economics

Free Doesn’t Mean Devalued

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Free Software, Music, Technology | Also tagged , , , , , , , , | Post a Comment
November 13, 2009 – 9:45 pm

I’ve tightened up my post on why free music doesn’t mean devalued music for Techdirt. If you’ve read the original, it’s largely the same content, but cleaned up a little and much more concise.

Free Doesn’t Mean Devalued:

The concept of zero took ages for societies to recognize, let alone understand. Mike has explained before how it’s been a stumbling block in economics for some libertarian and “free market” types more recently. People who think about economics in terms of scarcity get upset when abundance pushes price down towards zero, as if the economic equation were broken. But if you flip the equation and think of it as a cost of zero, you realize that the trick is to use as much of those abundant goods as possible, adding value to complementary scarcities for which you can charge. Zero doesn’t break economics, it just requires a different approach.

But artists and other creators hit a different stumbling block than libertarians (libertarian artists aside…). Zero is a problem because they feel like their art is worthless; they aren’t hung up on scarcity, they’re hung up on “devaluation.” We’ve heard it from journalists. I hear it most often from fellow songwriters. The economic theory makes them feel as though their work is just viewed as some sort of cheap commodity. The thing is, value and price are not the same. Price is monetary value, but value is so much more than money. Price is what gets driven down to marginal cost, but value factors into the demand side of the equation. Expensive things aren’t necessarily valuable, and valuable things aren’t necessarily expensive. I value oxygen a lot, but it seems silly to pay for the air I breathe each minute, given the abundant supply.

More importantly, songwriters who get hung up on “devaluation” confuse recordings with music. They equate the two. A recording is not the song, it’s just an instance of it, and a digital audio file is just an instance of the recording. Equating these reduces music to recordings to files. As important as recordings are, there’s so much more to music. When you think of a song, do you think of the recording, or a memory you had connecting with the music? Do you think of the file and how much it cost, or the emotions, people and experiences that the music conjures up? The recordings are just a means through which we experience the music. Songwriters (of all people!) should know that the value in music is so much more than the price of a recording. It’s not devaluing music to give it away for free, but it can increase its value by allowing more people to connect with it, to know, love and understand it — to value it. It’s through that experience that music is valued, not price!

Ironically, the underlying concern ends up being economic — how will we make money? A price of zero for digital audio files doesn’t mean that no one values the songwriting profession, or that no one is willing to spend money on music and keep songwriters in business. Sharing digital audio files makes the music more valuable and leads to more opportunities for monetization. When you give music away and connect with an audience, the opportunity for monetization is in the associated scarcities — access, containers, community, merchandise, relationships, unique goods, the creation of new music, etc. — by giving people a reason to buy. Getting hung up on “devaluation” is a distraction from the opportunity — the necessity — to experiment with new business models.

So, can we please stop complaining that free means devalued?

Check out the lively discussion in the comments. Also, usually I’m pretty obsessive with backlinks, but somehow I missed an obvious post worth a link: Free Doesn’t Mean Unpaid

Is There A Better Word Than “Balance” In The Copyright Debate?

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Free Software, Law | Also tagged , , , , , , , , , | Comments (3)
November 13, 2009 – 9:42 am

Mike Masnick questions the word “balance” in the copyright debate:

I’ve long thought that balance is the wrong way to look at it. The purpose of copyright law is to incentivize the creation of new content, and thus the standard on which copyright law should be judged is one where the [benefits of the] creation of content is maximized. As such, there shouldn’t be a question of balance, because the ideal situation where content is maximized should make everyone better off. Talking about balance is figuring out how both sides should compromise to meet in the middle. Talking about maximizing content creation, on the other hand, is talking about ways to improve the marketplace of options for everyone.

He links to a paper by Abraham Drassinower of the U of T Law School arguing that balance is the wrong way to view copyright policy. “Balance” as a concept in copyright suggests that the law is designed to reward a content creator for their labour (the “sweat of the brow” argument), Drassinower argues, though Masnick has to tease out the main point: “Balance” falsely implies that this is a zero sum game, when “the goal of copyright should be maximizing the [benefits of the] creation of content overall, such that everyone is better off.”

I’m sold. I tried to use this point at the Toronto Copyright Townhall and in my submission to the consultation.

But, if not balance, then what?

