As the person who coined the term The Digital Economy in my 1995 book of that title, I feel obliged to comment on the UK government’s Digital Economy Bill, which was unveiled last Friday.   The proposed law is fundamentally flawed because it punishes Internet users who share songs. File-sharing a classic example of a disruptive technology, and we’ve got to get over this mindset that peer-to-peer sharing of music is stealing. The government should help the recording industry find a new business model that encourages music fans to enjoy a wide variety of music and compensates artists fairly for their talents. Sadly, obsession with control, piracy, and proprietary standards on the part of large industry players will only serve to further alienate and anger music listeners.

The solution is to stop trying to sell songs at a set price.  The music industry needs to think Wikinomics. Music should be a service, not a product. Here’s one scenario: instead of purchasing tunes, you would pay a small monthly fee for access to all the songs in the world – say $5 per month. Recordings would be streamed to you when you want to any appliance – your laptop, mobile device, car, home stereo, via the Internet. Call it Everywhere Internet Audio. Every customer has the Me Channel and could slice and dice the massive musical database anyway you like – by artist, by genre, by year, by songwriter, by popularity, and so on. The Me Channel would know what you like, based on what you’ve chosen in the past. You could even ask your Everywhere Internet Audio service to suggest new artists that resemble your known favorites or to create a new playlist of  Mick Jagger’s favorite tunes.

Musicians, songwriters and even their labels would be compensated through systems that track their popularity. All the music would be pooled and using actuarial economics the total pie would be divided up according to the number of times the songs of a given artist were streamed. Technologies and companies already exist that can do this.

Everywhere Internet Audio would make the problem of copyright protection vanish. No one would ever ‘steal’ music. Why would you take possession of a song when you can listen to any song at any time on any device? But rather than build bold new approaches for digital entertainment, the industry persists in a business model that turns their customers into criminals. And the industry that brought us the Beatles is now hated by its customers and is collapsing.