A Working Economy Without DRM?

Tilted Equilibrium asks: "In a few weeks, our school will be hosting a panel on DRM with several respected individuals. In advance of the panel, I have been doing some research on the topic and thinking about it in my free time. In economics, we learn that the price of a product is determined essentially by supply and demand. Without a DRM in place, we are capable of making as many copies of a piece of content as we want and seeding it onto the net. How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

Comments

Biased question

[swillden]

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

Most likely, you don't. But in large part you're creating a strawman, by specifying exactly the situation in which it is most difficult to make a profit.

It's entirely possible that the Internet will mean the end of $200M productions, because unless you can get your money back in the theater (I'm focusing on movies because they're the only things that fit your specifications), you can't make it back.

Maybe. I'm not absolutely convinced of that. I think DVD releases with lots of extras, including some that aren't digital, are a good model. Obviously, movie theaters have a workable model. There may be other approaches that can work. Any approach that offers the consumer real value for their money will work. People *want* to spend money on entertainment.

And, honestly, outside of movies, what other media meets your requirements? Not music. Music is cheap to make. Sure, it's likely that in a fully DRM-free Internet age that musicians won't be mega-millionaires, but I consider that a good thing. I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris.

I agree with Eric Flint's essay, found in the Free Library on baen.com: Until there's some way to make music/movies/books that doesn't require musicians/actors/directors/authors, and until people stop wanting those materials, there *will* be ways to make money off of them. It's just a matter of finding them. And, perhaps, accepting that people don't really need millions for doing what they love.

Re:Biased question

[BadAnalogyGuy]

I disagree with the whole idea that it's unnecessary to protect the works of content creators. DRM is a necessary evil and assuming a world without it is simply pissing in the wind. What we need to work towards is a DRM model that preserves as much of our rights as possible while still effectively preventing the widespread copying of content.

DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will support DRM standards. If the data stream is protected, the media appliance will acknowledge and honor the DRM lock and you will be unable to do more with the content than is allowed by the DRM lock. This is reality and it is already here. What we want to do is make sure that things like machine-local data can be transmitted from one machine to another (deleting the original data as it moves to the next device) are preserved while things like forward-lock (which prevents copying at all) are eliminated. Working against the system when you are completely outside the system is futile.

Re:Biased question

[westlake]

Music is cheap to make.

Talk to a classical musician: ask her the price of a fine solo instrument, a piano, a violin. The basic tools of her profession.

Re:Biased question

[intrico]

"I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris."

This is an excellent point about the music industry. The traditional business model is very inequitable to the average artist. The major record labels say that people are "hurting" these artists by downloading their music. But one can make a very strong, valid argument that by forcefully marketing a select few musicians to the massess, and creating huge barriers to entry to these marketing channels for thousands of other artists who may can be just as good or better, that they have have caused the general population to miss out on all of these other artists out there. This hurts all of these other artists by effectively denying them mindshare.
 
Getting marketed by a major record label is simple a matter of being in the right place at the right time, and really is not correlated at all to the quality of the artist's work. The same of course, goes for the movie industry where quality does not necessarily equal production costs and or marketing clout. And again, the traditional setup of the movie industry ends up denying access to marketing channels for many smaller independent film producers, making it harder to get the word about their works out to the masses. In short, the RIAA-associated and MPAA-associated marketing powerhouses have fostered an anti-competitive environment at the artist level. DRM-Free media will not ruin the "working economy", but it will create a level playing field for the actual artists who produce content.

Re:Biased question

[BadAnalogyGuy]

Your last sentence is a complete non-sequitor.

DRM-free media and the playing field for music artists are wholly unrelated. Artists that are not picked up by record companies (whether large or small) are not in any way prevented from producing their own music and publishing/selling it in a non-DRM format. There are no players that refuse to play non-DRM content. Non-DRM content is simply read as unprotected content and the full functionality of the device copying mechanism is available for that data.

In fact, you could argue that DRM-encumbered media is less attractive than DRM-unencumbered media because the former restricts user actions while the latter does not. However the real problem for the artists is getting discovered, and that has nothing at all to do with whether the record labels apply DRM to label-produced content.

Re:Biased question

[aussie_a]

You assume DRM is necessary, but in actuality, it isn't. These people somehow make a profit without DRM (otherwise they wouldn't bother releasing the e-books). As does these people as well as these people.

Perhaps multi-million dollar movies aren't capable without DRM or Britney Spears being profitable without DRM, but the truth is that the big media cartels aren't the only people in town no matter how much they want you to think they are. And DRM isn't necessary for artists to not only make a profit, but to make a living. Not all artists will be able to make a profit or a living, but then again not all artists deserve a profit or a living. DRM isn't a necessary evil, it's just an evil.

Re:Biased question

[the_womble]

It is still cheap to make compared with films.

That is partly because Holywood's business model has pushed up the cost of making films, but it is also because films are expensive to make.

