Former Musician Now Lawyer Comes To Terms With What's Happening To His Music Online

from the welcome-to-the-internet dept

G Thompson sends in this absolutely wonderful read by law professor Ben Challis, a former punk musician, explaining the mental back-and-forth he went through after discovering that some of his band's old music is available online -- specifically discovering that some sites are selling unauthorized copies of it. He reacts naturally at first -- which is to get upset -- but then as he thinks about it some more, he begins to recognize that this isn't all that productive. Eventually he seems to come all the way around to realizing that this actually is really good market research for him.

He begins to reason through the arguments, recognizing that he and his (one surviving) bandmate haven't actually put their own music online for sale, and they probably would have put some of it up for free anyway, so maybe having some free music out there isn't that bad. But more importantly, he realizes that this means there's actually both interest and demand in his old band (he even discovers that old copies of the band's single are selling for £35), and he might as well do something about it, rather than worry about what others are doing:
And should I really worry at all? Well clearly at this scale, no, not really. But even so, it does get you thinking and suddenly you see beyond the immediate problems of 'piracy' to the new opportunities that come with the web. First of all, now I know we have fans, I have my new blog (I know you are desperate to know, it is www.theignerents.blogspot.com). I then began to think of what other opportunities there are beyond those that just pander to my ego. Well with the Blog, I will soon have set up a mechanism for collecting fan data -- and databases are king now (I think!). And if we were still a band we could try and get a gig at the annual Rebellion Festival in Blackpool in March, the highlight of the punk calendar in the UK -- and maybe try for a European punk festival or two too! And we could definitely try and sell those last few boxes of CDs I have somewhere -- fans in Japan and Germany seem increasingly keen on Ignerents' collectibles, or I could empty out my cupboards and try and find those last few copies of our first single I have -- at £35 a pop that would pay for quite a few nice winter warmer! And what if I autograph them? Hang on, will the value go down? And maybe some PRS monies will come through - eventually I imagine they will; and hang on, and what about that Glastonbury Festival thingy -- I work there -- I know the main booker! So many possibilities, so little time!

It's a funny old thing the internet: yes it has destroyed a number of traditional business models in the music industry, and maybe "Ignerence was bliss" for me until a few weeks ago -- but the internet has created many many other new and interesting opportunities. The clever bands of the future will be the ones who can seize these opportunities and move quickly and nimbly from technology to technology and embrace and react to ever changing patterns in consumer behaviour.
This is really important. It's totally natural for people to react the way Challis does above when they first see their work copied online. Even though we encourage people to copy our stuff, there are brief moments when I feel the same way when I see it. But then you think logically about it, and you realize that it's up to you to do something positive about it, and use it to your advantage. Flipping out and going negative is a waste of time and does nothing valuable for anyone. But learning from it and realizing that it's actually valuable market research can be quite powerful.


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    ChurchHatesTucker (profile), Dec 24th, 2009 @ 7:45pm

    Imitation is the sincerest form of flattery

    No lie.

     

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    Anonymous Coward, Dec 24th, 2009 @ 8:40pm

    I've found a way to extend this thinking to scarce goods, which is working great for me. Say I order a pizza. Instead of paing something ridiculous like $14.99 for it, or whatever the guy wants to charge, I look up the wholesale prices for all the ingredients. Then, I figure out how long the guy spends making my pizza (usually about five minutes) and multiply it by the minimum wage. I add all that together and that's what I pay the guy. It usually comes to like six bucks!

    For some reason, the guy says I'm stealing from him! I tell him that if he didn't have a monopoly on his pizzas then that's what it would cost anyway and if he can't monetize his business, well, that's what the market wants. I also tell him that other people might see people eating pizza and get hungry for it so he should really be giving it to me free, but I'm willing to pay for the scarce goods because I'm a nice guy.

     

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      Anonymous Coward, Dec 24th, 2009 @ 8:51pm

      Re:

      Cool, can you lend me your magical pizza ingredient replicator? I could definitely use one.

       

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        Anonymous Coward, Dec 24th, 2009 @ 8:58pm

        Re: Re:

        No no I pay for the ingredients. And the guy's time. Reading comprehension please.

         

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          Anonymous Coward, Dec 24th, 2009 @ 9:00pm

          Re: Re: Re:

          Oh, I see, so your entire analogy is based on stupidity. Thanks for the clarification.

           

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            Anonymous Coward, Dec 24th, 2009 @ 9:10pm

            Re: Re: Re: Re:

            How's that? The customer sets the price in a free market. I'm covering the marginal costs. If he were selling the pizza for six bucks I'd buy it. Probably lots more people too.

             

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              Anonymous Coward, Dec 24th, 2009 @ 9:14pm

              Re: Re: Re: Re: Re:

              Pizzas are scarce. Analogy fails. Next.

               

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                Anonymous Coward, Dec 24th, 2009 @ 9:21pm

                Re: Re: Re: Re: Re: Re:

                But I'm paying for the scarce goods.

                 

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                  Ilfar, Dec 25th, 2009 @ 12:39am

                  Re: Re: Re: Re: Re: Re: Re:

                  I pay for pizza because it costs me more (I can't generally buy enough for ONE pizza) and takes me longer to collect and prepare a pizza than it does for the guy to show up on my door with pizzas, a free side for ordering online, and sometimes even the correct order and change!

                  I'm not paying for pizza, I'm paying for an adventure! :D

                   

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              Anonymous Coward, Dec 25th, 2009 @ 12:56am

              Re: Re: Re: Re: Re:

              You 'set the price' by ordering from somewhere cheaper. That's why your analogy fails.

               

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                Anonymous Coward, Dec 25th, 2009 @ 1:13am

                Re: Re: Re: Re: Re: Re:

                But I can't get Gino's pizza anywhere else. I mean, I can get pizzacwith the same or almost the same recipe but it's just not the same. It's hard to explain. Anyway if it weren't for Gino's government-granted monopoly on his pizzas they would be going for marginal cost which is $6.50 max.

