How an ISP music-license should work

The Electronic Frontier Foundation's Fred von Lohmann has weighed in on the controversy surrounding the expected Warner Music proposal to allow ISPs to pay a license fee in exchange for the unlimited right of their customers to download music, in any format, using any protocol. In a nutshell, the proposal is fair and works if ISPs can sign up voluntarily because they want to offer a "download all the music ever made" service; it's a problem if the ISPs are forced to pay a tax, whether or not they want to offer the service.

Voluntary for Music Fans. People who do not share music shouldn't have to pay for a license they don't need. After all, we don't have a "music tax on restaurants." Restaurants are free to experiment with no music, public domain music, or CC music, as they see fit. Internet users should have the same freedom. But this means that there will still be some enforcement against those who don't pay but keep downloading. That seems fair, and enforcement to get people to become paying subscribers will look very different from today's "mount a few heads on spikes to scare the rest" approach being used by the RIAA and MPAA.

Voluntary for Artists. Artists shouldn't be forced to participate if they don't want to. That said, the vast majority of creators and rightsholders will likely opt in, rather than opt to sue individual Internet users. After all, 99% of all songwriters are members of one of the three performing rights organizations (PROs) we have today. It sure beats having to find and sue every radio station every time it plays your song.

Not a Collecting Society, but Collecting Societies. Freedom of choice for artists only means something if they have options to choose among. Competition is critical to keeping collecting societies honest and transparent. If you compare the three PROs that service songwriters in the US to the unitary, government-backed collecting societies in the rest of the world, our system wins hands down on these fronts.

Voluntary for ISPs. There is no need to force ISPs to offer blanket sharing licenses to music fans. Some ISPs will voluntarily bundle the license with their offerings ("buy the all-you-can-eat music package for $5 more"), some ISPs may choose not to. Universities might choose to buy campus-wide licenses in bulk in order to stop the RIAA's college litigation campaign. Software companies like LimeWire might choose to bundle the license fee into their software, paid either by subscription fees or advertising. At the end of the day, it's the individual fan who needs the license, and she should have lots of ways to buy it.

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• [Skep]

  Until everything is tagged with a machine readable license I don’t see how this can work. People who pay the license will have no guarantee that any song they download is licensed under the agreement unless they look it up in advance somehow in a database. And, due to international treaties, US users could be sued by foreign copyright holders who are not signed parties to the deal.

• [Hounskull]

  Preservation of Net Neutrality should also be an bullet issue.

  That could be a backdoor attempt by Telecoms (and knowing them probably is) to carve out “music download service” or “P2P service” as somehow different than any other IP packets, and thereby start carving into net neutrality. i.e. they launch a “music download service” and start blocking p2p overall. When people inquire why, the argument is the ISP signed a distribution agreement for p2p music sharing, and any other p2p sharing is therefore a breach of contract.

  Yes that would be obvious BS to most IP folks. But courts and Congressional commitees, who think the internet is a “series of pipes” and tend to be very pro-business, they could fall for it or at least use it to muddy the waters.

  So yeah, that’s all good stuff, but permanence of Net Neutrality needs to be explicit in any agreement and law.

• [Skep]

  …additionally, is the license like the rental schemes in that you have to keep paying it in perpetuity if you want to keep listening to the songs? i.e. can pay the tax, download for a month and then stop downloading? Do you then legally own the song? Or do you have to erase them when you stop paying the tax? How do you prove you own them? Why pay the tax by the month? Why not by the week? Day? Or hour? i.e., just when you are actually downloading and not merely for the possibility?

• [Hounskull]

  #1 posted by Skep

  You’re missing the point.

  It would be broadcast from the music studio’s servers to the licensed users of the ISP. So yes, they would have control of where they open the spigot to.

  There is already a movement away from DRM towards providing services in the form of consumer convenience and experience. i.e. they know people can get music, they hope to be able to provide it more conveniently through their portals, and with unique experiences such as printed materials and concerts which aren’t copyable.

• [Skep]

  Take a look at this
  #4 POSTED BY HOUNSKULL , APRIL 3, 2008 1:06 AM
  #1 posted by Skep

  You’re missing the point.