What does make a lot of classical music quite instrinsically expensive to make (comapred to most other music) is the need for a full orchestra, so a lot of people's time is needed. The value of a good muscian's time is worth more than any insturment, even a Stradivarius (if you amortise the cost of the Stradivarius over all the performances it can be used for).

A more important point is that the cost is still low enough for business models other than pay per copy to work. I have some legit free downloads of classical music, and there is no reason there cannot be more., funded the same way.

With type of music that do not need large numbers of people alternative revenue models become even easier alternatives.

Re:Biased question

[BadAnalogyGuy]

We're not really talking about Trusted Computing here, though it may be interesting to see how TC impacts the availability of DRM-stripping software on mainstream operating systems.

Once the upcoming crop of DRM-enabled operating systems (Mac and Windows) only support media playback through OS API-level function calls, your "control of your computer" will have reached its conclusion. As system APIs become more plentiful, more useful, and easier to use, control is slowly creeping away from the now-productive developer and towards the central programming model/operating system.

You have every reason to be worried about losing control.

"I'll run Linux!"

With DRM implemented as an encrypted datastream and licensed to hardware/software makers, who is going to be able to bring DRM playback capabilities to Linux without also being tied to strict licensing restrictions that prohibit DRM-stripping as a feature or side-effect? These DRM systems are of course already running on Linux, just look at your favorite DVR which already implements such a system. Does this translate to your PC being able disable DRM content? Unfortunately, no. Not unless a DRM-licensee decides to break their license and provide the tools to do so. It's not out of the realm of possibility that a rogue employee may do such a thing, but the financial hardship he would face would typically be a sufficient deterrent.

Re:Biased question

[gfxguy]

I tend to agree and more.

I honestly believe people should be more honest with themselves and their wallets. If something is worth buying, it's worth buying. If it's not worth buying, don't buy it. Just because you don't like the arbitrary amount someone has set for the product doesn't mean you should be able to just take it. I mean, come on! We're not exactly talking about stealing bread to feed starving children! We're talking about movies!

However, I don't agree with DRM at all, either, because if you do shell out the cash, you should be rewarded with a lot of freedoms with that content. You should be allowed to make backups, you should be allowed to listen/watch on different devices and so forth.

Now the reality - the more these idiots apply DRM, the more worthwhile it is to STEAL the content because the stolen content gives you the freedoms you should have had to begin with. I make the analogy with software copy protection, specificly from the 80s and early 90s. The copy protection became so bad, I'd buy a game and the first thing I'd do is look up on the internet (through ftp sites, at the time) how to break it. Damned code wheels and all that crap. Forget it! It's the guys that stole the game that didn't have to put up with that crap, and it's the people illegally copying the movies that can do whatever they want with it.

I'll make these analogies as well: when cassette tapes hit the markets as a cheap, convenient means to copy recordings, the RIAA complained it would put them out of business. Instead, sale of prerecorded cassettes opened up a whole new revenue stream for them. When consumer grade video recording hit the market, the MPAA cried it would put them out of business. Instead, the video sales and rental market opened up a whole new revenue stream for them; movies that wouldn't ever even have seen the light of day began returning at least some money, and movies that made hundreds of millions were making another hundred million in rentals when, if the MPAA had it's way, they'd be making nothing.

Then the RIAA complained about CDs. CDs sound so good, that cassette recordings made from them sound better than vinyl. Yeah. CD sales skyrocketed and the RIAA increased it's revenue again. Then there was DVDs and how people would record this high quality content on VHS, and they were wrong there, too - the sale of DVD quickly overtook VHS sales; the discs cost less to produce, but people payed more for them.

The bottom line is that if you give the people what they want, they will pay for it. I can download mp3s illegally, or I can pay for them. I choose to pay for them when I think it's worth it. Otherwise I simply don't download them at all.

I realize few people out there are as honest (my wife calls it brain dead honest) as I am; even people who are generally honest might not mind downloading a few things here and there. So yes, copyright violations will continue to happen, but there has to be an "acceptable" rate, which you would calculate by figuring out how much the cost of enforcement is versus how much is lost.

Frankly, the worst part about DRM is that we pay for it. We pay extra for licensing fees so that our DVD player will be crippled, and we pay extra for content itself so that it can be crippled. WE are the ones who pay for lost functionality and freedoms, and the more they squeeze us, the more ONLY HONEST consumers are hurt.

If that's not ass-backwards, I don't know what is.

So my question to these idiots is: honest consumers are paying extra for products with reduced functionality, while people with illegal copies of the content seem to have the most freedoms. How does that make any sense at all?

Re:Biased question

[SanityInAnarchy]

You are repeating the same misconceptions in the same ways. Look at your language:

I disagree with the whole idea that it's unnecessary to protect the works of content creators.

