[p2p-research] Why p2p internet music funding proposals make no sense

Paul D. Fernhout pdfernhout at kurtz-fernhout.com
Tue Nov 3 06:05:42 CET 2009

Something I wrote today to someone else, but thought I'd post here.

It is common in some countries to have a tax on media or internet to fund 
musicians. It's been proposed in other countries, even for the USA.

This is the proposal that most seem to agree on and that best solves all the 
known issues.
   People with broadband Internet connections pay an extra $3-$5 on their 
bill (the amount is calculated by determining how much money is lost by 
Internet downloads and dividing it by the number of Internet connections), 
which is given to the operators of the system ("MiniPay"). (Optionally, a 
similar charge can be added to other Internet connections, blank media, 
burners, computers, etc.) In return, they receive a "blinded signature 
token" that allows them to tell MiniPay what they're listening to without 
cheating (the token can only be used once) and without knowing who submitted 
it (the ISP was "blinded" when it gave it out, so they don't which they gave 
to who). The token is sent to them automatically and electronically and is 
held onto by their MP3 player (e.g. iTunes).
   Copyright holders, when creating new songs and movies, submit a copy to 
MiniPay. MiniPay uses an audio/video "fingerprinting" technology to 
calculate a short number which identifies the song. They store this with 
information about the copyright holder, so they know who to distribute 
payments to later.
   Now people surf the Internet, downloading whatever songs they like, 
however they like, and listening to them. Their MP3 player keeps track of 
how many times they listen to each song (identified by using the same 
fingerprinting technology as MiniPay). If they use portable devices, the 
devices keep track and submit the information back to the MP3 player. If 
multiple computers share an Internet connection, the computers also share 
playcount data. At the end of the month, the computer collects all the data 
and anonymously submits it to MiniPay with the token.
   MiniPay divides up however much the token is worth (the $3-$5 charge less 
operating expenses) in proportion to how much each song is played. Then it 
looks at who holds the copyright to each song and deposits the money in 
their account.

OK, give up some money to musicians, that's OK with me.

Give up privacy as to what is listened to? Very questionable that "anonymous 
blinded tokens" would really be such. Probably various ways to game that 
system with stuffing the ballot boxes somehow (mentioned later in the page, 
I see.)

How do you attribute value to mashups? What of using music in products? What 
about chilling effects in making similar things? Some deep issues left 
unaddressed. Some say Jazz could never have been created today, with people 
learning from each other and building on each other. The chilling effects of 
copyright would prevent it. Most musicians (the 99%+ who never see the big 
bucks) lose out from strong copyright because they can't build on each 
others works the way the old time Jazz musicians could.

Besides, that is just about music. What about software, news, videos, 
contributions to blogs or comments? Running a web site? And so on?
What about compensating people for making the decision about what musicians 
to compensate (playing a music critic role)? Why draw an arbitrary line to 
one type of activity, making original music, and then ignore every other 
positive contribution people make to the public good in other ways?

Let's say the proposal quoted above was tried. There are 300 million people 
in the USA, and *all* pay US$5 for a connection, that's US$1.5 billion a 
month, or US$18 billion a year. How much would go for overhead? That's 
probably only US$10 billion to artists.

The US government budget is now about US$3 trillion.

The computer sales industry globally is hundreds of billions of dollars or 

US$10 billion a year is nothing. It is the tail wagging the dog, or even the 
flea wagging the tail, with all the power media executives have had over 

Why not just pay US$10 billion out of general tax revenue as grants to 
people who want to make free stuff? That was done during the 1930s Great 
Depression. It paid for a lot of art, photography, recordings, and music, 
some of it public domain.

But then everyone will want that support. So, give it to everyone who asks. 
What does a musician care if other people get paid to freeload if they get 
supported enough to do their own art? Then we are back to a basic income.

Besides, is, say, caring for your sister's kid or your sick Mom any less 
freeloading than making music for the internet? There are lots of implicit 
assumptions about what is worthwhile here...

Let's examine a basic income in the USA.

About one third of the US GDP of $14.4 trillion could be allocated to a 
basic income, money coming from general taxes, leasing goverment land and 
spectrum and other public assets like fishing rights, import/export tariffs, 
sin taxes (like a US$400 per barrel tax on oil and other carbon sources), 
and putting money directly into circulation instead of banks creating it via 
fractional reserve debt.

So, that would be about US$5 trillion / 300 million, which is about US$1400 
a month per person, which could replace unemployment, public schools, social 
security, and so on. With full health insurance thrown in for US$200 a month 
per person no exceptions (low overhead with single payer plus lots less 
stress and more free time to help peers be healthy), we reduce this to 
US$1200 a month cash and free-to-the-user comprehensive health care.

And there is still 2/3 of the GDP for people to compete for if they really 
think competition is a good way to run a society. So, about US$10 trillion a 
year of the US economy is paid through labor or interest on capital.

Seems a lot more straightforward than inventing tokens and popularity 
horseraces and so on just for music, and then maybe doing the same for news, 
websites, youtube videos, free software etc..

It's true that open source, as a public good, is providing lots of value but 
getting not enough funding, so this proposal would help fix that without 
requiring Google and other big companies to fund it all:
   "Open source: Big value, not big money"
   "Google: The open-source savior we deserve"

Also, why should a musician get compensated on current airplay when their 
stuff might only be popular in ten years, or even a hundred years, after 
they are dead? Lots of assumptions there...

Could a US musician live on US$1200 a month per person in his/her family 
(with full medical care) and devote himself/herself full time to music? 
Well, let's say he/she has a spouse and two kids. So, he'd/she'd be living 
on US$4800 a month, which is about the median US income. He/she might 
homeschool so as to not have to pay tuition to private school for his kids. 
He/she could devote a lot of time to his music, and maybe his/her spouse 
could devote time to making free software. It's not living high on the hog 
to live off of US$57K a year and homeschool two kids, but no doubt they 
could scrape by. They would only need one car, or might choose to live 
somewhere they did not need a car at all (it's not like there is a daily 
commute to "work" or "school").

Note, even "millionaires" might be better off under this plan:
"[p2p-research] Basic income from a millionaire's perspective?"

The current system makes no sense. This sort of music fee is a half-measure, 
from a narrow point of view. It's like when labor unions create their own 
private welfare state in a big company and let the rest of the people in the 
country who are unemployed twist in the wind, while person by person jobs 
are lost to automation or competition, as happened in Detroit. Media taxes 
try to be a middle ground, but when an ice flow is splitting in two, being 
in the middle may just get you dumped in cold water. :-)

--Paul Fernhout

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