Alternative compensation system
Encyclopedia
Various alternative compensation systems (ACS) have been proposed as ways to allow the widespread reproduction of digital copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...

ed works while still paying the authors and copyright owners of those works. This article only discusses those proposals which involve some form of government intervention. Other models, such as the street performer protocol
Street Performer Protocol
The threshold pledge or fund and release system is a way of making a fundraising pledge as a group of individuals, often involving charitable goals or financing the provision of a public good. An amount of money is set as the goal or threshold to reach for the specified purpose and interested...

 or voluntary collective licenses, could arguably be called "alternative compensation systems" although they are very different and generally less effective at solving the free rider problem
Free rider problem
In economics, collective bargaining, psychology, and political science, a free rider is someone who consumes a resource without paying for it, or pays less than the full cost. The free rider problem is the question of how to limit free riding...

.

The impetus for these proposals has come from the widespread use of peer-to-peer file sharing
Peer-to-peer file sharing
P2P or Peer-to-peer file sharing allows users to download files such as music, movies, and games using a P2P software client that searches for other connected computers. The "peers" are computer systems connected to each other through internet. Thus, the only requirements for a computer to join...

 networks. A few authors (e.g. Gervais 2004) argue that an ACS is simply the only practical response to the situation. But most ACS advocates go further, holding that P2P file sharing is in fact greatly beneficial, and that tax or levy funded systems are actually more desirable tools for paying artists
than sales coupled with DRM
Digital rights management
Digital rights management is a class of access control technologies that are used by hardware manufacturers, publishers, copyright holders and individuals with the intent to limit the use of digital content and devices after sale. DRM is any technology that inhibits uses of digital content that...

 copy prevention technologies.

Artistic Freedom Voucher

The artistic freedom voucher (AFV) is a system proposed by economist Dean Baker
Dean Baker
Dean Baker is an American macroeconomist and co-founder of the Center for Economic and Policy Research, with Mark Weisbrot. He previously was a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D...

 as an alternative to increasing penalties for downloading copyright material. Under this system, every adult would be given a certain amount of money ($100, for example) that would take the form of a refundable tax credit, and would act as a voucher that can only be used to support artistic or creative work. Baker claims that this system could create up to $20 billion annually to pay artists, which is far greater than what currently flows to them through copyrighted material. Potential recipients would register with the government—just as churches and non-profit organizations currently do—to qualify for tax-exempt status. The work of those who are part of this system will become public domain, meaning that artists will no longer hold intellectual property rights to that work.

Critics of the AFV, notably musician and investment specialist J. Mark Stanley, argue that it would be unfair to force taxpayers to spend money on art when those funds could be used to help people pay their rent and feed their children. He believes that the success of art should be based on competition and choice. In his 2010 article “The False Freedom of Art Vouchers,” he writes:

“Like school vouchers, the flat tax, and other pretenders, the AFV assumes the necessity of state intervention, and tries to bend liberty around such strictures. Freedom isn’t so forgiving to such manipulation.”

Donation Based Record Labels

While the systematic restructuring of copyright laws proposed by AFV is far from being put into practice, the concept of paying artists with donations has been tested, with some success. In 2006, musician Jeff Rosenstock founded Quote Unquote Records
Quote Unquote Records
Quote Unquote Records is a donation-based online independent record label, founded and run by Bomb the Music Industry! and The Arrogant Sons of Bitches frontman Jeff Rosenstock. The label is an example of Rosenstock's DIY ideals...

, which advertised itself as the first donation based record label. Artists on this label make their music available to download for free, and invite listeners to make a small donation if they want to. Between donations and ticket sales for live shows, Quote Unquote Records has been successfully recording music and expanding the number of bands on their label for the past five years.

Where does the money come from

Proposals have included targeted levies on internet connections, blank CDs, digital media players, etc. (many of these goods are levied various countries' existing private copying schemes); income taxation; or optional payments by users.

In terms of economic theory, consumer "opt in" regimes are very different from universal ones, but depending on how the scheme was administered, the differences might not be so large. For example, if the default option for ISP subscribers was to pay an ACS surcharge, which could be avoided by filing a signed commitment not to make unauthorised downloads from P2P networks, the effects might be quite similar. This scheme however is unsuitable for business owners who maintain free internet connections as incentive for customers. It would then be the responsibility of the business owner to monitor his or her customer's internet use.

Where does it go

Various proposals have been made to base the distribution of royalties on measures of consumer downloading, usage or voting.

The computer security issues to be addressed in collecting this data are considerable. The privacy and verifiability obstacles are very similar to those encountered in Internet voting; they may be soluble, but only with hardware assistance not currently available on ordinary PCs. The most practical way to deploy an ACS in the short term would be to collect statistical samples from a much smaller population.

The actual distribution of royalties would likely be carried out by a copyright collecting society.

Advantages and disadvantages

Alternative compensation systems have two very significant advantages over digital copyright. They do not impose artificial scarcity on copyright works: everyone can download as many songs, ebooks and films as they want (in economic terns, ACS eliminate the deadweight loss
Deadweight loss
In economics, a deadweight loss is a loss of economic efficiency that can occur when equilibrium for a good or service is not Pareto optimal...

 of copyright monopolies). They also avoid the very high technological and social
Elektra v. Santangelo
Elektra v. Santangelo was a case heard before the United States District Court for the Southern District of New York, filed by Elektra Entertainment Group as one of approximately 13,000 lawsuits that the Recording Industry Association of America has brought against individual defendants in the U.S...

 costs of digital copyright enforcement.

The two greatest drawbacks of ACSes are the excess burden
Excess burden of taxation
In economics, the excess burden of taxation, also known as the distortionary cost or deadweight loss of taxation, is one of the economic losses that society suffers as the result of a tax. Economic theory posits that distortions changes the amount and type of economic behavior from that which...

 of the taxation that is collected, and the need to decide what tax/levy rates to use for the system (although methods such as contingent valuation
Contingent valuation
Contingent valuation is a survey-based economic technique for the valuation of non-market resources, such as environmental preservation or the impact of contamination...

 may help a little with that question).

Alternative compensation systems in practice

Canada's private copying levy
Private copying levy
A private copying levy is a government-mandated scheme in which a special tax or levy is charged on purchases of recordable media. Such taxes are in place in various countries and the income is typically allocated to the developers of "content"...

 had the unforeseen result of temporarily creating an ACS for some kinds of P2P downloading. In BMG v. Doe, a dictum
Dictum
In United States legal terminology, a dictum is a statement of opinion or belief considered authoritative though not binding, because of the authority of the person making it....

suggested that this should also apply to uploading; but the dictum was criticised on appeal.

In France, the December 2005 DADVSI
DADVSI
DADVSI is the abbreviation of the French Loi sur le Droit d’Auteur et les Droits Voisins dans la Société de l’Information...

 amendments that were passed by the Senate
French Senate
The Senate is the upper house of the Parliament of France, presided over by a president.The Senate enjoys less prominence than the lower house, the directly elected National Assembly; debates in the Senate tend to be less tense and generally enjoy less media coverage.-History:France's first...

 would have created an ACS called a "global license". These amendments were removed before the bill finally became law.

In 2009, the German Social Democratic Party
Social Democratic Party of Germany
The Social Democratic Party of Germany is a social-democratic political party in Germany...

added a proposal for an ACS variant called a "cultural flatrate" to its party platform.

External links

The source of this article is wikipedia, the free encyclopedia.  The text of this article is licensed under the GFDL.
 
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