No one is arguing "that it's unnecessary to protect the works of content creators." We're arguing that DRM, specifically, in any form, is not worth the harm it causes, and that content creators can make a profit without it. After all, they did before DRM existed.

DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will support DRM standards. If the data stream is protected, the media appliance will acknowledge and honor the DRM lock and you will be unable to do more with the content than is allowed by the DRM lock. This is reality and it is already here.

If you are astroturf, you need to listen here: If that is really and truly the reality, I will wean myself off modern media. I simply refuse to spend any money on anything that has unreasonable "protection" on it. If there are enough of us, you will lose money on DRM.

That is why I refuse to buy anything Blu-Ray until I am convinced that it's permanently cracked.

If not, I simply don't care enough. There is enough entertainment in the world that comes without strings attached.

What we want to do is make sure that things like machine-local data can be transmitted from one machine to another (deleting the original data as it moves to the next device) are preserved while things like forward-lock (which prevents copying at all) are eliminated.

Current DRM models have two problems: In order to enforce any kind of protection, they require specific software/hardware stacks, which reduces user choice -- for instance, it becomes essentially impossible to have a proper open-source media center, or even to run a closed media center on an open OS.

The second problem is, much of it is online. For instance, the music subscription services -- pay $x/mo and get as much music as you can download, but if you stop paying, they stop playing. Another example is Steam: You only pay once, but it insists on connecting to the Internet periodically to get updates and to be able to shut you down if they find two copies from the same purchase online at once. The problem with this is, I'm essentially trusting the content provider not to unfairly revoke my right to use my content -- Valve could one day decide not to let me play at all, or their servers could go down, and I'd be stuck without a game.

This puts things entirely too much out of control of the consumer, who, in a very real sense, no longer owns their stuff. Think of it this way -- the rights to a book are owned by the author, and only licensed to a publisher for a finite amount of time. If you buy a book, you own that copy, and may do whatever you want with it, other than distribute copies of significant portions of the book. Yet I never hear authors screaming about how they're being completely ripped off by those damned libraries with their damned copy machines, not to mention kids with OCR who just throw the stuff up on the Internet.

Now, look at the Music industry. No real, provable signs that Internet piracy does a thing to their sales, yet publishers own artists' song rights forever, and now they want consumers to give up any concept of owning a song, the way we have for software. Oh no, now you own a license to play this song, which they can invalidate any damn time they please.

Working against the system when you are completely outside the system is futile.

Wrong. Almost all attempts at DRM are futile. No DRM will make it completely impossible to pirate something. If it does, it will be so oppressive that consumers won't take it anymore.

Here is the system that really works for everyone: For media, make it more con

Re:Biased question

[NeutronCowboy]

Not only are we paying in terms of money, we are paying in terms of culture that is being locked up and lost forever because there is no legal way of archiving it. That, in my opinion, is the biggest cost of all and the prime reason DRM is Evil.

Re:Biased question

[Flyboy Connor]

This will never happen on any sort of feasible scale. It isn't a matter of being "honest" (or as most people who take the same position you have, of being "moral") it is a simple matter of economics - rationale consumers will not pay for something they can get for free.

Weird. Computer games can be downloaded for free, or acquired for a very small fee from your neighbourhood copy-peddler. And still the game-development industry is steadily increasing its revenues. And music? People can download any song they want through eDonkey and such, and the music industry does not seem to suffer. Movies? The movie industry gets richer and richer by the day.

You might think it is rational what you say, but practice shows differently. It seems you are not taking everything into account. Probably, if you scan this thread a little more, you'll find out what that is.

Re:Biased question

[Jah-Wren Ryel]

It seems you are not taking everything into account.

Actually, it's you who aren't taking everything into account. All of your examples involve additional cost factors - people who buy movies, music and games instead of downloading them are making a judgement that the cost of downloading is not only not free, but higher than the cost paying in the approved manner. That's in part because of the perception of the legal costs, in part because of the cost involved for getting plugged into the P2P networks (learning curve, perceived risk of virii, etc) and in part because of the cost of actually finding the desired product online.

None of these issues have a thing to do with honesty. Nada, zero, zip. It just basic economics.

If you would like to actually demonstrate a scalable example where a market works on "honesty" instead of basic economic principles, please be my guest.

How? Ask Apple

[SuperKendall]

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

Ask Apple, they are doing so today. Sure they use DRM but the way they work sales would not really be hampered much by them not doing so - after all, I can download any song for free today but I choose to buy through ITMS.

you don't...

[twiggy]

You don't.. you sell something other than the tracks.

You create a completely different model now that people expect the tracks in digital form for free (or will risk an RIAA lawsuit to get them).

you make your money on tours, tshirts, or making amazingly badass CD packaging (see: Tool - 10,000 Days) that makes it worth picking up a hard copy.

Or, you make your money by giving people valuable merchandise or preferred seating at concerts for joining your fan club.

You can't create demand for something that can be infinitely and freely copied.

