Tagged: artificial scarcity

Why free culture?

The other day, I wrote a (ridiculously long) post announcing my commitment to free culture, and more specifically, to free music. I didn’t expect anyone to read the entire thing, but my friend, John, not only read it but also responded to it on Facebook. I’m not sure what his privacy settings are like on that note, so as I reply I will quote him often.

John, I really appreciate your response. I didn’t interpret as “pompous” in any way, and I hope the same will be true for my response. ;) I really appreciate the opportunity to hammer out these points in more detail, the opportunity to have a real discussion and debate about them. It’s nice to be able to address these questions in a conversation rather than just on my own.

(0) Statement of Intent

My original post was largely addressed to people already familiar with the free software movement. Long as it was, I assumed for the most part that readers would already accept the idea of free software and argued for extending those freedoms to cultural works. I’ll try to reply to John’s concerns now, along with a few other commons concerns, without assuming such prerequisite knowledge.

Still, this is part of an on-going conversation and is not intended to be complete. I hope to develop a more complete and concise summary on my wiki over time.

Index

(NOTE: these links might not work on Facebook)

  1. Freedom — the ethical argument
    1. The Four Freedoms
    2. A Moral Imperative
  2. Economics
    1. Definitions
    2. Approaching zero
    3. The Economics of Abundance
    4. Let’s talk about music
      1. Selling music recordings
      2. Live Performances
      3. Session Work
      4. Other Merchandise
      5. Kevin Fox – an example
  3. Other
    1. Communism
    2. Exploitation
      1. The T-Shirt Example
    3. Nine Inch Nails — Ghosts
    4. Making a direct profit from your product
    5. Digital Audio Players
    6. Shakespeare
  4. Conclusion

(1) Freedom — the ethical argument

(1.i) The Four Freedoms

The Definition of Free Cultural Works describes the four freedoms as follows:

  • the freedom to use the work and enjoy the benefits of using it [freedom 0]
  • the freedom to study the work and to apply knowledge acquired from it [freedom 1]
  • the freedom to make and redistribute copies, in whole or in part, of the information or expression [freedom 2]
  • the freedom to make changes and improvements, and to distribute derivative works [freedom 3]

This is generalized from the free software definition.

(1.i.0) Freedom 0: the freedom to use

This is the most fundamental freedom, to use a work that you posses. For software, this means “the freedom to run the program for any purpose.” For music, this means the freedom to listen to that music.

Digital Restrictions Management (DRM) is a huge attack on this freedom. With music, for example, you are unable to listen to music as you please if DRM dictates which devices or which software is permitted to playback your files, or even how many times or how often you can listen to them. Even though all DRM is circumventable, some countries (like the United States) legally forbid you to do so. Anti-circumvention measures mean that no one has any fair use rights, because DRM technology is law.

John hasn’t directly expressed any troubles with this freedom. This, I think, is the easiest one to accept. However, simple as it is, it’s often not respected. DRM is a technical measure that attacks this freedom, and legal barriers exist in the gray areas such as making multiple copies of a copyrighted item for personal use (e.g. backup, use on multiple devices, etc.). Fair dealing provisions in copyright law may be able to protect this freedom, but most large proponents of copyright law are also large opponents of fair use (e.g. RIAA/CRIA).

(1.i.1) Freedom 1: the freedom to study

For software, this is extremely relevant, described as “the freedom to study how the program works, and adapt it to your needs” (from the Free Software Definition). This includes access to the source code. In the Definition of Free Cultural Works, “the license may not, for example, restrict ‘reverse engineering’.” This is the freedom to open the hood of your car and make modifications.

For cultural works, the part of this freedom which may be more relevant is the freedom to “apply knowledge” acquired from studying the work. I’m not quite sure exactly what this means yet, but it seems reasonable. If there are objections, we can research and discuss further.

