The Economics Of Abundance Is Not A Moral Issue

from the continuing-the-series dept

As regular readers know, I've been working on a series of posts discussing the concept of economics when there's a lack of scarcity. My last post on the importance of understanding "zero" in economics (and the fact that many of the problems people have in grasping the subject being due to a misunderstanding of zero) kicked off a really interesting discussion, that has me diverging from my planned third post in the series. Instead, I'd like to focus on one of the key objections people keep coming up with: the idea that this whole concept of the economics of abundance makes no sense because it means the creators of content make no money and they have a right to make money for their creative output.

It makes for a compelling emotional argument, but it is wrong on two major points. First, is the idea that it means creators of content can't make any money. In fact, nothing can be further from the truth. What this series is leading up to is an explanation of how the opportunity for making money is even larger when you understand the economics, and don't rely on directly selling the non-scarce good. However, for now we'll leave that aside and focus on the second point: that there's a right to make money. That's completely false. Economics is not a moral issue. It doesn't care about anyone's "right" to make money from their creative output... and neither should you. The idea that anyone automatically has a right to make money from their creative output is wrong. Everyone has the right to try to make money out of their creative output, but if the market isn't there, then there's no money to be made.

For example, I could draw a picture on a scrap of paper and try to sell it as fine art -- but no one would buy it, because my artistic drawing ability is pretty weak. That is, the market would properly value my drawing at something close to zero because there would be no demand for it. It has nothing to do with my right to make money. Similarly, in a situation where there's a lack of scarcity, the market would properly value something at close to (or equal to) zero because there's infinite supply. It has nothing to do with the moral issue of the creators right to profit from the creative output, and everything to do with the market at hand.

Perhaps part of where this gets confusing is that we have the current situation to fall back on: where content creators have had a good run selling their content. People have trouble then understanding why we would suggest that they should learn how to take the same content they've been selling for money and give it away free. The issue here is that the comparison is wrong. It's not about a choice between being able to sell the content for money or giving it away for free, but a recognition of where the market is going. Historically, the content has been made scarce by connecting it to a specific media (music on CDs, video on tape/DVD, etc.). What the internet is doing is breaking down the barrier of that scarcity, and that's changing the market, pushing out the supply to infinite levels and putting clear pricing pressure on the content. People used to make a living selling buggy whips too, but the market changed, and they couldn't any more.

In other words, it's wrong to look at this as a "choice" between the old way and the new way, but to look at the market trends and recognize that the old way (pretending the content is scarce) won't be viable any more -- and when that happens, those who try to sell their abundant good based on scarcity will find that there is no market and no matter what "right" they have to try to make money, the market won't care. Once you realize that, you can make the argument that content creators should wait until that market shift is complete to make the change, but as we go forward, I'll hopefully make a convincing argument that it actually makes much more sense (and much more money) to begin shifting now, before being forced to shift. But, for that, we'll have to wait a little longer...


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Ethan B., Nov 15th, 2006 @ 1:45pm

    Your most succinct explanation yet

    Keep bringing the power to the people, Mike. You're absolutely right. Thanks for deconstructing the constant knee-jerk reactions I also hear where when talking about the subject.

    I think an early, strong example of the price of digital media getting pushed towards zero is eMusic. DRM free mp3's from [major] indie labels for...$0.23 a piece? Does anyone in their right mind think that prices are going to go up from here? It's an impossibility to control the supply of purely digital goods!

    Thank goodness!

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Ethan B., Nov 15th, 2006 @ 1:49pm

    Re: Your most succinct explanation yet

    haha, well the joke's on me...just browsed over to eMusic and they are...raising prices! only marginally, though...looks like closer to $0.30/mp3. I think ultimately we are still right about the trend. Eventually someone will bust out with the all-u-can eat music buffett for $X/month.

    This whole thing is already starting to remind me of per-minute long distance charges...12 cents a minute! no, 11 cents! no, 8 cents! wait...5 cents! And so on out the asymptote.

     

    reply to this | link to this | view in thread ]

  3.  
    identicon
    Mike S., Nov 15th, 2006 @ 1:50pm

    I'm with you on this, but your buggy whip analogy is flawed. The 'infinite availability' of digital goods is only worth discussing because people still want those goods. Nobody wants a buggy whip anymore. Buggy whip manufactures had to accept a totally different market change than the one faced by artists/musicians/whatever.

    What you are talking about, I think, is how the release of a CD, for example, should be used in a promotional fashion to get people to go see concerts or buy T-shirts or something along those lines. That may be inevitable, but it's a hard pill for the artists to swallow.

    To see why, take the following as an argument. There are many, many artists that I absolutely love (Mountain Goats, Regina Spektor, Iron and Wine to name but a few) but I'm 31 years old, and don't think a concert tee is quite my style anymore. Plus I'm getting to the point where I really don't want to go to crowded, smoke-filled rooms to see a (generally) lesser-quality version of the music I love. Sometimes I do, usually I don't.

    Somewhat incoherent and rambling, but that's my $.02

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    Jamie, Nov 15th, 2006 @ 2:09pm

    Mike, I agree with you on where the market is going, and I think that most of the content industry agrees as well. It isn't that they don't see the future, it's that they see the solution differently.
    While you see the change as a requirement that they will need to update their business models, they see it as a requirement that they need to control the technology through new laws and DRM.

     

    reply to this | link to this | view in thread ]

  5.  
    identicon
    wire cramped, Nov 15th, 2006 @ 2:15pm

    ZERO sum game

    I agree its a difficult issue but I have been in the PC computer industry since its birth(ish) and I knew from the onset that with the *copy* command a few electrons later and wham brand spanking new copy for me!

    The issue never send before is a product that can be replicated with the click rather then setting up an entire production or whatever. In this we see not a lessening of the worth of that product but an override on its ability to be obtained without effort(which means money).

    Now I love me some artists and I dont want them to do this for free as I think that will kill the music world. I want a way for them to be paid for their efforts but I dont want to pay an unfair price for it either. As an aside i think the distribution companies need to die then the artisit sees a ton more profit even at the $0.30/mp3 from certain sites.

    We need to fix this industry as well as others like email. Their are ways to legally get music and prove you own it and it will take buy in from everyone including consumers. It will take some sort of digital check in method that everyone is going to hate like when you play it it verifies your ownership and before you can copy it verifies the device is yours too or you pay to copy to unknown device.

    Now remember anything, including my stupid suggestion, will always get a bad backlash but I wager that the backlash comes from everyone who is trading it illegally not legally. Those who are on the up and up would not mind a verification process if it were made simple and anonymous for them. This is already true for anyone who has a subscription to cable DVR or sattelite etc as the card in the machine identifies the owner and makes them pay for the content (pay per view) on some monthly billing after the fact. It does not stop them from copying it to others but that part could be added to all devices.

    ALL or any suggestion can be defeated by criminals but 'tis the way of the world so we try to stay a step ahead. We copied the game DOOM to almost every computer in the world and likely not many people ever bought it but this company is going strong today!

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    Xenohacker@hotmail.com, Nov 15th, 2006 @ 2:20pm

    he Economics Of Abundance Is A Moral Issue For U.S

    In the U.S. we banned slavery and indentured servitude. But when our markets are open to free trade from countries paying slave labor wages with no human rights or a wage we have considered the minimum wage. We both ensure that slaves remain slaves as well as pave a path to our own slavery.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Jamie, Nov 15th, 2006 @ 2:22pm

    Re:

    The buggy whip analogy isn’t flawed when you apply it to physical media rather than content. CDs, cassette tapes, and records are all obsolete or becoming obsolete. Sure there will always be a small market for them, just as there is a small market for buggy whips now, but the future of content is independent of physical media. That is where the abundance comes in. When we replaced all of our records with cassettes and then replaced those with CDs, we weren't really changing the product. The product that was being sold was still the physical media. It was in a different form, but was still basically the same product. The physical media was what was sold with the content being the incentive to make you buy that physical item.
    The switch to digital files is not the same. The product being sold is now the content. There is no physical component to the sale. Its up to you to put the content on whatever physical device/media you want.

     

    reply to this | link to this | view in thread ]

  8.  
    icon
    Mike (profile), Nov 15th, 2006 @ 2:26pm

    Re:

    I'm with you on this, but your buggy whip analogy is flawed. The 'infinite availability' of digital goods is only worth discussing because people still want those goods. Nobody wants a buggy whip anymore.

    Mike, I think you read too much into the buggy whip analogy. I was just making the point that the market changed.

    In the case of the buggy whip, it was demand that changed. In the case of content, it's supply that changed. In both cases, though, the fair market price dropped significantly and the market needed to adjust.

