace and youtube people quite compare. If you do, that’s great, but you’re a minority.

24. Nobody
    

    March 27th, 2008 at 11:42 pm

    Capitalism and Democracy is about free enterprises and the freedom to innovate for all to prosper - taxing the music business is a totalitarian and communistic system aimed at controlling everything and making everyone pay for it to benefit but a few.

    Are we going backwards here people? Think about it.

25. Josh
    

    March 27th, 2008 at 11:50 pm

    @23 Bob: no one that I can see is saying that musicians don’t have a right to earn money. Everyone has that right. They don’t have a right to be given money just because they’re musicians though. Seriously, music existed long before the record industry was born, and it will live long after it’s dead.

26. Mitch the Bitch
    

    March 28th, 2008 at 12:00 am

    #7 Bob.

    Their are many many other ways. Touring, T-Shirts, etc etc etc. Exposure creates many opportunities beyond music. Ask Gene Simmons, whom isn’t particularly talented musically…

    Tax is a ludicrous idea that will never work. Hell, even a demoncrap politician wouldnt have that sized balls. Except Stretch Pelosi of course but in her case it isnt her genitalia it’s her pure stupidity…

27. Marc Fawzi
    

    March 28th, 2008 at 12:10 am

    Let me be the 100th person to say that

    advertising on TechCrunch should be FREE because the cost of hosting the ads relative to the money made from the ads is negligible and always tending to $0.00.

    A wise man once told me that “it is all in vain.”

    TechCrunch will continue to charge for ads while expecting musicians to give away the music for free (and charge for ads?)

    Not everyone is an ad salesman.

    Some people don’t believe in selling ads for a living.

    No offense to anyone making a living off of ads.

    I thank TechCrunch for promoting our freedom of speech, in all its forms, especially the ad-supported form.

    ‘)

28. blackmonday
    

    March 28th, 2008 at 12:12 am

    josh says right. i fail to understand how anyone without a stake in the recording companies racket could possibly confuse musicians with recording companies. in a sense it is endearing them to see them fight tooth and nail for that diminishing plot of land they had staked so well. they lost the fight a few years ago when they started suing old ladies for music downloaded by their kids or grandkids. of all inequities in the world it is nice to see one get dismantled. of course this is just an interlude.

29. Mitch the Bitch
    

    March 28th, 2008 at 12:13 am

    #22 Araron.

    You mean the healthcare system and the educational system that the Demoncraps broke?

    Kids. They think they know everything when they are 20 and have only seen the cycle of stupidity once.

    Once you turn 40 you realize that this crap is an endless cycle. Demoncraps break it then Republicans get elected to fix what the demoncraps broke.

    The problem now is the spectrum has shifted hard left. Hell Bush is a stinking Lib compared to crats in the 50’s. The current demoncraps are pure socialist fascists. Open youre eyes it’s nearly too late…

30. Morgan
    

    March 28th, 2008 at 12:44 am

    “tantamount to extortion, because it forces everyone to join,”

    Does this mean we can get rid of the NEA? I haven’t received an opt-out on that yet…

    As bad as this idea is, as antithetical as it is to anything I believe, I have a hard time buying the outrage people feign over it when so many support ideas just like this for so many things I detest. Every day I pay a little for:

    - someone’s abortion of a pregnancy I didn’t cause
    - someone’s painting I didn’t ask for or get to see
    - someone’s teacher that made a kid slightly dumber
    - someone’s belief that I’m making the world warmer
    - someone’s tariff to ‘ balance’ the market
    - someone’s subsidy to ‘protect’ an industry

    So spare me the over-the-top rhetoric. This is absolutely par for the course for today’s pathetically protectionist, economically illiterate leftists (and populist-right morons too).

31. Ben P
    

    March 28th, 2008 at 12:54 am

    I dont see anyone mentioning that this is basically the same idea as what the EFF has actually proposed in their whitepaper on the music industry. The only difference being that this would be mandatory through legislated mechanisms.

    As long as the dollars go to the artists and not the labels, I think its an ok idea.

32. hyokon
    

    March 28th, 2008 at 1:22 am

    I take a minority opinion. Let the creators (artists and their helpers) decide whether to release their music as paid or free. It is always better to have choices and currently what is lacking is the ‘paid’ choice.