                Anyway he should be happy. It's not like he's losing money; I cover his marginal costs. Plus I told a friend about his pizza one time so he should be paying ME for free advertising. I also told my friend about my marginal cost buying strategy and so my friend gets Gino's pizzas for marginal cost too.

                 

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                  Marcus Carab (profile), Dec 25th, 2009 @ 10:18am

                  Re: Re: Re: Re: Re: Re: Re:

                  You realize that marginal cost is just a little bit more complicated than you're making it sound, right?

                   

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                  Anonymous Coward, Dec 26th, 2009 @ 9:27am

                  Re: Re: Re: Re: Re: Re: Re:

                  Wait, are you suggesting that if you make a Gino's pizza at home, you run the risk of litigation?

                  Gino's has the pizza, you offer them $6.50. They say no, you go hungry.

                  But if you could press Ctrl+C, then Ctrl+V, and have the exact same pizza, you think Gino needs to hire some lawyers?

                  Also, if you can make that pizza for $6.50, why not enter the market at $10 and crush Gino?

                   

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            slander (profile), Dec 24th, 2009 @ 9:14pm

            Re: Re: Re: Re:

            Schizophrenia--it beats being alone...

             

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        Anonymous Coward, Dec 25th, 2009 @ 8:45am

        Re: Re:

        Actually, this is a genius comment: "Cool, can you lend me your magical pizza ingredient replicator? I could definitely use one." and it really blows this stupid pizza example out of the water.

        Just like the pizza, the work, time and effort to make the song/pizza is concluded when the product is finished. After you consume the pizza, there is no more pizza. After you consume the "Art" the art is still there. AND it can be duplicated billions upon billions of times giving it zero value.

        So, for you to use your pizza example, I repeat what the AC asked you: Cool, can you lend me your magical pizza ingredient replicator? I could definitely use one. Because the music can be replicated over and over and over again at no cost. Which you don't have as pizzas can be replicated, which means your analogy is beyond stupid.

         

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          Anonymous Coward, Dec 25th, 2009 @ 10:31am

          Re: Re: Re:

          But you see I'm trying to pay for all the marginal costs. Just not a penny more. I also want to make sure not to include any amortized fixed costs in there, or pay for Gino's overinflated sense of self-worth. I am sure that Gino pads his prices to cover the cost of his education and experience, his car payment, his failed sandwich shop, and so on. Those have nothing to do with the marginal cost of MY pizza and so I'm just going to stop paying for them.

           

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      Anonymous Coward, Dec 24th, 2009 @ 9:47pm

      Re:

      You also have to pay for the electricity the oven used, the gas, tires, oil and travel time for the guy who delivered it, the insurance, tax and maintainance on the building, yadda yadda yadda, ad nauseaum.

       

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        Anonymous Coward, Dec 24th, 2009 @ 10:09pm

        Re: Re:

        The oven was already hot when I got there and the lights were on also. As far as I can tell the truck was coming to the guy's place already to drop off some other stuff. Gino--he's the pizza guy--owns the building so he's not paying any rent. He also makes his own lunch in the oven so it's not like he heated it up just for me. He would have had to heat it up for himself anyway.

        Where does it end though? Should I pay him for his time taking a shower in the morning too? My company certainly doesn't pay me for that time.

        Maybe some of this factors in--I'll give Gino an extra quarter to cover any of these incidental costs. $6.25 is still lots better than $14.99.

         

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          Steven (profile), Dec 24th, 2009 @ 11:28pm

          Re: Re: Re:

          You are failing in that you fail to cover all the marginal costs (as an example that pizza guy doesn't just cost his salary).

          The pizza market is fairly competitive. I strongly suspect that the $14.99 is far closer to marginal cost than the $6 bucks you guesstimated your way to.

           

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            Anonymous Coward, Dec 24th, 2009 @ 11:36pm

            Re: Re: Re: Re:

            Why is it my problem how much the pizza guy thinks he costs? What he does outside the five minutes he spends making my pizza isn't my problem. He's putting a kid through college and he drives a nicer car than me. Clearly he's padded his marginal costs quite a bit.

            Dominos runs a deal sometimes where you can get pizzas for like five bucks but Gino uses a little better ingredients so I'm ok paying him $6.50.

             

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          The Anti-Mike, Dec 25th, 2009 @ 7:19am

          Re: Re: Re:

          It's like anything, if you are willing to discount all of the costs as "incidental" or "already there" it is pretty easy to make anything cheap.

          Walmart sells t-shirts for $10. But hey, the store was already open, the people stocking the shelves were already there, the container was already coming from China, the distribution center is already paid for and the truck was going to go to the store anyway. So the only cost is the $1.25 initial for the t-shirt and 6 cents to cover the rent of the floor space for the day you came to pick up the shirt, net is 1.32 - 10% profit, Wal-mart should be selling t-shirts for about $1.45 each.

          You pizza example is full of that type of assumption. You cannot just ignore things because you think they are already paid for or not relevant to your individual order. Each of those costs has to be spread over every unit made in order for them to be profitable. On the oven, things like maintenance, wear, utilities used (even when nothing was in it), how often the entire unit has to be replaced, etc. Ownership of the building doesn't mean that the owner isn't paying property taxes, insurance, etc, plus honestly, he still should be charging himself rent or at least putting money aside as his expected return for use of the building.

          I could go on, but it is safe to say that your $6.25 pizza would be exactly what Gino needs... to go out of business.

           

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          Cyryl, Dec 27th, 2009 @ 10:35am

          Re: Re: Re:

          He doesn't own the building and NOT pay rent. Ever heard of property taxes?

          What about the maintenance costs to maintain the building's working order? All of the chemicals he must continually purchase to maintain it's cleanliness so that the Health Department doesn't shut him down?

          The oven was already hot? Sorry but... It still requires some form of energy to MAINTAIN it's warmth - to which he no doubt pays a tidy little monthly fee to the local energy district.

