"Why do CDs cost as much as vinyl LP albums did? The production costs for (digital) CDs are several of orders of magnitude less than they were for (analog) LPs, yet the price-point never moved."
I'm not sure I follow. Are you of the belief that manufacturing cost is a significant portion of the cost of sale? It sure isn't in most industries I can think of (the manufacturing cost is a small portion of what it cost Apple to sell you your iPod, or for some other vendor to sell you your mouse and your keyboard). From what I've seen, that's the case with CD production as well -- heck, royalties alone usually cost the record company more than the piece of plastic does.
I'm also not sure about your assertation that price points haven't moved. I'm guessing you're not using constant dollars. When CD players started getting affordable around 1985, CDs were $18. If prices hadn't moved, they'd be $32 today. CD prices have been in free fall lately, with new CDs hovering at around $13. That's a 60% drop.
The reactions here are pretty surprising. The plaintiffs may have lied?
This is Napster we're talking about -- a company that was based on a Big Lie; that they weren't aware that their service was used largely for piracy, or that they they weren't trying to make money off of the large demand for piracy. The "smoking gun" internal emails from Shawn Fanning acknowledging that Napster was essentially a piracy service certainly made that clear for anybody who wasn't able understand the blindingly obvious.
And now we have a case where one set of companies who happen to be members of the RIAA (UMG and EMI) are suing another company that happens to be an RIAA member (BMG) and suddenly lying is a bad thing? And UMG/EMI are the bad guys, and BMG is not, even though they all happen to be members of the RIAA?
My guess is that it's not that Slashdot's readership has suddenly found religion; rather, it's situational ethics at its most extreme. It's OK to lie if you're Shawn Fanning when you say things like "I didn't intend Napster to be used for piracy and we don't want Napster to be used for illegal purposes," since, after all, you're doing a great service for the world by letting teenagers everywhere get lots of free music. BMG gets a free pass here as well; despite the fact that they're a record company, they invested in Napster (see "lots of free music").
"I've seen several people refer to pirating as "stealing". Keep in mind, it's only stealing when you would have gone out to purchase it in the first place! At least that's how most justify it."
that's OK. We English-speakers also use "theft of service," "stealing your thunder," "stolen kisses," and so on, and smart people know what they mean.
You're correct that many people justify piracy because they wouldn't have bought it in the first place. Well, why would they, if they can use BitTorrent and their high-speed connection to get it with just a few mouse clicks? Those with a certain moral compass don't need to buy any media nowadays, so "I wouldn't have bought it anyway" is a good, general-purpose rationalization.
"The ultimate question in my mind is, what is the actual cost of manufacturing and distributing? It's like a $0.03 piece of plastic, the disc that is. Generic packaging like they talk of here can't cost very much. If it gets 15x the people to start buying movies again IN ADDITION to the people who currently pirate them, well... for $3 or $4 per release like some have suggested, I bet they stand to make their money back."
In most hard goods industries, the manufacturing cost is not the majority of the cost of sale. In the computer peripherals industry, the manufacturing cost is perhaps 10% - 30% of the final sticker price. We -- as do the DVD manufacturers -- must deal with many things that cost real dollars and cannot be ignored:
Royalties and licenses
Shipping costs
Development costs
Overhead costs (ie. the electricity and the air conditioning for the buildings that hold the materials and employees)
Channel programs (merchandising, promos, co-op ads, and the like)
Price protections (when you see something permanently marked down in a store, odds are that the manufacturer, not the retailer, is eating the difference, netted off the retail margin.)
Returns (for both defective inventory and stuff that doesn't sell)
Also, I've learned that many Slashdotters aren't aware that distributors and retailers also want a cut. If you buy a mouse for $50 or a CD for $14, that's not $50 or $14 that goes to the manufacturer. Distributors typically take 5% - 6%, and retail margins vary... from about 15% at Amazon to 35%, 45%+ at Best Buy. Of course, that 35% that Best Buy takes is also gross, and the gross vs. net is equally ugly for them.
The point here is that "blank CD and DVD media only costs a few bucks, so I'm being robbed if I'm being asked to pay $14 for that CD or $18 for that DVD" is a great general-purpose rationalization for piracy, but it's not accurate.
"But with no competition, certain industries price their goods at whatever price they feel they can get away with (CDs, DVDs, software, etc)."
The DVD, CD and software industries are just as fiercely competitive as the automobile industry is, to use the GP's analogy.
I think many people are confused because CDs and DVDs tend to cost the same, regardless of the supplier. The same is true of the audio industry, particularly in the high-volume segments. There's not a huge delta between the price of a Honda Accord and its close competitors. It's the very same thing in various computer hardware industries, as well. Logitech and Microsoft set their prices for mice and keyboards to match each other. Yet smart people know that the auto or computer peripheral industries aren't monopolies. "The auto industry is a monopoly because auto manufacturers are the only source of cars" is a tautology. Drop in "film studios" and "record companies" and the same holds. Actually, I'd say that films and music are less of a monopoly by the somewhat skewed Slashdotter definition. I've known a few people who've successfully run five-guy record companies, and I know a guy who was able to raise the money to produce a film that was a success in its own right. I don't personally know anybody who's been able to start a car company.
"Piracy is the natural result of prices being set with no basis in reality."
Interesting. The net margins on CDs and DVDs (gross != net, folks) is much lower than that of many industries, including the computer peripheral industry. If the net margins on CDs and DVDs upset you, if you learned how much Microsoft or Logitech makes on a mouse or a keyboard, you would be unbelievably angry. "Margins on CDs and DVDs are unacceptably high" is a great mantra for justifying piracy, but in the grand scheme of things, it just ain't true.
"Whether or not you agree with pirates (who sell the copyrighted material) or simple copyright infringers (who upload it gratis)"
Nice try at redefining the terms.
What's wrong with calling yourself a pirate? When I was the age of many of the commenters here and me and my friends were trading Apple II warez, we had no problem with the term whatsoever. Why are so many slashdotters afraid of the term? Show a little backbone, guys.