(( I do plan to release the “source” for my music (ie. multi-tracks), I think, even though it’s not required by the CC BY-SA license. The Barenaked Ladies did this for a few of their tracks when they were encouraging fan remixes. I think it’s a cool idea. ))

(1.i.2) Freedom 2: the freedom to make and redistribute copies

First, and perhaps this is the root of many of the rest of my questions, I continue to take issue with the freedom to redistribute software, music or any other such item at no cost. Thus I take issue with Myers’ point that he takes as self-evident [about] freedom of distribution[.] I believe that this promotes a kind of Randian piracy of creative effort. [- John]

This is fundamental. If you consider physical goods, there are no limitations on redistribution. If you buy something, it’s yours and you are free to do with it what you please, which includes sharing it with a friend, reselling it or giving it away. We don’t have this freedom with digital goods, such as software or music. The reason, I would argue, is that with digital goods, one needs not relinquish their own copy to share it with a friend. It’s actually copying, not transferring ownership.

But, what’s wrong with that?

I think digital technology is a blessing and not a curse. This is an advantage of digital technology. Sure, it will shake up business models that are based on scarcity if goods are no longer scarce, but businesses come and go with technology. We shouldn’t limit the usefulness of technology in order to protect out-dated business models. That sort of protectionism prohibits progress and does not have the best interests of society in mind. We don’t need to prop up the buggy-makers just because automobiles are making them obsolete.

It’s a strange idea for things to be owned by their creators rather than their owners. Imagine what implications that would have on all your possessions, none of which would actually be yours anymore.

John, correct me if I’m wrong, but I think your problem here is with the economic implications of such a freedom. I would argue that the economic considerations are secondary to the ethical ones, and that there are economic models that work.

Let’s look at the ethical side. Benjamin Mako Hill quotes Eben Moglen when addressing the issue:

The great moral question of the twenty-first century is: If all knowledge, all culture, all art, all useful information, can be costlessly given to everyone at the same price that it is given to anyone — if everyone can have everything, everywhere, all the time, why is it ever moral to exclude anyone from anything?

If you could make lamb chops in endless numbers by the mere pressing of a button, there would be no moral argument for hunger ever, anywhere.

I see no system of moral philosophy generated by the economy of the past that could evolve a principle to explain the moral legitimacy of denial in the presence of infinite profusion.

Mako Hill continues,

With all its warts, copyright was a system that filled an important role at a particular time and in the context of particular technological and social systems around the production and and consumption of a particular intellectual good: eighteenth century printed books.

The only reason freedom two was ever restricted was that, in a certain specific context, it made some sense to do so. In that context, the average person couldn’t practically redistribute works anyways; few people owned a printing press. Now that anyone can be a distributor, the freedom is much more important and the trade-off of restricting it as an economic incentive for creation is no longer a fair one.

What about before copyright? How would works of Aristotle had been preserved if scribes needed to worry about licensing copies? How would such ideas spread and give rise to academic and intellectual debate? The advantage of the natural and free flow of ideas vastly outweighs any perceived advantages of giving creators an artificial monopoly over their works. The freedom to share something with your neighbour is more important than the creators ability to become rich. Plus, with the proper economic perspective, allowing the exercise of this freedom can help you make money.

I’m going to leave this as rather abstract and philosophical for now, but we can get into specific practical examples of the exercise of this freedom as the conversation continues.

As an auxiliary argument, there is absolutely no way that people will stop making use of technology that is so useful. The RIAA will never stamp out Napster spin-offs. DRM will never work, it is defective by design and unbelievably flawed in such basic technical ways. To believe that something infinite (a digital good) and in demand can be made truly scarce is foolish.

(1.i.3) Freedom 3: derivatives

If you accept freedom two, I think freedom three follows fairly easily. If permitted to distribute verbatim copies, why not permit the propagation of improvements or spin-offs as well? I addressed many of the main concerns in my original post. In short, derivatives can include modifications (a musical remixes, changes to the software code) or other uses as well (e.g. syncing music and video, like the way my high school Student Council used music in our videos). The derivatives are one of the most important parts of free culture, since it’s only natural for us to reuse and build on existing ideas.

I won’t go into depth here.

