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Cybernaut

The $5 store

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The idea got rolling in the U.S. in February and recently jumped the border into Canada with the full support of the Songwriters Association of Canada: charge all broadband internet users a flat monthly fee of $5 and legalize the trade of music through peer to peer (P2P) services. Internet Service Providers (ISPs), like Telus and Shaw in Whistler, would track the songs that are being traded and make payments to recording companies based on traffic statistics.

The music industry has tried going after the downloaders directly, but there are just too many people out there using P2P programs, and each case costs too much in time and resources to prosecute. They’ve tried to lobby governments to create new laws that would make ISPs responsible for all illegal downloading, but governments have been unwilling to shoot the messenger. The industry has even tried to embed CDs with digital rights management software that prevents buyers from copying songs on their computers, but that turned into a fiasco when the software functioned like a virus.

But while other approaches have failed, I really believe the $5 plan is a good idea with a few negative points. The most obvious is that the tax would be applied across the board, and many people who don’t currently steal music would end up paying for those that do. Obviously the ISPs can snoop on their customers and apply the charge when they detect P2P activity, but that complicates the situation — it’s far easier just to apply the charge with no exceptions, and encourage everyone to trade music.

Another negative is the impact on Apple shareholders by killing the iTunes Music Store, although judging by the speed in which the company is moving into movies and television I think Apple already sees the writing on the wall.

The $5 fee also props up a failing industry that would rather litigate than innovate, and that is in large part responsible for its own financial woes because of its unwillingness to change and embrace technology. At a time when Trent Reznor of Nine Inch Nails and Radiohead are showing the way, bypassing the music industry to release music directly to the web, the fee would secure the music industry’s future at a time when it seems destined to fail.

Although $5 seems like a bargain to me — I used to spend $30 to $50 a month on music when we had a CD store in town — it adds up. As of last July, roughly 53 per cent of 116 million American households were broadband subscribers, which means roughly 61 million homes would be on the hook for the $5 charge. That’s more than $305 million in revenue per month, and $3.66 billion per year.

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