  It would be broadcast from the music studio’s servers to the licensed users of the ISP. So yes, they would have control of where they open the spigot to.

  And you are missing the FA.

  From TFA, for your convenience:

  All the Music, From Anywhere. Music fans have made it clear that they are going to use whatever software they like, to download anything that can be found in any “Shared” folder on the planet, including the unauthorized concert recordings, the rarities, the old b-sides, and the alternate takes. It’s time to figure out who should be paid for them, rather than wishing for a world where you can somehow make them disappear.

  That means that downloaders need a way to know what’s licensed other than an “official site”–which would partially defeat the whole purpose of the “tax.”

  Yes, the studios could provide songs directly. The bandwidth could cost them more than than their cut. A good portion of Apple’s 30 cent cut of iTunes music (most) goes to costs of running iTunes. Therefore, the studios would have to charge around 20-25 cents person to break even for costs unless they had other things to monazite.

  If people can download for free, they will only buy limited things from the studios.

  What also remains to be seen is how such a “tax” would affect aggregators. Would this only be benefit for individuals? Could the *AA still sue Napster-like companies? Could Allofmp3 pay the $5/mo and start back up? Could other companies sell songs by the bandwidth the way Allofmp3 did? How would it affect streaming audio royalties.

  It is an interesting idea but there are a lot of kinks to consider.

• [Hounskull]

  Read #5. Already addressed that.

  “Yes, the studios could provide songs directly. The bandwidth could cost them more than than their cut.”

  Nonsense. Bandwidth is becoming increasingly cheap and will only get exponentially cheaper as broadband wireless becomes universally deployed. Youtube is already providing tremendous bandwidth for free with existing technology.

  “If people can download for free, they will only buy limited things from the studios.”

  You’re comparing apples and oranges. They’re looking to sell licensing rights to entire catalogs. Not compete with pirates on “hit songs.” Their incentives then move away from hits to something more like YouTube with more small bands and niche content. Of course they’ll have the hits too, but those will also be part of the flat fee.

  The quantity of music available increases tremendously, and from the most obscure to the biggest hit, it’s all instantly available at broadband speeds, for a flat fee. That’s the selling point and that’s where piracy can’t really compete because it’s unreliable and very limited catalog. Most of my favorite artists aren’t pirated.

  That also effects artists in that we’ll have fewer big record deals for big artists, and more smaller deals for niche artists. There will still be hit bands and hit songs of course, but more more of their revenue will come from live performances and upsells of unique goods.

• [Hounskull]

  btw, another interesting potential is towards generating more serialized content and live content delivered in virtual (and perhaps real world) social spaces. For example, weekly podcasts and virtual concerts would have the same subscription appeal as cable TV serials. Like a serial TV show on cable, it’s generally easier to subscribe to cable then to go through the hassle of trying to DL it.

  Taking it further, live virtual conceprts could be combined with other interactive experiences, from chat to integration with MMO. A band like the Gorillaz could tie into a game like WOW for a live concert, as part of a liscence deal to a music provider available to subscribers.

  Presently, companies fight a losing battle to prevent piracy or storage of media because they want to sell and rent copies later. But, if you consider a future where everything is digital and comes over the net, then it’s pointless to restrict replay usage, and makes more sense to try and sell a flat subscription fee based on breadth of catalog, ease of use, streaming wireless availability to portable devices, and continual availability of new content.

  Additionally the social aspects of sites such as MySpace may themselves become a selling point for subscriptions, just as the social aspect to WOW or other MMO is as important as the game content itself.

• [Cory Doctorow]

  It’s useful to compare this to other blanket licenses, for example, the license offered to radio stations.

  When a DJ drops the needle on his record, he is legit, no matter where the recording came from (an iPod, a bootleg, a download), and no matter what happens to the transmission after it is received (shared, retransmitted, recorded, webcast). The radio station has paid for the right to play all the music, over its equipment, regardless of origin or eventual disposition.

  In this system, an ISP’s customer is like the DJ: it doesn’t matter where she gets the music, nor what the people who receive it from her do with it. *Her* use is legit. Solving the global issues is a matter of proving the model works and going to other countries and looking to get their ISPs to offer comparable licenses.

