The Performing Rights Society, the UK outfit collecting royalties for the music industry, wants to charge Internet providers for the amount of illegal downloading that happens via their networks. ISPs should monitor the traffic of their users and compensate the music industry for its claimed losses, PRS economist Will Page argues in a paper published today.

In a paper titled “Moving Digital Britain Forward Without Leaving Creative Britain Behind”, Will Page suggests various models through which ISPs could compensate the losses allegedly caused by customers that share music without consent from copyright holders.

The proposal piggybacks onto the UK’s Digital Economy Act, which requires that the level of illicit file-sharing should be measured. The PRS believes this is a unique opportunity to use these statistics to charge ISPs accordingly, by putting a price tag on the traffic volume generated by illicit downloaders.

Not all parties are equally excited about the idea. UK ISP Talktalk has responded negatively to the proposal from PRS. “It would require monitoring of traffic and this has huge implications in respect of directives on privacy and data retention,” TalkTalk told Sky News.

“It’s profoundly unfair – it is like making a bus company responsible for shoplifters who use their buses to get to the shops,” TalkTalk said. “It is futile since people will switch to undetectable methods e.g. encrypted services, streaming.” TalkTalk further emphasizes that the music industry should focus on building sustainable business models though innovation and by listening to consumers instead.

Indeed, the PRS proposal is overly simplistic since measuring illicit traffic is extremely complex. With the increased adoption of anonymizing services it might even prove impossible to get an accurate estimate.

Despite the technical issues, the economic aspects are more complex than the PRS believes them to be. Foremost, there is still a debate as to whether piracy results in losses, and if so, to what extent. Even if this number would be known, one can question whether it’s fair that non-pirating customers will eventually have to deal with price increases caused by the suggested “pirate levy”.