Words like “balance” are used often to make sure that the interests of the public aren’t forgotten in the face of copyright holders’ interests. I strongly support the group, Fair Copyright for Canada, but “fair” has similar problems to “balance.” What words might serve to include the public interest without suggesting a zero sum game? Mike described it as “maximizing [the benefits of] content creation,” but that seems more useful in explanation than at the sound bite stage.

What about “calibrate?” I notice that Mike used the word in a subsequent post on why morality isn’t relevant in copyright: “A properly calibrated system is one where there’s the greatest overall economic good and everyone has the greatest opportunity to benefit” (strongly related — if it’s an economic question rather than a moral one, rights holders interests are not necessarily opposed to the public interest). “Calibrate” seems like the most accurate word. It doesn’t directly conjure up the notion of the public interest, but it does so indirectly by suggesting an approach that’s about more than “protection.” But it’s too technical for a mainstream audience.

Is there a more accessible synonym for “calibrate?” Optimize? It works, but “optimizing copyright law” seems a bit too vague, and doesn’t really capture the non-zero sum game and the public interest. Thesaurus.com doesn’t help much either.

So what else? I’m not sure. I like “calibrate,” but it won’t work with all audiences. “Optimize” is nice to use in passing to reinforce the point, but it doesn’t introduce it. “Balance” and “fair” are still useful for drawing attention to the interests beyond that of rights holders, but I won’t offer those terms without a caveat or disclaimer.

Other suggestions?

Free Music Doesn’t Mean Devalued Music

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Music | Also tagged , , , , , , , , | Comments (5)
November 6, 2009 – 8:32 am

Update: A more condensed version of this post was published on Techdirt.

Mike Masnick does a great job of explaining why some libertarian and “free market” types freak out when they see a zero dollar price tag. The concept of zero took ages for societies to even recognize, nevermind understand. It’s not a number, but the absence of a number. A stumbling block for mathematics and physics in the past, it’s now misunderstood in some economic circles. Economics is often defined by scarcity, but with digital goods and “intellectual property,” we have an infinite supply — abundance instead of scarcity. Prices gets pushed towards marginal cost in a competitive market, and these “infinite” goods have a marginal cost of zero… so that’s where the price gets pushed. This upsets some people, as if it were a “divide by zero” type error that breaks the equation.

But a lack of scarcity isn’t a problem. Instead of thinking of it as forcing a price of zero, you “flip the equation” and think of it as being a cost of zero. If something can be reproduced for free, the trick is to use as much of it as possible — give it away, leverage the abundance to add value to other complementary scarce goods. Zero doesn’t break economics, it just requires a different approach. (This is all just a condensed version of Mike’s post.)

Songwriters, however, hit a different stumbling block than libertarians (songwriting libertarians aside…). Zero is a problem because they feel like their music is worthless; they aren’t hung up on scarcity, they’re hung up on “devaluation.” A lot of artistic types hear the economic theory and feel as though their work is just viewed as some sort of cheap commodity.

The thing is, value and price are not the same. Price is monetary value, but value is so much more than money. Price is what gets driven down to marginal cost, but value factors into the demand side of the equation. An expensive thing isn’t necessarily a valuable thing, and something that’s available for free isn’t necessarily without value. I value oxygen a lot, but it seems silly to pay for the air I breathe each minute, given the abundant supply.

More importantly though, songwriters who get hung up on “devaluation” confuse recordings with music. They equate the two. A recording is not the song, it’s just an instance of it, and a digital audio file is just an instance of the recording. Equating these reduces music to recordings, to files. As important as recordings are, there’s so much more to music. When you think of a song, do you think of the recording, or a memory you had connecting with the music? Do you think of the file and how much it cost, or the emotions, people and experiences that the music conjures up?

When I listen to Reflection, I am in Rosedale Valley, running a cross country practice in Grade 11 with a friend, as the meaning of the final verse hit me in all its pain and glory. When I listen to Dispatch live albums, I’m at the Hatch Shell in Boston, or Madison Square Gardens, at one of the reunion concerts. When I listen to the Good Lovelies, I’m in Ottawa at the OCFF conference in a packed hotel room full of folk musicians listening to a raw, passionate acoustic performance. You don’t connect with the files, you connect with the music. The recordings are just a means through which we experience the music.

