Ten Good Reasons To Buy

from the scarcity-plus-value dept

So I already put up my post about all the Connect with Fans + Reason to Buy (CwF+RtB) stories from last year, which kicked off with my presentation at Midem 2009 all about Trent Reznor and his business model experiments. This year, we wanted to do something a bit different at Midem and get a lot more interactive. So, we set up a brainstorming workshop to see if we could build these sorts of business models for some artists. I did a (very) short presentation to kick off the session (no video, sorry) and then we broke up the audience into groups where we could pick specific artists and (quickly) run through the process of setting up a business model. I wanted to share a basic writeup of what I presented, and sometime later I will try to do a writeup on some of what the groups discussed.

I was going under the assumption that, by now, most people understand the basics of how to "connect with fans" (though, we keep hearing stories suggesting that many still struggle with this a lot) and wanted to focus in the presentation on understanding the "reasons to buy." One of the problems is that many people assume that "value" alone is enough to get people to buy -- but as we've discussed multiple times there's a difference between value and price -- and assuming that value alone is enough to get people to buy isn't going to cut it -- especially if the product is abundantly available.

So the key is to find scarcities -- as we've said many times. But, not just any scarcities. Those scarcities must also be valuable. Value plus scarcity is the real reason to buy. And, the intersection may be different for each kind of content creator. In fact, it should be different for each content creator, because it is essential to recognize how to express the key value that a particular creator brings to the table. To help explain that, we discussed 10 key scarcities that are helpful to think through in creating reasons to buy. The list is not complete, but is a good starting point.
  1. Access: Access to the actual content creators is a real scarcity and one that can often be used to make money in ways that make fans quite happy. In fact, a study released at Midem claimed that, in a recent survey, 19% of respondents claimed they would pay anything to meet their favorite star. Now, obviously, that's a bit of hyperbole, but it does suggest a high degree of demand for access from top fans.
  2. Attention: One of the most important scarcities in the digital age. Attention is incredibly scarce, and if you've got it, you can do a lot with it.
  3. Authenticity: This one also includes "trust." The ability to be authentic carries tremendous weight and is quite scarce at times. But if you can provide something that is authentic and valuable, it's often a very strong reason to buy.
  4. Exclusivity: Many people value having something that very few (or perhaps no) others have.
  5. (New) Creation: The ability to create something new is a scarcity. This often confuses people, because a digital good once created is no longer scarce -- but the ability to create it is still very much a scarcity.
  6. Tangibility: The granddad of scarcities: physical products. Sometimes when we discuss scarcities people seem to think that we're only talking about tangible products. Nothing is further from the truth, as we often think that other non-tangible scarcities represent much larger opportunities, but that doesn't mean you should ignore the value of tangible products.
  7. Time (saving or making): People will pay if you can save them time (or give them extra time in some manner).
  8. Convenience: If you make things more convenient, many people will buy, even if free options are available. That's one reason why iTunes has done so well. Apple has made the whole process super convenient. It's also one of the top reasons why people say they buy bottled water -- even if they know the water quality is no different than tap water. They just find it more convenient.
  9. Belonging: Never underestimate just how important a sense of belonging to a group or a tribe is -- and being able to provide that in an authentic manner can be a true scarcity.
  10. Patronage: Definitely depends on the situation, but there are some people who just want to support an artist, no matter what. And that presents a scarcity.
So, we've got the list, but then what do you do with it. In my presentation, I looked quickly at a few artists (most of whom we've discussed before, so don't be surprised that you know their stories) and listed out what scarcities they appeared to use -- and made sure to include artists of all types: small to big. Among those we discussed were Josh Freese's hilarious tiers, as well as Jill Sobule's tiered offerings, noting that they involved a combination of access (hanging out with the artist, private concerts, phone calls, etc.), authenticity (in both cases, the lists were very much reflective of the individuals' personalities), exclusivity (many were limited), new creation (both involved the ability for the artists to write songs for the buyer), tangibility (offering tangible goods like CDs, t-shirts, and Josh's Volvo), belonging and patronage (big fans of both wanted a chance to support the artists they love).

We then looked at Moldover and Motoboy who each have offered really cool physical goods (Moldover's CD case that doubles as a virtual theremin and Moto Boy's wonderful music box). I showed off each of these products, highlighting how they clearly played up the tangibility scarcity as a reason to buy (as well as things like authenticity, exclusivity, belonging and patronage) to make this work.

As a final less well known artist, we looked at Matthew Ebel, whose experiments with giving fans a subscription service that provides new music and additional opportunities for access are working quite well. In that case, he's obviously using access, authenticity and exclusivity along with belonging and patronage.

Of course, this isn't just a model for small or up-and-coming artists. It can work quite well for big name artist, as well -- and on that front we discussed both Pearl Jam and Mariah Carey. As you may recall, Carey and her team put together a whole issue of Elle magazine, all about Carey, where Carey's team was allowed to sell the ads and keep the money. Some of the ads were for Carey-branded products, such as perfume. In this case, with a star this big, that particular aspect of the model is not about access (which is regularly used by smaller artists), but about belonging and tangibility (the magazine is tangible, as is the makeup that Carey was selling). But perhaps an even bigger point is that Carey was really selling her biggest fans' attention in selling advertising directed at them. As for Pearl Jam, they have their "Ten Club," which gives fans earlier access to the best tickets at shows (convenience, time saving, belonging, exclusivity) along with special physical goods, such as a special vinyl single, a magazine and other members' only contests and giveaways (tangibility, exclusivity).

Of course, there's a lot more that goes into building good "reasons to buy," but using these ten scarcities as a starting point is an excellent way to start a brainstorming process - as we did ourselves at the conference.