(1.ii) A Moral Imperative

I think a system in which the creator of something we legimately call a “tool” such as software, as it is explicitly called by many proponents of free software, should be able to directly monetize this tool but not be forced to offer it for free with no personal gain on the basis of some social moral. [- John]

But Rob Myers writes,

Free Culture is an ethical matter. As with Free Software, economic concerns are secondary… the economic harm [free culture] may cause for current business models is both acceptable as a moral consequence and can be offset by business models that are already being proven.

If you accept the ethical arguments, but hold economic concerns above them, that is a straightforward — and, I believe, misguided — example of the ends justifying the means. The ability to make a profit from one’s work is a good ends, as is encouraging the production of cultural works, but if the means involves violating people’s freedom, it’s unethical. Furthermore, it’s based on misguided thinking because cultural works can and will be produced, and profit can and will be made, without implementing a means that disrespects freedom. (That’s demonstrated by history, by current examples and by the economic arguments.)

To limit any of the above freedoms is unwise, unnecessary and unethical.

(2) Economics

(2.i) Definitions

Price
the amount of money needed to purchase something; a product’s monetary value.
Value
The property or aggregate properties of a thing by which it is rendered useful or desirable, or the degree of such property or sum of properties; worth; excellence; utility; importance. [1913 Webster]

(2.ii) Approaching zero

I read Techdirt a lot, which you can tell if you ever click through my links. Mike Masnick from Techdirt writes extensively about the economics of abundance.

We usually think of the economics of scarcity — the allocation of scarce resources based on supply and demand. Economic models based on scarcity break down when the supply is abundant. There is an inverse relationship between price and supply; as supply increases, price decreases (assuming constant demand). Thus, as supply approaches infinity, price approaches zero. Digital goods are infinitely abundant, therefore it’s natural and inevitable that their price will approach zero in a competitive market.

Note that value and price are two separate things. Value, as defined above, is much more than price; price is merely a subset of value — monetary value.

Mike Masnick writes,

[Price and value] are not the same. Value drives demand — but price is set by the intersection of demand and supply. If supply is abundant, it’s not going to matter how valuable your product is, price will get pushed towards zero.

We can see the price of digital audio files approach zero, the price of news articles approaching zero, etc. Free (as in price) music does not conflict with the free (as in freedom) market, basic economics still applies to infinite goods.

(2.iii) The Economics of Abundance

Many people think that economic models break down when a zero enters the equation. (“You can’t compete with free [as in price]” or “giving your content away isn’t rational”, etc.) The economics of abundance teach us how to make more economic sense of zero. Business models based on the economics of abundance recognize abundant goods and use them to add value (especially monetary value) to scarce goods. Basic supply and demand still applies to scarce goods, but abundant goods can be leveraged to increase that demand.

Kevin Kelly writes about eight “generatives” (things which can’t be copied) that are “better than free [as in price]:” immediacy, personalization, interpretation, authenticity, accessibility, embodiment, patronage, findability. You can find examples by clicking through the links or reading some of my posts on generatives. His suggestions aren’t exhaustive, but they’re a good starting point. (And yes, the word “generative” is silly.)

The economics of abundance is about monetizing the complements, or, more specifically, monetizing the scarce complements. In recognizing abundance when you posses it, you can capitalize on it, for example, as a promotional tool for your scarce goods.

The alternative is artificial scarcity, to pretend that your abundant goods are scarce and attempt to artificially inhibit supply. DRM is an example of this. This usually tramples on people’s freedoms and neglects much of the value of the goods you posses (i.e. their digital value). Also, it usually fails. How has DRM worked for the music industry?

(2.iv) Let’s talk about music

The language is very ambiguous here, so I’m going to be careful with my terms.

Music — an ordering of sounds, possibly words — has immense intrinsic value. Music is valued in and of itself. Music in this sense (e.g. a song, a composition) is also scarce. In order to get a new song, someone must write it. Though, a composition is not scarce in the same sense that physical goods are scarce because it is an idea and ideas are naturally free-flowing; when someone hears a tune, they might possess it without taking it away from someone else. From an economic perspective, however, a composition is scarce.

