Spain’s “Digital Canon” iPod tax is good for the middleman…and only the middleman

June 25, 2008

As of July 1, Spain’s controversial “digital canon” law will impose a tax on any gizmo that can record, copy, or store digital media.

In theory, this is a tax on “piracy” that goes towards supporting artists.

In reality, the cash goes straight to the “collecting societies” that represent artists and collect royalty payments on their behalf. The law apparently makes no provision as to how these societies must distribute this revenue.

The collecting societies’ survival depends on the preservation of restrictive IP regimes and royalty-based business models in creative industries. As a result, they have historically acted to constrain artists’ and users’ ability to opt out of IP-based remuneration schemes.

With the passage of this law they have successfully imposed the cost of their existence on consumers and producers in an entirely separate industry. Not surprisingly, the electronics equipment manufacturers and re-sale firms (not to mention consumer advocacy groups) are furious.

Declining sales across many of the content industries will continue to lead increasingly desperate firms (and their lawyers) to seek ridiculous regulatory interventions like this one. The results are expensive, inefficient legal instruments that will prove even more costly to overhaul as the digital economy continues to evolve.

Instead of more laws like this one, regulators should seek to incentivize alternative business models that capitalize on the network effects of costless digital reproduction. In the case of music, I’m thinking of something along the lines of VODO and other schemes that capitalize on what Doc Searls has called “the volunteer economy“.

If I were a Spanish citizen, investor, or entrepreneur I’d wonder why my elected officials weren’t willing to make a more far-sighted investment in the future of my culture, my technologies, and my economy.

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