The Lack Of A 'Golden Ticket' Business Model Doesn't Mean You Give Up And Go Home

from the how-do-these-people-keep-their-jobs? dept

This one is a bit surprising. Following the recent nutty statements from Prince, Kara Swisher has decided to take the contrarian position to explain why Prince might not be so crazy after all. Her reasoning is that she's spent several days down in LA talking to entertainment industry execs (her first mistake), and they seem to agree with Prince that the internet is a darned problem. Of course, to some extent, that's like asking the leading buggy whip makers their feelings on automobiles. Just because they haven't figured out a way to thrive doesn't mean that the automobile revolution is "over."
After spending several days here in Los Angeles this week, talking to execs, talent and others who toil in the entertainment industry--I can't say what I am hearing is that much different in terms of the continuing frustration with the lack of decent business models to replace the ones that have worked for so long and been so lucrative for the entertainment and media industry.
This is how disruptive business models work. The disrupted whine and complain about how the disruptors haven't shown them how to continue making the same monopoly rents they made in the past. But that, of course, ignores the nature of disruption. Disruption doesn't work by having someone come along and show the legacy players how to exactly replicate their old profits. It's the exact opposite of that. Disruption is when others figure out how to break down the barriers to do something more efficiently, and undercut the old business model. But that doesn't mean that there's anything wrong for the underlying benefit that people get.

More entertainment content -- movies, music, books -- are being made today than ever before. Anyone bitching and complaining about how the internet is "destroying" the industry isn't paying attention. What they should be focused on are all of the massive new opportunities created by this sudden glut of content, combined with massively more efficient (and often free) methods for content creation, distribution and promotion.
From music to movies to television, the biggest minds here still sound perplexed as to what will finally be the golden ticket to carry them through to the inevitable next era of digital distribution.
That single sentence basically describes the problem. These guys are sitting back and waiting for someone to hand them a golden ticket that replicates the old ways of doing things. That's not how it works. No one gave the buggy whip makers a golden ticket that let them keep their old lines of business going.

But the lack of a golden ticket most certainly does not mean there are no business models. Those who are embracing new business models are finding plenty of opportunity to do amazingly well (in fact, better than they did before). But, for the most part, it involves hard work and multiple streams of revenue. It's not the old "sit back and let the cash roll in" model that the industry is used to. But, some of us think that's a good thing.
"Why is the consumer always right?" said one exec to me this week in a typical statement. "You can't have a business if there is no business model."
It's a good thing the exec who said that did so anonymously, because otherwise his or her board of directors should be calling for him to be fired. The consumer is always right in a competitive marketplace because if you don't serve them, your competitors will. That there are still entertainment industry execs who don't get this is scary. And, saying there are "no business models" is so wrong that it again seems troubling that this exec still has a job in the industry. We spend a lot of time pointing to all sorts of working business models every day. They may not be the "golden ticket" that this exec wants where he gets to sit back and relax and see the cash flow in, but they can actually bring in a lot more money by leveraging a more efficient system, connecting better with fans, and giving them a real (scarce) reason to buy, rather than trying to bully them into paying through artificial scarcities.

From there, Swisher reverts back to Prince's statements:
If you remove the sillier parts of his quote that preceded it, such a statement is not unreasonable from an artist who wants to be paid for his creative efforts.

Thus, instead of mocking that sentiment, perhaps it is time for tech leaders to figure out a way to keep talent from being dragged into the future without so much kicking and screaming.
The role of the disruptor is not to make life easy for the disrupted. Swisher and these execs seem to be confusing the role of certain folks in the legacy industry with the overall entertainment industry itself. As noted, the entertainment industry is thriving. More movies, music and books are being created. More money is being spent. It's just that it's going to different players. There's no reason to "figure out a way to keep talent from being dragged into the future." The opportunities and wide open path are there. The problem isn't that tech leaders haven't made it easy for them. They have. It's that these guys are so myopically focused on the way they used to make money they don't realize that the new opportunities are already there and have been embraced widely by others.


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  1.  
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    Mike C. (profile), Jul 7th, 2010 @ 8:16am

    New business model

    The whole time I'm reading this post, I kept thinking back to a recent Wil Wheaton blog post (new window). It contains a link to a video of an interview he did while up in Portland, OR this week.

    The part that gets me is when he talked about Twitter and the w00tstock shows he's been part of with Adam Savage and 'Paul and Storm'. He points out that there has been no official marketing of the events, merely hype via Twitter, blog posts and word of mouth. And yet, even with the lack of "official" marketing, every show has been sold out.

    Obviously, this won't work for everyone, but it is a great example of "you never know what will actually work".

     

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    Jon Lawrence (profile), Jul 7th, 2010 @ 8:59am

    Take this business model for free

    Here, I've got one for our (content) business:

    http://prezi.com/oe45kg2noinq/the-socially-enabled-theater/

    I'm getting sick of hearing producers (disclosure: I'm a Producers Guild member), bitch and moan about our business in one breath, and in the other breath talk about how creative they are.

    Well, if we're so damn creative, why aren't we talking about new business models and making them work? Everytime I bring up the topic, eyes glaze over.

    Were there *any* buggy whip makers that made a successful transition to the automobile business?

     

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    Hephaestus (profile), Jul 7th, 2010 @ 9:08am

    "From music to movies to television, the biggest minds here still sound perplexed as to what will finally be the golden ticket to carry them through to the inevitable next era of digital distribution."

