Songwriters originally viewed radio exactly the way the music industry today views KaZaA users — as pirates. After trying to sue radio out of existence, the songwriters ultimately got together to form ASCAP (and later BMI and SESAC). Radio stations interested in broadcasting music stepped up, paid a fee, and in return got to play whatever music they liked, using whatever equipment worked best. Today, the performing-rights societies ASCAP and BMI collect money and pay out millions annually to their artists. Even though these collecting societies get a fair bit of criticism, there's no question that the system that has evolved for radio is preferable to one based on trying to sue radio out of existence one broadcaster at a time.
Copyright lawyers call this voluntary collective licensing. The same could happen today for file sharing: Copyright holders could get together to offer their music in an easy-to-pay, all-you-can-eat set. We could get there without the need for changes to copyright law and with minimal government intervention.
The Money: Collecting It
Starting with just the 60 million Americans who have been using file-sharing software, $5 a month would net over $3 billion of pure profit annually to the music industry — no CDs to ship, no online retailers to cut in on the deal, no payola to radio conglomerates, no percentage to KaZaA or anyone else. Best of all, it's an evergreen revenue stream — money that just keeps coming, during good times and bad, so long as fans want digital music online. The pie grows with the growth of music sharing on the Internet, instead of shrinking. The total annual gross revenues of the music industry today are estimated at $11 billion. But that's gross revenues. A collective licensing regime for file-sharing can promise $3 billion in annual profits to the record labels — more than they've ever made.
How do we get filesharers to pay up? That's where the market comes in — those who today are under legal threat will have ample incentive to opt for a simple $5 per month fee. There should be as many mechanisms for payment as the market will support. Some fans could buy it directly through a website (after all, this was what the RIAA had in mind with its "amnesty" program). ISPs could bundle the fee into their price of their broadband services for customers who are interested in music downloading. After all, ISPs would love to be able to advertise a broadband package that includes "downloads of all the music you want." Universities could make it part of the cost of providing network services to students. P2P file-sharing software vendors could bundle the fee into a subscription model for their software, which would neatly remove the cloud of legal uncertainty that has inhibited investment in the P2P software field.
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