How Government Regulations and Taxes Impact the Music Downloading Industry
The digital music segment is driving the limits of user preference, widening its business forms and reach users around the world. Digital channels have surpassed physical layouts to grow to be the leading proceeds flow in the globe's major market, the US.
The current and expected government policies and regulations, including taxes and laws prepared to address issues incorporated with externalities, will negatively affect the illegal music downloading industry, and in turn, positively influence the music industry as a whole. By setting regulations and imposing taxes on Internet users, the government is cutting down the wide aspect of music piracy, and thus, the only beneficiaries are the artists and the record companies themselves. Current music piracy is generating a positive externality to those downstream transactions. A certain license fee set by the government on Internet users will prepare to revolutionize illegitimate file sharing and peer-2-peer activities, hence tackling and limiting the issue of externalities (Boorstin, 2004). An anticipated 6.5M broadband consumers illegally download files annually, which the industry cautions has led to a plunge in album and DVD sales. Around 95 percent of Internet music downloads is believed to be unlawful. So, the rules and taxes set by the authorities will control and regulate the notion of piracy and will subsequently help in fighting and reducing the unlawful endeavors of many Internet users. Industry procedures are helping expand this rightful business (Gayer et al., 2006). Limewire, the largest source of violating downloads in the US, has been announced unlawful, and Mininova, the main BitTorrent website, closed its illegitimate activities. The Pirate Bay was banned by the government in Italy, and its workers' illegal certainties were sustained by the Court of Appeal in Sweden.
It is evident that the government's acts to impose regulations and taxes will cut back the free downloading activities around the world substantially, however, will help artists and record companies contemplate on their surging sales and increasing revenues.