    One thing I found very interesting at the end of the portfolio.com article: “Apple is reportedly negotiating with the major record labels to offer consumers free access to the entire iTunes library in exchange for paying a premium for Apple hardware.”

    If Apple pays labels (that is, ultimately to musicians) based on downloads, that is close to my idea of alternative free model, even though I did not expect the hardware manufactures to increase the hardware price.
    http://slowblogger.com/2008/02.....-free.html

    We should understand that whether you are charged by Apple or the label is economically not very different. All of them need to make money to exist. There is no particular reason why you should prefer paying $110 to apple and zero to labels than paying $100 to apple and $10 to labels. If you don’t think labels worth existing, that’s a different topic. But as long as they add value, they should get paid, too. Personally, I think many musicians will look for help of others who will take care of non-music works so that they can focus on creating and performing music. I don’t know whether the they will look like current labels or different (smaller?), but they will be there. It is called division of labor, which I also wrote about most recently.

    By the way, I don’t like the term ‘tax’. Someone made a mistake by calling it tax rather than paid subscription. That sounds terrible.

33. Drew Freyman
    

    March 28th, 2008 at 1:29 am

    First let me say I’m not in favor of a music tax and I believe the music industry should innovate to accomodate the new methods of marketing and distribution made possible by technical innovations. However, I think Mr. Arrington’s flippant comment that good artists will always find some way to make money is too simplistic. Without a method to exercise ownership over their creations artists will always have trouble getting the true value for their work. DRM has been proven inadequate to address this issue. But in the absence of a method to protect the true value of their creations the incentive to create could drop so precipitatiously as to decimate the industry. A new method to effectively reward artists to sufficiently motivate them to create while reducing the cost and increasing the convenience to consumers needs to be seriously considered. The music tax is one attempt, albeit a lame one. But rather than just criticising and advocating the destruction of the current music industry, shouldn’t we acknowledge that artists deserve fair value for their creations and help them to invent new methods to extract it in the context of technological innovations?

34. Gary Storm
    

    March 28th, 2008 at 1:33 am

    well my wife is an artist so I can see this from all angles…. and I can see some merit in all of them.

    But I don’t think there’s a rat’s chance in hell of an entertainment medium being a compulsory tax. Teachers/govt/medical are all valid to get tax dollars. In the case of the BBC, it’s TV-license (tax) is an abnormality (but a good one… quality shows).

    Pro’s of a tax:
    - musicians (and engineers, producers, A&R etc) actually get paid (a rarity nowadays). Can actually continue to make music.
    - people can control directly what music they like (as in the tv ratings for the BBC) and get’s produced.
    - musicians strive to produce the music people want to hear, so they can get their share of the tax.

    Cons:
    - music becomes boring because too many are trying to please the masses (a-la what the record labels do now). On the other hand there will still be an indie scene, just like now.
    - I don’t want to part-fund music like Britney. I’d rather pay direct for music I like, at the store. Maybe I don’t like music at all and shouldn’t have to fund it. If you don’t own a tv in the UK you don’t pay the tv license.
    - Stores would shut down??

    I dunno. I just know it’s only fair to pay for what you like, whether you download it or watch/listen to it at a friends house or on the radio. We have two (soon to be 3) babies to feed. Mandyleigh isn’t money-hungry at all. She just wants to be able to support our family, and afford to be able to make another album. People can download the free mp3’s and see if they like them, and if they do…. buy the album. It helps keep her music going and helps her get to the next stage up the ladder. Simple as that. I don’t think she would want a tax on music to pay for her songs though…. she would rather know people liked her stuff enough to pay for it themselves.