    There will be no golden ticket for digital distribution. Efficiencies, and competition have entered your industries. The cost of all media will go to zero for the consumer.

    "Why is the consumer always right?"

    This guy really does come from a monopoly business if he is even thinking this.

    "Who will pay for the high upfront production costs of most major entertainment projects?"

    LOL ... in a business with no competition people can charge as much as they like. That is the only reason why your upfront costs are so high. Competition will drive those costs down.

    "Can costs come down enough to make up the difference?"

    Yes, but so will salaries. Are you ready for it? probably not, you dont want to see your salary go from the multi million dollar range down to 100k a year or less.

     

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    interval (profile), Jul 7th, 2010 @ 9:36am

    Re:

    @Hephaestus: "There will be no golden ticket for digital distribution."

    Has there ever been a "golden ticket" for anything other than lottery winners? These guys (so-called music industry execs) appear to have either never learned or forgotten what its like to work for a living, so used to the days when they could print money by pressing records and cds, so they're taking to robbery (in the form of malevolent and onerous licensing mechanisms). I think the last golden ticket business was Hughes Tool & Die, wasn't it? I mean, how many businesses are there that actually believe the world owes them a living? Don't answer that. But the world really needs disease cures, so I can give some pharmaceutical companies a pass. Who the hell really needs record license holders to thrive? Bastards.

     

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    Mike Harmon (profile), Jul 7th, 2010 @ 10:00am

    Re: Take this business model for free

    http://en.wikipedia.org/wiki/Studebaker
    there was this one at least, not a whip maker but a buggy maker did make it into auto manufacturing.

    it also reminds me of when seiko started making quartz watches after the watch manufacturing industry turned it down.

     

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    chris (profile), Jul 7th, 2010 @ 10:23am

    Re:

    Yes, but so will salaries. Are you ready for it? probably not, you dont want to see your salary go from the multi million dollar range down to 100k a year or less.

    that's the real issue. the legacy players see the problem like this:

    i make millions dollars per year. tell me how am i supposed to keep making that much money giving stuff away for free?

    the answer is easy. you can't. and to make matters worse, there are creators out there that would be overjoyed to make less than 100k per year making their entertainment products.

    it reminds me of clay shirky's collapse of complex business models:

    Dr. Amy Smith is a professor in the Department of Mechanical Engineering at MIT, where she runs the Development Lab, or D-Lab, a lab organized around simple and cheap engineering solutions for the developing world.

    Among the rules of thumb she offers for building in that environment is this: “If you want something to be 10 times cheaper, take out 90% of the materials.” Making media is like that now except, for “materials”, substitute “labor.”


    compare that to this article about the drama surrounding the screen writers for the new "A Team" movie:

    The pic comes out Friday following almost 10 years in development, millions of dollars in script costs, all for a movie version of a forgotten TV show that 20th Century Fox already is predicting to reporters may not gross more in its opening weekend than the recent 4th installment of the Die Hard franchise. Not since examples like Sister Act and Armegeddon and G.I. Joe have so many screenwriters labored so much to produce so little...

    ...What wasn't to the writers' liking was an executive so arrogant that on several occasions he actually "ran the script through his own typewriter," one scribe tells me. "I'm not kidding. He wrote pages." And another source confirms to me, "he was rewriting stuff personally." Still another tells me: "He micromanages scripts (down to insulting writers about grammar, which he’s often wrong about), he rewrites scripts himself in violation of every guild rule, and along with fancying himself a screenwriter, he considers himself a story genius – without realizing that most of ideas are clichés he comes up with are all the latest clichés from the movie he saw last weekend."


    so you have an industry with high labor costs, thanks to its elaborate system of guilds, that is now facing competition from content creators with potentially zero labor costs. oh, and the finished product of this exorbitant labor is often a product that stinks.

    the issue isn't a business model problem, it's a product problem. the product they want to sell simply costs too much to sell for the going rate.

     

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    Anonymous Coward, Jul 7th, 2010 @ 10:31am

    "The consumer is always right in a competitive marketplace because if you don't serve them, your competitors will." - in the music business, this concept is a "fail". the only real competition in the music business is people who dont pay for the same content, and distribute it anyway. if the companies that actually make the content go out of business, both sides lose, and in the end, the consumer was wrong.

    short term thinking makes the consumer right. longer term thinking means that the consumer will lose most of their choices, and be mad because they lost them.

    If the "free" music industry actually made enough quality new music (the type the public wants) there might be competition. right now, both sides get their supply from the same place, but only one is paying for it.

    disruptive indeed, especially for the freeloaders.

     

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    out_of_the_blue, Jul 7th, 2010 @ 10:34am

    Varying "models" with same old *premises* = bad results.

    "We spend a lot of time pointing to all sorts of working business models every day. They may not be the "golden ticket" that this exec wants where he gets to sit back and relax and see the cash flow in, ..."

    Well, you're assuming that the "content" chain still *needs* executives of that sort at all. A good deal of middle-men, hangers-on, various parasites can *definitely* be cut out of the process now, and because those types *know* that they have been and are useless, they've a big incentive to use existing power and money to keep themselves in cushy positions. -- I think they'll be able to do so, in contrast to the more idealistic, because this isn't like the problem of buggy whip makers: the "product" is mere data, and there are already existing protective "laws" for them to leverage further.

    "... but they can actually bring in a lot more money by leveraging a more efficient system,..."

