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by Mike Masnick

Thu, Jan 11th 2007 12:45pm

History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers

from the no,-seriously... dept

As regular readers know, I've been working through a series of posts on how economics works when scarcity is removed from some areas. I took a bit of a break over the holidays to catch up on some reading, and to do some further thinking on the subject (along with some interesting discussions with people about the topic). One of the books I picked up was one that I haven't read in well over a decade, but often recommend to others to read if they're interested in learning more about economics, but have no training at all in the subject. It's Robert L. Heilbroner's The Worldly Philosophers. Beyond giving readers a general overview of a variety of different economic theories, the book actually makes them all sound really interesting. It's a good book not necessarily because of the nitty gritty of economics (which it doesn't cover), but because it makes economics interesting, and gives people a good basis to then dig into actual economic theory and not find it boring and meaningless, but see it as a way to better understand what these "philosophers" were discussing.

Reading through an early chapter, though, it struck me how eerily a specific story Heilbroner told about France in 1666 matches up with what's happening today with the way the recording industry has reacted to innovations that have challenged their business models. Just two paragraphs highlight a couple of situations with striking similarities to the world today:

"The question has come up whether a guild master of the weaving industry should be allowed to try an innovation in his product. The verdict: 'If a cloth weaver intends to process a piece according to his own invention, he must not set it on the loom, but should obtain permission from the judges of the town to employ the number and length of threads that he desires, after the question has been considered by four of the oldest merchants and four of the oldest weavers of the guild.' One can imagine how many suggestions for change were tolerated.

Shortly after the matter of cloth weaving has been disposed of, the button makers guild raises a cry of outrage; the tailors are beginning to make buttons out of cloth, an unheard-of thing. The government, indignant that an innovation should threaten a settled industry, imposes a fine on the cloth-button makers. But the wardens of the button guild are not yet satisfied. They demand the right to search people's homes and wardrobes and fine and even arrest them on the streets if they are seen wearing these subversive goods."

Requiring permission to innovate? Feeling entitled to search others' property? Getting the power to act like law enforcement in order to fine or arrest those who are taking part in activities that challenge your business model? Don't these all sound quite familiar? Centuries from now (hopefully much, much sooner), the actions of the RIAA, MPAA and others that match those of the weavers and button-makers of 17th century France will seem just as ridiculous.

If you're looking to catch up on the posts in the series, I've listed them out below:

Economics Of Abundance Getting Some Well Deserved Attention
The Importance Of Zero In Destroying The Scarcity Myth Of Economics
The Economics Of Abundance Is Not A Moral Issue
A Lack Of Scarcity Has (Almost) Nothing To Do With Piracy
A Lack Of Scarcity Feeds The Long Tail By Increasing The Pie
Why The Lack Of Scarcity In Economics Is Getting More Important Now

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Good Book! by Anonymous Coward on Jan 11th, 2007 @ 1:11pm

I too have read that book - for a law school class on business organization believe it or not.

It was one of the few books that I kept and still have today, even though I could have sold it back to the campus bookseller for 60% of purchase price at the end of the class.

Good tip!

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And so it Goes by Dizzle on Jan 11th, 2007 @ 1:12pm

Great post. We are indeed doomed to repeat the history we can't or won't understand.

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Like the song... by James on Jan 11th, 2007 @ 1:15pm

...its all just a little bit of history repeating (cue jazz music). We will all be better once these the MAFIAA keels over dead, and then perhaps some real innovation can happen.

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by Outraged on Jan 11th, 2007 @ 1:20pm

OH MY GOODNESS! THAT IS COPYRIGHTED MATERIAL YOU JUST GAVE AWAY FOR FREE!!!!!

I now have no reason or intrest in purchasing that book and the copyright holder is now ruined and pennyless!

Wow, that really does sound dumb! So many industries are long overdue for an overhaul!

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protectionism by misanthropic humanist on Jan 11th, 2007 @ 1:57pm

Keep on this Mike, it's a fascinating research topic. I hope you get a publisher to take a book of your own on it one day.

Protectionism is an ancient common theme, the alchemists, the swordsmiths, the stonemasons, the brewers all have this in their history. The aims are always benign to start with, to protect (literally, in a good way) otherwise etherial knowledge that was only passed down word of mouth from generation to generation. Then it becomes the task of controlling it, to become gatekeepers of knowledge, and finally it becomes an offensive to stamp out rival knowledge. And it's cyclic, with hubris always before fall, often involving the destruction of the very knowledge the gatekeepers sought to preserve.

History has shown one thing to be consistent. You can have paradigm shift or incremental progress, evolution or revolution. It really is either/or. If you block the flow of progress eventually it will come busting through depite all your efforts. Evolution and incremental progress are always more comfortable than revolutionary movement, and yet generation after generation there are those who will stand their armies before an irresistable force. Blocking irresistable forces causes more misery in the end than allowing them to roll gracefully by.

I read a fascinating book (whos title escapes me for the moment) on
strategic control of technologies, well before 9/11 and the "terrorism" hysteria. It brought up all these familiar arguments. That the common man was not responsible enough to have forbidden knowledge. That popularisation would debase high standards (of safety for example). That the means to innovate should be restricted.

Before shaking your head in agreement, consider that this (rare and possibly classified text) was all about biotechnology and nuclear technolgies. Does that change anything with such a scary context? I argue that it does not, in a reality where box-cutters and public transport become the preffered tools of destruction.

As a psychological observation I have one thing to say that fits perfectly into your picture of the "economics of abundance". What is the mindstate of the protectionist? Is it that he fears his means of income is threatened? Is it that he fears losing control over knowledge and the means of production will disempower him? Only a little, it is more subtle. The protectionist fears the end, the limit. His greatest fear is that "that's all there is", there is no better way, nothing more, nothing beyond. He fears he has reached the peak of achievement and can never do better, it is an intellectual mid-life crisis of a kind, and so begins the quest to build a wall around what he has.

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Scarcity in Economics by Kevin on Jan 11th, 2007 @ 2:01pm

Great Post. After your post last month about scarcity I picked up the book you refered to, "Zero: The Biography of a Dangerous Idea" Great book.
I also have read Heilbroners' book a few times since high school, most recently about 2 years ago.
it's good to revisit old books to get fresh ideas.
I escecially like the chapters onThorstein Veblen.

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Same thing goes for powdered wigs by freakengine on Jan 11th, 2007 @ 2:06pm

Check out my article about this. Except for plastic surgery, we actually appear to have devolved. Devo may have been right.

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by freakengine on Jan 11th, 2007 @ 2:07pm

Sorry for the double post. Just click on my name for the link.

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Awesome by Paul on Jan 11th, 2007 @ 2:25pm

So can we look forward to more blatant book advertisements in the future?

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Not the Same by Dan on Jan 11th, 2007 @ 2:26pm

At the risk of being flamed. . . .

These are not the same situations.

The RIAA and MPAA want to keep people from stealing their property. The button makers wanted to keep people from making a new kind of button. The RIAA and MPAA are not (YET) stopping people from making their own new music and movies.

I don't like the tactics these organizations are using anymore than you, but they do have a right to protect their intellectual property.

Now, if the button makers were going around arresting people for reusing buttons on different clothes than they were originally sewed to you'd have a better comparison.

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Good Topic! by Rose on Jan 11th, 2007 @ 2:54pm

The situation is indeed the same, and only highlights the inability of some business executives to think outside the box to please their customers.

In America's litigeous environment they fit right in, I guess...

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so how come by simon on Jan 11th, 2007 @ 3:02pm

so how come when another party (see here allofmp3's like) make-it in sales, without their initiative, consent, whatever, with same kind of legal product (because they are legal in their country) are slapped down and constrict by pressure (see Credit Card refusal to collaborate) and their money in legal fees (up to 20% from sales) were turned down

RIAA ans MPAA stick to same platform sale : cda/whatever, ignoring what they are selling, who cares this day about a cd , so soft and easy to deteriorate, all want digital format, high quality, playable on all supports at affordable prices to kick out free, high compressed, low quality digital music available on share networks

yes, we wanna buy the music, yes we want to buy the films, yes i want to go with my external hard drive at shop and say how much this movie costs, please put-it on my hard-drive and mark-it as purchased on my personal card, so i can retrieve-it again at service price anytime i will desire from shop.

i want to see a shop offering this : come with your personal digital support and get your movie from us: high definition, rental for 3$ , 1-5 views, no copy option, media player included , full purchase, 12-15$ option to retrieve at any time again for only 1-2$ service cost ...

same thing for music/music albums/ whatever including print-outs, etc ...

and i wanna see them worldwide so i can get them too here in belgium ,without having to download lower quality ones from share networks, due to traffic limitation ...

