Tuesday, May 27, 2008

Arrington On Copyright: Wrong

I have always disagreed with Michael Arrington's position on copyright, which seems to be that people are going to steal, no one should do anything about it, and that copyright based businesses are going to die and that's not bad in his mind.

In January, Michael wrote:
Personally, I think a new era of free recorded music and paid live performances is a very good thing. Recorded music will become a marketing tool to get people to pay for concerts and merchandise. Overall the music industry will be smaller in terms of revenue. But the artists who are driven to create their art will continue to do so, and many will make a very good living from it.

First, to be clear if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc. What we will be saying is in the Internet era, copyright doesn't matter. And this is good?

Second, there is no evidence *at all* that free music on the Internet is an effective (i.e. successful career building) marketing tool. There have been no blockbuster successes that have come from, for example Garageband availability. I don't think you could even count more than a handful – if that – Internet-based artists making a living from music. I believe several of the American Idol contestants have been on indie music Internet sites, but you cannot attribute their success to the Internet.

Third, if the recorded music industry goes down, concert sales will not grow – they will shrink. This is because the money that goes into creating concert demand (all from record label marketing spends) will disappear. People *will* see fewer concerts and they will cost less money because of reduced demand. So not only will the recorded music business disappear, but so will the much of the live music business. So there will be no "live music windfall" to share. Revenue in live music will shrink substantially from where it is today.

In a continuation of the theme, Today Arrington writes:
My position is that it’s bad to criminalize natural behavior. And watching a clip of The Office, whether it’s legally on Hulu or illegally on YouTube is natural behavior. The only question is whether or not people are getting sued, or going to jail, for doing it.

There are several problems I have with the above statement. The first is that no one is criminalizing the viewer. In all p2p cases and in the YouTube case, the entity being criminalized or sued is not the viewer but the "facilitator". This means the person who posted or makes available the content, or the service itself.

In the case of Limewire, the software (I think by default) makes your music collection available to others. Most but certainly not all people know they are becoming *sources* of pirated content as well as consumers of it. But just to be clear, you can use Limewire without making your music available to others. In any case, I do not believe there has ever been a case of someone being charged with anything for receiving, watching or listening to pirated content. It is always for making it available to others in some way. So on the face if it, Michael's statement is misleading.

The second problem I have with this statement is that it reflects a misunderstanding of the purpose of law. I know Michael is a lawyer and I am not, but nevertheless, the purpose of law is most generally to stop people from harming each other, or society at-large, whether it is natural to do so or not. Certainly not paying taxes would be more "natural." And while we might argue over taxation levels, few would agree that allowing tax evasion would be socially beneficial.

The way it works is if the activity is harmful to others, we make the activity illegal. The larger the harm, or the more difficult it is to catch, the harsher we tend to make the offense in order to create a deterrent effect. This is the absolutely appropriate and necessary role of law in this country and actually more generally on our planet.

But the third problem I have with Michael's statement is that it suggests that he has some reasonable alternative in mind to monetize content published in this free-for-all way. But he does not. What he said today is this:

It’s time to rethink copyright laws, and it’s time for copyright holders to rethink their business models. The winners won’t be the companies that win or lose billion dollar lawsuits. It’ll be the companies that throw out everything that’s come before, and build new businesses around the natural behavior of people. Remove friction and win.

Without specifics, this is an empty, meaningless statement. Without enforcement and/or monitoring, whatever scheme one might come up with can't work. We don't currently have the technology to track every copyrighted piece of work, and we are unlikely to have any such technology in even the medium term. There is just too much content. Such tracking may be possible for TV shows and some music because of the severely constrained pool of content, but it will be impossible for everything else.

So generally, if we were to legalize the free trading of copyrighted works it would really be the end of monetizing content. Among other things, this would mean no more $100 million movies. Even $5 million movies would likely be impossible to recoup. Our visual entertainment would be confined to things like Star Wars Kid.

As I see it, the concept of "rethinking copyright" without specifics and without the willingness to follow things through to their natural conclusion is dangerous. This discussion must be about consequences. If you cannot propose solutions and provide reasonable answers to what the consequences are, such suggestions are only harmful because they embolden people to think that stealing intellectual property is acceptable and that IP protections are bad. But, In fact without intellectual property and attendant protections, we will be flushing down seven or eight percent of our economy directly, and indirectly twenty percent or more.

In other words, the stakes here could not be larger.

Interestingly, in the narrow confines of music, where usage could be tracked at least fairly well, Michael's concept of not punishing file sharing but turning it into a business might be possible. But this idea would, since there is no viable advertising model for music downloads, require that we tax ISPs and distribute the money in some way to copyright holders. But Michael is vehemently against that, calling it extortion.

The bottom line is you must do some combination of :
  • stopping the illegal publishing of the content through laws and/or technology
  • providing a means of monetizing free-for-all publishing through a tax of some sort
  • finding an advertising model on the net that really works broadly – so far most advertising outside of search has failed (including YouTube) or is failing, and music download ads have failed horrifically.
The argument that copyright holders are wrong or stupid for not coming up with some new business model and for trying to enforce the law is not just wrongheaded, but as I said above, it is dangerous.

A big piece of our economy and our value in world markets is tied into the creation of intellectual property. The collapse of the concept of intellectual property will have devastating economic effects on everyone in every post-industrial economy. This may seem like it is just about illegal downloads, but the issue is much more serious and if not addressed portends an economic melt down of unthinkable proportions. A little "straight talk" is really critical at this point, because we really are talking here about economic Armageddon. And so I hope that real conversation can begin soon, before it really is too late.

72 comments:

  1. Hear, hear! And it just gets harder with every generation that grows up in an atmosphere of "everything must be free because I want it."

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  2. Home taping is killing music.

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  3. "Second, there is no evidence *at all* that free music on the Internet is an effective (i.e. successful career building) marketing tool. There have been no blockbuster successes that have come from, for example Garageband availability. I don't think you could even count more than a handful – if that – Internet-based artists making a living from music. I believe several of the American Idol contestants have been on indie music Internet sites, but you cannot attribute their success to the Internet."

    There are bands like Panic[!] at the Disco which achieved success via the Internet as a discovery and promotional medium. So-called Myspace bands.

    I'm not challenging your premise because I'm not prepared at the moment to cite more than a handful of these but I would caution you against saying that there is no evidence at all because I think there is good evidence. Not enough to support Arrington's position, but enough to make your statement incorrect.

    I also think there is at the very least a niche for free-music-driven artists within the small label or independent communities who, while not being blockbusters, produce good quality and enjoyable music and make a living from doing so. I don't think you're arguing against them, but someone ended up railing on any group who decided to promote by free music and were able to exist on that model then I think they should be supported as being contributors to culture at their own expense to some extent and not treated as scabs or strike-breakers trying to ruin wage protection in an industry.

    My two cents. But, I agree with your statement about "natural behavior." That's really specious. I could get in to lots of controversial examples here--probably just stating that I could get in to such examples is enough for most people to think this through.

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  4. Justin,

    Today *most* bands succeed by getting enough online attention to get signed to a label, but not enough to actually make a career from their online activities. Everything converts to traditional sales before there is actual money making success.

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  5. Theres so much sense and logic in this post, its fantastic.

    What i like most about your posts Hank is that you dont just throw ideas around, you break it all down and offer suggestions.

    Cheers, Scott

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  6. Agreed. Just cautioning you from going too far, like Arrington's scorched earth recommendation.