Digital audio files — a format of musical recordings — are infinite because they are digital. Whenever I say “music is an infinite good,” the “good” I am referring to is that digital musical recording, not the composition (i.e. the idea) itself.

Also, digital audio files are infinite, but CDs are scarce insofar as they’re physical. Thus, “music” can refer to either the composition (e.g. a song), a digital recording (e.g. an OGG file) or an embodied recording (e.g. CD). I’ll try to be clear.

Music is extremely valuable, though copies of digital audio files are easily made and therefore not as valuable, especially in a monetary sense (i.e. price). As an infinite good, it is natural and inevitable that the price of musical recordings will approach zero. This does not mean that artists can’t sell music recordings. This does mean that artists will want to sell other things alongside their recordings.

(2.iv.a) Selling music recordings

As an independent BY-SA artist, I still expect to make a significant amount of money from selling my music recordings (whenever I have something to sell). Recent examples have shown that people will still buy music they like when it’s available at no cost. People still paid for Radiohead’s In Rainbows despite the fact they could get it at no cost and people still paid for Nine Inch Nail’s Ghosts despite the fact that it was available on file sharing networks at no cost. People will still support the artists they like with their wallets (in generative-speak, this is patronage).

In both cases, artists added value to their offerings to encourage fans to pay. Radiohead offered the deluxe box set (generative-speak: embodiment), and Nine Inch Nails offered several packages which included added value (high quality audio files, artwork, CDs, DVDs, signed packages, etc.).

A CD is also a physical good and is therefore scarce. Most artists make money from selling CDs at concerts, especially independent artists. The more popular an artist becomes, the higher the demand for their CDs. In Rainbows has been selling on disc despite the fact that it is widely available online.

(2.iv.b) Live performances

For me, live performances have been my main source of (musical) income over the past year. This “product” is the least copyable of all. Even if all your music, all your artwork and t-shirt designs are released under free (as in freedom) licenses, no one can reuse your person in a live performance. Concert tickets are an important complement to music.

Songwriters who aren’t performers obviously wouldn’t be able to take advantage of this though.

(2.iv.c) Session work

Most of my musical activity in the last year has been on violin, partially because my band is dead (that’s another story), partially because I’m in demand as a violinist. There aren’t many violinists who are also folk/rock/songwriter savvy and I’ve been trying to leverage my skills recently by playing with other artists. This overlaps with live performances, but I can (and hope to) also offer my services on violin for work in a recording studio.

(2.iv.d) Other Merchandise

Bands make a surprising amount of money from other merchandise, such as t-shirts and posters. I don’t think it’s an epicycle (which John had mentioned) because a) it’s already an important part of life as an independent artist, and b) it’s in addition to (not in place of) selling music.

The point here is more of a “make sure you sell the other stuff too” if you’re music is widely available at no cost. This certainly applies to free culture artists, but also to musicians in general since all popular music tends to be available at no cost online.

(2.iv.e) Kevin Fox – an example

Kevin Fox is one of my musical heroes. He’s a singer/songwriter, guitarist and cellist. As a cellist in the music business, he’s in high demand. He’s played on some of Robyn’s recordings (as session work) and I spotted him in a recent Jann Arden music video. I’ve seem him play in the Andy Kim band (“Sugar, Sugar”) and he’s been the musical director for Shaye. His main product is himself.

For me, I hope to have a similar component to my music career as a violinist and multi-instrumentalist.

Also, as a side note, he makes money from making music, not from music that he’s already made. In what other careers does one make money from work they’ve done in the past? Usually, people make money from working. I don’t think it’s a tragedy if musicians do the same thing.

(3) Other

(3.i) Communism

John often brings up communism when talking about free software/culture, though often with some disclaimers about it being a bit of a tangent, but I thought I’d take a second to address the issue.

I don’t understand how free software or free culture is at all communist.

The systems of copyright and patents impose government sanctioned and enforced monopolies on ideas. Free software and free culture involves less government control, more free market, more personal freedom and allows for more freedom of expression.