    But the end result is the same, and the point is the same. We don't whine about the fact that buggy whip makers have a "moral right" to make money. Nor should we complain that content creators have a moral right to make money. If the market isn't there, then they need to deal with that.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Ethan B., Nov 15th, 2006 @ 2:30pm

    Re: Re:

    I am with Jamie on this one.

    Pure digital is a *fundamental* change in the product. Record companies are in the business of selling physical media. They are NOT in the business of "getting as many people turned on to an artist" [which is what the ARTIST WANTS]; they want to control supply and maximize profit.

    Can't do that once everything is digital, folks. New business model time.

    The record companies have been hugely profitable by controlling the means to production and distribution. These controls are now GONE.

    Time for new players who understand this; don't look for effing Edgar Bronfman to figure this out. He's old! ;-)

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Frank, Nov 15th, 2006 @ 2:43pm

    Mike, when your series is over, could you put the whole thing together in a PDF download or something, for mass consumption? This is just an awesome hard core logic-based argument that pretty much silences the noise we're hearing these days. I would love to study this and have a few lines ready when some know-nothing lamo gets uppity about copyright and artists' rights.

    Hey, I know! Offer it as a free download, but sell a hardbound, autographed copy. ;-)

     

    reply to this | link to this | view in thread ]

  11.  
    identicon
    slick, Nov 15th, 2006 @ 2:52pm

    I have encountered "the right to X" misconception many times. The problem is, thinking about it as having a right to anything, is a flawed understanding of rights. Rights are not rights *to* things, rather they are freedoms *from* things. Let's take the the first of three inalienable rights mentioned in The Declaration of Independence; life. It should be obvious. No one has the right to life; we all die. Nothing can stop that. What we have is the right not to have our life taken from us. Just like no one has the right make money, but they have the right not to be prevented from making money.

    The problem is that if there were rights *to* things, that implies that those thing must be provided some how. Like, for instance, a right to health care. If we have a right to health care, that assumes that some one must provide us health care whether they want to or not. What is no one wants to provide health care at all? Where does it come from then? If we have a right to it, then do we have the right to enslave some one to provide it for us? Slavery is immoral, but having rights *to* things implies slavery because The Right *to* Whatever actually means The Right to (have provided for me) Whatever.

     

    reply to this | link to this | view in thread ]

  12.  
    identicon
    Buzz, Nov 15th, 2006 @ 2:57pm

    I agree with Frank.

    I too would like a PDF copy of the whole series. And the autographed hard copy would be nice as well. ^_^

     

    reply to this | link to this | view in thread ]

  13.  
    identicon
    Jamie, Nov 15th, 2006 @ 3:02pm

    Re:

    Good point slick.

     

    reply to this | link to this | view in thread ]

  14.  
    identicon
    C-Delerious, Nov 15th, 2006 @ 3:07pm

    Pricing was the problem

    Record companies are/were in the business of selling entertainment, not media. They call[ed] it 'product'. That they controlled secondary uses of the entertainment by the high cost of devices to reproduce the media (not the content) was convenient and that is the convenience they'd like to legislate back into existence (cost passed on to taxpayers via FBI salaries).
    Thus the pay-per-play technologies they love and the market hates.
    The Big Problem to me is not that the cost of reproducing the media is near zero now, but the ubiquity of "music" - you can't go into a store or many other public places without pervasive background music; as a nation we've lost comfort with silence. People prefer even radio commercials to quiet - quiet makes many nervous. With music everywhere, it's hard to think of it having any intrinsic value (oversimplified but the point is there). So who can blame a music publisher for trying to collect cash for an instance of enjoying the music, rather than a piece of plastic that enables that experience?
    We the market are accustomed to paying once for the privilege of enjoying some music whenever we want - that's the deal we've had ever since Edison. The music marketers are trying to change that deal but we are mostly not buying, instead clinging to the original model which has served us well. Why else would we pay $18 for a lump of plastic that cost less than a dollar to make?
    Well now we don't necessarily have to. It's the pricing that's wrong, not the distribution technology. I can make a pretty good copy, packaging and all, of a DVD, but unless I pay myself nothing it's worth more to me to buy it than to copy it, because most DVDs are priced reasonably. CD's have always been priced too high. Now a whole generation has come along with no interest in CDs. Can't think of a way to put that genie back in a bottle.

     

    reply to this | link to this | view in thread ]

  15.  
    icon
    mmrtnt (profile), Nov 15th, 2006 @ 3:12pm

    Water, Not Whips

    In the past, the only way to get water was to buy it in bottle form. And then, wonder of wonders! INDOOR PLUMBING!

    Now the bottled water providers are fighting to get a cut from the delivery of water through pipes.

    Well, that's not the way it worked, historically.

    Water, for all intents and purposes, in the US is basically free for the taking - yet the bottled water industry is a billion-dollar business.

    That's because they (bottled water cos) were forced to compete for business using the "perceived value" of their goods.

    By the same token, the recording industry should emphasize the "perceived value" of their products (original packaging and the pride of a legal purchase to name two) and, taking into account the relative hassle of downloading vs the convenience of buying a professionally packaged product, price all CDs appropriately. Say, $3.99 to $6.99US.

    MjM

     

    reply to this | link to this | view in thread ]

  16.  
    identicon
    Angus, Nov 15th, 2006 @ 3:14pm

    But ...

    I think that perhaps some of the problem is that there IS very much a market for CDs and other media. There is still a minority of people who actually want to buy a digital version of a song or movie. Our current state of technology is such that digital copies are often harder to deal with and share than our hard-copy media (it's easy to lend a friend a puchased DVD, but a lot harder to give them a 2GB movie file - unless you have a DVD burner).

    Until the hardware catches up with this digital new world, we will still see a market for hard-copy media. Most of the complaints you hear are probably from people who currently make money off this distribution network, who wonder why you're loudly yelling for their livelihood to be made redundant - not realising that the fuiture is rushing towards them (or sometimes creeping as hardware is still not usable/portable/cheap).

    My point is that if the artists cannot control their content, then in the future someone like Mike S. who likes music, but not the 'extras' (t-shirts, cups, etc) will potentially find themselves having to choose from an inexpensive LEGAL 'pirate' CD (if we removed the criminal aspect of copyright infringement) and a more expensive version of the same CD sold directly by the band. The value is in the portable access to the band's music - the problem is that the profit ends up in the hands of the CD manufacturer and NOT the artist.

    The end result may be lots of poor, but popular, artists and a few rich CD manufacturers.

    That won't happen if digital content becomes easier and cheaper to buy, backup and take with you - but at the moment the technology (IMHO) does not make this possible for most of the shopping public.

     

    reply to this | link to this | view in thread ]

  17.  
    identicon
    Xenohacker@hotmaill.com, Nov 15th, 2006 @ 3:19pm

    Mikes A Commie Thief

    "Everyone has the right to try to make money out of their creative output, but if the market isn't there, then there's no money to be made."

    If the market was shattered due to mass larceny does your logic still tally? If everyone is jumping off a cliff shouldn't you do it to?

    "For example, I could draw a picture on a scrap of paper and try to sell it as fine art -- but no one would buy it, because my artistic drawing ability is pretty weak."

    First of all, don't compare your sketch of a booger on a scrap of paper in the same arena as musicians across America and abroad that craft music to diminish the hurt you are causing.

    "What the Internet is doing is breaking down the barrier of that scarcity, and that's changing the market, pushing out the supply to infinite levels and putting clear pricing pressure on the content."

    The Internet is constructing an unspeakable supply and breaking down all demand. The end of capitalism... sounds communist to me...

    Your a communist aren't you Mike? I can tell you are sure not a capitalist. Content creators should be paid for content they sell. If they cannot sell their worthless music then they should not make money. However, I feel confident in consumers to make that decision rather that a THIEF like you!!! Your trying to build an argument to justify something that is immoral. I will admit right here and now I download content and I will continue to thieve content anywhere I can get it. But I don't try to rationalize my immorality with rhetoric about "economics when there's a lack of scarcity" you are the weakest link... go home :-(

     

    reply to this | link to this | view in thread ]

  18.  
    identicon
    Bob, Nov 15th, 2006 @ 3:20pm

    Thank You

    Nice to see that someone in the technology sector understands economics. I used to be ignorant on the subject, like many other propeller-heads, but have learned a lot about the truths that economics teaches us. One of those truths is that economics and commerce are not moral per se. Interestingly enough, my continuing economics education has largely taken place from the Internet, and from blogs in particular.

    Keep up the good work.

     

    reply to this | link to this | view in thread ]

  19.  
    identicon
    teece, Nov 15th, 2006 @ 3:23pm

    Well, Sort of.

