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1 <!--#include virtual="/server/header.html" --> 2 <!-- Parent-Version: 1.96 --> 3 <!-- This page is derived from /server/standards/boilerplate.html --> 4 5 <!--#set var="TAGS" value="essays cultural funding" --> 6 <!--#set var="DISABLE_TOP_ADDENDUM" value="yes" --> 7 <title>The Right Way to Tax DAT - GNU Project - Free Software Foundation</title> 8 9 <!--#include virtual="/philosophy/po/dat.translist" --> 10 <!--#include virtual="/server/banner.html" --> 11 <!--#include virtual="/philosophy/ph-breadcrumb.html" --> 12 <!--GNUN: OUT-OF-DATE NOTICE--> 13 <!--#include virtual="/server/top-addendum.html" --> 14 <div class="article reduced-width"> 15 16 <h2>The Right Way to Tax DAT</h2> 17 18 <address class="byline">by <a href="https://www.stallman.org/">Richard 19 Stallman</a></address> 20 21 <div class="infobox"> 22 <p><em>[This article does not concern software, not directly. It 23 concerns a parallel issue about sharing copies of music.]</em></p> 24 25 <p><em>[The article was first published in <cite>Wired</cite> magazine in 1992; the 26 text has not been changed; instead, I have added notes, in square 27 brackets and with italics or other emphasis.]</em></p> 28 29 <p><em>[The original article addressed the (then hypothetical) issue 30 of sharing music using (then just appearing) digital audio tape 31 recorders, since that is what the proposed US tax law was supposed to 32 address. Nowadays it could be applied to Internet file 33 sharing.]</em></p> 34 35 <p><em>[Another approach developed by the late Francis Muguet with my 36 assistance, which includes some of these ideas, is called 37 the Global Patronage 38 system (in French, Mécénat Global). I support both 39 solutions; that is to say, I favor adopting either one.]</em></p> 40 </div> 41 <hr class="thin" /> 42 43 <p>Record company magnates don't like the digital audio tape recorder 44 (<abbr title="Digital Audio Tape">DAT</abbr>), which can make 45 perfect copies of musical recordings. They fear that customers will 46 copy music themselves, and stop buying prerecorded music.</p> 47 48 <p>Threatening lawsuits, they have obtained from the manufacturers of 49 DATs an agreement to pay a fee for each DAT unit and each DAT tape 50 sold to consumers. This fee is to be divided among various 51 participants in the music business: musicians, composers, music 52 publishers and record companies. In addition, DAT manufacturers have 53 agreed to cripple DAT units so that they cannot make a copy of a copy 54 of a prerecorded piece.</p> 55 56 <p>Now the record companies have asked Congress to enact a law turning 57 this fee into a tax and prohibiting manufacture of DAT tapedecks that 58 function without imposed limitations.</p> 59 60 <p>The stated purpose of the tax is to “compensate” 61 musicians for copying done by individuals using DATs. However, 57 62 percent of the funds collected would go to record companies and music 63 publishers—leaving less than half to the people who participate 64 in the creative process. Most of these remaining funds would go to 65 musical superstars, and thus would do little to encourage musical 66 creativity. Meanwhile, DAT users would be unable to make full use of 67 the power of DAT technology.</p> 68 69 <p>Here is a proposal for a different system for taxing DATs and DAT 70 tape—one designed to support music rather than cater to vested 71 interests.</p> 72 73 <ul> 74 <li>Collect funds with a tax on DAT machines and DAT tapes, as the 75 current proposal provides.</li> 76 <li>Use a survey system to measure the extent of copying of each 77 musical piece.</li> 78 <li>Distribute these funds entirely to the people who create 79 music.</li> 80 <li>Adjust each contributor's share so that it increases more slowly 81 per copy as it gets larger. This spreads the funds more widely to 82 support a larger number of musicians adequately.</li> 83 <li>Make no restrictions on the functioning of DATs.</li> 84 </ul> 85 86 <h3>What is the purpose of copyright?</h3> 87 88 <p>The record industry presents its proposal as a way to 89 “compensate” musicians, assuming that they are entitled to 90 be paid for any copy made. Many Americans believe that copyright law 91 reflects a natural right of authors or musicians—that these are 92 entitled to special consideration from public policy. However, any 93 lawyer specializing in the field knows this is a misunderstanding, a 94 view rejected by the American legal system.</p> 95 96 <p>The stated purpose of copyright, given in the U.S. Constitution, is 97 to “promote the progress of science and the useful arts.” 98 Progress in music means new and varied music for the public to enjoy: 99 copyright is supposed to promote a public good, not a private one.