          Next up: FUEL COSTS. I don't think that I have to elaborate on that one. We've all seen the prices at the pumps.

          You also try to get off the hook by justifying your thinking with 'paying him for his time'. That doesn't work out either. The reason being that he could have spent that time doing OTHER profitable things. His time alone is not going to create PROFIT. So it would seem that you also need to figure out a [REASONABLE] profit margin and add that in to the cost.

          I won't tell you that most pizza chains don't charge you a FUCKING RIDICULOUS amount of money at times.

          But we pay it ANYWAY. Don't we? Wouldn't YOU continue to charge people what you KNOW they're willing to pay - like it or not?

          You're a very short-sighted person.

           

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            Anonymous Coward, Dec 27th, 2009 @ 11:16am

            Re: Re: Re: Re:

            What does this have to do with the original topic?

            Sir, You are an asshole. The original topic is about artists. It seems the ONLY on topic response to the original story *****IN THIS WHOLE THREAD***** is comment #104.

            Every one else is trying to make this into some philosophical discussion about pizza. I've read the original story, IT ISN'T EVEN MENTIONED.

             

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      zcat (profile), Dec 24th, 2009 @ 10:28pm

      Re:

      I have a better analogy.

      I figured out the pizza hutt recipe by buying a store-bought pizza and identifying (rip) what was in it by sight and taste, then I went and got the same ingredients (blank cd) and made by own pizzas at home.

      So now pizza hut says I'm stealing pizzas and wants to sue me for $80,000 per pizza. Yeah, that seems fair.

       

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        Anonymous Coward, Dec 24th, 2009 @ 10:33pm

        Re: Re:

        It's only because of a government-granted monopoly on the recipe and bogus "intellectual property" laws regarding "trade secrets" that let Pizza Hut keep their recipe secret in the first place. Same with Coke. If government weren't owned by lobbyists and cared about people they would force Pizza Hut to publish all recipes for the good of society.

         

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          Anonymous Coward, Dec 24th, 2009 @ 11:21pm

          Re: Re: Re:

          Because the last thing we need is a better society.

          Merry Christmas!

           

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          Anonymous Coward, Dec 25th, 2009 @ 12:59am

          Re: Re: Re:

          Can't copyright a recipe. Sorry.

           

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            Anonymous Coward, Dec 25th, 2009 @ 3:51am

            Re: Re: Re: Re:

            Maybe not, but there certainly is some kind of legal protection that can be afforded for a recipe.

             

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              Andrew F (profile), Dec 25th, 2009 @ 12:01pm

              Re: Re: Re: Re: Re:

              Yes, trade secret -- which is basically "copyright" by locking the recipe in a vault and letting only people you trust see it. That's not a government-granted monopoly; that's a "monopoly I have because of my vault and a gun I will use to shoot you if you try to force your way in."

               

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                Anonymous Coward, Dec 25th, 2009 @ 12:11pm

                Re: Re: Re: Re: Re: Re:

                But your monopoly isn't really guaranteed by your gun, it's guaranteed by the government in the form of laws allowing non-disclosure agreements, laws against industrial espionage, and courts that will enforce them. That makes it a government-granted monopoly. Unlike patents, this monopoly lasts in perpetuity.

                If the government were not owned by lobbyists and cared about their people instead of a few self-interested corporations, everyone would have a copy of the formula for Coke and many companies would compete selling it.

                 

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                  Andrew F (profile), Dec 25th, 2009 @ 12:45pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Sure -- but governments are more willing to grant monopolies that are "natural" or "feasible" to protect.

                  In the trade secret case, if I could figure out the secret formula to Coke by simply buying a can and running some tests, then current trade secrets law does not prevent me from making my own competitor to Coke. In fact, there are several such competitors doing such tests everyday. I wouldn't be surprised if someone already figured out the formula, but no one believed him because of some weird branding / psychology issue.

                  The only way Coke could stop me from using that formula was to patent it first -- but patents expire, so not infinite.

                  Trade secrets are not property rights. They're just secrets. Privacy law probably provides better analogies than property law.

                   

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                  Andrew F (profile), Dec 25th, 2009 @ 12:48pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Also, see my other comment on the semantics of monopoly: http://www.techdirt.com/article.php?sid=20091223/2253347494#c555

                   

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        Anonymous Coward, Dec 25th, 2009 @ 3:49am

        Re: Re:

        "So now pizza hut says I'm stealing pizzas and wants to sue me for $80,000 per pizza. Yeah, that seems fair."

        But your pizza isn't an EXACT copy of Pizza Hut's. It's your approximation of a Pizza Hut pizza. Plus, if I remember correctly it's the SHARING of the content (via P2P when users download) that is getting people into trouble with the RIAA/MPAA.

        The pizza analogy is a very crap one, as are almost every single one I come across.

        The person who started, and those who support, the pizza analogy just go to show (as usual) how little understanding they have for the issue.

        Not that I'm in favour of the way the end users are being harassed. I just hate seeing the issue clouded by misguided interpretations and analogies. There-by just turning everything into a pissing match

         

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      Andrew F (profile), Dec 25th, 2009 @ 12:34pm

      Re: Pizza Analogy

      I believe AC's point is that Gino the pizza man should be able to use his government-granted "monopoly" / property rights to earn a profit in addition to his marginal costs. Likewise, content creators should be allowed to earn a profit on each piece of content they sell in addition to the "zero" marginal cost of it being duplicated.

      I don't think Mike Masnick et al. have any issues with anyone charging and earning above marginal cost. I believe the issue is about the extent of the property right needed to make a particular method for earning that profit work.

      That is, analogy fails because the property right for pizza is very different from copyright for music.

      All property rights are monopolies. I own a pizza-- I have a monopoly on who eats my pizza. It's a state-backed monopoly insofar that the police will arrest anyone trying to eat my pizza. That's fine, but we don't normally think of it as a monopoly. Why? Because it's a very well-defined narrow property right that's easy to enforce.