    Again, this is pre-loading with *your* values. Existing executives don't care beans about efficiency, or the quality of the content. They have a nice cushy place and are willing to bend the rest of society to any degree required in order to *keep* it. In fact, if current trends continue, they'll be set even better, practically in control of governments.

    "... connecting better with fans, and giving them a real (scarce) [new] reason to buy, rather than trying to bully them into paying through [old] artificial scarcities."

    I don't understand how *all* scarcity isn't artificial in this area. You've outlined putting some parts behind a pay barrier, so I think that it only makes sense with the editorially bracketed "[...]" words added.

    >>> Overall, I think the "model" that *must* fall is getting ridiculous incomes from producing entertainment for *mass* distribution. Simply put, these people want to get filthy stinking rich in an entirely *material* way from a product that doesn't add anything to material wealth. Psychic rewards simply don't count with even the performers. Their efforts are intentionally "designed" for widest demographics ("rebellious" youth, mostly), rather than for excellence of art. Therefore, they don't *deserve* much in the way of rewards, and rest of society needs to work out a way to see that incomes fall in line with *value* to society. (That's EASY: either explicit limits on sales income per person per song, OR steeply progressive income tax rates, either of which can be implemented *without* harm to the ordinary person.)

    (Some sort of error occurred 1st attempt.)

     

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    John Fenderson (profile), Jul 7th, 2010 @ 10:42am

    Re:

    "the only real competition in the music business is people who dont pay for the same content, and distribute it anyway"

    Nope. The real competition is from artists who leverage modern tools to produce and sell quality work. They're increasingly realizing that they can make as much, if not more, money from their work (and retain ownership and control of it -- no small thing) by bypassing the middleman of the established record labels.

    Sure, they're unlikely to make millions, but in trade they are more likely to make a living than they were under the old system.

     

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    Anonymous Coward, Jul 7th, 2010 @ 11:18am

    Our economy can only support so many artisans. If you can't make a living as a performer, then you are not one of them and it is time to get a job to supplement your hobby. You are not entitled to success.

     

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    Anonymous Coward, Jul 7th, 2010 @ 11:21am

    Re: Re:

    not only are the unlikely to make millions, they are also unlikely to give up their day jobs. they only represent a very, very small fraction of a percent of music consumption in the us alone. that tail is not going to wag the dog.

    the real issue is that record labels are competing with torrent sites / file traders on an unequal basis. they each have the same product, but only one paid for it. so only one can suffer a loss. competing by giving the content away as well is not working, while mike doesnt want to address it, concert tours are turning to dust this summer as people refuse to pay inflated ticket prices. guess what, there is a limit to what people will pay for the transient joy of a concert.

     

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    Anonymous Coward, Jul 7th, 2010 @ 11:22am

    Re:

    To clarify: if you cannot make money in the current market, then one of two things has happened:

    1) You have failed to utilize the market properly
    2) Your art is not as good as you think it is

    There is nothing wrong with the market and there is nothing wrong with consumers. Coming to terms with the fact that 1 or 2 is the reason why you are not successful is an important part of growing up.

     

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    Anonymous Coward, Jul 7th, 2010 @ 11:35am

    Re: Re: Re:

    "as people refuse to pay inflated ticket prices"

    Well there's your problem. Make the ticket price relative to the value of the performance.

    Success in the market is not raking in millions. It is raking in enough to do it again tomorrow with a little left over to spend on improvements.

     

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    Hephaestus (profile), Jul 7th, 2010 @ 12:04pm

    Re: Re:

    "it reminds me of clay shirky's collapse of complex business models:"

    I hadn't read that before but it reminds me of when things under go a Catastrophic Failure especially the part ...

    "Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some."

    In the case of the current media companies its not that they have reached the point where they would collapse under their own bureaucratic weight. You hit it on the head with ...

    "so you have an industry with high labor costs, thanks to its elaborate system of guilds, that is now facing competition from content creators with potentially zero labor costs."

    Competition from external sources, high internal costs due to never needing to compete, and a total failure to realize they cant resell the same content to people over and over any longer, a failure to meet customer demands.

    We could go on for hours naming the inefficiencies of the record labels and movie studios.

    "the issue isn't a business model problem, it's a product problem. the product they want to sell simply costs too much to sell for the going rate."

    Agreed... especially when people are now producing web only series at no and low cost. "Pioneer one" , a 5 minute short for under 500 dollars.

    These low and now cost shows are going to cause a reduction in what people charge for content making the survivability of the TV and Movies studios unlikely as they will not be able to compete.

     

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    Hephaestus (profile), Jul 7th, 2010 @ 12:27pm

    Re: Re:

    "These guys (so-called music industry execs) appear to have either never learned or forgotten what its like to work for a living, so used to the days when they could print money by pressing records and cds, so they're taking to robbery (in the form of malevolent and onerous licensing mechanisms)."

    Isn't it cool !!! They are painting themselves into a corner. Creating a structured set of rules, agreements, and licensing mechanisms that will be their only source of income in a few years. Until someone decides to only play free or CC stuff on a major station as a cost cutting measure and it spreads.

    It is my belief they are attempting to remove the public domain entirely to prevent the above scenario. They going after the CC, PKI, EFF, etc to paint them as the bad guys to this end.

    "But the world really needs disease cures, so I can give some pharmaceutical companies a pass."

    Actually this is being looked at from various angles due to a ??WHO?? report showing ??50?? million people worldwide have died due to lack of access to modern pharmaceuticals. Mainly due to cost, and lack of production licensing options.

