First thought: EFF finally agrees with me (mostly)!

Second thought: How come I don't get any credit and EFF doesn't offer me a job?

Third thought: Man, I need a smaller ego.

Seriously, I am quite glad the EFF has offered this clarification of their music filesharing policy (A Better Way Forward: Voluntary Collective Licensing of Music File Sharing). With a minor quibble or two, and one major problem, I think this is precisely the answer to our filesharing dilemmas.

The Money: Collecting It

Interestingly, though EFF has often condemned the lawsuit strategy of the RIAA, the paper recognizes the importance of legal sanction to enforce this voluntary regime. Lawsuits (or the threat of lawsuits) against consumers are necessary to provide incentive for consumers to opt-in to the system and discourage free riding:

How do we get filesharers to pay up? That's where the market comes in -- those who today are under legal threat will have ample incentive to opt for a simple $5 per month fee.

I may not agree with all the procedural aspects of the lawsuits (for example, the original interpretation of the DMCA subpoena provisions was heinous), but lawsuits against consumers who are uploading unlicensed music are perfectly valid. Of course, it would be great if the RIAA would offer the carrot as well as the stick, but that doesn't mean the stick is illegitimate.

Furthermore, the enforcement mechanism must be reasonably efficient. For example, it would not do to for the RIAA to merely charge people back subscription fees for free riding. One, the fees would be so low as to make enforcement completely unviable, especially given the need for the RIAA to actually file a lawsuit in order enforce their valid claims. Two, where is the risk? If I'm caught cheating, at most I would have to pay what I should have paid in the first place. Given the need for efficient enforcement to make the system work, the EFF should include more discussion about what would be a reasonable form for the inevitable lawsuits (or threat thereof).

For example, perhaps there would be a "first bite" strategy. First time offenders would be required to pay a multiple of back subscription fees and perhaps a small ongoing surcharge on future rights (~ $7/month instead of $5/month) to help subsidize enforcement. Repeat offenders would be subject to standard copyright penalties.

Of course, there are other reasons besides lawsuits why consumers might want to opt into a voluntary system that EFF doesn't mention. For example, would the RIAA still be permitted to spoof and use other non-illegal tactics to inhibit the function of P2P networks with a significant number of free riders? Seems to me that convenience of use would also be a major benefit to encourage people to sign up with a legitimate system.

The Money: Dividing It Up

What the EFF offers up is fine, especially the emphasis on transparency (critically necessary to avoid some antitrust issues). I've often complained about how such census/monitoring systems will be gameable and etc., and whatever system is ultimately developed will certainly fail in many ways. However, the key is that correcting any failures will be on the shoulders of the rights holders themselves, rather than government-sponsored highly contentious decisions about the value of art.

A Significant Problem: Using Any Software Won't Cut It

Why? Free riders. If people are permitted to freely share files on existing P2P systems, there goes any chance you have of limiting free riding.

Under EFF's proposed system, say I go ahead and get a license. For $5/month I can fileshare with impunity, that is, I can upload songs all day long. The free riders in this system will be the people downloading the songs from me. How do you enforce against downloaders? You can't, at least without draconian technical and legal enforcement mechanisms which I am sure the EFF would rightfully oppose.

What will happen under EFF's system is that a significant number of people will sign up for the system, say 10-20% of the filesharing population (if you are lucky). At this point, you stop getting subscriptions, because the free riders can get all the music they want for free, without fear of legal sanction. Sure, you might have some foolish people who both download and upload, but not many and all you'll do is turn them into legitimate uploaders for a small fee/fine. Suddenly, your $3 Billion/year is only $600 Million or $300 Million. Additionally many fee-paying subscribers will feel like suckers for paying, when there is no way

ISPs will not be big fans of this either. Sure, one ISP can offer "Unlimited Uploading and Downloading only $5/month!" Joy. The other ISP offers "Unlimited Downloading - For Free!". What uses more bandwidth, do you think? If I were an ISP, I would much prefer people downloading the music they listen to, then serving as much music as their system will handle (with no money for me - the $5 goes to the copyright holders).

Controlled Uploading: It Doesn't Have to Bad

Compulsory licenses avoid this problem by forcing everyone to pay, regardless. This comes at the expense of heavily involving government, which should be a last ditch solution.

Any voluntary solution that will work will have to control uploading to a certain extent. I, myself, believe that something similar to Bit Torrent would work pretty good. Basically, those who have paid the $5/month would gain access to Bit Torrent seeding servers for the download of music. Those who don't pay, don't get access. People would not be permitted to share the songs directly (though there is still the darknet), but could easily share Bit Torrent pointers, such that another subscriber would be able to download the same song (more efficiently than most fully decentralized P2P systems).

Of course, acting as a Bit Torrent "seeding" host should be freely available to any player in the system, as long as they agree to comply with certain objective standards regarding security. You could even have Bit Torrent servers that charge for better access (with some of the money going to the copyright holders).

There are other benefits to this quasi-centralized service. Standardization of formats and metadata will permit search engines to compete on better finding music. Playlist swapping would become efficient. Remix "recipes" would also be possible.

Let us continue the debate.

See also,

Furdlog: Jason Schultz and Dreak Slater On Compulsory Licensing and EFF’s Compulsory Licensing Trial Balloon.

WIRED: The Answer to Piracy: Five Bucks? (What's up with the levy? Bad idea.)

Not Quit a Blog: the EFF "solves" p2p...

Unlimited Freedom: The EFF Offers a Better Way Forward on File Sharing