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  7. While I mostly agree with your post, I think the ultimate question is what are we going to do about it? What can we do about it? There's really close to nothing anyone can do to stop this. Sure, you can shut down the websites that offer music for free, but you can't shut down torrents or LimeWire. Those services are, in themselves, completely legit, and since the music (or whatever media) itself is stored on the users' computers, the only way to stop it is to go after the users individually, which is near impossible because so many people pirate. Again, I'm not saying it's impossible to do anything, because there are a few things we can do to slightly lower it, but in the end it's an inevitable problem that can't be solved, and must only be worked around. There's nothing you can do about it except adapt.

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  8. Actually I think we're very close to having technology that could track almost all media over the Internet. The problem has been that the content owners have refused to pay for it or invest in it to make it worthwhile. Now they are reaping the future they sowed. Macrovision has been trying to get mass adoption around DRM technologies for years but the studios always wanted someone else to pay for it.

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  9. What I find amusing is that people with 6+ figure jobs have an easy time calling for the demise of the current copyright model. Abandon your day job and try to make a living selling material protected by copyright law while others steal your work and then tell me how broken the system is. It's easy to harp on large companies but the vast majority of those that reap the benefits of Copyright law are smaller individuals who would have little chance of surviving as a business entity with out it.

    What I'd like to know is when is the last time Arrington and his crew actually supported a local photographer and paid them for the images placed on his site? Camera's aren't free the last time I checked photographers can't survive on free food, free rent and free transportation. The same is true for musicians and filmmakers of course.

    Developing something that is creative let alone a creative success is far more difficult than people like Arrington can imagine and apparently appreciate.

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  10. "First, to be clear if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc. What we will be saying is in the Internet era, copyright doesn't matter. And this is good?"

    Wrong. The Movie/TV industry have created something amazing - Hulu. People will always read books offline (except for tech referential books).

    The music industry is the only industry that has no clue what they're doing. The digital music scene is ruled buy computer companies - isn't that hilarious?

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  11. "So generally, if we were to legalize the free trading of copyrighted works it would really be the end of monetizing content. Among other things, this would mean no more $100 million movies. Even $5 million movies would likely be impossible to recoup. Our visual entertainment would be confined to things like Star Wars Kid."

    ... because nobody would go to a theater when they could watch a crappy DVD rip on their computer.

    You made some good points, but then you had to go and undermine all your credibility by making provably false statements ("you can't compete with free" - paraphrasing; please correct me if that's not what you meant) and overly broad generalizations ("there is no evidence *at all* that free music ... is an effective ... marketing tool"). Go ask Tim Lee @ TechDirt if you're not familiar with how to compete with free. Here's a clue: even though Iron Man was available for free on torrents before it was released, you didn't see everybody staying home to watch it on their laptops, because there's more to media consumption than just cost.

    Change isn't just coming, it's already arrived; for good or for ill, it's here, and we must all adapt or become irrelevant. And that anonymous poster who claims the technology will exist that can track almost all media across the Internet is either completely clueless about technology, a media shill, or hallucinating (let me know when you figure out how to differentiate between mp3s ripped from media I legally own and mp3s I acquired from a friend's legally ripped collection).

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  12. Darkuncle,

    Actually, if ironman was made free because of a change in copyright law, then people would *not* buy it and there would be easily accessible versions on large flat screen TVs.

    "("there is no evidence *at all* that free music ... is an effective ... marketing tool"). Go ask Tim Lee @ TechDirt if you're not familiar with how to compete with free."

    Actually, I suspect I am far more expert on music issues than tim lee, or anyone at techdirt where they seem to be really on drugs. And as astonishing as it may seem, and though it may seem like hyperbole, it is not. This is not mere tuesday morning speculation as I have been looking for such evidence for several years. There is *no evidence* that the internet has been used to successfully sell records and concert tickets at a level necessary to make a decent living. It really is true. There are hundreds of thousands of artists wishing that they could make a living selling music and a small number that do, and none of those (or maybe one somewhere under a rock) who makes a living without label marketing efforts.

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  13. Its not that music "should" be free, but that it will be free.

    It is basic economics that how much you can sell something for will slowly drift down to whatever it costs to actually make each copy... since each copy costs $0 to make, eventually you can only sell it for $0. Because if you don't sell it to the people for cheaper, someone else will.

    The thing isn't that people "want" you to give away your music, but because each copy costs $0, bands that manage to charge $0 for their music and still find a way to make money other ways will reach more people than bands that charge you money to hear their music in the first place.


    I've found many bands I now like because of compilation disks downloaded from MySpace or distributed free over P2P. I never would have found them if I had to pay for the music first. Now that I'm a fan of the bands, the bands have an opportunity to sell me something that doesn't cost $0 to copy, like concert tickets or signed disks or t-shirts.
    Again, not a chance if I would have had to pay for the music in the first place since I wouldn't have shelled out the money for a band I didn't know.


    Its economics. If someone else can charge less for a product, they will get the business.

    I may not get to hear whatever band you are peddling, but I'll hear any of the thousands of other bands that sound just as good.

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  14. you're missing the point, Hank. If new theatrical releases were freely available in large screen formats (which they aren't, and won't be for some time - even if the will were there, the backend infrastructure to deliver it is not), people would STILL pay to see it in the theater because there's more to media consumption than the price.

    I seem to recall stating this in my previous post, and you either missed that, or ignored it. People pay for things they can otherwise get for free all the time, because the monetary cost is only part of the picture. Bottled water. People pay for concert tickets when they could listen to the radio. People bought Harry Potter when they could have read scans of it for free on torrents.

    Please stop arguing that there's no competing with free - it's provably false, and repeating it doesn't make it any less so.

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  15. darkuncle,

    You *can* compete with free. It is just a **MUCH** smaller business, and one that will leave lots of people out of business. This is about macro economics, not the economics of one specific circumstance. So your framing is off since whether or not *some* can compete with free is irrelevant. The point is that the businesses *will* be smaller. Much smaller. And that is empirically obviously true.

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  16. I just don't think there's much of a future in Hank's perspective here. Making copies of data is what computers do best - indeed, there's not much utility in computing unless you can copy data from memory to CPU and back - making it a rather natural phenomenon to copy and distribute digitally. I don't think that any future generation would have much of an interest in reversing this natural process simply because it ran counter to an ancient business practice, some many years ago. And I doubt very much that talk of a "Music Tax" will go any further than a half dozen desperate blogs.

    I work in the music business. Probably (based on Mr. Williams' apparent understanding) not the one you're thinking of - the one where toaster manufacturers and water utilities sell little discs of plastic for $20. That business is over. Nobody should cry for it. Nobody at the top at Sony, BMG or EMI was on your side, Music Fan. They wanted your money, that's all.

    Today's music business better reflects the reality with music. Artists are making serious money with a TV commercial placement these days, not with a chart-topping single. And the live music business is booming. Tours are money-making events again if you're of moderate size, and I'm mixing a lot of live concerts for cable, YouTube and DVD.

    Today, with the Internet, bands can break even on $300 in sales. It was $300k in the old days, before you saw any 10% royalty. Ladies and gentlemen, this is progress.

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  17. I agree that the business model will be smaller - but not so much smaller, as _different_. There is no divine right for any business model to exist, and in this case it wouldn't matter if there were - this ship has already sailed. Zero-cost distribution and flawless infinite copies are technologies that are not going away - business models will simply have to adjust, on local and global levels.

    At this point the argument about whether or not copyright needs an overhaul is really beside the point - we can pass all the draconian laws we like (or dislike) and snoop on each other 24x7, and some segment of the population will _still_ trade files (in fact, there's a segment of the population that would trade under those circumstances simply to protest such policies).

