Should the EU raise a “music tax” to be paid by broadband and mobile phone users to compensate music labels (akin to the TV license paid in many European countries)?

Earlier in the month, The Register published an article titled “Big labels are f*cked, and DRM is dead — Peter Jenner” .

Peter Jenner is a music industry old-timer (who was Pink Floyd’s first manager and has also looked after T.Rex and The Clash among others), and is Secretary General of the International Music Managers Forum. His voice is as authoritative as it’s brash.

Jenner says the major music labels “raped their whole business model” to cover profit shortfalls and haven’t got the “got the time or energy” to think about the future of their business.

His analysis of the current situation is accurate:
– “digital music pricing has been a scam where the consumer pays for manufacturing, distribution, and does all the work”;
– “DRM, pay-per-download, and per-device restrictions force users to pay multiple times for a single song”.
(which, taken together, in my view, provide individuals an incentive to seek pirated music)

I also suggest that the RIAA (US), MCPS-PRS (UK) and other national rights bodies are shooting themselves in the foot. By punishing new bona-fide Internet-based business models that promote music with over-bearing the regulations and fees common to traditional media (TV, radio, etc.) they are preventing the emergence of legal alternatives and, in the process, helping the illegal outfits flourish.

Jenner’s recommendation is for EU countries to introduce a blanket broadband license of about €4/month to compensate music companies in exchange of them abandoning DRM and them accepting greater pricing regulation.

There hasn’t been enough debate as this recommendation warrants. The clearest thinking has come from Micheal Arrington of TechCrunch who was highly critical.

I think the idea of a broadband fee is quite sensible.

Competition is unlikely to create an environment without DRM and excessive pricing.
– iTunes controls more than 70% of the music download market and is unlikely to soon loose it’s strangle-hold on the market (over 70% of new US cars have iPod docks and six airlines are now talking about supporting it too).
– Microsoft’s has just introduced a new DRM, instead of the one it already had, for it’s new Zune MP3 player.
– Mobile operators are closed networks where there is no competition for like services.

This tax wouldn’t elimate innovation. Music labels would still compete for a larger share of the broadband license. And, anyway, it is already a tried and tested concept. Many countries (eg, Canada, Holland, Germany) charge a “rights tax” on reproduction media such as blank cassettes and blank CDs. This tax would be no different.

Germany and Sweden have already introduced similar taxes to pay for their public broadcasters.

The danger is that other rights holders would demand a similar tax. Movie studios? Book publishers? Phtographers? In the process they might over-tax individuals to the point of slowing down broadband penetration.