      Now imagine if the pizza owner could say, "I'm not selling you the pizza but only the right to eat the pizza in the store. You can't take it to go, share it with your friends, or try to guess what my secret ingredient is and make your own pizza at home." This is (1) stupid for business reasons but also (2) beginning to look more like a monopoly. Why? Because the property right now extends well beyond this one physical pizza but also to how I'm allowed to use this pizza and future pizzas. It reaches out from the pizza parlor into my own home. This is the monopoly and kind of property right that makes folks nervous.

      Not all property rights are equal. Courts frequently abridge property rights all the time for the purposes of social good. For example, you usually can't landlock someone by buying up all the land around them and forbidding them to leave. Courts will usually find some out for the landlocked owner to prevent abuse of property rights (in this case, probably an easement).

      In the pizza case, we've decided that Gino's current property right on the pizza ultimately yields a better outcome for all on average, but if he starts abusing that right, then the courts will step in to restrict it.

       

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        Anonymous Coward, Dec 25th, 2009 @ 12:52pm

        Re: Re: Pizza Analogy

        So you're saying that monopolies are a good thing? It's real property maximalists like you that make Gino's pizzas cost $14.99.

         

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          Andrew F (profile), Dec 25th, 2009 @ 1:02pm

          Re: Re: Re: Pizza Analogy

          Sure. Limited monopolies (e.g. limited property rights) are good. I'd only be a maximalist if I insisted on extending property rights as far as I possibly could.

          And if you became good friends with Gino instead of trolling his shop, he'd probably sell you the pizza for less $14.99. I get discounts all the time.

           

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            Anonymous Coward, Dec 25th, 2009 @ 1:05pm

            Re: Re: Re: Re: Pizza Analogy

            If you think property rights are a good thing, then why wouldn't more property rights be more good? Why wouldn't you want as many as them of possible?

             

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              Anonymous Coward, Dec 25th, 2009 @ 1:10pm

              Re: Re: Re: Re: Re: Pizza Analogy

              We should start assigning property rights to things that aren't even property, am I right?

              Like the love I have for my family.

               

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                Anonymous Coward, Dec 25th, 2009 @ 1:25pm

                Re: Re: Re: Re: Re: Re: Pizza Analogy

                Well you can but there's very little demand for it so the price would be zero or close to it on the open market. Maybe your grandma will give you a hundred bucks for it. She probably already does.

                 

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                  Anonymous Coward, Dec 25th, 2009 @ 1:31pm

                  Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                  But what about the love I have for your family!?!

                   

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                    Anonymous Coward, Dec 25th, 2009 @ 1:38pm

                    Re: Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                    You're obviously not marketing it well enough because I asked them and they were like "who?" If you take my grandma to the store she'll probably slip you a $20. Same if you go by yourself and bring her a handle if Captain Morgan's.

                     

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              Andrew F (profile), Dec 25th, 2009 @ 1:55pm

              Re: Re: Re: Re: Re: Pizza Analogy

              If you think property rights are a good thing, then why wouldn't more property rights be more good? Why wouldn't you want as many as them of possible?

              Bacon is a good thing, but too much bacon clogs your arteries and kills you.

               

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                Anonymous Coward, Dec 25th, 2009 @ 2:02pm

                Re: Re: Re: Re: Re: Re: Pizza Analogy

                Look I am just using our host's infallible argumentation about maximalism.

                 

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                  :), Dec 25th, 2009 @ 2:19pm

                  Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                  No you're not you are just distorting the worlds to try and confuse everyone.

                  And by the looks of it this is working.

                  The real problem is not how much someone gains from something is how he gain.

                  The right analogy would be a pizza producer that don't own a pizzaria, charge everybody that makes pizza, put ridiculous restrictions on how pizzas are to be made and consumed and double, triple dip all the time and claim ownership for all resources derivatives from what he thinks he owns.

                  That guy makes more money then the producer the worker, charge the clients and have no real physical cost and try to segment the market even further so it can charge more it has no respect for culture or tradition, don't like competition and whine like a baby when it is not heard.

                   

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                    Anonymous Coward, Dec 25th, 2009 @ 2:33pm

                    Re: Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                    Yeah someone who does all those things is even worse than Gino. But I still don't see how that gives Gino the right to overcharge for his pizzas and use government protections to do so.

                     

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                      Anonymous Coward, Dec 25th, 2009 @ 2:43pm

                      Re: Re: Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                      It doesn't that is the point.

                      Anybody wanting to make a pizza can do so and Gino can't do nothing about he can't tell where people eat, he can't put tracking devices, he can't spy on his customers.

                      The only thing he can do is sell to people willing to buy.
                      Make it not about the product but about the service the experience. For that he can charge more not for the pizza that anyone can do it.

                       

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                        Anonymous Coward, Dec 25th, 2009 @ 2:56pm

                        Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Pizza Analogy

                        But Gino thinks he can just charge whatever and I have figured out how to subvert his totally unfair monopoly by just taking his pizzas for the minimum theoretical marginal cost. I'm a proud pizza pirate!

                         

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              Pjerky (profile), Dec 26th, 2009 @ 11:14pm

              Re: Re: Re: Re: Re: Pizza Analogy

              Ok AC, you are a moron. Your logic fails miserably given that (1) he specifically said "LIMITED PROPERTY RIGHTS", not property rights in general. (2) Unless you are a fat, bedridden slob suffocating on your own fat rolls I think that you, like every other human that lives, knows that many things are good, but even good things still require moderation. (3) By your logic breathing is good, so why don't you breathe more and more, keep on doing that faster and faster, after all breathing is good for you, more must be better. I will watch as you hyperventilate and collapse.

              Moderation is key here, like many other things in life laws, of any type, require moderation and limitation. Laws are good, fine I can accept that. More laws are better, this is where we run into a problem that is a case by case determination. You must ask yourself several questions.

