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The Economics of P2P File-Sharing
brajesh writes "Does P2P file-sharing really affect music sales and in what ways? According to a blog entry at "The Long Tail", a paper from David Blackburn[.pdf], a Harvard PhD student, on the economics of P2P file-sharing concludes that it does indeed depress music sales overall. But the effect is not felt evenly. The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading. Form the paper - "Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high." But then "File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work." There is also another compilation of studies on economics of P2P."
"File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent."
So what this is saying is, P2P helps smaller independent artists and is detrimental to large "manufactured" pop acts. Which is pretty much common sense, and is why the corporate music industry is so against it.
The argument that "lack of investment" will produce a shortage of talent is clearly ridiculous. How many of the great, truly talented acts we all know and love were the product of "investment" by the music industry? And how many struggled in poverty for years because they loved making music, before finally being signed up by a label and exploited for all they were worth...?
Hopefully this will move the industry somewhat away from acts such as Britney Spears (which traditionally have much higher profit margins and lower risk than smaller acts) and towards a business model that is wrapped around greater diversity and the continual sale of older music (which they usually drop the ball on fast, in order to focus the public on the newer mega acts).
Maybe the records industry could somehow start promoting clusters of artists and whole genres instead of one mega artist? Hmm..
Will code a sig generator for food
Perhpas this is a good thing in the sense that the lesser known artist has a chance to rise up and even out with the more popular artist. Most of the songs I download are not mainstream anyway, why? Because I can turn on the radio or the TV if I want to hear those artists. P2P gives me a chance to search out further for something that might really inspire me. Just because your not on MTv does not mean your music blows. The quality of mainstream music is starting to wear me down lately anyway.
"Nothing, not all the armies of the world, can stop an idea whose time has come." - Victor Hugo
P2P is here. It's not going away and you can't even legislate it out of existance. For right or wrong, there is nothing the various copyright industries can do except adapt to the change. Everything else is just hot air.
Simon
For the past 50-years the only way to be a "successful" musician was to write songs 2:50 long and sell 500,000 records. Ever wonder why everything on the radio sounds the same? If an artist can't break even, they're pretty much worthless in the eye of the label.
Legitimate online digital distribution of music could possibly replace the notion of rock stars with micro-stars in their respected genres. There just needs to be some sort of way to market these niche artists online so the cream rises to the top. A group who could make 80% off of their recordings is not so bad off considering the average signed artist only sees 5 - 15% per record.
What this means is that being a musician will no longer be a multi-million dollar a year job. It will be a job that pays only thousands of dollars a year, the same thing "the rest of us" get paid. And it also means that more people will be able to be musicians, as opposed to now where being a musician for a living is very difficult. I'll definitely take many musicians making many songs and each making enough money to pay rent over a few musicians making a few songs and making enough to pay everyone's rent. Ask yourself which of these two makes a better society.
The GeekNights podcast is going strong. Listen!
"File sharing is reducing the probability that any act is able to sell millions of records"
How about file sharing is allowing people to sample the artificial crap the music industry churns out these days and they decide not to waste their money on the product?
nothing socialist about file-sharing. socialism is government being mommy and daddy providing for needs, controlling and subsidizing unprofitable industry, and promoting mediocrity. file-sharing is breaking laws that make it tough for independent bands to compete with brittany spears, marilyn manson and whatever major act is being promoted through major media channels. This distribution model is broken, it doesn't serve the artists, the fans, or foster creativity and innovation. Take a good look at how the recording industry operates, it's not a monopoly any more than microsoft is a monopoly. Bill Gates has nothing on these guys. I'm not saying the music should be free, I am saying that the recording industry needs to be brought down to erect a new business model where the recording artist are the profit center, not the recording industry. Socialism my ass, this is a Revolution.
P2P is breaking the vicious cycle where the rich get richer and the poor get poorer. It's the only reason all the **AA execs are frothing blood at the mouth about it.
I thought everyone already knew that.