Education seems to have been better back then, too. We understood what homonyms are, and the fact that "pirate" has multiple meanings didn't confuse us any more than the fact that "bark" is both the noise a dog makes, and the stuff that covers a tree.
Fair enough. It's interesting to note that a very common meme on Slashdot that now that we're here in the digital age, artists should stop trying to make money on sales of their music, and instead make money on concerts. It looks like that notion has been rejected by Slashdotters, as well.
I think the fallback meme here is: "people who produce content that I can easily copy should just give up on making money. If they're real artists, they'll { compose | write | sing | paint | code } for the pure joy of creating work for me to enjoy."
"Just like the more they jack the prices of CDs up, the less Im going to buy them."
For what it's worth, for the past several years here in the US, CD prices have been free falling. Five years ago, $18 for new releases weren't uncommon; new releases are now under $14.
"You can't tell me that Apple suddenly decided to cancel this product just because news of it got leaked to the web."
Steve Jobs can be amazingly petty and vindictive. This sounds exactly like something he would do, to avoid giving the Mac rumor community the satisfaction of being right.
"There is something more to this that Apple doesn't want us to know. I just can't quite pinpoint what is going on..."
That's because most of the time, Apple's pretty good at keeping secrets. As are most companies. It's a fact of business life that shouldn't cause anybody any stress.
"The whole concept of somebody paying a website owner on the basis that visitors to the website might have seen an advert {but probably are not going to do anything about it, and almost certainly not buy the product} is just broken on too many levels to be sustainable."
Interesting. Ad-supported sites have been around for more than a decade. Of the top five sites in the US, four of them (Yahoo, Google, MSN and MySpace) are ad-supported. Most of the others near the top are stores (ebay, Amazon and the like) or support a brick-and-mortar business. The highest-ranked site I could find that make their money through selling services are craigslist (although one could call that an ad-supported site) and match.com (which, I guess, is also an ad-supported site, in a way).
When you say it's unsustainable, do you mean that you think it might collapse in the next three to six months? Or are you talking years down the road?
Agreed that copyrights are too long. I could argue that death+70 covers the case of a guy writing a hit song and then getting run over a bus. Somebody with a "real" job has a 401(K) and life insurance for stuff like that. Musicians typically do not. But you're correct; the latest extension was indeed at the behest of Disney, and if it happens to help in the case of the poor fellow who meets the bus, then that's incidental.
I take a pragmatic view here: I'm aware that the USA is, in effect, in an economic war with many other countries, and that our intellectual property is one of our biggest exports. If Disney hadn't gotten their way and Mickey Mouse were in the public domain right now, it would shift the profits on Mickey from Disney, to 10,000 Chinese companies. If US companies had lost, say, $100 billion in combined revenue over the past decade if copyright had not been extended, this might affect my way of life, as that's $100 billion in taxable income that would go toward my way of life. It would be an effect that might not be offset by the fact that I would now legally be able to buy a Chinese-made Mickey Mouse t-shirt for $5 at my local Wal-Mart, vs. the $15 that Disney wants for them now.
Re:Some artists just want to be heard...
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"Classic straw man. As was your crack about only getting $15 for an album. If that album sold 1 million copies, you stand to get $15,000,000. Does that cover your expenses for a year, in any way, at all, hmmmm ?"
A million copies classifies a CD as "platinum" (gold is 100K copies). I've known various people who try to make money at music, but I've never known anybody who's successfully released a platinum album. I think they are rare. Do you disagree?
"But no, apparently, not only do you get to make $15M for 1 years work, you get to make money from that years work, for the rest of your life!"
Exactly... you've put your finger on it. That person who manages to sell a million copies of the album, and moreover, have that album enjoy enduring success (think the luminaries here... Elvis, The Who, etc.) is very lucky indeed.
But, we know that this doesn't happen very often, and it's unfair to resent the system in which artists are compensated based on a few rare examples. Likewise, it would not be fair to me to scream about how people in the computer industry are over-paid whiners using Larry Ellison as an example. Every industry has its superstars while most toil in obscurity.
Re:Some artists just want to be heard...
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"Not quite, I've bought your album once on vinyl, paying you for the material cost of making the record and for your creativity. Then I purchased your album again on 8-track, you again got paid for your creativity."
That's correct. If you would like one copy of an album, it'll cost you $13-$15 or so. If you would like to buy five copies, the store will charge you $75. If you would like to buy one CD of the clean version, one CD of the explicit version, and three copies of the cassette version, that's also $75.
"When CDs came out even though the manufacturing cost of a disc is miniscule and you didn't activate a single, new creativity neuron, I again had to pay you full price for the same creativity I purchased twice in the past."
I'm not sure I follow. Are you of the understanding that the manufacturing cost is a majority portion of the cost of sale? That's not correct for many industries (including the computer peripherals industry) and it's certainly not the case with CDs.
I'm also not sure why you wrote "I again had to pay." It's your choice. If you would like the CD, buy it... if you don't want it... don't. You don't have the right to free copies in other formats (the same goes for painting, books, movies, and so on). If that were the case -- say, for example, with each CD you purchased you got a golden coupon that you could redeem in perpetuity for more copies -- that would have to be built into the initial sale price, and it would no longer be $13 - $15.
"The insanity of multimillion dollar fines for downloading a single CD is beyond words."
Wow, I didn't know it had gotten that bad. Can you give a citation of somebody getting a multi-million dollar fine for downloading one CD? I thought that S504(c)(2) limited statutory damages for infringement at $30K per work, but I figure that'd apply more to distribution, and not downloading, and I figure that there'd have to be evidence that the CD was distributed widely by the pirate in order for the court to consider the $30K max.
Re:Some artists just want to be heard...