    "Who the hell really needs record license holders to thrive?"

    the record license holders themselves ... ;)

     

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    Anonymous Coward, Jul 7th, 2010 @ 12:33pm

    Re: Re: Re: Re:

    "Well there's your problem. Make the ticket price relative to the value of the performance." - right. the problem is people are discovering that there is little value in paying enough to make up for the money being lost on the music sales side. mikes entire deal the last few years is that live ticket sales are making up for what is lost in recorded music sales. mostly it was done through much higher ticket prices ($500 for bon jovi anyone?), rather than through increases in touring or significant increases in tour dates.

    that current large tours and cancelling out, shrinking, canceling dates, and so on is an indication that people are no longer willing to pay the price. personally, i blame free music, which has in turn taught people that even performing music has little actual value. when tickets for two, parking, a couple of beers and maybe dinner is higher than the average rent in most cities, there is a problem. the temporary trend in ticket sales stops working when people realize they are paying way over the value for something, mostly to support other parts of the business being ripped apart by freeloaders.

     

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    Anonymous Coward, Jul 7th, 2010 @ 12:40pm

    Re: Re: Re: Re: Re:

    "Wahhhh, business is hard." - TAM

     

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    nasch (profile), Jul 7th, 2010 @ 12:54pm

    Re:

    if the companies that actually make the content go out of business, both sides lose, and in the end, the consumer was wrong.

    Companies don't make art, people do. So you're saying that companies (music labels, movie studios, whatever) will go out of business, and (some of) the people those companies were paying to make art will stop doing it. My response is: fine. We don't need that "art" anyway. We'll get it from people who are going to make art no matter what.

    I hope these companies just hurry up and go out of business or adapt, so we can all see who is right and who is wrong, but I think it's going to take a while.

    Finally: you're crazy if you think movies, music, and art will stop being produced in the absence of the currently dominant businesses. Art is part of human nature, and cannot be stopped.

     

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    nasch (profile), Jul 7th, 2010 @ 1:03pm

    Re: Varying "models" with same old *premises* = bad results.

    Therefore, they don't *deserve* much in the way of rewards, and rest of society needs to work out a way to see that incomes fall in line with *value* to society. (That's EASY: either explicit limits on sales income per person per song, OR steeply progressive income tax rates, either of which can be implemented *without* harm to the ordinary person.)

    Why not just let the market decide how much they deserve like we do with most industries?

     

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    Bob, Jul 7th, 2010 @ 1:06pm

    Echo chamber

    Unfortunately the comments section seems to be mostly an "echo chamber." I am against very long term copyright policies, however, copyright, as a method for encouraging content production, is something that has been around a long time. What is so wrong with copyright? I don't mean copyright as currently practiced in America, but copyright in general? Its purpose is rather clearly defined in the US Constitution, and I believe its purpose is worthy. Promotion of content creation is a worthy objective, and if the monopoly on that content can provide it, what is the problem?

    It is difficult to extract the egregious behavior of current copyright holders, from the true benefit of copyright. But copyright is the method currently used to help create and sustain a market. I agree that it is not the only way, but it is a legally sanctioned way.

    Lets think of music artists. If you were one, which method would you rather have to make money. Create music that people like, copyright it, and distribute it for $1 a song. The better your music, the more money you will make (theoretically), which should push people to make better music if they want to make more money. Alternately, you could decide that this was the best music you will ever make, and you will accept however much money comes from selling the music for $1 a song.

    Or would you rather create music that people like, give it away free, and have to hustle selling something else, or giving concerts? I would propose that the first way is easier and the second way is harder. But what if you're agoraphobic? There is no way that you could give concerts. The amount of money that you will make from posters and donations from conscientious listeners will not provide you enough money to live on. You stop making music in order to get some other job. The art world and the culture of the society could lose out because musicians can not support themselves.

    The benefit of copyright is very nicely summed up on the US Constitution. If we wish to support arts and progress, some method to allow people to support themselves by their artistic endeavors is needed. Your argument about disruption and that nobody is entitled to keep their business model, is well taken. Except that in this case, art is not just about business. There are socially important reasons for promoting creation of art. In the society in which you wish to live, having professional art may not be important. However it was seen as important by the "founding fathers" to include it as part of the law of the land.

    How about just one more idea: If there was no copyright, and a musician created an album that was wildly popular. In order to recoup the cost and the personal labor of producing the album, the musician decides to give (and charge for) concerts. However, the musician is not a very good show man. I come along (who is a very talented show man) and I produce a fabulous show using all of the songs from the musician's album. Because I put on a great show, the original musician can no longer gain enough audience for his concerts. Will this musician be likely to try to produce music in the future? I would highly doubt it. But if you say that musicians can no longer expect to produce music once and sell it as many times as it will sell (which means dismantling copyright), you cannot say that the musician can make it up with a different business model. All of the other business models that I have heard here require, or heavily depend upon, copyright. If a musician can have monopoly to hold concerts, why can't they have a monopoly to sell CDs?

     

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    BigKeithO (profile), Jul 7th, 2010 @ 1:30pm

    Re: Echo chamber

    I've never once heard this blog call for getting rid of copyright at all. I think you are arguing something that never happened. There are calls to restrict copyright to something a little more reasonable than it currently is and to embrace things like Creative Commons (which also depends on copyright) but not to get rid of it.

    This blog supports finding smart new business models that can flourish and thrive by embracing file sharing. I think it can be summed up by saying file sharing isn't going away any time soon, so instead of wasting so much time and money fighting it learn to embrace what it allows and make money. No where does it say get rid of copyright and hope for the best, in fact I can think of a lot of posts that say this is a silly idea.