    Right or wrong, this is the state of affairs for the foreseeable future, unless somebody figures out a way to either destroy existing technology, or implement a perfect police state.

    What's irrelevant is whether or not a particular industry can compete, or whether this course of events is one that we should/would have chosen, or really how we feel about it at all. Time to be pragmatic and get creative, or find oneself replaced by somebody else who did.

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  18. I agree with the comments that state there is nothing technical that can be done about copyright infringement.

    I also agree with the comments about how this will create an economic imbalance in the marketplace which will result in reduced media production.

    As a consumer of media, who doesn't want to loose the media I dearly value. I support what I love and pay for it. It seems obvious to me that this is what needs to happen to maintain my supply.

    I suspect many other copyright infringers have or will have the same realization.

    Ultimately producers and consumers will arrive at a new equilibrium. The sky is not falling.

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  19. Well,

    Arrington is a trend follower and a trend setter (in some sense).

    For instance, today, he announced facebook will go open source before even facebook announced it.

    How does he get this insider info?
    Could he get this info if he were to take on facebook, google, and etc.???

    He is a very smart new generation reporter... He is not a columnist. He is not an industry leader. There is no way he can calculate and foresee how the copyright issue will be settled.

    His talent is in reporting and he does it good.

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  20. @anonymous (13th comment) "Its not that music "should" be free, but that it will be free."

    No. Music should not be forced to be free, and some will be free and the other not.

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  21. As a kid who used to be in a band, I can say free is the ONLY model that worked for us. The independent music scene is one of the few real-life instances of the mythical economic perfect competition. If people have access to (nearly) infinite bands, and everyone but me makes their music free, I don't even have a shot at getting a potential fan to my website again to buy a t-shirt. Obviously, my band wasn't a huge success by any means, but we made enough to cover our costs on tour (~300 a day between gas, food and misc expenses) and recoup $5,000 worth of recording.

    Maybe record labels need to accept that being multinational, billion dollar a year companies isn't in line with the new direction of the industry. I think once the bloated support industry that has sprung up around artists fades, the quality of content will increase and more people will be able to get exposed to music worth hearing, rather than Rihanna x100000.

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  22. @anonymous above,
    You are free to make your music free. Why are you trying to "require" everyone to make music free?

    By the way, your economic is not correct. Music market is probably better described as monopolistic competition, unless you (and others) produced undifferentiated music.

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  23. completely agree with the author. gave a thumb up on StumbleUpon

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  24. @hyokon said... No. Music should not be forced to be free, and some will be free and the other not.


    Economics is what is pushing music to be free and just because some people don't want that to happen is not going to stop it.

    Economics tells us that the cost of an item always drives down to the cost of making the copy. This is why businesses work so hard at cutting costs, so they can get that extra edge over their competition.

    Economic reality does not care what "should" or "should not" happen. Its more like a force of nature.

    It is not a person who is driving the cost of music to $0, it is the economic reality that when a company (or band) manages to make a successful business model by giving away music, they will have an edge over a company that tries to charge for music.

    Bands that give away music will reach more people than those that charge.

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  25. Well in Europe we have people who manage our economy/economics - poorly but they do it, its not a free force that does what it likes.

    If it all becomes free, there will be less money to "develop" talent - the talent may still be found online and become popular online, but if theres not any money to "develop", there will be less talent pursuing a career in that area.

    Hank you should build a visual cycle of this.

    Im concerned that with music, we get to a stage that theres no "new" decent music because theres no money in it for the most talented artists - then we all want to pay to get better music.

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  26. @Scott Purdie said...
    If it all becomes free, there will be less money to "develop" talent - the talent may still be found online and become popular online, but if theres not any money to "develop", there will be less talent pursuing a career in that area.


    You've got to remember that before there were record labels there was music. Lots of music. After record labels change to meet the reality of the digital age there will still be music, lots of music.

    Talent will still develop. Good bands will build an audience online and can translate that to lots of gigs. Good groups will still attract managers who will help develop them to bigger bands.

    Just because the songs themselves are free does not in any way mean the bands wont make money and wont "develop" just like they did long before there were record labels.

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  27. @anony "You've got to remember that before there were record labels there was music."

    And people paid to hear it (gig/record).

    How does a band make a decent living?

    How many make a living without label marketing efforts?

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  28. Please forget about the "it's free to copy" argument, when it costs thousands of dollars to produce the first one. That is crackpipe logic at its worst, and insults the intelligence of everyone here trying to say something actually meaningful.

    I've already tried to debate Mike Masnick and Michael Arrington - because the majority of their arguments are deeply flawed and have huge, huge holes in them that they cannot explain without going into some serious, bigtime denial.

    To the folks that think all musicians want to be road rats who live on $300 a day (divided by five musicians, of course):

    Forget about the fact that distributing someone else's works is against the law. Forget the simple, non-debatable truism that the music you're "sharing" wasn't yours anyway. So now nobody pays for music. The only way someone who makes music can actually survive doing what they love, is, well?

    Please, don't tell me a small local band that is too broke to tour is going to make a living on retailing personalized toilet paper and bumper stickers from their cafepress account.

    Please, don't tell me they are going to make a living on the local circuit, where in a lot of places the band actually has to pay to play. Been that way for decades.

    Please DO tell me, with logical, reasoned words, how someone who spends thousands of dollars creating something to give away is going to survive?

    You're so convinced (self-deluded IMHO) that the market forces will eventually push music into a free distribution model.

    And you thought music sucked now. Just wait, because this is the golden age compared to the drivel you're going to get when nobody can make a living at it. It's already nearly impossible to make a living as a musician as it is, and your crackpipe future can only make it worse.

    The problem with the music industry is the middleman. And that problem is sorting itself out organically, thanks to the Internet's disintermediation(TM).

    However, getting rid of the middleman isn't enough for some; and they'd prefer to get rid of the musicians as well. Go figure.

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  29. this argument is economically insane and copyright is obviously a brief, fleeting, and now obsolete legal response to replication technology. that being said, here are a couple points that rarely come up when fanboys prattle on about the professional fate of Madonna and Sugar Ray:

    1) artists in general are rarely compensated fairly, if at all, throughout history across the world. your arguments about incentive only defend profit hording leeches in the industry which is categorically the most unfair to its primary producers (recording artists).

    2)your incentive assumption fails because most professional musicians don’t make their living selling records, it is a very tiny subset of musicians which are album oriented recording artists. the price freefall is not catastrophic for music as a whole, only for artists who depend on the major label model for their primary income which is a minute, and usually less talented, portion of professional musicians. if you are terrified of the new Blink 182 album not coming out maybe you have a dog in this fight, but then you would have more severe problems to be concerned about.

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  30. Ron said: "Your incentive assumption fails because most professional musicians don’t make their living selling records, it is a very tiny subset of musicians which are album oriented recording artists."

    Before the Internet, you were absolutely correct. But now you're dead wrong. The Internet makes it possible for the bands to sell directly to the fans, and the recording industry is no longer a critical piece of the game for a band to make decent money. Assuming they get paid for those downloads.

    Ron also said: "Artists in general are rarely compensated fairly, if at all, throughout history across the world."

    So now that copying music is easy, let's screw the artists even more? Holy smokes dude, I'd hate to be an old lady trying to cross the street with you around.

    Somehow coming to the defense of the bands gets twisted into being a fanboy for generic, commercial crap like Madonna and such. What about the REAL bands? The Internet makes it possible for them to compete with the commercial trash, but you're instead choosing to lump them all into the same bin, severely limiting their income opportunities.