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· Score: 2, Interesting
"If I repair your car today - no matter how good a job I do - you pay me once, and I get to eat today. If your car keeps running for another 20 years, you don't have to to keep giving me royalties because of what a great job I did. Hell, even a doctor only gets paid once for a life saving operation."
The basis here is that musicians, poets and authors are typically the three lowest-paying jobs. There's little or no job security. By comparison, it is relatively easy to make a steady income if you are a trained mechanic or doctor.
"However, if I make a hit album today, the RIAA, CRIA think that I should be allowed [or, more importantly, they should be allowed] to live off the proceeds of that record for the remainder of my natural life, as can my family for 50+ years after my death."
FYI, much of the long-term royalties that help pay the rent -- radio airplay, covers and the like -- are administered through ASCAP/BMI and the record companies see none of it.
"Why are creative people rewarded in perpetuity, when doctors don't?"
Because -- as covered above -- trying to make a living in the creative arts can be very, very tough. It is by no means a guarantee of riches, or even a living wage.
"Because creative people get to write legislation."
Are you sure about that? I've known several authors, poets and musicians in my lifetime, and none of them have been involved in writing legislation.
Are you also positive that the medical industry doesn't have an effect on legislation? The pharmaceutical industry alone (which has a lobbying group that's distinct from the the medical device lobby, the HMO lobby, and so on) spent $44MM in 2003 and 2004just on state officials. If this contradicts your understanding that the medical profession does not have an effect on legislation, please let me know.
"Just think, in this day and age, it'd be more like "What's a phonograph? and why does it have to be protected?""
FYI, this happens a lot. the second "T" in AT&T stands for "telegraph" and the "C" in NAACP stands for "colored."
"I wonder if it'd be just as silly concept to have these groups to protect things like manual printing presses, and then try to extend that to everything from typewriters, to photocopiers to the modern printing presses."
I'm not so sure about that. Technology comes first; the law follows. Motion pictures weren't protected by copyright for several years after their advent, because the lawmakers didn't know what to do with them. Autos were zipping around for a while before the lawbooks were updated accordingly; the first motor vehicle codes were adaptations of the codes on the book for operating horses and carriages. Lots and lots of the laws relating to online crime are adaptations of the original non-online versions. Laws preventing miscogenation were in place partially due to then-current scientific understanding that children of mixed race had a higher chance of being mentally retarded; when the law was struck down in California in the 1940's, the ruling cited newer studies that disproved the theory. In short, laws are constantly changing.
Many people think that with the advent of the Internet, it's useless to try to apply the legal concepts of past decades, but precedent shows otherwise.
"For the price of the Jag, buy two Subaru WRX STis (5.49 seconds), and throw in a Sportbike (numbers aren't usually published, but it's obscenely fast!) for grins. That ought to do it."
Subarus, sport bikes, and Jaguars are all aimed at different market segments. The typical 50-ish dude looking at the Jag might not be caught dead in a Subaru.
"Also, when will people realize that horsepower doesn't matter? It's all about the power to weight ratio. If the vehicle is light enough, you can toast anything with only 20 HP. And this Jag makes 400 HP? How much does the thing weigh?"
To clarify your point: horsepower determines top speed. It's the torque that determines the acceleration. My car has 190 HP and hits 60 in under five.
"Instead of focusing all their precious R&D effort on an automated traction control system, why not take some weight off! It'll clean up the handling far better than this silly system, and improve the gas mileage, and performance, too!"
Because they are building a Jaguar, not a Subaru. The weight gain necessary for things like a quiet cabin. The 50-ish dude does not want a car that sounds like a Subaru when you're in it.
Jaguar has made some attempts to get the younger crowd with the X-Type, but the XK Convertible is squarely aimed at the middle age buyer. Under no circumstances is Jaguar interested in making an STi clone.
"I've seen some pretty hilarious emails passed on from customer service, from the threats to file a class action lawsuit because we wouldn't permit unrestricted P2P (from people that had left us to go to a DSL network that was a disaster)"
That is indeed hilarious. I guess they thought that unrestricted P2P is their God-given right, just like all those movies and MP3 files are.
"Ultimately you have a choice: you can please 85% of your customers with well engineered traffic, and send the 10% abusers and 5% financial deadbeats to the competition, or you can please the losers and send away the good customers. If you want to stay in business, you know what the right decision is."
Well put. That's a good credo for lots of other businesses, both online and off.
"Currently the P2P networks are providing exactly what we want. That's the target the networks need to aim for. Nothing less will succeed to any significant degree."
Please define "significant." Apple and the TV networks are making millions off of TV show downloads on the iTMS.
Granted, the iTMS may not be right for you, and thus you are "forced" to use P2P. But there are lots of other types of people out there.
The networks are not going after the Slashdot crowd -- the "information wants to be free" folks for whom, I suspect, nothing will ever be good enough unless it's suicidal from a business standpoint. They are instead going after the mainstream audience; those who are willing to open their wallets. There's a lot more of them out there than there are of us.
"The model is broken. Most people want music downloads.. not free. Even the sale statistics prove this that were just recently published."
Ah. I thought you were referring to the business model of investing money in a product and then selling it to recoup the investment, but I guess you're talking about the distribution model. I agree with you here; I think I've seen the same studies that show that physical media like CDs are going to be a niche product in another decade.
"The problem is an antiquated business model that they are struggling to keep in tact.. even though it's going to fail unless they can take control of the Internet."
I've lost you again. Do you mean specifically the business model of selling CDs, as opposed to selling online? From my observation, the record companies are getting into the online thing just fine, just a little late for most bleeding-edge Slashdotters (it's deja vu all over again... I bought my CD player in 1984 and it was years before the record companies would release content in CD simultaneously with the vinyl release). They'll probably continue to sell CDs for as long as there's a market (just as they continued to sell LPs for as long as they could), but given the lack of overhead (and thus more profit potential) of online distribution, I don't any record label will be particularly sad to see that day when CDs are museum pieces. I can't think of any record companies that are refusing to join the digital revolution and are hoping to keep the CD format alive... can you? I still run into some out-of-print CDs that I can't yet find on iTMS, but I usually assume that it's due to clearance issues (the composer and songwriter typically must give permission) rather than some wrong-headed effort to keep the CD format alive.
