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+<!--#include virtual="/server/header.html" -->
+<!-- Parent-Version: 1.77 -->
+
+<title>The Right Way to Tax DAT - GNU Project - Free Software Foundation</title>
+
+<!--#include virtual="/philosophy/po/dat.translist" -->
+<!--#include virtual="/server/banner.html" -->
+
+<h2>The Right Way to Tax DAT</h2>
+
+<p>by <a href="http://www.stallman.org/"><strong>Richard
+Stallman</strong></a></p>
+
+<p><em>[This article does not concern software, not directly. It
+concerns a parallel issue about sharing copies of music.]</em></p>
+
+<p><em>[The article was first published in Wired magazine in 1992; the
+text has not been changed; instead, I have added notes, in square
+brackets and with italics or other emphasis.]</em></p>
+
+<p><em>[The original article addressed the (then hypothetical) issue
+of sharing music using (then just appearing) digital audio tape
+recorders, since that is what the proposed US tax law was supposed to
+address. Nowadays it could be applied to Internet file
+sharing.]</em></p>
+
+<p><em>[Another approach developed by the late Francis Muguet with my
+assistance, which includes some of these ideas, is called
+the Global Patronage
+system (in French, M&eacute;c&eacute;nat Global). I support both
+solutions; that is to say, I favor adopting either one.]</em></p>
+
+<p>Record company magnates don't like the digital audio tape recorder
+(<abbr title="Digital Audio Tape">DAT</abbr>), which can make
+perfect copies of musical recordings. They fear that customers will
+copy music themselves, and stop buying prerecorded music.</p>
+
+<p>Threatening lawsuits, they have obtained from the manufacturers of
+DATs an agreement to pay a fee for each DAT unit and each DAT tape
+sold to consumers. This fee is to be divided among various
+participants in the music business: musicians, composers, music
+publishers and record companies. In addition, DAT manufacturers have
+agreed to cripple DAT units so that they cannot make a copy of a copy
+of a prerecorded piece.</p>
+
+<p>Now the record companies have asked Congress to enact a law turning
+this fee into a tax and prohibiting manufacture of DAT tapedecks that
+function without imposed limitations.</p>
+
+<p>The stated purpose of the tax is to &ldquo;compensate&rdquo;
+musicians for copying done by individuals using DATs. However, 57
+percent of the funds collected would go to record companies and music
+publishers&mdash;leaving less than half to the people who participate
+in the creative process. Most of these remaining funds would go to
+musical superstars, and thus would do little to encourage musical
+creativity. Meanwhile, DAT users would be unable to make full use of
+the power of DAT technology.</p>
+
+<p>Here is a proposal for a different system for taxing DATs and DAT
+tape&mdash;one designed to support music rather than cater to vested
+interests.</p>
+
+<ul>
+<li>Collect funds with a tax on DAT machines and DAT tapes, as the
+current proposal provides.</li>
+<li>Use a survey system to measure the extent of copying of each
+musical piece.</li>
+<li>Distribute these funds entirely to the people who create
+music.</li>
+<li>Adjust each contributor's share so that it increases more slowly
+per copy as it gets larger. This spreads the funds more widely to
+support a larger number of musicians adequately.</li>
+<li>Make no restrictions on the functioning of DATs.</li>
+</ul>
+
+<h3>What is the purpose of copyright?</h3>
+
+<p>The record industry presents its proposal as a way to
+&ldquo;compensate&rdquo; musicians, assuming that they are entitled to
+be paid for any copy made. Many Americans believe that copyright law
+reflects a natural right of authors or musicians&mdash;that these are
+entitled to special consideration from public policy. However, any
+lawyer specializing in the field knows this is a misunderstanding, a
+view rejected by the American legal system.</p>
+
+<p>The stated purpose of copyright, given in the U.S. Constitution, is
+to &ldquo;promote the progress of science and the useful arts&rdquo;.
