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Music industry proposes 'ISP tax'

A music industry coalition has proposed that ISPs and others should pay a licence fee to compensate rights-holders for unlawful file-sharing by their customers. One critic called the plans, which would change copyright laws, "ill-conceived and grasping."13 Jul 2006

The group met in London yesterday. It did not represent the entire UK industry – notably, the BPI was not in attendance. But nearly 1,000 independent record companies and 50,000 songwriters, composers and music publishers were represented.

Music creators are not paid when their work is distributed over unauthorised peer-to-peer (P2P) networks. Despite the growth of iTunes and other licensed sources of digital music, illegal file-sharing is still huge. Internet traffic monitor CacheLogic reports that 60% of all internet traffic by data volume is P2P file-sharing – and music has been the main driver of P2P activity to date.

But the groups represented yesterday do not want to target the individuals who infringe copyright in this way. Instead, they want to target the intermediaries.

According to a joint statement issued after yesterday's meeting, ISPs, mobile companies and device manufacturers "profit extensively and reap wider value from the unauthorised distribution of music whilst being protected from liability by a series of legal immunities and safe harbours." There were no ISPs in attendance at the meeting.

Horace Trubridge, Assistant General Secretary of the 32,000-strong Musicians Union, compared ISPs to shops that play music for customers.

"If I were to open a hairdressers and play music, I get a benefit," he told OUT-LAW. "So PRS and PPL expect me to buy a licence." He explained that an ISP is "getting a considerable benefit" from P2P. And Trubridge wants ISPs to pay for that benefit.

Asked how the system would operate and how licence fees would be calculated, Trubridge replied: "That's the $64 million question." The details have not been worked out; this proposal is only at a formative stage.

Mobile companies and makers of MP3-players and other hardware are also being targeted. Trubridge pointed out that Bluetooth connectivity makes it easy to share songs among mobile phones without any benefit to rights-holders. But Trubridge said this was not a copyright levy of the kind that exists in other parts of Europe. "This is not a tax on consumers," he said. "We don't think consumers will notice." But he acknowledged that companies are likely to reflect any new fees in their prices.

The meeting concluded that a 'Value Recognition Right' is needed and that "unlicensed intermediaries – rather than consumers" should be "the target of copyright enforcement actions."

Truman was critical of the BPI's pursuit of individual infringers – the major 'uploaders'. "We don't think that's good for the industry," he said.

Copyright legislation would need to change to accommodate the proposal. It is likely that e-commerce legislation which recognises and protects ISPs as 'mere conduits' would also need to change. Asked whether he thought the changes could be achieved while maintaining consistency with EU Directives, Truman said he hoped the proposal would reverberate throughout Europe and possibly worldwide.

ISPs and digital rights groups reacted with disdain.

Malcolm Hutty of ISP group LINX said: "We don't accept that ISPs should be responsible for paying for all the value that our customers acquire as a result of using the network. There are already very effective procedures in place which rights holders can use to pursue cases of copyright infringement and ISPs co-operate fully with such investigations, but beyond that, it's nothing to do with the ISP. There is no need for an ISP tax, and it is absolutely inappropriate that the ISP industry should be forced to seek a licence from the music industry in order to operate."

Suw Charman, executive director of the Open Rights Group, said: "This proposal is ill-conceived and grasping. Suggesting that ISPs and telcos should be responsible for the content transferred by their users illustrates how poorly the music industry understand the net, the right to privacy, and the ISPs' duties to their customers under the Data Protection Act."

According to Truman, the music industry will present a paper on its proposal to Andrew Gowers who was tasked last year by HM Treasury to lead an independent review of intellectual property rights in the UK. A public consultation ran between February and April.

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