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Warner Music wants an ISP tax

by Scott Bicheno on 29 March 2008, 12:18

Tags: Warner Bros. (NYSE:TWX)

Quick Link: HEXUS.net/qamfy

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Digital music honcho to promote bad idea

Warner Music Group’s Chairman and CEO, Edgar Bronfman Jr., convinced by industry guru Jim Griffin’s proposal to add a music surcharge to all ISP subscriptions, has hired him to promote it.

Bucking the trend towards making money while giving away content, Griffin’s proposal envisages a levy similar to the compulsory subsidy paid by all British taxpayers to support the BBC. Apparently this could create an annual cash pool of up to $20 billion to compensate an industry that is currently worth…$10 billion. Hmmm.

So: a statist mechanism devised in 1927, to make sure the ‘right’ stuff was broadcast to the ignorant masses, is the answer to free market problems in the 21st century.

Absent from the discussion is whether the prosperity or even the survival of the entertainment majors is necessary to ensure that artists continue to create. Retailers, as always, will adapt or die. The fittest will work with artists directly – which would leave the majors nowhere.

As previously reported, Warner joined Sony/BMG and Universal in backing Amazon’s MP3 over Apple’s iTunes. But, like the bosses of all the entertainment majors, Bronfman remains exercised about file sharing on the net, booming despite DRM and prosecutions for internet piracy.

Griffin, a graduate of David Geffen’s school of charm and deportment, has run with what he believes is the most palatable of the alternatives developed a few years ago by Harvard Professor Terry Fisher (the blog links to the relevant, tedious, chapter of Fisher’s book).

Doing well out of seeming to do good

Fisher’s analysis, like much that emerges from Harvard, rests on the theory of ‘market failure.’ That is, the concept beloved of governments that people do not know what is best for them and must have their faltering feet guided along the straight and narrow by subsidy carrots and tax sticks.

It is always amusing, in a lip-curling way, when companies that clawed their way to a dominant position through unfettered competition decide that they are a ‘public good’ in need of government protection. The danger in the Griffin/Fisher concept is how attractive it may be to legislators.

While we can expect this idea to be treated with the contempt it deserves by the tax-averse Americans, there is a real danger that the concept could catch on over here. Just this week a review into the digital entertainment business concluded that more state intervention is required.

Politicians are in greater need than any other occupational group to justify their privileges. Popular engagement in the political process in Europe is sinking fast towards the US level, and intestinal rumblings of concern can occasionally be heard over the slurping and burping at the public trough.

The channel is all too aware that much regulation, in particular emanating from the EU, discourages the growth of new companies that might undermine the majors (:cough: WEEE :cough:). Deep pockets can better afford the added costs, and can offer officials and legislators attractive – and perfectly legal – inducements.

The Brown regime in Britain is entirely devoted to the idea that regulations, each with their attendant quango, cement its hold on power. What better way of doing well out of seeming to do good than to impose establishment ‘order’ on the worryingly anarchic etail environment?



HEXUS Forums :: 33 Comments

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What bloody nonsense will they come up with next ?

Does this mean that if this tax is in place, I can download as much music as I want off the internet in any form from any site and it wont be considered piracy ? If not what the hell is the point of this tax other fattening up an industry that can be more or less rated as a parasite ?
I think that is the intention Sinizter. But you would pay the tax regardless of how much, if anything, you downloaded. :whip:
Its a ridiculous idea i have to agree. My main reason for posting though is to thank Scott Bicheno for such a well written article, sadly not somthing i always expect when looking around the web. Good work hexus.
It won't happen. We should not be complacent, but once news of this became mainstream it would be very politically unpopular. The only way they could do it would be the usual sh*te about using the money to combat internet terrorists/pirates/hackers/sexual predators and virtually anything else you can think of. Drug dealers too probably.

As much as they “try” to police the internet they should realise it just won't happen.

If this occured IF, likelyhood would become that someone would host his wireless and give out WEP keys to local mates who would pool in to pay the monthly broadband bills on a high tier.

No matter what they do the internet always adapts.