CDs haven't been $20 for years. The average price of a new CD is $13 and change.
You're correct that the record stores and distributors make a total of $2- $3 a sale, so all the record company ever sees out of a sale is about $10.
"The record company makes at least 17 million and all their expenses are covered out of pocket by the artist."
It's not out of pocket, per se. A more accurate statement would be that all of the artist's expenses are paid out of pocket by the record label. The recording artist gets paid last, only after all the expenses have been covered. If the album is a failure, the record company eats the loss and the artist ends up with zero -- but they're not in debt. In this regard it's better than a traditional bank loan -- if you borrow $50K from the bank to self-produce/promote/etc. your record and it only makes $25K, the bank will still insist on getting all $50K back, plus interest. They'll be a lot less understanding than the record label. A record label won't ruin your credit rating and repo your car if your album doesn't turn a profit.
"There's some good reasons I don't play for a living anymore...it's not much of a living, making 30,000/yr before taxes."
This statement is sure to either confuse or enrage the usual Slashdotters who are quick to point out that it's morally okay to pirate music because musicians are wealthy -- after all, just look at all those fancy cars in the rap videos! It does, however, echo what I've heard about musicians having among the lowest average incomes of any profession. I hope ASCAP is still sending you checks...
"but what're they selling to make up for said loss?"
Subscriptions, my dear boy. They get $BIGNUM people signed up at the low price, then raise the price, and begin making money on the subset of $BIGNUM who remain subscribed. You see, dropping your subscription to these music sites makes your music go away. If you're paying $5 a month and you've downloaded 10,000 songs, you just might be tempted to keep paying when it goes to $5 or $10 a month.
Oh, never mind the long explanation, then -- you know all about scams. The joke going around is that the "r" variable passed in your URL stands for "retard."
"If your ear can hear it, it can be copied. A high quality analog output from a stereo can just be piped back into the computer and recorded & encoded in your favorite format, ogg, mp3, whatever...."
And if you park your car on the street, it can be stolen, no matter what measures you use.
And yet people still buy auto security systems. Manufacturers still install them.
To be sure, lots of Slashdotters are befuddled by notion of software and CD manufacturers using copy protection despite its breakability. I wonder whether car thieves are similarly confused.
"Do other people really spend time downloading random songs they've never heard before?"
If you don't count the 20-second snippet on iTMS, sure. Their "listeners also bought" feature, along with their other features that encourage random surfing, have incited me to download lots of new music that I'd never once heard on the radio, from artists that I had never heard of. It's largely been a positive experience.
"So what you're saying is... When I buy a CD, of that $18, $0.20 is going to the artist, and $15.80 is going to pay for advertisements, middle managers, and contract lawyers, whos only talent is to siphon money off a font of talent?"
Not really.
First, a clarification on the royalties. The GP stated that the band makes $0.20 -- that might be post-tax. Royalties paid to the songwriters are $0.08 by law, but they can be $0.06 or so if the songwriter is also the performer. For a ten-song track that's $0.60 - $0.80 just for the songwriters alone.
The recording artist typically gets a royalty that starts at 8% of the suggested retail price (established artists get more), so it starts at about a buck for a new artist. However, the recording artist is typically only paid royalties on CDs sold, not CDs produced or even shipped. Returns, breakage, and CDs produced but not sold can eat away at that. So that we can do an apples-to-apples comparison (this will become clear below), let's use $1.60 for total royalties paid per CD.
Anyway, New CDs are down to $13 or $14 now; this means that they're sold to distributors for about $10. That $10 is all the record company sees, and it goes to:
Shipping (maybe $0.50 or so)
accrual for returns and price protections (10% - 20%)
those pesky royalties ($1.60)
materials (another buck or so)
Studio rental time (a buck a CD if it cost $10K in rental and sells 10K copies)
Paying the engineer and producer -- this will utterly boggle Slashdotters who see a piece of sheet music and equate it in their head with a finished CD, but good music has good production values and is well engineered. For all the talk about how somebody can build a state of the art recording studio in their basement for $1K, the truth remains that music engineered and produced by amateurs will often sound amateurish. Kanye West owes the success of his new CD largely to his talent, but his producer, Jon Brion, has made much of the essential magic happen. Jon is a genius and producing and playing on the CD took weeks and weeks of his time. Jon does not offer his services for free.