This will be good for everyone but the current three monopoly publishers. Popular taste will do a better job of finding talent than payolla in the form of coke and whores. A more distributed music distribution system will be more competitive for artists and the money that now flows into a few hands will flow into many. The job will get done and people will still pay the piper.
Friends don't help friends install M$ junk.
What rubbish. Socialism promotes nothing of the kind. It was a socialist/communist nation that put the first man into space. Hardly a mediocre achievement. Bureaucracy and inefficiency are not a uniquely socialist phenomenon as anyone who's worked for a large corporation can easily see.
Does a Christian soccer team even need a goalkeeper?
I think the industry's biggest problem is a lack of diversity. Right now, everything on mainstream radio sounds exactly the same. Even ten years ago, radio was still crap, but at least you could differentiate the music better. Personally, I rarely even listen to the radio at all anymore, and when I do, it's a classic rock station.
Record companies want to go with what's "safe" these days. No one wants to take a risk on signing and promoting an artist that's "different." However, the big rewards come with big risk. I really wish these huge, billionaire conglomerates like WEA and SonyBMG would gamble a little bit more. They're actually losing a lot of good acts who are moving to smaller labels like Koch and Sanctuary. Audium (a Koch label) has become one of the best labels in country music by signing artists who got cut by the majors, like Dwight Yoakam, Merle Haggard, and Dale Watson. Sanctuary is now home to the likes of Iron Maiden and Morrissey, two of England's best sellers ever, who still are putting out good albums. It just kills me how labels will not settle for "just" platinum anymore. You have to go multi-platinum to be a success now. I remember how Capitol was getting disappointed with Garth Brooks when his albums started selling "only" two million copies. This is the same Garth Brooks who single-handedly saved Capitol/EMI from bankruptcy with No Fences and Ropin' the Wind, each of which sold something like over 10 million two consecutive years. He had the top 3 albums in the U.S. for over a year. But if he's only two-times platinum and not ten-times platinum, then he's no good to Capitol! This is the kind of moronic thinking that drives the recording industry. It is pure, unadulterated greed. So much greed that it completely clouds any sensibility they might have.
I hope they do.
Free market ensures that if some fat exec having a hissy fit says 'I'm not playing with you anymore', someone else will be happy to provide the same service (probably at lower cost).
If P2P kills huge record monopolies, and instead we have numerous small companies who make money from selling CDs and un-DRMed downloads *regardless* of P2P, that's free market pwning artificial monopolies right there.
It might very well be that current huge and bloated 'content creation industry' will be 'damaged' by P2P, but it's luridicious to claim that everyone would stop making music, movies and TV just because of P2P's 'effect' on making money with the content.
I'm still convinced that if the 'content business' would just bite the bullet, restructure to lower expectations (their current legal offerings are grossly overpriced) and instead put down unDRMed DL service with all the content in the world, at uber download speeds, they'd make gigabucks *regardless* of the fact that people would copy the stuff. Why bother with P2P sites and untrustworthy files if you can get a 'legal' proper version, perfect quality, no strings, use as you like within the framework of current law, at a reasonable price?
I know if my choices were 'DL from uberfast official site, 10Mbit/sec, perfect quality, 3-5$ for the full contents of a DVD, ready to be burned to disc if I so choose' and 'grab dvdrip with no extras off P2P at crappy speed and no guarantee of quality', I'd pay a few bucks for no hassle.
Fat execs are unable to grasp the effect of internet and plentiful bandwidth. Their 'product' is PURE DATA, so *gasp*, internet will make distribution of said data much more efficient than their stupid 'manufacture shiny discs' business model.
Current record exces sound like scribes whining when someone invented the printing press, and started mass-producing books that earlier had to be scribed by hand (and were extremely expensive and rare). Today's internet makes reproducing of entertainment so much more efficient and cheaper, so those CD presses belong to the museum, and as costs go down, so must the prices. CD presses had so huge upfront investment required that the companies could create an efficient monopoly. Anyone can trump up a website, and while today the bandwidth is still not free, I expect the price of it to go down so rapidly that in a few years bandwidth costs of sending 10 GB movie file over the internet is fractions of a cent.
