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Lord Mandelson, The UK Digital Economy Bill Is Deeply Flawed -- I Challenge You to a Public Debate

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As the person who coined the term "The Digital Economy" in my 1995 book of that title, I do feel obliged to comment on the UK government's Digital Economy Bill, which was recently unveiled. The bill is fundamentally flawed because it punishes Internet users who share songs. File-sharing a classic example of a disruptive technology, and we've got to get over this mindset that peer-to-peer sharing of music is stealing. The government should help the recording industry find a new business model that encourages music fans to enjoy a wide variety of music and compensates artists fairly for their talents. Sadly, obsession with control, piracy, and proprietary standards on the part of large industry players will only serve to further alienate and anger music listeners. And not just lovers of music. This Bill will hurt musicians, songwriters, the UK economy and it not even in the interest of the record labels.

There are many alternatives to ensure that everyone gets fairly compensated for their work. One solution is to stop trying to sell songs at a set price. The music industry needs to think Wikinomics. Music should be a service, not a product. Here's one scenario: instead of purchasing tunes, you would pay a small monthly fee for access to all the songs in the world -- say $5 per month. Recordings would be streamed to you when you want to any appliance -- your laptop, mobile device, car, home stereo, via the Internet. Call it Everywhere Internet Audio. Every customer has the Me Channel and could slice and dice the massive musical database anyway you like -- by artist, by genre, by year, by songwriter, by popularity, and so on. The Me Channel would know what you like, based on what you've chosen in the past. You could even ask your Everywhere Internet Audio service to suggest new artists that resemble your known favorites or to create a new playlist called "Mick Jagger's current favorites."

Musicians, songwriters and even their labels would be compensated through systems that track their popularity. All the music would be pooled and using actuarial economics the total pie would be divided up according to the number of times the songs of a given artist were streamed. Technologies and companies already exist that can do this.

Everywhere Internet Audio would make the problem of copyright protection vanish. No one would ever 'steal' music. Why would you take possession of a song when you can listen to any song at any time on any device?

Other approaches could solve the industry's problem, but they also require Wikinomics thinking -- experimentation and a spirit of collaboration -- traits the labels have failed to demonstrate. Intellectual Property Scholars William Fisher and Neil Netanel argue that peer-to-peer music sites should be allowed to distribute music for free. But the providers of such services, including Internet service Providers (ISPs) and device manufacturers would be charged a fee. Like Everywhere Internet Audio artists would be compensated according to the popularity of downloads.

Alternatively, the Electronic Frontier Foundation has proposed a "voluntary collective license" that would give the purchaser immunity from prosecution for non-commercial file sharing. Again the fees from the license would be pooled and divvied out to artists.

Internet activist Cory Doctorow says approaches like these are better than streaming. "I'm not enthusiastic about music being streamed to me over a corrupt, expensive, unreliable 3G network with no roaming capability, heavy tracking and censorship. It's better to simply collect money for the MP3s that are traded" he says.

Fresh thinking like this is supported by a growing number of musicians. The Songwriters Association of Canada is proposing an end-user license fee - something President Eddie Schwartz says is supported by vast majority of user lovers. The fee, estimated at $4 dollars a month for access to the world of recorded music on demand, would be administered by the ISPs. This is not some kind of coercive socialistic tax, as some might suggest. Consumers, creators and rights owners can opt out.

Says Schwartz: "This proposal would do more than eliminate the problem of so-called 'stealing of music.' It would enable musicians, songwriters and their agents to be fairly compensated for their work" he says. "With more artists able to make a living, there would be a wonderful explosion of creativity and everyone would be winners."

But rather than build bold new approaches for digital entertainment, the UK legislation shows that the industry persists in a business model that turns their customers into criminals. And the industry that brought us the Beatles is now hated by its customers and is collapsing.
Lord Mandelson, I'm headed to the UK this week. I challenge you to a public debate on the BBC.

Don Tapscott is the author of 13 books about new technolgies in business and society, most recently Grown Up Digital. He is Chair of the nGenera Insight think tank, and an Adjunct Professor at the Rotman School of Management, University of Toronto. Twitter @dtapscott.