Paying the artists who did the cover art
Paying the people who worked on the marketing and promotion
etc.
While I agree that it's kind of fun to think of all the money as going to "middle managers and contract lawyers" (it's good to add "overpaid executives" for good measure), the reality is that most of the money that goes into the production cost of a CD either goes to (a) some third party company that does a mundane task (such as running a record store, or operating a shipping company), or (b) "little people" who probably have a salary that's less than that of the typical Slashdotter.
"The RIAA can't pay iTMS DJs and Producers to force users to download the hot song of the week."
Have you listened to the iTMS "new music Tuesdays" podcast? While not as nauseating as the Top 20 on 20, it's got a lot of the popular stuff you see elsewhere.
"The RIAA can't pay iTMS to list the proper version of the Top 40 Charts."
They don't need to. The list of top tracks (scroll down a bit for the list) and albums sold on the iTMS matches up very closely with the airplay and sales charts published by Billboard.
"The RIAA can't control which markets get their music, heaven forbid a black consumer getting a listen to Kenny G by accident."
Maybe I don't get the joke here, but why would the RIAA want this?
"I know it would be contrary to their agreements with Apple Records, but if the music execs do go ahead with this, I think Apple should start selling music directly from the musicians rather than going through the labels."
iTunes already does this! Anybody can work with CDBaby. CDBaby takes only 9% of what they get from Apple, and gives the rest to the musican. The catch is, of course, that you must have the means to record, engineer and master your own tracks. Despite what folks say about Mac minis replacing million dollar studios, that's harder than it might sound.
The real trick making your favorite artists want to eschew the label route for the do-it-yourself method.
"Repeat after me: Correlation does not imply causation."
Brilliant analysis -- thank you.
Remember a few months back when the "P2P users more likely to buy music online" survey was posted? The same analysis applies, yet the correlation/causation difference was largely lost on Slashdotters. Hopefully your post will provide some enlightenment of this fundamental step of statistical analysis.
"The difference is that you cannot PROVE that eDockey intended the software for illegal purposes. And how the law is supposed to work (yeah, it is not how it works any more), we are supposed to give eDonkey every benifit of the doubt that they intended the service to be used legally, unless you provide solid evidence otherwise (tape recordings of conversations, emails, chat transcripts, personal notes)."
That's a popularly held understanding, but it's not necessarily true. There's circumstantial evidence, and there's also the legal concept known as prima facie. And, there's what's colloquially known as the "laugh test." In short, the courts will often declare something to be a duck if it looks, acts, walks and talks like a duck, even if there's no signed "I am a duck" confession.
I worked with the guy who wrote the first version of eDonkey during its early months of operation. He's anything but stupid. P2P piracy was in full swing then, and if he were to try to get into the witness stand today and claim that he didn't know that eDonkey would be used primarily for piracy, that he didn't intend it to be used for piracy, or that he didn't intend to profit from piracy (eDonkey has had ads from the beginning), he would quite simply be laughed at. There's way too much circumstantial evidence to allow him to try to pull a fast one and claim that he was entirely naive to the existence of P2P piracy at the time. If you wouldn't buy such a ridiculous story, you can bet that the courts wouldn't, either.
"However, under the Grokster standard, either of the latter could be considered instruments for wanton copyright violation (despite the ridiculousness of it) and be banned...if they were new technologies."
I think two common Slashdot mistakes are exibihited here:
Making the assumption that everybody who is not engaged in the poster's line of work (in this case, supreme court justices) is foolish and/or naive (you didn't say this specifically, but a common sentiment around here is that since the SCOTUS couldn't understand the fact that Grokster is just like a pencil/camera/xerox machine, they are clearly clueless technophobes who did not do enough research.)
Relying on a one- or two-line summary as an accurate description of something.
I'm aware that most people have better things to do with their time, but I think that anybody who's passionate about fair use, P2P, and the like should read the actual judgement rather than rely on a brief, misleading summary.
The bad news is that it's 55 pages, but the good news is that you don't need to read very far before the xerography / pen / camera analogy falls down.
