Slashdot Mirror
The Economics of File Sharing
Howzer writes "A great Salon article popped up today, and it appears Stan Liebowitz at the Cato Institute is having second thoughts about his paper that was published on May 15. It seems the facts simply don't support his earlier assertion (& the well-known position of all the major recording labels) that downloading hurts music sales. It's good to see this argued from another angle, especially by a guy like Liebowitz."
Downloading will be a serious threat until the industry figures out that people may not want a whole cd just a few particular songs. So the consumer cant have it legally so there is only one option left -> download it from a song swapping service. Now no one gets paid for anything. Why not cut the loss and sell the songs online for a couple bucks. I mean high quality WAV files that the user can do what they wish with NOT liquid audio
I know that I lot of people claim that being able to download music leads to them actually purchasing more CDs...but from my own experience, after getting ADSL installed, a CD burner and a portable MP3 player, I now only buy 2-3 CDs a year. I used to buy 30-50 a year. The same amount of money has to go somewhere...now I elect to put it into broadband, not CDs. As much as I love being able to freely download music, I think the guys at the MPAA are right: P2P is going to significantly hurt their sales.
I'm glad to see an academic who is confident enough to be able to say, "I may have been wrong; I don't know." These days such professors are becoming a scarcity.
He makes a very good point, too; you would expect CD sales to noticeably decline if people were using MP3s as a replacement for CDs. But they're not. The average computer illiterate still finds it difficult to turn an MP3 collection (which, more often than not, is a jumbled mess of files spanning a several directories) into CDs, because they just don't know how to sort them or how to keep track of them. So they keep the MP3s on their computer and buy the CDs for their Discman.
Many (including myself) have bought a CD because they found a few tracks online, but couldn't get good copies of all of them, and they wanted all the songs in the original order. Other people are still buying CDs, but they're buying the ones they can't find online. I know many people who buy into the whole ultra-pop-star fad, but don't buy those albums because they're so easily available online. Instead, they buy music they like that they couldn't find online--and in the end, it's those artists who need to be bought the most.
But the truth is that nobody can tell how much downloaded music is affecting record sales. It's hard to get the recording industry to ever release detailed statistics on what they sell, and when they do release information there are always doubts as to its validity. (They do have to make the shareholders happy, after all.)
Normally I'd rant and rave about how file-sharing is going to be the death (or the rebirth) of the music industry, but I think at this point people have started to realize that on their own. Now it's just a matter of buying popcorn, sitting back, and enjoying the show, because over the next decade or two we'll get to see some of the biggest and richest corporations in the world die a fiery death.
I'm not sure what is more alarming, that it took this guy 6 months to crank out his piece for the Cato Institute or that someone at Salon actually imagined that anything coming out of there constitutes serious research.
This guy is not worth this attention. His essay on QWERTY hardly constitutes the rebuttal of path dependence he thinks it does. All it convinced me is that QWERTY isn't as inefficient as everyone claims. The logical gap between stating that and claiming that "lock-in" effects are trivial is enormous.
But he gets press for ideological reasons. Once you admit to certain kinds of inefficiencies you invite the kind of public debates the Cato Institute hates: the merits of price-caps, or quality controls, or "open access" requirements on things like source code or cable lines.
It all leads to a ridiculous faith in the efficiency of markets. Getting screwed by your local telephone company? It's not a monopoly! ANYONE could compete with them, so let 'em charge what they will.... i386 a standard? Microsoft?
I'm personally waiting for this crowd to produce a piece of "serious research" teling us all that Enron really was perfectly efficient after all.... What were we thinking?
Of course, everything is black and white and nothing is complicated. So when the music sales went down in 2001, of course the first recession in years after a long economic boom and a drop in the quality of music, as well as people getting increasingly pissed at the music industry couldn't have had anything to do with any of this. It's obvious what was the real cause. No reason to even consider the possibility of anything else.
mark
If you want to make an apple pie from scratch, you must first create the universe. -- Carl Sagan
I'm glad you said "mostly" Libertarian because the Cato Institute is the classic example of what I call pseudo-Libertarian.
True Libertarians are opposed to all threats to our liberty, whether they come from other people, from corporations, or from government. Pseudo-Libertarians are willing to accept any amount of threat to their liberties just so long as they don't come from government. In fact, they are willing to support threats to our liberty from corporations and from wealthy individuals if they can imagine that the government action which would protect us from a real threat to our liberties from business could somehow be construed as a government threat.
Eternal vigilance only works if you look in every direction.
I believe the reason that we haven't seen a decrease in sales of audio CDs is because of convenience. I have many audio CDs purchased from retailers, many MP3 files downloaded from the internet, and a CD burner. I have copied only a small subset of my MP3 files onto CDs. Why is this?
CD creation is a time consuming process that requires me to purchase consumables (blank CDs). Then I have to keep track of where my CDs are and what is on them. Also, a CD holds a relatively small amount of data(700MB). In short, I couldn't be bothered.
I believe that you will see significant degradation in CD sales when hardware manufacturers standardize on a portable and inexpensive data storage media. This would allow consumers the ability to carry a "data storage widget" (compact flash perhaps..). It would store thousands of songs and plug into home audio systems or car stereos. It could store entire collections on something the size of a matchbook.
The only thing supporting CD sales is the "network effect" of the CD format. Once we achieve an "inflection point" of the presence of standardized portable memory modules and devices that use them, I believe the bottom will fall out of the CD sales market. I also believe that the record companies have foreseen this.
The CD market today survives on the "high viscosity" of data transfer from the internet to audio playback devices. New devices and technologies will lower that viscosity and change the media market forever.
If you believe that an (talented?) individual has the exclusive right to their work, do you then believe that the individual cannot sell that right or use it in anyway that benefits them?
If you believe that the exclusive right to an individuals work is a tangible right and able to be transferred by contract and agreement then the fact that Britney Spears chose to sell her work and it's copyright protection to a company is irrelevant.
Why do you want it so bad? Why do you have a right to it because it exists? If she sings it in front of you, you heard it and you have a right to the memory of it. If she sells it to you, you can do anything with the data from that copy to enjoy and listen to it all you want. But posession of it must remain with you.
If I write something it belongs to me. If someone breaks into my house and steals what I wrote along with my chainsaw does that mean you can take what I wrote with no feelings of guilt, but the chainsaw you would be wrong to take? Why? Explain that to me. If I give something to a friend, I did not give it to you. If I broadcast something over airwaves then you have physical access rights to the data on those airwaves, but you can't ditribute them to everyone (i.e. if I give you a copy of my book you have the copy not the right to make and distribute copies).
Copyright is simply this: an implicit contract which must be opted out of by the author. If you buy something that is coyrighted you agree to that contract as a citizen of the United States or as a citizen of any country that recognizes copyright law.
This part has nothing to do with your comment:
Most of what is distributed today is done so with the understanding that it falls under the protection of copyright. You can't assert that without copyright everything (or even most) of what is on the market would still be on the market.