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Re: Same thing goes for powdered wigs by Anonymous Coward on Jan 11th, 2007 @ 3:03pm

SPUD PATROL!

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Re: Not the Same by Anonymous Coward on Jan 11th, 2007 @ 3:13pm

I see your point, but one could argue that they are the same. The button makers were making buttons to fit a specific design, basically selling copies of the original button, for use on clothing. Tailors began making their own buttons, basically producing their own copies of the button makers item. When I buy a CD I am buying the a copy of the music industries original. People can now download music, making their own copies of the music industries item.

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Re: Not the Same by misanthropic humanist on Jan 11th, 2007 @ 4:52pm

"Now, if the button makers were going around arresting people for reusing buttons on different clothes than they were originally sewed to you'd have a better comparison."

A good point well taken Dan, insofar as reasoning by analogy can be.

However I must correct you on this point,

"The RIAA and MPAA want to keep people from stealing their property."

The MAFIAA (get used to it :) do not own that intellectual property.
They claim to represent interests who do, who in turn claim to represent interests that do. That's two levels of indirection. The only people who have a legitimate claim to that property, the artists, are almost universally opposed to the lawsuits and abuse.

"The RIAA and MPAA are not (YET) stopping people from making their own new music and movies."

If you consider the suppression of mashups, remixes and sampling which are legitimately granted under Fair Use provisions, then yes they are.

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Re: Not the Same by Mousky on Jan 11th, 2007 @ 8:48pm

It's about the business model. Mike is pointing out how instead of changing their business model, the button makers turned to the government to protect their industry. This is exactly what the RIAA and MPAA have been doing over the past 10 years. Instead of changing their business models, the RIAA and MPAA have turned to the government to extend the life of copyright, to make it illegal to circumvent copy protection schemes, having the ability to file lawsuits willy nilly with little to no repercussions, and so on, to protect their out-of-date business model.

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Brilliant by BBlackmoor on Jan 12th, 2007 @ 8:23am

This is brilliant. I look forward to the day when the Digital Rights Mafia are in the history books right next to Tammany Hall, the Southern Pacific Railroad... and 17th century French button makers. :)

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control of innovation by Elin whitney-Smith on Jan 12th, 2007 @ 11:32am

In Holland and later in England the newly literate craftsproducing class changed how they ran their businesses. Men like Jack of Newburry hired 100 apprentices and gave them material to weave and collected the cloth when they were done. Because he, unlike his father, could read and keep track of his business with double entry book keeping he didn't have to live in common with his apprentices.

The guilds objected, as they did in your exerpt so Jack simply moved out of town.

This was the beginning of capitalism and the incredible wealth of the West.

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i hate you for this.... by greg on Jan 13th, 2007 @ 3:12am

you're making me defend the RIAA....

however..... in order for the analogy to be proper, the RIAA would have to be angry that people started recording their own music and stopped buying theirs. Or - these cloth button types would have to be making bit perfect bootleg duplicates of the traditional buttons then giving them away for free.

Ill be honest, Im a pirate and Im proud to pirate, but this anti-RIAA rabble rabble mindless din is just getting embarrassing.

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Reminds me of Bastiat by Charno on Jan 13th, 2007 @ 5:56am

Excellent post. Also reminds me of renowned liberal economist Frederic Bastiat's satirical article "A Petition", where he (satirically) suggests that sunlight should be banned in order to protect the candlemaking industry.

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RIAA by Jim Beau on Jan 13th, 2007 @ 5:06pm

Fuck 'em

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by Anonymous Coward on Jan 14th, 2007 @ 11:03am

RIAA ,a recording industry trade group paid for by Geffen Records, Island Records, Universal Music Group, Concord Records, EMI Recorded Music, SONY BMG, Buena Vista Music, Curb Records, RCA Music Group, Universal Music Group, Warner Music Group, The Atlantic Group, Koch Entertainment, Wind-up Records, Virgin Records America, Tommy Boy Records, Capitol Records.

Please associate the companies that fund the RIAA with each mention of it. That way people will start associating it with who the bad guys really are.

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by bodo on Jan 14th, 2007 @ 5:38pm

You don't need to go to other industries. The history of copyright is full with interest groups trying to maintain their grip on production and distributions channels well from the early 1500's.
One thing one can learn from history is that there were times when massive piracy was able to induce a change in how business is done.
two great books on the topic:
Patterson L R: Copyright in Historical Perspective, Vanderbilt Univ. Press, 1968
Plant M: The English Book Trade, George Allen & Unwin, 1939

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Not getting the comparison... by David on Jan 15th, 2007 @ 7:48pm

The RIAA doesn't care if you use innovative new tools to make your OWN music. What they care about is using new technology to steal the work of other people - people who have put in the time to make a product and are setting a price for their property which people are then free to pay for or not in a voluntary transaction.

I honestly would like somebody to explain to me how so many seem to be for the piracy of intellectual property. It's just mystifying to me.

Are we saying that just because we can pirate music and movies now from the privacy of our own homes - that just because the technology exists to allow us to do so, that it's okay to do it?

The technology exists to counterfeit money failry easily, but nobody thinks that's okay.

I just don't see why it's so bad that people who make movies and music want people to pay for the product they've made if they choose to consume it.

It's great that some people are making their own content and want to distribute it for free. Awesome. But that doesn't mean that NOBODY, then, should have the right to create content with the intention of charging users for what they've made if that be their choice. Just like any other product.

I can put in the time, money and effort to create teddy bears and give them away for free through the mail if I wanted to. Nobody disputes that. But if I wanted to charge people for those bears, nobody would bat an eye. So why do people think that those charging for movies and music shouldn't have the same right?

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Abundance Is Good by Chuck Pelto on Jan 15th, 2007 @ 9:00pm

TO: Mike
RE: Consider Our Alleged Medical Care Crisis

I think you could apply this methodology to solving our problem with medical care in this country.

The proverbial elephant in the living room, as far as I can tell, is the fact that the AMA has a hammer lock on the priesthood of medical practicioners.

If we had more doctors and such, we'd have more competition. And, consequently, lower costs.

In my honest opinion, there is enough blame to go around for EVERYONE on this; patients, politicians, drug companies, insurance companies, government bureaucrats, etc., etc., etc.

All the politicans want to talk about all of them, except for the AMA. And I find that a bit curious.....

Regards,

Chuck(le)

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RE: Not getting the comparison... by Homer on Jan 15th, 2007 @ 9:25pm

Well, David,

Here's the problem with your argument. I *am* a producer of unique and copyrighted information, and I am thoroughly opposed to the position of the MAFIAA (thanks for the insightful description, misanthropic humanist :o)).

The MAFIAA are not really opposing piracy (more accurately, copyright violation). They aren't concerned with the wholesale distribution of the intellectual property of their 'members' (if they were, they would spend their time and effort pursuing those who are actually distributing *for profit* copies of movies and music, etc. *as a business*), instead of wasting their time suing individuals. What the MAFIAA want is *control*. They want you to pay, frequently, and expensively, for the *right* to use what you have already purchased. They are TERRIFIED of the idea that they are not needed, as middlemen, in the transfer of concept from creator to consumer.

The MAFIAA produce no content, they create no new music, they create no new movies. They do NOTHING other than suck the life from those who create, at the cost of those who consume. Just like any 'protection racket', they want their 'cut', though they have not actually earned it.

They are sucking at the teat of the state, buying elected officials, greasing the wheels, because they live in fear that the actual producers of content can live without them. Electronic distribution is NOT a threat to copyright, it is a threat to the middleman, who takes a cut without providing a *real* service.

Why do you think that the *vast* majority of the artists (whom the MAFIAA claim to represent) oppose the heavy handed tactics used by the cartel? They know, instinctively or otherwise, that the MAFIAA only make the actual producers of content look bad by association.

Those of us who create content *do* want to be compensated, but even more than that, we want to be *heard*. Besides, the existence of the MAFIAA does not correlate to our being compensated, they expend a fantastic amount of effort to make sure that they compensate the actual artist as little as possible.

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by David on Jan 15th, 2007 @ 10:01pm

I am also a content producer. Of motion pictures. And online piracy has the potential to completely devastate my industry. Making a movie takes about two years from concept to completion. It takes hundreds of people working on it. And it takes literally millions of dollars to pull it off(well).

This is a different animal from music. Nowadays, you can make a good track of music on home equipment for less than $10,000. You have to make a lot less to make it worthwhile as a business venture.