Re:you don't...

[QuantumG]

You can't create demand for something that can be infinitely and freely copied.

Wow. How can you say all that and still miss the point. There's no problem "creating demand", there's only the problem of "limiting supply" and you can actually do that, but to do so requires you to be so fuckin' evil that you're willing to get in everyone's face and prevent them from helping others.

stupid question

[RelliK]

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

The same way it worked before DRM. You are making a ridiculous assumption that DRM is the only thing that prevents someone from distriduting copies of copyrighted works. That is utterly false. There is this thing called copyright law that works just fine without DRM. Photocopiers didn't kill the book publishers. Tape recorders didn't kill music industry. VCRs *multiplied* the profits of the movie industry, despite the fact that certain studios nearly had them outlawed.

For this reason your question is either biased or stupid or both. Turns out it is entirely possible to have a viable economy without infringing on the consumers' fair use rights or first sale doctrine. Who would have thunk!

Re:stupid question

[Dhalka226]

For this reason your question is either biased or stupid or both.

Well then let's be fair: I think your comparisons are biased or stupid or both.

Photocopiers didn't kill the book publishers.

Because there is a significant time investment in standing around and copying all of the pages of a book. Not to mention that when you're finished, you end up with a stack of papers, not a book.

Tape recorders didn't kill music industry.

No, they didn't. Then again, tape recorders--in terms of piracy (which is what we're really talking about when we talk DRM--require that I know you and live nearby you. They require that I be able to hand you the physical copy. This is still a problem with CDs.

VCRs *multiplied* the profits of the movie industry

Again, for me to pirate you a movie, I have to be able to give it to you. Sure, I could mail it or something, but that's more work and expense for me. That fact means it's largely limited to me pirating things for my close friends, family or neighbors.

The issue with digital piracy is that you can create as many exact copies as you want with no quality issues, and distribute them around the globe with essentially no effort. It also costs essentially the same to make and share one copy with one friend as it would to make 10,000 copies to share with 10,000 random people (ignoring data transfer costs--which most people, at least in the US, don't pay specifically for anyway; they pay for the speeds of their lines, not how much data they squeeze through those lines in a month).

I don't support DRM for many reasons, but to pretend that my ability to make exact digital duplicates of a CD (or DVD or what have you) and distribute those copies to anybody in the world with a 'net connection is somehow akin to what I could do similarly with VHS tapes or cassettes is naive at best and disingenuous at worst.

To avoid having to make a second post, I'm going to go ahead and give my answer to the submitter's questions:

I'm perfectly willing to pay for, for example, music downloads, assuming that the price is fair. Here is clue #1 for music companies: If it would cost me roughly the same amount of money to buy each track on a CD digitally as to go to the store and buy the actual CD, you're charging too much. I should not have to pay the same amount for lower-quality copies of songs with no case, no insert, no artwork and no CD-pressing manufacturing costs, that I would for higher-quality versions with all that. That is just plain silly.

Clue #2: I want to be able to choose the quality of the song I download. If I really love a song, I want to be able to get a high-quality rip. On the contrary, if I don't really love a song, or if I'm just downloading it again for some reason (for example I took my laptop to school and noticed a few songs I had forgotten to transfer over, I re-downloaded those), I'd like to be able to get a lower bitrate--and to pay a lower price accordingly. A bit rate range of 128 to 320 (for MP3) seems fair. If you want to offer lossless options, hey, more power--but I personally could not hear a difference between 320 and lossless, so it means very little to me.

Clue #3: Choosing formats is nice. It's not particularly important to me, but I know it can be to a lot of people--and really, when you get right down to it, if you're doing steps #1 and #2 already, then letting people chose their format in addition to their bitrate is simply not that much more work, neither to code for nor on the server doing the jobs.

Clue #4: Probably the most important one, and the one that most specifically addresses the question posed in the submission: Once I buy the song from you, IT IS MINE. Get the hell off my back about what I can do with it. I don't want DRM. I don't want you to tell me how many different CDs I can burn it to, or what devices I can play it back on. If you charge reasonable prices, permit me to choose my for

Folks still buy Hamlet

[Spazmania]

Why do folks still buy copies of Shakespeare's plays or Beethoven's symphonies? They aren't even protected by copyright let alone by DRM.

There is always a business to be made out of selling value, even if the content itself is free.

Besides, given a reasonable choice most people will be mostly honest most of the time. If they're able to buy music or a movie they want at a price they consider fair in the format they want most will choose to do so. Take the money where you can get it; don't worry about the rest. As for the rest of the folks, most of them wouldn't buy your music or movie if they couldn't copy it. Its not important to them; that's why they were willing to make do with a mere copy.

the carrot rather than the stick

[macadamia_harold]

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

Simple: in addition to selling the music, you give people something else that requires no manufacturing cost, but is in finite supply, such as special "pre-sale" access to concert tickets. Fans are a lot more willing to give you their money when you offer a carrot, rather than threaten the stick.