At any rate, I think it's clear that record labels understand that piracy is a cost of doing business. Their efforts to curb it are with the goal of getting more people to pay for music... not pay for it in any particular format.
"Lots of businesses go away because they fail to adapt to a new business model when their old model is no longer profitable."
Yup. Luckily, Apple makes it pretty easy to get your stuff onto their store. There are even service bureaus like CDBaby that can take care of the transcoding for small labels or unsigned artists who don't have a friendly neighorhood geek to help them. I think the iTMS and their ilk are an opportunity for the indie labels to do better than in the past, since it's often harder for indie labels to get distribution of physical CDs. I've bought a lot more indie stuff than major label stuff on the iTMS, and it's stuff I never would have found in a traditional record store.
I understand what you're saying, but it fails in practice. When one reads therads like this on Slashdot, there's the obligatory "don't forget Magnatune!" post. Magnatune embodies what many Slashdotters would consider to be the perfect music business model: no DRM, you can listen to it in entirety before you buy, Creative Commons licensing, liberal redistribution rights, and so on. Yet while Apple and the record labels are having a grand old time with the iTMS and its explosive growth, Magnatune is flailing. It's telling that somebody has to point out that Magnatune exists each time the subject of piracy comes up.
If I were a record company executive, Magnatune's lack of success would not sway me from the "invest money in an artist and sell copies one at a time to recoup the expense" model. Piracy is a cost of doing business, just as retail businesses must deal with shrinkage. People will always try to get something for free, no matter what your business is. This means that it must be dealt with. I don't think it means the model is broken.
"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others."
Correct. Just ask Sally Hemmings.
"I do not add "within the limits of the law", because law is often but the tyrant's will, and always so when it violates the rights of the individual."
"Exactly. I owned about 150 CDs before Napster that I purchased over about 8 years. During Napster's prime, I bought another 170 CDs *because* Napster helped me find great music that I otherwise would have never known about."
I've had exactly the samee experience...but with the iTMS. I can listen to samples, find similar music, read reviews, and generally make informed purchase decisions. Since I started using the iTMS my music consumption has increased severalfold, I've never made an uninformed purchase, and I haven't had to break the law or otherwise paint a huge target on my back for the copyright holders to find me.
"They failed to embrace a new distribution mechanism."
I am not sure what you mean here. You mean online distribution? They sure did... remember, all the online music stores couldn't exist without permission from the record labels, and in most cases, the artists and songwriters. The iTMS has been growing at a logarithmic rate. Sure, it took time, but that's par for the course. CDs didn't really take off until about five or ten years after the format was invented; same with cassette tapes and LPs. New distribution mechanisms have tipping points, like so many other things in life.
If by "new distribution mechanism" you mean "allow free, unlimited distribution and rely on the honor system to make a profit," would you really think it reasonable to expect them to? Expecting an industry to adopt an arbitrary business model because it suits you, and using this as the impetus to break the law just isn't appropriate. There are plenty of unsigned musicians, and even a few small labels, that follow this model. They're largely obscure (which serves to show how workable this model is), but they're out there if you want to look for them.
I think Avi covered most of your points, but civil code is filled with inumerable examples of seemingly arbitrary statutory amounts. If you want to learn more about statutory vs. actual damages (this is crucial to understand if you want to make statements like "This is a court of law, they have to prove losses, not speculate"), and the bounds set by the courts for situations like this, you'll want to read Section 504. You'll see where the RIAA get that $750 number. HTH.
"I download music from the internet quite frequently, if I like the song I have downloaded I will usually buy the album if I don't like it I delete it, does this mean I am commiting a crime?"
This is behavior I've only ever seen on Slashdot. Of my friends who opt to get their music via P2P, they do it to save money. So they don't have to buy the CD, or download it from a service that demands payment. If I explained to them that they should go and buy the CD (or download it from the iTMS) when they already got a perfectly good copy for free, they would probably utter a pitiful chuckle in the same manner that Rhett Butler did when Atlanta burned to the ground.
Yet on Slashdot, there's a preponderance of people who always buy music they like after they've P2P'ed it, or people who wouldn't have bought it anyway (which is, of course, a tautology -- the existence of the music on the P2P networks is in itself a pretty good motivation not to buy it). P2P fans buy more music, not one dime has been lost to piracy, and the explosion of P2P's alignment with the decline in music sales is a complete and utter coincidence.
"It's extortion when you haven't committed the copyright infringement but have no hope of defeating their lawyers."
Perhaps, but how is this relevant? The author of the article does not claim that she wasn't downloading music illegally. Sounds to me that she took a chance and got the the old double zero on the RIAA roulette wheel.
As an aside, it's interesting that there is a large "Copyright and distribution information" link at the end of the piece. Apparently she's not going for the "entertainment wants to be free" angle that many Slashdotters subscribe to; otherwise, she would have published it through a service that would agree to release it in the public domain, and she would have refused payment.
"The rest of the cost is all in the content, and the music publishers pretty much charge whatever they think we'll pay for. But they were right, the CD's are cheaper than cassettes and vinyl ever were, and they're lining their pockets with the difference."
Are you sure about that? In the computer peripheral industry, we have to deal with:
Disti markup -- about five or six points.
Retailer markup -- twelve points at Amazon, 35 or 40 points at Best Buy, everybody else, somewhere in between
Shipping costs
Accruals for damaged goods and returns -- anywhere between two and 15 points
Channel marketing and merchandising -- retailers ask for another four to seven points here.
Advertising
Plus, the salaries of everybody who touches the product, even if they're not responsible for the "content".
