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As reported by TechCrunch – in March 2008, Warner Music proposed a $5 dollar/month get out of being sued tax to the U.S. Government. The tax would essentially protect illegal file sharers fro being prosecuted by the label, creating a highly controversial and minimally legal protection racket.

Protection rackets are a form of extortion most commonly used by the Russian Mafia & Japanese Yakuza. The scheme functions via powerful organizations which impose a fee to be protected by the organization’s actions. Similar to what you’d see in the modern day mob, where blocks are run by local chapters or bosses, and the businesses which fall within the leaders jurisdiction are forced to pay a tax for simply residing within the same residence.

The core difference between your standard protection racket and Warner’s imposed corporate tax are that the illegality of their actions are trying to be sanctioned officially to recover lost revenue from pirate digital music distribution.

The tax is being shopped to major internet service providers to help offset the ISP’s liability if a user on their network is known to be downloading terabytes’s of 0-day warez. The ISP’s would then in turn be expected to pay on behalf of the users on their networks, to avoid copyright infringement.

Warner’s decision to push for this new subscription based tax should be no surprise to music industry insiders. Within the last decade Warner Music has been failing shrinking from a $15 billion dollar music label to $10 million in under a decade.

The tax is expected to generate a $20 billion revenue stream, functionally tripling Warner’s earnings.

So Warner, does this mean $5/month for unlimited (illegal) downloads of your entire music catalog? What’s to prevent the label from becoming a loss leader when individuals realize they can download 100’s of CD’s for $5?

Since initially reported, the heat on this issue has subsided, though if interested you can call up your local congressperson to learn about their stance on the Warner tax.