Recording Industry Proposes Taxing Students Instead of Suing Them

The Techdirt blog last week unveiled a new approach to addressing content piracy by students. Both Techdirt, and subsequently The Chronicle’s Wired Campus, noted that Warner Music Group is negotiating with several universities to conduct an experiment in “voluntary blanket licensing.” Under the program, colleges would charge and collect a flat rate fee/tax, for a nonprofit organization managed by the recording industry. That nonprofit would distribute the revenues to artists. The Techdirt site includes a PowerPoint presentation on the proposed program produced by EDUCAUSE. The Techdirt blog does raise some interesting concerns: such as whether the tax is truly voluntary or not, and whether the model would stifle other innovations that may prove to be better solutions for students, institutions, and artists. The posting notes:

There's obviously something appealing about ending the lawsuits and letting people file share freely. But, it's quite problematic to add an effective "tax" when none is necessary. Plenty of other business models, such as those we've outlined here and elsewhere can suffice to fund the creation of music. The presentation says that a nonprofit has been set up to handle the money, claiming that it's "to be clear we intend to operate with good intentions and not profit as a motive," but given the way the industry has acted in the past, that's difficult to take at face value. Also, this isn't really a license. It's a "covenant not to sue" -- meaning that lawsuits could still result.

As a colleague of mine is fond of saying, “nonprofit is a tax status, not a business model,” meaning, that nonprofits do not have to run in the red. They can derive revenues that exceed their costs, i.e., make a profit. If such is the case, will there be a refund back to the institutions and students, or will that excess profit go back to the recording industry? There is nothing wrong with the recording industry profitable. It is necessarily if the industry is to survive and prosper. The concern would be that an involuntary tax be employed to students, when not all students may take advantage of the service. There are other potential business models developing in and around higher education that could also work. Institutional licensing has some other risks, such as long-term costs versus the initial cost ramifications.

A final observation, made by another colleague of mine, is that at the end of the EDUCAUSE PowerPoint presentation there is a note that how this model could lead to all other content following a similar model – including text. In the library space we hear claims of a “serials crisis” brought on, in large part, by the growing licensing costs associated licensing fees applied by the content holders. Perhaps different groups in higher education should fund a study or policy paper review to evaluate the true implications (costs and savings) to students and institutions presented by content licensing over both the short and long terms.