In other words, material cost is probably the least significant factor. If it's $1.62 by your estimate, the royalties probably cost them more than that. Then add another buck or so for production costs (if it costs $50K to produce and you amortize it across 50K pieces, but most CDs don't sell that many). With sell-in to disti at around $8 or $10 per CD, the reports I've heard -- that the music industry nets out at around 10 - 20 points -- sound accurate. At least in the PC peripheral industry I have the luxury of netting 20 points plus. If you think record companies are greedy, mouse and keyboard manufacturers must make your blood boil with an insatiable fury.
Slashdot Mirror
"Why do CDs cost as much as vinyl LP albums did? The production costs for (digital) CDs are several of orders of magnitude less than they were for (analog) LPs, yet the price-point never moved."
I'm not sure I follow. Are you of the belief that manufacturing cost is a significant portion of the cost of sale? It sure isn't in most industries I can think of (the manufacturing cost is a small portion of what it cost Apple to sell you your iPod, or for some other vendor to sell you your mouse and your keyboard). From what I've seen, that's the case with CD production as well -- heck, royalties alone usually cost the record company more than the piece of plastic does.
I'm also not sure about your assertation that price points haven't moved. I'm guessing you're not using constant dollars. When CD players started getting affordable around 1985, CDs were $18. If prices hadn't moved, they'd be $32 today. CD prices have been in free fall lately, with new CDs hovering at around $13. That's a 60% drop.
The reactions here are pretty surprising. The plaintiffs may have lied?
This is Napster we're talking about -- a company that was based on a Big Lie; that they weren't aware that their service was used largely for piracy, or that they they weren't trying to make money off of the large demand for piracy. The "smoking gun" internal emails from Shawn Fanning acknowledging that Napster was essentially a piracy service certainly made that clear for anybody who wasn't able understand the blindingly obvious.
And now we have a case where one set of companies who happen to be members of the RIAA (UMG and EMI) are suing another company that happens to be an RIAA member (BMG) and suddenly lying is a bad thing? And UMG/EMI are the bad guys, and BMG is not, even though they all happen to be members of the RIAA?
My guess is that it's not that Slashdot's readership has suddenly found religion; rather, it's situational ethics at its most extreme. It's OK to lie if you're Shawn Fanning when you say things like "I didn't intend Napster to be used for piracy and we don't want Napster to be used for illegal purposes," since, after all, you're doing a great service for the world by letting teenagers everywhere get lots of free music. BMG gets a free pass here as well; despite the fact that they're a record company, they invested in Napster (see "lots of free music").
"I've seen several people refer to pirating as "stealing". Keep in mind, it's only stealing when you would have gone out to purchase it in the first place! At least that's how most justify it."
that's OK. We English-speakers also use "theft of service," "stealing your thunder," "stolen kisses," and so on, and smart people know what they mean.
You're correct that many people justify piracy because they wouldn't have bought it in the first place. Well, why would they, if they can use BitTorrent and their high-speed connection to get it with just a few mouse clicks? Those with a certain moral compass don't need to buy any media nowadays, so "I wouldn't have bought it anyway" is a good, general-purpose rationalization.
"The ultimate question in my mind is, what is the actual cost of manufacturing and distributing? It's like a $0.03 piece of plastic, the disc that is. Generic packaging like they talk of here can't cost very much. If it gets 15x the people to start buying movies again IN ADDITION to the people who currently pirate them, well... for $3 or $4 per release like some have suggested, I bet they stand to make their money back."
In most hard goods industries, the manufacturing cost is not the majority of the cost of sale. In the computer peripherals industry, the manufacturing cost is perhaps 10% - 30% of the final sticker price. We -- as do the DVD manufacturers -- must deal with many things that cost real dollars and cannot be ignored:
Also, I've learned that many Slashdotters aren't aware that distributors and retailers also want a cut. If you buy a mouse for $50 or a CD for $14, that's not $50 or $14 that goes to the manufacturer. Distributors typically take 5% - 6%, and retail margins vary... from about 15% at Amazon to 35%, 45%+ at Best Buy. Of course, that 35% that Best Buy takes is also gross, and the gross vs. net is equally ugly for them.
The point here is that "blank CD and DVD media only costs a few bucks, so I'm being robbed if I'm being asked to pay $14 for that CD or $18 for that DVD" is a great general-purpose rationalization for piracy, but it's not accurate.
"But with no competition, certain industries price their goods at whatever price they feel they can get away with (CDs, DVDs, software, etc)."
The DVD, CD and software industries are just as fiercely competitive as the automobile industry is, to use the GP's analogy.
I think many people are confused because CDs and DVDs tend to cost the same, regardless of the supplier. The same is true of the audio industry, particularly in the high-volume segments. There's not a huge delta between the price of a Honda Accord and its close competitors. It's the very same thing in various computer hardware industries, as well. Logitech and Microsoft set their prices for mice and keyboards to match each other. Yet smart people know that the auto or computer peripheral industries aren't monopolies. "The auto industry is a monopoly because auto manufacturers are the only source of cars" is a tautology. Drop in "film studios" and "record companies" and the same holds. Actually, I'd say that films and music are less of a monopoly by the somewhat skewed Slashdotter definition. I've known a few people who've successfully run five-guy record companies, and I know a guy who was able to raise the money to produce a film that was a success in its own right. I don't personally know anybody who's been able to start a car company.
"Piracy is the natural result of prices being set with no basis in reality."
Interesting. The net margins on CDs and DVDs (gross != net, folks) is much lower than that of many industries, including the computer peripheral industry. If the net margins on CDs and DVDs upset you, if you learned how much Microsoft or Logitech makes on a mouse or a keyboard, you would be unbelievably angry. "Margins on CDs and DVDs are unacceptably high" is a great mantra for justifying piracy, but in the grand scheme of things, it just ain't true.
"Whether or not you agree with pirates (who sell the copyrighted material) or simple copyright infringers (who upload it gratis)"
Nice try at redefining the terms.