I would hope that songwriters, of all people, could realize that the value in music is so much more than the price of a recording. It’s not devaluing music to give away your music for free, but rather increasing its value by allowing more people to connect with it, to know, love and understand it — to value it. It’s through that experience that music is valued, not price!

Furthermore, a price of zero for digital music doesn’t mean that no one values the profession, or that no one is willing to spend money on music and keep songwriters in business. When you give music away and connect with fans, the business opportunity is to monetize the associated scarcities — access, containers, community, merchandise, relationships, unique goods, the creation of new music, etc. — by giving fans a reason to buy.

Music still has value, and there are still plenty of ways to monetize it. Getting hung up about “devaluation” is a distraction from the opportunity and the need to experiment with these new business models. Recognizing that digital recordings are an infinite good and giving them away for free only makes the music more valuable, and only leads to more opportunities for monetization.

So, can we please stop complaining that freeing up music devalues it?

Despite Declining CD Sales, CD Baby Experiences Growth in 2008

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Music, Technology | Also tagged , , , | Post a Comment
February 12, 2009 – 2:42 am

This post originally appeared on Techdirt

While CD sales dropped 14% overall in 2008, CD Baby — a popular online music store that lets independent artists sell music directly to fans — actually saw an increase of 2%. In addition to selling physical discs, CD Baby offers optional digital distribution through iTunes, Amazon MP3, Napster, Rhapsody, eMusic, etc. and directly through their website. Still, almost 30% of albums last year were only offered as physical discs (though, some of these artists probably use other companies for digital distribution). While growth in digital sales was predictably larger (45%), even a small increase in CD sales in the face of the broader crisis is a sign that CD Baby is doing something right.

There are a few reasons why CD Baby could be having better luck with CDs than the rest of the industry. First, a lot of independent artists are discovered through live performances, and the CD has yet to be replaced as the standard format to sell music at shows. The credit card swipers that CD Baby offers artists accounted for $2.4 million worth of revenue last year (though, that includes sales of other merchandise too). Second, CD Baby seems to be taking advantage of the long tail, with minimal setup fees, minimal starting requirements (artists only need to mail in 5 CDs to start selling) and short-run duplication services, though they haven’t released enough data to confirm how distributed their sales have been. Lastly, great customer service and a sense of humour can’t hurt (e.g. an order confirmation email starts, “your CD has been gently taken from our CD Baby shelves with sterilized contamination-free gloves and placed onto a satin pillow…”). Although it doesn’t make any sense to base an entire business model on selling CDs, there’s still money to be made for artists and companies using CDs as part of their model.

Read the comments on Techdirt.

Why Doesn’t Girl Talk Allow Commercial Use?

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Music, Technology | Also tagged , , , , , | Post a Comment
July 27, 2008 – 6:27 pm

[This originally appeared on Techdirt.]

Legal trouble for Girl Talk — an artist named Greg Gillis who released a “mash up” album using the pay what you want model — is almost inevitable, but the situation gets even more interesting when you consider how the music is licensed. Girl Talk uses a Creative Commons Attribution-Noncommercial license for Feed the Animals, even though the songs on the album were made by using hundreds samples from other artists. Gillis claims his songs are fair use on the basis of being transformative and because the clips used are very short.

Aside from potential legal claims over the license if the fair use defense fails, why would Gillis — an artist making commercial use of samples from others — put a noncommercial restriction on his work? It seems a bit hypocritical. Granted, he does claim that “the CC license does not interfere with the rights you have under the fair use doctrine, which gives you permission to make certain uses of the work even for commercial purposes,” but is the noncommercial restriction for other uses really necessary?

First of all, as Mike Masnick pointed out in his critique of a noncommercial copyright, the distinction between commercial and noncommercial use is extremely blurry. Equally blurry in this case is the distinction between transformative and non-transformative use. At what point exactly does a derivative work become transformative? But, more importantly, Mike asks “if someone else is able to do something commercially useful with my content, why should that be a problem?” Girl Talk ought to be a perfect example of this, yet Gillis seems to deliberately limit the possibilities through his choice of license.

