MediaScrums

Ars Technica wrote yesterday that the Isle of Man‘s investment minister Ron Berry had announced that the Isle of Man would introduce a Blanket License.

“At the end of the day, we’re not going to stop piracy,” said Berry. “Embrace it… Had the music industry embraced [the original Napster], we’d have a very different medium today.”

Under the terms of the license, every citizen of the island, which allegedly has a 100% broadband penetration, would be allowed to legally engage in file sharing. Interestingly, the model seems to be supported by the recording industry as the statements by BPI’s Geoff Taylor indicate. Given the less than enthusiastic reaction of the industry to the blanket license model in the recent year, who seemed to focus on again alienating customers with “Three Strikes” or “Graduate Response” models of deterrence, this could mark a paradigm shift. If the trial at the Isle of Man will be successful, this could be the beginning of a new era, in which consumer and industry interests are no longer adverse, but aligned by a smart business model.

While Ars Technica already sees “Grandma (…) browse BitTorrent trackers for songs of unknown quality (and with perhaps limited metadata and album art)” while still paying for the license, I have argued elsewhere that the introduction of a blanket license will inspire the creation of a new generation of new music services, which will compete on convenience and customer satisfaction rather than on access to the catalogues of the major record labels. The blanket license does not mean the end of iTunes&Co, but it means that having a contract with a major does no longer protect your turf from competition.

So, good news for customers, including Grandma – and by the way, who sold that broadband Internet connection to her anyway?

By Wolf

British record labels seem to miss yet another chance to regain leadership in shaping music distribution on the Internet: Instead of announcing the launch of an innovative, convenient, legal file-sharing platform, today the national news broke that the music industry, represented by their lobby organisation BPI, had agreed with 6 ISPs serving the UK on a process of distributing “warning” letters for illegal file sharing to their customers. Although the controversial termination of the Internet connection as a final threat, as discussed in previous proposals and planned to become effective in France later this year, has been replaced by the threat of “slowing” the connection, the measures focus on deterring customers from using their Internet connection to use for file sharing.

A recent survey by the publishers and artists association British Music Rights and the University of Hertfordshire has shown how much students value their music, but also how rampant file sharing is in these age groups. Instead of exploring models to capture the social value of file sharing, the music industry continues to believe that they will be able to bring the Genie back into the bottle. These alternatives already exist and do not necessarily require government involvement. Companies like Playlouder.com in the UK or Noank Media in the US have developed the models and technology required to collect content fees, measure the amount of file-sharing traffic, and distribute the fees to the copyright holders. Instead of preventing file sharing, they allow ISPs and copyright owners to participate and benefit from the distribution of digital content by consumers over the Internet.

BPI has claimed for a long time that the rampant use of illegal file sharing networks prevented the creation of legal alternatives. Their approach to solve this hen-and-egg problem seems to focus on using the stick first and rely on the magic of the market to bring about the alternatives. If their logic was right, consumers should expect to see legal alternatives emerging soon as the stick is out now. Until then, I will feel inclined to believe that the industry underestimates the social significance of file sharing and will continue to develop models which fail to meet the demands of their (potential) customers.