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    andrew johnson (profile), Jan 26th, 2010 @ 10:52am

    real scarcity

    It struck me while reading this that what Mike calls "real scarcity" might better be termed "natural scarcity" to contrast with "artificial scarcity". Reason for the change being that "artificial scarcity" is also very real, albeit arbitrary; just look at black-market prices and say that scarcity there is not real, though clearly artificial.

    As for the 10 Reasons to Buy, I like how they mainly focus on psychological needs of consumers, which is something that tends to be greatly overlooked in most economic discussions. In a market such as music, where the primary goods(the music) has lost its scarcity and has been reduced to just bits on a hard-drive, the next most profitable market may be in catering to the desire of consumers to feel some sort of connection with that artist. And if all else fails there will always be live events...

     

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      chris (profile), Jan 26th, 2010 @ 2:00pm

      Re: real scarcity

      I like how they mainly focus on psychological needs of consumers, which is something that tends to be greatly overlooked in most economic discussions. In a market such as music, where the primary goods(the music) has lost its scarcity and has been reduced to just bits on a hard-drive, the next most profitable market may be in catering to the desire of consumers to feel some sort of connection with that artist. And if all else fails there will always be live events...

      i think this ties into maslow's hierarchy of needs:
      http://en.wikipedia.org/wiki/Maslow%27s_hierarchy_of_needs

      once you solve the physiological problem of content distribution (physical access to the bits) your desires immediately move up the pyramid to something else.

      the human condition is defined by scarcity: our lives are shaped by what we don't have. the instant that you solve one scarcity others immediately open up.

      if your content speaks to me, and i can effortlessly obtain access to your whole catalog, i immediately want something else which i consider to be more "real".

      the content industries want to stop this progress and say "stop, this content IS real and it's what we are selling because we can make and distribute copies of it very cheaply."

      the consumer response of course is: "yeah, but i can make copies too, so please sell me something real."

       

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    Suzanne Lainson (profile), Jan 26th, 2010 @ 11:17am

    Belonging

    I've pondered how to enhance the live show experience by finding ways for people to expand their social lives that way.

    There are the usual methods:

    1. Hoping people meet other people at shows (which doesn't happen as often as I would like to see because it's still hard to strike up conversations with strangers).

    2. Providing online social networks so people can get to know each other offline and then perhaps connect up at shows.

    But I don't see evidence that either method works that well in engaging lots of people who would love to meet more friends/dates. Music seems better at facilitating people who already know each other than it does creating a social network for people needing more social interaction opportunities.

    Has anyone developed some other techniques? I've been looking at sources outside of music for ideas.

     

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      Suzanne Lainson (profile), Jan 26th, 2010 @ 11:37am

      Re: Belonging

      I meant to say providing online social networks so people can get to know each other online and then perhaps connect up at shows."

       

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      Derek Bredensteiner (profile), Jan 26th, 2010 @ 12:17pm

      Re: Belonging

      2. Providing online social networks so people can get to know each other offline and then perhaps connect up at shows.

      There's some barriers to overcome there. In order for an actual connection to happen, a few things are helpful:
      1. Common Interest - which is handled quite well with the common music interest there
      2. Comfort with the process - some random website, even with the best UI ever, doesn't have the same comfort level and secure feeling that something like facebook provides
      3. Appearance of options - If there's only 2 people on the social network, then it has a much lower chance of growing than if it at least appears like there's a large group interested in this social experience. It's a chicken and egg problem that has to be overcome.
      4. Easy flow - The entire process; from finding the network, to identifying a group or individual to connect with, to communicating with that group or individual, to actually meeting with that group or individual. It has to be easy, it has to be simple, and some structure/guidance is needed or it just won't happen.

      There are a lot of ways to attempt this, from custom application for connecting on a band's web site (lacks comfort / options), to a myspace or facebook group/page (lacks flow / structure).

       

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        Suzanne Lainson (profile), Jan 26th, 2010 @ 12:55pm

        Re: Re: Belonging

        Appearance of options - If there's only 2 people on the social network, then it has a much lower chance of growing than if it at least appears like there's a large group interested in this social experience. It's a chicken and egg problem that has to be overcome.

        Easy flow - The entire process; from finding the network, to identifying a group or individual to connect with, to communicating with that group or individual, to actually meeting with that group or individual. It has to be easy, it has to be simple, and some structure/guidance is needed or it just won't happen.


        I've been online and participating in various groups for years and have watched the dynamics. Those two points in particular are important. You need a certain critical mass to get things going and then you need at least a few people to make sure the community continues to function.

         

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    Hephaestus (profile), Jan 26th, 2010 @ 11:58am

    I wonder why they are failing ....

    After reading all ten of those reasons to buy I realized something. The recording industry does none of them. Weird that ....

     

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      MattP, Jan 26th, 2010 @ 12:28pm

      Re: I wonder why they are failing ....

      The recording industry focuses only on #6: Tangibility. As far as they're concerned the other 9 were created after they turned 30.

       

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    Pangolin (profile), Jan 26th, 2010 @ 12:43pm

    Leveraging scarcity

    Southwest Airlines is doing this now. You can check in 24 hours before your flight to get your boarding pass. I'm usually right on the minute in order to get a good seat and so my family can all sit together.

    Now with Southwest - for $20.00 you can check in earlier than the 24 hours.

    Artificial scarcity and great rtb.

     

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    Suzanne Lainson (profile), Jan 26th, 2010 @ 12:48pm

    More thoughts on belonging/exclusivity

    One of the challenges with "selling" belongingness and exclusivity is that in most cases the best groups are the ones where you can't just buy your way into. You may need money to even be considered, but often you have either be invited or you have to submit and be okayed and only then you may have the option to pay membership dues. And if you are really cool, not only do you not have to pay, people give you freebies to join.