    However, for now we'll leave that aside and focus on the second point: that there's a right to make money. That's completely false. Economics is not a moral issue. It doesn't care about anyone's "right" to make money from their creative output... and neither should you.

    When you say this, do you realize you are just playing a semantic game?

    Physics is not about rights. An atom bomb is just an application of physics; physics doesn't care if you drop atomic bombs on cities.

    Same thing, just as empty a statement.

    In the end, *everything* is a moral issue. Don't lose sight of that fact.

    I suspect I agree with your overall thrust here (I'm not a big fan of IP at all, DRM in particular), but it is nowhere near as simple as that statement makes it seem.

    You can't simply banish morality and be done with it. It is a fundamentally important decision: is this system moral? One hopes any economic systems are efficient, but they *also* must be moral. There are plenty of economic scenarios that are very immoral. Slavery, for instance, has made perfect economic sense at various times in human history. The simple study of the economies of slavery is not a moral issue, but the slavery itself most certainly is. It's pretty easy to show that a society can prosper economically and allow slavery. But that is in no way a refutation of the immorality of slavery.

    I think you are confusing those two ideas. If one feels there is a moral obligation to make money off of IP, you can't simply banish that belief with a hand-wave invocation to economics. So I think you pretty much have to stick with your point 1, and abandon point 2 altogether. WE decide what we think is right and wrong, NOT the theory of economics. Economics can only shed some light on the workability of our systems of right and wrong as they relate to economic issues.

    Such things as morals and beliefs and rights are NOT going to be anywhere near as neat as the messy soft science of economics. You are correct when you say that economics is not a moral issue, but it has no meaning at all in this context to make that statement.

    A study of the economic theory of something does not abdicate all considerations of morality. If someone thinks the economic system you argue for is immoral, you're going to have to engage that argument. I suspect I might agree your reasons on the lack of immorality here, but you need to be more careful with the reasoning.

    In any event, I am certain the economics of non-scarce items is not even slightly straightforward. Hell, we suck pretty bad at figuring out the economics of scarce items, without throwing a whole new genre into the mix.

     

    reply to this | link to this | view in thread ]

  20.  
    identicon
    Susheel Daswani, Nov 15th, 2006 @ 3:33pm

    Good points...

    I think another point to consider about the 'economics of abundance' is the enforcement problems this newfound abundance creates. At some point, spending money policing 'infringement' is just not cost effective.

     

    reply to this | link to this | view in thread ]

  21.  
    icon
    Mike (profile), Nov 15th, 2006 @ 3:42pm

    Re: Mikes A Commie Thief

    The Internet is constructing an unspeakable supply and breaking down all demand. The end of capitalism... sounds communist to me...

    This is the argument that makes the least sense to me, because my argument is very much based on free market capitalism. I also never said that it's "breaking down all demand." In fact, I believe the opposite. It's increasing demand, but that's for a later post.

    It's not at all about the end of capitalism. In fact, quite the opposite. It's about getting rid of artificial barriers to commerce, to let free market capitalism work.

    Content creators should be paid for content they sell.

    Yes. If they can sell it. But they should not just be paid for the content they *make*.

    If they cannot sell their worthless music then they should not make money.

    Indeed. No disagreement from me.

    However, I feel confident in consumers to make that decision rather that a THIEF like you!!! our trying to build an argument to justify something that is immoral. I will admit right here and now I download content and I will continue to thieve content anywhere I can get it.

    This is also amusing. I do not download music or movies. I buy CDs or DVDs. I do not use any file sharing programs. I have never had Kazaa or Grokster or any such program installed on my computer. I believe that under current laws, using those products has a high chance of being considered illegal and I will not break the law.

    This has nothing to do with me justifying any behavior -- especially since I don't do what you accuse me of. It's about understanding the economics that are impacting the market, and learning how to profit from it. That seems a particularly capitalistic point of view, so I'm curious why you disagree.

     

    reply to this | link to this | view in thread ]

  22.  
    identicon
    teece, Nov 15th, 2006 @ 4:00pm

    Xenohacker Ideas on Communism

    I can tell you are sure not a capitalist. Content creators should be paid for content they sell.

    Do you realize that in a purely-free-market capitalist system, patents and copyright would not exist?

    Both are a violation of free market principles, as people generally understand those principles today. They're an imposition of human decisions (government granted monopolies) into a market that free market capitalism generally says should be completely left alone.

    I think both communism and free market fundamentalism are completely unworkable in decent, prosperous human societies, but your use of the term "communism" seems to be showing a fundamental ignorance of the theory here.

     

    reply to this | link to this | view in thread ]

  23.  
    identicon
    Jamie, Nov 15th, 2006 @ 4:07pm

    Re: Well, Sort of.

    Teece,
    I think you missed his point entirely. Moral positions are all choices about what is the "good" thing to do when you are faced with a choice. What Mike is saying is that there is no "choice" to be made here for the content producers. The old business model based on physical media does not work anymore. They need to change, or they will be left out in the cold.
    So what Mike is talking about isn't a "moral" issue. Mike is simply trying to state facts about what the shift from physical media to digital media means to the economics of the market.
    The morality of copying music you or others haven't paid for is a separate issue from the recognition that the old business model is dead.

     

    reply to this | link to this | view in thread ]

  24.  
    identicon
    Xiera, Nov 15th, 2006 @ 4:24pm

    Re: Mikes A Commie Thief

    "If the market was shattered due to mass larceny does your logic still tally? If everyone is jumping off a cliff shouldn't you do it to?"

    If a severe case of mass larceny occurred, the market would still exist. People would still demand the products/content. If there is no demand, then people (and corporations) still have the -right- to try to sell their products/content, but "there's no money to be made". If everyone is jumping off a cliff, you -do- have the -right- to do it too.

    "First of all, don't compare your sketch of a booger on a scrap of paper in the same arena as musicians across America and abroad that craft music to diminish the hurt you are causing."

    You clearly missed the point. He's saying that a lack of demand results in the same consequences as an infinite supply. If I could draw a Supply-and-Demand schedule for you online, I would gladly show you how this is the case.

    I'll try to explain in words:
    - Zero demand: The demand curve is a vertical line at 0. The supply curve can be anywhere it wants, but it will eventually reach an equilibrium at price = 0.
    - Infinite supply: The supply curve is a vertical line at infinity. The demand curve can be anywhere it wants, but it will never intersect the supply curve because infinity is greater than all numbers and one cannot logically compare infinity and infinity.

    "The Internet is constructing an unspeakable supply and breaking down all demand. The end of capitalism... sounds communist to me...

    Your a communist aren't you Mike? I can tell you are sure not a capitalist. Content creators should be paid for content they sell. If they cannot sell their worthless music then they should not make money. However, I feel confident in consumers to make that decision rather that a THIEF like you!!! Your trying to build an argument to justify something that is immoral. I will admit right here and now I download content and I will continue to thieve content anywhere I can get it. But I don't try to rationalize my immorality with rhetoric about "economics when there's a lack of scarcity" you are the weakest link... go home :-("

    First of all, if Mike was a communist, he would be recommending that the government regulate the price of all online media produced, that the government collect all payments on online media, and that all producers of online media be equally paid. This is not what he's suggesting.

    Rather, Mike suggests that the very mechanism that drives the free market economy (supply and demand) is being -obstructed- by so-called "rights" that producers do not (read: should not) have.

    And when you are criticising a piece such as Mike's, please stick with the original assumption: that economics is not about morality.

    Don't whine about something that you clearly do not understand. Thank you.

     

    reply to this | link to this | view in thread ]

  25.  
    identicon
    Charles Griswold, Nov 15th, 2006 @ 4:27pm

    Selling Free Stuff

    The issue at hand is how to make money from something that's available for free. Magnatune has one possible solution. Another idea is to include "feelies"; physical objects such as booklets, temporary tattoos, collectible cards, and the like that couldn't possibly be downloaded.

     

    reply to this | link to this | view in thread ]

  26.  
    identicon
    teece, Nov 15th, 2006 @ 4:28pm

    RE: Jaime's Well, Sort of Response

    No, I don't really think I missed the point, Jaimie.

    It is a simple fact that people today commonly violate software and music copyright, much of which now is (ridiculously) a criminal act.

    Economics has nothing to say about the morality of IP laws. But if one *does* think that IP laws are moral, and that to violate them is immoral, then it is *very* important to address that.

    It may be a horribly inefficient system, but if the laws are not changed, the content producers do not have to change their business model. It's a perfectly valid business model, and they have every right to lobby the government to enforce existing laws. And with those laws in place, they can continue on as they are (it's a very unstable system, to be sure, and one major content producor could disrupt the equilibrium, but seeing as how the media conglomerats operate as a cartel anyway, I don't think that is a concern.

