Whacking A Straw Mole... And Missing Badly

from the hank,-you-need-better-aim dept

It's been a few months since we heard from Hank Williams (not the singer, but some guy who writes for Silicon Alley Reporter). You may recall he was the guy who got numerous basic facts wrong about copyright online, and then displayed an ignorance of basic economics in attacking my critique of his claims. He's been quiet for a bit, but he's back, claiming to play "whack-a-mole" with the arguments being made by myself and others concerning the economics of free music.

Tragically, when you're playing whack-a-mole, it helps to actually whack the mole in question. Instead, Williams appears to have stretched out and tried to whack-a-made-up-straw-mole in the corner... and even missed that.

Williams repeatedly puts words in my mouth that I never said, and then tries to knock each of those strawmen down. He never once quotes anything I actually said, preferring to pretend I said a bunch of stuff I haven't said. Amusingly, he even fails to knock the false things I never said down. It, again, makes me wonder if Williams' writeups are really just a super clever satire -- though, those who know him tell me this is not the case at all. Williams is actually serious. So let's go check out what he says I said, and what he says in response:

Masnick regularly argues that the music business should be making money other ways than selling "shiny discs".

Actually, that's not quite true. I have always said that musicians should focus on selling scarce goods. Shiny discs are in fact one of many scarce goods. So selling more CDs is not a bad idea -- if you can do it. The problem, however, is that the market definitely appears to be moving away from shiny discs. Some have figured out how to still keep that market alive -- such as Trent Reznor -- by giving people a good reason to buy the shiny discs. So we're all for still selling shiny discs if you can. But, I think we all admit that's not the eventual path to music industry success any more. So, this is a strawman argument from Williams. He then attacks a post I wrote nearly two weeks ago (a bit slow on the response, eh?) criticizing Warner Music for bitching about the royalty rates it had agreed to on video games like Guitar Hero and Rock Band:

And in the Guitar Hero/Rock Band case, Warner wants a greater royalty for using their music in the wildly popular video game. So here, it sounds like Warner is taking Masnick's advice, right?

Only if Warner misread my advice as badly as Williams' has. The focus is on selling scarce goods, not the infinite goods that are already created. So, again, we have a strawman, as Williams seems to want to pretend I said something I didn't say in order to knock it down. Let's move on...

Warner is still wrong, Masnick says. They shouldn't be demanding more money for the use of their music. They should be happy knowing that Guitar Hero is great marketing for Warner Music to sell, err... shiny discs.

Straw piled upon straw piled upon straw. Again, my complaint was never with the effort to sell shiny discs alone, but my complaint with Warner's actions has nothing at all to do with the label trying to sell more shiny discs. The point is that through the games like Guitar Hero and Rock Band new fans are introduced to certain music, which allows the musicians in question to make money from a variety of business models, involving selling scarce goods associated with those acts.

So: According to Masnick, music labels shouldn't plan on selling music in the traditional way. But they also shouldn't demand substantial licensing fees from a big, profitable video game franchise, even when that franchise is entirely based around music -- because that franchise helps them sell music in the traditional way.

Well, no, that's only according to three levels of false strawmen created by Williams. But, amazingly, in those 3 levels of straw, there's some truth -- though, Williams' big swing at the straw heap is a big miss as well. It's true that record labels shouldn't plan on selling music the traditional way. I don't think anyone denies that. That market is increasingly in trouble. And, it's also correct that they shouldn't demand substantial licensing fees from big, profitable video game franchises -- especially when (this is the part Williams not-so-deftly skips over) they already have signed licensing fees for the music.

The point (also skipped over by Williams) is that there are a wide variety of business models that musicians can choose from these days that use the music as a promotion for those scarce goods (which include things like concerts, access to the musician, the creation of new music, etc.). I never said that being in games like Guitar Hero and Rock Band help musicians sell music the traditional way. I said it acts as promotion for the artists, which allow them to build up a larger fan base on which they can use these myriad business models that focus on selling scarce goods.

Masnick says he's not against selling music. But when you look at his arguments, he really doesn't leave much on the table. If you can't charge the biggest media companies in the world for your product, who can you charge?

Where to start? The strawman here is the false belief that the only thing the musicians have to sell is the music itself. That's clearly not true. As for that first statement about me not being against "selling music," that's correct -- in that if you can sell music, more power to you -- but it won't make sense once more artists realize they can do better using the music to promote the other scarcities they sell. But to say that there's not much left on the table suggests either an inability to read what I actually have written -- pointing to tons of business models that show that freeing up the music actually puts a lot more on the table -- or just willful ignorance.

