Tax haven the Isle of Man, with a population of around 80,000, wants to introduce a compulsory blanket licence for music downloads. Broadband ISP subscribers would pay a "nominal" compulsory tax, but be able to share music legally.

Surprisingly, the proposal has won approval from the chief executive of the BPI, Geoff Taylor.

"At the end of the day, we are not going to stop piracy, so let's embrace it," the Manx government's inward investment minister Ron Berry told the MidemNet conference this weekend.

The idea of legalising P2P rather than stopping it is an ancient one: it's been used to create for new technologies for over a hundred years. Where it's too complicated and/or expensive to count or police individual exchanges, a blanket licence has been issued. It's five years since Jim Griffin explained the merits of these here.

"If ISPs take the position advocated in the Isle of Man, we’d be in an enormously better position," Taylor responded.

However, many in both the tech business and the music business are wary of a government-imposed tax. A voluntary subscription scheme would provide an incentive for new services to be created - P2P service providers would compete for your custom. Such a voluntary P2P scheme is expected to be announced from a major UK ISP within a few weeks.

With a compulsory licence, ISPs would have no incentive to look after music sharers or differentiate themselves - everybody would be able to offer anything. And privately, labels are wary that collective agreements set a low floor price for music royalties.

A large record label can pocket far more by cutting direct deals with a BT or a Sky for a licence, rather than going the collective route. And as a recent survey shows, 81 per cent of users may not be considered "music sharers", so would chafe at being slapped with a tax.

But the approach has its supporters, including music manager Peter Jenner. We reported on a lively debate about voluntary vs compulsory approaches here in November. Summing up the differences at MidemNet this weekend, UK Music's Feargal Sharkey said most speakers were agreed on 80 per cent of the substance, only five per cent was hotly contested.

It's ironic that the Isle of Man is proposing a compulsory tax. The island has no capital gains tax, corporation tax and income tax is ten per cent. Industry sectors deemed to be of strategic importance - including movies and fishing - are zero rated. ®