    I'm thinking of stuff like expensive country clubs, or elite business gatherings, or the Oscars/Grammys.

    So although in theory one can think in terms of selling something to fans that makes them feel part of a small group, that group may not be worth much if a random group of people with money can buy their way in.

     

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    tkmitchell (profile), Jan 26th, 2010 @ 1:00pm

    price vs value

    I saw a billboard the other day that summed it up nicely.

    Price is what you pay, Value is what you get.

     

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    Richard (profile), Jan 26th, 2010 @ 2:17pm

    Salesman's motto

    #10 is really the key here - since it corresponds to the old salesman's motto that you don't sell a product - rather you sell yourself.

    You need to sell yourself before you can sell #1, #3 and #9.

    Also once you succeed in selling yourself you will get a premium price for everything else.

    At the extreme you don't need to sell anything else at all. You can even take extreme measures not to sell anything else and even make it hard for people to give you money and still survive.

    Don't believe me?

    Look at this from the Coptic monastery of St Macarius in Egypt.

    http://www.stmacariusmonastery.org/eabout.htm#d

    "The monastery has no regular source of income and no bank account. We do not solicit donations, publicize the monastery's financial needs or receive financial support from any organization. And yet, when the monastery's needs are put before God in our communal prayers, donations are received daily,"

    You might think that one couldn't carry on like this for very long - but the monastery has survived like this for over 1600 years it is the second oldest continuously functioning institution on the same site in the world. (The oldest is another similar monastery just up the road).

    In case you wonder what this has to do with music I should add that the monks sing pretty well too (if you happen to like that kind of thing).

     

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    Brendan (profile), Jan 26th, 2010 @ 3:34pm

    Better than Free

    While many of the ideas could have been "independently inspired," this sounds an awful lot like an expansion of Kevin Kelly's "Better than Free". He offered a list of eight points at the time.

    Your main additions are focusing on access to the artists themselves (or their attention), which is an important point.

    I just though it was worth pointing out a previous discussion of some RtB's.

     

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    The Anti-Mike (profile), Jan 26th, 2010 @ 5:49pm

    Too bad #0 no longer applies:

    #0: Because the music is good.

     

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    Gene Cavanaugh, Jan 27th, 2010 @ 8:57pm

    More about "artistes"

    Normally I simply scroll to the next article when I find this sort of drivel; but this one caught my eye. It illustrates how far we have progressed.
    In the past, lesser artists (they weren't artistes then) had to struggle, but eventually proved themselves. This was people like Mozart, Beethoven, even the Beatles in the early days. They did have talent, though.
    The article does not mention talent (well, creativity, but not talent).
    THAT'S THE SECRET! Learn to promote, forget about talent!!!

     

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      Suzanne Lainson (profile), Jan 27th, 2010 @ 11:59pm

      Re: More about "artistes"

      The article does not mention talent (well, creativity, but not talent).
      THAT'S THE SECRET! Learn to promote, forget about talent!!!


      Yes, that's the hang-up for many musicians. Most got into music to play music, not to do the other stuff. If the goal is to make money in order to play music, you don't have to do all of this other stuff for income. Just find a day job that you like and then make music in your free time. You may find that you actually have MORE time to make music and to do the music you really want to do if you aren't trying to come up with "reasons to buy."

      I see so many talented musicians who play and also have non-music day jobs. That's really the norm for most musicians. Having that day job gives them the freedom to experiment.

      I think it is great that some musicians have developed into marketing machines. But for those who don't want to go that route, do music for creativity, self-expression, and community. There's some damn fine music being created by people who have no intention of making a living from it.

       

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        Mike Masnick (profile), Jan 28th, 2010 @ 2:37am

        Re: Re: More about "artistes"

        There's some damn fine music being created by people who have no intention of making a living from it.

        Indeed. No one has ever said otherwise.

        What I don't understand is why you constantly need to insult those who want to help the artists who *do* want to make a living out of it.

         

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          Suzanne Lainson (profile), Jan 28th, 2010 @ 7:59am

          Re: Re: Re: More about "artistes"

          What I don't understand is why you constantly need to insult those who want to help the artists who *do* want to make a living out of it.

          I've never insulted any artist. I think you're interpreting my suggesting there are nuances and complications and it is good to talk about them, with a challenge to your ideas and therefore you are trying to discourage the discussion by constantly telling me I am insulting artists.

          I've lived the music business every day for a number of years and know how some of these things play out.

          Most of these discussions on this forum are by non-musicians. I'm trying to bring more depth to the music discussions.

           

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    Suzanne Lainson (profile), Jan 28th, 2010 @ 8:48am

    My perspective

    Some folks are suggesting that this is a great time to make money in music if you are an artist. They come up with a few examples to show how it can be done.

    And then if other musicians give it a try and don't generate enough money to live on, they are told:

    (1) You weren't creative enough.
    (2) You didn't work hard enough.
    And/Or
    (3) Your music isn't any good.

    Sometimes one of those is true, but the reality is that there aren't enough fans in the world to support all the talented, hard-working, creative folks out there. People can already get music for free, so they may choose not to spend their money on the other stuff bands hope to use to generate money.

    These are complex economic times and people have priorities other than helping to support musicians. I wish that weren't so, because I'd like everyone who wants to make it in music to do so.

    The alternative, which is how most musicians get by, is not to view music as an income-generating career.

    And as more technological tools become available for people to create, record, and perform music, I think that many more people will do it for artistic reasons rather than for income. It's a good trend. Look at all the people who post videos on YouTube. Very few of them are doing it with the idea that they'll get a financial return from it somewhere down the line.