              The first question is what are you trying to accomplish with law? Is the current law not accomplishing this? If not why and will more laws be both effective and provide the greatest benefit for all or is there another way to accomplish our goals without more laws that has a better effect?

              If law is the only option then lets look at one more thing before creating a new law. Is what we are trying to accomplish, our goal, to the larger benefit of all, which is the group we are trying to serve when writing law? Or is this goal designed to only benefit a small group and will actually cause more harm than good to the group as a whole that we are trying to serve being lawmakers (all the people)?

              I think if more people considered these things first we would have less laws and more people working on real solutions and real problems and humanity would benefit greatly. But common sense and solid logic and reasoning seems to escape many of those involved in making laws.

              Quality over quantity people!

               

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        Anonymous Coward, Dec 25th, 2009 @ 1:02pm

        Re: Re: Pizza Analogy

        I disagree that Gino's monopoly is better for everyone. It's not better for me. It's the entitlement society that breeds these ideas. That's why I only pay marginal cost for his pizzas. If enough of us start doing it Gino will have to adapt his business model to something a little smarter and that will be better for everyone.

         

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      Mike Masnick (profile), Dec 25th, 2009 @ 4:13pm

      Re:

      I've found a way to extend this thinking to scarce goods, which is working great for me.

      Ah, I see our economically illiterate friend has decided to hijack the thread.

      Since it seems to have gone off the rails, I might as well give a little Christmas economics lesson (not that he'll pay attention).

      1. When we talk about price equalling marginal cost, it is only so in a market where there is no limit on supply and where there is no ability to exclude. That is, a non-rivalrous, non-excludable market, or a market for infinite goods.

      In a market where there is excludability and rivalry, along with a limited supply, then you can charge above marginal cost.

      2. No one has ever said that price always equals marginal cost or that the customer should only pay marginal cost. Only a willful misreading of basic economics would suggest that. But there are many markets where price does get *driven* to marginal cost. And if you recognize that that is where things are going, it does not make sense to fight it, because others will get there first.

      3. The argument that "the customer sets the price" is wrong. No one has said that. What we've said is that the market sets the price, which is the intersection of supply and demand.

      4. Now, if you did have a market with infinite pizzas, there would be an issue here, and the *market* would push the price towards marginal cost, and eventually it would get there.

      5. This wouldn't necessarily be a bad thing. if there were infinite pizza, you would create additional complementary markets. Along those lines, if you ask any pizza place what their highest margin item is, they'll tell you it's not the pizza, but it's the soda. The pizza actually helps them sell a lot of higher margined soda.

      So, despite the willful ignorance of basic economics presented by our anonymous friend (who knows he's making a fool of himself, which is why he will not identify himself), no one has ever claimed that basic economics says the customer should only pay marginal cost on any product. In fact, it (and we) have said the opposite. We have said that if the product is in infinite supply, and non-excludable, then it is a *fact of nature* that price will get driven to marginal cost. There is no debate on this subject, except among the economically ignorant.

      That said, it will *also* create new scarcities, and the nice thing about scarcities is that they *are* rivalrous and they *are* excludable, and as such you *can* and *should* charge greater than the marginal cost.

      So, the reason our willfully ignorant friend above cannot just pay the marginal cost for his pizza is because Gino (who, I should note, makes a damn fine pizza) simply won't give it to him. And our economically ignorant friend has no other source to get it.

      The reason things are different with music is because there *are* alternative sources, and the supply is effectively infinite and the price thus gets driven to zero.

      I can only assume that our economically ignorant friend above, who apparently has nothing better to do on Christmas day than to spread his ignorance, has either never taken a basic economics class, or failed it miserably.

       

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        Clark W Griswold, Dec 25th, 2009 @ 7:34pm

        Re: Re:

        I bet this guy's shitter was full, so he decided to come to Techdirt and share some Holiday Cheer.

        http://www.youtube.com/watch?v=F9sY6iH9Ojg

         

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        Richard (profile), Dec 26th, 2009 @ 2:13pm

        Re: Re:

        To summarize - the point is that in general markets will set (and customers will accept) a price that is above marginal cost - but proportional to it. For example British government "cost plus" contracts allowed a profit of 7%. That was of course in a zero risk situation.

        In retail (including the restaurant trade) you have to account for wastage (materials and staff time when trade is slow). This can easily double the cost - so if you double your $6.50 and add 7% you get rather close to your $14.99.

        Now there is plenty of scope for smart businessmen to pare away at these factors - thus reducing the price (and if they are ahead of the competition add a little extra profit too).

        The key factor is that the "taxes" you add to the marginal cost to cover these things (and upfront fixed costs too) have to be proportional to the marginal cost.

        You can add a markup of $8.49 to a $6.50 pizza - you can't add a markup of $8.49 to something that has a marginal cost of $0.05.

        And if the marginal cost drops to 0 then your markup has to be 0 too.

         

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      Chuck (profile), Dec 25th, 2009 @ 6:42pm

      Re:

      But what if he doesn't WANT to work for minimum wage? And you forgot the operating costs!

       

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      slander (profile), Dec 25th, 2009 @ 11:53pm

      Re:

      BadAnalogyGuy, is that you?

       

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    The Anti-Mike, Dec 24th, 2009 @ 9:18pm

    They aren't consumers if they aren't buying anything, they are just leeches.

     

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    m.b, Dec 25th, 2009 @ 1:13am

    Guys,
    "Ignerence was bliss". It certainly is to your writer of this post!
    "Ignorance" is the correct spelling, you spelt it wrongly twice do a spell check before you post and you wont be laughed at.

     

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      Big Al, Dec 25th, 2009 @ 4:57am

      Re:

      Reading Fail (esp. background).The band was "The Ignerants" and the spelling was a play on this.

       

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      A friend of the stars, Dec 25th, 2009 @ 5:25am

      Re: "Ignerence"

      m.b. - Ignerence is the name of the band...I know you don't really do irony in the USA, and the fact that you don't get the ironic message here sort of underlines that. Ben Challis is one of the UK music industries top lawyers by the way...just Google him.