Moreover, free software benefits many corporations. Companies like Google and Facebook wouldn’t exist without free software, they wouldn’t have had the ability to rapidly scale their software without licensing fees (freedom two) or adapt it to their particular needs (freedom one).

Just because free software/culture encourages collaboration and a sense of community doesn’t mean that it’s communist.

(3.ii) Exploitation

John’s uneasiness about freedom two seems to be largely based on a concern that creators will be exploited if they don’t have copyright laws to protect them. I believe this is a common myth that ought to be debunked.

First of all, copyright doesn’t prevent exploitation. I would argue that, in its current state, it encourages in many ways. How many musicians actually own the rights to their music (example), authors to their books? Copyright laws don’t necessarily protect the “rights” of creators if those rights are assigned to corporations. How many times have you heard about musicians in dispute with their labels? There are authors who can’t sell or distribute their own novels anymore because of publishing deals, even if the publisher refuses to print and sell more copies after they cease to become available. I’ve met musicians who aren’t allowed to sell me their own CDs because of their record deals. Copyright laws encourage the exploitation of artists by corporations.

Secondly, the purpose of copyright was not to prevent exploitation. The purpose of copyright was to promote the progress of science and useful arts (in the words used in the American Constitution, for example). Copyright doesn’t grant creators artificial monopolies to “protect their rights” or because they “deserve” such monopolies, but only because such monopolies were believed to be potentially useful, in so far as they promoted the creation of more works by offering a financial incentive.

Society traded away its rights in exchange for more cultural works. The deal may have been fair a few centuries ago, when the average person would hardly be able to exercise freedom two, but copyright laws are ill-suited for the digital age when we exercise such a freedom constantly.

(3.ii.a) The T-Shirt Example

Let’s say I decide to sell t-shirts (humour me, I’m not exactly that far yet, lol).

Take your example of monetizing music through t-shirts or other paraphenalia. Under the fullest extent of such a free licensing system, is not the artwork on the t-shirts also free for commercialization, and if not, why is it exempt. [- John]

I would release any artwork under a CC BY-SA license as well.

If it is free for commercialization, isn’t the person to benefit the most from the production of the t-shirts going to be the company that can produce and distribute them in the cheapest way, which could be, for example, the GAP rather than Blaise’s private records. [- John]

First of all, that’s a very narrow view of benefit. It only considers short-term financial benefit. Sure, there could be a lot of potential for short-term benefit for other companies, but the long-term benefit of all the advertising and publicity that sort of thing would generate can’t be neglected. If people are buying and wearing my t-shirts faster than I can make them, if the demand is strong enough that some big company wants to start selling and distributing them, by all means. They are entitled to make a profit from their work, and yes, it would compete with one of my side products, but it would serve to supplement and support my main product — me, the musician. T-shirts and other such merchandise may be a great source of supplementary income, but that merchandise has indirect value insofar as it acts as a promotional tool for other scarce goods, such as concert tickets or CDs.

That’s just focusing on freedom two. What if the GAP exercised freedom three? What if they took my shirt and modified it to make it “better” and started selling the modified version? That’s why I use copyleft licenses — the GNU GPL for software and now a CC BY-SA License for cultural works. Any derivatives or redistributed copies are required to maintain the same freedoms. If someone improved on my design, I would be free to sell the improved design on my own as well.

Also, there are ways to be competitive. Even though there’s value to others selling my shirts, I’d make more money if I sold them myself. Other people can’t create autographed shirts, for example. If the shirts are so popular that some major corporation is distributing them, that would presumably make an autographed copy that much more valuable. In generative-speak, that’s authenticity.

Many people buy band merchandise at concerts. If I’m selling my own “Blaise’s private records” t-shirts at my concerts, that’s an advantage I have over third-party competition. In generative-speak, that’s immediacy.

Patronage is also important. Kevin Kelly writes,

It is my belief that audiences WANT to pay creators. Fans like to reward artists, musicians, authors and the like with the tokens of their appreciation, because it allows them to connect. But they will only pay if it is very easy to do, a reasonable amount, and they feel certain the money will directly benefit the creators.