    Music could use more of this realistic perspective.

     

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    Suzanne Lainson (profile), Jan 28th, 2010 @ 11:49am

    Hard to find music-related scarcities

    Here's the fundamental challenge for music.

    Music isn't scarce.
    Musicians aren't scarce.
    Talent isn't all that scarce these days because there's a lot of good music out there.
    Most of the "reasons to buy" aren't scarce because there are alternatives to choose from.

    Popularity and fame can be scarce, though often fleeting. But we have seen from reality TV that fame and popularity aren't necessarily tied to talent. The reason people still want to get their music on TV, on radio, and sometimes even get signed to a label is that those do increase one's chances for popularity and fame. As long as not everyone can do any of those things, musicians still pursue them. But the very model of DIY, where everyone has a chance to get their music out to the world, is the opposite of going through a gate to increase your chances for fame.

     

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      vivaelamor (profile), Jan 29th, 2010 @ 4:53am

      Re: Hard to find music-related scarcities

      You seem confused over the economic term 'scarce'. While recordings of music are not inherently scarce because the cost of copying is near zero, the music itself is most definitely scarce or there would be no market for it. If there were no market for music then the death of the music industry would not be a problem because peoples demands would be met sufficiently without it.

      The fact that the death of the music industry is perceived as a problem admits that there is a market for something scarce in music. The real threat is to those who would be affected by a shift to a more competitive market, there is no cure for that because it is how the system is supposed to work.

      If it were not for the inflated industry bought about by artificial scarcity then a lot of successful artists today might find themselves struggling tomorrow. On the other hand, the reverse is true and many who are not successful now, might be in a more competitive market. Furthermore the industry would be better meeting the demand for music while potentially being smaller and costing less.

       

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        Crosbie Fitch (profile), Jan 29th, 2010 @ 5:29am

        Re: Re: Hard to find music-related scarcities

        Yes, music and recordings thereof remain scarce, and there remains a good market for them.

        What is no longer scarce are copies of recordings. Copyright is supposed to enforce scarcity (unnaturally), but its dam has broken thanks to the Internet and digital technology.

        So, copies are no longer scarce and the only ones upset by this are publishers who had been relying on fans being able to make their own copies, having to buy them from authorised vendors.

        Unfortunately, far too many people have been blinded into conflating the copy as the recording, and so assume that if copies are free that recordings must be free and musicians can no longer sell their recordings. This is complete bunkum. The only one unable to sell anything is the manufacturer of copies. The musician can still sell their music and recordings and their fans can still buy them. The fact that everyone can make their own copies for nothing makes no difference except to musicians who persist in believing they have to sell them to record labels in order that the musician gets a 1% royalty on sale of copies.

        Musicians could sell their recordings directly to their fans - if they weren't so brainwashed, and the labels weren't so keen to prevent themselves being disintermediated.

        Remember, although fans can make their own copies, they can't make the artist's music, nor can they record their studio performances. And you need music and a recording before you can make a free copy.

        So tomorrow's musician no longer hires a record company to sell copies for them, instead they sell a recording directly to their fans. The market for copies has ended.

         

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        Suzanne Lainson (profile), Jan 29th, 2010 @ 11:01am

        Re: Re: Hard to find music-related scarcities

        You seem confused over the economic term 'scarce'. While recordings of music are not inherently scarce because the cost of copying is near zero, the music itself is most definitely scarce or there would be no market for it.

        I'm not sure we really do know what the market is right now. Many consumers have become conditioned to get digital copies for free and to get streaming for free. Of course, people are still paying, but the more free stuff that is out there, the lower the price goes.

        As for live shows, yes people are still going, but in some cases ticket prices are dropping. I've seen it for both local and national shows. Some festivals are folding. Live Nation says they have to merge with Ticketmaster because both of them aren't doing that well separately. Whether or not that is actually true, Live Nation has been providing a number of sales over the last year to move tickets.

        Generally what I have been writing about is what I anticipate seeing 5-10 years down the road. Everyone has pointed out that the labels were slow to grasp the changes in the music landscape. Now I am suggesting that the DIY market place will change too as fans are given more technological tools to become their own shows. I see the music market continuing to splinter so that we have ever more people making music, and smaller and smaller core audiences for most of them. We have gone from the ability to sell millions of copies, to a time where 10,000 is considered good, to a time when I think we'll have even more people putting out music, but it will be to tiny audiences.

        There seems to be a belief that music making will continue to be mostly one-sided, from artist to fan. However, cultural trends being what they are, I think the entertainment/cultural world will be far more interactive and the concept of "artist" will change as more people think of themselves as creative. Given the choice between creating your own art and buying someone else's, I think many people would choose the former.

        What I am trying to do is push the music industry discussion forward so that people counting on the current system won't be as blindsided by potential changes as the labels were in the past.

        The irony about talking about this in Techdirt is that overall this forum advocates doing away with trademarks, copyright, and patents. So when I suggest that doing so may allow and encourage everyone to make their own music and undercut the DIY artists who hope to sell their art, then I am challenged by Mike.

        I'm looking at the research being done at universities to create more musical tools that take music to the masses. For example, we are seeing some very cool iPhone applications that allow people will no musical training to make music.

        Personally I would like to have everyone get paid a fair amount for their music. However, fans have gotten used to free and I think we have to accept that.

         

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          Crosbie Fitch (profile), Feb 4th, 2010 @ 3:32am

          Re: Re: Re: Hard to find music-related scarcities

          One musician can only undercut another musician if you consider music as a substitutable commodity.

          If one person on a road charged N pennies for sacks of horse manure, and another person gave sacks away for nothing, they would undercut the price of the other.

