Australia’s Digital Economy: Future Directions

I wrote recently about a report released by the Australian Government called: Australia’s Digital Economy: Future Directions and how the Government is considering the positive and negative impacts of three strikes policies. I wrote to Senator Conroy this week outlining the nature and aims of these proposals, provided a summary of the current state of three strikes programs around the world, outlined the reasons as to why this is a counter productive and unnecessary approach and discussed the most appropriate alternative that should be employed instead – a voluntary or compulsory licensing scheme.

Here’s what I wrote about viable alternatives:

The fact remains that there are far better alternatives available to the government and the music industry to ensure that financial rewards remain for the production of content. These include voluntary collective licensing or the blanket licensing of music. Differing primarily in whether consumers and copyright holders are forced to participate, these schemes enable users to pay a flat monthly fee for the unlimited access to music, use technology to track the downloading of songs and use the collected funds to compensate artists for the use of their works. Whilst requiring some development to be introduced, such a scheme would enable the unrestricted exploration of culture, increase competition in the creative sector by providing an even playing field that does not operate in favour of strong media corporations and address all of the concerns raised above.

Proposals have been developed in the United States by the likes of Professor Fisher, Professor Netanel and the Electronic Frontiers Foundations. At present in the United States, Choruss, a corporation set up with connections to Warner Music, are trialling licensing schemes of this nature in colleges. Trails have also been undertaken by Professor Fisher at Harvard University in other countries.

There is real potential to implement a licensing system in Australia. ABS data as at December 2008 states that there are 6,680,000 Australian non dial up subscribers. Applying a monthly tax to these subscribers of $5.31 per month would recoup the entire sales of the Australian Recording Industry Association for 2008 - $425,638,008. Over a 12month period each non dial up connection would go up $63.72. While on the face of it this appears to be a fairly minor increase, other options are also available - this simply represents the maximum cost placed on the maximum number of people.

A broadband levy or licence could also be scaled to accommodate only the loss of income to the record industry. Taking the peak of 2001 where total sales were $647,620,000 and relating this to the total sales for 2008 of $425,638,008 shows a total drop in sales of $221,981,992. To simply recoup the difference, broadband subscriptions would rise by only $2.77 per month. The levy could be adjusted annually to accommodate the changes in lost income and the number of subscribers. As the number of broadband subscribers increases the monthly levy would be reduced.

Another option would be to spread the levy to include dial up services as well and implement a tiered structure. In this scenario, dial up services would increase by as little as $1 per month, reducing the impact on broadband subscribers. While all internet users would be supporting the music industry, those with the faster connections and greater capacity to download music would pay more of the costs.