What's wrong with calling yourself a pirate? When I was the age of many of the commenters here and me and my friends were trading Apple II warez, we had no problem with the term whatsoever. Why are so many slashdotters afraid of the term? Show a little backbone, guys.
Education seems to have been better back then, too. We understood what homonyms are, and the fact that "pirate" has multiple meanings didn't confuse us any more than the fact that "bark" is both the noise a dog makes, and the stuff that covers a tree.
"I just wont go to their concerts."
Fair enough. It's interesting to note that a very common meme on Slashdot that now that we're here in the digital age, artists should stop trying to make money on sales of their music, and instead make money on concerts. It looks like that notion has been rejected by Slashdotters, as well.
I think the fallback meme here is: "people who produce content that I can easily copy should just give up on making money. If they're real artists, they'll { compose | write | sing | paint | code } for the pure joy of creating work for me to enjoy."
"Just like the more they jack the prices of CDs up, the less Im going to buy them."
For what it's worth, for the past several years here in the US, CD prices have been free falling. Five years ago, $18 for new releases weren't uncommon; new releases are now under $14.
"You can't tell me that Apple suddenly decided to cancel this product just because news of it got leaked to the web."
Steve Jobs can be amazingly petty and vindictive. This sounds exactly like something he would do, to avoid giving the Mac rumor community the satisfaction of being right.
"There is something more to this that Apple doesn't want us to know. I just can't quite pinpoint what is going on..."
That's because most of the time, Apple's pretty good at keeping secrets. As are most companies. It's a fact of business life that shouldn't cause anybody any stress.
"The whole concept of somebody paying a website owner on the basis that visitors to the website might have seen an advert {but probably are not going to do anything about it, and almost certainly not buy the product} is just broken on too many levels to be sustainable."
Interesting. Ad-supported sites have been around for more than a decade. Of the top five sites in the US, four of them (Yahoo, Google, MSN and MySpace) are ad-supported. Most of the others near the top are stores (ebay, Amazon and the like) or support a brick-and-mortar business. The highest-ranked site I could find that make their money through selling services are craigslist (although one could call that an ad-supported site) and match.com (which, I guess, is also an ad-supported site, in a way).
When you say it's unsustainable, do you mean that you think it might collapse in the next three to six months? Or are you talking years down the road?
Agreed that copyrights are too long. I could argue that death+70 covers the case of a guy writing a hit song and then getting run over a bus. Somebody with a "real" job has a 401(K) and life insurance for stuff like that. Musicians typically do not. But you're correct; the latest extension was indeed at the behest of Disney, and if it happens to help in the case of the poor fellow who meets the bus, then that's incidental.
I take a pragmatic view here: I'm aware that the USA is, in effect, in an economic war with many other countries, and that our intellectual property is one of our biggest exports. If Disney hadn't gotten their way and Mickey Mouse were in the public domain right now, it would shift the profits on Mickey from Disney, to 10,000 Chinese companies. If US companies had lost, say, $100 billion in combined revenue over the past decade if copyright had not been extended, this might affect my way of life, as that's $100 billion in taxable income that would go toward my way of life. It would be an effect that might not be offset by the fact that I would now legally be able to buy a Chinese-made Mickey Mouse t-shirt for $5 at my local Wal-Mart, vs. the $15 that Disney wants for them now.
"Classic straw man. As was your crack about only getting $15 for an album. If that album sold 1 million copies, you stand to get $15,000,000. Does that cover your expenses for a year, in any way, at all, hmmmm ?"
A million copies classifies a CD as "platinum" (gold is 100K copies). I've known various people who try to make money at music, but I've never known anybody who's successfully released a platinum album. I think they are rare. Do you disagree?
"But no, apparently, not only do you get to make $15M for 1 years work, you get to make money from that years work, for the rest of your life!"
Exactly... you've put your finger on it. That person who manages to sell a million copies of the album, and moreover, have that album enjoy enduring success (think the luminaries here... Elvis, The Who, etc.) is very lucky indeed.
But, we know that this doesn't happen very often, and it's unfair to resent the system in which artists are compensated based on a few rare examples. Likewise, it would not be fair to me to scream about how people in the computer industry are over-paid whiners using Larry Ellison as an example. Every industry has its superstars while most toil in obscurity.
"Not quite, I've bought your album once on vinyl, paying you for the material cost of making the record and for your creativity. Then I purchased your album again on 8-track, you again got paid for your creativity."
That's correct. If you would like one copy of an album, it'll cost you $13-$15 or so. If you would like to buy five copies, the store will charge you $75. If you would like to buy one CD of the clean version, one CD of the explicit version, and three copies of the cassette version, that's also $75.
"When CDs came out even though the manufacturing cost of a disc is miniscule and you didn't activate a single, new creativity neuron, I again had to pay you full price for the same creativity I purchased twice in the past."
I'm not sure I follow. Are you of the understanding that the manufacturing cost is a majority portion of the cost of sale? That's not correct for many industries (including the computer peripherals industry) and it's certainly not the case with CDs.
I'm also not sure why you wrote "I again had to pay." It's your choice. If you would like the CD, buy it... if you don't want it... don't. You don't have the right to free copies in other formats (the same goes for painting, books, movies, and so on). If that were the case -- say, for example, with each CD you purchased you got a golden coupon that you could redeem in perpetuity for more copies -- that would have to be built into the initial sale price, and it would no longer be $13 - $15.
"The insanity of multimillion dollar fines for downloading a single CD is beyond words."
Wow, I didn't know it had gotten that bad. Can you give a citation of somebody getting a multi-million dollar fine for downloading one CD? I thought that S504(c)(2) limited statutory damages for infringement at $30K per work, but I figure that'd apply more to distribution, and not downloading, and I figure that there'd have to be evidence that the CD was distributed widely by the pirate in order for the court to consider the $30K max.
"If I repair your car today - no matter how good a job I do - you pay me once, and I get to eat today. If your car keeps running for another 20 years, you don't have to to keep giving me royalties because of what a great job I did. Hell, even a doctor only gets paid once for a life saving operation."