</p> 100 101 <p>Yet copyright is often thought of as a natural right by laymen and 102 politicians, which often leads to wrong decisions about copyright 103 policy. Even courts, defining the details of the copyright system, 104 often let this thought creep back implicitly even though it is 105 supposed to be excluded. This is a conceptual error because it 106 mistakes a means (copyright) to a larger end (progress) for an end in 107 itself.</p> 108 109 <p>Promoting progress in the arts does not inherently justify the idea 110 that authors are entitled to any particular sort of copyright, or even 111 that copyright should exist at all. Copyright is justified if the 112 benefits of progress exceeds the burden that copyright imposes on 113 everyone except the copyright holder.</p> 114 115 <p>How do we make this cost/benefit comparison? It depends partly on 116 facts (how does a particular law affect musical activity and music 117 users) and partly on our value judgements about those results.</p> 118 119 <p>Let's assume that it is worth paying a DAT tax if the result is a 120 significant increase in musical activity, and investigate how we 121 should arrange the details of this tax in order to maximize the 122 benefit. But first, let's review basic principles and facts which 123 have a bearing on the inquiry.</p> 124 125 <h3>Diminishing returns</h3> 126 127 <p>The law of diminishing returns is a general principle of economics. 128 It states that each additional increment of efforts or funds spent on 129 a given goal typically produces a smaller and smaller increment in the 130 results. There are exceptions to this law, but they are local; if you 131 keep on increasing the inputs, you eventually leave the exceptions 132 behind.</p> 133 134 <p>For example, you can make traffic flow more smoothly by improving 135 roads. Adding one lane to 20 miles of congested roads in a city might 136 increase the average traffic speed by 15 miles an hour. Adding a 137 second lane to those roads will not give the same improvement; this 138 might increase the average speed by only 5 more miles an hour. The 139 next additional lane might make no noticeable difference if the 140 traffic jams are already gone. Yet each successive lane will cause 141 greater dislocation as more and more buildings must be torn down to 142 make room.</p> 143 144 <p>When applied to the activities of musicians, diminishing returns 145 tells us that each successive increase in the income of musicians will 146 have a smaller effect on the amount of creativity in music.</p> 147 148 <p>Diminishing returns is the first reason to reject the idea that any 149 use of music “should” be covered by copyright. There is 150 nothing to gain by trying to guarantee owners control of every 151 possible aspect of the use of music or to give them a financial stake 152 in every possible aftermarket. Extending copyright can only 153 “promote progress” up to a certain point. Further 154 extensions merely increase what the public pays to the owners for what 155 they will do anyway. Extending copyright beyond that point is 156 certainly undesirable.</p> 157 158 <h3>Trade-offs</h3> 159 160 <p>Those with a vested interest in extending copyright start the 161 discussion by claiming that copyright “should” be extended 162 as far as it can go. But the principle of diminishing returns renders 163 this claim implausible. So they fall back on the position that 164 copyright should be extended to maximize the rate of progress. But 165 this too is wrong, because it ignores the existence of other 166 trade-offs. Copyright imposes costs and burdens on the public, like 167 any other government project. The benefit may not be worth the 168 price.</p> 169 170 <p>Government fills many important functions, but few would say that 171 any one of these functions should be expanded to maximize output. For 172 example, governments build roads, and this is very useful. But few 173 leaders would advocate building every road that could be built. Road 174 construction is expensive, and citizens have other uses for their 175 money. Too much concentration on building roads means that other 176 social and individual needs will be unmet.</p> 177 178 <p>The same considerations apply to individual decisions. By spending 179 more money, you can buy a bigger and fancier house. Most people would 180 prefer the more expensive house, all else being equal. But given 181 finite resources, at some point spending more on a house becomes a 182 poor allocation of them.</p> 183 184 <p>Copyright does not directly spend public funds, but it does impose 185 a cost—a loss of freedom—on every citizen. The wider the 186 scope of copyright, the more freedom we pay. We might prefer to 187 exercise some of our freedoms rather than trade them away. We must 188 judge any decision in copyright policy by comparing the benefits with 189 the costs.