Adam and Fred duke it out over on the PFF blog, and I have to admit that my previous criticism was a bit hasty. I skimmed the report, but didn’t read the conclusion very carefully. He proposes a plausible alternative business model for the labels wherein consumers pay a flat fee for the right to make unlimited peer-to-peer downloads of copyrighted music. This is, at a minimum, a serious proposal worth discussing, and I can see some appeal in it. Notably, it does give people a way to “go legit” without being forced to put up with irritating and pointless DRM restrictions.
I do, however, think Adam continues to have a good point: what to do with the people who don’t join this scheme either? Fred seems to think that the number of such people will be trivial and so enforcing the rules against them won’t be very difficult. I’m not so sure. Even $5/month is a non-trivial amount of money to some people, and lots of people are lazy. I think a lot of people might continue to use P2P without paying the fee, and you’d be left in the same situation you’re in now: no way to enforce the rules except to sue them.
Secondly, is $5/month going to be enough to come anywhere close to replacing music industry revenues? The music industry currently gets about $13 billion in revenues. They’d be saving some money by not having to ship plastic discs around, so let’s round that down to $10 billion. To replace that revenue with $5/month subscriptions, it would need 150,000,000 subscribers. Is that reasonable? I honestly don’t know. If you combine the populations of the U.S., the EU, and Japan, there certainly are enough people in the industrialized world to support such a scheme, but I think the music industry would find it extremely difficult to corall enough of them into signing up.
After all, if I were a consumer in Fred’s future, what I would do is pay my subscription, download all the music I wanted in a month, and then cancel the subscription the following month. I might do that every 6 months or so. That would mean instead of adding $60/year to the industry’s coffers, I’d be adding about $10. To break even at that price you’d need about a billion subscribers, which is probably impossible, at least until China and India join the ranks of the wealthy nations.
Moreover, this kind of scheme seems like it would be extraordinarily difficult to enforce. If legitimate P2P services require users to log in with an RIAA-approved password, what’s to stop a dozen friends from sharing the same password? If the P2P services don’t require logging in, how will anyone figure out which users are legit?
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