     

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    JC, Jul 7th, 2010 @ 1:51pm

    Re: Re: Re:

    they each have the same product

    That is the constant flaw with your arguments. The record labels DO NOT have the same product. Even iTunes doesn't have the breadth of selection available on most file sharing networks.

    The "studios" have never really released the product people are willing to buy - high quality, DRM free recordings of all music they have ever produced.

    Your BS about concerts is just that, BS. Call me when you have some evidence about ticket prices going down.

     

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    JC, Jul 7th, 2010 @ 2:01pm

    Re: Echo chamber

    Unfortunately, most of what you have written is irrelevant to the real issues. This is not intended as an insult; I've talked with many people about the whole issue of copyright and it is a very difficult conversation to have meaningfully.

    Your discussion hinges primarily on this statement: which method would you rather have to make money.

    The point of this blog is simple - you don't have a choice about how you make money. The only person who has a choice about how money is made are the consumers.

    You can choose to TRY making money in a variety of different ways (i.e. selling recordings, giving away music and selling t-shirts, touring, working in a factory). But ultimately you do not get paid because you want to, or because you work hard, or because you deserve it - you get paid because someone else makes the choice to pay you. Once you really fundamentally understand that fact, this blog starts to make a lot more sense.

     

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    nasch (profile), Jul 7th, 2010 @ 3:17pm

    Re: Echo chamber

    Good responses to your post, but I'll add more.

    I would propose that the first way is easier and the second way is harder.

    I'm sure few would disagree, however, the purpose of copyright law is not to ensure that creators can make money easily, or even at all.

    If we wish to support arts and progress, some method to allow people to support themselves by their artistic endeavors is needed.

    Perhaps. It's also possible there would be plenty of progress of science and useful arts without copyright, in which case it's not serving its Constitutional purpose. But as mentioned before, I think most of us wouldn't mind reasonable copyright laws.

    If there was no copyright, and a musician created an album that was wildly popular. In order to recoup the cost and the personal labor of producing the album, the musician decides to give (and charge for) concerts. However, the musician is not a very good show man. I come along (who is a very talented show man) and I produce a fabulous show using all of the songs from the musician's album. Because I put on a great show, the original musician can no longer gain enough audience for his concerts. Will this musician be likely to try to produce music in the future? I would highly doubt it. But if you say that musicians can no longer expect to produce music once and sell it as many times as it will sell (which means dismantling copyright), you cannot say that the musician can make it up with a different business model.

    You have set up a false dichotomy: give concerts or sell recordings. There are always other choices. In your example, a partnership with the showman would be the most obvious possibility to me. He enjoys performing your music and is good at it. Offer to write music for him to perform in exchange for a percentage of his earnings. Since you're both getting paid already, you can release your recorded music for free to build popularity. Everybody wins: writer, performer, and fans.

    I would also like to point this out as an example of how reasonable disagreement is handled around here. Bob posted some reasonable thoughts about copyright and explained why he holds his opinions. A few people then posted disagreement and indicated (cordially) exactly what they disagree with and why. There is no shouting down or any of the other crap that this forum is accused of.

    The previous paragraph is not directed at you Bob. I hope you'll continue the conversation and feel welcome.

    (sorry if this double posts)

    (sorry if this is too long)

    (sorry if these parenthetical comments are what makes this too long)

     

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  25.  
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    Mike Masnick (profile), Jul 7th, 2010 @ 5:24pm

    Re: Echo chamber

    Unfortunately the comments section seems to be mostly an "echo chamber."

    Hi Bob. The comments here really are not very much of an echo chamber. If you look, nearly every single set of comments on the site has people taking all sorts of different positions.

    And, in fact, the people who agree with me on one post will often disagree with me on others.

    However, if someone states something that is not backed up by evidence or fact, people may challenge them on it. It is full contact commenting, but hardly an echo chamber.

    What is so wrong with copyright? I don't mean copyright as currently practiced in America, but copyright in general? Its purpose is rather clearly defined in the US Constitution, and I believe its purpose is worthy. Promotion of content creation is a worthy objective, and if the monopoly on that content can provide it, what is the problem?

    It is the "if" statement you mentioned. "If the monopoly on that content can provide it," then we agree with you. I've stated over and over again that I'm in favor of overall economic and cultural progress. My problem is the lack of any evidence that copyright does this. In fact, all of the actual evidence shows the opposite. That's our concern.

    But copyright is the method currently used to help create and sustain a market. I agree that it is not the only way, but it is a legally sanctioned way.

    Indeed. But what if it's also the way that is used to actually stifle creativity and hold back progress? Wouldn't that be an issue.

    Lets think of music artists. If you were one, which method would you rather have to make money. Create music that people like, copyright it, and distribute it for $1 a song. The better your music, the more money you will make (theoretically), which should push people to make better music if they want to make more money. Alternately, you could decide that this was the best music you will ever make, and you will accept however much money comes from selling the music for $1 a song.

    First of all, copyright is not about making the best system for musicians. If that were the case, then it would set up a welfare system. After all, isn't that even better than what you describe? How about if you're a musician the gov't automatically pays you $500,000 per year. That seems even easier than copyright!

    The fact is that, as you noted, copyright is supposed to promote the progress, not set up the easiest possible business model for musicians.

    Or would you rather create music that people like, give it away free, and have to hustle selling something else, or giving concerts?