+Progress in music means new and varied music for the public to enjoy:
+copyright is supposed to promote a public good, not a private one.</p>
+
+<p>Yet copyright is often thought of as a natural right by laymen and
+politicians, which often leads to wrong decisions about copyright
+policy. Even courts, defining the details of the copyright system,
+often let this thought creep back implicitly even though it is
+supposed to be excluded. This is a conceptual error because it
+mistakes a means (copyright) to a larger end (progress) for an end in
+itself.</p>
+
+<p>Promoting progress in the arts does not inherently justify the idea
+that authors are entitled to any particular sort of copyright, or even
+that copyright should exist at all. Copyright is justified if the
+benefits of progress exceeds the burden that copyright imposes on
+everyone except the copyright holder.</p>
+
+<p>How do we make this cost/benefit comparison? It depends partly on
+facts (how does a particular law affect musical activity and music
+users) and partly on our value judgements about those results.</p>
+
+<p>Let's assume that it is worth paying a DAT tax if the result is a
+significant increase in musical activity, and investigate how we
+should arrange the details of this tax in order to maximize the
+benefit. But first, let's review basic principles and facts which
+have a bearing on the inquiry.</p>
+
+<h3>Diminishing returns</h3>
+
+<p>The law of diminishing returns is a general principle of economics.
+It states that each additional increment of efforts or funds spent on
+a given goal typically produces a smaller and smaller increment in the
+results. There are exceptions to this law, but they are local; if you
+keep on increasing the inputs, you eventually leave the exceptions
+behind.</p>
+
+<p>For example, you can make traffic flow more smoothly by improving
+roads. Adding one lane to 20 miles of congested roads in a city might
+increase the average traffic speed by 15 miles an hour. Adding a
+second lane to those roads will not give the same improvement; this
+might increase the average speed by only 5 more miles an hour. The
+next additional lane might make no noticeable difference if the
+traffic jams are already gone. Yet each successive lane will cause
+greater dislocation as more and more buildings must be torn down to
+make room.</p>
+
+<p>When applied to the activities of musicians, diminishing returns
+tells us that each successive increase in the income of musicians will
+have a smaller effect on the amount of creativity in music.</p>
+
+<p>Diminishing returns is the first reason to reject the idea that any
+use of music &ldquo;should&rdquo; be covered by copyright. There is
+nothing to gain by trying to guarantee owners control of every
+possible aspect of the use of music or to give them a financial stake
+in every possible aftermarket. Extending copyright can only
+&ldquo;promote progress&rdquo; up to a certain point. Further
+extensions merely increase what the public pays to the owners for what
+they will do anyway. Extending copyright beyond that point is
+certainly undesirable.</p>
+
+<h3>Trade-offs</h3>
+
+<p>Those with a vested interest in extending copyright start the
+discussion by claiming that copyright &ldquo;should&rdquo; be extended
+as far as it can go. But the principle of diminishing returns renders
+this claim implausible. So they fall back on the position that
+copyright should be extended to maximize the rate of progress. But
+this too is wrong, because it ignores the existence of other
+trade-offs. Copyright imposes costs and burdens on the public, like
+any other government project. The benefit may not be worth the
+price.</p>
+
+<p>Government fills many important functions, but few would say that
+any one of these functions should be expanded to maximize output. For
+example, governments build roads, and this is very useful. But few
+leaders would advocate building every road that could be built. Road
+construction is expensive, and citizens have other uses for their
+money. Too much concentration on building roads means that other
+social and individual needs will be unmet.</p>
+
+<p>The same considerations apply to individual decisions. By spending
+more money, you can buy a bigger and fancier house. Most people would
+prefer the more expensive house, all else being equal. But given
+finite resources, at some point spending more on a house becomes a
+poor allocation of them.</p>
+
+<p>Copyright does not directly spend public funds, but it does impose
+a cost&mdash;a loss of freedom&mdash;on every citizen. The wider the
+scope of copyright, the more freedom we pay. We might prefer to
+exercise some of our freedoms rather than trade them away. We must
+judge any decision in copyright policy by comparing the benefits with
+the costs.</p>
+
+<h3>&ldquo;Incentive&rdquo; is the wrong concept</h3>
+
+<p>The idea of providing a monetary incentive for making music is
+based on a misunderstanding. Musicians hope primarily for other kinds
+of reward; they must. Very few musicians get rich from their music; a
+talented person whose primary goal is wealth would seek it in other
+ways.</p>
+
+<p>In fact, psychological studies show that the desire for an
+extrinsic reward (such as profit) generally hampers creative
+activities such as writing music. The people who can do them well are
+usually those who do them mostly for their own sake.</p>
+
+<p>This is not to say that musicians don't care about being paid.
