July 11, 2014

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A Bad Idea Whose Time Has Come?

On Monday I attended a workshop to discuss compulsory licensing of music. A compulsory license might work like this: a small “tax” is added to the cost of Internet connections and/or computers and/or electronic devices that record and play music. In exchange for paying this tax, everybody gets free access to all the music they want, with no limits on sharing or redistribution. (Napster becomes legal.) The tax revenue is split up among musicians, songwriters, etc., based on how often each piece of music is played (as determined by statistical sampling). The average person would end up paying about $5 a month. (At present, there are no serious compulsory licensing proposals on the table, only a few trial balloons.)

There are plenty of reasons to dislike this proposal. It’s a non-market approach, based on a tax-and-redistribute model. It makes the price of music a political issue, rather than something to be worked out consensually between buyers and sellers. And a politically viable version of it would necessarily lock in much of the economic inefficiency in today’s music business.

Despite all this, compulsory licensing may be a bad idea whose time has come. The conventional wisdom is that compulsory licenses only make sense in markets that are disfunctional; and there is strong evidence of disfunction in the market for music today. Too many customers get their music illegally and refuse to pay; almost all artists are dirt-poor, and even the rich ones tend to see the system as unfair; and the greatest music distribution vehicle ever invented – the Internet – is vastly underexploited. Everybody in the business feels hemmed in and threatened. By all rights, this ought to be the best time in history to be a musician, a songwriter, or a music fan; but the reality is not so grand.

I’m conflicted about this. Philosophically and politically, I find compulsory licensing hard to stomach. And yet I have a nagging suspicion that it’s the only way out of the mess we’re in.