The basis here is that musicians, poets and authors are typically the three lowest-paying jobs. There's little or no job security. By comparison, it is relatively easy to make a steady income if you are a trained mechanic or doctor.
"However, if I make a hit album today, the RIAA, CRIA think that I should be allowed [or, more importantly, they should be allowed] to live off the proceeds of that record for the remainder of my natural life, as can my family for 50+ years after my death."
FYI, much of the long-term royalties that help pay the rent -- radio airplay, covers and the like -- are administered through ASCAP/BMI and the record companies see none of it.
"Why are creative people rewarded in perpetuity, when doctors don't?"
Because -- as covered above -- trying to make a living in the creative arts can be very, very tough. It is by no means a guarantee of riches, or even a living wage.
"Because creative people get to write legislation."
Are you sure about that? I've known several authors, poets and musicians in my lifetime, and none of them have been involved in writing legislation.
Are you also positive that the medical industry doesn't have an effect on legislation? The pharmaceutical industry alone (which has a lobbying group that's distinct from the the medical device lobby, the HMO lobby, and so on) spent $44MM in 2003 and 2004 just on state officials. If this contradicts your understanding that the medical profession does not have an effect on legislation, please let me know.
"Just think, in this day and age, it'd be more like "What's a phonograph? and why does it have to be protected?""
FYI, this happens a lot. the second "T" in AT&T stands for "telegraph" and the "C" in NAACP stands for "colored."
"I wonder if it'd be just as silly concept to have these groups to protect things like manual printing presses, and then try to extend that to everything from typewriters, to photocopiers to the modern printing presses."
I'm not so sure about that. Technology comes first; the law follows. Motion pictures weren't protected by copyright for several years after their advent, because the lawmakers didn't know what to do with them. Autos were zipping around for a while before the lawbooks were updated accordingly; the first motor vehicle codes were adaptations of the codes on the book for operating horses and carriages. Lots and lots of the laws relating to online crime are adaptations of the original non-online versions. Laws preventing miscogenation were in place partially due to then-current scientific understanding that children of mixed race had a higher chance of being mentally retarded; when the law was struck down in California in the 1940's, the ruling cited newer studies that disproved the theory. In short, laws are constantly changing.
Many people think that with the advent of the Internet, it's useless to try to apply the legal concepts of past decades, but precedent shows otherwise.
"For the price of the Jag, buy two Subaru WRX STis (5.49 seconds), and throw in a Sportbike (numbers aren't usually published, but it's obscenely fast!) for grins. That ought to do it."
Subarus, sport bikes, and Jaguars are all aimed at different market segments. The typical 50-ish dude looking at the Jag might not be caught dead in a Subaru.
"Also, when will people realize that horsepower doesn't matter? It's all about the power to weight ratio. If the vehicle is light enough, you can toast anything with only 20 HP. And this Jag makes 400 HP? How much does the thing weigh?"
To clarify your point: horsepower determines top speed. It's the torque that determines the acceleration. My car has 190 HP and hits 60 in under five.
"Instead of focusing all their precious R&D effort on an automated traction control system, why not take some weight off! It'll clean up the handling far better than this silly system, and improve the gas mileage, and performance, too!"
Because they are building a Jaguar, not a Subaru. The weight gain necessary for things like a quiet cabin. The 50-ish dude does not want a car that sounds like a Subaru when you're in it.
Jaguar has made some attempts to get the younger crowd with the X-Type, but the XK Convertible is squarely aimed at the middle age buyer. Under no circumstances is Jaguar interested in making an STi clone.
"I've seen some pretty hilarious emails passed on from customer service, from the threats to file a class action lawsuit because we wouldn't permit unrestricted P2P (from people that had left us to go to a DSL network that was a disaster)"
That is indeed hilarious. I guess they thought that unrestricted P2P is their God-given right, just like all those movies and MP3 files are.
"Ultimately you have a choice: you can please 85% of your customers with well engineered traffic, and send the 10% abusers and 5% financial deadbeats to the competition, or you can please the losers and send away the good customers. If you want to stay in business, you know what the right decision is."
Well put. That's a good credo for lots of other businesses, both online and off.
"Currently the P2P networks are providing exactly what we want. That's the target the networks need to aim for. Nothing less will succeed to any significant degree."
Please define "significant." Apple and the TV networks are making millions off of TV show downloads on the iTMS.
Granted, the iTMS may not be right for you, and thus you are "forced" to use P2P. But there are lots of other types of people out there.
The networks are not going after the Slashdot crowd -- the "information wants to be free" folks for whom, I suspect, nothing will ever be good enough unless it's suicidal from a business standpoint. They are instead going after the mainstream audience; those who are willing to open their wallets. There's a lot more of them out there than there are of us.
"The model is broken. Most people want music downloads.. not free. Even the sale statistics prove this that were just recently published."
Ah. I thought you were referring to the business model of investing money in a product and then selling it to recoup the investment, but I guess you're talking about the distribution model. I agree with you here; I think I've seen the same studies that show that physical media like CDs are going to be a niche product in another decade.
"The problem is an antiquated business model that they are struggling to keep in tact.. even though it's going to fail unless they can take control of the Internet."
I've lost you again. Do you mean specifically the business model of selling CDs, as opposed to selling online? From my observation, the record companies are getting into the online thing just fine, just a little late for most bleeding-edge Slashdotters (it's deja vu all over again... I bought my CD player in 1984 and it was years before the record companies would release content in CD simultaneously with the vinyl release). They'll probably continue to sell CDs for as long as there's a market (just as they continued to sell LPs for as long as they could), but given the lack of overhead (and thus more profit potential) of online distribution, I don't any record label will be particularly sad to see that day when CDs are museum pieces. I can't think of any record companies that are refusing to join the digital revolution and are hoping to keep the CD format alive... can you? I still run into some out-of-print CDs that I can't yet find on iTMS, but I usually assume that it's due to clearance issues (the composer and songwriter typically must give permission) rather than some wrong-headed effort to keep the CD format alive.