          However, music is not like horse manure - well, not all of it.

          I don't think fans 'have gotten used to free' music, but they have got used to free copies (don't forget the radio and home taping). Frankly, musicians should pay people to audition them - never mind free. Even the labels recognised this wrt payola. What people expect is to not have to pay to audition music, but they don't mind paying the going rate for high quality copies, e.g. vinyl/acetate discs. When the copy costs nothing to make, then people expect the going rate to be nothing. NB no-one expects the production of music to be free. And it's only expected to be given away by new/undiscovered artists (for promotional purposes). Just as people might expect new acts to play for free in a pub, they expect artists with large fan bases to have a high ticket price for concerts.

          So really, not much has changed except the cost of making copies (and the ability of copyright to prevent people making their own).

          Very little has changed concerning the value of music or the cost of making it.

          Of course if you equate 'music=copy' then you're going to delude yourself into taking a long walk off a short pier - "can't sell copies=can't sell music".

           

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            Suzanne Lainson (profile), Feb 4th, 2010 @ 9:45am

            Re: Re: Re: Re: Hard to find music-related scarcities

            So really, not much has changed except the cost of making copies (and the ability of copyright to prevent people making their own).

            Copyright is a non-issue with the artists I am talking about. They own their own copyrights and are free to give away or sell their music as they wish.

            But what has happened is that fans now price recorded music by what the market determines. That means they see it as free if most artists give it away.

             

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              Crosbie Fitch (profile), Feb 4th, 2010 @ 10:35am

              Re: Re: Re: Re: Re: Hard to find music-related scarcities

              Copyright is also a non-issue with fans. They own the copies and music in their collections and freely give it away or sell it as they wish.

              So, now that we've agreed copyright is a non-issue to the people that matter (artists, their audience and fans), we can focus on the business between them.

              There are two prices. The price a musician is prepared to sell their music for, and the price a fan is prepared to buy it for. If a musician gives away their music then obviously price doesn't come into it. However, that doesn't mean a musician can't sell their music once they've build up a fan base through giving it away.

              That you think 'most artists give it away' would only affect the market price of music if music was a homogenous commodity, like elevator musak that hotels might shop around for.

              Is that the way you think of music? As pulp/content/musak? If it is then there's not much point in continuing the discussion. You can only conclude as you have done that no-one ever need consider buying musak again because it seems as if there are always people giving it away.

              Here's another way you could try to escape that grievous notion of what music is. You could consider that music is advertising on the part of musicians. In other words every mp3 file is an advert for the musician. Because it's an advert, that's why it seems free (indeed is sometimes worth paying a radio to play). However, it isn't free, it's been paid for by those fans who bought it, bought the product they heard the previous adverts advertise.

              Every published work of art is an advert to encourage the artist's audience to purchase the next work of art. Being an advert, the artist encourages their fans to share it, copy it, play it, remix it, anything to promote the artist and build up their fan base. They do not prosecute their fans for promoting them, for file-sharing. They invite their fans to patronise them to commission them to produce more great music.

              It's a bit of a paradigm shift and red pill/blue pill thing, but it's up to you which to take. If you want to understand the old copyright business model and why such things as DRM, DMCA and ACTA are necessary then you believe in copyright, you believe that copyright is vital and to be protected and respected at all costs. If you want to understand new non-copyright based business models then you must forget about copyright, believe that it doesn't exist.

              You can't look on the other side of the paradigm shift with an unshifted mind.

               

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    Crosbie Fitch (profile), Jan 29th, 2010 @ 5:19am

    A gap between creation and proliferation

    Mike, there's a vital omission when you say "a digital good once created is no longer scarce". It is rather "a digital work once created AND widely circulated is no longer scarce".

    There is a gap between creation and circulation that the creator (including privy collaborators/confidants) can utilise to propose an exchange of their created, uncirculated work with the fans who want it widely circulated to them (via file-sharing).

    For example, the artist can provide a sample, or low quality preview of their work, just as a programmer can provide a binary to demonstrate their source code prior to sale. Once sold, once released in exchange for money, the work circulates without constraint.

     

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      Suzanne Lainson (profile), Jan 29th, 2010 @ 11:06am

      Re: A gap between creation and proliferation

      There is a gap between creation and circulation that the creator (including privy collaborators/confidants) can utilise to propose an exchange of their created, uncirculated work with the fans who want it widely circulated to them (via file-sharing).

      But what if there is so much music out there that we lose fans willing to pay for those early copies? I've got so much legal free music on my computer that I personally don't feel much need to look for music to buy.

      Are all of you familiar with this site?

      Daytrotter: The source for new music discovery and free MP3 downloads from the best emerging bands.

      The quality and quantity of music on Daytrotter downloadable for free is truly amazing.

       

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        Crosbie Fitch (profile), Jan 31st, 2010 @ 2:24pm

        Re: Re: A gap between creation and proliferation

        Suzanne, do you not have any favourite artists? Could you see yourself have even the slightest inclination to persuade them to produce some more music?

        Remember, copies are free. It's the music that takes work, and needs paying for.

         

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          Suzanne Lainson (profile), Feb 1st, 2010 @ 9:22am

          Re: Re: Re: A gap between creation and proliferation

          Suzanne, do you not have any favourite artists? Could you see yourself have even the slightest inclination to persuade them to produce some more music?

          Remember, copies are free. It's the music that takes work, and needs paying for.


          I'm confused about your point.

          As for paying money to artists, I wish it were easier. I've worked with some for nine years. CD sales are down. Guarantees for live performances are down. Cover charges have gone down.