Reading the judgement should also demonstrate that the SCOTUS did ask the right questions and does have an understanding of the technology. While it's our right and duty to challenge the rulings of the SCOTUS, let's not make the mistake that they lack cognative power.
"Does this mean I cant lend a DVD that I buy legally to my friend?"
The way the article was written, I can see why you'd ask, but this version of the article dropped an important word: screener. The AP version of the article is more accurate:
"Separately, the U.S. Attorney also charged Ronald Redding, 37, of Linthicum Heights, Maryland, with misdemeanor copyright infringement for giving away his "screener" copy of "Million Dollar Baby," which was sent to him for Academy Awards voting. He agreed to plead guilty, the U.S. Attorney said."
Your rights to loan or resell your regular old DVDs have not been trampled upon.
"Wouldn't embedding something in the movie and then giving the movie to people to watch--all while waiting for them to break the law... is this not entrapment?"
No... not hardly. Use a technological measure to track a stolen item is similar to putting a LoJack in your car. Installing a LoJack in your 911 and then leaving it in a parking lot -- even if you leave the doors unlocked and park it in the worst neighborhood in town -- is not entrapment. It may be risky behavior, as is distributing Academy Award screeners, but this does not absolve the person who chooses to steal that car or copy that screener. It is not inducement to break the law.
"For the defense to be successful, the defendant must demonstrate that the police induced an otherwise unwilling person to commit a crime. However, when a person is predisposed to commit a crime, offering opportunities to commit the crime is not entrapment, such as in the widely held misconception that policemen must answer questions truthfully if they are asked the same question three times, or that they must say "yes" if asked if they are a police officer."
Nope -- here I think it's fair for the market to decide. As you stated, ultimately consumers have voted with their wallets, and they generally prefer to buy their CDs at Best Buy and Wal-Mart rather than at dedicated music stores. Bummer for the indies, but that's market Darwinism.
"So it's dismissed, but she still owes somewhere between a couple thousand and a hundred thousand dollars? She's fucked regardless."
Her lawyer claims that he was working for her pro bono. I imagine it was on a contingency. If the judge had ruled that the plaintiff must pay her fees, her lawyer would get paid, but since that didn't happen, she owes nothing.
"We the consumers were told that the price would drop as the production costs of CDs came down."
Are you sure?
"Well, I can produce a CD for about 25 cents in my house now. So why am I paying at least 50 times the price that I could produce the thing for?"
You're confusing the act of duplicating a CD, with the process of recording, engineering, producing, marketing, and distributing an album. Nobody -- not the artist, the engineer, the person who ran the register at the record store, or the dozens of other people involved -- does this for free. Nobody.
"Where is the price reduction that was promised? It never came."
What, have you been living in a vast network of caves? When CDs came out in the mid-80's they were $18. That's about $32 in today's dollars. If your theory were correct, we'd be paying $32 for our CDs now. The reality is that CD prices are in freefall -- the average price of a new CD is down to $13 and change.
Really, I can't believe you wrote that. Don't they teach people about inflation in high school nowadays? This isn't even Econ 1A stuff, guys -- you really should be smarter than that.
"Get a clue. Reduce your prices."
Irony!
"Good luck with your business."
I don't think they need it -- Apple recently sold their 50 millionth track on the iTMS and the online music biz is still growing.
"If music can be reproduced so cheaply, don't try to sell music - all the other business leaders have the smarts to do sustainable business that consumers can't "Just Do"."
Meanwhile, Apple has just sold its 50 millionth track on the iTMS, and the online music business is still growing. We can try to convince ourselves that it's not a viable market, but Apple has shown differently.
I fully acknowledge that it may be the case that you have no interest in buying music, since you can get all you want for free. It's probably even the case that all of your friends feel just the same way you do -- but remember that not everybody shares the same moral compass.
"You say you want to hold the cheapest songs on iTunes to.99 cents and raise the prices on the popular tracks? Was not this what you were trying to do when that pesky price fixing scheme was discovered back when you were at Universal?"
Kind of, but not quite.
This is how the price fixing thing went down:
Best Buy and Wal-Mart started selling CDs at or below cost as an incentive to get customers into the stores (where they'd ideally buy higher priced, higher margin items -- the CDs are what's known as "loss leaders").
