Compulsory licensing has been a hot topic lately. On Monday, The Daily Princetonian ran a piece by Fred von Lohmann, a lawyer with the EFF, in which he advocated compulsory licensing as a solution to file sharing. In response, Alexander Payne wrote, "Compulsory licensing makes me cringe." Derek Slater responded with his "facts and myths of compulsory licensing." Payne responded to the comments he's received, while Ren Bucholz jumped in support of Derek. Today, Slashdot even has an interview with Edward Felten in which he mentions compulsory licensing in passing. (Thanks to Derek for many of these links.)
I mentioned compulsory licensing last week, in a slightly different context. I've been intending to make a more in depth post about the subject, but I've been putting it off, for one simple reason: compulsory licensing is complicated. I didn't want to say anything about it until I studied it and understood its history and its current functioning. Given that the subject has taken off without me, I'm going to go ahead and express my current thoughts anyway.
The music industry has a problem. The industry depends on sales of CDs to make money, but CD sales are falling. At the same time, file sharing, in which one computer user makes computer files, often music files, available to any other computer users to copy, is rising. Music publishers fear that consumers are downloading songs they like rather than purchasing them, and they are fighting file sharing with information campaigns, legislation, lawsuits, and technical measures. In his article, Fred von Lohmann observes the harm this fight is doing to the music industry, the computer industry, and education. He proposes that a solution is compulsory licensing. Under his proposal, ISPs, including universities, would pay a fixed fee per user to a fund that would be distributed to publishers and artists. He notes that compulsory licensing is already used in the music industry and argues that universities could be a testing ground for various compulsory licensing approaches.
Everyone else has started discussing the merits of that approach. My response is to urge everyone to move slowly and cautiously and not be too quick to judge the merits of compulsory licensing. My response is to be skeptical of compulsory licensing. I am doubtful that a solution that satisfies the music industry while not harming the Internet can be found.
I'm going to start by looking at the music industry in an ideal world. First, consider music distribution when distribution can only occur in a physical medium. A musician records a song. If the musician wants to distribute the song, many copies must be produced and then shipped to customers who are interested in the musician's music. Intermediaries arise naturally. The most important of these is the record label, which takes responsibility for manufacturing and distributing the recordings of many artists. The record label sells the recordings and distributes some of its revenues back to the artists.
On the other extreme, consider music distribution when distribution is automatic and there is essentially no distribution medium. A musician records a song. If a customer wants a song, they get the song automatically. The functions of manufacturing and distributing are unnecessary. The musician can sell the recordings and receive the revenues directly.
In the real world, we're somewhere in between. CDs are the dominant physical medium. Prior to the development of computers, radio and cassette tape were the mechanism of automatic distribution. Computer technology has greatly simplified automatic distribution. Effectively, we've shifted from resembling the first ideal to resembling the second. This threatens to make the primary function of record labels obsolete.
Reflexively, my idealistic response is to say, "too bad for the record companies." As a practical matter, that won't work. The record companies will fight to ensure their survival and their existing business practices. Beyond that, I like CDs. If the Internet became the only medium of music distribution, many customers would feel a loss.
So here's the problem. The music industry has developed a business model that's in danger of being made obsolete. Compulsory licensing does not change that. The most it does is say, "In exchange for destroying your business, here's some cash."
The music industry is doing great harm by fighting technology. Obviously, a solution that benefits both the music industry and the computer industry while preserving customers' rights would be a great thing. I'm doubtful that compulsory licensing actually solves the right problem, but I'm curious about what problems led to compulsory licensing in the past. I think the thing to do now is to read up on the origins of compulsory licensing.