    If that makes the artist more famous and allows them to make more money, make more music and spread their content around to more people then... um... yes? Isn't that better?

    I would propose that the first way is easier and the second way is harder.

    Again, nothing in copyright law is about making anyone's lives easier. But if we're using "easier" as the standard, then I'm afraid you're argument also falls apart. After all, the original purpose of copyright is to help the public get more content (not to help artists). So, let's look at it from the perspective of the public. In your two scenarios which one is "easier" for the public? I'd argue the latter.

    But what if you're agoraphobic? There is no way that you could give concerts.

    But there are tons of business models that don't rely on concerts. We've described how big artists (Reznor) and small artists (Motoboy, Matthew Ebel) made lots of money from models that didn't involve concerts (they did *also* use concerts, but that was not their core money making method).

    The amount of money that you will make from posters and donations from conscientious listeners will not provide you enough money to live on.

    Why do you say that? The evidence does not suggest that's true at all. I mean, no one is saying every musician can make a living without concerts, but plenty of them can and do.

    The art world and the culture of the society could lose out because musicians can not support themselves.

    Then you should rail against current copyright laws that for years concentrated all power in music making to a small group of gatekeeper labels, keeping everyone else out.

    If you didn't fit into what they wanted, you weren't able to make a living. Now, however, any artist can take control over their own career.

    The benefit of copyright is very nicely summed up on the US Constitution.

    No, that's not the benefit. That's the purpose of copyright. It is an open question as to whether or not such monopolies really do promote the progress. The evidence, to date, suggests it does not.

    Except that in this case, art is not just about business. There are socially important reasons for promoting creation of art.

    Indeed. Which is why you should be happy to know of the recent Harvard study that showed that as copyright laws are more ignored, more art has been created. Celebrate!

    However it was seen as important by the "founding fathers" to include it as part of the law of the land.

    The history of how it was included in the Constitution is fascinating. It had nothing to do with protecting artists, of course. Initially it was entirely about promoting *learning* -- which is why it did not cover things like plays and entertainment. Also the founding fathers were very concerned about how the "bad" side of monopolies could outweigh the "good." They would likely want to see the evidence that is present today which suggests they were right, and reconsider whether or not it made sense.

    How about just one more idea: If there was no copyright, and a musician created an album that was wildly popular. In order to recoup the cost and the personal labor of producing the album, the musician decides to give (and charge for) concerts. However, the musician is not a very good show man. I come along (who is a very talented show man) and I produce a fabulous show using all of the songs from the musician's album. Because I put on a great show, the original musician can no longer gain enough audience for his concerts. Will this musician be likely to try to produce music in the future? I would highly doubt it. But if you say that musicians can no longer expect to produce music once and sell it as many times as it will sell (which means dismantling copyright), you cannot say that the musician can make it up with a different business model.

    You have a hypothetical. I could easily create a different hypothetical that works just as well. So, for example you put on better shows, and this musician writes better music. Well, basic efficiency suggests the two of you team up. You pay him to write you the songs, and then you perform them live: and you both benefit. No copyright necessary.

    All of the other business models that I have heard here require, or heavily depend upon, copyright.

    That's simply not true. Almost all of the business models we describe do not rely on copyright at all.

    If a musician can have monopoly to hold concerts, why can't they have a monopoly to sell CDs?

    Because concerts are a true scarcity -- there is only so much room in a venue. Music is not. It can be replicated for free infinitely. And that's where economics of supply and demand come into play.

     

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  26.  
    identicon
    Jason Lotito, Jul 8th, 2010 @ 7:05am

    Online Entertainment Industry is doing well

    What I find odd is the assertion that it's hard to find business models for online entertainment, when the truth is, for more than a decade, online entertainment has been surviving and thriving.

    The issue isn't finding a workable business model for online entertainment. Rather, it's accepting that your old model needs to change, and your new model needs to provide real value. You can't just copy/paste an old model into a new system and expect it to work.

    This has been proven time and time again throughout history. Heck, the music industry grew because it was able to find a business model using new technology. So did the movie industry.

    They were disruptive and innovative back in their day. But they've forgotten that.

    No, the online entertainment world is doing just fine. It doesn't need you. You need it.

     

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  27.  
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    phil28, Jul 8th, 2010 @ 7:06am

    Kara Swisher not the brightest bulb

    If it weren't for Mossberg Kara would still be reviewing vacuum cleaners for her old column in the WSJ. And don't forget, she's now in bed with Rupert Murdoch, and apparently is influenced by his equally wacky opinions.

     

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  28.  
    identicon
    Anonymous Coward, Jul 8th, 2010 @ 7:22am

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

    god, you arent even a good troll (and you are trolling the wrong name). sorry, but it isnt that business is hard, it is that mikes entire concept of selling scarcity only works when people are flush and rich, not during normal times. scarcity, especially transient scarcities (such as concerts or meet and greets) are lost money. they are things that you do, the money is done, and you have no real retained value except memories. people can do this when they are floating in cash, but when things get even marginally tight, all of this stuff goes out the windows.

    that the entire music industry is suppose to "give away the infinite, sell the scarce" and the public cant afford the scarce pretty much sticks a fork in the business model. its done and disproven by events.

    it goes back to the reason why you sell recorded music for a reasonable price - because people could justify that, because they listen to the music all the time (and get value over and over again for their purchase).

    it is amazing to see real life shoot down mikes master thesis.