A few music retailers (TWE and Tower Records among them), which did not have stores full of consumer electronics, clothing or groceries to sell, could simply not match the loss-leading prices posted by Wal-Mart and Best Buy. So, they went to the record companies for help.
The record companies set up MAP ("minimum advertised price") programs with TWE and Tower. The record companies would help fund the stores' ads (called "program money" or "co-op money") as long as the ads didn't list prices that went below the MAP. Tower and TWE could sell CDs for whatever prices they wanted; but they couldn't advertise them below the MAP. MAP programs, by the way, are prevalent in many, many industries, including the PC peripheral industry.
Best Buy and Wal-Mart, which were getting no program money from the record labels, went to the government.
The court, in turn, smacked the record companies and told them to stop their MAP programs. They did... and meanwhile, MAP programs continue in many other industries.
Wal-Mart and Best Buy continued selling CDs at or below cost. Tower Records filed for bankrupcty.
The price fixing judgement was a win for Wal-Mart and Best Buy. The big losers were not the record companies (as the MAP programs did not affect the price at which they sold records into distribution), but indie record stores, which can no longer get co-op money from record labels. It's also a loss, indirectly, for people like me who remember and cherish indie record stores. They're a dying breed.
"he's trying to directly oppose the law of supply and demand."
What he's doing -- in this case, attempting to charge more for high-demand items to see what happens, rather than fixing the price at $0.99 -- is the essence of pricing theory. It is Steve Jobs who's directly opposing this, by fixing the price at $0.99 regardless of the demand.
Personally, I hope that if the record companies persuade Apple to let them price tracks above $0.99, that the idea falls on its face. But that's the thing about pricing theory -- sometimes you have to just try things to see if they'll work, particularly in a new market like this one.
As counter-intuitive as this will surely sound, a 2:1 ratio of retail price to BOM cost is not great in this industry. I can think of at least five well-known, A-list PC peripheral and CE device companies who have a 3:1 ratio or greater.
You're correct that Sharman has an office in Australia; their address in Vanuatu is likely a PO box run by a mail forwarder.
Let's keep in mind that it's only conjecture that the WinMX shutdown is due to threatening letters from the RIAA. While my guess is that setting up an office in a particular country is liable to make things worse, one can still be subject to another country's laws if one is, as I mentioned in the GP, doing business in that country. In the case of WinMX (perhaps in some future incarnation), this might include selling ad space to US-based countries, or selling an upgrade d ad-free version of the client to customers in the US, or otherwise soliciting business from US citizens. I can't guess how such a case would turn out -- perhaps you're right that the Canadian courts would try to block extradition or enforce a judgement -- but there's precedent here.
That will only protect them if they're doing business only in Vanuatu -- only trying to sell ad space to Vanuatu businesses, taking steps to ensure that only Vanuatu residents can use their network, and so on. Sharman Networks, who run Kazaa, also print a Vanuatu address on their articles of incorporation, but this is for tax purposes only. As we all know, Kazaa was recently nailed in Australia, as they do business there and many of their executives live there.
"It should be especially hilighted that Kazaa has already moved to Vanuatu, so the island clearly has decent internet connectivity in place already."
Just to be clear... that's where Sharman Networks is headquartered for tax purposes. They don't have servers there. There are probably a dozen outfits on Vanuatu that'll set up a PO box for you and forward your mail.
Running afoul of the Berne Convention or local copyright laws was probably never a reason for Sharman's setting up in Vanuatu -- you can generally be nailed in any country in which you do business, regardless of the address printed on your articles of incorporation.
"Its strange that the RIAA would bother sending a letter to a Canadian company."
Because the company does business in the US. Generally speaking, if you're soliciting business in the US (including selling ad space), you're liable to run afoul of US laws.
It's this same principle which allowed Kazaa to be sued in Australia, even though they're headquartered in Vanuatu. While many folks are of the understanding that Kazaa located in Vanuatu to avoid violating the Berne Convention, the real reason is likely due to it being a tax haven.
He's correct. Check the front few pages of some of your favorite books and look for the copyright statement. Some use the blanked "may not be reproduced in any form" but some have a longer version that specifically calls out storing in an electronic form.