Radiohead is the high-profile recent example here. But, as this relates to my t-shirts example, if I make my t-shirts available at a reasonable cost, easy to buy and I make it clear that the money will be directly benefiting my work, I would feel confident that I could compete with third parties.

And, again, insofar as third parties are successful, they are successful at promoting me.

What about examining this in a more positive light? Releasing t-shirt art under a free license allows for fan sharing. Fans could make their own t-shirts as well, without having to break the law. The positive effects that type of thing brings about with respect to building a community (in this case, a fan base) serves to counter any immediate economic setbacks from third party competition. There are benefits as well.

Increased competition may be a side effect of a free license, but the above examples show how this side effect is manageable and I believe any negative effects (e.g. increased competition) are outweighed by the positive effects (e.g. fan sharing, improvements on the design) and the ethical considerations (respecting freedom and the positive effects that can have on a community).

(3.iii) Nine Inch Nails — Ghosts

I found Reznor’s experiment interesting – giving away 9 of the 36 tracks and charging a nominal fee for the rest. In fact I think it’s brilliant, including the seeding of torrents. But I think it doesn’t work well as an example of progress towards free music because it must be conceded that a sizable (though unmeasurable) portion of the 1.6 million dollars made was made from people wanting the other 27 tracks that were not freely published. One can argue that the people paying $5 are just donating because they could easily have gotten the same thing from some file sharing site online but I don’t think that’s entirely true. I don’t think I’m the only person that still feels that file-shared music is unethical and does not consider that a legitimate means of obtaining a work. [- John]

John, you missed a key point about the release. It’s legally impossible for people to steal his music; it’s released under a Creative Commons License. Although it’s a non-free license (BY-NC-SA — doesn’t allow commercial use), music file sharing is explicitly permitted in the license, as are derivative works.

That brings up another common misconception about free software/culture though, that you have to give everything away. Reznor made the first nine tracks available at no cost on his site and spread them on bit torrent himself. He leveraged that popularity as a promotion tool, and then requested a bit of money for the remaining tracks if you wanted them through the official channel (another example of patronage).

Even more importantly, Ghosts II-IV (the tracks he charged for) have only contributed to a portion of his success. His 2500 limited edited ultra-deluxe packages sold out in under two days and, costing $300 each, those alone grossed $750,000 USD. People weren’t buying that because they just wanted Ghosts II-IV, they were buying it because they wanted “all the high quality downloads, two CDs, a data DVD, a Blu-ray high def DVD and assorted extras, all in a nice package signed by Reznor.” It wasn’t just the less-available tracks that were causing people to reach into their wallets. True fans wanted the extras and Trent delivered, using the infinite goods as a promotional tool for the more expensive scarce goods (in generative-speak, capitalizing on patronage, embodiment and authenticity).

(3.iv) Making a direct profit from your product

I think a system in which the creator of something we legimately call a “tool” such as software, as it is explicitly called by many proponents of free software, should be able to directly monetize this tool but not be forced to offer it for free with no personal gain on the basis of some social moral. [- John]

They can: they can sell their software. No developer is forced to give anything away at no cost. However, once you give it to someone else, to control what they do with it and to attempt to control what everyone in the world does with it is an abuse of power and disrespects people’s basic freedom of use.

If freedom two is asserted, then economic laws will eventually bring the price to zero, since the supply is infinite. As I see it, there are two options:

  1. Control your users, even though it is unethical
  2. Look at other economic models, such as monetizing the product’s complement (which is not at all exclusive to free software – proprietary software companies do this too), to make money without doing something unethical

It sounds radical, but I’ve heard RMS (Stallman) say that if there is no ethical way to develop software, then it would be better if no one developed software at all. Fortunately, there is an ethical way to do it. It just may require a shift in economic strategies.

It will always be possible to make some money from your product directly. Red Hat can still sell it’s enterprise GNU/Linux distribution, and I can still sell my CDs. But insofar as these products are digital and abundant, and insofar as copyright restrictions violate people’s freedom of use and freedom of speech, it does not make economic or ethical sense to impose barriers and expect to make your entire living directly from the products.