     

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  29.  
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    chris (profile), Jul 8th, 2010 @ 7:52am

    Re: Re: Re: Re: Re:

    right. the problem is people are discovering that there is little value in paying enough to make up for the money being lost on the music sales side. mikes entire deal the last few years is that live ticket sales are making up for what is lost in recorded music sales.

    that's your disconnect. people still pay for stuff, they just don't pay what they used to. that's a shift in the market. the 90's are over and they're not coming back, no matter how desperately you want them to.

    if you want to continue in the content business, you have to be able to deliver a product that turns a profit at the going rate. the going rate is significantly lower than it used to be. to quote marsellus wallace from pulp fiction:

    Now that's a hard motherfuckin' fact of life, but it's a fact of life your ass is gonna have to get realistic about.

    if the going rate is X your production costs are Y, your profit is equal to X - Y.

    if Y is greater than X, you can shake your fist at X all you want, but you should really focus on bringing Y down to a sustainable level if you want to continue in the entertainment business. if you can't fix Y, maybe you should go into something else.

    that current large tours and cancelling out, shrinking, canceling dates, and so on is an indication that people are no longer willing to pay the price.

    indeed. the market changed and the established players have to change with it or go under.

    personally, i blame free music, which has in turn taught people that even performing music has little actual value.

    you can blame whomever you want. that doesn't change the fact that music is free and people that want to make music for a living have to find new and creative ways to make money.

    the temporary trend in ticket sales stops working when people realize they are paying way over the value for something, mostly to support other parts of the business being ripped apart by freeloaders.

    people don't pay to support businesses. they pay for value. end of story. there are two golden tickets: 1) increase value or 2) reduce costs.

    anytime something is overvalued, there is a market collapse. this happened when people realized that tech start-ups were overvalued, it happened again when people realized that real estate was overvalued, and it will happen again when people realize that intellectual property is overvalued.

    but have no fear, people still buy technology even though the tech sector imploded, people still buy houses even though the housing market collapsed, presumably people will still be paying for entertainment once the entertainment market corrects itself.

     

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  30.  
    identicon
    Anonymous Coward, Jul 8th, 2010 @ 7:52am

    Re: Re: Re:

    "Agreed... especially when people are now producing web only series at no and low cost. "Pioneer one" , a 5 minute short for under 500 dollars. " - actually, when you calculate the costs of peoples time to do this, you know the cost isnt $500, but tens of thousands of dollars.

    when you calculate the costs of the equipment uses, the time spent, and so on, it wasnt made for $500.

    further, and this is the key, these people are not going to give up their day jobs to do this for long, unless you want to accept the socialist concept that the state should pay time (welfare) so they can stay home and make movies.

    so which would you like?

     

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  31.  
    identicon
    Anonymous Coward, Jul 8th, 2010 @ 7:54am

    Re: Re: Echo chamber

    "Because concerts are a true scarcity" - and one people are less and less interested in paying for. mike, are you ever going to address the issues of all of the concert tour cancellations, cut backs, and such? it is important to look and see that perhaps the scarcity model you are pushing only works when people are flush with cash and can make expensive optional purchases of transient scacities.

    otherwise, we risk spending more time in the aptly spotted "echo chamber".

     

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  32.  
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    chris (profile), Jul 8th, 2010 @ 8:14am

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

    it is that mikes entire concept of selling scarcity only works when people are flush and rich, not during normal times. scarcity, especially transient scarcities (such as concerts or meet and greets) are lost money.

    go lurk the new kids on the block message boards and see how much money women have "lost" over the last three years attending their events.

    people can do this when they are floating in cash, but when things get even marginally tight, all of this stuff goes out the windows.

    if times are tough, maybe you should reduce expenses so you can lower prices.

    that the entire music industry is suppose to "give away the infinite, sell the scarce" and the public cant afford the scarce pretty much sticks a fork in the business model. its done and disproven by events.

    so we the world should just pretend that this superior way to promote and distribute content doesn't exist? good luck getting that genie back in the bottle.

    it goes back to the reason why you sell recorded music for a reasonable price - because people could justify that, because they listen to the music all the time (and get value over and over again for their purchase).

    that's a good idea, except for the fact that the going rate for recorded music is $0. other than that, though, it's a really good idea.

     

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  33.  
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    chris (profile), Jul 8th, 2010 @ 8:43am

    Re: Re: Re: Re:

    actually, when you calculate the costs of peoples time to do this, you know the cost isnt $500, but tens of thousands of dollars.

    so they are lying about their costs? if so, why would they do that? why are they using the DISCO to promote and distribute it for free when they invested tens of thousands of dollars out of pocket?

    these people are not going to give up their day jobs to do this for long, unless you want to accept the socialist concept that the state should pay time (welfare) so they can stay home and make movies.

    how much would it really cost then? how much money would they need?

    i don't think it's necessary to accept socialism and demand payment from the state. it could be something simple, like people do stuff because they want to. or that people make stuff because it's fun and want to share it.

    how much do their day jobs pay? how much value is there in being able to make the things you want to make full time?

    i can't speak for the VODO guys, but if i could make enough to pay the bills by having fun and making cool things, i would gladly sacrifice many luxuries to enable that pursuit.

