Last March the music industry announced they'd created a new organization tasked with trying to implement a music "piracy tax." In essence, users would pay their ISP $5-$10 a month for the right to download, copy and share as much music as they'd like without restrictions. Or at least that's the sales pitch; it's hard to believe the music industry's implementation of such a plan wouldn't have serious flaws -- the least of which being that the industry would probably have everyone paying a piracy tax, whether they pirated or not.

The idea of collective licensing is obviously not new. The EFF proposed just such a system back in 2004, but the music industry instead decided that "suing the hell out of everyone" (TM) made better business sense. In light of the group's creation, the EFF penned a guide on the right and wrong way to go about collective licensing.

The EFF believes a good system would be voluntary for users, artists and ISPs. A bad system would be little more than a Capone-esque protection racket, where you either "voluntarily" adopt the system, or get knee-capped. Knowing what you know about the music industry's tactics, which would you guess will be their approach?

To get their version of collective licensing approved by lawmakers and the public, the industry has hired former Geffen Records boss Jim Griffin to sell the idea over the next few years. According to Techdirt, the opening salvo in the sales pitch for the industry's version of collective licensing is to convince college universities that if they adopt such a system, the industry will stop suing students (maybe). Mike Masnick at Techdirt isn't particularly impressed:But not everybody dislikes the idea. Ars Technica's Nate Anderson this week penned a somewhat vitriolic post in support of the industry's new endeavor, proclaiming that Techdirt was engaged in "knee-jerk churliness" (sic) while "jackboot(ing) the music industry in the proverbial groin" for trying something new old. The Ars post mirrors complaints by Warner Music sent to Techdirt, suggesting that inherent skepticism of an industry that's shown no limit to their dysfunction and greed is an act of high treason:Of course Ars fails to note that Griffin and Warner Music aren't crafting the new system transparently with public input, and have thus far kept it under wraps. However, early leaks don't look promising. Indications are the system won't really be voluntary, and is -- in fact -- somewhat of a protection racket where those who pay don't get sued. In the industry's dream scenario, ISPs jump on board out of a fear of liability, tacking the $5-$10 piracy tax onto consumer bills already filled with annoying fees.

Even if done right the system has the potential to be a nightmare. In a follow up post responding to Ars's indignation, Masnick offers an interesting expanded post (be sure to read the entire thing) on why a music tax is a bad idea. Not only would the music industry's version of collective licensing not be mandatory, it would involve the creation of a massive new payment bureaucracy system they'd be sure to game.After watching the industry for the last decade, who wouldn't be skeptical of Griffin and Warner's plan to craft an entire new pricing model behind closed doors? A $20 billion kitty, managed by the music industry once filtered through ISPs, using the U.S. justice system for enforcement? What could possibly go wrong. Once in place, do broadband users see similar fees from the porn, gaming, comic, books, and movie industries?

Artists seem to be figuring out on their own that while piracy is killing traditional label album sales, there are creative new ways to make money, using the music as a promotional tool for touring and merchandising. Masnick argues that traditional labels are properly being punished by the market for failure to adapt to broadband and piracy, and rewarding them by letting them craft a new taxation system designed to keep them in control makes little sense.