35. Gerd Leonhard
    

    March 28th, 2008 at 1:35 am

    Michael, I have said this before and I’ll say it again: you don’t get the music thing, and it would be great if you devoted a bit more time to this issue before you call it a protection racket. While I am totally with you on not trusting the big labels - incl. WMG but excluding Jim Griffin, personally, and un-decided on the new EMI - I think the flat rate would mean music essentially ‘feel like free’ music for the consumers (since their per user music fees will easily be covered by next-generation advertising, data-mining, upselling etc) and bring some real money back to the artists and writers which is what matters most. The fact that WMG is starting to push this is a HUGE admission of the utter failure of their past approaches, and a positive sign of some real change coming; and that change may be a lot larger than they are bargaining for here. Whether they (or any other major) can survive this shift to ‘music like water’ remains to be seen, but it is not a protection racket — it’s the END of their CONTROL (not that they had a choice, really … but still!) Read my blog post about this, here: http://www.mediafuturist.com/2.....w-web.html

36. anon
    

    March 28th, 2008 at 1:43 am

    I find Michael’s argument amusing. He argues that “Music Taxes Will Kill Music Innovation,” but fails to realize that the death of the majors will also kill music innovation.

    The music industry has been robbed from for years. They have a right to be pissed off.

37. Warner Bros Music
    

    March 28th, 2008 at 2:00 am

    Look you little brats, were going to get that money out of you

    ONE WAY OR ANOTHER……………

38. Dubber
    

    March 28th, 2008 at 2:01 am

    Gerd and I have had this argument before - and while I’ve mellowed a little and lie in what I like to think of as the more reasonable area between Michael Arrington and Gerd Leonhard on this matter, the astonishing thing is that this all starts from the position of entitlement on behalf of the record labels.

    A flat rate music tax (it’s just not like water, Gerd - I’ve read everything you’ve ever written, and I still don’t entirely get that metaphor) is based on the presupposition that the record labels ARE the music industry, and are the source of music.

    The record labels don’t have to die, as Arrington wishes - and nor are they simply entitled to a premium added on top of the service charges of an entirely different industry - but they do need to completely ditch a whole lot of baggage, learn to operate in the new media environment, and just evolve.

    And can I please encourage people to stop calling the major record labels “the music industry”? They’re just one small part of a rich and vibrant eco system. The record labels claiming to be the music industry is like the lions claiming to be the zoo. Stop playing their game and letting them trick us into thinking that their losses are the ‘fate of the music industry’. It’s just nonsense.

39. Nicholas Chambers
    

    March 28th, 2008 at 2:12 am

    Interesting.

40. Gerd Leonhard
    

    March 28th, 2008 at 2:18 am

    totally not my point, Dubber - should have been clear from my writings.. I am not at all concerned with the fate of the big labels, and I think that the new music industry may have little use for them in their current form and thinking. Rather, all these developments are pointing to the continued empowerment of the ARTISTS and the USERS, and the future of the major labels is not the key issue here. This is about the MUSIC industry not the RECORD industry, and the fact that we are moving towards an open ecosystem - whatever that means for all the participants.

41. D'Artagnan
    

    March 28th, 2008 at 2:19 am

    If they’re so keen on all you can eat for $5 a month, why don’t they just do that now, instead of all the protected tracks going for a buck a pop?

42. vozome
    

    March 28th, 2008 at 2:31 am

    I quite agree with d’Artagnan. the word tax is repulsive, and the proposed amount is insane. however if my ISP gave me the option of downloading all the music I wanted with no restriction for say, another $ or two a month, I’ll jump right in.

    that being said I will still buy CDs. you have to admit they make better gifts than an itunes gift certificate.

43. Andy
    

    March 28th, 2008 at 2:35 am

    So a tax is not a good idea. You appear to support free downloading. The question is, how do you see the music industry making money in the future? Surely the proposition that all musicians will simply self publish is a non-starter. They certainly wouldnt make the millions they do today. So what’s the plan Michael?

44. spanatko
    

    March 28th, 2008 at 2:41 am

    I have a question - there is a band producing a new record, new CD. A guy walks into their studio and says - I am from orgnization X&Y and we protect artists against fraud and intelectual property theft.

    We demand from you 30 cents for each song on your record - from every copy you sell - and you have no other option than to accept. (?!?)

    This acutally happens here in EU /Slovakia/ - the organization is called SOZA and it is nothing more than just legal mafia, and this happened 2 days ago.

    Do arists experience something similar in other parts of the world as well?