    This is not an issue of the Miller refusing to believe that mills are no longer necessary. The artificial, imposed-by-man nature of IP law changes the nature of the game fundamentally. Not only are there issues like a lack of real scarcity, there is also the issue of the very product itself being plastic and defined by law only.

    I see this all the time: the idea that economics can somehow tell us the right thing to do. It can't. So when someone starts talking about things that are moral, you can't just hand wave the concern away.

    (Yes, you can say "I'm only addressing economic issues" but you're not going to convince anyone that way).

    Mike is simply trying to state facts about what the shift from physical media to digital media means to the economics of the market.

    No, that's not what he said, actually. I think he might have *meant* to say something like that, but he didn't. He said:

    Economics is not a moral issue. It doesn't care about anyone's "right" to make money from their creative output... and neither should you.

    That's very much an overstatement, and bad rhetoric. (Like I said, I suspect I [more or less] agree with where he's going). I suspect that Mike thinks the economic argument he is going to make will dispel the moral problems, but he needs to be much more clear about that.

    Because you can never take the morality out of the question unless your only concern is an academic study of economics.

    I see this a lot in armchair economics folks, that have an Econ 101 understanding of things (not saying that's Mike). A lot of Americans really believe that modern economics says communism is wrong and capitalism is right. That's complete nonsense. Modern economics says one is more efficient than the other, which is a whole 'nother animal.

    Mike is treading too close to that kind of thinking for my tastes.

     

    reply to this | link to this | view in thread ]

  27.  
    identicon
    Xiera, Nov 15th, 2006 @ 4:34pm

    Put it this way...

    I'll reference the concepts in the previous part of this series:

    When an artisan or corporation or whatever makes a physical product, they can sell it. They no longer have it. They cannot sell it again (legally). If they want to make more money, they must invest the costs into making another item and selling that one. This is marginal cost. A certain fixed cost goes into the concept that produced the original item. After that, everything is a marginal cost (until improvements are made to the item).

    When an artist or record label makes media, they can sell it. They still have it. They can sell it again. If they want to make more money, they do not have to invest any more money. The marginal cost is zero. After the fixed cost (of time and overhead costs) that goes into making the music originally, there is no additional cost.

    The difference? When there is no marginal cost, but one continues to charge for the product/content, one can theoretically make an infinite profit. This is part of what Mike is addressing.

     

    reply to this | link to this | view in thread ]

  28.  
    identicon
    Matthew Wiggins, Nov 15th, 2006 @ 4:38pm

    What about price of creation?

    Really interesting articles in this series, but something I haven't been able to figure out for myself.

    Yes, the abundance does bring the price of *distribution* down close to zero, but what about all the costs incurred in *producing* the content?

    Are content creators now destined to only make money off of other products, and not on the content they actually create?

    Sure, it can cost pennies per download to allow users to download copies of the movie, but you still had to spend several million dollars to produce the movie in the first place. how do you recoup this loss?

     

    reply to this | link to this | view in thread ]

  29.  
    identicon
    Alex Hagen, Nov 15th, 2006 @ 4:44pm

    Moral issue?

    Sigh, none of this is new, and we deal with it through laws, exactly as we are trying to do now.

    Copyrights and patents have always existed to do exactly what they are doing now; protect creators from people who would take their creation. The fact that copies of digital music or software are completely free is irrelevant, since bootleg copies of taped music, cheap copies of patented goods, and knockoffs of prescription drugs have a minuscule per-unit costs compared to the cost of researching or producing the first one. It is always cheaper and easier to take someone else's content or ideas rather than research or create your own.

    Stop pretending that this is new in any significant way Mike. The only thing new is the culture that says that it is perfectly OK to illegally copy things, and the culture that says people who actually create useful things should change the way they do business to some mysterious other model rather than go after those that are "stealing" their work.

    If the moral issue of taking someone's work as your own isn't enough, I'll give you an economic one. If everyone "steals" people's ideas and creative works, no one will create them anymore. To use a non-digital example, how many billions have been spent creating an Aids vaccine? How much of that would have been spent if copying drug recipes was a rampant as copying music is becoming? Would private companies even bother to create anything if they knew that they could never make money from it since everyone will just "steal" it?. Without IP laws, economies of all kinds of industries disappear, and it is in all of our best interests to prevent that.

     

    reply to this | link to this | view in thread ]

  30.  
    identicon
    teece, Nov 15th, 2006 @ 5:20pm

    Re: Moral Issue

    Alex Hagen:

    Copyrights and patents have always existed to do exactly what they are doing now; protect creators from people who would take their creation

    Copyrights were created to stop people from profitting off of your work, as happened with Shakespeare and countless others.

    I don't think copyright or patents were really concerned at all with the non-commercial use of the invention or copy. Rather, they were a government-granted monopoly on commercial use.

    The concept of essentially free copies, available for non-commercial use, is something that would have been pretty alien to the folks that wrote copyright and patent law originally. Copying a book or an invention covered by copyright or patent was real work, which made non-commercial copying more or less a non-issue; today both can be replicated painlessly and essentially for zero cost, which changes things.

    So I don't think it is at all true that what we see today is not new.

    I also think that current patent and copyright law has been very poorly thought out, in regards to how essentially free copies effect laws regarding non-commercial usages.

     

    reply to this | link to this | view in thread ]

  31.  
    identicon
    Xiera, Nov 15th, 2006 @ 5:23pm

    Re: What about price of creation?

    http://www.techdirt.com/articles/20061025/014811.shtml (Mike links to this in the original post.)

    We had this discussion. It was rather fun and interesting.

     

    reply to this | link to this | view in thread ]

  32.  
    icon
    Mike (profile), Nov 15th, 2006 @ 5:39pm

    Re: Moral issue?


    Stop pretending that this is new in any significant way Mike.


    Alex, I am not pretending this is new at all. Where have I suggested that? Nothing of the sort. In fact, in my original post in the series I chided those who claim it's new pointing to much of the history behind the concepts dating back to Jefferson and even earlier.

    The problem, however, is that many people (yourself included, I'd say) don't seem to understand the actual economics -- which is what I'm focusing on.

    I note that you ignore the economics and go back to the moral issue itself.

    When you try to talk about economics, you get it wrong. You claim that the AIDS vaccine would never be created without patents, but in the last discussion on this topic, we pointed to plenty of examples of pharmaceutical industries thriving in the absence of patents. And the AIDS vaccine is a really bad example, since much of it was developed not due to free market economics, but through gov't funded research. It wasn't done by private companies, but using public money. I'm not saying that's the right way to develop drugs, but saying your example doesn't hold any water.

    Without IP laws, economies of all kinds of industries disappear, and it is in all of our best interests to prevent that.

    This is, as I've pointed out, provably false. The very point of these posts is to show that those industries can be even bigger and more profitable without worrying about IP protections.

     

    reply to this | link to this | view in thread ]

  33.  
    identicon
    Xenohacker@hotmail.com, Nov 15th, 2006 @ 5:56pm

    Im Moving On To Other Articles...

    I adore how you hide behind the ambiguity of your editorials true drive. I find it amusing how you do not offer workable examples of how it is growing demand in your discussion. Charles Griswold's at least provided a link to information on companies trying to capitalize with different business models... maybe he could write your articles. I believe his content is better... your thought processes have not made it that far...

    I don't want to diminish the affect of the great comments before this one so I will just end with a few comments... :-)

    If you are merely discussing economics why are you writing for Techdirt and not something like Ecodirt LOL?

    I viewed a movie recently that said something to the affect: "I don't have to prove I am right just that you are wrong to win the argument." (Thank You For Smoking)

    I have found the arguments presented to your article have clearly refuted anything the author was originally stating and the clearest arguments for this article were presented by readers sticking up for him in the after math. So I will just state that your original writing would have to be amended so many places to resemble a logical argument that the article is wrong.

     

    reply to this | link to this | view in thread ]

  34.  
    icon
    Mike (profile), Nov 15th, 2006 @ 6:18pm

    Re: RE: Jaime's Well, Sort of Response

    Economics has nothing to say about the morality of IP laws. But if one *does* think that IP laws are moral, and that to violate them is immoral, then it is *very* important to address that.

    No. The point is that the morality of the question is entirely separate from the economics of it. You can debate the morality of it -- but it's entirely separate. I am not saying that morality plays no part in the question of freeing content. I'm saying it plays no part in how the economics will play out.

    It may be a horribly inefficient system, but if the laws are not changed, the content producers do not have to change their business model. It's a perfectly valid business model, and they have every right to lobby the government to enforce existing laws.