Since when has DRM done anything

[CrazyJim1]

Only thing I saw DRM do is stop a Backstreet Boys CD from working on my exgf's portable CD/DVD player.

DRM doesn't stop online piracy anymore than a speedbump in your driveway slows interstate traffic.

Four ways to make money.

[thedletterman]

Given the presented variables, there are serveral ways to still make money.

1. Distribute the product yourself for free, request donations.
2. Merchandise goods that do not meet the same criteria.
3. Recreate the initial (creative creation) stage in live venues.
4. Control physical access to content.

Given the current "stage" with no shortage of supply of talented musicians, cheap manufacturing, and distribution mechanisms available, I'd personally like to see a revolution of internet radio where artists upload their tracks for free, stations stream their tracks to users, users rate their favorite tracks, and the station's advertising revenue distributes royalities to the artists and station manager. It creates like a democratic system of which artists get paid the most on which stations, and creates a very populist system for music completely destroying the 'mainstream' or even 'indy' model where station managers pick and choose their playlist and present that as the only options. As someone in the executive side of the music industry there's just way too much good talent and cheap processes for the ivory tower industries to remain standing. The business model is going to have to shift and adapt, or the people will throw everyone out of the ivory towers. No amount of intellectual property laws and drm is going to stop that.

Copyright was invented to protect cost of printing

[Swordfish]

The whole purpose of copyright was originally to protect those people who invested in the typesetting of printed works against unscrupulous printers who would then set up their printers only for the proven best-sellers of the other printers who took risks.

Nowadays, the cost of typesetting and printing (or composition, arrangement, recording etc.) is borne by the artists, and the publishers do nothing of value that a kid in a garage can't do. So there is no further need of copyright to protect the printing investment. Anyone can record, print and distribute for essentially nothing.

The question is now whether monopolies should be retained when the cost of publishing is essentially zero. The answer is clearly no. If all copyright on music is removed, the result will be a flowering of music and literature from artists who otherwise would have been strangled and suffocated by the dominance of the monopolists.

In short, technology has made the protected markets of music and literature publishers obsolete. Considering the trashy sounds that pass for published music these days, I don't know why anyone keeps buying that rubbish. At least 10% of people nowadays can produce much better music in their garage. So why not just stop buying the commercial garbage and just get unencumbered music off the net for free?

Pay for labor, not for copies.

[Kadin2048]

I've discussed this in other threads before, but I think the way that you make money without DRM is by not trying to make entertainment on speculation.

Basically the entertainment companies go out right now, and make a movie/song/whatever, and spend a whole lot of money doing it, in hopes that they can then go and sell the end product over and over and over to make up the investment. There is really not any way to do this, without DRM. As I think DRM is fundamentally flawed, so is this business model. That doesn't mean it might not stick around for a few centuries, but it's eventually doomed.

The problem is that DRM tries to artifically limit the supply of something that requires very little labor in order to reproduce. The n-th copy of a digitally delivered Brittany Spears album costs virtually nothing; it's only the first copy that really costs a lot to make. (Okay, so this sets aside that the net value of any given Brittany Spears album may in fact be negative.)

In the past, since the recording companies basically controlled the means of producing more copies (vinyl/CD stamping factories), they could artificially inflate the cost of the marginal (that is, n-th) copy, in order to pay for a bit of that first one. The only reason this works is because they have a monopoly on the means of producing more copies. That's it.

What digital delivery, and computers/the Internet in general, do is make widely available the means of production. (Apologies if I'm sounding a little Marxist here, but it's tough to avoid the terminology.) When anyone can make that 'one last' copy, you can't fix the price of it anymore. You just can't. DRM is an attempt to put a finger in the dike, to make it artificially hard again to make an additional copy, but they have a whole lot of information theory working against them. There is no practical way, that I can envision, to allow people access to digital media which does not inherently give them an opportunity to copy it, particularly since copying is inherent to the digital distribution process. And this is only going to get more difficult in the future.

So given this, what to do? The answer is to make people pay in advance. There will always be a demand for new content; even with the entire past produce of human civilization on tap, it is the nature of people to want things that are fresh, that have been created specifically for them (whether individually or as a group). Rather than trying to make money up off of the marginal copies, which have little to no inherent value, charge for the first copy. Charge interested parties, in advance, for creation of the work. If people aren't interested in funding its creation, it doesn't get made. If fans want an artist to continue to produce, then they can pay to commission more albums. Rather than paying an inflated cost for each copy, which has some portion of the original labor's cost built into it, they will pay for the cost of that labor up front. It is the labor which is valuable, not the copies.

This of course would force a re-evaluation of both how we think of the relationship between artists and their public, and also of how much art we as a society produce (right now I think it's clear that we produce a surplus; we produce more new art than the public really demands, and one must understand that in a pay-in-advance system, this would no longer be supportable), but I don't think there's anything fundamentally wrong with it. As people demand new content, they will pay for it to be created. Either they will pay what it costs to create it, or it will not be made.