Techdirt is both a blog and a consultancy, so you're supposed to take this seriously -- someone is supposedly paying for this advice. Why?

Well, actually, we're not a "consultancy," but at this point, expecting Williams to understand the difference between a consultancy and an expert network is apparently too much to ask. And, we would never expect anyone to take anything seriously just because we're a business (though, not a consultancy). We expect people to take us seriously because they read what we have to say, look at the evidence (both on a micro and macro level), recognize that the evidence is compelling and then make a decision that it's worth paying attention to. If you skip that first level (the actually reading what we have to say part), then it's no wonder that you might be confused about the rest of our business model. The good news is that our business model works, both for us, and for others who embrace it. Williams can keep denying it as long as he wants, but we've got plenty of evidence where it counts.

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Pro-Copyright Strawmen Won't Protect You From Real Economics

from the knock-'em-down dept

Over the last couple of months, I've discussed some unsubstantiated claims by Hank Williams, a writer for Silicon Alley Insider, that seemed dubious and uninformed, such as the idea that business models based on "free" were the fault of venture capitalist and made it impossible for small businesses to survive. Then, a couple weeks ago, there was his totally unsubstantiated attack on those who support weakening copyright protections. Williams has now responded, with a piece taking a few quotes from me out of context and insisting that I had no evidence to back up my claims. In reading through his claims, one thing becomes clear: Williams, like many others, likes to set up strawmen on what he wishes I said, and then to try to prove his point, puts artificial restrictions on what counts as proof. Let's take a look.

Williams original statement: First, if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc.

Masnick said: This assumes that without copyright, content creation goes down. There's no evidence to support this. In fact, we see more content creation today than ever before in history, and most of it is not because of copyright in the slightest.

Williams' Response: First of all, as far as I know, we still have copyright laws in this country. But Masnick says copyright isn't important to the creators of that content. How do we know this? Because Masnick says so. And I am sure most movie makers, book authors and publishers, and TV producers agree that they could continue to make their products without copyright. I am sure Jeff Zucker agrees. I am sure Bob Iger agrees. I am sure all those writers who get book advances agree. What about YouTube? What about the blogosphere? Well, the last time I looked Star Wars Kid had neither a TV nor movie deal for his famous clip.

The strawman that Williams is using here is to mix and match what type of content he's talking about to suit his purpose. I thought he was talking about content as a whole, which is what he implied. But when I pointed out that there's more content being produced today than ever before (thank you internet) and the vast majority of it isn't being produced because of copyright, he changed his tune, to say he only meant professionally made content that was made using copyright. In other words, it's a tautological argument: the only content that counts is the content produced by this particular business model -- so if that business model goes away, there will be less content produced by that business model. Well, duh. But that doesn't mean less content will be produced, which is what his handwaving is meant to imply.

And, of course, there's little evidence to suggest he's correct even there. The music industry, as has widely been demonstrated, has not been decimated by piracy at all. While the recording industry has had trouble adjusting, just look how many musicians have found a decent audience thanks to the internet. The combination of cheaper tools to make music, record music, distribute music and promote music means that more people can and are making music today than ever before in history. The same is true of other types of content as well. Of course, Williams has a neat trick in his bag to discount all of those, but we'll get to that next.

Williams said: There is no evidence at all that free music on the Internet is an effective (i.e. successful career building) marketing tool.

Masnick said: That's simply untrue. Mr. Williams may not have found such evidence, but it's only because he didn't look very hard. The number of bands who exist solely because of their ability to build a following on the internet is rather large at this point, with plenty of bands crediting the internet's ability for easy distribution and marketing for their own ability to exist.

Williams' Comment: Again, Masnick's response appears to be: "You are wrong because I said so." But I'm trying to help: Via the Free Music Research Project I've started, I'm trying to see if I can find any artists that have effectively used the Internet promotion for anything other than to get noticed by a label. We are still in fairly early days, but so far no qualifying artists have been submitted. Kevin Kelley and Jaron Lanier have both also aggressively been looking for such artists, and they haven't found any either. I am not saying that there aren't any, but at this point any evidence is elusive. I suspect that there may be one somewhere. But probably not three.

And here's the neat little trick. The devil is in the details, but Williams has defined using free music to create a success so incredibly narrowly to make sure to limit the number of musicians who meet his qualifications. Let's go through the problems with his definition one-by-one.