(3.v) Digital Audio Players

The first thing I thought of when you talked about using derivative products to make money off music which will ultimately approach a price of zero because it has infinite supply was iPods, and how Steve Jobs and company are surely laughing all the way to the bank about DRM-free music, and have been since day one, knowing full well that statistically no one had 20gb of purchased cd music to fill the devices with, but they did have 20gb of file-shared music and that’s how they cashed in. [- John]

I will never buy another iPod (unless I buy it for the hardware and run Rockbox…), but let’s talk Apple for a second. Apple’s 160 GB iPod Classic has an advertised capacity of 40,000 songs. Even at the relatively low iTunes price of a dollar a song, that would mean someone would have to spend $40,000 to fill such an iPod (unless Apple implements the rumoured music bundle). Technology is making music — digital audio files, that is — an essentially infinite good. We have huge, portable storage, and it’s trivial to copy a file. Whether or not this is a problem depends on freedom two.

The revenue from those 100 million plus iPods sold has, however, not been seen nor so much as sniffed by any of the bands whose music populates them. [- John]

Why should bands deserve any money from digital audio player sales? That seems like another popular myth, the type of statement that no one would ever apply equally to any other industry. One industry doesn’t deserve money because it makes another more valuable or profitable. Do hardware developers owe software developers money because the demand for hardware goes up when useful software is created? Do telecommunication companies owe Internet companies money since they’ve made a business around the value such web companies provide (e.g. no one would want an Internet connection if there wasn’t value online, but Rogers doesn’t pay Google royalties for delivering its site to users)? Do home decor businesses owe construction companies money for building the houses that they decorate? Do popcorn makers owe Hollywood for promoting the consumption of their product?

Sure, I think it would be beneficial to both parties to maintain a good relationship, but technology companies don’t owe artists any money. That’s just propping up out-dated business models.

(3.vi) Shakespeare

But the more interesting point is what would Hunt say about this. (For those who bothered to read this other than Blaise, Mr. John Hunt is a counter-cultural English teacher from our high school.) He would say that if music is truly in infinite supply as was suggested, then it must literally have no artistic value, since “there can only be one Beethoven”. [- John]

Funny you should mention Mr. Hunt. Shakespeare (Mr. Hunt’s ultimate hero, for those other than John) is one of the standard examples of how innovation happens without artificial monopolies, and how the best innovation can be choked by it. Shakespeare borrowed so many of his ideas from others, story lines for example. The value was in the innovation, not invention. He told those stories in a much more compelling way than anyone had before or has since. But, were they subject to artificial government sanctioned monopolies, they could have been largely off limits for reuse.

Shakespeare — author of some of the greatest cultural works of all time — lived in a world without copyright. If copyright had existed, he might not have been able to write some of the plays he did. He’s a testament to the free flow of ideas for cultural works.

I’ve explained the difference between price and value above, and compositions versus digital recordings. So, I think you misinterpret me to say “there can only be one Beethoven.” I’m not suggesting otherwise, just that, say, once someone makes a digital recording of a composition by Beethoven, we can have an infinite supply of that recording.

(4) Conclusion

John, your main issue was with freedom two. If you’re saying, “freedom two is unethical insofar as it removes the possibility for the author of a work to profit from it,” I respond that freedom two is therefore not unethical at all. And thus, it’s a freedom that ought to be respected.

I believe copyright is ill-suited for the digital age. It may have once been appropriate, but in the current climate it does more harm than good. It attacks people’s freedom of use and freedom of speech. Free software/culture is a moral imperative and economic considerations are secondary. However, economic considerations show us that a) free [as in price, at least] culture is inevitable and b) free [as in freedom] culture can make economic sense. Business models exist that already have been or are being proven.

There is no excuse but ignorance or fear for taking the unethical route.

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Kevin Kelly’s Better than Free

When copies are super abundant, they become worthless.
When copies are super abundant, stuff which can’t be copied becomes scarce and valuable. When copies are free, you need to sell things which can not be copied.