45. Someonewholovethemusic
    

    March 28th, 2008 at 2:42 am

    People like you, Michael, are the stupid side of this story. Why don’t you simply analize the situation? Why don’t you simply try to see what can be fair or not, putting yourself in the shoes of all the people that are working hard to make music and to save this industry? The problem is that people like you goes always to the easy argue… You and people like you are part of the problem.

46. skidoo
    

    March 28th, 2008 at 2:51 am

    ok, once and for all :

    in Europe, the “tax” you’re talking about doesn’t concern only music, but actually any form of e-products susceptible to be pirated and downloaded through P2P.

    the tax will not be applied directly on consumers, but on ISPs !!! And ISps will simply charge more customers using, say, aver 3Gb of bandwidth usage, because it’s way enough for regular internet usage.

    I know it’s a way to get back to old ages when ISP were charging by the bandwidth usage, but look at what comcast is doing lately. That’s where we’re going. And to be honnest, it is logical, after all, since ISPs server farms costs are directly linked to their overall bandwidth usage.

    so michael, forget about these “terrible” music labels and their “socialist” ideas, that’s not the real problem. the problem is to keep musicians with at least some leverage and freedom to live from their art.

    and the way this “tax” on ISPs will be implemented in Frande, is that it will be regulated by the Minister of Finance and the treasury will collect these taxes. Then the Minister of Culture will fund musicians independantly, somehow the same way it was done in times when music was not even recorded.

47. gregory
    

    March 28th, 2008 at 3:38 am

    weird, desperate, i lose all respect fro bronfman

    luddites

48. Bob L'Eponge
    

    March 28th, 2008 at 4:13 am

    no tax they could possibly impose the man on the street could possibly outweigh the value a large music pirate gets from downloading several albums a week or a month. The marginal cost to the label or piracy isn’t being compensated. So big music pirates still come out winners, saving money vs. using iTunes, emusic or amazon mp3; despite this draconian scheme

49. Matt
    

    March 28th, 2008 at 4:39 am

    The Electronic Frountier Foundation has proposed a Voluntary Collective Licencing scheme for a long time .

    The proposed fee should be just that voluntary and if you do not opt in to pay the $5 a month to your ISP then you are still open to legal liability from the record labels if you do opt in then they cant sue you ….Its still extortion but has the backing of the EFF ;).

    http://www.eff.org/wp/better-w.....le-sharing

50. NZN
    

    March 28th, 2008 at 5:18 am

    If we pay $5 per month, then the full catalog must be available for distribution by any entity that pays the access fee.

    Universal licensing terms.

51. Dan
    

    March 28th, 2008 at 5:56 am

    $5 a month for guilt free illegal downloads?! I’m down!

52. I Am Not Posting To Spam My Blog
    

    March 28th, 2008 at 5:58 am

    “the death of the majors will also kill music innovation”

    Total bollocks. Record industry money may create more music than we would have otherwise but it does not create innovation. It is not like Silicon Valley venture capital - it comes after the innovation, not before. An innovative artist does not go to a record label and say ‘look, I think I have an idea of how to create a new style of music and my band has some pretty impressive credentials, can we have some money to buy instruments and keep a roof over my head while we figure it out’ in the same way you can get funding to develop a technology idea. The money only comes when you’re playing to crowds and someone notices you - the ‘development phase’ is over by then, you’ve already got the product.

    Record label money only cares about success and is completely dumb where innovation is concerned - artists do have an incentive to create ground-breaking music and get rich and famous, but it’s the exact same incentive that R&B singer #43,239,921 has to get noticed for their beautiful but entirely generic singing. Innovation is very poorly rewarded in music compared to other sectors.

53. Jeremy
    

    March 28th, 2008 at 6:02 am

    @41 Agree completely. If they want a flat fee per month why don’t all the big labels get together and create a service that includes their entire catalogs and charge $5/month for unlimited downloads

    In reality what they want is to charge $5/month and then charge us for the music.

54. -=Apostle-=
    

    March 28th, 2008 at 6:09 am

    I’ve been talking about inclusive surcharges since ‘97. Where’s everyone been? Anyway, I mentioned Noank Media last year, this is their model. This is NOT a new idea.

55. DC Crowley
    

    March 28th, 2008 at 6:09 am

    @Jeremy ‘In reality what they want is to charge $5/month and then charge us for the music.’

