Weaker Copyright = Stronger Economy

Discussion in 'NZ Computing' started by Lawrence D'Oliveiro, Jun 22, 2010.

  1. Just started reading this paper by Oberholzer-Gee and Strumpf
    <http://techdirt.com/articles/20100621/0933449895.shtml> about file sharing
    and copyright. Here’s the abstract:

    The advent of file sharing has considerably weakened effective copyright
    protection. Today, more than 60% of internet traffic consists of
    consumers sharing music, movies, books and games. Yet, despite the
    popularity of the new technology, file sharing has not undermined the
    incentives of authors to produce new works. We argue that the effect of
    file sharing has been muted for three reasons. (1) The cannibalization
    of sales that is due to file sharing is more modest than many observers
    assume. Empirical work suggests that in music, no more than 20% of the
    recent decline in sales is due to sharing. (2) File sharing increases
    the demand for complements to protected works, raising, for instance,
    the demand for concerts and concert prices. The sale of more expensive
    complements has added to artists' incomes. (3) In many creative
    industries, monetary incentives play a reduced role in motivating
    authors to remain creative. Data on the supply of new works are
    consistent with the argument that file sharing did not discourage
    authors and publishers. Since the advent of file sharing, the production
    of music, books, and movies has increased sharply.

    Some extracts:

    In a sample of 5,600 consumers who were willing to share their iPod
    listening statistics, the average player held a collection of over 3,500
    songs (Lamere, 2006). A full 64% of these songs had never been played,
    making it unlikely that these consumers would have paid much for a good
    portion of the music they owned. While it is difficult to say how
    representative this sample is, there is no doubt that trade groups such
    as the Business Software Alliance vastly exaggerate the impact of file
    sharing on industry profitability when they treat every pirated copy as
    a lost sale (Economist, 2005). The demand for titles is not completely
    price inelastic.


    In practice, it is often surprisingly difficult to predict whether new
    products and technologies are complements or substitutes. As a result,
    we can often not be sure how changes in copyright will influence demand
    and industry profitability. The entertainment industry’s history
    provides many examples of the difficulties involved in distinguishing
    substitutes, unrelated products, and complements. Music companies fought
    the introduction of radio in the 1920s, fearing the new medium would
    provide close substitutes to buying records. Since that time, the
    numerous attempts to bribe radio stations in the hopes of influencing
    playlists suggest the industry has come to see radio as an important
    complement to recordings (Coase, 1979). Similarly, the entertainment
    industry battled home taping and the introduction of the VCR, arguing
    the new technology “is to the American film producer and the American
    public as the Boston strangler is to the woman home alone†(Valenti,
    1982). Once the Supreme Court decided to protect technologies like the
    VCR, it did not take the industry long to discover that selling
    videotapes (and now DVDs) presents a major business opportunity.
    Lawrence D'Oliveiro, Jun 22, 2010
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  2. Lawrence D'Oliveiro

    Sweetpea Guest

    Is there a citation to support that wild assertion?
    Sweetpea, Jun 22, 2010
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  3. Lawrence D'Oliveiro

    Sweetpea Guest

    I reckon that the vast bulk of the decline in CD sales id mostly due to
    the fact that most new music is puerile garbage that most people don't
    think is worth actually paying money for.
    Sweetpea, Jun 22, 2010
  4. Lawrence D'Oliveiro

    Simon Guest

    I also suspect that a proprtion of the population is actively
    rebelling against "big music" for the way in which they've treated
    their own customers.
    Simon, Jun 22, 2010
  5. Lawrence D'Oliveiro

    Sweetpea Guest

    I imagine you're right, altho' I think that's more by means of bands
    signing up to alternative labels or releasing their own material directly.

    I know a local band who is currently over in the UK recording their first
    full album with the help of a respected record producer. They're not
    signed up to a record label and have paid their own way. I think that
    they're bloody marvelous - even perhaps NZ's next Crowded House.

    They, like so many good local bands, are Indie.
    Sweetpea, Jun 23, 2010
  6. Lawrence D'Oliveiro

    Simon Guest

    Yes, as you've noted there's definitely more to it than just that, but
    anecdotally, I know a lot of people who have "had enough". That
    however is probably a self-serving sample and so should be taken with
    a grain of salt!
    As you're alluding to, the other issue is how much the bands actually
    recieve from sales. That appears to be a tiny fraction of the amount
    that the music companies receive, all the while bleating that they're
    finding it financially tough these days.

    If the music companies had embraced the internet instead of fighting
    it, and established a non-DRM customer friendly retail sales channel,
    I don't think the issue would be anywhere near as bad as it currently
    is. Although even whether it is that bad is debatable given the fud
    that I suspect is being spread by stakeholders.
    Simon, Jun 23, 2010
  7. If the music companies had embraced the internet instead of fighting
    it, and established a non-DRM customer friendly retail sales channel,
    I don't think the issue would be anywhere near as bad as it currently
    is. Although even whether it is that bad is debatable given the fud
    that I suspect is being spread by stakeholders.[/QUOTE]

    Agreed. Big companies are known for their inability to cope with change.
    They are making money now and see no reason for it. Then they complain that
    'pirates are causing us huge losses', make up some numbers to back up their
    'claims', and try to come down hard on these 'misusers'.