  Or compare this with the US compulsory license on compositions: if you want to sell a recording of you performing *any song ever written*, you just need to pay a small fee to a collecting society, which will pass the money on to the composer.

  You sell the record to me, and I take it to a country that doesn’t have the deal and sell it on as a wholesaler: you’re still legit. The composer still got paid in the USA. It may be that the recording found its way to China and got duplicated 10,000,000 times. You’re still legit. The composers need to get a better deal out of China, but abandoning their US revenue until that happens is suicide.

• [Teresa Nielsen Hayden / Moderator]

  Why DCer was disemvowelled: It’s unfortunate. He knows a lot about the music business, and can be an interesting source of information on it. What he doesn’t seem to be able to do is talk about it without throwing in personal attacks on Cory. At this point he’s accumulated a long history of comments where he’s done that. I’ve reproved him for it, argued with him, just disemvowelled the personal attacks, etc., and as far as I can tell it’s had no effect whatsoever. I’m tired of trying.

• [dalziel_86]

  Talking about licenses that apply to record companies is missing the point entirely.

  Firstly, those licenses are performance licenses. They’re not about acquiring music or playing it, they’re about performance, distributing the music over the airwaves. That’s generally all they cover. They don’t allow radio stations to copy music, or release their own albums, or anything else. This proposal is talking about an arrangement to cover the acquisition and distribution of content, as well as this ‘license to play’ the music that the industry would like to be selling you instead of (or as well as) the music itself. The radio station licenses and this proposed arrangement aren’t really comparable.

  Secondly, the reason the radio station licenses exist is because the people whose music is being played get promotion out of being played. That’s the added value of the license, and the reason those licenses are made available, and for non-absurd cost. In order for the licensors to make arrangements like the one being discussed, there’d have to be similar value involved, or an extraordinary cost, because essentially the license would grant most of the rights that the licensor has. What then is the licensor to make a profit from, if not the cost of the license?

• [Skep]

  “When a DJ drops the needle on his record, he is legit, no matter where the recording came from (an iPod, a bootleg, a download), and no matter what happens to the transmission after it is received (shared, retransmitted, recorded, webcast). The radio station has paid for the right to play all the music, over its equipment, regardless of origin or eventual disposition.”

  IIRC, one of the copyright trade groups sued radio stations looking for royalties for all the internal copies made on tape for playback, though I think the trade group lost. I think that with radio stations they are allowed to play them over the air for compulsory royalties, but they aren’t necessarily allowed to download music. A radio station could be sued by the RIAA for downloading/uploading–or what ever the RIAA sues for. Being a radio station wouldn’t necessarily be a defense.

  Note you can get blanket licenses for playback of songs at venues and events from ASCAP/BMI but you still have to buy the music in spite of the license. The license is only for playback, it doesn’t exempt you from any other copyright claim.

  With the radio stations, they pay based on playback rather than transfer, so they pay when they play the songs. With the ISP license you pay for transfer, I’m unclear on whether I then “own” permanently because I paid a license to download it and how I prove I own it at a later date after I’ve stopped paying the license.

  Also, is it a double dip? Do both the uploader and the downloader have to pay or only one? After all, in the sales model only one party pays royalties.

• [dalziel_86]

  Sorry, that first sentence should read ‘radio stations’ rather than ‘record companies’.

• [Cory Doctorow]

  Skep, you’re misunderstanding me — yes, a DJ could be busted for *downloading* a song, but the act of *playing* the downloaded song over the air is legal. The license covers playing music, period, regardless of source.

  As to royalties, there are plenty of double dips — indeed, they’re the norm in blanket licenses. For example, a DJ buys a CD at a record store — that’s one royalty to the composer and artist. Then she plays it on the air — that’s another royalty. The broadcast is piped through a department store that pays for the performance right — that’s a THIRD royalty.

• [DCer]

  Nn f th cllctng scts nd prfrmng rghts rgnztns r nt trnsprnt. Cry s thrwng n msnmr t fl y. Thy ll dcmnt wht thy d vry wll nd cmmnct t thr cstmrs ll f tht nfrmtn. wndr f Cry s syng tht h shld hv th rght t s hw mch prtclr rtst rns, whch h shld nt. H dsn’t dsrv t s smn’s chcks, srry bd, nc try (f crpy).

