Nothing Else is Working! Time for a Tax

So, let’s look at what the music industry has done over the past decade to battle the emergence of P2P and declining CD sales:

1. Essentially killed Napster rather than leveraging it

2. Launched a nasty legal war against consumers

3. Embraced technology such as DRM that consumers totally dislike

4. Gotten into bed with Apple, only to get pissed off once they realized Steve Jobs was taking over the business

Now, Warner Brothers CEO Edgar Bronfman Jr. has decided to take another controversial route: he’s hired industry executive Jim Griffin to lead a lobby charge for a – wait for it – music tax that would applied to ISP bills, and possibly raise $20-billion.

It’s simple; it’s lucrative and, darn shootin’, it’s going to save the music industry from dire straits (as opposed to Mark Knopfler’s Dire Straits). At least, it will be all these things in theory.

But as Mike Arrington enthusiastically rants about, it’s also “crazy” and “dangerously stupid”. It’s a move that smacks of desperation because the music industry has blown the last decade by trying to hang on to a business model that is antiquated and ill-equipped for new digital era in which we work, live and play.

For whatever reason, the music industry still believes consumers should pay for music even though consumers have been telling them for years, they’re only willing to pay a little bit or nothing at all. Look at how P2P services are still thriving, and how Russia’s AllofMP3.com was doing really well by selling albums for about $3 as opposed to $20.

So where is the money in music if consumers don’t want to pay for it? How about live performances – a neat concept dating back several centuries in which people pay for the privilege of becoming to see a musician(s). The amazing thing amid the glut of free music, consumers are happy to pay a premium price to see major performers. Hell, they’re paying $250 a pop to see The Police.

There’s also merchandise sales, access to special Webcasts, special boxed sets (Trent Reznor did pretty well recent by selling 2,500 copies of a $300 “ultimate-deluxe edition” while offering free downloads of nine songs from Ghosts I-IV), and other things that will require some creativity and risks.

In other words, there is life beyond selling CDs or digital tracks.

My friend, Mathew Ingram, makes a great point that if the music industry manages to somehow push through a music tax, how long would it be before the movie and television industries starting to look at a tax. And what about newspapers, magazines and photographers?

At the end of the day, I’m not at all surprised the music industry is exploring a tax. They missed the digital boat as it sailed away over the horizon. Sadly, they’re trying to force it to come back but using a tax but this approach is stupid, outdated and provides more evidence the music industry just don’t get it.