When a tax is not a tax

[Peter Suderman]
Over at my blog group-home, Reihan wonders if maybe, just maybe, a "music tax" might be a good idea. He's responding to an idea that popped up in a recent Portfolio piece. Basically, the labels, or at least Warner music, want to see an additional $5 tacked onto everyone's ISP bill. They'd divide the spoils, and ISP subscribers would be able binge on file sharing without fear of legal reprisal.

I actually think this sounds great, at least provided that it's voluntary—in other words, that it's not really a tax. The article quotes David Barrett, who manages peer-to-peer networks for web hosting colossus Akamai, as saying that, no matter what the label reps say, "it's a tax."

"It'll be a government-approved cartel that collects money from virtually everyone—often without their knowledge—and failure to pay their tax will ultimately result in people with guns coming to your door."

Look, I'm usually the first person to smell hidden taxes, but the Warner rep advocating the plan explicitly denies any desire to have the government involved, and as long as that's true, this seems to be a pretty good way to solve the problem of illegal file sharing. My suspicion is that the $5 price point is probably too low unless it really is a tax, but I don't see why a $10 or even $20 fee wouldn't work. Think of it in comparison to other unlimited-media servives. The average monthly cable TV bill is almost $50, and all-you-can-watch Netflix plans run $14-$24 a month. How many people who buy music even a few times a year wouldn't spend the price of a CD a month (or less) in order to have essentially unlimited access to music?

So while I sympathize with Barrett and with folks like Michael Arrington who worry that this will quickly result in compulsory licensing, I see no reason why this can't or shouldn't work on a voluntary basis..

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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