French subsidy
October 14, 2010
The European Union on Tuesday approved a plan that would let the French government subsidize music purchases through online subscription services.
The scheme would allow French citizens between the ages of 15 and 25 to purchase a 50 euro ($70) Carte Musique, or "Music Card," for only 25 euros. The money could be spent on online music subscription services. French officials have said the plan would last for two years and people would be able to buy one subsidized card per year.
It's the latest development since French President Nicolas Sarkozy first proposed the plan at a speech in Paris in January, where he argued that French youth don't pay for music because they are so accustomed to getting everything online for free.
"We have to absolutely re-create a market," he said during the speech. "Let me add that buying music is a good investment, beyond simple pleasure. I hope that the Music Card for youth will be put into place as soon as possible, by summer 2010, for all music, of course."
The Music Card plan has not moved as fast as Sarkozy had hoped, and it may take even longer, given that the government has not stated when it will launch, nor which music sales services it will work with. The government has said the cards will only be used on subscription-based sites, like eMusic, and not services that offer individual tracks for download, like iTunes.
Industry says piracy hurts profits
The music industry has said piracy is hurting their business, especially in European countries where piracy is rife, as is the case in Spain and France.
The International Federation of the Phonographic Industry reported in January that France has seen local artist album releases fall by 60 percent between 2003 and 2009. The federation links this drop to its statistics showing that one-quarter of the French online population illegally downloads music.
Online music stores will also have to contribute a little something in return for the subsidized cards. The new government measure will require music operators to reduce prices, extend subscriptions times and advertise for the Music Card on their websites. Plus, they can only receive a maximum subsidy of 5 million euros per year.
EU market reform needed
But online industry observers are not convinced that such a scheme will solve, or even make a dent, in the larger online piracy problem.
"This is a small and inadequate recognition of something that's far bigger and more difficult to fix," said Joe McNamee of the European Digital Rights Initiative, a non-profit organization in Brussels. "The market in Europe for digital content is extremely fragmented, extremely uncompetitive."
In other words, the legal music services that do exist in some parts of Europe aren't available in other parts of the continent. The single economic market hasn't yet translated into a single market for music - songs available legally online in France or Ireland may not be available in Estonia, Malta, or Bulgaria.
Other critics of the Music Card plan point out that this idea isn't sustainable - giving French youth some free money to spend on music won't necessarily change their behavior in the long run.
"There is no evidence that this would be useful to anything but bringing a bit more money in the pockets intermediaries of distribution of digital music," said Jeremie Zimmerman, a spokesperson for the French online advocacy group La Quadrature du Net.
The French government told European Union authorities that it estimates around 1 million cards will be sold per year. If that holds, that could yield 50 million euros over two years going straight from French taxpayers to the music industry.
Author: Cyrus Farivar
Editor: Sean Sinico