    Exactly. Greed versus value for money. Music has the same value as a candy bar. listen to it for a while. rarely listen to it ever again. They still are not getting real. Just think why South West Airlines exists and PanAm does not. Those old economics and business models are dead. The music industry needs new leaders who wanna play ball and earn an ‘honest’ buck. But so do telcos, financial products… It’s the challenge of now.

56. micfo.com
    

    March 28th, 2008 at 6:27 am

    I think this will badly affect to the career of budding talents and creativity.

57. G
    

    March 28th, 2008 at 6:28 am

    Let me first note that I am not in favor of copyright infrigement - and believe copyright holders should be protected. However, I do not consider this ISP tax a viable solution - but that’s for these labels to figure out themselves.

    Having said that - Someone pointed out in an earlier comment that in Italy they pay a tax that covers DVD burning etc. (@stephano #5)

    WE DO THE SAME HERE IN THE US - HAVE BEEN FOR YEARS - manufacturers have been paying a tarriff on every device that enables copying - it goes into a pool which is then distributed to copyright holders.

    “1004. Royalty payments2

    (a) Digital Audio Recording Devices. —

    (1) Amount of payment. — The royalty payment due under section 1003 for each digital audio recording device imported into and distributed in the United States, or manufactured and distributed in the United States, shall be 2 percent of the transfer price. Only the first person to manufacture and distribute or import and distribute such device shall be required to pay the royalty with respect to such device.”

    your can read further at - http://www.copyright.gov/title17/92chap10.html

58. Sylvain
    

    March 28th, 2008 at 6:33 am

    Waow, first time I almost agree with Arrington on a music related post (at least if labels = major labels)

    Nevertheless, the quote to show that he’s a visionary could have been forgotten… especially as he’s not the first to say so, everybody around me is telling the same thing since the beginning of this century… whether they work/used to work for a major label or an indie one…

59. Ame one
    

    March 28th, 2008 at 6:34 am

    As a musician and copyright holder, I say why not have a music makes sense. Makes things easier for me. I can write my music and still get a piece of the action. Sounds nice doesn’t it. Realistically, even if there is a music tax, odds are I will still receive the little amount that I am currently getting. I just don’t see how people will be able to get paid through from this fund. It also seems like it may be open to fraud. Anyways, it doesn’t seem like a good idea to me. It sounds like a nice utopian concept.

60. Ferodynamics
    

    March 28th, 2008 at 6:35 am

    Stop listening to their music.

    This is what I listen to: http://www.last.fm/user/pjbrunet/

    PS: You got some Flash in your page that crashes Firefox even with Flashblock on, on this laptop too (another machine) something in your page is jacking things up, my entire machine is crawling to a halt.

61. Ben
    

    March 28th, 2008 at 6:50 am

    Why stop with music? Why not just collect taxes to support all other industries like cars and airlines? In fact we could all just work directly for the government and then get all goods and services from them for free. It worked out so well for the Soviet Union!

62. Freddy Free
    

    March 28th, 2008 at 6:57 am

    When - When - When ?
    Google - when are we going to get free advertising?
    ISP’s - when do we get free internet access? What - U want $2.00 per gig?
    Apple - When do I get my free ipod?
    Apple - When do I get my free Mac so I can record my free music?
    Am I missing something. I thought it was all about free? I see my songs everywhere being downloaded for free.
    Oh well. Time to head out to the food store and stock up on some free food. Maybe I can swap them a T-Shirt for a bag of groceries.
    Where am I going to get the $5.00 per month? This is all very confusing.

63. JB
    

    March 28th, 2008 at 7:06 am

    Will deaf people be required to pay the tax?

64. Nathan
    

    March 28th, 2008 at 7:13 am

    Regardless of your opinion of the proposed plan(s), Jim Griffin is one of the few people who have a practical and well-grounded view of music in a networked world. Warner is the better off for having brought him on board, and I know that if they listen to him fully that we will all be better off.

65. Spinoza
    

    March 28th, 2008 at 7:20 am

    In other words… Tax & Drugs & Rock & Roll

66. Jonathan
    

    March 28th, 2008 at 7:37 am

    So, could I just create my own record label and sign some crappy bands, then reap in the income these taxes would provide?