Why attempt to limit the positive externalities? Maybe some of the artists sampled on the Girl Talk album will really like a song their music appears in and want to include it somehow on a release of their own, make use of it on their website, etc. Should those artists then be required to pay for the use of a song which includes samples of their own music? Maybe, but it seems like respecting “upstream” would help an artist like Gillis maintain a better relationship with the artists from which he’s sampling.

Furthermore, what about people who might do something with the album that’s potentially commercially useful for Girl Talk? For example, if someone were to make an interesting remix or video using Girl Talk’s music , not only would they be required to refrain from commercial use themselves (unless it was fair use), but Gillis would require their permission to make use of it himself. If he had used a copyleft license like the Creative Commons Attibution-Share Alike, both he and any artists making derivative works would have the ability to monetize their efforts. Instead, derivatives are relegated to the realm of the amateur because, with a noncommercial license, the barriers of a permission culture are still intact for artists trying to make a living from their work. One would hope that Greg Gillis, of all artists, might realize the benefits of removing these barriers, especially on commercial use.

[This was largely inspired by a couple Rob Myers posts — Noncommercial ShareAlike Is Not Copyleft and Why The NC Permission Culture Simply Doesn't Work — which convinced me to license my music under a free license.]

[Read the comments on Techdirt.]

Why don’t record labels act as post-filters?

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Music, Technology | Also tagged | Comments (1)
May 27, 2008 – 7:08 pm

I’ve attended a few panels on the music industry in the past few weeks. I listened to David “Click” Cox speak and answer questions at Long & McQuade a few weeks back (as part of the Big Schmooze, I believe), and I sat through a few music panels at the Mesh Conference last week. I may write in more detail about that one later, but it’s a general sentiment that I wanted to comment on now. Techdirt picked up on it earlier today.

Why don’t record labels act as post-filters?

I read Chris Anderson’s book, The Long Tail, a few weeks ago. One of the themes in the book is the distinction between pre-filters and post-filters. In the 20th century, the focus of media companies was on hits (the “short tail”). Pre-filters were extremely important to determine what content would end up being commercially successful. Media companies were limited by the distribution methods, by things like shelf space. A CD store can only stock so many CDs, so it was very important for them to determine what would be successful before it got to market. The labels became very good at this, but there were still flops and surprise hits. The business of predicting what will be successful is not easy; it’s a business of predicting the future.

In the 21st century, digital distribution methods have virtually removed all of those barriers. With the essentially infinite shelf space of an online store or service, it’s now economically viable to stock everything, even those items which might only sell once or twice. (This is basically the “long tail”.) Anderon says that “the Long Tail without filters is just noise,” and notes that post-filters are now extremely important.

[Post-filters] find the best of what’s already out there in their area of interest, elevating the good (relevant, interesting, original, etc.) and ignoring or downplaying the bad. When I talk about throwing everything out there and letting the marketplace sort it out, these post-filters are the voice of the marketplace. They channel consumer behavior and amplify it, rather than trying to predict it.

…

In Long Tail markets, where distribution is cheap and shelf space is plentiful, the safe bet is to assume that everything is eventually going to be available. The role of filter then shifts from gatekeeper to advisor. Rather than predicting taste, post-filters such as Google measure it. Rather than lumping consumer into pre-determined demographic and psychographic categories, post-filters such as Amazon’s custom recommendations treat them like individuals who reveal their likes and dislikes through their behavior. Rather than keeping things off the market, post-filters such as MP3 blogs create a markets for things that are already available by stimulating demand for them.

Apple doesn’t spend time or money determining what iTunes should stock. It stocks everything; the effort goes into helping people find what they want. Google does the same for web pages (and the rest of the world’s information), Napster did the same for files, Last.fm and Pandora do the same for music.

A post-filter attempts to measure success after something goes to market, and to help people find it. This doesn’t make a post-filter inherently successful, but it sure eliminates a lot of the risk and uncertainty of predicting the future by instead analyzing the past and the present.

When I was listening to David “Click” Cox, I couldn’t help but notice that any attempts to adapt to the technology were still inhibited by this notion that record labels are supposed to act as pre-filters. They still expect to be the gatekeepers, to determine what will be successful before it goes to market and to make investments in that and take risks.

That still may be useful, but why not act as a post-filter as well?