+Most hope to make a living from music so they will be free to devote
+their time to it. As long as they earn enough to live, they will make
+music as best they can. We might wish them to earn somewhat more than
+just enough, so they can live as well as most Americans. But to offer
+them wealth beyond this gains the public little&mdash;it is a matter
+of diminishing returns.</p>
+
+<p>With this understanding, let's consider how a tax on DAT tape could
+be designed to serve the intended purpose of copyright.</p>
+
+<h3>Who should get the funds</h3>
+
+<p>If the purpose of the DAT tax is to better reward musicians and
+composers, then all the money collected should go to them&mdash;not
+just 43 percent. The musicians and composers are the ones who truly
+create the music. In principle, we could do without record companies
+entirely.</p>
+
+<p>Record companies do provide a useful service: they distribute
+prerecorded copies of music, usually of high quality. This service is
+widely used, and will probably remain so. And it is right that the
+purchasers of prerecorded copies should pay for this service. But
+listeners making copies for themselves or their friends do not consume
+this service; they use only the work of the musicians and composers.
+The record companies contribute only incidentally and their role is
+not essential.</p>
+
+<h3>Dividing the funds</h3>
+
+<p>What share of the tax revenues should each musician or composer
+get? The record company proposal would divide the money in proportion
+to record sales.</p>
+
+<p>It makes sense to distribute the funds based on how much that
+musician's work is copied, more or less. But strict proportionality
+is not the best apportionment. If each musician gets a share in
+strict proportion to the amount of copying of his or her music, then a
+large share will go to make a few superstars even richer than they are
+now. This won't do much to promote musical culture or diversity.</p>
+
+<p>We can promote music more effectively by making any one musician's
+share of the tax revenues taper off as copies increase. For example,
+we could calculate an &ldquo;adjusted number of copies&rdquo; which,
+beyond a certain point, increases more slowly than the actual
+number.</p>
+
+<p>The effect of tapering off will be to spread the money more widely,
+supporting more musicians at an adequate standard of living. This
+encourages diversity, which is what copyright is supposed to do.</p>
+
+<p>The US government has already established a program to fund
+diversity in the arts: the
+<abbr title="National Endowment for the Arts">NEA</abbr>.
+However, NEA grants involve discretionary power, which makes them a
+center for controversy, sometimes because a few members of the public
+strongly dislike the work, and sometimes because hardly anyone
+particularly likes it. Spreading out DAT tax revenues will also have
+the effect of supporting less popular musicians. However, it will not
+support musicians whose work nobody likes. In addition, since it
+involves no discretion, no arbitrary decisions, there is little room
+for objection on account of any particular case.</p>
+
+<p><em>[I was later asked an interesting question: what organization would
+&ldquo;manage&rdquo; the distribution of these funds. Since this is
+tax money, a government agency should collect the tax and distribute
+the funds. Private organizations should not be involved.]</em></p>
+
+<h3>Encouraging home copying</h3>
+
+<p>The record company proposal includes a requirement to make it
+difficult for home listeners to make copies. Specifically, it
+requires that consumer DAT machines refuse to copy a copy that was
+made on a consumer DAT machine. The argument for this requirement is
+based on the assumption that home copying is somehow unfair.</p>
+
+<p>In the past, many people have considered it unfair, because it
+reduced the income of musicians. The DAT tax makes this reason
+obsolete. Once home copying does contribute to the income of
+musicians, through the DAT tax, the reason to discourage home copying
+disappears.</p>
+
+<p>Therefore, if a DAT tax is adopted, the ability to copy DAT tapes
+should not be restricted. Home copying is more efficient than record
+companies and record stores; music lovers should be encouraged to use
+home copying as much as possible.</p>
+
+<h3>Measuring the use of each piece of music</h3>
+
+<p>Today, nearly all the recorded music in the United States is
+purchased in record stores; home copying is but a small fraction.
+This will probably remain true for a long time, because record stores
+offer a place where a person can go to find a particular piece or to
+browse a wide selection. While this remains true, we can usually
+estimate the audience of a given piece fairly well by counting record
+sales.</p>
+
+<p>Eventually, home copying may become so widespread that estimating
+its extent from sales figures may be unsatisfactory. This is already
+unsatisfactory for musicians who distribute independently without the
+help of record companies; and if any musicians need additional
+support, these are the ones. We need another way to estimate usage of
+any given piece, in order to distribute the tax funds.</p>
+
+<p>We can make these estimates by survey. From time to time, survey
+staff would ask randomly chosen members of the public to show what
+copies they have made of copyrighted music. The citizens asked would
+not be required to answer. But no penalty and no guilt would attach
+to having made copies, so most people will be glad to participate.
