Alternative Compensation Systems

02004-10-26 | Uncategorized | 2 comments

The owner of the copyright in an audio or video recording who wished to be compensated when it was used by others would register it with the Copyright Office and would receive, in return, a unique file name, which then would be used to track its distribution, consumption, and modification. The government would raise the money necessary to compensate copyright owners through a tax – most likely, a tax on the devices and services that consumers use to gain access to digital entertainment. Using techniques pioneered by television rating services and performing rights organizations, a government agency would estimate the frequency with which each song and film was listened to or watched. The tax revenues would then be distributed to copyright owners in proportion to the rates with which their registered works were being consumed. Once this alternative regime were in place, copyright law would be reformed to eliminate most of the current prohibitions on the unauthorized reproduction and use of published recorded music and films. The social advantages of such a system, we will see, would be large: consumer convenience; radical expansion of the set of creators who could earn a livelihood from making their work available directly to the public; reduced transaction costs and associated cost savings; elimination of the economic inefficiency and social harms that result when intellectual products are priced above the costs of replicating them; reversal of the concentration of the entertainment industries; and a boost to consumer creativity caused by the abandonment of encryption. The system would certainly not be perfect. Some artists would try to manipulate it to their advantage, it would cause some distortions in consumer behavior, and the officials who administer it might abuse their power. But, on balance, it is the most promising solution [to the intensifying crisis in the entertainment industry].

Use the title-link to read more about this Alternative Compensation concept, especially how the Office is to monitor what consumers actually listen to and watch.

Note: the RIAA has co-developed ISRC codes, which are already embedded into many songs, and which basically already do what is mentioned above. They are unique to each song and will be used to track digital performances for the performing rights organizations, BMI, Ascap etc.

Is this the solution we have been waiting for? I don’t see it. But it raises an interesting point of view and is something we need to add to the stew.


  1. Flavio

    This is obviously a very creative and somewhat of an idealistic concept, but I agree it is probably not the solution. I even see another flaw: let’s say this concept gets implemented and the tax deal is in place I find it extremely difficult to track the frequency in which listeners/ watchers outside the USA open a particular file. It would take several years to ensure/ enforce through other government agencies or organizations abroad do as a great of a job protecting the interest of copyrights owners. Than I can also see big bands or big public figures receiving better control because their stakes are higher – the little guy that just released his/ her first work and is little known throughout the world may not receive as good control. Thirdly, the word tax is very often associated with government/ and laws due to their nature requiring enforcement – I would rather have a system or a concept that would keep the government alone. But hey, the good news is that people are thinking about the issue and sooner or later the right concept will come.

  2. Victor

    I’m not sure I fully understand the system being proposed, but it sounds to me like everyone would essentially be supporting artists that they don’t necessarily listen to. Here we go again with the issue of trusting the government to equitably distribute money!

    So, the problem is that artists and distributors are losing profits because the current system is leaky. This solution to me sounds like, “Let’s stop the leaks by centralizing the distribution of music – and the mechanism of distribution will be through the government.” Surely consumers will prefer their music to stay in the open market – so they will gravitate towards the artists who are there.

    Well, maybe I don’t understand this proposed system – but so far I’m inclined to believe there must be a better solution.


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