    Woo Hoo!!! I just found my new calling. Record producer. Thanks, RIAA.

67. Robert Einspruch
    

    March 28th, 2008 at 7:52 am

    Hey Keith, this is techcrunch - no politics here! BTW, due to George Bush’s tax scheme where labor is taxes at a higher rate a rate than capital (40%+ vs 0%-15%), Arrington is probably in a higher tax bracket than Paris Hilton, the partners at Sequoia and Bill Gates’ children.

    This has to be hoax! No industry is this stupid. Would people that do not own a CD player, iPod or PC pay the tax? What if I only listen to the radio? If it is true then I am going to try to get a cushy job in the music industry!

68. Tony T
    

    March 28th, 2008 at 7:52 am

    I don’t think a music tax works but does anyone have ideas on what would work? Musicians deserve to be paid for their music, and im not just talking about tshirts etc. Maybe lower cd prices and premiums bundled with them for the true fans?

69. Larry Larrikin
    

    March 28th, 2008 at 7:56 am

    Regardless of what happens, people will continue to make music and innovate. MA argues that ‘hobbyists’ won’t be paid in any case so whether the popular mainstream artists are paid via a music tax won’t change anything for the ‘hobbyists’.

    What I find interesting is how we arrived here. We didn’t one day decide to remove copyright protection for recording music. Instead, we are letting technology decide our laws by our lack of will and ability to enforce them.

    The other interesting thing about the opinions of MA and many posters is that they assume that the laws of current technological inventions and free-market capitalism are, like the laws of gravity or thermodynamics, immutable and beyond human control. Many of their arguments are based on the fact that we are slaves to ‘the way things are’ and thus there exists only one possible outcome. In actual fact, society has the ability to shape technology and capitalism to suit our interests.

70. Halo Smyth
    

    March 28th, 2008 at 7:56 am

    The biggest problem the music industry has with the internet is that the crap they put out is not worth buying to most people. Maybe if GOOD artist got signed every now and then they could sale full albums. I see on of the biggest problems for the music industry is that in 1998 if you wanted a CD because you heard ONE song on the radio you liked. you couldn’t listen to it ahead of time - you had to assume the rest of the CD was good and pay $15 for it. Then most of the time when you got it home you would find out that the other 11 songs on it sucked there was just the good one. Another problem is record labels don’t sign musicians for their talent anymore, they sign them for their marketability and because they do that no one thinks their music is worth buying, maybe worth downloading but not worth buying.

71. Robin
    

    March 28th, 2008 at 7:57 am

    @27 Marc Fawzi

    Michael CAN charge to advertise on his website because screen real estate is a scarce good.

    The cost of copying and distributing recorded music has fallen to almost zero, and is thus infinitely available.

    [b]The plastic disc distributors are dying[/b] and music and musicians are flourishing. Welcome to the internet age!

72. marty nickel
    

    March 28th, 2008 at 7:58 am

    disintermediation - removing the “middle-man” - has been the one of the primary sources of benefit from the internet and from computing in general. it’s no surprise when the middle-man squalks - they’ve been soaking up our money for a long time. but we can’t allow them to franchise their middle-man status by building it into law.

    yes, these are big, powerful, influential companies. one of the reasons government exists is to protect normal people from the whims of big, powerful, influential companies!

73. Tim
    

    March 28th, 2008 at 8:00 am

    @30 Morgan

    For the sake of comparison, we pay about 3.6 cents a month for funding the NEA, and that is for ALL the arts, not just music.

74. Voidious
    

    March 28th, 2008 at 8:06 am

    Just wanted to say that I think you grossly misrepresented what Trent Reznor said. (At least you linked to your previous article which misrepresented it slightly less.)

    He by no means “called for a music tax” - he merely commented that a monthly subscription service at the ISP level might be the kind of direction things need to go now that people feel like music should be free.

75. Mitch Reisendorf
    

    March 28th, 2008 at 8:15 am

    Whenever this topic of ISP-level taxing surfaces little attention is paid to how does the money get shared amongst the artists? Does Beyonce get the same check as Nina Sky? Lets just guess the reason why it isnt discussed because the goal is to keep all the money in the label hands and tell the artists they’re owed zero because most are not in ‘recouped’ standing with the labels. Ask any of the artists signed to the labels if they’ve seen a check from the You Tube deal or Imeem deal etc….