          In Denver/Boulder there has been an explosion of talented artists/musicians. Almost all of them have day jobs that pay their bills because there's not enough money coming in from music to do that.

           

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            Crosbie Fitch (profile), Feb 2nd, 2010 @ 9:51am

            Re: Re: Re: Re: A gap between creation and proliferation

            Let us assume you do have one or more favourite artists. Let us assume you might have the inclination to persuade them to produce more music. However, let's assume that you've long since lost any urge to persuade record labels to produce copies given you can now make all your own copies for nothing.

            Of course, you can't make the music of your favourite artists yourself (only they can), so you still have to persuade them to make it for you - and they want paying.

            Doesn't that sound like the idea opportunity for an artist to make a deal with you and every other one of their fans?

            The artist can offer to write a new song, or record another cover, in exchange for $10,000 from their 1,000 true fans such as yourself. You all just stump up $10 each, and then when the artist delivers their end of the bargain you do the exchange.

            Everyone's happy. Art for money, money for art.

            And then the artist is heavily, virally promoted when that recording they just sold to their fans for ten grand is freely and LEGALLY shared on umpteen file-sharing networks.

            The next time they try this they have 10x as many true fans.

             

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              Suzanne Lainson (profile), Feb 2nd, 2010 @ 10:09pm

              Re: Re: Re: Re: Re: A gap between creation and proliferation

              The artist can offer to write a new song, or record another cover, in exchange for $10,000 from their 1,000 true fans such as yourself. You all just stump up $10 each, and then when the artist delivers their end of the bargain you do the exchange.

              This is a perfectly legitimate idea and some artists are doing variations of it on sites like Kickstarter or even their own websites where they are offering to presell CDs.

              I know, though, that a lot of bands don't ever seem to get to the point where they can get 1000 fans to pay for a song or a CD or come to a show. In many cases the bands aren't good enough. But in other cases, they have fans who like them, but just don't buy. It's a puzzlement to me, actually. I've seen artists who have fans and who write great music and who even tell their fans they need financial help and their fans nod, agree the life is tough, and then don't really offer to help. For example, I was selling merch at a show for someone. A good friend of hers brought someone else over to show her the CDs. When the new person started to buy a CD, the "good friend" said right in front of me, "Oh, don't bother. I have a copy and I'll burn you one." I remember thinking, "You are so oblivious that you offer to rip a copy of a CD right in front of someone trying to sell them."

              So I think part of the challenge is to convince fans that the artists need financial support. And it's also necessary to cultivate a fan base that has money. If your fans are themselves struggling to pay their bills, they may need that $10 for necessities.

               

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                Mike Masnick (profile), Feb 3rd, 2010 @ 1:19am

                Re: Re: Re: Re: Re: Re: A gap between creation and proliferation

                So I think part of the challenge is to convince fans that the artists need financial support.

                And this is where we disagree so strongly. You keep insisting that the challenge is convincing people to pay. I'm saying it's not that at all. It's giving them a reason to buy. If they have a real reason to buy, the effort has *nothing* to do with "oh, this artist needs financial support" and everything to do with "I want that product, and the only way I can get it is to pay for it."

                 

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                  Crosbie Fitch (profile), Feb 3rd, 2010 @ 3:00am

                  Re: Re: Re: Re: Re: Re: Re: A gap between creation and proliferation

                  Absolutely Mike, and this has been true since time immemorial.

                  You do not buy a basket from a basket seller because you recognise they need financial support. You buy a basket because you want a fricking basket, and you and the seller agree as to what it's worth exchanging your good money for.

                  To buy something or simply a warm feeling, because you want to financially support someone is known as charity. Despite the conclusions of many despairing artists, charity is not a business model.

                  If someone doesn't think your music is worth any significant amount of their money in exchange, then they are not a customer. If you're lucky, it's someone who's willing to spend 3 minutes of their precious time auditioning you on the off-chance that they might like your music.

                  NB I still don't think Suzanne's twigged the difference between buying music and buying CDs (copies of music). Copies are a convenience and worth pennies. Frankly, in addition to selling CDs in posh cases (even for a few bucks), I'd provide a wifi access point and details of how people can download MP3 files or the CD ISO from the local fileserver - for free. Might as well also provide USB sockets for people to obtain just the MP3 files (selling memory sticks if folk don't have 'em). This is an easy thing to do and saves people the hassle of firing up their file-sharing software when they get home and waiting half an hour. Far better to help people not yet your customers to further audition your music and share it with their friends (or strangers), and then create far better goodwill to win future customers (who want to buy your music - not copies).

                   

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          Suzanne Lainson (profile), Feb 1st, 2010 @ 9:23am

          Re: Re: Re: A gap between creation and proliferation

          Suzanne, do you not have any favourite artists? Could you see yourself have even the slightest inclination to persuade them to produce some more music?

          Remember, copies are free. It's the music that takes work, and needs paying for.


          I'm confused about your point.

          As for paying money to artists, I wish it were easier. I've worked with some for nine years. CD sales are down. Guarantees for live performances are down. Cover charges have gone down.

          In Denver/Boulder there has been an explosion of talented artists/musicians. Almost all of them have day jobs that pay their bills because there's not enough money coming in from music to do that.

           

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    Suzanne Lainson (profile), Jan 30th, 2010 @ 11:39am

    Selling art is relatively recent

    I'm working on a blog post about participatory art. In my research, I came upon this paper. It gives multiple examples of how the norm used to be that people were active creators of art rather than mere consumers. If you have followed my comments on Techdirt, you've seen that I have been suggesting that the idea that we'll have thousands, maybe millions, of bands each with a core of fans who will buy from them might not actually be the model of the future. Rather, we might have millions of people equipped with enough tools to make their own art. The result will be more creativity, but perhaps less money to support so many people hoping to make a living in music full-time.