       

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        Friend of the stars, Dec 25th, 2009 @ 5:27am

        Re: Re: "Ignerence"

        ...and sorry, in deference to Big Al I realised my first sentence should have been "Ignerence is A REFERENCE to the name of the band."

         

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        harbingerofdoom (profile), Dec 25th, 2009 @ 7:20am

        Re: Re: "Ignerence"

        hey waitaminute!
        we do irony just fine over here... saying that people in the US dont get irony is like saying all people who dont pay are leeches...
        its not true, its an oversimplified sweeping generalization and that kind of broad ignerence is a tactic reserved for those who cant keep the hyperbole out of an argument.


        so there! :p

         

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      Anonymous Coward, Dec 25th, 2009 @ 7:28am

      Re:

      the band to which this article makes reference is THE IGNERENTS. its a punk thing, i guess that is why ben challis is able to take lemons and well you know.

       

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      Mark, Dec 28th, 2009 @ 6:42am

      Re:

      "Ingerance" was the name of the band.

       

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      Christopher Joel, Dec 28th, 2009 @ 8:17am

      Re: spell checker

      I believe you missed his band name, The Ignerents. The purposeful misspelling was a reference to his band name.

       

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      slander (profile), Dec 28th, 2009 @ 5:29pm

      Re:

      You ended your sentence with a preposition.

       

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    Anonymous Coward, Dec 25th, 2009 @ 2:02am

    Yeah, "More Pizza."
    I get it.

     

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    Anonymous Coward, Dec 25th, 2009 @ 2:03am

    Funny

     

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    herodotus (profile), Dec 25th, 2009 @ 5:35am

    "I just hate seeing the issue clouded by misguided interpretations and analogies. There-by just turning everything into a pissing match."

    Do you know of any internet forum, message board, chat room, etc. where the conversation doesn't consistently devolve into a pissing match?

    Because I would love to see it, even if all of the conversations were about bilge pumps.

     

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      PaulT (profile), Dec 26th, 2009 @ 1:42am

      Re:

      The boards at mondomovie.com, a site for a British podcast on cult, horror and weird cinema, rarely goes down this path.

      Sadly, there's too many idiots willing to try and derail conversations for fun or due to firmly held beliefs they cannot bear to have challenged. They're interchangeable (Poe's law) but they always rear their head on controversial and political issues - both very present here.

       

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    B, Dec 25th, 2009 @ 10:53am

    Pizza Analogy

    The pizza analogy is a complete fail.

    Let's please move on.

     

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    Anonymous Coward, Dec 25th, 2009 @ 12:32pm

    How is making pizza like making art?

     

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      Anonymous Coward, Dec 25th, 2009 @ 12:35pm

      Re:

      You should have one of Gino's pizzas. The man is an artist.

       

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        Anonymous Coward, Dec 25th, 2009 @ 1:08pm

        Re: Re:

        DON'T EAT HIS ART! ARE YOU CRAZY! HANG IT UP ON A WALL AND SELL IT FOR A MINT IN 100 YEARS!

        That is, if Gino really is an artist. Who makes art. That you can still sell in a hundred years.

         

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    identicon
    :), Dec 25th, 2009 @ 1:41pm

    Copyright ain't future proof.

     

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    identicon
    :), Dec 25th, 2009 @ 2:07pm

    The pizza

    I love pizza.

    But if someone was to say to me that:

    - I can't share it with my friends, family or anybody.
    - I can't eat it anywhere and told me I'm only allowed to eat in my kitchen and if I want to eat it in a park or on the bedroom I have to pay more for it.
    - Tried to install a GPS or other devices on the pizza to track and enforce the limitations.
    - He owns my poop(derivative work) and told me that I cannot use it to produce fertilizer or energy or methane.

    I would get very upset with such a thing.

    Besides pizzas have no monopoly, there is no such a thing as 4 pizza producers is there?

     

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      Anonymous Coward, Dec 25th, 2009 @ 2:26pm

      Re: The pizza

      Then there's no such thing as a music monopoly since there are thousands of music producers. Glad we can get over that silliness.

       

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        :), Dec 25th, 2009 @ 2:34pm

        Re: Re: The pizza

        Glad you agree that monopolies are bad and that people sharing all things is good.

         

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          Anonymous Coward, Dec 25th, 2009 @ 2:42pm

          Re: Re: Re: The pizza

          Absolutely. I am not a hypocrite that feels that some monopolies are ok but others aren't. And if monopolies on a song someone creates are bad, then monopolies like Gino's on his pizza are also bad.

          Hey I'm gonna borrow your car later, ok?

           

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    identicon
    :), Dec 25th, 2009 @ 2:27pm

    The pizza

    Further if the pizza guy tried to say to me in with plates I'm authorized to eat the pizza I would be annoyed.

    If the pizza guy said he would put some device in my microwave or oven to sense ingredients of pizza and shutdown I would be annoyed.

     

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      Anonymous Coward, Dec 25th, 2009 @ 2:38pm

      Re: The pizza

      Hey here is an idea then...don't eat that pizza. Don't take it and eat it anyway. Go eat something else. Eat someone else's pizza. Eat somebody else's fish.

       

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        :), Dec 25th, 2009 @ 3:25pm

        Re: Re: The pizza

        That what I thought to, I can make my own pizza and eat it.

        It will be equal to that guys pizza and probably cheaper.

        In real life I can even say that to its face and nothing will happen.

        But on copyright land that is not a possibility.

         

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    Anonymous Coward, Dec 25th, 2009 @ 2:42pm

    Fuck the pizza

    Seriously. The analogy is old and doesn't apply.

     

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    Anonymous Coward, Dec 25th, 2009 @ 2:44pm

    American Pie

    It's a pizza... and a pie. Go fuck it.