In which case you can no longer charge 20$ for a copy of a movie.
Movie theaters are in a deep doodoo as well. They will have to improve presentation quality and service - to make it more like a 'special thing' that movies used to be back at the start of the last century. Improving home theaters are pwning crap theaters, and their offering of 10$ movie showing + overpriced soda is no longer attractive to the customer. ADAPT OR DIE, just like every other business has to.
The fact that the big hits lose sales due to P2P is bad for some labels, and not for others.
E.g. Sony has a lot of big-name hits. So P2P == evil.
Koch Records has a lot of smaller-selling indies. P2P != evil.
However, I have a deep suspicion that RIAA is run by the likes of SONY, and not the ones like Koch.
Also, musicians are keenly aware of the differences: to get on Koch, you pretty much have to have your album finished and mixed. They produce and distribute it, and give you a big percentage. Other ones front tons of money for production and advertising, and give back a smaller percentage -- and they are the ones that stand to lose the most from P2P.
The most interesting thing in all of music these days are mixtapes and mashups. They are both illegal to sell -- no copyrights are cleared, so you'll hear samples, beats and so on from entirely different groups. You can now buy them over the web, or download them from P2P.
http://www.thebricktestament.com/the_law/when_to_
Richard MacLemale on iTunes.
Music - www.richardmac.com
> socialism is government being mommy and daddy providing for needs, controlling and subsidizing unprofitable industry, and promoting mediocrity.
No, it is not. It is what opponents associate with socialism. Especially, when phrased the way you do. If formulated less biased, it can be one form of socialism. (Statecontrolled production with social-security networks)
> I'm not saying the music should be free, I am saying that the recording industry needs to be brought down to erect a new business model where the recording artist are the profit center, not the recording industry. Socialism my ass, this is a Revolution.
Bringing the owning class down and to empower those people actually working in some kind of revolution for the common good is a traditional socialist position. And even one of the more radical one. Calling it business model is nothing more than a fig leaf.
"Between strong and weak, between rich and poor [...], it is freedom which oppresses and the law which sets free"
A few points here :
1. True, filesharing might reduce the incentive to invest in new acts. But it definately reduces the need. If you don't need millions of dollars to launch your album, just a laptop and a podcasting site, then who needs investment? I think what will happen is that the promotional aspects of the music biz will survive in a substantially reduced form (after all, people still need to hear about you!) but the whole production and distribution megalith will go the way of the 8-track.
2. I agree, though, that P2P itself means next to nothing to a small unknown artist. Nobody is going to type your name into Limewire if they have never heard of you, obviously. Internet radio and podcasting are muhc more meaningful and useful tools for such artists. You get a podcaster to listen to your music, they play it for people, those peopel go to your website, etc.
3. It's said a lot, but it bears repeating : even Britney Spears makes only pennies per CD. The big name artists make all their money on touring. So there's no reason to worry about the ten cents you might be 'stealing' from Britney if you download a song. If you love her and want to support her, go to her concerts, buy her clothes, her perfumes, whatever. She gets a lot more money out of that.
Essentially, the music industry has reacheed the point where it is almost completely parisitical in nature. And like any parasite, it wants to control its host, and fears the light of day. Right now, they exploit the fact that the people and most importantly the legislators don't really grasp the issue at all. When you say to someone "Should they be allowed to steal our music?" and they know nothing of what is truly going on, it's hard to blame them for saying "Gee, I guess not!"
But we don't have to worry about that. This revolution requires no propaganda on our side. With every MP3 player, every iPod, every DVD player sold, our view sells itself. Eventually the RIAA and its bloodsucking ilk will be reduced to the level of rambling lunatic old men defending their collections of old cans and newspapers with bloodthirsty vehemence, oblivious to the fact that nobody wants them any more.