    I just found an excellent historical overview, which I think might be very useful in terms of talking about scarcity and arts-related purchases.

    ART ALIENATED
    An Essay on the Decline of Participatory-Art
    http://home.att.net/~evanslee/art_alie.pdf

    From the introduction:

    This alienation from art is a relatively recent phenomenon. As we shall see, the making of art was a central part of people's lives for most of human history--that is, until the relatively recent advent of a capitalist, commodity-based culture in Europe and North America in the sixteenth and seventeenth centuries. At that time the emphasis in art shifted from participants, who could satisfy their own artistic needs, to specialists, who demanded a paying, non-participating audience to buy their 'products'. Essentially, the art-commodity came to replace participatory-art in most people's lives, and art increasingly became a source of alienation.

    This alienation only grows worse as the technology for the perpetuation of art-commodities develops. The mad scramble to buy compact discs, car stereos, videocassette recorders, and Walkman-type portable tape players is an indication of this almost obsessive fetishizing of the specialists' art-products. This fetishism is best exemplified by the avid record collector and 'audiophile', someone who may well own thousands of records and play them on the finest equipment available, and yet be unable to play an instrument or sing a simple tune. Such a person has truly been reduced to Marx's concept of the Commodity Man (or Woman), someone whose identity is tied up, not in what he or she does, but in what he or she buys.

    It is vital that we liberate ourselves from this fetishism of art-products, and thereby overcome our artistic alienation. As with all forms of human expression, the making of art is an essential part of our being and of our need to express our feelings and thoughts, joys and sorrows. In addition, it can be satisfying and fun in a way that no art-commodity can possibly be, because one is actually doing instead of just watching. Ultimately, then, we must start making our own art in order to begin the process of liberating ourselves from the alienation of commodity culture, and thereby regain our ability to fulfill our expressive needs.

     

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    Suzanne Lainson (profile), Jan 31st, 2010 @ 1:41am

    Seems like this is relevant

     

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    Suzanne Lainson (profile), Feb 3rd, 2010 @ 9:49am

    Music is free

    If someone doesn't think your music is worth any significant amount of their money in exchange, then they are not a customer.

    Music is free. I can get it online for free. I can watch performances online for free. I can see live music for free (not everyone plays for free, but there is so much live music to see for free that if you don't have money, you can still catch it).

    If I want music, I don't want a T-shirt. When we have talked about the fact that Techdirt t-shirts can be copied and people can get the alternative much cheaper, Mike says that people will buy them for him to support Techdirt.

    That's exactly the mentality I am talking about in terms of musicians. If you buy an item from them to help support them, it is the same thinking. If you think to yourself, "Well, I can get exactly the same shirt elsewhere but I'll pay more and buy it from Mike to show my support," it's similar to a charity mentality.

    The fact of the matter is that if I want music and all I want is music, I don't have to spend any money. Some of the reasons to buy that have been given in support of music have actually been reasons to support your favorite musician because he needs it, not because he's offering you a scarce good.

     

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      Crosbie Fitch (profile), Feb 3rd, 2010 @ 10:24am

      Re: Music is free

      Suzanne, you've become blinded by copyright into being unable to recognise the difference between creative work and a copy. A copy is not the work, it's a copy. Copies cost next to nothing in comparison. Intellectual work is LABOUR.

      A musician can produce or perform music and give it away - a free concert or promotional sampler perhaps. Alternatively they can sell tickets, and if they sell enough, they can exchange the ticket revenue for a performance of music. However, this is nothing to do with copies. Even though their fans can make copies for nothing, those fans cannot make the musician perform at the concert unless they pay them money.

      Similarly, you cannot make a musician record a studio performance for nothing. Once they've sold such a recording to their fans who've paid for it, sure, THEN you can make copies for nothing. You can make copies for nothing because it takes next to zero work and material resources to produce a copy. That's why copies are free. The copy is free - NOT the music.

      That's why if musicians focussed on selling the music (what they're good at making) instead of selling copies (what their record label and fans are good at making) then they wouldn't get so upset at the fact that their fans had taken back their liberty to make and share copies.

      Hence the business model I evangelise: Money for Art, Liberty for People (MfA+LfP).

      It's not charity. It's an exchange: art for money, money for art. It's also ethical as it restores the people's cultural liberty, their natural right to copy (as suspended by Queen Anne in 1710 for the benefit of the press).

      If you can get all the music you want without paying anything then that's brilliant. However, if you're anything like me you will come across the odd few artists whose music you like so much, you just can't get enough of it. In such a case you may well join their other fans in persuading them to produce more and sooner rather than later. And I think you'll find money can be more persuasive than begging.

      I'll let Mike explain CwF+RtB.

       

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        Suzanne Lainson (profile), Feb 3rd, 2010 @ 1:06pm

        Re: Re: Music is free

        I've gone to so many shows -- for awhile as many as 200 shows a year. I watch the audiences to see why they are there. In many cases it isn't really the music per se. It's for what they are getting out of it personally. And often those personal needs can be met in a variety of ways.

        Now that people are giving away music online for free, and now that so many bands are looking for places to play (effectively dropping the income they make on ticket sales), musicians are looking for non-music items to sell (e.g., merchandise, relationships, access). If you look at the above list of ten good reasons, many don't have to do with the music and can be sold by non-musicians as well. If, as a musician, you are selling "belonging," you will be up against any organization that also sells memberships. In some cases, the ideal package for the consumer will be music for free and paid membership in a non-music club.

        All I have been pointing out is that I see an explosion of musicians, many of them talented, many of them getting rave reviews in their local papers, many of them playing on any given weekend. Those of us who have been in Colorado for decades note in amazement that never have there been so many talented musicians playing simultaneously.