+Fans will hope to be chosen so that they can contribute to the count
+for their favorite musical groups.</p>
+
+<p>To make the survey more efficient and broader-based (and thus more
+accurate), it could be automated. The survey bureau could mail
+read-write memory cards to the chosen participants, who would connect
+them momentarily to their DAT units and then mail them back. With
+proper design, the survey bureau would have no way of knowing who had
+sent in any particular card, and thus no information about who had
+copied what, but they would still have an accurate total.</p>
+
+<h3>Conclusion</h3>
+
+<p>The record companies have proposed an excellent scheme for taxing
+the public to increase their own income, but this isn't a legitimate
+purpose of copyright. Through due attention to the ends of copyright
+rather than past means, we can design a system which supports
+musicians while giving citizens full freedom to copy music as they
+wish.</p>
+
+<h3>What You Can Do</h3>
+
+<p><em>[This section is no longer applicable today; it is too late,
+because the DAT tax bill was adopted in 1992&mdash;and DAT
+recorders are obsolete nowadays. However, the same method can support
+musicians and other artists in a world where sharing copies on the
+Internet has been legalized.]</em></p>
+
+<p>Record company lobbyists are working hard to pass their form of DAT
+tax. There is little organized opposition, and little public debate.
+Their bill has already been sent out of committee in the Senate.</p>
+
+<p>This article proposes an alternative to the record company plan.
+In order for this alternative, or any alternative, to have a chance,
+we must first prevent the hasty adoption of the record company plan.
+To help accomplish this, please write letters to:</p>
+
+<blockquote>
+<p>Congressman Barney Frank<br />
+437 Cherry St<br />
+West Newton, MA 02165</p>
+<p>Senator Metzenbaum<br />
+United States Senate<br />
+Washington, DC 20510</p>
+<p>House Subcommittee on Intellectual Property<br />
+House of Representatives<br />
+Washington, DC 20515</p>
+</blockquote>
+
+<p>Urge Congress to reject the record company bill so that this and
+other alternatives can be properly considered. It takes just a few
+minutes to write a short letter, but in combination with other
+people's letters it can do a great deal of good.</p>
+
+<p>If you know any musicians, composers, or songwriters, give them
+copies of this article. Many musicians prefer this alternative to the
+record company tax plan, and they are strongly motivated to act on
+their concern.</p>
+
+</div><!-- for id="content", starts in the include above -->
+
+<!--#include virtual="/server/footer.html" -->
+<div id="footer">
+<div class="unprintable">
+
+<p>Please send general FSF &amp; GNU inquiries to
+<a href="mailto:gnu@gnu.org">&lt;gnu@gnu.org&gt;</a>.
+There are also <a href="/contact/">other ways to contact</a>
+the FSF. Broken links and other corrections or suggestions can be sent
+to <a href="mailto:webmasters@gnu.org">&lt;webmasters@gnu.org&gt;</a>.</p>
+
+<p><!-- TRANSLATORS: Ignore the original text in this paragraph,
+ replace it with the translation of these two:
+
+ We work hard and do our best to provide accurate, good quality
+ translations. However, we are not exempt from imperfection.
+ Please send your comments and general suggestions in this regard
+ to <a href="mailto:web-translators@gnu.org">
+ &lt;web-translators@gnu.org&gt;</a>.</p>
+
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+Please see the <a
+href="/server/standards/README.translations.html">Translations
+README</a> for information on coordinating and submitting translations
+of this article.</p>
+</div>
+
+<p>Copyright &copy; 1992, 2010, 2014, 2020 Richard M. Stallman</p>
+
+<p>This page is licensed under a <a rel="license"
+href="http://creativecommons.org/licenses/by-nd/4.0/">Creative
+Commons Attribution-NoDerivatives 4.0 International License</a>.</p>
+
+<!--#include virtual="/server/bottom-notes.html" -->
+
+<p class="unprintable">Updated:
+<!-- timestamp start -->
+$Date: 2020/07/01 15:25:23 $
+<!-- timestamp end -->
+</p>
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+</html>