  Cry stts tht DJs by rcrds nd py rylty. Rd DJs cn btn th msc fr f chrg by cllng th rcrd cmpny n 90% f css. knw bcs wrkd n rd 20 yrs g. ndpndnt bnds nd lbls? lwys thr fr th LP nd phn ntrvw.

  gn, Cry hs nvr wrttn pr-msc rtcl n Bng Bng nd ths n, whch s ltrlly rddld wth flshds, s n xcptn. W rdrs gt t Cry, y ht mscns, bt cn’t y t lst b hnst bt t? s tht t mch t sk?

• [RMS]

  The system proposed by this article has several major flaws.

  The worst flaw is the failure to establish the freedom to share. You
  would be allowed to share some music and not other music. How would
  you know which CDs are legal to share? Obviously you wouldn’t.

  The plan says it is “voluntary for artists”, but the word “artists” is
  misleading. In most cases a record company has the exclusive rights,
  because they had the clout to make the artists give them that. So
  “voluntary for artists” really means “voluntary for record companies”.

  Involving collecting societies in the scheme will cause the money to
  be allocated badly. They will surely claim that they collect money
  because we “owe” it for the music we shared. That idea (which we
  should reject on general principles anyway) implies distributing the
  money in linear proportion to the popularity of each work. That means
  most of the money will be designated for superstars, leaving a small
  fraction to be nominally designated for all the other musicians.

  But those other musicians will never receive the money that is
  nominally designated for them. The plan talks about “rights holders”,
  which implies that the record companies, following the exploitative
  contracts they have signed with most musicians, will take that money
  from them. That’s what they do with the fraction of the price of a CD
  that nominally is “for the musicians” (except when those are
  long-established superstars) — the record company keeps it, and the
  musicians get nothing.

  This scheme would collect money for superstars, and for those
  predatory dinosaurs the record companies, but it wouldn’t support the
  musicians who could really use support.

  Despite those flaws, the scheme would be an improvement over the nasty
  copyright system we have now. If it is offered to us as a compromise,
  perhaps we should accept it, provided we would not thereby forfeit the
  possibility of further improvement of the system.

  But we should never adopt such a small change as our demand. It is
  easy to design a system that respects the freedom to share, and that
  effectively supports the musicians that aren’t rich. The only
  obstacle is the power of those who shouldn’t have any. We should keep
  demanding that system until we get it.

• [Skep]

  Again, Cory has never written a pro-music article on Boing Boing and this one, which is literally riddled with falsehoods, is no exception. We readers get it Cory, you hate musicians, but can’t you at least be honest about it? Is that too much to ask?

  I guess it depends on what you mean by “pro music.” I’m certainly interested in hearing more inside info from you. You have some interesting points. But I do think Cory is “pro music” but not necessarily “pro-corporate music oligarchy.” “Pro-music” is a very arguable concept in that there are lots of ways one could consider one’s self to be “pro music.”

  By your definition Cory has also never written a boing boing post that is “pro book,” though, in fact, he does not try an dictate his business model for books on others even though he is a great advocate of giving away his work to increase sales.

• [Skep]

  It would seem that the devil is in the details. With Warner, the devil is writing the details, so it seems their proposal is much less likely to be desirable than one put forth by EFF.

• [Cory Doctorow]

  The guy from Warner used to be a free agent. He’s a radical copyfighter named Jim Griffin, and he’s a hell of a dude. I trust him to the ends of the earth.

• [Skep]

  “#11 POSTED BY CORY DOCTOROW , APRIL 3, 2008 10:34 AM
  The guy from Warner used to be a free agent. He’s a radical copyfighter named Jim Griffin, and he’s a hell of a dude. I trust him to the ends of the earth.”

  Well, that’s good news. He does have a challenge in pleasing his employers and coming up with a plan that will be fair consumers. It’s a contentious issue and I would think he’s in the unenviable position of being criticized from all sides no matter what he comes up with.