The Biggest Joke: The ISP Music Tax

Jim Griffin is again hawking his ISP music tax and this time it’s Warner Music Group who is buying the blow. Chris Castle makes some excellent points on the legal side but the whole ISP tax deserves more scrutiny.

Basically, the scheme adds a fee onto the monthly ISP fee. Say $5 to your Road Runner bill. In exchange, the consumer gets to use P2P to download all the music he wants. So what’s the problem?

Assume for the moment there are no legal issues — sorry Chris. It’s a huge assumption, not just within the US but globally. Also assume that monopoly issues are also thrust aside. I know, those are massive assumptions that should kill this varmint right now. But I’ll pretend the labels have the muscle to pay off everyone in Washington and the world to take care of legal.

The plan still sucks.

There are still two big jokes here. Huge.

The first is who wants to run it. A record company. Or worse. All of them. From the Portfolio.com article:

“We’re building a [as yet unnamed] company inside Warner that is not intended to be solely owned by Warner,” Griffin says. “We hope all of the rights holders will come in and take ownership with us, and Warner will not control it. Our goal is to create a collective society for the digital age.”

There are plenty of collective rights organizations now. ASCAP, BMI, etc that act on behalf of their members, assume the responsibility of dealing with blanket licenses and dole out money. That a major record label or any sub company or collective it creates could possibly be the trusted third party is seriously funny. I mean hilarious.

Why on earth would artists/rights holders look to the labels for honesty and leadership now?

These are the same companies who have spent the better part of a decade committing corporate suicide through their own greed and stupidity. The same record companies that settled with Napster and brought in lots of cash from suing their own customers with their police arm, the RIAA, and have yet to actually give the artists any money.

It’s going to be a great pitch to the artists/rights holders:

“Sure, we’ve ripped you off in the past, made you sue us to give you the royalties you earned. We blew up our own business and yours in the process while sucking down overhead dollars on private jets and hookers. We sued Napster and college students on your name and haven’t given you a dime from it but trust us. We’re (WMG, UMG, EMI, Sony) and we’re here to act as a collective on your behalf. Trust us.”

Gives me goosebumps. Best. Pitch. Ever.

The second great hilarity is that Jim seems to want this to be compulsory. If it’s not, there’s no way it generates nearly enough revenue. So what’s the solution? Force people to pay. Whether they listen to music or not. Either way, the plan falls apart. Again.

Make this a voluntary payment and even at $100/year this plan won’t get 10 million subscribers. That’s $1 billion in revenue and a far cry from the $10 billion or $20 billion being bandied around.

There’s about 50 million US broadband households. To raise $10 billion, each household would need to be taxed $200 per year in what amounts to a corporate bail-out.

What’s next?

People download pictures too. A $7/month tax to go to a photography collective? The porn industry dealing with dropping revenues? Another $4/month for a porn collective or how about $3 for the software alliance.

What will the ISP bill of the future look like? A litany of taxes that go to collectives? Marx would be thrilled.

There’s no way everyone will get forced to pay. Not in this America. They may just go with the club approach. Indemnify individuals who pay from RIAA suit. Sounds like paying ransom money to me but desperation is the mother of bad ideas. We could see it. Floated like a balloon as the army of K street lobbyists pushes to save an industry that shot itself.

I don’t fault Jim Griffin for taking WMG’s money. Hell, it’s good that WMG is looking at fresh ideas and at least trying. It’s just that this ISP tax won’t work. Forced subscription won’t work.

The worst concept in the world is this: if you can’t get people to buy your product, make them buy your product. Sorry, that’s a lost path. It’s seriously wacky.

Sure, the major record labels drool at not having to even pay for the bandwidth (thanks P2P!) but I shudder to think of what the record labels — the guys who still dared charge artists for “breakage” decades after the switch from fragile LPs to CDs — would do sitting on a mound of cash like that. The same thing Tony would do to the mound of coke.

Yup. I stole that movie still frame. What ya going do bout it ya cockaroach? Tax me?