     

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    Anonymous Coward, Dec 25th, 2009 @ 2:50pm

    Improving The Health Of Children

    There is considerable evidence that adequate nutritional standards in school meals could make a significant impact on children's health. Health and nutrition experts tell us that:

    + Adult dietary patterns are learnt in childhood
    + Poor diet in children is linked to disease in later life
    + Scottish children eat only two of the five recommended portions of fresh fruit and vegetables a day
    + Three quarters of Scottish children eat no green leafy vegetables at all.

    Maybe this is because they're eating so much Pizza.

     

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    Anonymous Coward, Dec 25th, 2009 @ 2:58pm

    I won $300 for answering this question right in a trivia contest.

    I won a few bills cash for answering this question correctly. Maybe you can answer it correctly as well.

    Q. What group of people is known for eating their dead and weak?

    A. The ones that can't make their way around the kitchen, yet likes themselves a Pizza.



    If this very debate was happening in the middle ages, they would have died from starvation.

     

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    RD, Dec 25th, 2009 @ 3:03pm

    Ok please TRY to understand...

    "Hey I'm gonna borrow your car later, ok?"

    No its not OK. My car (or "a" car) is a singular PHYSICAL item, and cannot be copied except through expensive, time consuming means using scarce resources. Now, if you have the means to wave a wand (or your hand, or whatever) and magically duplicate my car with NO deprivation to me of the original item in ANY way, then go for it. THIS is the example all you idiots need to learn. This pizza analogy thing has gotten way, way out of control an DOES NOT APPLY IN ANY WAY to the topic of file sharing, infinite goods, and near-zero-cost distribution of digital media.

    Anyone, and I mean ANYONE, who continues to compare a scarce physical good to digital replication has already lost whatever point he is trying to make.

    THEY

    DO

    NOT

    EQUATE

    Get it right, because otherwise you are just making an idiot of yourself and NOT furthering the point in the least.

     

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      Anonymous Coward, Dec 25th, 2009 @ 3:15pm

      Re: Ok please TRY to understand...

      I am not making an analogy. I am merely applying and extending the same sound economic thinking to the realm of scarce goods. I will pay you the minimum theoretical marginal cost for the time I borrow your car so don't think I just want everything for free.

       

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        identicon
        :), Dec 25th, 2009 @ 3:30pm

        Re: Re: Ok please TRY to understand...

        No your are not people are not borrowing anything they are reproducing things for themselves that is the difference.

        Will you reproduce my car on your own?

        Besides the physical and the abstract are different.

        Trying to claim ownership of abstract constructions is like trying to copyright God can anybody claim ownership on the idea of God?

        The church sure tried and the result was called "The Dark Ages" :)

         

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    RD, Dec 25th, 2009 @ 3:29pm

    Ok please TRY to understand... attempt #2

    "I am not making an analogy. I am merely applying and extending the same sound economic thinking to the realm of scarce goods. I will pay you the minimum theoretical marginal cost for the time I borrow your car so don't think I just want everything for free."

    And this is why you fail. No one here is suggesting applying things in this way to scarce goods. These ideas work for DIGITALLY REPLICATED THINGS WITH NEAR-ZERO DISTRIBUTION COSTS.

    You are mixing them up and then trying to use it as a foil to "get" everyone here for not supporting your now-strawman argument.

     

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      Anonymous Coward, Dec 25th, 2009 @ 3:44pm

      Re: Ok please TRY to understand... attempt #2

      These are great ideas. Why would I apply them only to infinite goods? By extending them and accounting for the differences by covering the nonzero marginal costs we can take the social and market advantages and exploit them in the scarce realm.

       

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        identicon
        :), Dec 25th, 2009 @ 4:08pm

        Re: Re: Ok please TRY to understand... attempt #2

        Of course it is great that is why in the realm of physical goods nobody would try to restrict other from doing the same thing.

        People can make their own goods and share it with others there is no law against that.

        They even can go and tell that in the face of the vendor or manufacturer and they will have no problems with the law.

        Gino should go out of business because he can't find a market, he can't compete or do things better then others can.

         

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        Amaress, Dec 25th, 2009 @ 11:40pm

        Re: Re: Ok please TRY to understand... attempt #2

        This doesn't work with scarce goods and never will. One day, when you are in there, paying less than half the price for Gino's pizza - which I doubt you ever actually do, because if he's smart he would stop taking your orders by now, or have called the police - and someone in a hurry shows up at the counter and says, I'll give you $15 for that pizza so I can take it home right now, guess who Gino is giving the pizza to?

        Supply and demand. Whoever is willing to pay the most, gets the prize.

        P.S. You're a moron. And a lying moron. Just thought I'd say.

         

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    :), Dec 25th, 2009 @ 3:46pm

    Gino the pizza guy.

    Gino doesn't like other people making the same pizza that he makes so he goes to the authorities and ask them to make the makers of ovens and microwaves responsible for not letting anyone make the same pizzas that he makes he ask the government to place security features in ovens and microwaves to detect ingredients and if they are the same as his the oven or microwave have to shutdown or it under-cooks the ingredients so it tastes bad LoL

    That sounds ridiculous doesn't?

    OMG I would love to see a cartoon explaning to children that making their own pizza(copying the recipe) is against the law and why it is necessary to place GPS devices on boxes that will only open in authorized places.

     

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    Scarypoet, Dec 25th, 2009 @ 4:16pm

    Has anyone stopped to think that Gino charges 14 bucks for his pizza because that is what people are willing to pay? You can blather on about margins and fixed costs all you want but most consumers expect to pay about 12 to 15 bucks for a pizza. The pizza parlors know this and they set prices accordingly. If they find that they are not able to make money at that price then they either raise it, cut costs, or go out of business. It is unrealistic (actually childish) to think that a business is going to deeply discount an item that sells well and makes a profit. Pizza is not art but so what? The concept is still the same. No painting ever cost one million dollars to produce but many are sold for that price and more. Why? Because that is what people are willing to pay.