76. Jason
    

    March 28th, 2008 at 8:24 am

    The music industry is trying to prevent its inevitable death.

    What Radiohead and NIN did (providing their albums directly to the fans and cutting out the middleman) is the future.

    I’m old fashioned and I still buy CDs at the store and online. I do not purchase songs on iTunes. However, I have to admit, physical CDs are becoming passe. After buying the CD, I rip it to my hard drive anyway and listen to it on my iPod. As more and more people download songs, there will no reason to pay production costs of CDs and I’ll have to “get with the program” as well and buy online.

    With the digital formats and the internet, artists no longer need a record company that just marks up the cost of the CDs and pockets 99.7% of the sales revenue.

    Artists make most of their profits from ticket sales and merchandise anyway, so as long as they can build up a large enough following to be able to book gigs, artists will have a future without the record labels.

77. Paul
    

    March 28th, 2008 at 8:29 am

    It’s still sad to see people admitting to stealing in one sentence, and then trying to show fair-mindedness in the next (hello, #7?).

    The music tax? Never fly. At least agricultural subsidies can rest on popular myth - the beleaguered family farm - but nobody will come home from a job and a commute, take care of their kids and then think to themselves, “that tattooed guy with the Bentley, the one who was picked up from rehab by some supermodel - we all have to pay a little more to make sure his lifestyle isn’t threatened.”

    If you want to fix the music industry, spend just a little time looking for music from independent labels, and stop stealing or excusing your friends who do.

78. Trevor Plantagenet
    

    March 28th, 2008 at 8:45 am

    Obviously, a tax is a bad idea. It’s the moral equivalent of stealing music, which is also a bad idea. However, what’s very clear is that the file sharing movement, rather than killing the music labels, is giving them a new lease on life. Artists need labels now more than ever to protect their financial interests, since it is becoming more and more clear that popular sentiment is to deprive artists of financial compensation at every turn (enough with the t-shirts and touring already, that only works for stadium bands). So, guess what, music labels now have a new role as the collective bargaining and enforcement agent, because the artists have found that, to the contrary of the utopian vision that the Internet lets the artist interact directly with their fans, that instead it provides a way for the fans to anonymously and remorselessly steal them blind.

79. Aaron
    

    March 28th, 2008 at 8:52 am

    @Mitch - Nope, you’re not going to bait me into a political debate on the TC comments, especially not with intentionally polarizing language like that.

    @Bob - Oh anyone who argues that is just bitter? Let me demonstrate my point. I AM a musician - drums for 17 years, clarinet for four, writing music for 11 years, been in three rock bands, one youth orchestra, and have recorded and produced demos and EP’s for local bands…

    But guess what? Of course, when I was a teenager and writing music (and after high school for a few years) I felt that since I was kind of good that I should be able to gig, get shows, record, and eventually do all that band stuff involved with “making it.” Oh, me and about a thousand other musicians in local bands…

    What am I doing now? Programming at a web startup. Why? I don’t have the dedication to music to slave away (just like all the other musicians) for a small chance at success. And I’m fine with that. I’ll write music in my spare time and go to shows to support all my friends who DO have the dedication (at least for now).

    Like I said, claiming to be a musician gives you no more right to money than claiming to be a pilot gives you the right to fly a plane.

    Meanwhile, I can look back at all my former band mates and see how time has sorted them out based on how much they love making music and how much they’re willing to do to make that a living: (each * is a former band mate)

    * Kept writing music and honing his craft for the five years since my first band broke up, and now finally is in a band that has a good chance of getting signed to a major label.
    * Had a nervous breakdown, quit his last band, and moved to southern california to just go to school.
    * Just moved his band to southern california and is determined to ‘make it’ (more power to him)…
    * Continues to play coffee shops in the area with his friends for fun.
    * Has decided her dream is to own a restaurant and is going through college accordingly.
    * Had a complete breakdown and moved to New Jersey to join an orthodox Jewish community (WTF?? True story!)
    * Loves music and the industry, but not necessarily playing it and being in a band, so is going to school for business and management.