</p> 190 191 <h3>“Incentive” is the wrong concept</h3> 192 193 <p>The idea of providing a monetary incentive for making music is 194 based on a misunderstanding. Musicians hope primarily for other kinds 195 of reward; they must. Very few musicians get rich from their music; a 196 talented person whose primary goal is wealth would seek it in other 197 ways.</p> 198 199 <p>In fact, psychological studies show that the desire for an 200 extrinsic reward (such as profit) generally hampers creative 201 activities such as writing music. The people who can do them well are 202 usually those who do them mostly for their own sake.</p> 203 204 <p>This is not to say that musicians don't care about being paid. 205 Most hope to make a living from music so they will be free to devote 206 their time to it. As long as they earn enough to live, they will make 207 music as best they can. We might wish them to earn somewhat more than 208 just enough, so they can live as well as most Americans. But to offer 209 them wealth beyond this gains the public little—it is a matter 210 of diminishing returns.</p> 211 212 <p>With this understanding, let's consider how a tax on DAT tape could 213 be designed to serve the intended purpose of copyright.</p> 214 215 <h3>Who should get the funds</h3> 216 217 <p>If the purpose of the DAT tax is to better reward musicians and 218 composers, then all the money collected should go to them—not 219 just 43 percent. The musicians and composers are the ones who truly 220 create the music. In principle, we could do without record companies 221 entirely.</p> 222 223 <p>Record companies do provide a useful service: they distribute 224 prerecorded copies of music, usually of high quality. This service is 225 widely used, and will probably remain so. And it is right that the 226 purchasers of prerecorded copies should pay for this service. But 227 listeners making copies for themselves or their friends do not consume 228 this service; they use only the work of the musicians and composers. 229 The record companies contribute only incidentally and their role is 230 not essential.</p> 231 232 <h3>Dividing the funds</h3> 233 234 <p>What share of the tax revenues should each musician or composer 235 get? The record company proposal would divide the money in proportion 236 to record sales.</p> 237 238 <p>It makes sense to distribute the funds based on how much that 239 musician's work is copied, more or less. But strict proportionality 240 is not the best apportionment. If each musician gets a share in 241 strict proportion to the amount of copying of his or her music, then a 242 large share will go to make a few superstars even richer than they are 243 now. This won't do much to promote musical culture or diversity.</p> 244 245 <p>We can promote music more effectively by making any one musician's 246 share of the tax revenues taper off as copies increase. For example, 247 we could calculate an “adjusted number of copies” which, 248 beyond a certain point, increases more slowly than the actual 249 number.</p> 250 251 <p>The effect of tapering off will be to spread the money more widely, 252 supporting more musicians at an adequate standard of living. This 253 encourages diversity, which is what copyright is supposed to do.</p> 254 255 <p>The US government has already established a program to fund 256 diversity in the arts: the 257 <abbr title="National Endowment for the Arts">NEA</abbr>. 258 However, NEA grants involve discretionary power, which makes them a 259 center for controversy, sometimes because a few members of the public 260 strongly dislike the work, and sometimes because hardly anyone 261 particularly likes it. Spreading out DAT tax revenues will also have 262 the effect of supporting less popular musicians. However, it will not 263 support musicians whose work nobody likes. In addition, since it 264 involves no discretion, no arbitrary decisions, there is little room 265 for objection on account of any particular case.</p> 266 267 <p><em>[I was later asked an interesting question: what organization would 268 “manage” the distribution of these funds. Since this is 269 tax money, a government agency should collect the tax and distribute 270 the funds. Private organizations should not be involved.]</em></p> 271 272 <h3>Encouraging home copying</h3> 273 274 <p>The record company proposal includes a requirement to make it 275 difficult for home listeners to make copies. Specifically, it 276 requires that consumer DAT machines refuse to copy a copy that was 277 made on a consumer DAT machine. The argument for this requirement is 278 based on the assumption that home copying is somehow unfair.</p> 279 280 <p>In the past, many people have considered it unfair, because it 281 reduced the income of musicians. The DAT tax makes this reason 282 obsolete. Once home copying does contribute to the income of 283 musicians, through the DAT tax, the reason to discourage home copying 284 disappears.