        In terms of creativity, it is great. In terms of being a fan looking for good music, there are lots of options. In terms of wanting to make music with good musicians, there are all sorts of configurations; there are lots of collaborations.

        In terms of unsigned musicians making a living at this, it was better a few years ago because there weren't so many people giving away their music to the same pool of potential fans.

         

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          Crosbie Fitch (profile), Feb 4th, 2010 @ 3:07am

          Re: Re: Re: Music is free

          It sounds like you're adopting the publisher's perspective in treating 'music' as 'content', that it's all pulp and soma, indistinguishable, substitutable, lowest-common-denominator MTV filler.

          Try thinking of it this way (pre/post copyright):

          • All published music has either been paid for or is a promotional 'loss leader'.

          • All published music belongs to the public, is freely re-distributable, and free to be remixed, incorporated, improved, etc.

          • The production of music is labour intensive, expensive and highly valued by those who appreciate it.

          • Those who appreciate a musician's music will pay the musician to produce it.



          None of those statements conflicts with any other. However, someone indoctrinated by copyright cannot reconcile them. To them it seems as if all music is free. Moreover, given all music is homogeneous dross, no-one will ever be inclined to pay anyone to produce any more because too many new musicians are churning it out as a promotional loss-leader to build their fan base. They believe the market is irrecoverably saturated and will remain that way.

          So clearly, there must be a flaw in such thinking.

          The answer is that music is not a mildly variegated pacifier to be packaged and sold for consumption by the masses, but highly eclectic/diverse/heterogeneous and highly valued by respective audiences.

          Music is not a commodity except in the eyes of the publishing industry that needs something to fill the boxes it shifts - boxes it has a monopoly over (box=copy).

          Music is simply a label. It is a mistake to infer homogeneity from the label, e.g. as in 'water' or 'grass'. You could as well infer that no-one need ever pay for any software ever again because so much 'software' is now given away for free. It's all highly diverse and of interest only to respectively diverse and specialised audiences.

          Compare the newspaper industry. Newspaper publishers aren't in the business of producing news, but shifting containers of it (newspapers). It's the journalist who's in the news production business, and they're fine - always a market for news. It's the printers producing copies of it that are going under. That's why they think a paywall is the answer, because it's selling a look-see in the box which is almost as good as selling the box. They can't recognise the fact that the fundamental market is for news, not for boxes of it. People bought the boxes because they wanted what was in them. The news was free in the box, but the boxes cost money. And now the news is freely redistributed and no-one needs any boxes, but people still need the news to be produced. The crazy thing is hardly anyone is trying to sell news production to the people who want it. They're madly focussed on selling boxes or look-sees of 'news as content'.

           

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            Suzanne Lainson (profile), Feb 4th, 2010 @ 10:06am

            Re: Re: Re: Re: Music is free

            Musicians who want to sell music in digital or CD form are selling copies, by your definition. A musician can ask for a certain amount, but the fans might choose not to pay it. When everyone around you is giving their recorded music away for free, it becomes harder to ask for $10 to $15 for an album.

            The competition has lower prices.

             

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              Crosbie Fitch (profile), Feb 4th, 2010 @ 11:00am

              Re: Re: Re: Re: Re: Music is free

              No. Either you're selling music or you're selling copies. Copies are certainly a way of delivering music, but you've got to know whether you're selling the music or the copy.

              A musician doesn't spend yonks in a recording studio and sell the recording of their music to a publisher as a digital master on a DVD-ROM for $10 (the cost of the copy). If the musician has any clue they'll add quite a few more zeroes to their price.

              So, musicians are quite able to tell the difference between selling music and selling copies. They either sell the music for $10,000 as a session musician, or they make a deal with a label to get a $5,000 advance on a 1% royalty on sale of copies (protected from competition by monopoly), and hope the label can sell a million copies via iTunes for $1.

              Alternatively, the musician can do a deal with iTunes themselves and try and sell say 20,000 copies.

              They can even try selling CDs at $2 each and hope they sell 20,000.

              However, I can count on my fingers the number of musicians who've sold their music to their fans (instead of to a label), e.g. at $10 each to 1,000 fans. Note that although the music may be delivered to those fans via CD or BitTorrent, the fans are buying the music - not copies. Once the music has been purchased, copies can be freely sold or given away.

              The problem with selling copies is that anyone can now make them for nothing. Copyright is no longer effective as a monopoly to prevent this. However, if you sell music instead of copies, you don't need a monopoly such as copyright because no-one else can make your music (unless perhaps you produce formulaic musak for elevators).

              So, very few musicians are considering the business model of selling their music to their fans. Most think music=copy, and that selling music=selling copies.

               

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                Suzanne Lainson (profile), Feb 4th, 2010 @ 12:31pm

                Re: Re: Re: Re: Re: Re: Music is free

                However, if you sell music instead of copies, you don't need a monopoly such as copyright because no-one else can make your music (unless perhaps you produce formulaic musak for elevators).

                I still don't know what you mean. If you are talking about selling music that doesn't involve copies, do you mean playing live music? If so, just say that.

                You were talking about selling songs for $10 each. How is the fan going to get the song? On a disc? In a digital file? Only at live shows? I can definitely see a time when musicians might quit recording music altogether and only perform live, so that if you want to hear the music, you either come to the show or you listen to a tape of the show that a fan has made.

                 

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  •  
    identicon
    Best gaming PC, Dec 6th, 2010 @ 5:45am

    Reasons to buy

    These 10 reasons to buy should be included in all marketing strategies to increase sales. Best Gaming PC

     

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