Music Industry Proposes ISP Tax

Update (4 July 2008): Please note that this Press Release is 2 years old and relates to a proposal which is now, thankfully, off the table. ORG is keen for the music industry to come up with ways to monetise filesharing, but each proposal needs to be judged on its merits. If you are a member of the press and would like ORG to comment on a music industry proposal to monetise filesharing, please contact the ORG office on +44 (0) 20 7096 1079. You may be interested to know that we broadly subscribe to the 7 principles developed by Fred von Lohmann when it comes to judging what is a good or a bad approach to monetising filesharing. Cheers.

12 July 2006

A music industry coalition (1) today proposed a reform of UK copyright laws which, according to their press release, would see “Internet Service Providers (ISPs), mobile phone companies and device manufacturers” paying a levy or licence fee to the music industry for any illegal file sharing that their services or products enable.

This new right, which they have called the Value Recognition Right, would “allow the music industry to create a commercial relationship with any company deriving value from either the sharing or storage of music”.

Suw Charman, executive director of the Open Rights Group, said, “This proposal is ill-conceived and grasping. Suggesting that ISPs and telcos should be responsible for the content transferred by their users illustrates how poorly the music industry understand the net, the right to privacy, and the ISPs’ duties to their customers under the Data Protection Act. They are looking at booming technology markets, such as the growth in iPod sales, and wondering how they can get themselves a slice of the action.”

If granted this right, the music industry could then force licences or levies on a wide variety of businesses, not just ISPs and telcos. Manufacturers of any device capable of storing an MP3 would need to pay up. This could include companies that make hard disks, mobile phones, portable media players, game consoles and memory cards/sticks.

Whilst some European countries have a levy on blank media, applying this to every service or product which ‘derives value’ from music would drastically over-extend copyright’s reach.

Alan Cox, a respected Linux developer, says that this new right would likely be as harmful in the UK as the private copy levy has been in Europe.

“The private copy levy has seriously damaged new and novel music businesses, open source, data sharing applications, and business models based around media. It has also grossly distorted the market and led to many large EU companies importing all their CD media from the UK and other EU members who do not have a levy.”

In their press release, the music industry have also said that they would then shift their focus from suing the public to suing “unlicensed intermediaries”.

Digital rights activist Cory Doctorow says: “The music industry wants to make ISPs liable for the traffic they carry, and sue them if they don’t take action to police their users. The only way to accomplish such a policing is to throttle, spy, and firewall out potentially infringing traffic, an incredibly invasive regime that has no basis in international copyright or telecommunications law.”

The Value Recognition Right could damage ISPs’ status as a ‘common carrier’ which means that ISPs are not responsible for the content of their network until they have been notified that illegal material is being hosted or transferred.

Says Charman, “AIM and their colleagues also seem to be implying that the ECommerce Directive, which protects ISPs’ status as ‘mere conduits’ and is crucial to the net’s development, should be torn up. Messing with that for financial gain would be very foolish. AIM’s proposals are like charging the Post Office a fee in case some of the packages it delivers have illegally copied CDs in them, and making them responsible for the contents of every parcel they deliver.”

Malcolm Hutty from ISP group LINX said, “We don’t accept that ISPs should be responsible for paying for all the value that our customers acquire as a result of using the network. There are already very effective procedures in place which rights holders can use to pursue cases of copyright infringement and ISPs co-operate fully with such investigations, but beyond that, it’s nothing to do with the ISP. There is no need for an ISP tax, and it is absolutely inappropriate that the ISP industry should be forced to seek a licence from the music industry in order to operate.”

This announcement comes hot on the heals of the BPI’s attempt to bully ISPs Cable & Wireless and Tiscali into disconnecting customers whom the BPI accused of illegal file sharing. And that action came just over a month after the music industry forced Tiscali to shut down their experimental Music Jukebox service, which offered users the chance to legally listen to millions of songs.

(1) Including the Association of Independent Music (AIM), British Music Rights (BMR), the Musicians Union (MU), Music Managers Forum (MMF), the royalty collection society the MCPS-PRS Alliance, and the British Academy of Composers and Songwriters (BACS).

For more information, contact Suw Charman, Executive Director, Open Rights Group: Mobile: +44 (0)20 7096 1079