Ian Rogers, former GM of Yahoo! Music, has written an open letter to Guy Hands, the head of EMI, suggesting just that. More specifically, Rogers suggests establishing “affinity labels” to group similar artists together. By putting some big name EMI artists on each label and associating them with lesser known but similar artists, such affinity labels would act as a post-filter, helping fans to find similar music.

The record labels won’t succeed by trying to be the gatekeepers after the gates have been flung open and the walls have been torn down. But they don’t need to remain ignorant of collective intelligence, to solely consider themselves as pre-filters and limit their market and potential.

Why can’t labels really take advantage of digital technology by monetizing niche markets? Why can’t labels help music fans to filter the vast amount of content that’s already on the market to find what they’re interested in? Why don’t labels act as post-filters?

Confusing royalties and salaries

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Law | Also tagged , | Comments (1)
May 15, 2008 – 9:35 pm

Today, I was sent a link to an emotional rant by Harlan Ellison about paying writers royalties. I admit that I’d never never heard the name before (not sure if I should have or not…), but, from the sounds of his Wikipedia article, I’m pretty sure I wouldn’t like him.

He did an on camera interview about the making of Babylon 5, and the film company doing the packaging for Warner Bros. called him up because they wanted to use it on the DVD. They wanted to use it for free, he wanted to be paid. If he owns the copyright to the interview, he has the legal right to demand compensation, but it’s the ensuing rant which brings up all sorts of problems.

He hopelessly confuses royalties and salaries.

By what right would you call me and ask me to work for nothing. Do you get a pay cheque? Does your boss get a pay cheque?… Do you pay the camera man? Do you pay the cutters?… Would you go to a gas station and ask them to give you free gas?

They weren’t asking him to work, they were asking to use something he’s already worked on. A salary is about paying someone to do work, but royalties are about paying someone to make use of work they’ve already done. So, his pay cheque comments are off the mark. Also, if he was compensated for the use of the interview, would he pay the camera man and cutters who helped produce the original interview? What about the manufacturers of the camera or the audio equipment they used? What about the lighting crew? What about the actors, without whom there’d be no Babylon 5 to do an interview for? What about those who taught him the language he uses in the interview?

It’s not as clear who should be paid when it comes to work that’s already been done, compared to work that’s about to be done. In most other domains, people don’t get paid for work they’ve already done. I don’t pay Lenovo royalties when I develop software on my ThinkPad, I don’t pay Gibson royalties when I play a gig on my Les Paul, and I don’t pay my music or computer science teachers when I apply a concept they’ve taught me on the job.

He says, “they always want the writer to work for nothing.” That’s certainly a problem, but the example he’s ranting about is not about him being asked to do any work. He wouldn’t be doing any more work by saying yes than by saying no. Again, this doesn’t mean he doesn’t have the legal right to ask for compensation, but in confusing payroll cheques and royalty cheques his complaint doesn’t really make sense.

To be clear, I’m not saying it’s wrong for him to ask for money in this case. It’s the way in which he confuses royalties and salaries that’s problematic. Royalties aren’t always the answer, and though it may be convenient, it’s inaccurate to make an argument about paying people for work they do when you’re really talking about work they’ve done.

Ellison also seems to have an elitist complex and a problem with competition. He says, “I get so angry about this because you’re undercut by all the amateurs,” and then goes on to flap his arms (not sure why…) and mock the mindless attention seeking of the amateurs who “have no idea they’re supposed to be paid every time they do something.” Like, every time they take a piss, for example. (“I sell my soul, but at the highest rates. I don’t take a piss without getting paid for it.”)

What about the “amateurs” who realize they can get a competitive edge on the “professionals” by offering they content at a lower rate? Isn’t that called competition? If competition is driving down the monetary value of Mr. Ellison’s interviews, maybe he ought to invest some time in fine-tuning his business model (no, that doesn’t mean suing more people), rather than simply whining about the change in the market.

At the start of the rant, Ellison says “everybody else may be an asshole, but I’m not.” If you watch the video, you might even doubt the accuracy in that.

It’s entertaining though.

Rogers deliberately disables tracking of roaming charges

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Technology | Also tagged , , , | Post a Comment
May 2, 2008 – 8:58 pm

Do we really need another reason to hate Rogers? Jack Kapica got a bill for the first half of his trip to Rio, where he was charged for 5,151 kb of data transfer. Guess how much? No, no, guess again. This is Rogers, it needs to be insanely higher than what you think is insanely high.