Take away the profit motive from movies and they're just done. What investor in his right mind is going to pony up millions of dollars and two years of his life to make something that some punk will then just rip off "because they can"?

If people adopt the idea that just because they have the technical ability to download a movie without paying for it - that it's somehow their "right", then there just won't be any more movies. Period. At least not of the kind that anybody's going to actually want to watch.

This has already happened in Hong Kong, where VCD piracy(a form much less threatening than the internet for a variety of reasons) has decimated an industry that was once one of the most creative and vibrant in the world.

Twenty years ago Hong Kong was making about 350 movies per year, many of which were the creative envy of the entire filmmaking world. Last year, Hong Kong made 60 films - and I don't think a single one of them was worth watching - there's just no money there anymore, because nobody wants to put in a bunch of cash to get ripped off buy a kid buying his movie on the cheap at a stall in some arcade.

I'm not asking for draconian measures or unfair business practices. I welcome actual competition! But outright theft of intellectual property is NOT the same thing as competition. Stopping somebody from downloading a copyrighted work should be recognized as the act of "the good guys" - they're trying to stop stealing after all, right?

I just don't see unfairness in trying to make sure people don't steal these products.

Once again - the button-maker comparison doesn't work at all. Nobody is trying to stop people from using new technology to make competing films or music. All they're trying to do is stop them from stealing the films and music that other people have already made.

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So, Tell me by Homer on Jan 15th, 2007 @ 10:30pm

How is the behaviour of the RIAA, etc., going to prevent the scenario you describe?

My point isn't to argue that there's something wrong with copyright protection, etc.

My point is that the actions of the MAFIAA (I like that acronym :o) ) ISN'T GOING TO HELP, *AT ALL*.

If they were truly about actually protecting the rights of the artists, I would be 100% behind their efforts. But there is one simple fact behind this whole thing: THEY DON'T GIVE A SHIT ABOUT THE ACTUAL PRODUCERS OF THE CONTENT!!!!!!!!!!!!!!!!!!!!!!!!!!

The situation you describe for Hong Kong would have been better addressed by putting the resources into pursuing the distribution rings, instead of getting an aneurism about individuals.

The button maker comparison is entirely accurate. The MAFIAA are opposed to any distribution method that bypasses them (e.g. makers of buttons).

And apart from all of the above, the draconian measures supported by the MAFIAA concerning the actions of individuals (the DMCA, DRM, etc. ) simply DO NOT WORK at the stated task. They do not prevent piracy, they do not prevent illegal use of copyrighted material. They do nothing but inconvenience the honest customers. As a content producer, I choose NOT to believe that my customers are, by default, dishonest thieves, out to rob me blind by letting their friends watch or listen to my product.

It is the default assumption of dishonesty that I have the biggest problem with. When you tell your customers that you have to inconvenience them for their own good, because they're criminals at heart, and they'll rob you blind if you don't treat them like thieves and liars, then you've already lost your battle.

I'm all for getting compensated properly. I also believe that the vast majority of my customers are willing to compensate me, and I don't believe that treating them like shit is the way to make that happen.

I'd rather put up with the handful of freeloaders, if the alternative is to tell my honest customers that I think they're scum, out to rob me blind at the first opportunity.

My point isn't that I don't think there aren't good ways to address piracy. My point is that, so far, all of the ways presented by the MAFIAA, are, without a single exception, THE WRONG WAY!!!.

When you assume, by default, that your customers are thieves, then that is exactly what they will act like. If, on the other hand, you treat them like people, most of them will do the right thing, and the rest can be accepted like collateral damage (and that kind of thing has been, and will always be with us).

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Grateful Dead Marketing by M. Simon on Jan 15th, 2007 @ 10:49pm

What does an artist get out of the $9 to $15 that the stores charge? $.50? So why can't that be delivered for $.75 for a whole friggin album?

You know the Grateful Dead built their whole business model on giving away music. Are the MAFIAA to stupid to study how they did it and replicate the model?

The Dead had 10s of thousands of people advertising their wares for FREE. That is worth a heck of a lot. In fact flogging the product is the main cost of creating a popular band or a hit movie.

If distribution cost is around $.002 per CD then you need to look at a different way to profit. Ancillary items like Ts, Cover art on poster board - etc. Stuff it still takes capital and production talent to produce well. Or events like concerts where you pay for the live experience.

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Television by M. Simon on Jan 15th, 2007 @ 11:07pm

How does broadcast TV make any money?

They sell friggin advertising.

So Sony sets up a site for downloaders and makes you watch 5 seconds of commercial for every 500 MB of down load.

How hard can it be to figure this out?

The MAFIAA is stupid. The way to beat movie pirates is to find a business model that allows you to undersell them.

Sure the profits may be less or not. So fire the huge production staff. Advertising is expensive. Go with viral word of mouth. etc.

i.e. figure out how to become the low cost producer.

How do you make money on a $30 million dollar (cost) movie? Sell $60 million in ads.

i.e. figure out a new business model.

So a lot of folks will be out of work - well you know what they say - let them get a real job.

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by David on Jan 15th, 2007 @ 11:19pm

#28 and #29

None of what you guys are saying excuses stealing in the first place.

You seem to be taking the attitude that "if we have the technical means to steal, then that's our right, and content providers will have to work around US instead of the other way around".

I don't buy into that. I think it's within a business' right to try and prevent the theft of their product.

The business model of the Grateful Dead will work for one band out of a thousand, and it's not our place to tell somebody else what their business model should be.

We can certainly tell them with our dollars - what we choose to buy and what we don't. Deciding what something is worth to us and what is asking for too much and giving us too little in return. Those are the working decisions of a proper market.

But the market requires honesty to work. A social contract of voluntary transactions. When you say "I CAN steal so it is my right TO steal", then there is no longer an operating market there. You, as the consumer, are deciding your own price for the product that somebody else makes. And your price is zero.

The way a market is supposed to work is one person has a product and sets a price - if you want the product more than you want that much money, then you voluntarily make the trade and everybody wins.

Your way seems to be "We can steal and we're gonna steal and too bad if you can't figure out how to make money while we're not paying!"

You can't whine about big business not adapting to a business model when you, as the consumer, are not participating in the fair market in the first place.

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by David on Jan 15th, 2007 @ 11:25pm

Sorry - last comment should've addressed #29 and #30.

By the way #30 - you can't "sell advertising" and make back enough money to pay for one $60 million movie. You just can't. A TV series and movies are different things.

#28

They HAVE to target the individuals with internet piracy. There are "distribution rings" when you're talking about piracy of physical goods. But not electronic file sharing. There are no "rings" to target when people are just emailing or file swapping copyrighted material. It IS by definition a problem of individuals in the internet age.

And the default assumption isn't dishonesty - you don't have to assume it. You can look at it all around you. Just look at how much pirated material is swapped about online. I know literally dozens of people who never buy music at all - they only steal it online. And they think that's completely fine.

Also, doesn't every industry put in measures to prevent the theft of their products? Should Wal-Mart decide to "not assume its customers are thieves" and uninstall all anti-shoplifting measures? Of course not.

Why is it okay for other industry to take preventive measures to stop stealing, and prosecute those they catch stealing, but it's somehow not okay for the entertainment industry to do the same?

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Re: by Homer on Jan 15th, 2007 @ 11:55pm

But the market requires honesty to work

If you think I'm arguing otherwise, you are *so* missing the point.

You can't say that you expect honesty to be a part of the process at the same time as you are saying (implicitly or explicitly) that the customer is, by default, dishonest.

There is nothing in my argument that says (in any form) that I think that stealing is okay. I accept (however sadly) that some shrinkage of that type is inevitable. For me, the costs (in effort and trust) to try and prevent every last bit of it isn't worth it. I'm not going to treat my honest customers like criminals on the off chance that I might keep one or two other people from stealing.

In the areas where I am a customer, I make every effort to do right, and be honest and forthright in my dealings with those I do business with. But for any person (or business) who treats me badly because they fear (without evidence) what I *may* do, I have no regard whatsoever. I will not steal (thereby confirming their misguided worldview), but I will also not do business with them, no matter what, nor will I advise others to do so.

I would expect no different treatment from my customers if I were to treat them so shabbily.

If the efforts of the RIAA, MPAA, etc. were specifically designed to actually address theft of service and copyright violation, I would have little problem with them. But the behaviour they engage in (that every customer is, by definition, a thief, out to defraud at any opportunity), the belief that their antagonistic practices do anything but alienate those customers; that is what I rail against.

Their business methods *do* need to change, to adapt to the way information can be spread.