    I'd much rather sell my songs online for a buck apiece (knowing I won't ever see more than maybe 50 cents), as opposed to giving it all away and living out of a bus with the alleged dream of hitting it bigtime on the road.

    Tell you what, quit your job, teach yourself an instrument, start a band, and go on the road. You'll soon realize that "going on the road" for a small band means beating up the club owner in order to get paid after playing at his club all week, sending your drummer into the local store to shoplift so you can all eat, and putting every penny you actually *do* get paid into more gelpacks for lights and fixing the bus.

    That's assuming, of course, you actually can afford your own lights and bus.

    If you want to say the Internet has changed the business, you're correct. But that means you have to also update your definition of what exactly a *band* is. Besides, if you hate musicians so much, listen to white noise, you big cheapskate. :-)

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  31. spacemonkey: how many "recording artists" do you know who quit their day jobs without a trust fund?

    being in a rock band usually isn't a real job, and great artists will be compelled to create without incentive...they just might not bother giving it to you.

    i recommend you practice obsessively and get good enough to get paid for lessons, get session work, stand in on pick-up gigs, sell some commercial/industrial recordings, teach, book a residency at a museum or somewhere where the audience doesn't even know you will be there, etc. thats how real musicians pay the rent. They do not pay rent by driving to salt lake city with 4 guys in a van that keeps breaking down.

    i am sorry MTV lied to you.

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  32. There is one major flaw with your arguement: copyright law does *not* exist to prevent harm to anyone. At all. That is not the purpose of copyright law.

    The power to grant copyright protection comes from the Constitution, Art. 1, Sec. 8, which grants Congress the power "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the excluisive Right to their respective Writings and Discoveries;"

    The purpose of copyright law (and indeed Patent Law and arguably all IP law) is to promote the progress of science and the useful arts. It was thought that by providing exclusive control to the creator for a period of time, Congress would be providing an *incentive* for people to create new works. But that does not mean that we *have* to have copyright protections--it's a grant of discretionary power to Congress. I'll grant that it does seem to have worked well so far--but the Constitution clearly gives Congress the ability to limit Copyright or even abolish it altogether, if they think that would work as well.

    So the *real* question, which you don't really answer, is whether or not without copyright protection there would still be incentive to create. I don't think Arringtion's "natural behavior" arguement flys, because it doesn't really address this issue either. Obviously, monitization is a key component of incentive, but at the same time, the idea that rights must completely and utterly protected at all costs is not a given. Even the framers of the Constitution left that up to Congress to decide.

    So, although I'm not saying abolishing copyright is the best way to go, it's a legit alternative, and if you really want to address the issue, I think people need to stop thinking about "harms" done to creators, but instead look at *incentives* to creators. I suspect there is a way to balance protections to allow consumers what they want (not necessarily free as in beer, but freedom to do what they want, i.e. play a song on an iPod, stereo, etc. without invasive DRM) with the incentives necessary to keep artists creating content.

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  33. Ron, you got me confused for someone else. I *have* lived out of a tour bus for a couple years, and you've most certainly never seen me on MTV. And you're never going to see me on MTV either, I quit trying to make a living on music a long time ago.

    I don't know any "recording artists". I've always been an independent artist, and always hung out with other independent artists.

    However, like you state, music simply wasn't a realistic source of income. I don't make a cent off of music now, and don't aspire to either.

    I'm saying this in the hopes that you overcome your mistaken assumption that I'm a tool for the major labels.

    I used to be the small guy, just trying to make music. And with that being a part of my personal history, I'm obviously in support of the small guy just trying to make music.

    However I am not in support of the deluded cheapskate who thinks something that is easy to steal should be free, just because it is easy to steal.

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  34. Dave!

    you cannot take part of my statement and build an argument. What I said is:

    "the purpose of law is most generally to stop people from harming each other, or society at-large, whether it is natural to do so or not."

    I would say if we did not have inventions, art, music, etc. or we severely diminished them by eliminating incentive to create, that would harm society.

    You can argue that money does not motivate people, but at least in America, that argument has long been had and lost, and we have decided we like the capitalist structure here. There are those here and elsewhere that believe in the core socialist idea that everything should be commonly owned and money should not be an incentive, but you will find few takers for that here. And thus we have decided here that financial reward is the motivation for engaging in successful creative efforts.

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  35. Public domain is very important. Ask William Shakespeare who wrote "Romeo & Juliette" based on earlier works or Walt Disney who created such derivative works as Cinderella, Snow White, Sleeping Beauty, and more recently The Little Mermaid.

    That ability must be protected more than the ability of companies to protect copyright forever.

    Mickey Mouse and the Happy Birthday Song are both works who were created long before most of our lifetimes, but haven't been allowed to go to the public domain where they should eventually go.

    Paul

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  36. Paul,

    I certainly do not support indefinite copyright as we seem to now have. But this discussion has nothing to do with that issue.

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  37. I like Dave!'s comments, thats pretty on target.

    To expand on the law-and-order angle, everyone does realize that this piece pretty much advocates criminalizing everyone who has ever used the internet, right? consider that in the post-patriot act world.

    spacemonkey:

    did your artistic output cease once you decided it wasn't economically viable? Mine didn't, rather it continued to improve.

    i think we are a lot alike in our experiences, but my point is that what I call recording artists, you call independent artists, i.e. those this piece defends on economic grounds, are a minuscule portion of the market. i know plenty of musicians on both sides of the line and my only point is that musicians do not tend to rely on record sales as a source of income so this whole argument is moot.

    if your point is that e-commerce is a level playing field, i get, but its a hypothetical with an infinite number of new competitors so it might be a worse situation for independent sales than brick-and-mortar. I'll give you some ePets stock for your next record, fair?

    That being said it is a tangential technicality compared to what every one wants to fight about, which is if enforcement is appropriate or not.

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  38. @Purdie said...

    @anony "You've got to remember that before there were record labels there was music."

    And people paid to hear it (gig/record).


    People did not (always) pay to hear it. When there is a concert in the park it doesn't cost the listener to find some grass to sit on. When a bar hires a band it doesn't cost the listener to get in. Radio used to play music you'd want to listen to and it didn't cost.
    Examples of how you give away something to make something else more valuable (the park day or the bar).

    In another window, I'm looking thru Amazon's catalog of music so I can get some music via Pepsi Points... I'm going to drink soda anyway, so Pepsi is using free music to convince me to drink their soda.


    @Purdie said... How does a band make a decent living?


    Bands can sell t-shirts or rights to their music to shows or games or sell limited edition CDs or signed pictures.

    Free music does not mean no copyright. So the band can still make money selling music for other reasons or for live gigs.


    @Purdie said... How many make a living without label marketing efforts?


    Lots and lots of bands made livings without big labels marketing them. Just look in your local music scene. The better bands get more and bigger gigs. Its not the millionaire lifestyle, but its a living that many make.

    And again, just because the music is given away free does not stop there being labels, it just means the label has to make money in other ways than selling overpriced disks. Even now we see the big labels signing contracts where they get a cut of concert and other revenues.


    Marketing will be a challenge, but it always has been. With the vast proliferation of free music (MySpace) out there, its damn hard for a good band to get heard. But charging for something others are giving away isn't good marketing. (and making me pay some kind of "copyright tax" is _really_ bad marketing).



    @Spacemonkey said..
    Please forget about the "it's free to copy" argument, when it costs thousands of dollars to produce the first one.


