From Iceland — Making Online Music Services Less Taxing

Making Online Music Services Less Taxing

Published November 23, 2010

Making Online Music Services Less Taxing

At the beginning of October there was an article in Fréttablaðið, a free Icelandic daily newspaper, on the subject of a surcharge on Internet connections, which had been proposed by the Icelandic copyright bureau STEF and a new association of performing artists called FHH. The idea behind the surcharge was to compensate for lost revenues from illegal downloading and streaming of artists’ music by collecting a fee from every internet connection in Iceland, which would be distributed among songwriters and copyright holders according to some metric. Taxing people to compensate for theft is not a new idea and an internet search for “tax” and “theft” will result in plenty of arguments that treat the concepts as interchangeable. In Iceland, a surcharge has been placed on the sale of everything from cassette recorders to blank CDs using much the same logic.
The resulting debate from the proposal of this tax has been very positive even if the idea itself is flawed. Few would disagree that artists, composers and other music professionals should be paid fairly for the sale and distribution of their music online.
However, a dangerous notion has taken hold when people discuss the music consumer in this equation. From stories about the music industry suing grandmothers for downloading Metallica albums on Napster to proposals like this tax that seem to punish the consumer and assume wrongdoing, the music fan is increasingly being treated as a mindless criminal who is incapable of behaving on the internet. This notion disregards the social aspect of musical culture and shifts attention away from the real failure here, which is the failure of the creative industries to provide the right services and adapt to the changes that the internet has brought to their business. Music fans want to pay fairly if they are able to do so, and they will participate in other ways that benefit the artists if they are enabled to do so. The internet is a new way of communication and has the potential to bring music makers and the people listening closer together. Taxing it to redistribute wealth according to pre-existing monopolies is the old way of thinking.
Charging a tax on internet connections is unfair first and foremost to people who use legal music services. It is also unfair to the other creative industries (such as the film industry and computer game industry) that are also affected by people downloading their intellectual property. We must find creative ways to solve this problem that do not involve taxing people or forcing them to act in a certain way on the internet. For example, I think that the recent proposal by the French government to subsidise music cards for younger music purchasers is an excellent idea. This is a government that previously pushed for the three-strike rule (whereby you lose your internet access if you break copyright law), so proving that progress can be made in the most unlikely corners.
We should concentrate on providing excellent legal music services that make the issue of piracy irrelevant. It’s worth mentioning (and considered by some in the music business as heresy) that elements of piracy are used to great advantage by artists at all levels of their careers. Music services can learn a lot about how to create the service side from defunct services like All that remains is how to make a sustainable business that gives music lovers what they want while being responsible to the artists and labels that provide the music. There are several Icelandic music services that are trying to do exactly that, such as, and Grapewire.
We should also concentrate on educating people about the existence of these music services and especially those that pay artists fairly. We should encourage people to use these services when listening to music or buying it online. It will be good for Icelandic businesses, beneficial to Icelandic artists, and it will strengthen the development of creative culture in this country. People will act well on the Internet if they are given the opportunity to do so.
Alex MacNeil is the managing director of gogoyoko, a music service open all over the world that supports free streaming of all music on the site with a clever business model.   He also plays guitar in kimono.

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