Recently, Michael Arrington at TechCrunch wrongly accused “the music industry” of advocating a “music tax,” (something that copyright law calls “compulsory licensing”). One day, TechCrunch was appalled and horrified that the music industry was seeking compulsory licensing. The next, TechCrunch recanted, but characterized one label’s proposal for voluntary blanket licensing as “Here’s What They’re Really Planning: Pay Us Not to Sue You.” It called this “a scheme very similar to classic criminal protection rackets.” There are two fundamental problems with the TechCrunch reports.

First, “Pay Us Not To Sue You” describes—not the operation of criminal protection rackets—but the operation of property rights in all traded goods or services. Doubting Crunchers can verify this for themselves: Go to a local electronics store, grab some pricy gear, and leave without paying for it. This is why you cannot leave an Apple store with a free iPhone: The people who made it must be paid not to sue (or prosecute) you for just taking one. In effect, a property right in a trade good really is a right to sue those who just take it without securing consent, (i.e. “paying for it”).

Second, had TechCrunch actually investigated, it would have learned a shocking truth: While “the music industry” does not, many people and groups really do advocate replacing copyrights with a “music tax.” These include allegedly public-minded, Silicon-Valley-loving Internet savants like Lawrence Lessig, Yochai Benkler, and James Boyle, groups Public Knowledge, “innovation scholars” like Hessler, von Hippel, and Bessen, Berkman-Center law professors like William Fisher, Johnathan Palfrey, and Johnathan Zittrain, and the distributors of the file-sharing programs LimeWire, eDonkey, Grokster, Blubster, Morpheus, and KaZaA. Scores of other “scholars,” technologists, and “public interest” groups are also long-time advocates of replacing copyrights with such a “tax.”

And since TechCrunch was appalled by the mere hint of a compulsory “music tax,” it would have had apoplexy had it learned the gory details of the sweeping “content taxes” advocated by these supposedly tech-loving, public-minded thinkers. One such “careful and comprehensive” plan is advocated in Lessig’s book Free Culture (2004), described in Fisher’s book Promises to Keep (2004), and praised in many of the Grokster amicus briefs that the Supreme Court unanimously rejected.

Here is how it would work: The federal government will abolish copyrights and make digital content, (including porn), “seem free” to the rest of the world by taxing U.S. users of some technologies that can access, store or play content, (e.g., ISP services, blank CDs or flash drives, mp3 players, Tivos, etc.). The government will also implant into U.S. computers, TVs, portable players, smartphones, and stereos sophisticated spyware that reports everything that you read, watch, and hear—thus ensuring that you can’t “semi-deliberately … forget[] to report pornographic or juvenile programs….” So if you watch any tax-funded porn, then the government will record that, and record whether you watched it with your significant other—or whether you were alone. The government will then use this information, (along with its own “unavoidably vague” judgments about the value of content), to allocate tech-tax revenues among worthy creators. And, perhaps, for other worthy public purposes.

This nightmare of governmental control and surveillance is the Internet savants’ vision for the future of content and the Internet. And note: It does not involve “filtering” with automated fingerprint-matching technologies that need not even record what people are merely downloading. To the contrary, it involves pervasive government surveillance of everything that law-abiding citizens actually watch, hear, or read. So when someone like Professor Tim Wu calls fingerprint-matching “Orwellian,” he just misuses the term. It is not “Orwellian” for an ISP to use automated fingerprint-matching to prevent infringing uses of its facilities that undermine the private production and dissemination of expression. “Orwellian” means telescreens that receive and transmit so the distribution of government-controlled content also becomes its means of pervasive surveillance. That is literally “Orwellian”—and it the core vision of both Free Culture and Promises to Keep.

In short, neither TechCrunch nor anyone else can fairly blame the music industry, (or any other creative industry), for advocating a “music tax”—much less for advocating the vision of a dangerously socialized, spying Internet that has been embraced for years by the likes of Lessig, the Berkman Center, and so many other self-anointed Internet savants.

Nor should anyone readily excuse the savants’ haste to be rid of property rights: For years, many U.S. businesses have made the risky investments needed to produce many valuable resources—investments that made the U.S. a world-leading producer of both expression and innovation. They did so because our laws granted them enforceable property rights (exclusive rights) in the results of their labors—regardless of whether they resulted in good movies or good mp3 players. They did so even though their property rights—even if perfectly enforced—could still loose all value because of competition or “Creative Destruction”: If someone invents tomorrow new products or art forms that eliminate demand for existing mp3players or movies, then the businesses that produced those goods are finished.

But something very different is happening to content on the Internet: Music and movies have not lost their value. Nor has the ability to monetize their value been lost. For example, Free Culture argues that “file-sharing music was the crack cocaine of the Internet’s growth” that “drove demand for access” and “demand for bandwidth.” (p. 296).” So music delivered great commercial value—just not to those who made the risky investments needed to create the music that people valued.

Consequently, the real problem is that the property rights of the artists and venture capitalists who make the risky investments that create valuable expressive works are becoming too porous and difficult to enforce. If uncorrected, this situation could indeed play into the hands of "scholars" who long for a socialized, spying, government-controlled Internet.

But that will only happen if we forget that enforceable, pay-us-not-to-sue-you property rights are a prerequisite to market competition among potential producers of valued resources. If we do forget that, if we do force industries to choose between writing off most of the value generated by their shareholders’ investments or letting it be nationalized so it can be partially recouped, then TechCrunch might be right: Those industries may make—may even be obligated to make—choices that all of us will eventually regret.

All of us, that is, except the bureaucrats who end up lurking in our computers, smartphones, and televisions—watching, listening, recording, and judging.