    Indeed. But my point is that the economics will eventually trump the inefficiency put in place by the laws. So, I disagree that it's a "perfectly valid business model." It may be a perfectly valid business model now, but it will not remain so.

    And with those laws in place, they can continue on as they are (it's a very unstable system, to be sure, and one major content producor could disrupt the equilibrium, but seeing as how the media conglomerats operate as a cartel anyway, I don't think that is a concern.

    Well, the real issue is that the disruption is likely to come from outside the cartel. And the cartel itself can become unstable very quickly as soon as one player recognizes that they can get much more profit by bucking the cartel and adopting a different business model. At that point, the entire cartel effort falls apart.

    I see this all the time: the idea that economics can somehow tell us the right thing to do. It can't. So when someone starts talking about things that are moral, you can't just hand wave the concern away.

    I'm not saying that economics tells us the "right" thing to do. I'm saying that economics tells us where things are going, and that highlights the opportunities.

    Because you can never take the morality out of the question unless your only concern is an academic study of economics.

    I disagree completely. I think you absolutely NEED to take the moral issue out of it, or you cloud the arguments. The whole point in bringing this up is to highlight the economic issues and apply them back to the overall issue. What you're saying is that it's impossible to separate out the economic issues -- and that's not just wrong, it's a dangerous way to think, because it doesn't let you focus squarely on the issues at hand.

    You can apply the moral filter separately, but the economics has no impact on the moral side either way.

    A lot of Americans really believe that modern economics says communism is wrong and capitalism is right.

    Now that's funny to me, because THAT's a moral judgment right there, and you go on to condemn people who believe that. You actually agree with me. Economics does not take morality into account -- which is the whole point we're making here.

     

    reply to this | link to this | view in thread ]

  35.  
    identicon
    Alex Hagen, Nov 15th, 2006 @ 6:19pm

    "Alex, I am not pretending this is new at all. Where have I suggested that? "

    Continually: "the old way (pretending the content is scarce) won't be viable any more"

    There is no old way and new way, there is the same way there has always been; people creating, and other people copying those creations illegally, and getting sued for it. The only difference between then and now is the sheer quantity of people doing it. There is nothing new or special going on except for the culture of, for lack of a better word, lawlessness.

    "but in the last discussion on this topic, we pointed to plenty of examples of pharmaceutical industries thriving in the absence of patents."

    Where is that, because I see one example, Italy, and it appears to be a pretty poor one. And, I might add, you pretty much got your clock cleaned in the debate there.

    "This is, as I've pointed out, provably false. "

    Um, huh? You haven't even come close to "proving" it. You don't even have a workable theory for exactly how many industries would avoid destruction in the IP-less world you envision. You keep saying supply is infinite. Maybe it is infinite once for a single item, but let's see how infinite supply is when no-one is creating any new items anymore because there is no money in it.

    It's funny Mike, I am a long time reader of your column, and I was actually leaning towards your attitude at one point. But after reading discussion after discussion here, it is clear that your arguments don't stand up, and I have found myself agreeing more and more with the content providers. It's just too bad they are such a-holes.

     

    reply to this | link to this | view in thread ]

  36.  
    identicon
    PhysicsGuy, Nov 15th, 2006 @ 6:29pm

    Re: a Principal Research Scientist in the Research

    So I will just state that your original writing would have to be amended so many places to resemble a logical argument that the article is wrong.

    in the same manner that your replies would have to be amended to make logical counter point to mike's article? without such amendments your arguments have no solid basis, as is obvious from merely reading them; however mike's article makes sense without said amendments, therefore he holds firmer ground for debate on the issue.

     

    reply to this | link to this | view in thread ]

  37.  
    identicon
    PhysicsGuy, Nov 15th, 2006 @ 6:31pm

    whoops...

    my last post should be a response to :

    Im Moving On To Other Articles... by Xenohacker@hotmail.com on Nov 15th, 2006 @ 5:56pm

    i love when web browsers fail to copy to the clipboard... (i would blame it on windows but the occurrence of failure increases dramatically in web browsers. why oh why can't they seem to keep focus over what you just highlighted?)

     

    reply to this | link to this | view in thread ]

  38.  
    icon
    Mike (profile), Nov 15th, 2006 @ 6:55pm

    Re:

    Continually: "the old way (pretending the content is scarce) won't be viable any more"

    Ah, that's different. I'm talking about the old *business model*. That's different than the new business model. But the economics remain the same.

    There is no old way and new way, there is the same way there has always been; people creating, and other people copying those creations illegally, and getting sued for it.

    The thing is, not once in this debate (or anywhere on this site) have I EVER defended the practice of taking or downloading unauthorized content. I agree that it's illegal and I do not support it. The entire point is that the companies and individuals producing the content should learn to embrace new business models so that it wouldn't even be an issue any more.

    It's an important distinction. This debate is not about downloading music. It's entirely from the company side and what they should do.

    Where is that, because I see one example, Italy, and it appears to be a pretty poor one. And, I might add, you pretty much got your clock cleaned in the debate there.

    How did I get my "clock cleaned"? I'm curious, because the evidence still stands. Italy had a thriving pharma industry even with no patents. Do you dispute that?

    The only point that people disagreed with was that them putting patents in place later hurt the pharma industry. The pharma industry did, in fact, do poorly after patents were put in place, but it may or may not have had anything to do with the patents. Either way, however, it disproves your claim that there can be no pharma industry without patents. So, I don't see how I had my "clock cleaned" when the facts still support my position and disprove yours.

    As for other examples, we've highlighted the case of Switzerland and Denmark in the past, both of whom did away with their patent systems for a period of time and discovered it helped their economies grow. There are also other cases in Europe where pharma patents were forbidden and the industries still did well.

    Um, huh? You haven't even come close to "proving" it. You don't even have a workable theory for exactly how many industries would avoid destruction in the IP-less world you envision.

    Well, I have actually written about it here a bunch of times, given out plenty of examples of models where it worked, but as I said in this post, future posts in this series will continue to lay it out. If you look back at the comments on the last post, you'll see I hint at it a great deal as well.

    However, I do take exception to your claim about "how industries would avoid destruction." That completely misses the point. The destruction they face is in NOT DOING ANYTHING. That's the point I'm making. The market gets ripped out from under their feet if they don't change. That's the destruction they're facing.

    You keep saying supply is infinite. Maybe it is infinite once for a single item, but let's see how infinite supply is when no-one is creating any new items anymore because there is no money in it.

    Again, please read what I've written carefully again. I've made it clear that there are many, many business models that can make plenty of money, even if it's not about selling the content directly. I will explain them more in future posts, but to claim I've never discussed them here is flat out false.

     

    reply to this | link to this | view in thread ]

  39.  
    identicon
    William, Nov 15th, 2006 @ 7:10pm

    This is very interesting

    I understand what your saying. That as ease of production causes the marginal cost to drop too zero the actual cost should approach zero. But that completely overlooks one very simple and obvious fact. Copyrighted material can only be legally replicated with the permission of the owner of the copyright. Can you say scarcity.
    With books music and art that is where the value has always been. Anyone can make big plastic mouse ears for 5 cents a piece but only Disney can write Mickey Mouse on them and sell them for 14.99$. I think you are right CD's will go away but we will be paying 99 cents for downloads at ITunes or whatever for a very long time to come.
    And if you want your music for free do what I do and turn on the radio. Of course you still pay for it in the form of advertisements you listen too. By the way i used to download music but it cost me too much in the form of time spent in from of my computer.

     

    reply to this | link to this | view in thread ]

  40.  
    identicon
    Mike S., Nov 16th, 2006 @ 3:37am

    Re: Re:

    @Mike -- Point taken. I don't disagree with you at all on the major points -- particularly the notion of there being no right to make money, I was just refuting what I thought was an analogy in favor of your overall statement. Nevermind...

    @Those who responded to my earlier post -- The difference is still that people still want the musician to make the music. The demand still exists for the music (the CD has always only been the medium -- packaging even). He or she still toils away for however long it takes to make the songs and people still (perhaps moreso this time) want to get it -- only nowadays the people who want it can get it for free and there are people arguing that that's the way it should be.

    I wasn't refuting the analogy as a way of refuting the point, just pointing out how the artists are in a different spot than the buggy whip makers. We're essentially telling them to do the same work and expect less for it. We told the buggy makers to get another job because nobody wants your product.

     

    reply to this | link to this | view in thread ]

  41.  
    identicon
    mousepaw, Nov 16th, 2006 @ 4:57am

    Got it.

    Thanks Mike. This was a way better explanation. I'm looking forward to the next in your series.

