The old idea of a cultural flatrate or an internet levy has popped up again. This idea basically says “tax the net heavily – maybe €10 per user and month – and give that money to creators via the legacy copyright industries; the more somebody’s work is shared, the more money they get”. This idea will not work. Here’s why it will not work.
Let’s ignore for a moment that one-third of the material shared online is pornography, and that it would be politically impossible to subsidize the porn production industry with the several billion euros a year that would result from such a scheme.
Let’s ignore for a moment the insanity of giving the copyright industry a guaranteed source of income, regardless of their utter business failures, where they can take another 40% in “administrative costs” to pay for their zillions of lobbyists.
Let’s ignore for a moment the fact that something like 99.9% of the culture on the net didn’t fit in the previous remuneration scheme, and that if all creators are to be rewarded according to share, then there will be thousands of times more creators to be thus remunerated than there ever were in the legacy copyright industry. (The writers of this very blog, for a tangible example.)
Let’s ignore the legislative quality control that fails to answer the basic who is going to be compensated for what? question.
Let’s ignore the impossibility of measuring what is shared without invasive surveillance that is utterly incompatible with fundamental rights.
In fact, let’s assume that all of these problems can be solved, or already have been solved.
Let’s assume, then, that there is a fixed pie to be divided among creators, divided according to popularity, as measured by how much they are shared on the net. This is the cultural flatrate concept. What would happen?
This is where it gets convenient, as we already know for a fact what would happen.
We know how the events would play out, as exactly this has been tried over ten years ago, and it failed in the most predictable way possible. It was tried by the site mp3.com, which was so much a forerunner and vanguard that it was promptly sued out of existence by the copyright industry, bought out, and closed down. Only in recent years has its business model of cloud music storage been established as valid, but by new players such as Apple, Google, and Cablevision.
Here’s what they did. They had this pay for play business, where the more an artist was played and shared from mp3.com, the more money they got from mp3.com out of a revenue sharing pool. The band 303 Infinity was a favorite that rose to prominence through mp3.com, for instance. This is the exact model of the cultural flatrate idea.
So what happened?
As described on Wikipedia (my highlighting):
For a time, it looked like this continent of new artists would indeed change the music business, but several factors came about to stall the momentum of mp3.com. The pay-for-play experiment that rewarded artists monetarily for their downloads was sabotaged by the artists themselves. Honest acts were robbed of their intended share by enterprising gamers who exploited the system with programmed play bots and download gangs (posses) who would play long songlists often with the volume turned down to run up artificial numbers that equated into big bucks. Mp3.com tried and threw numerous cheaters off the site but they could not control the gaming…
This is the most predictable development ever. The second somebody gets paid from a common pool if a file is shared or downloaded, that file will get shared over and over again way beyond what would have happened otherwise, just to rack up artificial numbers that will translate into financial reward.
This is a school textbook example of how you can’t measure something for money without changing the thing measured completely in the process.
This is why cultural flatrate will never work. Please stop pretending it’s a good idea. It’s a terrible idea, as I have described previously, for many other reasons as well.