First, he says it only applies to bands that are not on any label. Why? Who knows. I certainly have never claimed that bands need to remain off labels. In fact, I've pointed out exactly the opposite -- that even in the world of free music there's plenty of room for music labels who take a more holistic approach to helping a band create a full business model. So, suddenly, he cuts off any band that has ever signed with a label, even those that are embracing giving away their content to make money in other ways.

Second, he says it only applies to bands that make all their music downloadable as mp3s on MySpace. Why only on MySpace? Again, no idea. I'm not sure what MySpace has to do with any of this. Perhaps this isn't that much of a limitation, since most bands do seem to have a MySpace page -- but it still seems like an odd restriction.

Third, it only applies to musicians who are US based. He says this is to make it easier to research the details, but of course, that leaves out successful examples we've discussed in countries like Jamaica, China and Brazil. But that's okay, because none of those examples meet some of Williams' other pointless restrictions.

Fourth, it only applies to bands who have agreed to give away all of their music, rather than those who are just testing the waters. Why this limitation? Again, it's not at all clear. But just because a band is testing the waters and learning how "free" works, doesn't mean that they don't count as evidence.

As a subsidiary point (point 4a) it appears to also only apply to bands that don't also sell their music (Hank can hopefully correct me if I'm wrong here). I'm putting this as 4a, because it's not entirely clear if this really disqualifies a band -- though, Hank does say: "The idea is to find artists that, as a career choice, are not selling their music." Hank is pulling a sneaky strawman trick here: by saying that if a band is still making any money from the legacy system, then obviously that legacy system works great. This is similar to the problem with point 4 above. No one says to completely ignore the old way while you transition -- but for Hank, that's just not good enough.

Fifth, Hank insists that the bands can only make money from touring, and demands that they have a published schedule online. In fact, in the comments he dismisses Jane Siberry/Issa, who has built a career out of giving away her music because she doesn't happen to have a tour listed online. This is a common point of attack that people have made. But, it again is an artificial limitation. I have never suggested that bands should make their money touring, so I'm not sure why Williams thinks that's a reasonable limitation. I have simply said that they can sell scarce goods while giving away the infinite goods (the music). And, those scarce goods can include many things. Touring is certainly a big obvious one -- but hardly the only one -- as can be clearly seen by the successful experiments run by both Trent Reznor and Jill Sobule.

In both cases, Reznor and Sobule sold other scarce goods that had little to do with concerts (though, one of Sobule's "tiers" included concert tickets). Reznor ended up making well over $1.6 million. Sobule made $75k (her goal) in less than two months. But, to Williams, these don't count -- even though neither of them were business models predicated on copyright. And, so we have a strawman. Williams has decided that the business model we support has all of these limitations on it, even though it does not -- and he won't bother to accept any musician who has their feet in both pools.

I'm not sure what that proves, but it certainly doesn't prove that the model we're discussing doesn't work. We've already seen plenty of proof that it does.

Williams said: There have been no blockbuster successes that have come from, for example, Garageband availability. I don't think you could even count more than a handful -- if that -- internet-based artists making a living from music.

Masnick says: Of course, that depends on how you define "blockbuster" success. Williams seems to define it narrowly to suit his purposes, and that completely undermines his argument. Bands like the Arctic Monkeys created the following that turned them into a huge success via the internet.

Williams' Comment: The Arctic Monkeys do not fit the criteria, but not because they aren't big enough, but because they aren't an Internet band. I will happily concede that the Internet has been helpful to labels in discovering artists. In fact the the Internet is now a primary research tool for label A&R departments. And such is the case with The Arctic Monkeys. But all of The Arctic Monkeys' major success, like best selling records, and major radio play, came after they signed with a label in 2005.

And if they were so successful without a label, why sign with one? Why not just keep that big pile of Internet cash to yourself? Even if you discount that the Arctic Monkeys are a label band,, and just accept Masnick's contention that they are an Internet blockbuster, one single band does not make a movement. It doesn't even qualify as a "handful".

We've already discussed the strawman of Williams' that somehow signing with a label disqualifies a band from gaining value from the internet or embracing free music. Instead, I'll focus on the fact that Williams conveniently snips out the success stories of Maria Schneider and Flo Rida. I'm sure he has reasons why they, too, don't qualify. However, when you spend so much time pointing out why every example "doesn't qualify" for some arbitrary set of rules, at some point you'll have to realize that all of those exceptions are the rule.