While I would rather it be otherwise, there will always be those who take from others, and there is no reasonable scenario that will make that go away (at least not at any cost that can be borne).

The right solution is not to hamper or alienate your honest customers, but to reward them. Offer extras that can't be downloaded, or that are tied to a particular account. There are a number of ways to handle the problem without telling your customers that you despise them.

Treat them like you want them to be your customers, instead of your enemies. As strange as it may seem, all indications are that most people are actually willing to pay for what they get.

You're not going to squelch every instance of theft, but if you treat your customers like dirt, they aren't going to have too many qualms about treating you like dirt in return.

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RE: 32 by Homer on Jan 16th, 2007 @ 12:08am

I'm not entirely disagreeing with what you say in principle, but moreso in practice.

You mention the antitheft devices that companies like Walmart, et.al. use.

That's a good point, but there are a couple of major practical differences:

For one, these devices are largely effective (not bulletproof, by any means, but a reasonable deterrent).

Second, they impose, at most, a very small inconvenience to the honest customer (a few more seconds in the checkout line while they are removed, etc.). They do not continue to interfere with the lawful use of the product after that.

You also make the point that there are individuals who are a big part of the problem. But you haven't really addressed how the 'protections' and other efforts by the *AA's actually do anything to ameliorate that behaviour.

The thing is, the various forms of DRM, legal restrictions such as the DMCA, and so on, present absolutely *no* deterrent whatsoever to those individuals you describe.

Unlike the physical security methods you mention in regards to Wal-Mart, etc., the intellectual property 'protections' place a greater onus on the honest user than they ever do on the dishonest user.

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Re: by Mike on Jan 16th, 2007 @ 1:36am

David,

You make some interesting points, but they're easily disproved. You've brainwashed yourself into believing a worldview that is false, and it will destroy your business a lot more than file sharing will.

I am also a content producer. Of motion pictures. And online piracy has the potential to completely devastate my industry.

This is false. Not responding to the changing market, which includes file sharing has the potential to completely devastate your industry. Sitting still and expecting old business models to keep working may devastate your industry. But, file sharing should not devastate your industry if the people in your industry actually understood the business you're in.

Making a movie takes about two years from concept to completion. It takes hundreds of people working on it. And it takes literally millions of dollars to pull it off(well).

This is a stupid argument. Just because you make something expensive, doesn't mean you deserve money for it. I could make a huge expensive machine, but if no one wants to buy it, then there's no market for it. Bringing up the cost to create is missing the issue.

Take away the profit motive from movies and they're just done.

You make a really bad assumption here. That online piracy kills the profit of movies.

You really think that crappy downloads are killing the movie business? You are in the wrong business, my friend.

The movie business is dying not because of online piracy, but because they forgot that they're in the *ENTERTAINMENT* business. Movies are a social experience. People want to go to the movies and have a good time. Unfortunately, the industry has made it a *BAD* experience. That's why people are turning to downloads. If the social experience of going out to the movies was as good as it should (and could) be, people wouldn't resort to downloads.

There's plenty of profit to be made in the movie business. The fact that YOU can't find it says more about your ability in the market, rather than the state of the industry.

What investor in his right mind is going to pony up millions of dollars and two years of his life to make something that some punk will then just rip off "because they can"?

More bad assumptions. Remind me never to go into business with you.

First, you again focus on the costs, which is the wrong thing to look at (and I'd suggest you look at some of the older posts we have on here about how movie making is getting much cheaper these days as reasons why Hollywood's arguments on this topic continue to be ridiculous).

Second, a smart investor will still put up the money recognizing that s/he can use the free publicity of online distribution to encourage more people to go see it on the big screen with a good overall movie going experience.

If people adopt the idea that just because they have the technical ability to download a movie without paying for it - that it's somehow their "right", then there just won't be any more movies. Period. At least not of the kind that anybody's going to actually want to watch.

This is false for a number of reasons. I suggest you look at the research David Levine has done that shows that copyrights actually slow down creation of content, rather than encouraging it.

Also, while there may be some people out there who claim that downloading is a "right," I disagree entirely. It is not a right. However, I think it's a bad business decision for anyone in the content industry not to allow it. Because what's going to happen is your competitors are going to figure out how to make money that way, and you and your stubbornness will find yourself in serious trouble.

This has already happened in Hong Kong

That's a huge generalization. There are plenty of reasons why the movie industry in Hong Kong is facing the challenges it is -- and one of them was its inability and unwillingness to change with the times.

Markets change all the time. Those who are slow to adapt are the ones who die. Do you always blame the market shift for the troubles facing dinosaurs who can't adapt?

I'm not asking for draconian measures or unfair business practices. I welcome actual competition! But outright theft of intellectual property is NOT the same thing as competition. Stopping somebody from downloading a copyrighted work should be recognized as the act of "the good guys" - they're trying to stop stealing after all, right?

Well, first of all, you are misusing the word "theft." It is not theft in either the legal or common sense use of the word. The Supreme Court notes that it's "infringement" and, while illegal, an entirely different beast than theft.

Theft involves loss. There is no loss in unauthorized downloads. You still own the original, which is completely different than theft.

I'm not saying that stopping unauthorized downloads is "bad" or "good." I'm not making a moral judgment on this at all, because none is needed. I'm saying that not wasting efforts trying to stop downloads is going to be good for business for those who learn to embrace it, and find new avenues to profit.

That you are unable to do so does not mean that no one is able to do so.

I just don't see unfairness in trying to make sure people don't steal these products.

Well, first, accusing them of "theft" is again wrong, but that's a separate issue.

However, it's not that issue that's the problem. It's the use of gov't granted monopolies to close off an open market that should set the price, and gov't funded law enforcement to handle what should be civil contract disputes.

Once again - the button-maker comparison doesn't work at all. Nobody is trying to stop people from using new technology to make competing films or music. All they're trying to do is stop them from stealing the films and music that other people have already made.

It absolutely works. You've just misread it.

The entertaiment industry is appealing to the gov't for gov't granted monopolies in order to protect their business model. When people come along and innovate new distribution methods, they go whining to the gov't to stop them, and ask to invade people's homes to see if they're using these new innovative technologies.

It's quite similar.

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The Button-Maker Analogy by Chuck Pelto on Jan 16th, 2007 @ 4:32am

TO: RIAA Defenders
RE: Where This Analogy Works

Defending RIAA, and their ilk, against the new technologies via government intervention is VERY MUCH akin to the French button-makers. And that's the point here.

The point is not, repeat NOT, one of fomenting the violation of copyright laws. We HAVE copyright laws. And they ARE enforcible. Look at what happened to NAPSTER et al.

What the entertainment industry is doing is using Congress to shackle and manical everyone else.

Case in point....

....look at the miserable way we do our personal DVDs.

Can't get one that will hold 9 GB of data. Why is that? Because the entertainment industry is paranoid about our breaking copyright laws. Fair-use and/or data management efficiency be 'damned' as far as THEY are concerned.

Similar to the egregious implementation of the "regionalization" of DVDs with movies on them. Why is that there? For the sake of the entertrainment industry. Not, repeat NOT, for OUR benefit.

The entertainment industry, like the medical industry, is attempting to be a monopoly. The medical industry is just much more effective about it.

Regards,

Chuck(le)
[All professions are a conspiracy against the laity. -- George Bernard Shaw]

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Movies doomed to disappear? by Infidel753 on Jan 16th, 2007 @ 5:10am

Has there ever been a successful business model in a situation where exact copies of the product were easily obtainable for free, by means over which the content producer had no control? Is there any reason to think this is possible?

Even the advertising-based model of broadcast TV will be in real trouble once the capacity of the average home intenet connection gets high enough to allow TV shows to be swapped around as easily as music is now. There are already ways to avoid commercials while watching TV, but they are more of a nuisance than they're worth to a lot of people. What happens to advertising revenues when a commercial-free copy of a TV show is available on the internet within an hour of the original broadcast?

Music won't disappear, of course -- there will always be people who put their own music on the internet just to get heard, not caring that there's no money in it (the musical equivalent of bloggers).

But I don't see how movies can survive. In a few years, internet connections and hard drive size will be such that high-quality copies of movies can be swapped around like songs today. The production costs of something like Titanic or Lord of the Rings can probably never be brought low enough to make them profitable on the crumbs of revenue that would still remain then. Expecting the industry to "adapt to the changing market" under those conditions is like expecting a chef to figure out how to prepare a meal with no ingredients. Businessmen aren't magicians.

And I don't see what can be done about it. The RIAA's tactics have not been effective at stopping file sharing, but what would be effective? Probably nothing.

