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IntroductionOne of the most startling byproducts of the Internet revolution has been the widespread and illicit sharing of copyrighted musical works. The Recording Industry Association of America ("RIAA") reported that an astonishing two billion songs are traded online each month. 1 Clearly, this development has enormous ramifications for numerous stakeholders, running the gamut from artists to record labels to consumers. This Article argues that there should be government regulation in the online distribution of copyrighted musical works. More specifically, it argues for a scheme of compulsory licensing in which a federal agency would set different regulatory rules such as mandated price ranges for the online distribution of songs. A system of compulsory licensing already exists in other contexts within the music industry, 2 and some scholars have proposed statutory compulsory licensing as a possible solution to the high transaction costs involved in contracting with a large number of different music publishers. 3 This Article intends to contribute to the literature in the following ways: first, by arguing that the anti-competitive nature of the music industry inhibits innovation and that this anti-competitive structure is what justifies government regulation in the form of compulsory licensing, and second, by detailing how a scheme of compulsory licensing could be effectively implemented and how such a system's benefits would outweigh its costs.This Article advances five basic arguments: 1) the government should grant copyrights to innovators in order to generate the optimum level of creative output; 2) the copyright system fails ...