We never said that one business model (and certainly not the one Williams insists must be there) is the answer. We simply explained the basic economics and how to craft multiple business models that take advantage of those economics. You can build a strawman to argue against any single business model, but given that the overall economics are sound, and the increasing number of artists who are taking advantage of those economics (even if they don't fit Williams' narrow criteria) are doing a fine job of proving the point that Williams strawman won't support. So, go ahead and knock over that strawman, Hank. The rest of us are focusing on the business models that work.

Update: A friend just alerted me to the most ridiculous contradiction in Williams' post that was too good not to point out. As we noted above, in determining who "qualifies" as a success story with these non-copyright-focused business models, Williams' says you can't include anyone signed to a record label. Yet, in determining what qualifies as a "success" story with internet content, he mocks the Star Wars Kid: "Well, the last time I looked Star Wars Kid had neither a TV nor movie deal for his famous clip." So, apparently, to be a success as an amateur, you need to sign a pro deal, but once you sign a pro deal, you no longer qualify to be considered a success as an amateur. This is positively brilliant. Williams has created a scenario where it's simply impossible to qualify for his definition of success, because the second you qualify... you're disqualified.

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Ownership Doesn't Make Sense In Communications

from the you-don't-own-your-conversation dept

Earlier this week, we explained the root cause of many of the problems the entertainment industry runs into when it tries to deal with copyright online. It views the internet in the same way that it views a broadcast media content platform, when it's been designed and used primarily as a communications platform. The entire concept of copyright doesn't make sense in the realm of regular communications. You don't worry who owns the copyright on the conversation you have on the phone or the email that you write to a friend. Yet, when viewed through the prism of a "content" platform, these are open questions. The same is true of things like blog comments. Yet, suddenly we find people arguing over who "owns" comments place on a blog page.

Mathew Ingram does a nice job highlighting the key issues that were raised this week on that question, but the whole conversation took a turn for the bizarre when Hank Williams weighed in. This is the same Hank Williams who posted a poorly researched defense of copyright. Now he's back claiming that the issue of who owns the copyright on blog comments is a really important question. If anything, you would think that the points he raises in his post would actually be the perfect evidence for why his original post was wrong (though he seems to miss that). It's quite clear from what he wrote that copyright law doesn't handle this situation very well -- which makes sense, because copyright is (again) designed for broadcast media, not communications. But rather than realize that's a good reason why copyright shouldn't apply at all here, Williams doubles down on why "ownership" over comments is something that needs to be worked out -- he suggests that blog and comment system providers create a totally useless mechanism to "declare" ownership of comments.

Except that this system is not at all necessary, and would only lead to more problems. The entire purpose of copyright is to act as incentive for the creation of that content. Yet, I think most people would find it preposterous to claim that the reason they commented on a blog was because of the protections provided by copyright. In other words, there's no question to worry about here because this content was all created without copyright being the incentive. However, in this bizarre and twisted world where infinitely available resources need to be shrunk down and "owned," Williams insists that we need to figure out who has the copyright on comments.

In the comments to Hank's own story, things get even more bizarre. First, Hank suggests that if the blog owner "owned" the comments then that might mean that the blog owner also "owned" the liability associated with those comments (which could mean in cases of libel or copyright infringement). Once again, though, Williams is showing his ignorance, as both cases are clearly covered by the safe harbors of the CDA and the DMCA, and the stacks upon stacks of case law concerning liability on things like blog comments. It's quite clear that Williams thinks ownership of infinite resources is a good idea -- but he doesn't appear to have thought through what that means and why it's neither necessary nor a good idea. Too bad.

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If You're Going To Argue In Favor Of Copyright, It Might Help To Do Some Research First

from the just-a-suggestion dept

TechCrunch's Michael Arrington is a welcome addition to group of people who have come around to recognizing that copyright law is problematic these days. His arguments won't surprise many around here, but his latest post on the subject got a bizarre response from Hank Williams (not the musician) at Silicon Alley Insider, insisting that Arrington's thoughts on copyright were flat out "wrong." Williams is the same guy who wrote a troublesome post explaining that there were no reasonable business models built on "free." That was easy enough to debunk, but Williams is back making simply incorrect claims in his attempt to refute Arrington.

Let's go through some of William's assertions and point out why they're either wrong or ill-informed.

First, if music goes down, so will every other form of copyrighted material including ultimately books, movies, TV, etc.

This assumes that without copyright, content creation goes down. There's no evidence to support this. In fact, we see more content creation today than ever before in history, and most of it is not because of copyright in the slightest.

