Update: More details of the scheme are here.
Musicians themselves may just be crazy, but the music labels are dangerously stupid, and need to be stopped before they can do any further damage to the music industry. Case in point: Warner Music, fully aware that the days of charging for recorded music are coming to an end, is now pushing for a music tax.
This isn’t the first time someone has called for a music tax. Peter Jenner argued for it in Europe in 2006. Trent Reznor said the same thing last year (as did the Songwriters Association of Canada). Mathew Ingram has other examples.
But Warner Music is doing more than just talking about a music tax. They’ve hired industry veteran Jim Griffin to create a new entity that would create a pool of money from user fees to be distributed to artists and copyright holders. Lawsuits against their customers aren’t working (The RIAA sent out 5,400 letters in the last year, says Portfolio, settling with 2,300 of those individuals and suing 2,465 who didn’t respond).
The goal? $5 per month from everyone, or fees of $20 billion per year. That’s double the current size of the recorded music industry ($10 billion).
Akamai’s David Barrett has an interesting angle on the issue (he says he wants to make it clear that he is speaking as an individual, not for Akamai). He calls the plan “tantamount to extortion, because it forces everyone to join,” and “It’s too late to charge people for what they’re already getting for free.” I agree - the music tax is little more than a classic protection racket.
As I wrote two months ago, a music tax will be the last stand of the music industry, and their last attempt to preserve the hierarchy that exists today. Here’s what I said then:
Music Taxes Will Kill Music Innovation
Forcing people to buy music whether they want to or not is not a solution to this problem. The incentives created by such a system are perverse - guaranteed revenue and guaranteed profits will remove any incentive to innovate and serve niche markets. It will be the death of music.
Music industry revenues will be a set size, regardless of the quality or type of music they release. Incentives to innovate will evaporate. There will only be competition for market share, with no attempt to build the size of market or serve less-popular niches. Forget labels building new brands and encouraging early artists to succeed - they’ll bleed existing big names for all they are worth and work hard to keep anything new - labels, artists, and songwriters - out of the market. New entrants just means more competition for a static amount of money. Collusion by existing players will run rampant.
Soon labels will complain that revenues aren’t high enough to sustain their businesses, and demand a higher tax. It will go up, but it will never go down.
As I said before, Asking the government to prop up a dying industry is always (always) a bad idea. In this case, it is a monumentally stupid, dangerous, and bad idea.
If this happens, it will put an end to the endless creative/destructive energy that is reshaping the music industry today. Good musicians will always find a way to make money. Others may have to follow their passion as a hobby and (shudder) get a day job to pay the bills. But if a music tax is put in place, that innovation will die, and with guaranteed revenues and profits, the need to innovate, market and compete will also die. A music tax is a sure fire way to destroy an industry that is just beginning to really blossom.
Yes, blossom. As terrifying as these days must be for music industry players, it’s clear that a golden age of creativity and innovation is ahead of us, all led by the Internet as a nearly perfect distribution mechanism for their product. Music labels must die. Hopefully, before they do any more damage.
Great post Mike! 100% agree the internet is fostering a boom of creativity and innovation and hopefully the best music is yet to come
Excellent post Michael. As someone who’s in finance, this move reminds me of the urge of Uncle Sam to tax Oil companies. Even though Oil companies generate good profits, they have not done so prior to 21st century and a while in the 80s, and taxing is just not the right solution (that’s why more incentives will come up for alternative energy usage).
That said, downloading is illegal and having tried several times to kill the problem, anyone has yet to come up with a solution that fits all (highly unlikely IMO) participants, from big record labels to end users (http://www.Amiestreet.com- has found an amazing and very fair solution).
Last thing we need is an oligopoly instead of free markets.
Thank you,
Yaser
Warner is probably pushing for $20 billion because it will give them a good start in negotiations, so they’ll end up getting 15.
Some are arguing that we should save an industry wherein people that do what they love doing most, make millions, while teachers and nurses are dirt poor. It wouldn’t be bad if the incentive to make millions would disappear from the music industry. It would be good for music.
Piracy has been around for a long time now, but there are still very good albums coming out.
Ours is defunct society that relies on control mechanisms to keep things livable. This may just be the next one.
I have not a clear vision of what the music industry should evolve into… but I’d rather it remain in a state of indeterminism and potential, rather than collapsing into some form of infirmed patient kept alive by way of a control mechamism. I don’t think we need more control. “You must take care not to smother yourself in laws trying to guarantee people a chance to breathe!”
Hm I take back my words.. there is nothing wrong with the possibility of making loads of money. I just care very little for contemporary mainstream music.
Sign me up. As soon as the tax looks likely, Im gonna start playin the flute again.
Money for all!