     

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  34.  
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    chris (profile), Jul 8th, 2010 @ 9:00am

    Re: Re: Re: Re:

    That is the constant flaw with your arguments. The record labels DO NOT have the same product. Even iTunes doesn't have the breadth of selection available on most file sharing networks.

    i think AC has a point. file sharing networks do distribute the same products as the content industry. the fact that the number of offerings on file sharing networks eclipses what is available for authorized downloads supports that idea.

    what AC fails to realize is that file sharing networks share what's popular, regardless of its origin. if the studios stop producing content, it won't affect file sharing in the least.

    in fact, once major studio content is no longer available, file sharing will increase in value since that's the only way for consumers to get their hands on that legacy content.

    whatever comes in to fill the void left by this theoretical studio collapse will also be distributed via file sharing. hopefully, for sustainability reasons, this new crop of producers knows how to leverage file sharing to their advantage since fighting file sharing is such a futile activity.

     

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  35.  
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    calmo (profile), Jul 8th, 2010 @ 10:12am

    that golden ticket...

    These guys are sitting back and waiting for someone to hand them a golden ticket that replicates the old ways of doing things. I don't think so. They know the old way of doing things is on a short rope. Throwing energy at ways to replicate the old way is just trying to stretch that rope by obstructing the disruption *until they can retire*, whereupon it becomes someone else's problem.

     

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  36.  
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    Mike Masnick (profile), Jul 8th, 2010 @ 10:15am

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

    people can do this when they are floating in cash, but when things get even marginally tight, all of this stuff goes out the windows.

    Yet, when times are tough people buy CDs? Huh?

    that the entire music industry is suppose to "give away the infinite, sell the scarce" and the public cant afford the scarce pretty much sticks a fork in the business model. its done and disproven by events.

    Ha! One poorly organized, poorly planned out event does bad, and it disproves the entire history of economics?

    By that reasoning, the fact that CDs aren't selling as well as they used to proves your argument (people just want to buy music) is "done and disproven by events."

    it is amazing to see real life shoot down mikes master thesis.


    Except, of course, real life still agrees with me and makes you look confused about economics yet again.

     

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  37.  
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    chris (profile), Jul 8th, 2010 @ 10:20am

    Re: Echo chamber

    What is so wrong with copyright? I don't mean copyright as currently practiced in America, but copyright in general?

    that it gets abused to the point of becoming the current american practice. also, those who benefit from the current american practice i are doing their best to spread that practice to the rest of the world.

    Its purpose is rather clearly defined in the US Constitution, and I believe its purpose is worthy. Promotion of content creation is a worthy objective, and if the monopoly on that content can provide it, what is the problem?

    the problem is that the monopoly is not used to promote the progress, but as a cudgel to stifle free speech, fair use, innovation, culture, and in some cases, even privacy. that stuff is always way more important than revenue, and if creative types have to sacrifice some wealth to protect people's basic freedoms, then so be it.

    Or would you rather create music that people like, give it away free, and have to hustle selling something else, or giving concerts? I would propose that the first way is easier and the second way is harder.

    that's great, but the first way is guaranteed to fail with mathematical certainty, and the second way has a chance of succeeding. the first way is not grounded in reality and the second way is. profit in the entertainment industry is not, should not and will never be a guarantee.

    If... a musician created an album that was wildly popular... However, the musician is not a very good show man. I come along... and I produce a fabulous show... the original musician can no longer gain enough audience... Will this musician be likely to try to produce music in the future?

    a lot of copyright types often assume that once someone "takes" something, that it's gone forever. that if someone copies your stuff, you can't copy your own stuff back.

    to render your current show obsolete, all the originator has to do is feature new original content. to me, that sounds like a real incentive to create more content.

    how quickly can you put your tour together once you decide to do this guys music? how quickly could you put together a new show if the originator makes new stuff? the originator automatically has the "first mover" advantage because he gets first crack at original content. even if your shows are better, they will always be behind his in terms of originality.

    plus, the originator can use your success with his old content to promote and endorse his new content.

    so, if you are smart, you will pay the originator to write for you, so you get to bolster your showmanship with his first mover advantage.

    also, without copyright, your awesome shows are fair game for the originator. assuming the real value is showmanship and not the quality of the content, the original artist can take what works from your show, and other popular shows, and incorporate it into his next series of concerts with new content that he/she created. you benefited from copying the originator, but he then benefits from copying you in return, and in the end, the best show makes the most money, again, assuming the value in mostly in showmanship which may not be the case.

    or, the originator can connect with those who currently enjoy his concerts, and give them even more of what they want to see, leaving you to do your shows that appeal to your audience.

    when there is no intellectual monopoly, there is nothing stopping brutal competition to deliver the absolute best product.

    If a musician can have monopoly to hold concerts, why can't they have a monopoly to sell CDs?

    everyone has a natural monopoly on their performances, because only they can perform as themselves. this doesn't automatically invalidate originality. you pay to watch a comedian perform, not to hear his jokes, but if that comedian only tells jokes you've heard before, it hinders the performance.

     

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  38.  
    identicon
    blinddrew, Jul 8th, 2010 @ 11:54am

    2 problems with Ms Swisher's article

    Firstly she hasn't spoken to either the creator or the consumer, she's spoken to the middleman. Secondly she hasn't done her research on the alternatives.
    Now i don't have a business model that works (i sure wish i did) but i know full well that the major label one is broken.
    If they are to survive their top people need to start earning their money.

     

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  39.  
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    Richard (profile), Jul 9th, 2010 @ 5:16am

    Re: that golden ticket...

    just trying to stretch that rope by obstructing the disruption *until they can retire*
    You might be on to something there.
    Otherwise, all they're doing is waiting for something new to come along and show them what to do whilst at the same time killing everything new that comes along. It's like waiting for the second coming by killing every newborn.

     

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


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