    It's been happening since at leat that technological advance called the
    compact cassette tape. Anyone else remember the 'casettes will kill the
    recording industry' stuff ? :) I notice that it hasn't happened yet. :) :)
    Bruce Sinclair, Jun 24, 2010
  8. Honest people would pay. The world is full of honest people.[/QUOTE]

    ... and thereis good data suggesting that if you give it waya, you make
    *more* money, not less. It's happened a few times at least IIRC. As we all
    know, the best advertising is word of mouth. :)
    Bruce Sinclair, Jun 24, 2010
  9. The costs of making music are quite low. It is the costs of making and
    distributing albums that are quite high. Even recording can be done for a
    modest cost these days.
    Lawrence D'Oliveiro, Jun 24, 2010
  10. In message
    Basically the labels offer the artists a royalty for each copy sold, but
    from that royalty they deduct all kinds of expenses, like recording, making
    the videos, etc. Funnily enough, even though the artists are paying for
    these things, the “rights†to them seem to remain with the record companies.

    It’s quite common for the total sales from an album to not be enough to
    recoup these expenses. So the artists end up owing money to the labels,
    which comes off the next album. Which incurs its own set of expenses. And so
    it goes.
    Lawrence D'Oliveiro, Jun 24, 2010
  11. Lawrence D'Oliveiro

    victor Guest

    So what are their options ?
    victor, Jun 24, 2010
  12. As they say, why let the facts get in the way of a good story. Why not find
    out what Radiohead themselves had to say about this experiment

    One myth which Dyball is completely successful in busting is the
    accusation that the band were somehow foolish by giving away the songs
    for free. The fact that Radiohead had made more money before ‘In
    Rainbows’ was physically released than they made in total on ‘Hail To
    the Thief’ is surely evidence enough that the initiative was a
    tremendous success.


    • After being made available for free for 3 months the album was no.1 in
    the UK and in the US
    • 1st Radiohead album on iTunes – no.1 album selling 30,000 units in the
    US in the first week
    • The physical CD has sold 1.75 million to date and is still top 200 UK
    & US
    • They sold 100k boxsets via W.A.S.T.E.
    • Nearing 17 million plays on last.fm
    • 1.2 million fans will see the tour
    • The digital income from the experiment made a material difference to
    WCM’s UK digital revenue this year

    (The date was October 2008.)
    Lawrence D'Oliveiro, Jun 24, 2010
  13. Lawrence D'Oliveiro

    victor Guest

    Why bother ?
    victor, Jun 24, 2010
  14. This is what happens when people can’t tell the difference between
    “substitutes†(people who buy A aren’t likely to buy B) and “complementsâ€
    (people who buy A are more likely to buy B).

    This is one of the key points of Oberholzer-Gee and Strumpf’s paper; that
    the content industries have been notoriously bad at predicting what is going
    to be one rather than the other.
    Lawrence D'Oliveiro, Jun 24, 2010
  15. Some more commentary here
    Naturally the IFPI doesn’t buy it. Notice how they fall into Masnick’s Law,
    claiming that the saleable scarcities “are generally more to the benefit of
    veteran, established acts, while it is the younger developing acts, without
    lucrative live careers, who do not have the chance to develop their
    reputation through recorded music salesâ€, conveniently ignoring all the
    examples of up-and-coming acts that have successfully used the Internet to
    build up a fan following (and an income base).

    And notice also the convenient counterexample that they cite: “In France,
    there has been a striking fall in the number of local repertoire albums
    released in recent yearsâ€, conveniently ignoring the fact that a key point
    in the debate is the increasing irrelevance of album sales to musicians
    getting heard and making money.
    Lawrence D'Oliveiro, Jun 24, 2010
  16. Lawrence D'Oliveiro

    victor Guest

    Its not really just file sharing, but digital technology in general
    which has provided the benefits in content creation and distribution
    which they attribute to file sharing.

    One local musician says
    "What trips me out something cronic is that when I began making music 15
    years ago now, I used 4 track recorders, old computers, synths, loads of
    cables and tapes, and floppy disks just to make a tune but now I can
    make a whole track under a tree in the park and release it worldwide.
    hahah !! I love the future."

    victor, Jun 24, 2010
  17. Lawrence D'Oliveiro

    Sweetpea Guest

    A CD is not the same as a live performance!
    Sweetpea, Jun 24, 2010
  18. Lawrence D'Oliveiro

    victor Guest

    I'm skeptical. Your potential fans will lose interest in your music
    altogether if all they hear is low quality samples, trying to compete by
    making your music sound worse is a hard concept to sell.
    How will you get to be widely known ?
    victor, Jun 24, 2010
  19. Lawrence D'Oliveiro

    victor Guest

    Even less likely to happen if no one knows who you are because you have
    only ever made low quality samples.
    Talent won't get you anywhere if no ones listening.
    victor, Jun 24, 2010
  20. Lawrence D'Oliveiro

    Simon Guest

    Oh and when were those services set up again? That's right, only
    recently. And who set them up? Record companies? No to that as well...
    And is the cost of these services reflective of the reduction in costs
    of the distribution channel? No, of course not.
    There is definately two sides to the story, and there will always be
    those people who will want something for nothing, however record
    companies have rejected embracing new technologies instead chosing to
    sue their own customers, while continuing to rip the artists off.
    Simon, Jun 25, 2010
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