"Publishers hold a lot of rights, but so do owners of a work. Libraries are allowed to make card catalogues of their books even going so far as to copy the title and the author without permission of the copyright holder. The law also says they can quote portions of the work, with special exemptions for academic endeavors."
The devil is in the details. In this case, quoting a few lines, or copying a few pages for academic use, are worlds apart from a for-profit business scanning entire books. This is precisely why (as the GP correctly pointed out) Amazon must get permission.
"Now Google, working with libraries, is enhancing that card catalogue to make it even easier to find the book you want. [...] Google is providing fair-use portions of books and working hard to make sure they don't violate any copyrights."
That's Google's defense. Many people disagree with them. You're right, this may go to court. Either way, the GP is correct that a for-profit business scanning a book and making it available to search is not under the popularly accepted understanding of fair use -- otherwise, Amazon would not be asking for permission.
"More important than the current law, however, does anyone doubt that having a searchable database of the contents of all books is a good thing for humanity? There is another exemption in the copyright laws, and that is for the library of Congress. Why the hell aren't they still collecting reference samples and providing a database like this for the good of the people?"
A similar case is often made for allowing the free availability of copyrighted music. I suppose one could make similar arguments for the world of print as are often made for music: "if authors ask to be paid for their work, they're businesspeople, not artists," and "the true authors will continue to write even after we throw out this ephemeral and outmoded 'one payment per copy'" system", et al.
"Google is providing a useful service that allows you to find the books you want, so that you can purchase them legally from bookshops."
Interestingly, this is also a common defense of using P2P programs to get music: we're all just "previewing" it so we can go "buy" it at the "store".
"While I agree Google should probably have asked the publishers for permission, a lawsuit is just far beyond common decency."
While it's easy for me to say "if I made my living as an author, I would want my stuff scanned by Google," but ultimately I understand that I can't get into the head of these people. I submit that perhaps they have genuine concerns. Let's let them do their own thinking. I acknowldege that Slashdotters know what's best for musicians... but writers, too?
Slashdot Mirror
CDs haven't been $20 for years. The average price of a new CD is $13 and change.
You're correct that the record stores and distributors make a total of $2- $3 a sale, so all the record company ever sees out of a sale is about $10.
"The record company makes at least 17 million and all their expenses are covered out of pocket by the artist."
It's not out of pocket, per se. A more accurate statement would be that all of the artist's expenses are paid out of pocket by the record label. The recording artist gets paid last, only after all the expenses have been covered. If the album is a failure, the record company eats the loss and the artist ends up with zero -- but they're not in debt. In this regard it's better than a traditional bank loan -- if you borrow $50K from the bank to self-produce/promote/etc. your record and it only makes $25K, the bank will still insist on getting all $50K back, plus interest. They'll be a lot less understanding than the record label. A record label won't ruin your credit rating and repo your car if your album doesn't turn a profit.
"There's some good reasons I don't play for a living anymore...it's not much of a living, making 30,000/yr before taxes."
This statement is sure to either confuse or enrage the usual Slashdotters who are quick to point out that it's morally okay to pirate music because musicians are wealthy -- after all, just look at all those fancy cars in the rap videos! It does, however, echo what I've heard about musicians having among the lowest average incomes of any profession. I hope ASCAP is still sending you checks...
"but what're they selling to make up for said loss?"
Subscriptions, my dear boy. They get $BIGNUM people signed up at the low price, then raise the price, and begin making money on the subset of $BIGNUM who remain subscribed. You see, dropping your subscription to these music sites makes your music go away. If you're paying $5 a month and you've downloaded 10,000 songs, you just might be tempted to keep paying when it goes to $5 or $10 a month.
"yet another bandwagon: http://ipodnanos.freepay.com/?r=2213429"
Oh, never mind the long explanation, then -- you know all about scams. The joke going around is that the "r" variable passed in your URL stands for "retard."
"If your ear can hear it, it can be copied. A high quality analog output from a stereo can just be piped back into the computer and recorded & encoded in your favorite format, ogg, mp3, whatever...."
And if you park your car on the street, it can be stolen, no matter what measures you use.