At any rate, I think it's clear that record labels understand that piracy is a cost of doing business. Their efforts to curb it are with the goal of getting more people to pay for music... not pay for it in any particular format.
"Lots of businesses go away because they fail to adapt to a new business model when their old model is no longer profitable."
Yup. Luckily, Apple makes it pretty easy to get your stuff onto their store. There are even service bureaus like CDBaby that can take care of the transcoding for small labels or unsigned artists who don't have a friendly neighorhood geek to help them. I think the iTMS and their ilk are an opportunity for the indie labels to do better than in the past, since it's often harder for indie labels to get distribution of physical CDs. I've bought a lot more indie stuff than major label stuff on the iTMS, and it's stuff I never would have found in a traditional record store.
I understand what you're saying, but it fails in practice. When one reads therads like this on Slashdot, there's the obligatory "don't forget Magnatune!" post. Magnatune embodies what many Slashdotters would consider to be the perfect music business model: no DRM, you can listen to it in entirety before you buy, Creative Commons licensing, liberal redistribution rights, and so on. Yet while Apple and the record labels are having a grand old time with the iTMS and its explosive growth, Magnatune is flailing. It's telling that somebody has to point out that Magnatune exists each time the subject of piracy comes up.
If I were a record company executive, Magnatune's lack of success would not sway me from the "invest money in an artist and sell copies one at a time to recoup the expense" model. Piracy is a cost of doing business, just as retail businesses must deal with shrinkage. People will always try to get something for free, no matter what your business is. This means that it must be dealt with. I don't think it means the model is broken.
"Rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others."
Correct. Just ask Sally Hemmings.
"I do not add "within the limits of the law", because law is often but the tyrant's will, and always so when it violates the rights of the individual."
Sally Hemmings would agree with this one, too.
"Exactly. I owned about 150 CDs before Napster that I purchased over about 8 years. During Napster's prime, I bought another 170 CDs *because* Napster helped me find great music that I otherwise would have never known about."
I've had exactly the samee experience...but with the iTMS. I can listen to samples, find similar music, read reviews, and generally make informed purchase decisions. Since I started using the iTMS my music consumption has increased severalfold, I've never made an uninformed purchase, and I haven't had to break the law or otherwise paint a huge target on my back for the copyright holders to find me.
"They failed to embrace a new distribution mechanism."
I am not sure what you mean here. You mean online distribution? They sure did... remember, all the online music stores couldn't exist without permission from the record labels, and in most cases, the artists and songwriters. The iTMS has been growing at a logarithmic rate. Sure, it took time, but that's par for the course. CDs didn't really take off until about five or ten years after the format was invented; same with cassette tapes and LPs. New distribution mechanisms have tipping points, like so many other things in life.
If by "new distribution mechanism" you mean "allow free, unlimited distribution and rely on the honor system to make a profit," would you really think it reasonable to expect them to? Expecting an industry to adopt an arbitrary business model because it suits you, and using this as the impetus to break the law just isn't appropriate. There are plenty of unsigned musicians, and even a few small labels, that follow this model. They're largely obscure (which serves to show how workable this model is), but they're out there if you want to look for them.
I think Avi covered most of your points, but civil code is filled with inumerable examples of seemingly arbitrary statutory amounts. If you want to learn more about statutory vs. actual damages (this is crucial to understand if you want to make statements like "This is a court of law, they have to prove losses, not speculate"), and the bounds set by the courts for situations like this, you'll want to read Section 504. You'll see where the RIAA get that $750 number. HTH.
"I download music from the internet quite frequently, if I like the song I have downloaded I will usually buy the album if I don't like it I delete it, does this mean I am commiting a crime?"
This is behavior I've only ever seen on Slashdot. Of my friends who opt to get their music via P2P, they do it to save money. So they don't have to buy the CD, or download it from a service that demands payment. If I explained to them that they should go and buy the CD (or download it from the iTMS) when they already got a perfectly good copy for free, they would probably utter a pitiful chuckle in the same manner that Rhett Butler did when Atlanta burned to the ground.
Yet on Slashdot, there's a preponderance of people who always buy music they like after they've P2P'ed it, or people who wouldn't have bought it anyway (which is, of course, a tautology -- the existence of the music on the P2P networks is in itself a pretty good motivation not to buy it). P2P fans buy more music, not one dime has been lost to piracy, and the explosion of P2P's alignment with the decline in music sales is a complete and utter coincidence.
"It's extortion when you haven't committed the copyright infringement but have no hope of defeating their lawyers."
Perhaps, but how is this relevant? The author of the article does not claim that she wasn't downloading music illegally. Sounds to me that she took a chance and got the the old double zero on the RIAA roulette wheel.
As an aside, it's interesting that there is a large "Copyright and distribution information" link at the end of the piece. Apparently she's not going for the "entertainment wants to be free" angle that many Slashdotters subscribe to; otherwise, she would have published it through a service that would agree to release it in the public domain, and she would have refused payment.
"The rest of the cost is all in the content, and the music publishers pretty much charge whatever they think we'll pay for. But they were right, the CD's are cheaper than cassettes and vinyl ever were, and they're lining their pockets with the difference."
Are you sure about that? In the computer peripheral industry, we have to deal with:
In other words, material cost is probably the least significant factor. If it's $1.62 by your estimate, the royalties probably cost them more than that. Then add another buck or so for production costs (if it costs $50K to produce and you amortize it across 50K pieces, but most CDs don't sell that many). With sell-in to disti at around $8 or $10 per CD, the reports I've heard -- that the music industry nets out at around 10 - 20 points -- sound accurate. At least in the PC peripheral industry I have the luxury of netting 20 points plus. If you think record companies are greedy, mouse and keyboard manufacturers must make your blood boil with an insatiable fury.
If your understanding is different, let me know.