So in five or ten years, movies will just stop being made (aside from very low-budget productions). Business responds to incentives, and when it's no longer possible to make a profit on what you've been doing, that's a pretty strong incentive to go into another line of work.

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Ridiculous by Jordan on Jan 16th, 2007 @ 6:40am

Look, I'm no fan of the RIAA, but many of the people here only serve to make the RIAA's case for them. Most of the replys to David are along the lines of "well I don't like the RIAA's business model, so they should expect to be ripped off." That's absurd. If you so loathe their business practices, don't buy their product. It doesn't excuse stealing or copyright infringement.

Futhermore, the RIAA owns the content as opposed to the artist for a reason: they spend tens of thousands of dollars helping an artist produce and distribute his or her music.

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Extremes on both sides by Kurmudge on Jan 16th, 2007 @ 8:20am

Everyone is talking past each other here. The issue is not whether or not someone should pay to buy the item in the first place- of course they should, and piracy of some degree has been around forever. The issue is whether or not the distributor can use the government to permit him to collect over and over from the same person who already paid, for the same thing, and also prevent a lawful owner from doing what he wants with what he paid for- for his personal use. If I buy a CD, I want to be able to play it at home, in the car, or on my mp3 player (not iPod; they try to control everything). I also want to be able to back it up in case the dog chews it. No one else is getting it or avoiding paying for it.

For example, I bought an e-book. I learned after I got it that the pdf file was locked to prevent me from printing out any pages (it was impossible to read and refer as needed to the end notes without printing the end notes out), and I was also not able to open the file again when I upgraded to a new computer, all because the publisher was trying to prevent people from reasonable fair use. I finally went to Amazon and bought a used copy of the same book; used to make sure that the publisher would definitely not get any of my money again (not illegal yet, but wait till the book publishers get the DMCA and similar rules applied to hard copies). If I ever need to read something from that publisher again, you bet I won't buy it new; if necessary, I'll go to the library, borrow it, and scan the sections I need.

There is a happy medium between the piracy free-for-all and the DMCA "we own your copy of the content, we just license you to listen to it 3 times in one format" dream. My daughter just moved to the UK, and is having a problem being able to play DVDs she bought legally. Bunk.

Creative marketers will adapt and win, the luddites of publishing and music will die. Some stuff filmmakers might want to do won't get done because it isn't economical. That has always been the case. There are medical treatments that don't get developed either. In the 16th century, patrons such as the de Medicis took care of such things.

But no one has a right to steal someone's work, nor does the creator have a right to put it out there and exercise permanent control of it in an unlimited fashion. There is a middle way, and we'll get there eventually, unless the influence peddlers in the "entertainment business" buy off Washington.

And, David, no one owes you the chance to have the job you dream of. I want to be the boss of my favorite football team, but the competition is too stiff with too few opportunities. Those with talent and drive will continue to make the fillum pieces that they want to, the rest will go flip burgers. Nothing new.

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by David on Jan 16th, 2007 @ 10:25am

Good posts. I'll answer some later today when I get some time.

Just wanted to respond to the last bit of #39 real quick...

I think you misunderstand. I don't think anybody owes me anything at all. I have earned the job I have - nobody has given it to me.

All I ask for is that people don't steal what it takes me two years and lots of blood, sweat and tears to create. I simply ask that if somebody is going to choose to consume my work, then they pay me the compensation that has been set to do so. If they don't want to part with that money to watch my movies, then they can voluntarily decide to keep their cash. Simple.

What's wrong with that?

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Re: by Mike on Jan 16th, 2007 @ 10:47am

I think you misunderstand. I don't think anybody owes me anything at all. I have earned the job I have - nobody has given it to me.

Then why do you demand that they treat you in a certain way, rather than what the market demands?

I simply ask that if somebody is going to choose to consume my work, then they pay me the compensation that has been set to do so. If they don't want to part with that money to watch my movies, then they can voluntarily decide to keep their cash. Simple.

Well, you're making a big assumption here. That the producer of any good sets the price. That's not true. The market sets the price, and if the market sets the price at zero, then that's an issue you need to deal with from the business side.

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Re: Movies doomed to disappear? by Mike on Jan 16th, 2007 @ 10:53am

Has there ever been a successful business model in a situation where exact copies of the product were easily obtainable for free, by means over which the content producer had no control?

Sure. The business of business. Ideas are freely copyable. Business models (until recently) are freely copyable.

Yet, execution is what matters. You can copy any business idea you want, but there's a lot more to being successful than just copying. And that applies to content as well.

What happens to advertising revenues when a commercial-free copy of a TV show is available on the internet within an hour of the original broadcast?

Well, traditional ad revenue may disappear, but alternatives will be created. Trust me. If there's demand for a product, someone will come up with a business model for it. It may be different than what you see today, but there will be a business model.

But I don't see how movies can survive. In a few years, internet connections and hard drive size will be such that high-quality copies of movies can be swapped around like songs today. The production costs of something like Titanic or Lord of the Rings can probably never be brought low enough to make them profitable on the crumbs of revenue that would still remain then. Expecting the industry to "adapt to the changing market" under those conditions is like expecting a chef to figure out how to prepare a meal with no ingredients. Businessmen aren't magicians.

No magic involved at all. Just because *you* can't see a way to make money, doesn't mean that no money can be made. It just means it's not an industry you should be in.

With movies, again (as I stated above), it's quite easy to come up with business models to make lots of money, even if the content is freely shared.

You just have to recognize that watching movies is often a social experience, and you need to make it a BETTER social experience. Make it an experience that people WANT to GO OUT and see with their friends in a nice place, rather than staying in. Focus on the overall experience.

Then, offer additional incentives. There could be post-movie discussion groups. Or perhaps actors in the movie might show up at some screenings. Or as you're leaving the theater your can buy a DVD of the movie with extra features. It goes on and on and on. There are many, many, many business models that begin to come out of it when you stop thinking of it as "the movie business" and start thinking of it as "the entertainment business."

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Most people will pay by Mark on Jan 16th, 2007 @ 11:14am

Much of the music I have bought over the years I first downloaded illegally. Now I use the Napster service, and can preview most of the music I want (but I still prefer CDs to paid downloads because of the cumbersome DRM crap).

If there had never been a Napster (the original) or Kazaa, good artists and producers would be worse off now. Sure, if I had never used file sharing, I may have bought a few more lousy albums and one or two decent ones, but there are so many artists whose work I never would have discovered. And after so many lousy albums, you grow wary of taking chances. Netflix is another elegant solution that (obviously) many people are willing to use.

So, David, I'm not insulting you here, but this is the consumer's perspective: If your movies suck, then not only do you not deserve the money of people who bought into the deceptive marketing, but you're not losing any money through file sharing because virtually no one is watching your stuff anyway. Even in the age of a terrabyte of internal storage, a crappy movie isn't worth 1GB of my hard drive space.

If I had downloaded your movie and I really liked it, I'd want to buy it if I could, because that's what you do when something value to you. You pay for it.

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by David on Jan 16th, 2007 @ 12:46pm

#41

What I "demand" is just the fair workings of the market. I set a price, you voluntarily choose to pay it if you think it's worth it, and not pay it if you don't. What you don't get to do is set your own price, at zero, and take it "just because you can". That's simply called stealing.

You can't do that with a DVD player. Or a loaf of bread. Or any other product. You don't get to "set your own price" - especially at zero - and walk off with it. If you do, you'll get busted for stealing. Entertainment is no different, or shouldn't be - it's only different because it's technically possible to engage in the theft without getting caught. Whereas it's very hard to do that with the DVD player or the loaf of bread.

Of course the market sets the price in the end, if the producer of the product wants to stay in business. If he doesn't set a fair price, then he will go out of business. It is your right as a consumer not to consume. That is how you set the price. It's NOT your right to refuse the producer's price and STILL consume the product. That is not a market at all. And it's not the way the actual market for goods works in other industries.

When you engage in theft, just because it's technically possible to do so, there is no longer a market operating. Period.

If it became technically possible for every consumer to set their own price - even zero - for a loaf of bread, regardless of what the producer of the product is asking, how is that a "market"? It isn't. And of course that wouldn't work.

So you can talk about markets all you want, but what we're actually talking about here is no market at all.

The producer sets prices. The consumer can buy or not buy, but he MUST pay the price for the goods if he consumes them in a fair market. The consumer helps the market set prices by voting with their dollars - by purchasing the product or not based on the producer's price. Over time, the reactions of producers and consumers cause the market to come up with the best price.