    I’m glad it’s not as easy to make a living as a musician as some of you want it to be. If it was, it would have taken me and a bunch of my friends longer to figure out what our TRUE passions were, as opposed to the cliche, illusory low-hanging fruit of pretending to be rock stars so we don’t have to grow up for a few more years.

    Sorry about the long post, but I think it’s important to refute the “you just think that because you’re bitter” argument. Bollocks.

80. Dennis Ramirez
    

    March 28th, 2008 at 8:52 am

    this music tax is an understandable but unrealistic idea.

    that said:

    for an industry that throws around so much money at developers and “entrepreneurs” for creating increasingly niche and debatably necessary applications and services, only to see almost no return on most of them and problems monetizing the few that “make it”…well, kettle, this is pot. you’re black as well.

    there is an celebrated and almost willful ignorance on here regarding the music industry and musicians.

    * disclaimer, i work for an independent record label, i am a musician, and i am a web designer/developer

    @52:
    bands DO in fact apply to labels for “funding” the same way startups apply to VCs for funding, with pretty much the same results. they send press kits and demos to labels that accept them, with all kinds of information and blather about why they are the next big thing, and why we should give them a chance on their music, even if they sound like every other band out there. the development phase is nowhere near complete by the time an unknown band gets signed to a record label. if it were, they would not need a record label, because they would have everything one could provide for them. yet, labels get their bands sponsorships from instrument companies, give them money to tour and record, etc. etc. we give them money to manage their careers. they hire their own managers, tour managers, sometimes publicists, etc.

    yes, a label would prefer a band with a good track record and loyal following, but they also take chances on what they think may be the next big thing, before someone else can snatch the opportunity away. we also trendspot the same way VCs do, and sometimes approach bands instead of waiting for proposals.

    and just like with startups, the majority of the bands that sign fail or stagnate. but we take a chance that a few of them will hit, and that at least one of those few will hit big.

    i am sure everyone will argue minutiae on why investing in technology and investing in art are not comparable things, and perhaps that’s true if we are talking about the value of technology in society compared to the value of art.

    but the argument here is about business practice or method. and there is not much difference between the two industries. Startups send in their own proposals and “demos” to VCs, with all kinds of reasons why they are the next big thing even if they are the 400th Digg clone or Twitter extension. The development phase is nowhere near complete for that startup at this point, otherwise they would not need VC funding, as their business model (if they have one) would have provided them with the money they need.

    and so, a VC will throw around waaaaaaay more money than a label ever would, which provides the startup with money to buy advertising, servers and equipment, P.R., pay the rent, etc.

    and the majority of startups fail or stagnate, but VCs take chances, etc. etc.

    sure, i am not a fan of all the ideas major or indie labels (or even musicians, for that matter) may come up with to keep up their industry. i think the way the RIAA went about handling piracy was ridiculous, but they had to do something. the industry’s source of revenue was slipping away, and the natural reaction of any industry is to fight to keep it. if MySpace or Facebook or whoever saw its revenue depleted because more and more companies just decided they should get their advertisements on their for free because “information about their services wants to be free”, you’d better believe they’d release the legal hounds without question.

    ===

    i am not even going to go on about the “only GOOD musicians should make money” idea. for an industry about the liberation of content (information wants to be free, give me a break), that’s quite the elitist and completely ignorant view of what it means or takes to be a musician, especially considering it’s not so different from that of a guy in his attic building a startup.

81. keef
    

    March 28th, 2008 at 8:55 am

    @21 josh: Pull your head out of your vagina and deal with the question- who raises taxes and who would be more likely to enact some crazy thing like this?

82. Dennis Ramirez
    

    March 28th, 2008 at 9:00 am

    @74
    Radiohead and Nine Inch Nails were able to do what they did because they were signed to a major label at one time, which provided them with the publicity, distribution, and production contacts most bands in the world (even ones on major labels) could never dream of.

    they did what they could because of previous success on a major label. that business model, while interesting, is unattainable and unrealistic for most active bands, no matter how hard they try.

    Radiohead still went through traditional distribution channels AND an independent label for the physical release of their album. they are still “playing the game” as it were, albeit for one grand and admirable