Second, there is no evidence *at all* that free music on the Internet is an effective (i.e. successful career building) marketing tool.

That's simply untrue. Mr. Williams may not have found such evidence, but it's only because he didn't look very hard. The number of bands who exist solely because of their ability to build a following on the internet is rather large at this point, with plenty of bands crediting the internet's ability for easy distribution and marketing for their own ability to exist.

There have been no blockbuster successes that have come from, for example Garageband availability. I don't think you could even count more than a handful -- if that -- internet-based artists making a living from music.

Of course, that depends on how you define "blockbuster" success. Williams seems to define it narrowly to suit his purposes, and that completely undermines his argument. Bands like the Arctic Monkeys created the following that turned them into a huge success via the internet. Maria Schneider won a Grammy with a model that relied on internet support. Flo Rida, whose music I keep hearing in random places, built up his following using the internet. And those are ones I can think of off the top of my head. We get examples sent to us practically every day of bands successfully using these models that don't rely on copyright. It's difficult to see how Williams can claim with a straight face that there's no evidence that it works. It also makes me wonder if Williams has ever been on the MySpace page of even a moderately successful independent musician.

Third, if the recorded music industry goes down, concert sales will not grow -- they will shrink. This is because the money that goes into creating concert demand (all from record label marketing) will disappear. People *will* see fewer concerts and they will cost less money because of reduced demand. So not only will the recorded music business disappear, but so will the much of the live music business. So there will be no "live music windfall" to share. Revenue in live music will shrink substantially from where it is today.

That's quite an assertion considering exactly the opposite has been happening. Recorded music sales have been shrinking rapidly over the past few years. Concert revenue, on the other hand, is at an all time high. Williams is simply incorrect and clearly hasn't done the research. In fact, the numbers we've seen have shown the same thing consistently: every single aspect of the music business is on the upswing, except for sales of shiny discs. Concert revenue is up. The number of people making music is up. The number of people earning money from their musical careers is up. Even the instrument sales business has been up. The music business is doing great -- and it has nothing to do with copyright. The demise of copyright hasn't done anything to hurt the other aspects of the business, despite William's uninformed conjecture.

As for William's reasons for why it will shrink, it shows a profound misunderstanding of how the music business works today. We've already established that he doesn't understand that internet promotion works, but it does. So the fact that you don't have a record label out pushing your CD isn't a problem for the other parts of the music business, because the internet and the ability to connect directly with fans via social networks and websites has taken up the slack.

Williams then goes on a tangent about the purpose of laws being to protect others from harm, which all sounds nice, but really is besides the point here. As we've pointed out at length, and backed up with economic research and examples, there are new business models being developed that allow everyone to be better off. Bands make more money, fans get access to more music, and everyone's better off. Where is the "harm" that anyone needs to be protected from in that situation?

Williams then chides Arrington for not having any real suggestions on how to reform copyright law -- which may be true, but that doesn't mean others haven't thought it through. But, instead, Williams immediately jumps to the false conclusion that any change of copyright law will harm nearly the entire economy:

As I see it, the concept of "rethinking copyright" without specifics and without the willingness to follow things through to their natural conclusion is dangerous. This discussion must be about consequences. If you cannot propose solutions and provide reasonable answers to what the consequences are, such suggestions are only harmful because they embolden people to think that stealing intellectual property is acceptable and that IP protections are bad. But, In fact without intellectual property and attendant protections, we will be flushing down seven or eight percent of our economy directly, and indirectly twenty percent or more.

This is simply untrue, and suggests Williams has never once looked at the economic research on this topic. We're seeing more content production and more money made from content production today than at any time in history, and much of it has absolutely nothing to do with copyright. Williams also leaps to the false conclusion that this is about "piracy" rather than about business models.

Much of our economy and our value in world markets is tied into the creation of intellectual property. The collapse of the concept of intellectual property will have devastating economic effects on everyone in every post-industrial economy. This may seem like it is just about illegal downloads, but the issue is much more serious and if not addressed portends an economic melt down of unthinkable proportions. A little "straight talk" is really critical at this point, because we really are talking here about economic Armageddon.

Again, if Williams is going to make these sorts of ridiculous claims, he owes it to himself to read some of the research first. He can start with Against Intellectual Monopoly. In the meantime, Silicon Alley Insider is usually a fantastic read. They should think twice about letting someone like Williams comment on subjects which he is clearly uninformed about, however. This is only the second time I've had a serious problem with an SAI article, and both were by Williams.

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