A recent study from the University of Hertfordshire found that 88 percent of UK residents think that ripping a CD onto an iPod is legal. Sadly, they're wrong; ripping remains illegal. But the music industry has at last embraced the radical idea that format shifting ought to be legal... with (of course) a terrific catch: the music biz wants to get paid. Under a new plan submitted last week by major UK musician groups like BPI, the Music Publishers Association, and the Music Producers Guild, format shifting would be legalized, but only onto devices that are "licensed." In other words, get ready for a new iPod tax.
The UK's Intellectual Property Office has been spearheading the effort to reform the copyright laws in the country on the lines laid down by the 2006 Gowers report, and one of the suggestions was that format shifting (which everyone already does) be made legal. The UK music business went along with this; in fact, we noted in early 2006 that the UK equivalent of the RIAA, the BPI, actually suggested to the Gowers commission that this be done.
"This is about the UK music industry responding effectively to the changing way music is consumed," said an unnamed executive at the time. "The submission states that we are willing to explore options to clarify what behaviour should be deemed acceptable for the consumer."
And then came hints that this apple might come with a serious worm. Early this year, the BPI again said all the right things about format shifting, but we noted that the Association of Independent Music was making noises; apparently, the group wanted to get paid whenever music was transferred from a CD to a portable device.
Now we have the official, combined filing (PDF) from ten different music organizations in the UK (including AIM), and it's a doozy. Follow the ruthlessly simple logic with me:
- Step one: format shifting is valuable; just look at how many people do it. From the filing: "Unquestionably, there is a value produced by the ability to format shift for both consumers and commercial enterprises which directly arises from the transferability of music."
- Step two: creators don't see any of this value, and they should (because without them, there would be no value for anyone). "It is imperative that creators and performers should benefit directly from this value," says the filing. "Ultimately it is their creativity which underpins the entire value chain."
- Step three: start taxing iPods to recoup this value. "The only solution which achieves these goals is a flexible and market-led approach based upon a business-to-business relationship... an exception subject to license."
Device manufacturers, who are apparently building their fortunes on the back of the music industry's content without paying for the privilege (err, but didn't the consumers already pay for the discs?), would have to pay a license fee to the music business that would be split among all the involved parties according to a formula that makes the Schrodinger equation look like a bit of first-term algebra.
The current UK IPO proposal would create an exemption for format shifting without such a license; the music groups insist that the UK should not "enshrine this market failure in national legislation."
Behold the Trojan horse
Consider the situation for a moment. The sickening death dive of the CD has sucked billions out of the worldwide music industry as consumers move to digital downloads; this has been bad news for revenue, since digital downloads are often cheaper and are susceptible to cherry-picking. So what to do about the problem? Hide the costs of using CDs, appears to be the answer.
Right now, to be legal, a UK resident has to buy a CD and then re-buy the tracks from a digital online store in order to use them on the iPod. The alternative is to skip the CD and just buy the digital tracks, which can be listened to on an iPod and a computer, though you can't play the music in your CD player. This makes the CD a horrible value. (Or it would, if anyone in fact did this.)
So what the music industry wants to do is 1) hide this cost in a device's price and 2) force everyone to pay it. Now, moving the music from a CD to a portable player legally doesn't seem like a bad deal, since it costs nothing extra (well, it did, but you already paid it and couldn't opt out). And, as a bonus, everyone who buys an iPod pays up.
The whole situation seems like an exercise both astonishing in its petty greed and doomed to failure. The greed bit is obvious enough; users are exercising the exact same performance rights (an individual listening to songs that she has already paid for) regardless of the device in question. The music business argues that this is fair because, to quote one allegedly analogous example, "technology companies pay a commercial license to use MPEG software for their services." Err, what?
In our view, the CD is just a bit-delivery mechanism, and it's ridiculous to single out CD users for moving those bits to various devices when the same tax doesn't apply to a different bit-delivery mechanism (i.e., the online download store).
But the whole plan is also doomed to failure. The music business knows that CD sales are tanking and the licensing scheme collapses when the discs disappear, so at most this is a short-term solution... unless it is a Trojan horse to open the way for other device licensing schemes in the future.
Consider: this whole plan only applies to legally purchased CDs in cases where the owner hangs on to his copy of the disc. But the report also notes that a large percentage of songs on any given music player aren't ripped from CDs or come from online stores. My guess is that what we're looking at here has less to do with CDs than with getting another levy a few years down the road, one which seeks a substantial fee from each device sold to make up for illegal P2P usage. Universal has already squeezed Microsoft for a buck a Zune here in the US, but establishing the principle in law (and for much higher amounts) could be a windfall for the music business.
For good measure, the groups ended their filing by saying that museums and galleries shouldn't qualify for a new "archival purposes" copyright exemption and that the UK doesn't need an exception for "parody, caricature, and pastiche" because creators "feel strongly about the use of their creative works in a different format and it is crucial for them to decide on the use either is parody or as pastiche."
I think I need to lie down.