This is the way the market should work: as people desire novelty, the business models would be formed around the demand. Instead of a top-down approach, it's bottom-up; allowing consumer choice and demand to drive how people will make money. There are lots of ways that they could do it, from straight work-on-commission to more subtle crediting schemes, or donationware/threatware (e.g. "I'll write the next installment of the

Re:Pay for labor, not for copies.

[shmlco]

The basic problem with your premise is that now an author (let's say) need only convince a small, select number of people that they should finance his work for a year. Further, once that work is completed there are many mechanisms the market can be use to judge that work (reviews, word-of-mouth, ratings, picking it up in a store and flipping through it) and find out if it has value to them, and is worth the twenty bucks.

Now, let's compare that with an assurance contract, where I have to convince a LOT of people that I can produce something of value, doesn't generate an advance so I can actually get on with creating it, and really provides no guarantee to the end user that it will be a quality product, or one suitable to you (you were expecting killer hard-code SciFi, not a time-travel romance novel). Once I produce it according to the contract, you have to pay for it, with no recourse.

I don't see paying in advance as the answer either, as it limits the available selection to "known" authors who've already made a name for themselves. Stephen King might be able to get a 100,000 people to pay in advance for the next chapter of his new book. A new and unknown author certainly can not.

Further, I tend to see it generating "more-of-the-same" content. Weber may be getting ready to branch out, but what happens when his fans only want to pay up front for more HH? How much of the storyline of The Matrix do I have to reveal before I can convince several million people to kick in $20 up front?

Finally, the up-front "salary" kills the dream as far as I'm concerned. Every author, singer, actor, and director dreams of the "great american novel" or hit song or blockbuster movie. Those dreams convince them to take risks and experiment with new ideas. I don't want those dreams dampened with a "just a job" mentality, working for minimum wage...

Re:Pay for labor, not for copies.

[arkhan_jg]

These problems are the same as any small business has getting off the ground. How do I get new customers when they could just go to the big chains they already know?

The answers are the same. You take out loans to pay for marketing, promotions (giving stuff away free), and then pay them off when you're established and making a profit. You might even have to work two jobs to support yourself while you follow your dream and get established.
Not everybody makes it. Either they have a product that not enough people want, or people didn't find out about it, and they go under. That's the free market.

It's very little different to how artists work today. Unknown artists struggle to get exposure, so do bread-and-butter work and 2nd jobs to get by.
Giving away some of your work for free, especially digitally where it costs you virtually nothing, is great marketing. The 'tip-jar' method does work sometimes, as does getting people to pay for higher quality versions of your material. Give away the low-res one, maybe with adverts embedded (hellooooo, radio) and use that to get people to pay for the high-res version. After a few cycles of that, people will pay in advance for the new one to get it made, or released if already made.

The old method of charging many times what something cost to produce is dying. The whole point of the free market is for new businesses and new business methods to be tried out, and live or die in the attempt. DRM is the complete antithesis of the free market as it uses government law to prop up an artificial and failing business model, and removes the freedom of the customer to choose alternative providers. DRM on physical products warps the meaning of physical property itself for the purposes of the big media cartels.

My singlle player version of Half-life 2 DVD is a great example of the evils of DRM on physical media. It's encrypted, so I can't use it without Valve unlocking it for me online. I can't resell it, as my key is now used. I can't even give it away, as the key is tied to my steam account which has other older versions of my games in, and I can't delete the key or move it. The physical DVD in my hand might as well be a blank piece of plastic with a number printed on it, and to add insult to injury, when the game was first released I had to put my DVD in the drive for the DRM check, while people who'd bought it online didn't. It's over a year later, and I'm still pissed at Valve.

Re:Pay for labor, not for copies.

[Kadin2048]

While I certainly can't argue with you about your personal feelings on commissioning work or not, I think you're very mistaken to say "Since the dawn of time it's been like this. If you create something, you take a risk doing it. If people like it, it may pay off." That's quite untrue. In fact, the whole 'at-risk' business model of entertainment is fairly new in terms of being universally dominant.

Throughout most of human history, artists made great works basically on commission, at least until they had developed enough of a reputation to ensure a market for their work. We hardly even remember the people that bankrolled the creation of much of our reportoire of classical music (unless it happens to be named for them), and yet without them it might not exist.

Traditionally, a person might get their start by working on direct commissions that offer very little creative control to the artist. An example might be a commissioned portrait, or a piece of music where the end-product is spelled out rather precisely ("I want an opera in the Viennese style, about ..."). The client takes very little risk, because the acceptance criteria are clear, and the artist gets some income and develops their reputation. Provided that they can develop a market for their work, then in the future they can produce in advance, knowing that the next time someone comes through their door, they'll be able to sell them the previously-produced symphony/painting/whatever.