    I agree totally...
    But the way bands and labels recoup the cost used to be by adding in a small cost to each song sold. This made sense when it cost something to make a disk and you could only make a fixed number of disks. The cost of each copy is non-negligible so the impact of adding a small amount to spread the initial upfront cost is insignificant. With a fixed cost to produce each copy, you have to sell a certain number to make back the up-front cost for the disks and the production.

    But things change as the cost of making copies goes down. Suddenly its much cheaper to make more and more copies, so the amortization of the initial production of the song is spread out more and more. And since your up-front cost to make the copies gets lower and lower, you have to sell fewer and fewer to recoup your investment.

    Now take the cost of copying to $0. You can instantly make 20 million copies of a song for $0. Yes it still costs to produce the initial copy, but you can spread that cost out to an infinite number of copies. How can you amortize and add an incremental cost to a copy that costs $0 to produce?? Do you charge $.01 per copy??? (*)

    And again, the band that can get by giving away its music for $0 will have more people listen to its songs than the band that charges even $.01.

    It is not that people want to steal or that people want to undercut musicians (**)... its just economics. If an item costs $0 to produce a copy, then economics will cause that item to cost $0 to sell because if you don't sell it for $0, your competitor will.



    (*) And the idea of paying the same for a song electronically as you do for a physical copy is absolutely ludicrous! The physical copy costs some amount to make which just isn't there with the infinite number of electronic copies they can make. Even with the overhead of servers and virtual storefronts, online songs really shouldn't cost but a fraction of their physical copies.

    (**) Note, I'm sure some people do want to steal and others don't care much about if the musicians ever get paid... but most of the people pointing out the economic reality of free music are not in that camp.




    @Spacemonkey said.. Please DO tell me, with logical, reasoned words, how someone who spends thousands of dollars creating something to give away is going to survive?


    Take two bands. They are both equally good and both play lots of small local or regional gigs and want to get bigger and "go pro". Both bands scratch together thousands of dollars to make a master disk and another $5,000 for 1000 copies of the disk with a nice label and all professional looking.

    Both bands sell disks at their local music stores and at their gigs.

    One band gives away the music as fast as their server can copy the files. They encourage people to post copies of the music anywhere. They encourage people to share the songs as much as possible. They give away lots of the extra disks to anyone who asks.

    The other band charges $10 each from their website.

    In the next year:
    Which band is going to make more money?
    Which band is going to reach more potential fans?

    After one year, which band is more likely to have more fans and thus fill more gigs and thus get more offers for bigger gigs?


    Economics is not about "good" or "bad" it is more like a force of nature. If something costs $0 to copy, then someone will sell it for $0 and the person who tries to sell it for $.01 will be undercut.

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  39. Ron,

    To paraphrase:

    The people that actually *do* make money selling music are bad and undeserving of their success. These people disgust me. But I want what they make - i.e. their crappy music... for free. And so I will take it -- crappy though it is. And it is OK for me to take it because these financially successful musicians are just a small group of people relative to the larger pool of musicians that don't make it. So if the successful ones cant do it for free they are either stupid or greedy or both. Personally I think making music, and writing songs should not be a career for anybody. They all suck.

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  40. Anonymous, thanks for the logical explanation.

    However, there's something significant missing from your examples of the two bands.

    What if, one of the bands was solely interested in making music, and not so enamored with touring and performing live?

    They still produce music. They produce an art that people enjoy. The production of that music comes at a real cost, plus time and effort of course.

    If they were selling their songs online for $1 each, they would have a chance to get compensated for their efforts. With the crackpipe free distribution model(TM) however, they are forced to accept that their recordings will always be a financial loss and the only way they could ever make money would be by touring or at least trying to gig locally. And if being a musician is obviously not a viable profession, then you can't tour because you need a real job to pay the bills.

    I keep bringing this up, and it rarely is answered to. Simple fact: Not all bands want to live out of a bus, not all bands are interested in the gigging scene.

    That assumption is just that, an assumption. So does this mean you should only be a musician if you want to tour?

    I thought the Internet, as a means of cheap distribution, would be a solution to that problem.

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  41. Anonymous,

    Your argument is a common misuse of the marginal cost pricing principle of economics. The idea you espouse is that competition is driving things down to its marginal cost which in the case of music is, you posit, zero.

    But this is not the case. Consumers are not buying the cheaper product between arctic monkeys and madonna. If they were that would be competition. And if madonna and the arctic monkeys kept lowering their prices because consumers were buying from the cheaper musicians, then your thesis would be correct, and competition would drive the price towards (but never all the way to) its marginal cost. But that is not what is happening. Band A is not lowering their prices in response to Band B. Consumers rarely make A to B price comparisons between artists because you cannot replace a madonna record with an arctic monkeys record and vice versa.


    What is actually happening in the market is that unit volume is down because people are taking the product, using it, and not paying for it. This is *not* competition and it does not relate to marginal cost pricing at all. If you dont believe me please look up marginal cost pricing principle, but please stop misusing it.

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  42. @ Hank

    Hank isn't wrong to say that "Without specifics, this is an empty meaningless statement." But it is a bit of an twisted exaggeration. These kinds of speculative statements are the life-blood of blogs just like yours, Hank ;)

    I think you also may have misunderstood what Michael was saying when he said companies should "throw out everything that's come before," because the rest of your refutation seems to imply that Michael's suggestion requires some kind of "tracking technology" for copyrighted material. Besides being an impossibly expensive technological feat, there are some very good reasons no one should want this implemented, and I don't believe that's what Michael had in mind.

    @ arguments that the Internet is not as effective as traditional marketing media for copyrighted material:

    While I am inclined to agree with Hank's statements about American Idol being *the* major contributing factor to successes among its contestants, it's easy to see how this method of reasoning would lead to a biased sample problem: as traditional (ie. non-internet) media are still drawing the largest number of eyeballs, isn't it therefore natural for artists who are reaching toward success using newer media like the Internet to also reach out to traditional media when the opportunity presents itself? In other words: don't bands that initially depend on the Internet as their marketing plan of action tend to disclude themselves from that exact sample group once they start seeing great enough success to get noticed by traditional media?

    As others have noted, Hank, I think it's a very unhealthy exaggeration for you to say that "there is no evidence at all that free music on the Internet is an effective [career building tool.]"

    @ some important semantics of Hank's post:

    "...few would agree that allowing tax evasion would be socially beneficial."

    Were something allowed, it could not be evasion. This may seem like a trivial accident that could easily be rewritten, but I think it's indicative of Hank's way of thinking, which seems to value persecution of freeloaders (freeloaders which fundamentally can't exist if what they're using is actually free of charge) and devaluation of the productivity of other freeloaders (you know, the ones who make new music or games that incorporate the works of others, without paying, probably because they aren't themselves charging anyone else; see the Florida Today story at the end of my comment for more.)

    "The way it works is if the activity is harmful to others, we make the activity illegal. The larger the harm, or the more difficult it is to catch, the harsher we tend to make the offense in order to create a deterrent effect. This is the absolutely appropriate and necessary role of law in this country and actually more generally on our planet."

    The problems I perceive with this paragraph are twofold:

    First: The application of this supposition to this debate (which seems to me to be the economic and moral consequences of intellectual property law) suffers from the assumption that it is harmful to deprive someone of a specific business model as a means of making a living. I believe Hank's other arguments which are more about economics make much more sense than this one, because which business models our society elects to behold as being valid and invalid is completely subjective; it varies between different cultures and different eras. As such, the perception of whether or not individuals are harmed by the removal of a particular business model is also entirely subjective.

