Legal P2P coming to the UK - adios iTunes?

By tomorrow morning, the UK's musical landscape could look very different. Legal filesharing is on the horizon as part of radical a new carrot-and-sti

First off, the stick. The BBC is reporting that the music industry has struck a deal with the six major internet service providers to send out warning letters to file-sharers suspected of infringing copyright. Virgin Media has already despatched some threatening missives, but other ISPs such as the Carphone Warehouse had previously been opposed to the idea of becoming Big Brother's little stooge.

So why the change of heart? Tellingly, the BBC story reveals that net firms have committed to "develop legal music services." This is where the carrot appears: rumours are circulating that a deal has been cut to allow the ISPs to offer a legal peer-to-peer service at a relatively low subscription cost (as low as £30 per year) on top of the standard ISP charge.

Details of the deal are far from clear - but cheap, legal peer-to-peer music sharing undoubtedly poses a huge threat not just to existing subscription services like Napster and Emusic, but also to the dominance of Apple's iTunes. After all, why would you pay £8 for an album when you could pay four times as much for everything ever recorded...

Too good to be true? Possibly. But there's no doubt that the music industry is finally waking up to the fact that it needs a radical overhaul. CD sales are plummeting and legal web sales aren't filling the gap. Just as radio was heralded as the end of recorded music until the industry worked out a licensing deal, so peer-to-peer sharing could yet turn from demon to saviour.

Stay tuned for more news.

UPDATE 24/7/08 6.38am The Independent newspaper has more details about calls for a £20-£30 'tax' that would allow internet users to share music. The exchange of files would be monitored, with the rights-holders to the most popular songs receiving the biggest cut.

According to the Indie, Billy Bragg's manager Peter Jenner reckons the cash raised by the P2P tax would match the current £1.2bn turnover of the British music industry. By my reckoning (my calculator doesn't go take numbers that big so I'm doing it in my head) that would mean imposing the tax on some 40m broadband connections.

This scares me a bit. Firstly, because clearly it won't be an opt-in service - everyone will pay, whether they download music or not. Secondly, because the government's statistics suggest that only 15m UK households have an internet connection, so the figures don't add up. And finally, because the ISPs are launching a campaign to discourage people from using file sharing, which is sending out mixed messages.

Hopefully the confusion will clear as the day progresses.

UPDATE 24/7/08 17.30 Geoff Taylor, chief executive of the BPI, has told the BBC

"A levy is not an issue under discussion. It has not been discussed between us and government and as far as we are aware it is not on the table."

He said: "There should be effective mechanisms in place (to deter file-sharing) and as long as they are effective, we don't mind what they are."

Sadly, that sounds like the sort of old-school thinking that won't get the music industry out of its current hole.

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