That is a fair, voluntary market system. Where everybody's rights are protected. It is completely and overwhelmingly fair.

What you're talking about is no market system. Nor is it in any way "fair".

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Re: Movies doomed to disappear? by yes on Jan 16th, 2007 @ 3:08pm

> The production costs of something like Titanic or Lord of the Rings can probably never be brought low enough to make them profitable on the crumbs of revenue that would still remain then.

> So in five or ten years, movies will just stop being made.

I doubt that.
But I believe that mediocre actors will stop being paid $20 million for 6 weeks of work.

Either they work for less, or they will be replaced by ones that are willing to work for electrons.

I believe that in five to ten years time, there will no be large difference in the movie experience for films like Titanic or Lord of the ring if they are entirely computer generated.

There will still be an audience willing to pay enough to finance a Woody-Allen-type film with real actors, but these are not costing 100 million today.

And there will be an enormous competition that will bring prices down.

For the last 100 years, a really large group of people would have liked to be a director - probably at least as many as would have liked to be an author of books.

But there are probably three orders of magnitude more different books printed each year than different movies shown in cinemas.

With books, it is hard or even impossible to tell if they were written on a small or large budget.

How much better is the last "Harry Potter", where the author could have afforded to buy an island to be undisturbed, than the first "Harry Potter", where the author lived in a small flat with noise coming up from the street ?

The same will be true of computer generated movies, and then everybody that today loads his holiday video up on YouTube, will be able to generate something with a higher technical quality than "Nemo" or "Shrek" on his home PC and perhaps a couple of friends PC's spare capacity.

Also, Films with real actors will be cheaper.

Amateur digitial video cameras today are probably much better than professional studio equipment 10 years ago, and who needs a dollys and cranes if there is electronic image stabilisation and 10 million + pixel resolution to electronically zoom and pan in postproduction on your home PC?

Exotic locations?

Buy "views" from any place on earth at ebay, or download them from a "movie-sourceforge" and mount your actors into them.

Of course, there are probably not a million Spielbergs out there, but i would expect a couple of dozen.

While I do not shed a lot of tears for the likes of Tom Cruise or the Disney execs, I am afraid this will be very tough on people in the movie industry like set decoraters, caterers, lighting technicians, etc.

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Air Is Free by M. Simon on Jan 16th, 2007 @ 3:15pm

Air is Free

How do you get people to pay for air?

1. Sell them an air purifier
2. Sell them an air freshener
3. Sell them oxygen in a bottle
4. Sell them an air conditioner

etc.

The cost of air is zero.

What is its value?

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Re: Movies doomed to disappear? by M. Simon on Jan 16th, 2007 @ 3:22pm

What the market is telling the movie folks and the MAFIAA is that their product is overpriced.

They can accept that and change their business model or the new competition will eat their lunch no matter how many content protection schemes they get Congress to mandate.

Now is the time to change while they still have significant cash flow.

When air is easy to "steal" you figure out how to make money by giving it away.

The trend is your friend.

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Entertainment by M. Simon on Jan 16th, 2007 @ 3:28pm

The way a loaf of bread is protected from theft is you put it in a store.

If you put it on the street it is harder to keep opportunists from taking what they want.

You know recorded music was feared because it would put an end to live entertainment. Movies were feared because they were cheaper to put on than plays.

Now we know live content is easier to protect than recorded content.

Call it the live entertainer's revenge.

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by David on Jan 16th, 2007 @ 3:34pm

#47

The "market" isn't telling them any such thing. Thieves are.

The "market" telling you something means consumers are unwilling to pay the price you are asking to consume your product.

When you remove the choice consumers must make - "pay the price to consume the product or keep my money" - by saying it's okay for them to reject the price AND still consume the product, then you are no longer operating in a market situation.

Just because something is technically possible it doesn't make it right or correct, or a "right". It's technically possible for kids to pull security tabs off of CDs and take them out of the store, but I don't know many people who would argue then that "it's the market telling these stores their wares are overpriced!"

No, it's not. It's simple theft.

The market telling you something is overpriced is people choosing not to consume your product because they don't like your price. Not stealing it "because they can" and just tough luck to you.

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by David on Jan 16th, 2007 @ 3:36pm

#48

This doesn't really speak to any argument advanced here. Taking what you say here, am I correct in saying that you think it's okay to steal "because you can"?

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Finally getting to the point by Sam on Jan 16th, 2007 @ 4:28pm

The last few comments are finally getting to the point of the discussion, IMO. With computers, the internet, mp3s and so on, the incremental cost to produce an additional copy of a song, or movie is dropping towards zero. No more records to stamp, jewel boxes to mold, cassettes to record, boxes to ship, shelves to stock, cashiers to hire, train and pay, stores to light and heat. Just an instant and nearly costless transfer of bits.

People know this to be the case. If I wanted to make a copy of one of my CDs, the material cost would be less than a dollar, based on retail prices for blank cds, jewel cases, etc. But in a store it would cost $10 to $20. People know this, they aren't dumb. So if the incremental cost of producing a copy of a movie or song is dropping, why isn't the price charged for a movie or song not dropping as well?

Because the industry wants to continue to charge the same amount for a product that is costing them less and less to produce and distribute. And when people see the inherent greed and look for an alternative way, the industry wants to go after them legally, to force them to pay the artificially high price based on an obsolete, high priced distribution system.

If the industry was to charge for a movie or song closer to their actual cost of production, then the problems of piracy would dwindle, because the differential between the cost that the industry can produce for and the pirate can produce for converge. Loss of profit motive for the pirate.

The internet and technology is an excellent way to force the cost out of products, so that they are priced closer to their actual cost of production. That is what piracy is doing - forcing the industry to price closer to cost, and that is what the industry is fighting so hard to prevent.

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Stay on topic, folx! by TJ on Jan 16th, 2007 @ 4:49pm

Some of you are missing the point here and are focusing on buttons vs music. From what I read, the comparison here is not between the button makers and the RIAA themselves, but the *tactics* that each group was/is employing to try and oppose the sea-change. Each group wanted government to pass laws to allow them to search end-users homes for products they didnt like. The button-maker guild wanted to enter homes and search closets. The RIAA/MPAA want to digitally enter your computer and search your files. In a free society, intimidation tactics are doomed to fail, and fail miserably. If the RIAA/MPAA want to continue to exist, they will have to come up with something to make themselves more attractive to customers (better product/better pricing/something noone has ever thought of before).

If you want to argue the actual substance of the article, fine please do so, but so many of the previous comments set up straw-men that I wanted to respond.

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Yeah....RIght.... by Chuck Pelto on Jan 16th, 2007 @ 4:50pm

TO: Jordan
RE: Where Have I Heard 'THIS' Before?

"Look, I'm no fan of the RIAA"... -- Jordan

Maybe somewhere in the 50s or 60s. It went along the lines of....

"Look, Many of my friends are _________."

You can fill in the blank.

The facts remain.

[1] Why do we have to abide by the "regionalization" of DVDs?
[2] Why can't we do DVDs at 9GB?

Answer me that????!?!

Regards,

Chuck(le)

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Re: by Mike on Jan 16th, 2007 @ 6:07pm

David,

It's not worth discussing this with you if you keep reverting to calling infringement theft. That's false. It's false in every way. It's false legally and it's false by common sense.

The Supreme Court has clearly stated that infringement is a totally different beast than theft. You cannot call it theft if you are being intellectually honest.

For it to be theft, something would need to be missing. But nothing is missing. A copy has been made. And, while it's unauthorized, that's not theft, because you have not lost anything.

Your argument that people cannot take a DVD player or whatever is meaningless and unimportant to this debate. What would you say if I had a magic box that let me create an exact replica of a DVD player, but the original remains?

I haven't stolen anything.

No one is saying that there's a "right" to do this because it's possible. Please stop saying that's what we're saying. We're not.

What we're saying is that the market economics are clear. Price gets pushed to marginal cost. That's how economics works. The marginal cost of your product is zero, and so the market is always going to push it towards zero. That's an economic factor you need to deal with in your business model.

I note that you completely ignore some of the suggestions I have elsewhere about how the movie industry can continue to profit even if there's no artificial protections in place.

You may say that there's no market system going on here, but that's just because you don't think it's fair to you. Unfortunately, markets aren't always fair. But, they are efficient. It's an important distinction -- but it's helpful to understand the difference. When designing policy, an efficient market is likely to be better overall than trying to regulate any kind of "fairness." The nice thing about the market system is that, when left alone, it often does come up with solutions that are quite fair. There are, certainly, some cases of market failure, where it helps to have a regulatory body step in, but I find it hard to believe that your industry is one that needs such regulatory help.

