The Music Industry's Last Stand Will Be A Music Tax
It is becoming more and more difficult for the music industry to ignore the basic economics of the their industry: unenforceable property rights (you can't sue everyone) and zero marginal production costs (file sharing is ridiculously easy).
Context & Ripple Effects
This piece closes out a TechCrunch arc that began in October 2007 with the argument that recorded music was marching toward free, sharpened by the claim that [[a:1180723|even free couldn't compete with piracy because piracy requires no signup, no ads, and no limits]]. By December 2007 the labels' answer was still enforcement, with the RIAA escalating to suing fans over personal use — a move this column reads as proof the litigation strategy has hit its economic ceiling.
The 'music tax' here is a predicted endpoint, not an announced policy — the analyst reasons that when rights are unenforceable and copies cost nothing to make, a blanket levy is the only structure left that preserves label revenue. Not everyone buys it: the same-day pickup on mathewingram.com/work called the idea 'a dumb idea', making the proposal itself the contested ground.
First-order effects
- If labels pursue a levy, broadband subscribers become the paying unit — every ISP customer pays for music whether they download anything or not, replacing per-track sales and per-infringement lawsuits with a flat collection.
- ISPs move from neutral pipes to billing intermediaries: whoever administers the tax gains a new gatekeeping role over how the collected money reaches rights holders.
Second-order effects
- P2P distribution stops being contraband economics once a blanket fee exists — file-sharing networks gain a legal revenue path, undercutting the paid-download stores whose value proposition was legitimacy.
- Labels that hold strong catalogs benefit most from a per-subscriber split, pressuring independent artists without major-label representation to accept whatever allocation formula the levy system sets.
Third-order effects
- The pattern points away from copyright-as-enforcement toward copyright-as-compulsory-license across digital media — pricing set by collective fees rather than per-copy transactions, with allocation politics, not piracy lawsuits, becoming the industry's central fight.
The trend: Recorded music is shifting from selling enforceable copies to collecting blanket access fees, with litigation's diminishing returns forcing the industry toward levy-style models.