    Some examples of this cultural subjectivity: In some cultures, it is considered quite objectionable that natural resources be reaped in any way that does not benefit all inhabitants of the land from which those resources are taken. Conversely, some people believe that if you are clever enough to know of a more valuable usage for those resources, then you can simply buy them and reap the difference of valuations. Another example: Some people find that certain greenhouse gas emissions are not justified by the ends for which they are suffered; if those people had their way, those businesses would be ended. Jobs and fortunes would be lost. Even if you don't subscribe to global warming (although I'm quite sure you're a little diluted if you don't) you can certainly conceive of some uber-wasteful means of producing something that isn't allowed in your country today because your society deems it too harmful. In France, you cannot run advertisements targeting children age 12 or under. Those are unworkable business models, too, but they are less objectiontable due to incidental circumstances, such as whether or not there are any people who presently feel their livelihoods depend on those business models.

    Yes, some people will make less money without the notion of intellectual property enforcing their scheme for monetization. For instance, if I ignore intellectual property law, I can review an album before I choose to buy it without having to find a store or a friend who will let me preview it first. If I ignore copyright law, I can choose to steal a platinum album from an artist who I have decided doesn't need my money as much as Charity XYZ. The Church of Scientology would also be much less empowered to harass its detractors, and Wikipedia wouldn't feel compelled to get permission to display the insignia of the United Methodist Church.

    Second: I believe a strong argument can be made that the current state of intellectual property law in the United States is much more harmful to all the arts than it is beneficial.

    @ Labels

    Hank made several statements both in his main article and in responses to comments referring to record labels which suggested both that they exist apart from the Internet (as though record labels don't create websites for bands or sell music through iTunes) and that their means of marketing were infinitely more effective than the Internet. This contains a few critical errors of logic:

    First: Not all products sell equally well with demographics reachable by each medium. Personally I'm surprise that someone as smart as Hank has not really talked much about this; some products simply would never have been considered successful were they hocked by traditional advertising media. Likewise, it's probably very difficult to sell the latest plastic pop sound over the Internet.

    Second: Record labels work, as Hank has made very clear, for money. If all music and other artforms were governed primarily by their potential for monetary gain, we'd have an even more spiritually barren wasteland to call our entertainment industry. (Maybe we can fill the void in our soul with million dollar Hollywood special effects.)

    Wrapping this up:

    I applaud Hank for attempting to consider the economic realities of this "devaluation of intellectual property," but in the end he's very biased, as he never takes any time to discuss the economic benefits of this devaluation. He only focuses on the negative impacts, maybe because that's a ripe niche in the blogosphere for an intelligent writer to take, or maybe because his friends and/or family are also friends of the MAFIAA.

    Here for your consideration, however, are some real-world issues that have received a great deal of consideration as economic realities of keeping frozen this antiquated manifestation intellectual property law in the United States:

    I have mirrored the archive.org copy of the original Floriday Today article because it is no longer available on their website. This article features a story about musicians, "usually duos," playing covers without compensation at a coffee shop. What does our society value more? The right of musicians to play these songs? Or the rights of those songs' original musicians to tell them they can't? Does your evaluation change if the venue doesn't invite the musicians, and the musicians are just playing for fun without an invitation to do so?

    In a BBC article we have a story of a automotive maintenance chain being sued for copyright infringement because the mechanics listened to the radio while working. What does England value most? (Also when I read this article, I'm confused because when I hear "radio" I assume they mean commercial radio, commercials and all, and I don't see how this can be considered infringement by anyone but the radio station if in fact any infringement is going on at all.)

    Another well known point of contention in the intellectual property arena is sampling music -- in some cases I would agree that it's a rather clean-cut case of one artist benefiting from the work of another artist, and if he sees monetary gains then he should be paying a royalty -- but I would not want that royalty to be prohibitively expensive. In other cases I would disagree: if an artist includes a sample of a song that to make a deliberate artistic reference to that song, it's not as if the free market is available to give that artist other options: that artist can't choose to license more affordable music, and I don't think the author of the original material (be that music or any other material) has any right -- nor do we as a society have any interst in -- preventing an artist from reusing that material.

    The point I'm trying to illustrate here is that there are a lot of widely varied economic realities to the intellectual property debate, and Hank only ever examines one side of them.

    Earn a little respect Hank and quit regurgitating an oversimplified view of the problem.

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  43. Hank, marginal cost IS zero and it IS in competition.

    1) the consumer can choose it as a perfect substitute instead, that is a competitor, and a perfect one at that, by definition.

    2) Marginal cost to copy is the very tiny cost of bandwith to copy the file. that is literally how much it costs to make the copy. no question this is MC.

    just because legality is questionable doesn't change the definition of competitor and marginal cost of production. economics isn't about money and laws, it is about analyzing decision making and values.

    MC and price war theories hold quite irrefutable in this situation.

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  44. Ron,

    The marginal cost pricing principle has nothing to do with competing with the stolen version of your product since that is not competition in the economic sense. You may, if you wish, rewrite the meaning of economic theory, but that is what you are doing since (as a result of research I am doing) I have spoken to several economists about this and no once considers theft a component of the theory since the psychological and interaction dynamic is totally different. I simply say if you are going to use academic or theoretical frameworks, please know how they are used by the people from whose domain they come. You can't just say its so "because". And there is no academic or scholarly literature to back up your interpretation.

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  45. hank, i think the economists you talked to are either speaking to something different or are utterly incompetent. i think they might be thinking the argument is nonsensical because the MC doesn't apply to a competing firm, but i would argue that the consumer is investing the MC themselves (effort and bandwidth).

    if music isn't in competition with free then what is this entire conversation about?

    in my explanation i gave assumed definitions as proof my interpretation of econ is correct. you merely claim to have talked to economists about the subject.

    can you provide better definitions of competing product and marginal cost? please explain what your wacky economists are insisting.

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  46. Ron,

    "can you provide better definitions of competing product and marginal cost"

    Actually, no I can't. It seems fairly obvious to me if you look in any economic texts. But if you need more I cant give it to you in a blog comment. And and even if I could, I could not right now because I am weary. This thread has been going on all day and people like you who righteously promote theft have an indefatigable zeal for your unethical advocacy.

    But soon i will respond in copious exacting detail. I am working on a *much* longer work to lay it all out. And I am sure, when it is done, and when it is for sale, you will steal it since you don't believe in copyright, and you will insist that I should instead be touring or something, because you have a divine right to my and all of the creative works of others.

    Simply amazing.

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  47. This comment has been removed by a blog administrator.

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  48. This comment has been removed by a blog administrator.

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  49. i'm so sorry you are weary. but you just accused me of pulling concepts out of thin air when i did in fact define them.

    you say you cannot, i assume because you have to consult an expert, as they are simple concepts. i summarized it in 2 bullet points.

    if you are going to be so dismissive of my stated definitions you really ought to correct them rather than claim you have smart friends who swear you are right.

    where is the love?

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  50. Ron,

    I would suggest, since this is *your* adaptation of the marginal cost pricing principle, that it is your job to cite appropriate references to ground it. I do not believe you will find any such academic support. But I must credit you with your efforts to *sound* erudite while defending your right to steal.

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  51. Hank,

    Nice well thought out post. You may not be a lawyer but your knowledge of IP law is sound. The fact that Arrington is a lawyer doesn't give him any sort of monopoly.

