27 October 2005

Consumers would pay less for more entertainment

This article on The Register about free and legal P2P is worth the read for anyone harbouring "moral issues" on file-sharing. (And as a sidenote, we already do this in Canada — we tax rewritable media so we don't need to throw 14-year-olds into the already over-burdened judicial maelstrom.) So I am sure our beautiful neighbours to the south of us can figure out how to implement it. This should really be looked at as inspiration in the face of any sort of problems that can arise socially and/or economically. We, as a race, really do have the capacity for remarkable problem solving. Thanks for the e-mail, Harley!
In the year 2000, the record labels earned $7 billion on retail sales of $13 billion. For the sake of argument, let's assume that in the first year 20 per cent of retail sales were lost to unlimited copying. That's $1.4 billion, although they'd save $210 million in manufacturing costs, and approximately $145 million in mechanical royalties. That brings the compensation to $1.045 billion for the recordings royalties and $138 million for songwriters, plus an amount for lost radio-related royalties.

For the movie industry, calculating the potential loss is extremely difficult. Firstly it's hard to estimate how much the industry earns now from DVD and VCR sales and rentals, and cable and satellite deals. And it's even harder to gauge the loss from file swapping. Even with the advent of Bitorrent, downloads are slow, and few have the patience or resources to find value in them compared to the availability on offer at plentiful late night retail outlets. Fisher reckons five per cent, rather than twenty per cent for the music business, of a $10 billion industry, or $479 million.

So combined, that's $1.677 billion to keep the RIAA and the MPAA happy.

But of course that's not all it would cost: the model requires an organization to calculate and distribute the royalties, performing the duties of ASCAP or BMI today. ASCAP reported that its 1998 administrative overhead was 16 per cent, so Fisher generously estimates 20 per cent. (It's pretty generous, as we'll see, because the digital overheads may actually be much lower). This takes - and bear with us, because it also generously throws in a 10 per cent charge for inflation between 2000 and 2004 - the net result to $2.306 billion.

So who pays?

If it was implemented as a regressive poll tax, with 87 million household filing IRS returns, each household would pay a mere $27 extra a year: a little over $2 a month, or 51 cents a week. That's half the price of a single iTunes Music Store song.

That's the most efficient way, with the lowest overheads.

…continue reading via The Register

…more on Professor William Fisher

Another Fuck you to the naysayers. Wow, two in one week! Here's to the little guys in the community, like (Edmonton's) Listen Records, Freecloud, Blackbyrd Myoozik, Megatunes, et cetera!

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