     

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    RD, Dec 25th, 2009 @ 4:47pm

    Two different things

    "Has anyone stopped to think that Gino charges 14 bucks for his pizza because that is what people are willing to pay?"

    Sure, and for any scarce good, this is Economics 101. But the discussion at hand is one of NON SCARCE INFINITE GOODS. And for these kinds of "goods", the marginal cost WILL drive to near-zero. But these are two COMPLETELY different things, and two different arguments. You are all mixing it up with this stupid, IDIOTIC pizza analogy.

    Let me repeat for those slower than the rest of the class:

    Infinite goods (in this example, digital media) ARE NOT

    ARE

    NOT

    the same as a scarce good (in this example, pizza).

    NOT

    THE

    SAME

    full STOP for the love of JESUS.

     

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      Richard (profile), Dec 26th, 2009 @ 2:27pm

      Re: Two different things

      Well they're really the same except for one simple fact:

      When you multiply by zero you always get zero.

       

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        Anonymous Coward, Dec 27th, 2009 @ 12:47am

        Re: Re: Two different things

        Well they're really the same except for one simple fact:
        When you multiply by zero you always get zero.


        True, however, many of the artists and bands that I've met enjoy performing over the studio work. They see the studio work a necessary evil which will allow them to get back to what they truly enjoy, which is performing their work live. Most get a thrill up their leg when they are able to perform live in front of a few thousand or few hundred thousand people and won't exchange that rush for anything made in the studio, or a letter, blog post, or tweet for anything else in the world. That's what most artists value.

        Therefore, a business model where the music can be shared, and in some cases, maybe it's even given away, yet someone comes back and buys something or donates, because it resonates somehow with fans is the best gift most artists want to recieve.

        In this reality, the only ones who loose are those who are involved in the distribution of plastic discs, because they typically have no interest in being involved in setting up or determining tour dates. This is why exclusivity needs to be re-evaluated, or at a bare minimum, in the forefront of the artists mind.

        You say that when you multiply zero by zero, you always get zero. Mathematically, this is correct. But this very problem stems around buying into a concept of "Good will". Your in-adherence to this concept may be characterized as misguided. I'll remind you that since August 15, 1971, your monetary system is wholly based on a "Good Will" concept and/or the failure of your Government.

        If you remain worried about getting something for nothing, well, one should look themselves in the mirror.

         

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    :), Dec 25th, 2009 @ 5:01pm

    Go see Santa people LoL

    www.noradsanta.org

    According to Norad he already passed over here.

    Merry Christmas to all.

    I have completely forgot that it is Christmas still in some parts of the world :)

     

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    Anonymous Coward, Dec 25th, 2009 @ 5:08pm

    Combo Breaker

    I'm a Papa Murphy's fan myself. There's one on El Camino Real, and I am partial to "Murphy's Combo Breaker". It's especially tasty if you slice up about 5 more mushrooms and put them on prior to banking. Also, it's tons cheaper to get the mushrooms at the grocery store than what Mike will charge to put Triple Mushrooms on it.

    But, a problem still remains- you still have to cook it, which can lead to a burned pizza if allow yourself to get suckered into crappy train wreck thread jackings such as this.

     

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    :), Dec 25th, 2009 @ 5:27pm

    News Year will be a happy one and the bigger picture.

    http://www.newscientist.com/article/dn18298-videostitched-cellphone-streams-go-widescreen.html

    Te chnology advances and with it comes capabilities that were not possible before.

    Like from the Microsoft labs in Cairo that can stitch together footage from various different cameras uploading from the same location from different places at the same time.

    Now imagine people all going to a concert and taking pictures and using their cell phones to upload video in real time to somewhere and the software puts them all together and produce a super high quality version of it.

    People trying to stop something like that will be like trying to fight bee's.

     

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    Mike FitzSimmons, Dec 26th, 2009 @ 10:10am

    Permission

    Wouldn't the former musician from this article have been a lot happier (and better off) if he had been contacted and told that there was demand for his music, instead of some company taking advantage of his fans in his absence? Would your tune be the same if the story had been "I heard one of my songs being used in a commercial for Gino's pizza, and later found out that the pizza place had paid that online music distributor a million dollars to use that song in the ad."?
    As a musician who has all of his old band's music available online for free, I would not want anyone else getting money for its sale.

     

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      Mike Masnick (profile), Dec 26th, 2009 @ 10:40am

      Re: Permission

      Wouldn't the former musician from this article have been a lot happier (and better off) if he had been contacted and told that there was demand for his music, instead of some company taking advantage of his fans in his absence?

      Happier? Maybe. Maybe not. As we said, it is a natural reaction to be upset at first. But, in the long run, I actually think he might be better off this way. If someone just came to him and said there was demand, he wouldn't know for sure. And he wouldn't know the extent of the demand or where it really was happening.

      Now he knows for sure, and it didn't cost him a *dime* to do that research.

      As a musician who has all of his old band's music available online for free, I would not want anyone else getting money for its sale.

      Sure, no one *wants* that, but we're not talking about what you *want*. If we were, you'd just say you want a billion dollars, and we'd be done with this conversation.

      We're talking about what is happening and how you *should* deal with it. What you want is meaningless.

       

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    mhenriday (profile), Dec 27th, 2009 @ 2:29pm

    As Hamlet put it,

    the readiness is all.... Henri

     

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    G Thompson (profile), Dec 28th, 2009 @ 4:33pm

    Thanks

    Thanks for the hat tip Mike and I knew you would love the article.

    Hope you had a great xmas and hope that New Year is memorable (or depending on what you drink..NOT able to be remembered *lol*)

    Now.. why am I all of a sudden craving pizza? ;)

     

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    HubZub, Aug 19th, 2010 @ 8:45am

    Its true what he says, the bands of the future are going to need to adjust to changing technology and embrace the changes. A great example is Angels and Airwaves who instead of trying to sell their latest album, they put it online for free download (because people were going to get it free anyway from other cites right?) and then they asked for donations. I would be interested in seeing how this method worked for them.

     

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