A Very Taxing Situation

Ted Cohen, TAG Strategic; chairman, MidemNet Visionary Chair Committee

As you may have read in this month’s WIRED, the recorded side of the music business is continuing its downward spiral. Doug Morris, (Universal Music Group) UMG’s head honcho, feels it’s time to extract some value from everyone who is exploiting music to enhance their own business. Whether it’s Apple selling hundreds of millions of iPods or Verizon signing up millions of broadband customers, it’s time this free ride on music’s back come to an end. At least Doug Morris thinks that’s the case, and maybe he’s right.

There’s a lot of discussion these days about the idea of a levy/tax/tariff on ISPs to compensate copyright holders for the unlicensed transport of music, film and television content across the Internet and mobile carriers. Whether or not these proposed revenues would offset the 15-20% drop in physical sales this past year, it is an interesting concept to consider.

The labels and the studios feel that the ISPs have turned a blind eye to piracy over their networks, and, in some cases, have actually promoted the practice. Ads from many major services have touted, “sign up now for our high-speed broadband access and download thousands of songs a month!” Now, at $.99 each for a legal track from, say, iTunes, that could be a pretty hefty MasterCard bill each month.

So, shouldn’t the carriers and the ISPs let the content owners share in the upside? Would $2-5 a month for unlimited music access be too much for consumers to pay? Wouldn’t they welcome the unfettered opening of the tap? I, for one, think it might be one of many worthwhile solutions. But, as they say, the devil is in the details. How is this windfall distributed: on a granular use basis or via some type of sophisticated sampling construct? Each of these approaches has both its benefits and drawbacks, each would mobilize detractors. And, in this all-you-can-eat scenario, what is the value-added upsell?

It’s very possible that it’s all about monetising the experience: recommendation, playlists, filters, context and mood, all could be major profit centers. It’s early days for iLike, MOG, iMeem, Pandora, LastFM and others, but the promise is definitely there.

I continue to look for your ideas for panel topics and panelists. It’s your panel, let’s collaborate.

Ted Cohen hosts MidemNet's First user-generated conference session January 27; submit your ideas by commenting on this or Cohen's previous post.