Voluntary collective licensing proposes an alternate solution to the RIAA’s crackdown on file-sharing.

“Pre-settlement” letters to shake down file-sharers to the tune of $3000 a piece. Suing more than 30,000 file-sharers since 2004. Taking Napster and Grokster to the Supreme Court. Lobbying to introduce a bill (HR 4137) that would require universities to investigate “technology-based deterrents” to file-sharing, and tie their access to federal funding for student loans to their willingness to comply. Sometimes the actions of the RIAA, the major record labels’ trade association, seem as draconian as they do futile.

Despite countless attempts to legislate its end, file-sharing still thrives today. Bit Torrent transfers account for a huge amount of internet traffic and networks like SoulSeek and the reborn Oink (now Waffles.fm) carry music back and forth between music fans at an astonishing rate. The RIAA knows this, but has failed to come up with a model to compensate artists and its labels, and to deal fairly with those file-sharing consumers.

But there is a solution to turn file-sharing from a loss of control into a legitimate business, creating a revenue source for artists and an almost limitless resource for consumers, and it’s a fairly simple one: Collect a small monthly fee from system users ($5 a month is a number often cited) through a service they already use, such as their ISP or a student’s dorm fees. Users could download as much as they want, using whichever system they want, knowing that they’ve paid for the use of the system (much like paying for cable TV). The movement of files would be tracked through the system in a way that is accurate but still respectful of users’ privacy. And a portion of the money would be redistributed to rights holders based on download rates.

The proposal has been around for years, starting with Harvard Law Professor Terry Fisher’s book Promises to Keep in 2004. It has been updated by the Electronic Frontier Foundation (EFF) since then and I’ve been fortunate to work with them on the idea, called Voluntary Collective Licensing, since last summer. The plan received further interest this spring when Warner Music announced it had hired digital-music industry veteran Jim Griffin to explore the possibility of implementing such a system.

There are many questions left to be answered about how such a system would work, some with fairly easy answers: Companies like Big Champaign are already able to track P2P users with a variety of methods, and any business school student would jump at the chance to write a new business plan to get artists paid from file-sharing. Such upheavals and new models come along every time a new disruptive technology emerges (like gramophones and radios and cassette players). The more difficult question is: How to create a system that’s fair for everyone? Anything will ultimately have to be okayed by the RIAA–and let’s face it, they don’t have the best track record.

However it happens, there is little doubt that sometime in the next 10 years–and maybe as soon as the next couple–digital music and music ownership in general will become less like a commodity and more like a utility that you simply turn on. Sites like imeem.com already function this way and have secured licensing deals with major labels to do so. When file-sharing follows suit in a way that is fair for artists and their supporters, we can move forward in a fair and equitable manner for all.

For a simple read on the proposal for Voluntary Collective Licensing, see the EFF’s “A Better Way Forward” white paper at eff.org.