     

    reply to this | link to this | view in thread ]

  42.  
    identicon
    Alexander Pensky, Nov 16th, 2006 @ 6:03am

    The key to this post:

    The idea that anyone automatically has a right to make money from their creative output is wrong. Everyone has the right to try to make money out of their creative output, but if the market isn't there, then there's no money to be made.
    Absolutely correct. And while you are tying these together into a series, hold that point in your mind and consider that you can also apply it to the situations where rights holders try to extend copyright and trademark protections into something they're not meant to be. The point of a copyright is not to say "no one may copy this product unless the copyright holder has been compensated". It is to say "IF there is any money to be made from the duplication and distribution of this material, THEN the copyright holder has the sole right to make that money". The concept of copyright was invented with the printing press, and is expressly designed for an economy in which duplication and distribution contribute to scarcity. Once duplication and distribution have zero marginal cost, copyright no longer serves any effective purpose. It should be retired and replaced by some new concept in intellectual property law, which would grant a more appropriate set of privileges to the rights holder.

     

    reply to this | link to this | view in thread ]

  43.  
    identicon
    Rick Ringel, Nov 16th, 2006 @ 7:29am

    Let the market decide

    I understand about zero marginal cost, and I understand market pressures. However, it is not for us to guide the market's invisible hand.

    If a content creator wants to create artificial scarcity, then it is their right to do so. Look around - every company has a strategy to create percieved scarcity for their products or services. Did you ever meet a consultant that said "I'm nothing special"? Have you noticed that there tends to be less than 5 copies of every book in stock over at Amazon, but almost never zero? (maybe this is because we shop in the long tail, but I am skeptical)

    My point is this: if one set of creators uses output as a promotional tool, that is great. If another set of creators latch their output to a DRM system to create scarcity, that is great too. We have no claim to output of the latter set of creators, no matter how much we argue economic theory.

    Economic theory is a predictive model, not a system of rights management, and as Mike states, it is certainly not a moral Issue.

    I am 100% in agreement with Mike in that we must fight against those that would change the existing laws to protect the status quo: the market isn't broken, and it doesn't need fixed.

    -Rick

     

    reply to this | link to this | view in thread ]

  44.  
    identicon
    bshock, Nov 16th, 2006 @ 8:06am

    Excellent article. These points desperately need to be made in the widest possible public forum.

     

    reply to this | link to this | view in thread ]

  45.  
    identicon
    Jaylen Smith, Nov 16th, 2006 @ 8:47am

    Free Market Economics

    What I think most people are missing is that modern economics (Keynsian, Malthusian etc.) is based on the value of scarcity. When you take scarcity out of the equation then the theory falls apart.

    Economics always fights with morality and efficiently, (ie American jobs vs outsourcing). Consumers drive the market, if the consumers beat you (ie file sharing) in making your product more efficient, you can either beat them (create laws and sue them) or adjust to the market that has suddenly changed. Mike is suggesting that instead of fighting your customers adapt to make money off them. Considering consumers criminals before they purchase your product (RIAA/MPAA), or creating a large barrier (making it so that you have to purchase mulitpul versions of the same item for different devices), many would choose a simpler solution. His concept (from what I can gather) is very neoclassical in concept, without protections, let the market decide. It’s the basics of free trade.

     

    reply to this | link to this | view in thread ]

  46.  
    identicon
    Anonymous Coward, Nov 16th, 2006 @ 8:56am

    Re: ZERO sum game

    It will take some sort of digital check in method that everyone is going to hate...

    Those who are on the up and up would not mind a verification process...

    Not sure I buy your logic. If those who are on the up and up would not mind a verification process then why would everyone hate it?

    Fact is that this is still treating me as a criminal whether I've done nothing wrong or not - it's along the same lines as because I've done nothing wrong I shouldn't worry about my privacy. Crap.

    As a consumer, I'm not interested in electronic verification process for a couple reasons. One, there is no way in hell I'll believe that it is truly anonymous and I've got a problem with that. Two, I shouldn't have to prove I'm honest.

    Pay-per-view is not a solution to the current problem anyway - it's still attempting to create false scarcity in a saturated market. I'll admit I don't have a better solution but I don't think yours works and I for one would never buy into it as I think most consumers wouldn't.

     

    reply to this | link to this | view in thread ]

  47.  
    identicon
    Michael Brutsch, Nov 16th, 2006 @ 12:06pm

    Re: Re:

    The product that was being sold was still the physical media. It was in a different form, but was still basically the same product. The physical media was what was sold with the content being the incentive to make you buy that physical item.

    Not true. I would never pay $15-$20 for either a CD or a tape; it's the content I'm paying for. Just like I don't care whether a Picasso is on canvas or paper; it's the art, not the media, that you're buying. Especially when you consider that the media typically costs a small fraction of the sale price.

     

    reply to this | link to this | view in thread ]

  48.  
    identicon
    mousepaw, Nov 16th, 2006 @ 3:25pm

    Re: Re: Re: by Michael Brutsch

    Sorry to disagree.

    With all that's been said about ideas, concepts and intellectual property being value-less unless one can find a market for it, you really are buying the medium in order to get the content. I don't think the sale price is based on the medium in which it is contained (as you said, it is fractional) but is derived using formulas for a) what the market will bear, balanced with b) how much they need to charge in order to recover all the other costs that went into it. At least, that's it, if they're still using the same old pricing modules.

    Canvas vs prints? Many people do care and I'll bet it's still priced accordingly.

    It's how you fit it into Mike's theory. What would happen if everybody had, or could get a canvas Picasso? Would it mean the same to you then?

     

    reply to this | link to this | view in thread ]

  49.  
    identicon
    DWO, Nov 16th, 2006 @ 5:28pm

    Can this be applied to other art?

    Can this line of thinking be applied to other easy-to-copy art?

    Like... photography? Do you support me using other people's photos simply because the technology has changed and I can now digitize it easily?

    Or like... writing? Would it be ok for me to take your fine blog and replicate it (which is even easier that copying music) on some other domain?

    How is photography, writing, painting, etc different from music? Or, do the same rules apply? Are our laws about copywriting out of date as well?

    It seems to me the similarities have more to do with changing technology that makes it easy to copy and distribute data/content/art and less to do with scarcity and abundance.

     

    reply to this | link to this | view in thread ]

  50.  
    icon
    Mike (profile), Nov 16th, 2006 @ 6:00pm

    Re: Free Market Economics

    What I think most people are missing is that modern economics (Keynsian, Malthusian etc.) is based on the value of scarcity. When you take scarcity out of the equation then the theory falls apart.

    No. It doesn't fall apart at all. It works fine. That was the entire point of my previous post. People think it falls apart, but only because they don't understand the concept of zero. The economics works fine without scarcity.

     

    reply to this | link to this | view in thread ]

  51.  
    icon
    Gabriel Tane (profile), Nov 17th, 2006 @ 6:13am

    Re: Can this be applied to other art?

    "Like... photography? Do you support me using other people's photos simply because the technology has changed and I can now digitize it easily?"

    Why shouldn't you? Does the person who snapped the picture own the images contained therein? If you take a picture of my house, does that mean that you have ownership over that particular angle and view of my house? No. It's a picture. Yeah, you may have found a really artistically nice view of that tree with the sunset, but there's no reason someone else shouldn't be able to copy that image. You found the value of that scene, now you need a way to market it. Try postcards. Then, you're selling postcards, not the image itself. Just like CD's, not the music therein.

    "Or like... writing? Would it be ok for me to take your fine blog and replicate it (which is even easier that copying music) on some other domain?"

    Again, why not? If you claim that the writing of this blog post is yours, that's not violating copyright, its plagiarism. While that's not illegal, it discredits you once it's discovered and no one listens to you afterwards. I'm sure Mike wouldn't mind free publicity and the spreading of this dissertation. As long as you post it with proper credits and don't take it out of context, he'll probably support it.

    If you do take it out of context, then Mike will probably ask you to fix it. If you don't, then it's up to Mike to make sure the public knows what you're doing and why it's wrong. Mike shouldn't be able to (and shouldn't need to) sue you just because you found the Copy & Paste function. I'm sure that if he wanted to, he could find interpretations of copyright laws that would force you to take your copy of the blog off your domain, but it shouldn't come to that.

    For example, in one of Mike's previous entries, someone posted some copyright-protected works of another analyst (that apparently always is at odds with Mike's theories) in the comments. Mike mentioned in response to that posting was that he disagreed with someone posting it (since it's a copyrighted work) and would remove it if asked. My point is that if the author doesn't want his work disseminated, he should ask people to take it down without resorting to legal action.

    But it does beg the question... if someone doesn't want their ideas circulated, why would they publish them anywhere, much less on the internet?