</p> 285 286 <p>Therefore, if a DAT tax is adopted, the ability to copy DAT tapes 287 should not be restricted. Home copying is more efficient than record 288 companies and record stores; music lovers should be encouraged to use 289 home copying as much as possible.</p> 290 291 <h3>Measuring the use of each piece of music</h3> 292 293 <p>Today, nearly all the recorded music in the United States is 294 purchased in record stores; home copying is but a small fraction. 295 This will probably remain true for a long time, because record stores 296 offer a place where a person can go to find a particular piece or to 297 browse a wide selection. While this remains true, we can usually 298 estimate the audience of a given piece fairly well by counting record 299 sales.</p> 300 301 <p>Eventually, home copying may become so widespread that estimating 302 its extent from sales figures may be unsatisfactory. This is already 303 unsatisfactory for musicians who distribute independently without the 304 help of record companies; and if any musicians need additional 305 support, these are the ones. We need another way to estimate usage of 306 any given piece, in order to distribute the tax funds.</p> 307 308 <p>We can make these estimates by survey. From time to time, survey 309 staff would ask randomly chosen members of the public to show what 310 copies they have made of copyrighted music. The citizens asked would 311 not be required to answer. But no penalty and no guilt would attach 312 to having made copies, so most people will be glad to participate. 313 Fans will hope to be chosen so that they can contribute to the count 314 for their favorite musical groups.</p> 315 316 <p>To make the survey more efficient and broader-based (and thus more 317 accurate), it could be automated. The survey bureau could mail 318 read-write memory cards to the chosen participants, who would connect 319 them momentarily to their DAT units and then mail them back. With 320 proper design, the survey bureau would have no way of knowing who had 321 sent in any particular card, and thus no information about who had 322 copied what, but they would still have an accurate total.</p> 323 324 <h3>Conclusion</h3> 325 326 <p>The record companies have proposed an excellent scheme for taxing 327 the public to increase their own income, but this isn't a legitimate 328 purpose of copyright. Through due attention to the ends of copyright 329 rather than past means, we can design a system which supports 330 musicians while giving citizens full freedom to copy music as they 331 wish.</p> 332 333 <h3>What You Can Do</h3> 334 335 <p><em>[This section is no longer applicable today; it is too late, 336 because the DAT tax bill was adopted in 1992—and DAT 337 recorders are obsolete nowadays. However, the same method can support 338 musicians and other artists in a world where sharing copies on the 339 Internet has been legalized.]</em></p> 340 341 <p>Record company lobbyists are working hard to pass their form of DAT 342 tax. There is little organized opposition, and little public debate. 343 Their bill has already been sent out of committee in the Senate.</p> 344 345 <p>This article proposes an alternative to the record company plan. 346 In order for this alternative, or any alternative, to have a chance, 347 we must first prevent the hasty adoption of the record company plan. 348 To help accomplish this, please write letters to:</p> 349 350 <address> 351 Congressman Barney Frank<br /> 352 437 Cherry St<br /> 353 West Newton, MA 02165</address> 354 <address> 355 Senator Metzenbaum<br /> 356 United States Senate<br /> 357 Washington, DC 20510</address> 358 <address> 359 House Subcommittee on Intellectual Property<br /> 360 House of Representatives<br /> 361 Washington, DC 20515</address> 362 363 <p>Urge Congress to reject the record company bill so that this and 364 other alternatives can be properly considered. It takes just a few 365 minutes to write a short letter, but in combination with other 366 people's letters it can do a great deal of good.</p> 367 368 <p>If you know any musicians, composers, or songwriters, give them 369 copies of this article. Many musicians prefer this alternative to the 370 record company tax plan, and they are strongly motivated to act on 371 their concern.</p> 372 </div> 373 374 </div><!-- for id="content", starts in the include above --> 375 376 <!--#include virtual="/server/footer.html" --> 377 <div id="footer" role="contentinfo"> 378 <div class="unprintable"> 379 380 <p>Please send general FSF & GNU inquiries to 381 <a href="mailto:gnu@gnu.org"><gnu@gnu.org></a>. 382 There are also <a href="/contact/">other ways to contact</a> 383 the FSF. 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