Michael J. Bertrand, AKA Fruvous or FruFox My
Previously, all I've seen is supposition (which is essentially worthless) and surveys (which I am always loathe to trust no matter what the conclusion; they're too easy to skew).
I've not RTFA, but assuming he actually did some proper research, this might just be a useful piece of work; it would certainly make a change in this area.
It's official. Most of you are morons.
Remember, *nothing* was stolen during the p2p transaction, so she didnt actually *lose* anything, it is only a reduction in the vague concept of 'potential' ( i.e. unprovable ) sales.
When every anyone argues that nothing is stolen, meaning that nothing is physically taken, they always seem to overlook one key factor...the person involved in the acquisition unquestionably now has something of value in their possession. I'd like to see someone justify the notion that by virtue of the fact that Persion A has created something of value, that Person B is automatically is entitled to whatever benefit it may bring.
I'm not a fan of the *AA monopoly at all, but I do think the entitlement mentality that seems to be a large part of the p2p ethos, is rather repugnant.
My friend say that when he downloads, he ends up getting songs he wouldnt buy in the first place. He also feels that many of the songs inspire him to either buy from iTunes or Amazon.
Although, he prefers to buy used because he thinks that the music industry has bigger issues than online file trading - such as controlled product marketing (marketing what it thinks is good music), the recent recession, an increase of used music sales, and an overall poor quality of the bands the music industry choose to promote.
Ultimately these guys are the middle men. THey jack up the price for the interest of the middle men, not the artist.
Perfect examples are the cost of the CD compared to the LP - and the forth coming increase of iTunes song prices.
It was a socialist/communist nation that put the first man into space.
;-) say that it was really a dictatorship and a poor example of communism. Now you cite it as an good example. Well which is it?
Uh huh. When the Soviet Union is offered as evidence of the failure of communism the commies
The first man in space was put there by brilliant hardworking scientists and engineers. Too bad circumstances forced them to serve such an abomination of a government. They deserved better.
>What you say could apply to any service related business.
This is about the most wrongheaded/duplicitous argument i've seen in a long time.
>Is it OK to say, force a dentist to work on somebody at gunpoint?
No. This is clearly a stupid analogy. You are robbing the dentist of his time and effort.
>How about stealing information from a database that somebody took time and money to collect and collate?
This is analogous, yes. What exactly is wrong with it?
I notice you promote a website monetizing freely provided samples of 'information' other people spent time and money to collect and collate.
my password really is 'stinkypants'
To me that's the key point.
Lack of price response.
A lot of very good movies are on sale this weekend at $3. A lot of releases from the last year are either $5 or $8. Why the hell would I ever download a movie?
OTH, Music in the same add is on "sale" for $16.99. For that $16.99 I would get about 9 minutes of material I might listen to more than once. I know the physical cost of production was under 50 cents. I would have multiple reasons to p2p under that scenario
She was like chocolate when she drank... semi-sweet at first and then increasingly bitter.
No. There is something you must realize about the social sciences: they are not *hard* science. Very little in the social sciences can ever be "proven" or "disproven", because there is rarely a control in any study. You can't force people to naturally behave some way and use that as a control -- it is logically-impossible (and certainly in contradiction to the Heisenberg Uncertainty Principle).
Hypothesis-testing occurs on large datasets, but those datasets are generated by behavior which can never be simultaneously fully-controlled and fully-natural. Hence, the hypothesis is not fully-testable, unless it is so general as to be meaningless.
Economics is a powerful study, and I use its mindset all the time, but I would never call it a "science". It's a pseudo-science; a branch of applied mathematics and statistics that bases itself on uncontrollable natural processes. As such, "proof" never occurs, but strong suggestions (e.g. correlations, tendencies, etc.) do.
Is Capitalism Good for the Poor?
The answer is not in the dictum of Marx nor in the Libertarian writings of Rand, nor is it in the advances of science or medicine, because all of those remedies fail to take into account the fundamental problem that underpins all human suffering--the brokenness of the human heart. It is our condition as children of this brokenness that leads us to seek procedural solutions to a spiritual problem.