As I've explained clearly (though you ignore it, for no clear reason) there are other business models available to you. In fact, I'd argue that you're likely to profit greatly (much more than now) if you were to embrace those business models. It's your choice not to, but the economics say you will not last long should you decide to ignore what the market is telling you.

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I don't give a d*mn what you heard by Jordan on Jan 16th, 2007 @ 6:16pm

iMaybe somewhere in the 50s or 60s. It went along the lines of....

"Look, Many of my friends are _________."

I don't have to prove anything to you, but I'll do it anyway. I abhor the RIAAs business practices too. In fact, I freely admit to pirating music, but I don't try to justify it like many of the folks here. I'm stealing; if I get caught it's my fault and I'll take my lumps.

[1] Why do we have to abide by the "regionalization" of DVDs?
[2] Why can't we do DVDs at 9GB?

Answer me that????!?!

What's your point? Unless these 2 facts justify piracy, then this is entirely irrelevant to what I've said before.

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by David on Jan 16th, 2007 @ 8:43pm

#51

This argument doesn't make any sense.

Yes, an actual DVD may only cost $3 or so to make and ship. But the average movie costs about $65 million to make.

The entertainment industry is not selling cars - where each manufactured car cost a certain amount to produce and get to a dealer, and thus they should charge x amount to make a bit of a profit.

The movie costs what it costs and it makes what it makes based on how well the audience responds to it. Provided it's a paying audience, of course.

Two movies may cost the same amount to make, but one may make $300 million and the other may make $3 million. What the movies are "worth" are what a paying audience says they're worth by choosing to go to the film, buy the film, recommend it to friends, etc.

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The by David on Jan 16th, 2007 @ 8:54pm

#52

The comparison between the RIAA and the 17th Century French Button-Makers is plainly a specious comparison - and on two levels.

First of all, the button-makers stopped the innovation of the cloth button to avoid competition. But the RIAA isn't trying to stop people from using new technologies to create competing products at all. They don't care if you use these new tools to make your own "buttons"(music, movies, etc.). They are just trying to stop you from using this technology to steal the "buttons" they have already made.

It's just not the same thing.

The other section of the "comparison" is better, but still not that good. It mentioned that the authorities were allowed to search people's houses for these competing products and stop people on the street if they were caught wearing the contraband.

While this was no doubt ridiculous and anti-competitive, it still doesn't work as a comparison to what the RIAA is doing.

Again, nobody will search your house or stop you on the street for carrying original material created using new technology that belongs to you or a content producer who gave it to you willingly.

Having somebody search your house for competing products is lunacy. That's what the button-makers were doing. Having somebody search your house for stolen goods is fairly routine. That's what the RIAA is asking.

And it's hardly unheard of that the RIAA would want these kinds of actions today. Afterall, police can search your house if you are suspected of having illegal drugs or stolen property. They can stop you on the street if they see you carrying a stolen item, such as somebody's pair of sneakers or ipod.

So why should stolen entertainment be any different?

This button-maker thing sounds good for people who want to bash the RIAA, but the comparison just doesn't hold up in any respect. It's specious.

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Re: Re: by David on Jan 16th, 2007 @ 9:15pm

Mike,

I'm not ignoring any comments. I've been trying to save some to answer for later - the ones that will take more time to deal with, because I'm dealing wih a hard Friday deadline and working literally around the clock to finish this project.

I don't care what the Supreme Court says - this is the same body that basically crossed "public use" out of the Constitution and replaced it with "perceived public benefit" with Kelo. And on and on and on.

You can split hairs all you want - illegally making a copy of a movie is stealing intellectual property. This is common sense. No physical copy is taken, but the thing doesn't exist physically, does it? It's information in a digital realm, but no less somebody's work and property.

Just as it's wrong to plagiarize somebody's work, it is wrong to steal entertainment as well. Neither of these things is taking anything physical from the other person - but that's a pretty standard.

I can't swipe John Grisham's latest manuscript and call it my own, and I shouldn't be able to swipe James Camerons new movie and consume it for my enjoyment without paying.

Films are intellectual property, made to be consumed by willing customers. If the customers aren't willing to pay, nobody is forcing them to consume the product. This isn't difficult to get.

And your solutions are not very compelling, either. You're basically telling filmmakers to adopt the business model of the guy on the street playing a harmonica, with a hat sitting in front of him that you can throw money into. Basically begging.

The big difference, of course, is that playing the harmonica costs this guy next to nothing, whereas the average film costs $65 million to make. That's hardly the kind of money anybody is going to be willing to put up if they only way you can make it back is from the charity of strangers throwing money into your hat.

And it's no secret that the street corner guy gets 90% of his money out of people feeling sorry for him - not because they so dug his performance that they just felt compelled to pay for it. How many people are going to have that charitable attitude toward what they see as "Big Hollywood"?

The idea that it's wrong to expect people to fairly pay for a film if they want to view it is just mind-boggling to me.

We are perfectly willing to engage in these new distrubtion methods - the downloading of films for money, etc. And we're willing to look at new business models.

But the very first thing that has to be agreed on by everybody, before we're willing to do any of this, is this:

"Piracy is ALWAYS wrong. Just because you can download a movie without paying for it doesn't mean it is now you're right. Taking something without paying for it is wrong."

If we can agree on this, then we can get somewhere. Unfortunately, I seem to be hearing a lot of apologetics for the outright theft of intellectual property. You can see why we would be hostile to such attitudes, can't you? People seem to be saying it's okay if others steal our work without paying for it, and that because it's technically possible it then becomes their "right" to do so. This is ridiculous.

Then others come on here and say that films should cost less. No doubt. I know a little something about that. I launched my career on an ultra-low budget feature film.

But those kinds of films are pretty much one-shot affairs - especially if you want to do them well. Not only would I not want to go through shooting a movie that way again, which was nearly killing myself doing so, but you can't ask people to work for free and volunteer free stuff for your production forever. That's how these things get made so cheaply - calling in favors, getting volunteers, and busting your ass so hard you think you're gonna drop dead. But all of this is done with the expectation that after you go through this experience, you'll then get the rewards of having access to more funds on subsequent films.

So you can pay all those people that helped you out back by using them again - giving them good-paying work. And you justify your own insane investment by reaping some benefits from working with larger budgets in the future.

Nobody will be able to sustain a business model making films under $1 million for very long. And without the possibility of something better on the next one, very few are going to put themselves through what I did just to make a film. Like any endeavor, you do it because of the rewards that could come later if you succeed.

Technology will make budgets go down. So will the cutting of actor's salaries. But despite all of this movies will still cost millions to make in the future.

And nobody is going to invest millions in an industry that is essentially the same thing as the guy with the harmonica begging on the street corner.

And all because some punks on the internet think it's a-okay to consume a film without compensating the producers for their work.

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Buttons by Homer on Jan 16th, 2007 @ 9:38pm

There may not be a literal relationship between the button manufacturers and the *AA groups, but there is still a good portion of commonality in viewpoint.

First and foremost is the idea that it is appropriate to run to a governing body to protect a current business method.

While I agree, in principle, that it is acceptable to seek measures to deal with copyright infringement (not theft, they are clearly not the same thing), there is still the viewpoint of the *AA members that they are entitled to more than copyright protection, they also believe that they are entitled to the protection of their profit method, regardless of the realities on the ground.

While you are syntactically correct in your assertion that the *AA aren't explicitly arguing that they should repress competing distribution methods, it is clear, from their actions, that they do believe that they are entitled to protection from those competing distribution methods.

DRM, as one example, does not address copyright infringement, it attempts to address distribution (and it fails miserably at that task).

They are opposed to alternative distribution methods. They're aware enough that they cannot actually say that that is what they oppose, but the efforts they go through are not substantively different, in principle, from the button makers referenced in this context.

As for your argument about looking for stolen items, I'll accept that, once the *AA groups actually use the appropriate standards of reasonable suspicion and probable cause that the police are bound by. Instead of 'john doe' warrants, and non-independent 'experts', if they actually show reasonable cause, and tie that cause to a specific suspect, and get a legitimate (signed by a judge) search warrant, then I'll agree that they're operating within the same framework as legitimate law enforcement. Here's a hint for you: Right now, they rarely do that. And they are far more likely to go after a user, instead of a distributor, even though the distributor is clearly the more egregious offender.

I am, in no manner, an apologist for those who violate copyright, but the actions of the MAFIAA do far more harm than good, in the realm of copyright. What they do is the ethical equivalent of trying to kill someone who is stealing a loaf of bread. They need to quit overreacting, they need to start treating their customers like customers, instead of thieves, and they need to start accepting that they are now buggy whip makers in the era of the automobile. They are, by far, their own worst enemy.

