Making up for economic losses caused by the
Internet
23 January 2003
"We will hold ISPs more accountable,"
said Hillary Rosen, chairman and CEO the
Recording Industry Association of America
(RIAA), in her keynote speech at
the Midem music conference on the French
Riviera."
[...]
"Rosen suggested one possible scenario
for recouping lost sales from online
piracy would be to impose a type of
fee on
ISPs that could be passed on to
their customers who frequent these file-swapping
services."
[...]1
The music industry argues that it loses money
because of new technologies. That they would
make more money except that certain things
exist - like home audio recording machines
- and now, the Internet. They want to tax
these things, to make up for the theoretical
difference between actual sales and the sales that they MIGHT have made if these various things didn't
exist.
The music industry started this with
cassette
tapes. Every blank cassette tape, video
tape,
cassette recorder, and VCR sold pays
a fee
to the music industry.2 Similar "fees" (which are really
private taxes) were later mandated
for digital
audio tape and recordable compact discs.3 Compact discs even have a digital key embedded
in each disc to allow tracking - the
United
States has threatened a trade war with
the
Ukraine over the latter's' omission
of this
keying in a manufacturing plant located
in
the Ukraine.4
So let's extend the reasoning. The precedent
is clear; those who can reasonably demonstrate
that they have lost potential sales because
of a new technology can impose a tax on these new affordances.
Who has lost sales - who has been economically
hurt - by the Internet?
Well, catalog sales. If you can buy something
over the Internet you obviously didn't buy
it from a glossy bulk mail catalog delivered
to your door. So every catalog operator should
get a fee from ISPs, based on an estimate
of lost catalog sales - which Jupiter estimated
to be 6% in the fall of 20015. Surely it is higher, now.
Of course, we should discount part
of that
fee for operators that have started
their
own online e-commerce operations; Victoria's
Secret for example. Maybe they should
only
get 50%. I'm sure lobbyists can help
lawmakers
figure out the correct vigorish, err,
percentage.
Who else has been hurt by the Internet?
Television. Americans are watching
less television
- for the first time the number of
hours
of television viewed per day has declined
- in lock step with the amount of time
people
spend surfing the Internet. In 2001
the average
Internet user watched 4.5 hours per
week
less television than non-users.6
So clearly television stations, networks,
and advertisers have all been hurt by the
Internet. People aren't watching as many
commercials (let's not even start on Tivo and Replay and how they enable skipping
commercials in playback...) - and something must be done.
Every television station, network,
and indeed
every corporation that places a television
ad should get a fee from ISPs, compensating
them for the lost eyeballs.
Let's proceed. Who else?
Hmm. Newspapers... people are reading news
and classified ads online (newspaper classified
ad readership has declined by 11%)7, and getting sources that aren't owned by
the local newspaper monopoly. Gotta recompense
for THAT. Come to think of it, many of those
media comglomerates own local television,
too - so they validly can double-dip on an
Internet tax. Kinda cool, don't you think?
Better include radio stations, too.
So it seems there are a lot of people who are hurting from the Internet.
Well, not people, exactly, but corporations.
Fictive persons.
Are there any people who are hurt?
I think there is one class of people hurt... politicians.
You see, now the public has access to the
Internet, countering the concentration of
the media - what does this mean, in practice?
That people can more readily organize - so that the choices of who you donate
political campaign money to become
more than
which of two candidates you want to
vote against - just as television watching declines when
your choice of leisure time is no longer
channel flipping to what is the least boring
channel... Now everyone can talk to other
people in chat rooms organized around their
own interests - everyone can search the Web
to find organizations of affiliation - some
of them exceedingly narrow - people can affiliate
with small demographics spread across states
and continents and the entire world in ways never before possible.
It seems obvious that politicians from
the
two major parties just aren't going
to get
the kind of donations they are used
to.
So they should pass an Internet tax that
goes to political parties... of course, only
to the parties that got at least 10% of the
vote in the last election (thus cutting out
the Green Party)...
(2), (3) "Aug 1991 Senator DeConcini and Representatives
Brooks and Hughes introduce the Audio
Home
Recording Act guaranteeing right to
tape,
mandating a serial copy management
system,
and requiring manufacturers of digital
audio
equipment and media to pay a small
royalty
on their products."
[...]
"Oct 1992 Congress passes landmark
Audio
Home Recording Act. President Bush
signs
the bill into law."
Quoted from "Home Recording Rights Coalition:
Chronology", from www.hrrc.org: <http://www.hrrc.org/history/chronology.asp>
(5) "Catalog companies that have yet to
go online may have lost 6 percent of their
business and seen critical market share erode,
a Jupiter analyst said", from www.ecommercetimes.com: <http://www.ecommercetimes.com/perl/story/14274.html>
Making up for Losses caused by the Internet