from the more-pie-for-everyone dept
You may have heard the story. It's about a bunch of villagers all taking a little nibble of a pie, insisting that just a little bit won't hurt -- and then, of course, the entire pie is gone, and everyone claims that it was "Not I" who ate the pie.
Yes, it's a wonderful fable that you should read to your children in nursery school. But, for the adults who actually understand basic economics, it's clear that the situation the RIAA is facing has absolutely nothing to do with the situation described in the book. So let's fast forward from nursery school to econ 101, and perhaps educate the RIAA a bit.
The reason the pie story functions the way it does is because the pie is a scarce and limited resource. As such, each time someone takes, it means that there is less for others. It's a zero-sum game. In contrast, with a digital file, the content is abundant and an infinite resource. Each time someone makes a copy, rather than less for everyone, there's actually more for everyone. You're actually growing the pie. Neat!
The problem the RIAA and its labels face is not everyone nibbling on the pie. It's that it has always focused on selling pie at greatly inflated prices, because in the old world, you could only get the pie from a few RIAA-run pie shops. In the new world, with abundant pie, where each copy of a piece of pie expands the pie, suddenly people can get their pie from many other places. And it's been great for pretty much everyone, other than the proprietors of the RIAA pie shops. More musicians are able to get their "pies" out there, since the old pieshop gatekeeper is no longer the bottleneck. More musicians are able to make money since they no longer have to rely on the pieshop to fund their ability to make new flavors of pie.
Now, when you have a market with an abundant resource, that actually tends to open up all sorts of new business models around pie (pie eating contests, pie toppings, pie making lessons, pie crusts, pie tins, etc.). In fact, those business models are working quite well. But the RIAA seems to have become confused about where the pie has gone:
In the music industry, it takes the investment of many peoples' money, effort, and time to create the songs and albums we all get to choose from and enjoy. Since most acts never even reach the breakeven point in sales, music labels need to operate like venture capitalists and count on the successes to subsidize the continued development of many artists and releases that may never break out of the red. And it's easy to ignore the harm being done when you're only stealing one copy.Such a nice story. Too bad that it's just as much a children's fiction as the original pie fable. Recent studies have shown that the music industry has been growing, not shrinking over the past few years. It's just that the money is going to different places. Again, the RIAA has a blindspot for all the other places where people can get pie, and how they've build up great business models around it, assuming that if you're not getting pie from an RIAA shopkeeper, then you must be "stealing." But that's like saying every time I order pizza from Domino's, I'm stealing from Pizza Hut. Or, even worse, every time I make my own pizza at home, I'm stealing from Pizza Hut.
Music companies continue to develop more ways for fans to enjoy their favorite artists and songs legitimately -- and provide additional sources of revenue. But when more music is obtained illegally, and less money is available to invest in finding, developing, and recording new artists, the resources available for the next round are diminished. So if the investments dry up, and fewer new artists are able to be developed, will filesharers who stole bit by bit look at each other and say it was "Not I" who stole the pie?
The real problem is not different people taking "just a little bit." The people haven't been taking, they've been growing the pie. Massively. And the musicians and record labels who understand this have been growing and profiting nicely. So, seriously, RIAA, let's leave the children's fables where they belong and start focusing on updating your antiquated business model to deal with the twenty-first century.