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Context by Homer on Jan 16th, 2007 @ 10:01pm

A further elaboration:

While it may be literally accurate to say that the RIAA, etc., aren't exactly like the 17th century button makers, they have far more in common than they have in difference.

While the *AA aren't *explicitly* shooting for suppression of competition, they are clearly doing so implicitly.

In both cases, the plaintiffs are seeking government intervention to prevent legitimate competition and aid in the protection of their current business method.

In both cases, they seek intervention or legislation to suppress activities that are legal (in the case of the button manufacturers, actual competition, in the case of the *AA, fair use activities such as space and time shifting, etc.).

And so on.

As I've stated before, if the *AA's restricted their activities to those offenses that are clearly infringement, I would have no issue with them. But when the try to tell me that it is illegal to copy my legally purchased DVD to a portable player for my convenience (space shifting), then I am not obligated, in any reasonable fashion, to pay attention to them.

They don't merely want legal recompense for actual infringement (I support that), they want to roll back fair use and first sale. They UTTERLY OPPOSE any freedom of action on the part of their customers who have legitimately acquired copies of content.

Any group that can, with a straight face, claim that ' the VCR is to the movie industry as the Boston Strangler is to the woman home alone' is seriously demented, and completely out of touch with reality.

That's why I (as a content producer) despise them. They have no concern for my interests in protecting my property, they're only interested in how many times they can suck payment from their customers for the same thing, over and over again.

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by Nick on Jan 16th, 2007 @ 10:37pm

The button guild, no doubt, viewed the innovation of buttons as their intellectual property, and they were blessed by authority to be the only ones to make something that functioned as a button. The point is that for a large organization to think they are in the right while the rest if the world disagrees with their logic is indeed possible and still happening today.

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by David on Jan 16th, 2007 @ 10:46pm

#61

But the RIAA isn't trying to stop you from making competing content with new technology. That is exactly what the button makers were doing. That's why this comparison just doesn't work.

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Re: Re: Re: by Mike on Jan 17th, 2007 @ 12:41am

You can split hairs all you want - illegally making a copy of a movie is stealing intellectual property. This is common sense. No physical copy is taken, but the thing doesn't exist physically, does it? It's information in a digital realm, but no less somebody's work and property.

It's not splitting hairs. It's an EXTREMELY important distinction. The fact that the original owner isn't missing anything makes all the difference in the world. Don't think for a second that just because someone named it "intellectual property" is has any of the characteristics of traditional property.

Films are intellectual property, made to be consumed by willing customers. If the customers aren't willing to pay, nobody is forcing them to consume the product. This isn't difficult to get.

Nope. It's not difficult to get, but it's a bad business model and it will kill your industry. If that's what you want, that's fine... but others will figure out the right business model and you'll be out of business.

And your solutions are not very compelling, either. You're basically telling filmmakers to adopt the business model of the guy on the street playing a harmonica, with a hat sitting in front of him that you can throw money into. Basically begging.

Huh? I have NEVER suggested a business model based on begging.

I have suggested detailed business models that are based on giving people what they want in a way that they're happy to pay for it. I never suggested a model based on begging, and I'm wondering if you even have read what I've written.

You need to be aware of two things:

1. Your existing business model is being made obsolete through technology (same as the button makers).
2. If you learn to embrace what the new technology is enabling, there are much greater ways to profit (same as the button makers).

That you refuse to see it is really your own problem, but it's going to make life difficult very soon.

The big difference, of course, is that

History Repeats Itself: How The RIAA Is Like 17th Century French Button-Makers

from the no,-seriously... dept

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Good Book! by Anonymous Coward on Jan 11th, 2007 @ 1:11pm

And so it Goes by Dizzle on Jan 11th, 2007 @ 1:12pm

Like the song... by James on Jan 11th, 2007 @ 1:15pm

by Outraged on Jan 11th, 2007 @ 1:20pm

protectionism by misanthropic humanist on Jan 11th, 2007 @ 1:57pm

Scarcity in Economics by Kevin on Jan 11th, 2007 @ 2:01pm

Same thing goes for powdered wigs by freakengine on Jan 11th, 2007 @ 2:06pm

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Not the Same by Dan on Jan 11th, 2007 @ 2:26pm

Good Topic! by Rose on Jan 11th, 2007 @ 2:54pm

so how come by simon on Jan 11th, 2007 @ 3:02pm

Re: Same thing goes for powdered wigs by Anonymous Coward on Jan 11th, 2007 @ 3:03pm

Re: Not the Same by Anonymous Coward on Jan 11th, 2007 @ 3:13pm

Re: Not the Same by misanthropic humanist on Jan 11th, 2007 @ 4:52pm

Re: Not the Same by Mousky on Jan 11th, 2007 @ 8:48pm

Brilliant by BBlackmoor on Jan 12th, 2007 @ 8:23am

control of innovation by Elin whitney-Smith on Jan 12th, 2007 @ 11:32am

i hate you for this.... by greg on Jan 13th, 2007 @ 3:12am

Reminds me of Bastiat by Charno on Jan 13th, 2007 @ 5:56am

RIAA by Jim Beau on Jan 13th, 2007 @ 5:06pm

by Anonymous Coward on Jan 14th, 2007 @ 11:03am

by bodo on Jan 14th, 2007 @ 5:38pm

Not getting the comparison... by David on Jan 15th, 2007 @ 7:48pm

Abundance Is Good by Chuck Pelto on Jan 15th, 2007 @ 9:00pm

RE: Not getting the comparison... by Homer on Jan 15th, 2007 @ 9:25pm

by David on Jan 15th, 2007 @ 10:01pm

So, Tell me by Homer on Jan 15th, 2007 @ 10:30pm

Grateful Dead Marketing by M. Simon on Jan 15th, 2007 @ 10:49pm

Television by M. Simon on Jan 15th, 2007 @ 11:07pm

by David on Jan 15th, 2007 @ 11:19pm

by David on Jan 15th, 2007 @ 11:25pm

Re: by Homer on Jan 15th, 2007 @ 11:55pm

RE: 32 by Homer on Jan 16th, 2007 @ 12:08am

Re: by Mike on Jan 16th, 2007 @ 1:36am

The Button-Maker Analogy by Chuck Pelto on Jan 16th, 2007 @ 4:32am

Movies doomed to disappear? by Infidel753 on Jan 16th, 2007 @ 5:10am

Ridiculous by Jordan on Jan 16th, 2007 @ 6:40am

Extremes on both sides by Kurmudge on Jan 16th, 2007 @ 8:20am

by David on Jan 16th, 2007 @ 10:25am

Re: by Mike on Jan 16th, 2007 @ 10:47am

Re: Movies doomed to disappear? by Mike on Jan 16th, 2007 @ 10:53am

Most people will pay by Mark on Jan 16th, 2007 @ 11:14am

by David on Jan 16th, 2007 @ 12:46pm

Re: Movies doomed to disappear? by yes on Jan 16th, 2007 @ 3:08pm

Air Is Free by M. Simon on Jan 16th, 2007 @ 3:15pm

Re: Movies doomed to disappear? by M. Simon on Jan 16th, 2007 @ 3:22pm

Entertainment by M. Simon on Jan 16th, 2007 @ 3:28pm

by David on Jan 16th, 2007 @ 3:34pm

by David on Jan 16th, 2007 @ 3:36pm

Finally getting to the point by Sam on Jan 16th, 2007 @ 4:28pm

Stay on topic, folx! by TJ on Jan 16th, 2007 @ 4:49pm

Yeah....RIght.... by Chuck Pelto on Jan 16th, 2007 @ 4:50pm

Re: by Mike on Jan 16th, 2007 @ 6:07pm

I don't give a d*mn what you heard by Jordan on Jan 16th, 2007 @ 6:16pm

by David on Jan 16th, 2007 @ 8:43pm

The by David on Jan 16th, 2007 @ 8:54pm

Re: Re: by David on Jan 16th, 2007 @ 9:15pm

Buttons by Homer on Jan 16th, 2007 @ 9:38pm

Context by Homer on Jan 16th, 2007 @ 10:01pm

by Nick on Jan 16th, 2007 @ 10:37pm

by David on Jan 16th, 2007 @ 10:46pm

Re: Re: Re: by Mike on Jan 17th, 2007 @ 12:41am

**I don't give a d*mn what you heard by Jordan** on Jan 16th, 2007 @ 6:16pm