@25 - I can only agree with you.
Music existed well before labels. Mozart did not signed any contract with Decca, and created wonderful music. Labels grew powerful and rich only because they controlled the distribution when it was constrained by the scarcity of ’shelf space’, and the cost of vinyls and CDs.
Now, distribution costs are marginal or zero. Any talented guy can produce video and music from his bedroom, and can distribute it freely.
Look at the Photography industry. Now you can find excellent pictures for presentations, websites or brochures at Flickr with CC license. Don’t we have now more and better choice than when only pros could sell pictures?
Music labels will transform or die, and music will live long after that.
The printing of a CD cost $0.20 or $0.25.
It is then sold in the stores at $10.oo and even $20.oo.
And we always hear about musicians who have sold thousands of CD and have not received from the distributors one penny.
The so called “piracy” would never start if the consumers were not so outrageously exploited.
The distribution gangsters hijack the artists to fill their own pockets, and want to blame the public (even those who are not interested in the music) for their always new extortion plans.
When I buy blank CD for the pictures from my vacations, I have to pay a “tax” to the music “industry.”
Is there any way to satisfy this greed? They will never have enough.
And, by the way: the word “industry” in the dictionary means “economic activity concerned with the processing of raw materials and manufacture of goods in factories. How these highway robbers can label themselves “industry” is beyond my capacity of undestanding.
Keith (#8): Get off the tax rant, pal. It’s SO 1980s. Wake up: Bush and the Republicans HAVE ALREADY raised your taxes (and ruined the economy) by running up huge deficits that we and our children and grandchildren will be paying off for many, many years. A large share of the CURRENT budget ALREADY goes to pay interest on the national debt, and thanks to Bush and the Republicans it will only get worse. Question is: What do we have to show for Republican rule? A pointless war, a weakened economy, rampant corruption, widening wealth gap, a broken military, a muddied reputation, weak dollar, collapsing infrastructure, etc. Thanks, but no thanks.
As “scary” as it sounds for musicians to get a day job, it’s just the pendulum swinging back. Look at the past century: all the morons who became millionaires, and for what? For coming up with a cute little ditty that makes you want to snap your fingers? Asinine. No one ever should have been made independently wealthy for writing or singing a hit single.
As I just said in a post on publishing, let’s take the mega-paycheck out of this industry and see who stays around to perform. Those survivors are the true artists.
Some in this thread have bristled at the idea that a musician should have to get a day job. Well, guess what. There are real musicians RIGHT NOW that are doing that, and always have been doing that. They play clubs at night and work jobs during the day, and they are happy and contented; not crossing their fingers and praying desperately at night for a “big break” so they can “be the next Mick Jagger.”
The way asswipes like Jagger and the other millionaire musicians have conducted their lives of excess, drugs and disease will hopefully leave them a historical legacy equal to the demented kings of Europe. We now look at those inbred fools and ask, “Why did anyone ever support their lavish lifestyles?”
Maybe this is Bastille Day!
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The real joke is that these guys (Warner etc.) who are digging a hole in water to save their personal asses are reaching out so far with this tax initiative their not watching their stocks pile. They will spend the remaing monies they have on getting this to Washington just to see it get shot down. I guess we should expect a tax for watching content on YouTube.
These majors are blowing the biggiest opportunity to turn the biz around with endorsement web channel deals but you have old guys running an old biz model into the ground……..
Where should I send the flowers for the funeral??
Geebz
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I think we’ve lost a bit of perspective over the last few decades. Yes, musicians deserve a share of any income that is derived from their work. No, they do not all deserve to become millionnaires.
There are alternative funding methods out there. Give people a product that they want and charge a reasonable price for it. Make it as easy to obtain legally as it is illegally. Make it convenient for the consumer (no DRM, no proprietary formats etc). Give them some bonuses for buying the genuine product (include artwork with the downloads, include free gig tickets with every 5 tracks bought etc etc). If your product is any good people will recognise that and pay for it. Sure, some won’t, but some people will steal your cds from the shops anyway (i know that’s a bad analogy!).
I’m a musician, i’ve just released an EP for download with a small, start-up label. I’d like people to pay for the product. I’d like people to pay to come and see my gigs. In the longer term i’d like people to wear a t-shirt with my name on. I’d like eventually to give up the day job and be a full time musician. But i won’t be a superstar, i won’t be a millionaire, i won’t be stopped in the street by people requesting my autograph.
And i think in the future there will be a lot fewer millionnaire superstars - because when you get right down to it, do they deserve to be?
But i think that actually there might be more pro or semi pro musicians.
I might make a living of it, i think that this is still easily possible for musicians who are good enough.
In the meantime i have to accept the realisation that i might not be good enough.