    Summary: you shouldn't (and can't) market the ideas or information. That means that you don't have some inalienable right to make money off of it. If there's not a market for it, you won't make anything. I could make some beautiful sculptures out of dog shit, but if no one wants to buy them, I'm not going to make money off of them. Just because I made them doesn't mean that the world just automatically has to give me money for them.

     

    reply to this | link to this | view in thread ]

  52.  
    icon
    Gabriel Tane (profile), Nov 17th, 2006 @ 6:53am

    Just a thought:

    "without protections, let the market decide."
    -Jaylen Smith, Post #45

    This got me thinking about the choices involved. Let me take you where my mind is going on this and see if you agree. Feel free to point out anything I missed on this...

    Everyone involved in this market has choice in their participation. Artists have the choice to make the art or not. Distributors have the choice to help distribute it or go do something else. Consumers have the choice to consume the art or not.

    The artists are (mostly) ok with the choice to make the art and find compensation through means other than the direct sale of that art.

    Consumers show a willingness to purchase the art (or at least the media containing that art) to support the artist. Most of the "proud pirates" I've talked to or seen posting in places like this state that they want to support their favorite artists, but not the record labels...

    Which brings us to the weak-link here. It's the distributors (the labels and their storm-trooper enforcement, MP/RIAA) that have chosen to participate, but are trying to force everyone else to play their game their way. It's become clear that no one else wants to play that anymore.

    I remember back on the grade-school playground, when I was playing a game in a way that other kids didn't like, they all walked away. I didn't go running to a teacher to get them to make the other kids play.

    Now this is where my mind was going: If the people who are unwilling to play this new game (those making money off the old system) choose to leave, won't that mean a rise in the number of people who want to do this for the sake of the art? What I mean is, no more boy-band/popstar flakes who are in it for the money. Artists who actually have something to say and want to make art because they have some kind of artistic vision they want to realize. Oh, we may not like their vision (not a big Van Gogh fan myself), but it won't be crap just churned out for money.

    Anyone else remember the time when we had truly great artists that you just knew were up there playing something that they truly felt? How much money did people like Hendrix make? Not much. I know I'm being a dreamer here, but I'll keep my hope.

    (Rant to Follow)
    On the topic of choice: These record exec's and the ##AAs keep saying how they will be ruined if digital copying is allowed to run rampant. But it's their choice to be there. They could choose to go flip burgers at a nice, stable McJob. I know a lot of people are thinking "that's not a choice". You're wrong. It is a job. You always have the choice to lower your standard of living and live comfortably within that pay-range. What you are choosing to do is take that higher-paying job, but you have to accept the risks involved in it as well.

    The risk in this case is the market moving away from your business model. Where is it written that your chosen business model has to be legally protected from ever changing? Why wasn't there this kind of outcry when we no longer needed milkmen? A new distribution model was introduced (us getting our own milk from the store) and that meant that a milkman was no longer a viable career. What about payphone manufacturers? Why didn't they sue cell phone developers for "making technology that is stealing from us"?

    The public didn't just wake up one day and say "you know, I don't like those record companies. I think I'm going to go destroy them". The public said "you know, I don't like this game anymore. Let's go play a different game our way." The market has spoken. Those who are at risk can either choose to change with it or choose a different job.

     

    reply to this | link to this | view in thread ]

  53.  
    icon
    Mike (profile), Nov 17th, 2006 @ 1:39pm

    Re: Can this be applied to other art?


    Or like... writing? Would it be ok for me to take your fine blog and replicate it (which is even easier that copying music) on some other domain?


    How come every time I discuss this someone makes this point? I have said REPEATEDLY that you should just go ahead. Go ahead. All it does is give us more publicity. There are a bunch of sites that already do this. So, go right ahead.

     

    reply to this | link to this | view in thread ]

  54.  
    identicon
    Anonymous Coward, Nov 17th, 2006 @ 7:16pm

    Re: Im Moving On To Other Articles...

    Now this is funny! Xenohacker implodes!

     

    reply to this | link to this | view in thread ]

  55.  
    identicon
    Anonymous Coward, Nov 17th, 2006 @ 7:19pm

    Re: Re:

    So, I don't see how I had my "clock cleaned" when the facts still support my position and disprove yours.
    Facts? What facts? We don't need no stinkin' facts!

     

    reply to this | link to this | view in thread ]

  56.  
    identicon
    Ryan Waxx, Jan 17th, 2007 @ 4:27pm

    A person who creates does not have any 'right' to make profit from that creation. Granted.

    But under most morality systems, that person does have the ownership of that creation. That means that he can share however he wants, and if he hasn't authorized you to have that thing he owns, then taking it anyway is a crime.

    Additionally, although there are indeed many different marketing schemes, and although no one has a 'right' to any one scheme, could it not be argued that society has an interest in a particular marketing scheme, if it encourages the creation of high-quality products? Not everything has to be a 'right' for it to be a law, or even a policy.

     

    reply to this | link to this | view in thread ]

  57.  
    identicon
    Pat R., Feb 5th, 2007 @ 8:12am

    Slavery

    How the commandeering of another's body can be dismissed as a victimless crime is unknown.

    Whether for legal purposes, or illegal purposes, the ability to coerce or seduce someone to performing services without traceable compensation can be nothing but slavery.

    That people in 2007 are permitted to use slavery in the U.S., or throughout the world, to make money is moral injustice required to qualify as physical rape, if not slavery. Whether broker or john, the fact that services are not performed by them, but money is received by them - makes the crime slavery - and slavery cannot be considered to be victimless if human autonomy is the benchmark of morality.

     

    reply to this | link to this | view in thread ]

  58.  
    identicon
    t31os, Feb 11th, 2007 @ 9:44am

    Great - Total realisation

    I had never really taken a great interest in economics and looked at it from Mike's POV, of at least how he describes it, but its given me alot to think on.

    After sitting here for about an hour, i must say Mike is a very clever and thought prevoking guy.......

    I don't want to seem like Mike seduced me into a way of thinking..... but i really do agree and didnt really have the right angle to look at things from, but Mike you done me a favour bud...... i feel more at ease with my own thoughts on the several moral and non-moral issues discussed through-out the comments.

    So basicly, i'm just saying......... its a very good read, not just your own words, but even those of others.... thank you all....... best thing i've read from a webpage in a while.

     

    reply to this | link to this | view in thread ]

  59.  
    identicon
    t31os, Feb 11th, 2007 @ 10:44am

    Not moral

    I know what what you're saying is not taking morals into account, so if my comment above seemed to border on moral then maybe i'm off base.

    I just havnt read or met someone who can discuss/write about economics like Mike, so the read was an eye opener for me.......

    So really i was just saying thanks..... ;)

     

    reply to this | link to this | view in thread ]

  60.  
    identicon
    DJ Tang, Mar 22nd, 2007 @ 3:07pm

    Morality is a two way street

    How about a real world example. I am a music lover. I have amassed a 7000 disc music collection (CD and LP) which I paid for (new, used, and promos) It's cost me about $50,000!!! Now I wake up one day to dicover that music (almost all music) is free for the taking and as an additional bonus it no longer takes up shelf space in my over cluttered house, well game over man! I want to support the artists but only the artists - not the indifensable evil and greed of the "music idustial complex". So when there is a new and fair (to consumer and artist) business model I'll play ball, but until then I say death to the "muisc industrial complex" go see live shows buy direct from the artist.

     

    reply to this | link to this | view in thread ]

  61.  
    identicon
    Amedeo Amendola, Apr 22nd, 2007 @ 8:12am

    Making Money

    The "economics of abundance" is certainly a good subject to discuss. I see that the principle of making money has been brought up in this connection and that you grant principle of trying to make money. As for me, I cannot either grant or not grant that principle, until I know more specifically what is meant by "making money." I understand what is generically meant by "making money," that is, "acquiring money by selling something or by rendering a service and getting paid," but what is the specific meaning in the minds of the interlocutors? Is it "opportunistic money" or "legitimate money"? By legitimate money I provisionally mean the payment for a bottle of water that I sell in a store. By opportunistic money" I provisionally mean the payment that I exact from a customer who is dying of thirst wherefore I charge $ 100 instead of $ 1. In this deal I made money, namely $99. In another situation, given the country-wide scarsity of my merchandise and the high demand for it, I sieze the opportunity to charge $3 dollars instead of $ 1, but not $100 because I estimate that with this price, I would not be able to sell my merchandise at all.