    Arrington is mostly an entrepreneur, and a good one as far as I can tell, but I would not put much weight in his copyright rants. We are in no danger of seeing the Arrington copyright reality any time soon: 1) because it doesn't make sense; 2) because there are powerful interests that will never let this happen.

    That said, keep on hammering him because it makes for good reading!

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  52. ECONOMIC EXPLANATION:

    1) the consumer can choose to download as a near perfect substitute instead of buying a CD. this product is a competitor to traditional media sales.

    2) Marginal cost to download a copy is the very tiny cost of bandwith to copy the file. that is literally how much it costs to make the copy. no question this is MC.

    3) MC matters strictly because a firm cannot survive charging less than their MC for their product. In almost all cases this situation would force a shutdown decision.

    4) MC for download is smaller than even the transaction cost alone with a traditional media store.

    5) MC for the download is in this case not paid by a competing manufacturer, but rather an investment decision on part of the consumer.

    6) Consumers will (in a vacum) always choose to pay less (invest the MC in self-manufacturing the product) rather than pay a higher price somewhere else.

    7) This shows how the lowering marginal cost of production is applying price pressure to traditional media manufacturers. They are competing with a nearly perfect substitute product which has a price of effectively zero.

    8) The only way to soothe this price pressure is by aggressive enforcement, which would drive up the MC investment of the (presumably criminal) downloader by adding risk of severe punishment.

    LEGAL & ENFORCEMENT IMPACT:

    i do not think enforcement on this scale is possible, the technology will just evolve. Individual punishment would have to be far more wide ranging and effective than recent RIAA efforts. Again, i do not believe enforcement on this scale is even possible.

    Now, if it WAS possible, it would have the end result of eroding individual rights to a terrifying extreme. The FBI must raid your hard drive so Jack Valenti can keep his pension? You really prefer that to conceding that copyright was a temporary legal construct which has become obsolete? The alleviation of scarcity here by giving media to the poor may outweigh any economic hardships the displaced industries must suffer anyway.

    So in closing, i never said anyone had a right to steal, rather i suggest that the economic, legal and enforcement realities makes right and wrong utterly moot in this case.

    Prices drive to zero, enforcement remains impossible. If it is possible it will be a dangerous, Orwellian police action. i believe this to be inevitable.

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  53. @Hank Williams said...

    Ron,
    To paraphrase:

    The people that actually *do* make money selling music are bad and undeserving of their success. These people disgust me. But I want what they make - i.e. their crappy music... for free. And so I will take it -- crappy though it is. And it is OK for me to take it because these financially successful musicians are just a small group of people relative to the larger pool of musicians that don't make it. So if the successful ones cant do it for free they are either stupid or greedy or both. Personally I think making music, and writing songs should not be a career for anybody. They all suck.




    That's a strawman of what most people are saying... I thought you were above that...



    But I want what they make - i.e. their crappy music... for free.


    And I think what Ron and most people are saying is not that they necessarily want the music for free, just that the economic reality will push the cost of music to 0.

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  54. hey, you smugly insulted my knowledge of economics and said it was on me to *further* define the concepts which we were arguing about, which i did. aren't you supposed to now devastate me with your level of knowledge surrounding the impacts of marginal cost of production on pricing and competitive strategy? I'm dying to know what I got wrong.

    did you even read my post or just cut and paste your previous, self-righteous misunderstanding and/or oversimplification?

    looks like i forgot that the internet is like the special olympics...even though I won, I'm still retarded.

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  55. @spacemonkey

    I keep bringing this up, and it rarely is answered to. Simple fact: Not all bands want to live out of a bus, not all bands are interested in the gigging scene.

    That assumption is just that, an assumption. So does this mean you should only be a musician if you want to tour?


    If they want to make music and sell it, they can.
    Nothing stops bands from charging $100 per CD now, but they don't because no one (or few) would buy it.


    I've never said that bands cant sell their music for whatever they want... its just the economic reality that the pressure will be to push prices down to $0.

    When the cost to make copies is $0, someone will find a way to give away their music and still make a decent living and the pressure will be on all the other bands to give away their music too.

    Bands can still charge whatever they want for their music... just like they can now.
    And just like you don't see many bands selling disks for $100 a pop now, you will see more and more bands give away their music because they have to because everyone else is.

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  56. Why are you guys arguing about a problem that cannot be solved?

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  57. "the economic reality will push the cost of music to 0"

    MUSIC COSTS MORE THAN ZERO TO CREATE. To copy? OK, yes: zero. To create? If any serious, sustained creation is to happen, it costs AT LEAST a working wage for each creator involved in the process. This should be simple to understand.

    The same is true of every other art form. Why is the public so selfish and so unwilling to help the creators of art to be able to continue creating art?

    I'm not defending corporate greed in the current copyright laws, but I'm seriously pissed at the refusal to willingly support artists monetarily ... and the unwillingness to protect the support of artists through the law.

    Thanks for your support, you selfish, greedy consumers.

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  58. Great post, Hank!

    The copyright as it is today is kaputt. The Internet has created an environment for artists that will soon lead to ultimate mediocrity.

    As you pointed out, artists (a) have to survive, and (b) are looking -as almost anybody else living in capitalism- to make extra money that takes them beyond pure survival. Artists want to drive a nice car, too, and maybe own an appartment. However, with the unlimited distribution (that usually is FREE distribution to those who consume the product) their ability to sell their works shrinks. Now they are in fact competing not only against other artists for market share, but also against FREE copies of their own work. See Youtube as type example, where dozens of copyright protected works appear any given moment, fighting for the same eyeballs as the original creator or his licencee. Only very few artists can actually survive such a fight.

    If creators are not incentivized by making (decent) money, they will sooner or later pull out of the business and do something else instead. If you can not survive from your work, you HAVE to look for other ways. Simple, really.

    Right now, we seem to be in a consolidation phase; traditional artists who became famous in the "old world" will be able to make money because they built a brand name (Madonna, Stones, Britney Spears, U2, just to name a few). But over time, these artists will drop out of the system (and ultimately die).

    This will leave a void.

    But how will this void be filled? What will consumers listen to or watch or read when a good chunk of creators drops out of the business? Well - mediocre works. Works that have been created by consumers who are no professionals. They can not spend the time to become experts (because they have to survive), so their works will reach only average quality at best. For example, on video we will see more and more clips by teenagers, taken with their mobile phone. Does anyone want to see that crap? I don't know, but I guess we have no choice. Maybe our viewing habits will adopt to this change?

    BTW, I am a creator myself (photographer), and I feel the pressure from the Internet already. Believe it or not, but even photographers get ripped of by those freeloaders, and noone cares about us. I wonder whether the photos that appear on SAI or TechCrunch have been licenced?

    Anyway, one of the reasons why people actually steal artworks is certainly a feeling of "payback" for the decades of being in the strangling grip of the industry. For years they felt that they overpaid. And they wonder - does an artist have to have one or more villas? Does an artist have to have ten Ferraris? Consumers realize that they have paid for these toys, and decide that enough is enough, and start to steal content whenever they can. Video? Go to Youtube. Books? Go to Scribd. And so the value of IP is reduced to zero in their minds, and it becomes a habit to take the free lunch.

    Little do they know or care about the long-term consequences of this (and no, I am not keen on this world of mediocrity, either).

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  59. [quote]"So generally, if we were to legalize the free trading of copyrighted works it would really be the end of monetizing content. Among other things, this would mean no more $100 million movies. Even $5 million movies would likely be impossible to recoup. Our visual entertainment would be confined to things like Star Wars Kid."