$241.11.

That’s $46.81 per megabyte. God forbid he watched a video on YouTube during the second half of his trip. He might have to remortgage his house.

Don’t cry yet, it gets worse.

It was my fault, of course. I knew Canadians pay the world’s highest data rates, but I had no idea how much I was incurring while on the road.

So I went to a Rogers store and asked the sales clerk how I could have calculated the charges as they occurred. I expected there to be some website that could tell me what I routinely learn from taxi cabs: a real-time fare update. So where do I look?

I can’t do it, I was told by the sales clerk. It’s not possible.

Why not?

“Because Rogers tells all of its cellphone manufacturers to disable that feature in our cellphones,” he said in a manner that suggested I was the last person to learn this. Perhaps I was.

And why does Rogers do that?

That’s when he dropped the one-word bomb: “Revenue.”

Talk about honesty.

Talk about pure and unadulterated greed.

Evil, evil, evil…

The Problem With A Music Tax

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Law, Music, Technology | Also tagged , , , | Comments (2)
March 28, 2008 – 5:12 pm

I’ve written about the SAC’s proposal to legalize music file sharing several times in the past, giving it mixed reviews. It’s not a new idea, but it’s one of the first times an organization of artists has proposed it, and some record companies are entertaining the idea as well.

I’ve come to a decision about the proposal: I don’t like it.

Royalties were not designed for the digital age. The proposal suggests what essentially would amount to a music tax. There is no way to opt-out and it applies to everyone with an internet connection. Since when are royalties taxes? Since when do royalties apply to everyone? Royalties were meant to regulate a few large distributors and broadcasters. In the digital age, everyone can be a distributor or broadcaster. It just doesn’t work.

The CMCC describes this as a “forward thinking approach.” It’s a forward thinking approach, but from backward thinking minds. Royalties are not the answer to everything.

The no opt-out clause really makes it a deal breaker. The proposal is to charge everyone a fee, regardless of whether or not they are actually infringing any copyright claims. It’s aptly described as a “you’re a criminal” tax.

The EFF writes:

We are big fans of a collective licensing solution for the music file-sharing dilemma: music fans pay a few dollars each month in exchange for a blanket license to share and download whatever they like; collecting societies collect the money and divvy it up between their member artists and rightsholders…. But this should not turn into, as some have called it, an “ISP tax.” Any collective licensing solution should be voluntary for fans, artists, and ISPs alike.

Further, what sort of precedent would this set? Mike Masnick writes:

The biggest reason, as Geist points out, is the second you do this, plenty of other industries will come out of the woodwork demanding a special fee get applied to internet connections as well. Newspapers that think Google and Craigslist are “stealing” from them will demand a special “news tax.” And then think of all those other industries who claim they’re being impacted by the internet. You’ll have a special auto-mechanic’s tax, to pay for mechanics who are upset about the DIY info found online. The “knitting tax” for all the free knitting patterns online. I understand that AAA may be upset about Google maps. Travel agents want that “travel tax” to pay for all that business that Expedia has cost them. Where does it stop?

I do applaud the SAC for bringing forth this proposal and I’m proud to be a member. It is “forward thinking” in the sense that it seeks a way to make the new technology work, rather than to pretend it can be somehow stamped out. But I don’t think this particular proposal provides an answer.

Music royalties are not the answer in the digital age

By Blaise Alleyne | Creative Commons Attribution-ShareAlike 2.5 Canada | Posted in Free Culture, Free Software, Music, Technology | Also tagged , , , , , | Comments (3)
March 28, 2008 – 4:17 am

((If you’re tagged in this note on Facebook, it’s because I value your opinion and am interested to hear what you have to say. Or because I’m pretending to value your opinion and would be interested in proving you wrong. ;) Either way, you may want to read the first post to get up to speed, if the topic interests you.))

I recently wrote about Billy Bragg’s op-ed piece in the NYT, claiming that musicians deserve a cut of the profits from Bebo’s sale to AOL. I lamented the sense of entitlement his position displayed.

I take that back. I don’t think it’s really entitlement. I think it’s habit, well-intentioned but misguided old patterns of thinking.

