Internet levies for downloading: a bad idea

The report of the Dutch copyright working party chaired by MP Arda Gerkens has put some more fuel on an already heated discussion about a ban on downloading in the Netherlands. Social democrat party D66 introduced the idea of an Internet levy system for downloading in their election programme, but luckily this was revoked during the party congress.

Opponents of a ban on downloading often cite an Internet levy system as an alternative. By charging a little extra on top of the ISP subscription, a source of income is generated to compensate rights holders.

Such a solution is music in the ears of politicians. It is easy to explain and looks nicer to the electorate than banning the favourite hobby of Dutch Internet users. However, it remains to be seen whether a downloading fee is a reasonable and fair solution. As far as I’m concerned, there are big drawbacks to such a fee, both from a moral and a practical viewpoint.

A fee will mean the end of new business models

The main argument against an Internet levy is that it destroys the already limited functioning of markets in digital distribution. When a fee will be introduced, downloading (also from evidently illegal sources) needs to be legalised fully. For we can’t have both: and a fee on top of one’s Internet subscription, and having to pay for downloaded content.

It is not possible to explain to consumers that he should buy MP3s at iTunes when he already pays a fee that allows him to download for free. By introducing a fee, one gives consumers the right to download as much as they want. Every other message will simply not come across.

Introducing a download fee therefore means the end for all new, legal business models for digital content distribution.

A national system would not be sustainable

A national system of download fees will be unsustainable in an international context. With a in internet levy, the home copy exception will be lengthened in such a way that it will become nearly impossible for parties to market their works. Therefore, an Internet levy system is bound to be a violation of international copyright law (i.e. it will not pass the Berne three step test).

Furthermore, a national system of fees can have an undesirable effect on The Netherlands. Because an Internet levy would entail complete legalisation of downloading, the sales of physical carriers will collapse. Chances are that international firms will no longer be willing to release their products on the Dutch market.

A fair repartition is impossible without breaching privacy

An Internet fee means that our system of collective collection would need to be extended. This system is not working perfectly as it is, but with the introduction of a fee, repartition would become exponentially more complicated.

It is completely unclear how money, collected through this download levy needs to be divided. Because what is it that we download? Which e-books, movies, games and mp3s are downloaded most? For a good and fair system of reimbursement, one needs to check all downloaded files. And let this be exactly the main argument why everyone is dead against a ban on downloading.

Non-downloaders receive the short end of the stick

Someone who doesn’t download will have to pay a fee all the same. Not really fair. Furthermore, introducing a fee will mean that downloaders will download as much as they can to make the most of their fee, which puts pressure on the networks. This reduces the bandwidth of all Internet users.

Negative influence on ISPs

Therefore, it remains to be seen if ISPs will welcome an Internet levy system. The pressure on their networks will undoubtedly increase, while at the same time, the income will decline as subscription costs will rise. Without effective network management (something generally frowned upon by people opposing a ban on downloading) ISPs will likely not be able to cope with the resulting pressure. Throttling connections is not an option too, however, because that cannot be explained to consumers. If you pay a fee, you need to be able to download well.

Piracy becomes legal

In the end, the one who stands to benefit most is the (professional) pirate. Because a fee for downloading in effect comes down to legalising downloading, it is hard to imagine otherwise than that uploading will also be legalised. One cannot tax people for consuming illegal goods. This means that pirates (in the Netherlands) need no longer fear prosecution. Parties like the Pirate Bay can now safely reign in the riches without notable investments in creativity.

The industry strikes back

The entertainment industries are not well known for their innovative character when it comes to digital distribution, but they are very well able to protect their interests. I suspect that in a scenario with a download fee, the industries will no longer offer the possibilities to download anything at all. The industries will likely turn their back on carriers and instead offer paid access to their own streaming servers. The standards for this (DECES and Keychest) are fully in development. That way, we end with a downloading fee without anything to download.

The discussion about copyright and Internet is very complicated. Simple solutions like a fee for downloading sound good, but in practice come with big disadvantages. Politicians would do well not to overlook these.