    ... because nobody would go to a theater when they could watch a crappy DVD rip on their computer.
    [/quote]

    My brother, who has a large screen tv hooked up to a dvd player, prefers to watch dvds mailed to him from (a legitimate) dvd rental service. My neighbor with whom I was going to watch "I Am Legend" until he downloaded it at some P2P the suggestion of his nephew, mentioned that it would have been better at the top rated theater.

    I think that movie theaters may survive, but if DVD sales and rentals are curtailed by P2Ps and bittorent sites, that, along with the home theater business cuts the budget that movies have to work with, which will cut the quality of movies, which will further reduce the demand for movie theaters, which are the last hope of the movie indusrty.

    But don't worry, you can always download a free documentary of the rise and fall of the movie business.

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  60. This comment has been removed by the author.

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  61. And if you disagree, I will double post!!

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  62. Anonymous said...
    "Its not that music "should" be free, but that it will be free.

    It is basic economics that how much you can sell something for will slowly drift down to whatever it costs to actually make each copy... since each copy costs $0 to make, eventually you can only sell it for $0. Because if you don't sell it to the people for cheaper, someone else will."
    -----------------------------------
    Right. It cost me years of sacrifice, thousands of dollars of hard earned money and thousands of hours of painstaking work to make an album.

    Your simple rationalization fails to take that into account.
    -----------------------------------
    "The thing isn't that people "want" you to give away your music"
    ----------------------------------
    That is correct. people *always* wanted to get whatever they could for free.

    It's just that technology apparently has made it possible to FORCE me to give away my music, against my will, in violation of my copyrights.

    Without any compensation whatsoever. m|m

    And I'm just a hard working, "little guy". But no matter the size of your operation, you are still putting everything you have into it. You have to get something back to be able to continue.

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  63. Scott said:

    "I work in the music business. Probably (based on Mr. Williams' apparent understanding) not the one you're thinking of"

    There is only one music business. You work in an aspect of the music business that you think/hope won't be affected.

    " Today's music business better reflects the reality with music. Artists are making serious money with a TV commercial placement these days, not with a chart-topping single"

    As opposed to being able to make money both through licencing and sales of copies. You are bolstering HW's argument that the business is shrinking substantially.

    " And the live music business is booming. Tours are money-making events again if you're of moderate size, and I'm mixing a lot of live concerts for cable, YouTube and DVD."

    I'd like to know how many "moderate size" acts never had any label affiliation. Youtube is a money loser. Concerts for cable and DVDs will both go down the drain if people can download the content for free and play it back on their home theaters.

    And your job security/income as FOH may not be as secure as you think with the unemployment of countless top notch recording engineers who will be competeing for your job lest they wind up greeters at walmart.

    "Today, with the Internet, bands can break even on $300 in sales."

    Step away from the kool aid.

    Your laptop cost more than that. Even if someone in your band can do a decent job of recording, uses cracked software, the cheapest crappy Chinese equipment, and records and rehearses in a garage, your overhead is way higher than that.

    If you're talking about $300 dollars in sales of online copies, with a promotional budget of roughly $0 that's pretty optimisic.

    If you're talking about selling CDs at a concert, that doesn't even pay for the gas.

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  64. "Economics is what is pushing music to be free "

    No, it's the irresponsible use of technology that is pushing music to be free.

    Before people were able to accomplish illegal downloads, you had to buy physical copies at a store, listen on the radio and wait for the song to come up in rotation, or go to a friends house and listen.

    And don't get me started on how much faster/ cheaper/ easier it is to copy a CD than it ever was to copy to analog tape. There's no comparison.

    "when a company (or band) manages to make a successful business model by giving away music, they will have an edge over a company that tries to charge for music.

    Bands that give away music will reach more people than those that charge."

    Oh really? Which bands that give away their music have reached more people than the Beatles or (insert next 1000 most popular acts)?

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  65. Donny Viszneki said...
    "Were something allowed, it could not be evasion."

    Right. Well copyright infringement is not only not allowed, it's a felony.

    Quoted from http://www.unc.edu/~unclng/copy-corner66.htm

    The most recent amendment to criminal copyright infringement was the No Electronic Theft Act of 1997 (NetAct) which made it a felony to reproduce or distribute copies of copyrighted works electronically regardless of whether the defendant had a profit motive.

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  66. This is the best thing I've ever read on the net.
    Anyone who thinks stealing intellectual property is acceptable needs to be socially euthenized... cut off from doing harm to those in the world who have talent, drive, and meaning, and not allowed to roam the world free to steal all they want without consequence.
    We may not have enough consequences in place now... it's just technology needing to catch up with itself... and as soon as it does, all these countless millions of thieving losers around the world will finally pay for what they've done.
    I know it sounds condemning, but hey, I have morals; I don't steal.

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  67. i hear alot about all of my generation downloading music. I still buy cds from the record store. I have never even used iTunes. I am 25 and have been on the indie music band wagon since i was 14. I look on the internet to hear songs as a sample, sort of the largest compilation album ever made. If I like what, I go to the store and buy it when i have the money. if i end up loving the album, i go see the band when they come to town. additionally, i would rather own the album and the album art that an mp3. i can't believe i am the only consumer like this.

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  68. Wow. I'm so impressed, I'll say it backwards. Wow. Well written!

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  69. First, there can be no successful online (or copyright free) organizations as long as copyright is law. The market is skewed as long as the government grants copyright monopolies. Second, one cannot steal a song (or any idea), they can only violate copyright. To steal something one must be able to deprive someone else of it. Third, innovation won't suffer, but buggy whip manufacturers will. Oops, I mean "current copyright managers will".

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  70. When copyright law was being debated in British Parliament, what proponents said was that if there were no rewards for writing books, there would be no writers of books. This extends today to music, television, film, and computer software.

    What everybody forgets is that intellectual property rights are not a divine right, but an instrument of law that succumbs to one evil (government sanction of a monopoly) to avoid another (the stifling of innovation). These days, I would say that intellectual property laws are a tool that make the rich get richer and the poor get poorer, especially since the rights are transferable. So many times you read about great innovations that are bought by large competitors simply to bury them to protect their existing monopoly of the market. There are companies that do nothing except research patents, buy them, then file lawsuits.

    On the other hand, I am writing into a blog that is running software that's provided for free (apache web server). In fact, 90% of the internet is run on free, open source, software. I use open source software, and I contribute patches to open source software -- and I don't need any royalties paid to me for my work in order to do my work.

    Technically, I can't make a home video of my children singing happy birthday because the rights to the song "Happy Birthday to You" belong Warner Brothers.

    In intellectual property laws, I see a bad, corrupt system that needs to be seriously reworked, and I absolutely can't get behind the status quo.

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  71. Can everyone be an astronaut? No.
    Can everyone date a runway model? No.
    Can everyone be a fulltime musician? No.

    Why is that? Because supply and demand doesn't allow it. There's too much competition in music, and it's only going to get worse and worse and worse. Most musicians will never make a full-time living at it. It's always been that way. Music is a passion job, the act of making music is pleasurable and the process is it's own reward. Good songs will continue to be made by musicians, even if they might (gasp) have to work regular jobs like everyone else.

    A bit of copyright protection is okay (maybe 20 years), but nothing as grossly bloated as what we're seeing now. The current copyright laws are designed to protect mega corporations, at the expense of personal freedoms. That corporate money train needs to end. All the people leeching on "intellectual property" profits, need to go out and find real jobs, do something that actually helps society.

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  72. God gave Hank Williams much wisdom. Praise be to God.

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