In the comments of the ongoing debate that’s sprung to life on Joe Weisenthal’s blog post, Billy writes:

And for the record Blaise, I also view the technology as a blessing rather than a curse – it has the potential to allow more artists to make a living than before.

I’m just concerned that there are enough safeguards in place to ensure that we are able to earn a living – that we don’t go from the old feudal arrangements with the record companies to a new shiny kind of feudalism on the internet.

I responded thusly:

I’m glad to hear you view the technology as a positive opportunity. I think where we differ is in our expectations. I’ve become more and more involved in the free / open source software community where users of the software have the freedom to redistribute software as they please, for a fee or not, and software is often available at no cost. Programmers still make money through the economics of abundance that Mike talks about, through monetizing the scarce goods (i.e. their time for custom software development, support services, brand name reliability like Red Hat GNU/Linux, etc).

It seems to me as if you are arguing that these royalties should exist because that’s what you’re familiar with. That’s how musicians have monetized their music over the last few decades. It seems as if you’ve worked backwards from a conclusion that royalties are the answer.

How are musicians to make money in a digital environment? Well, how did we do it with another huge technology challenge – radio… With royalties! Therefore, digital music needs fair royalties. And thus, the bebo’s were ripped off because they didn’t get their royalties.

That thinking has blinded you to the fact that they made a fair deal (they traded royalties for hosting and exposure) of which the terms haven’t changed, and I think it’s also why you refuse to turn the tables and allow your logic to work in reverse (in terms of musicians compensating Bebo for any of their success).

I reject the idea that royalties are the answer to digital technology. With traditional radio, being a broadcaster is analogous to owning a printing press. Owners of printing presses and radio stations were a small minority of the population, and distribution is on a large scale.

On the Internet, anyone can be a broadcaster or a distributor. And it can happen on a large (e.g. Bebo) or small (e.g. blog) scale. To take the thinking about royalties and copyrights that was developed to manage a few large publishers and mass distributors, and now attempt to regulate everyone in the same way just won’t work. Now, everyone can be a distributor. Enforcing regulation on digital technology is impossible and, more importantly, the benefits aren’t worth the drawbacks.

I’m young and inexperienced, so maybe I’m wrong. But I think the challenge to people who’ve been in the industry for a while is to understand that embracing this new technology can’t simply be a matter of adapting old concepts, like royalties, to the digital world. Digital technology is different in a fundamental way. So, too, does our approach as musicians need to be fundamentally different.

Billy is still dead wrong in too many ways to count on the initial issue he rose. In the case of Bebo, the rights holders made a deal of which none of terms changed with the sale, in the same way that the deal wouldn’t change if an artist got a record deal. Applying royalties retroactively, against the terms of an initial agreement, is flat out stupid and unethical. And denying rights holders the ability to make such an agreement, and therefore sites like MySpace and Bebo to exist (where you don’t need to be selected to be heard), would be unwise.

I think Billy is well-intentioned, but too used to old ways of doing business. What needs to be “safeguarded”? It seems that he fears exploitation in a digital world. If you embrace the economics of abundance, the distribution of your digital goods isn’t exploitation. It’s promotion, advertising for your scarce goods. If you don’t embrace that thinking, how can you even survive in a digital world? 98% percent of music acquired online is through file sharing networks. (Update: If… you believe the CRIA)

Embracing the economics of abundance means recognizing your abundant goods and leveraging them to add value to your scarce goods, rather than attempting to limit the abundant goods with artificial scarcity. The refrain is as follows: There is an inverse relationship between price and supply; as supply increases, price decreases, therefore as supply approaches infinity, price approaches zero. Digital goods are infinitely abundant insofar as they’re digital. But price and value are two separate things; price is a subset of value (monetary value). Since digital goods are abundant, they can be spread easily to add value to scarce goods (which can command a higher price). WIth respect to music, digital audio files are the abundant goods which can be used to add value to scarce goods such as embodied recordings (e.g. CDs), concert tickets, t-shirts, or a musician’s time (e.g. session work). (Credit: Techdirt)

I believe royalty-based systems are ill suited for the digital age. Royalties weren’t meant to be applied to everybody, yet anyone can be a distributor or a broadcaster in the digital world. The answer to monetising music in the face of digital technology lies in embracing the new digital nature of music through the economics of abundance, rather than attemping to create artificial scarcity.

What do you think?