Kevin Kelly’s recent post is a great summary of the ideas behind economic models which value the ease of copying in the digital world, as opposed to fearing it and imposing artificial scarcity instead. His thinking is very much inline with Mike Masnick’s writings on the economics of abundance at the Techdirt blog.

Kevin outlines eight “generatives”: authenticity, accessibility, immediacy, interpretation, personalization, patronage, embodiment, findability. (I’ve reordered them as I find “aaiippef” makes it a bit easier to remember them all.) He defines a “generative” as “a quality or attribute that must be generated, grown, cultivated, nurtured… [it] can not be copied, cloned, faked, replicated, counterfeited, or reproduced.”

This list is an excellent starting point for economic models in the digital world. These eight things cannot be copied. These are the things that people will be willing to pay for. These are the things that can be made to be more valuable through leveraging the abundance of copyable goods.

More importantly, I think, the types of economic models derived from this thinking allow us to take advantage of the abundance of digital information rather than fearing it. This sort of thinking allows us to view digital technology as a blessing rather than a curse.

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Apple TV – Why digital video rentals don’t make sense

Apple’s announcement that they will begin renting films via iTunes seems to me like a small step “ahead” for a struggling service, rather than anything indicative of what true success will be like in the merging area of computers/televisions.

Mike Masnick from Techdirt put it best:

Rentals make sense for physical goods, when you are returning the good at the end so it can be rented out again, but they’re an artificial construct in a world of digital goods.

Why should you have to “return” a digital download? It doesn’t make any sense. Plus, the extra hassle and nuisance of dealing the the Digital Restrictoins Management (DRM) surrounding these video formats is not worth it for the few dollars you might save compared to the price of owning a film. Mike Masnick focuses on the economic impact of other companies, such as Netflix (now offering unlimited downloads – though still encumbered by DRM), competing against Apple TV but not imposing unnecessary and artificial restrictions. If competitors don’t offer something more compelling, countless people still turn to unauthorized downloads which are completely DRM-free. Even if this “rental” model succeeds for Apple TV, it won’t last long and it won’t win out.

Also, renting a video from the old fashioned movie store down the street will avoid (some of) the DRM headaches caused by trying to find a device that will play the video. Good luck with Apple TV. I looked into it briefly over the summer when I was putting together my own home PVR, but the model is entirely locked down. (I opted to use MythTV instead, which has been running just fine on old computers that were previously collecting dust.)

No thanks, Apple. That kind of thinking is defective by design.

What Goes Around
[Source: http://www.penny-arcade.com/comic/2008/01/18]

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Software Registration Keys

I read a post by Jeff Atwood (Coding Horror) on software registration keys today that reminded me that I’d been meaning to write about this.

Software is digital through and through, and yet there’s one unavoidable aspect of software installation that remains thoroughly analog: entering the registration key.

Doesn’t that seem entirely artificial? Software registration keys are like serial numbers. The concept is hopelessly tied to physical goods. It makes no sense in the digital world. It’s an attempt to treat digital goods as if they are physical in order to force the economics of physical goods onto a digital marketplace. There are better solutions.

Unless you oppose the very concept of commercial software, there has to be some kind of enforcement in place.

First of all, I believe that Jeff is misusing the term commercial to refer to non-free software. If that’s the case, I oppose the very concept of non-free software. This does not mean that I oppose commercial software though. There are many examples of free (as in freedom) commercial software companies, such as Red Hat, Canonical (Ubuntu) and MySQL. Rather than pretending that software can be treated like a physical good, these companies are making considerable amounts of cash without stamping their software with serial numbers.

Software registration keys are futile. It’s a constant uphill battle for these proprietary software developers against those who would make unauthorized copies (which most people seem to view as normal) because they’re trying to maintain an artificial business model that pretends digital goods are physical. Until digital goods become physical goods (aka never), this problem will not go away, unless, of course, you reject the idea of non-free software and embrace (or at least accept) the unique value in digital goods.

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