You say that you wouldn't put a down payment on a creation that hasn't been made yet, but I suspect that you do this all the time without really thinking about it. If you've ever paid a wedding photographer, you've done exactly that; you're commissioning artwork, by paying in advance (or agreeing to pay) for somebody's time. If you've ever had a house built, same thing applies: you're paying a "creator" (the tradespeople/contractors who do the construction) to make a "work" (the house), according to an agreement (perhaps plans, or perhaps just your general idea of what you want). A better example might be an architect; they design you a building based on your (potentially vague) criteria and desires, in return for payment. This might not seem very 'artistic,' but it's the exact same concept. And in the economic model I'm suggesting, there's really not much difference between a general contractor and an architect and a painter and a performance artist. They are all skilled tradespeople, and all get compensated for the time that they spend on projects, based on the demand that exists for their trade.

The current economic system favors tradespeople who can produce works which are easily reproducable: you can't take the same house and sell it 10,000 times over, but you can do that with an audio recording; thus a recording artist seems like a more potentially lucrative career than a carpenter. However, once technology collapses the inflated-value bubble that one could previously create by selling copies, the recording artist is left in the same posistion as any other skilled person; their income arrives as a direct result of finding people who will pay for them to do whatever it is that they do.

Because no one would write songs without DRM!

[twitter]

It is a classic theorem of economics that public goods are under-produced.

Oh, do tell. You obviously have the public good formost in your mind. Still, I don't think your abstractions hold up beyond themselves and are meaningless.

How do you explain music, poetry, stories and all that which people created before machine presses and copyright? People have been singing and dancing forever and they will continue to do so despite your inability to profit from or diminish their joy.

DRM turns information goods into private goods. Now they can be sold and owned. They become excludable. The investment needed to produce them can be recovered by charging for their sale. ... DRM is an optimal way to manage information goods.

Let's turn this on it's head. If it were possible to effortlessly and infinitely reproduce bread, would you degrade that process? Do you think it's more important for big commercial makers of wheat and bread to profit than it is for others to eat? Why do you want to do that to information? Music and knowledge are bread for the mind and soul. It is insane to limit their distribution for the benefit of "owners." Ideas are not property and trying to make them so is stupid and wasteful.

I'd like to tell you that DRM will be circumvented by customers, but the market will do it first. Companies that cling to DRM will have no customers when confronted by reasonable competition. Now that's an optimal way to manage information.

Just ask Linux

[Kamiza Ikioi]

Not a biased question at all. It's the question asked daily at Novell, RedHat, IBM, etc, etc. Some sell backend services and support (equivilant to live concerts for artists). Some only charge for hard copies, but give the content away for free download (buy the CD, but feel free to purchase the CD with art, lyrics, a wall poster, and extras). Some don't make money at all through their users, except for donations, and the jobs they get because of their expertise (think Christian musicians who basically give away their music to radio stations free, because most stations, like most people, aren't rich... but make money back at wildly sold out concerts of very devoted fans).

There's an economy when the creation costs much, but manufacturing and distribution approach $0. Linux already does it. Music and Movies just need to figure it out as well. And, I have to say that the creative quality and scope in Linux far exceeds that of companies still under the old supply/demand model. Maybe the same could happen with media. Just look at all the crap music that's "popular" (I don't know with who, I suspect major $Payola$). The real break out artists are broke, indie, collaborators (including rotating band members) and just love what they do.

I wasn't even going to mention The Grateful Dead... that'd be too redundant and obvious here, regardless of the fact that its exactly what I'm talking about.

Why DRM is counter-productive

[pen]

Let's say I just heard a song I really liked. I liked it so much that I want a copy of it to listen to again. Maybe even the whole album. Ok, what are my options?

I can buy a CD from a store or order it from Amazon. This means I have to either put on some pants or wait for days. And my computer doesn't have a CD-ROM drive. And this is really inconvenient.

I can sign on to iTunes or similar and buy the song. Except it's DRMed so I can't get an MP3. And that album was released by a label that doesn't participate in iTunes.

I can buy the MP3s from a grey market place online such as allofmp3.com. This is pretty much illegal, I have to pay for it, and the artist still doesn't get jack. Oh, and their selection is better than most stores but still sucks.

Finally, I can log on to my P2P network of choice and more than likely download whatever I want, in decent quality, pretty much instantly.

Now, should I support a corrupt, backwards, outdated industry that is working overtime to make my life a pain in the ass by lobbying for all kinds of crazy laws and filing lawsuits left and right, even if this is less convenient to me?

Re:Why DRM is counter-productive

[BadAnalogyGuy]

Please accept my sincerest apologies for the inconvenience of not breaking the law. Is it inconvenient for you to wear pants? I apologize profusely and wave my magic wand (no, mine not yours, you sicko) and you can now walk around pantsless all you like outside.