     

    reply to this | link to this | view in thread ]

  62.  
    identicon
    Amedeo Amendola, Apr 22nd, 2007 @ 10:27am

    Giving away somebody else's property

    Before dealing with the economics of scarcity or abundance, we must deal with the question whether it is licit or criminal for one person (or corporation) to give away (make a gift of) somebody else's property. Examples:
    -- Do-gooders take away from the rich and give to the poor.
    -- The governemnt takes part of a worker's income and gives it away to non-workers, to political friends, and to countries hungry for money.
    -- Business corporations sponsor radio or television programs (to advertize themselves), which they pay for, not out of their personal income, but out of money extracted from the customers [in the addition to the legitimate payments for their sold products]. They do not give away this extracted money; they use it to pay the broadcasting coorporations. A program of a broadcasting coorporation may consist of recorded music. Said broadcasting corporation pays the music recording industries for the use of their records. The recording indusrties own the physical records, the media on which the music exists. But the music is owned by those who pruduced the music. So, while the music producers do not sell or give away their product to the recording instrustries, the latter sell it. So eventually the broadcasters (as well as the internet broadcasters) give away the musicians' property.

    Analogous situation: I buy a book; that is, I am paying for the physical medium in which a poet's work exists. This happens to be a rare book. So, a broadcasting company pays me for the use of this book. A televison station takes it upon itself to advertize for a philarmonic company (from which it gets paid) and diplays, free of charge, page after page the book on the screen so that anybody may read it (and can make himself a video-recording of). The broadcasting company is giving away somebody else's property, namely the poet's texts. (If I, a private individual, were to make copies of my book and sold them, I would end up in jail, either because I sold re-prints of the printe's property, or because the author never sold his text to me or give away his text to me.)

    The issue as to whether it is licit or criminal for anybody to give-away away somebody else's property is to be answered jurisprudentially [by reasoning about Rightness], not in terms of whether the proprietors get any benefit or not from the give-aways, whether the broadcasters are entitled to make money or not by engaging in selling [the use of their broadcasting faciulities], or in terms whether the away-givers are the new do-gooders for the entire population of a country, the praiseworthy philanthopists of our times.

    "Economics," namely BUSINESSMEN AND MERCHANTS, may not operate in terms of what is right or criminal, when they deal with somebody else's properties, but when a criminal property offence is done unto them, then they practice jurisprudence.

     

    reply to this | link to this | view in thread ]

  63.  
    identicon
    Dan, Jun 22nd, 2007 @ 9:15am

    Re:

    Actually the buggy whip example fail becuse it was demand that dropped to 0 not variable costs.

    A better example might be paper, which is still very useful. However, unlike hundreds of years ago, a single sheet of notebook paper has tiny costs compared to marginal utility.

     

    reply to this | link to this | view in thread ]

  64.  
    identicon
    Eric R., Oct 24th, 2007 @ 3:30pm

    Economics is not a moral issue.
    I disagree.

    1. If one is studying economics, then one is studying the production, distribution, and consumption of goods and services. (Assumption 1: definition)

    2. The production, distribution, and consumption of goods and services are a subset of human actions. (Assumption 2)

    3. Therefore, if one is studying economics, then one is studying human actions. (1, 2)

    4. All human actions are open to moral assessment. (Assumption 3)

    5. Therefore, if one is studying human actions, then moral assessments are a valid part of the study. (4)

    6. Therefore, if one is studying economics, then moral assessments are a valid part of the study. (3, 5)

    Premises 1 and 2 seem uncontroversial to me. 3 and 6 are logical deductions. 5 is a rewording of 4.

    Is 4 true? Anyone who has studied Ethics in a formal setting will likely agree with it. For example, if Utilitarianism is true, each of our actions is "good" to the extent that such an action maximizes happiness. Therefore, each of our actions is open to moral assessment under Utilitarianism, as even the most seemingly insignificant action has the potential to alter the state of the universe in such a way as to affect happiness.

    There may exist moral theories under which 4 is false, but notice that my argument only requires "the production, distribution, and consumption of goods and services" to be open to moral assessment (I composed a stronger argument than needed). Majority of the ethical theories I am familiar with would certainly make moral prescriptions with regard to something as prominent and unavoidable as human economic practices.

    Put short: economics inherently involve human activity, and human activity is prescribed by morality.

     

    reply to this | link to this | view in thread ]

  65.  
    identicon
    CaptainReality, Nov 28th, 2007 @ 7:48pm

    It don't matter none!

    To all of the 'morality vs. economics' people out there.

    It doesn't matter what moral arguments you make. They're ALL irrelevant. The simple fact is that most young people don't buy music on physical media anymore... they copy it from their friends and from the internet. This is only becoming easier as time goes on. Suing people is making little difference, and eventually the RIAA will tire of it (or run out of lawyer money). DRM has also clearly failed.

    You can stand there and bang-on about morality and who's owed what until the cows come home, and it won't make a lick of difference to those trying to sell CDs. Their market is disappearing from under them, and the rate that it's disappearing is increasing; this is a simple, demonstrable fact, and all the moralising in the world won't change it.

    This is why the economics argument presented trumps all morality arguments. The morality arguments are about what people 'should' do. The economics argument is about what people 'actually' do.

    Y'all can call me a thief, a communist, a crack-pot libertarian, immoral, or whatever label makes you feel good. It won't change the reality one whit.

    It's hard-boiled realists vs crackpot idealists. Any bookie could give you odds on whose right (hint: it ain't the crackpot idealists).

     

    reply to this | link to this | view in thread ]

  66.  
    icon
    Jay (profile), Jun 11th, 2010 @ 9:52pm

    It still seems a little off...

    No one is forcing a price on the musician's way of life.

    The market has first gone digital, making the good less scarce.

    But we still pay for access to the musician through concerts, backstage passes, and their constant touring.

    As the millennium progresses, we will see the digital go further and further, more than likely, we'll see the savvy musicians without labels and handling their own progression and connections with fans.

    Sadly, the buggy whip makers didn't change, enforcing things to sustain a market that had dried up. Kinda like the RIAA

     

    reply to this | link to this | view in thread ]

  67.  
    identicon
    Bob, Jun 25th, 2010 @ 7:20am

    Economics and morals

    I despair of a world in which theft is condoned, in which the actions of a majority have to be right and lawful because they are the actions of a majority, and in which people feel it is perfectly fine to take something I have created and use it for free. This has happened to me - some drawings I had published were printed on T-shirts, which the manufacturer then sold, making them money from my work. How is this a good business model? In music terms it seems you are encouraging artists NEVER to record, only to do live concerts and sell lunches with them or signed items of clothing, as these are the things that will make them money. This is not a model I am prepared to follow, so I will probably never be a rock star.

    There are also several misconceptions and misapplications in what I have read above. The fact that delivery of content has changed does not affect the value of the content - there is still good music and crap music, music that people are prepared to pay for and music that will never sell. The fact that a piece of music can be sold over and over again does not mean that the demand for it is there. The idea of an infinite revenue stream is only applicable if demand is infinite - and it patently is not - the population of the world is finite. Therefore, every free copy of the music takes the place of a potential sale, reducing the market. The buggy whip analogy is totally false - the demand for buggy whips dried up, the demand for good music will always be there. It is NOT the CD that you are buying, else you would buy a blank CD - it is the content. Same with the photograph on a postcard - why did you not buy a blank card? It was the picture that sold.

     

    reply to this | link to this | view in thread ]

  68.  
    identicon
    Paul Fernhout, Jul 3rd, 2011 @ 8:09am

    Basic income and five interwoven economies

    While there are great points here on trying to make the exchange economy work better, what's missing from the broader discussion across the web is ideas like a "basic income" to soften the exchange economy (funded by taxes or government revenues for allocating resources) or a bigger transition to a gift economy (Linux, Wikipedia), subsistence economy (3D printing, dirt-cheap solar panels), or a planned economy (just building public access life-supporting infrastructure, made easier with better computing models and elecronic democracy) as ways for people to get by whether what they want to do is make music, write stories, keep up a blog, or raise happy healthy children. I put together a YouTube video and presentation linked at my site called: "Five Interwoven Economies: Subsistence, Gift, Exchange, Planned, and Theft". The key point is that the balance between those five types of transactions shifts with cultural change and technological change. We need to look at across all five types of transactions to understand what is going on in our world right now, not just focus on the exchange transactions. The exchange economy may just become less important in our lives as many costs go to zero through technological advances, and cultural advances may also lead to a basic income for those things that may still need to be rationed or which people may still need to be motivated to do through pay.

     

    reply to this | link to this | view in thread ]

  69.  
    identicon
    Paul Neubauer, Sep 13th, 2011 @ 3:55pm

    The last company making buggy whips is still making buggy whips, they just have a nitch market.

    The market is still there for quality content.

     

    reply to this | link to this | view in thread ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This