Do you find it inconvenient that you don't have a CD-ROM drive? I don't know what kind of cheap-ass system you have there, but by all means go ahead amble into your local Best Buy with your dick swinging free and grab whichever stereo system grabs your eye. Hell, take two. My apologies that it was illegal and inconvenient to do that until now.

I bet paying the phone company is pretty inconvenient as well. Stop paying! Hey, sorry it was set up that you had to pay each month. Now it's all yours, no charge. We'll still need a credit card number, so steal one from an old lady at the Best Buy parking lot.

Yeah, things were pretty inconvenient. Sorry, man.

The Problem is The Product as defined

[jcdick1]

As I see it, the problem is that the CD or the MP3 is what is being defined as the product. I have said it before, and I will say it again, the music is the product, and not the media used to distribute it. If the artists want to be musicians, then they need to be making music, not CDs. The goal should not be a platinum-selling album, but a 250,000 attendee concert series. I should be able to go out on any night of the week, with ten dollars in my hand, and have my choice of any style of live music by bands that aren't local, regardless of where I live. So I say to the musician, "Don't be a recording artist, just be an artist." Will there be tons of money to be made? In the case of the Grateful Dead, you betcha. But you better have the staying power. Is there decent money to be made? Absolutely. You won't be buying a Ferrari any time soon, but then, if you are in it for the money, most people probably don't want to hear you anyway.

Financing the "Star Trek" society

[Paul Fernhout]

An essay I wrote in 2004:
    http://www.kurtz-fernhout.com/oscomak/AchievingASt arTrekSociety.html
An excerpt:
"Now, let us move on to the question of where could more money for
education and creativity come from -- such as to fund more creation of
free copyrights and free patents? And where could budget cuts be made so
US parents (and everyone else) could work less hours and devote more
time to their families and charitable hobbies -- including informally
educating their children? As we shall see, a hundred billion dollars
here, a hundred billion dollars there, and soon we are talking real
money. :-)

Let us consider ways to free up money for the non-profit sector (or
reducing working hours) by cutting wasteful government and consumer
spending in these areas with (annual estimate of easy savings):
    * Healthcare ($800 billion),
    * Military ($200 billion),
    * Prisons ($125 billion),
    * Agriculture ($40 billion),
    * Transportation ($250+ billion),
    * Housing ($350+ billion),
    * Manufacturing (very variable),
    * Media (very variable),
    * Banking ($14000 billion up front, $320 billion annually), and
    * Education (very variable).
This is a total of $14000 billion up front and at least another $2085
billion per year. And this is even without considering any lifestyle
changes such as from widespread adoption of Voluntary Simplicity:
    http://world.std.com/~habib/thegarden/simplicity/
which will ultimately result in the largest savings in the US and
worldwide (but I discuss no further here). "

Re:Public goods

[medarby]

...competition will force prices to the level of manufacturing costs.

IANAE(conomics)M(ajor)

Competition? What competition? Aren't we really facing multiple monopolies? It's not like Big Summer Movie #1 is offered by multiple companies. It's only offered by one. Competition is good if you consider the demand for ALL movies, but that's not really what happens. If I really want to see 3 movies this summer, I'll save my money and go to them, and not the 97 others that are released. Big Summer Movie #1 is not really competing with Big Summer Movie #2 or Crappy Art Movie #9864.

Each DRM product is a monopoly and not affected by other DRM products. The only thing to consider is the demand for an individual product and the fact the the supply for that product is monopolized.

Re:TCP does not work.

[Shaper_pmp]

Except that when you're sat at home wanting to back up your entire DVD collection, who goes on bittorrent and waits to download them all? And who just suddenly guaranteed that every movie I own is available on bittorrent?

There are only so many hacking groups, and you can only rip and transcode so many movies per day, y'know. And with DRM+TCP both of those numbers are effectively set to decrease dramatically.

You're missing the point - even if piracy is always possible, and even if making the ability to hack hardware a requirement doesn't stem the flow too much, and even if the more specialised requirements and necessity of having a physical (no doubt quickly-made-illegal) device doesn't make catching and prosecuting pirates easier, it's the normal users who are effectively stuffed.

If I want to pirate the latest Stargate SG-1 or Desperate Housewives, I'm fine on bittorrent. If all I want to do is back up my $obscure_movie DVD that I already bought and paid-for, I'm boned unless I can rip it myself.

Maybe you weren't aware of this, but many people like watching movies that there isn't a huge mainstream audience for, or that unaccountably aren't popular with the early-adopter geek set.

And maybe you've missed this, but not everyone is interested in the pirate's viewpoint. If you just want to serially rip off movies, great. Ethically indefensible, but great. I've even done it myself before now. But there are those of us who value quaint concepts like personal freedom and fair-use copyright exemptions, and we're the ones who're getting fucked in the arse by DRM/TCP.