And yet people still buy auto security systems. Manufacturers still install them.
To be sure, lots of Slashdotters are befuddled by notion of software and CD manufacturers using copy protection despite its breakability. I wonder whether car thieves are similarly confused.
"Do other people really spend time downloading random songs they've never heard before?"
If you don't count the 20-second snippet on iTMS, sure. Their "listeners also bought" feature, along with their other features that encourage random surfing, have incited me to download lots of new music that I'd never once heard on the radio, from artists that I had never heard of. It's largely been a positive experience.
"So what you're saying is... When I buy a CD, of that $18, $0.20 is going to the artist, and $15.80 is going to pay for advertisements, middle managers, and contract lawyers, whos only talent is to siphon money off a font of talent?"
Not really.
First, a clarification on the royalties. The GP stated that the band makes $0.20 -- that might be post-tax. Royalties paid to the songwriters are $0.08 by law, but they can be $0.06 or so if the songwriter is also the performer. For a ten-song track that's $0.60 - $0.80 just for the songwriters alone.
The recording artist typically gets a royalty that starts at 8% of the suggested retail price (established artists get more), so it starts at about a buck for a new artist. However, the recording artist is typically only paid royalties on CDs sold, not CDs produced or even shipped. Returns, breakage, and CDs produced but not sold can eat away at that. So that we can do an apples-to-apples comparison (this will become clear below), let's use $1.60 for total royalties paid per CD.
Anyway, New CDs are down to $13 or $14 now; this means that they're sold to distributors for about $10. That $10 is all the record company sees, and it goes to:
While I agree that it's kind of fun to think of all the money as going to "middle managers and contract lawyers" (it's good to add "overpaid executives" for good measure), the reality is that most of the money that goes into the production cost of a CD either goes to (a) some third party company that does a mundane task (such as running a record store, or operating a shipping company), or (b) "little people" who probably have a salary that's less than that of the typical Slashdotter.
Your post was funny and all, but...
"The RIAA can't pay iTMS DJs and Producers to force users to download the hot song of the week."
Have you listened to the iTMS "new music Tuesdays" podcast? While not as nauseating as the Top 20 on 20, it's got a lot of the popular stuff you see elsewhere.
"The RIAA can't pay iTMS to list the proper version of the Top 40 Charts."
They don't need to. The list of top tracks (scroll down a bit for the list) and albums sold on the iTMS matches up very closely with the airplay and sales charts published by Billboard.
"The RIAA can't control which markets get their music, heaven forbid a black consumer getting a listen to Kenny G by accident."
Maybe I don't get the joke here, but why would the RIAA want this?
"I know it would be contrary to their agreements with Apple Records, but if the music execs do go ahead with this, I think Apple should start selling music directly from the musicians rather than going through the labels."
iTunes already does this! Anybody can work with CDBaby. CDBaby takes only 9% of what they get from Apple, and gives the rest to the musican. The catch is, of course, that you must have the means to record, engineer and master your own tracks. Despite what folks say about Mac minis replacing million dollar studios, that's harder than it might sound.
The real trick making your favorite artists want to eschew the label route for the do-it-yourself method.
"Repeat after me: Correlation does not imply causation."
Brilliant analysis -- thank you.
Remember a few months back when the "P2P users more likely to buy music online" survey was posted? The same analysis applies, yet the correlation/causation difference was largely lost on Slashdotters. Hopefully your post will provide some enlightenment of this fundamental step of statistical analysis.
"The difference is that you cannot PROVE that eDockey intended the software for illegal purposes. And how the law is supposed to work (yeah, it is not how it works any more), we are supposed to give eDonkey every benifit of the doubt that they intended the service to be used legally, unless you provide solid evidence otherwise (tape recordings of conversations, emails, chat transcripts, personal notes)."
That's a popularly held understanding, but it's not necessarily true. There's circumstantial evidence, and there's also the legal concept known as prima facie. And, there's what's colloquially known as the "laugh test." In short, the courts will often declare something to be a duck if it looks, acts, walks and talks like a duck, even if there's no signed "I am a duck" confession.
I worked with the guy who wrote the first version of eDonkey during its early months of operation. He's anything but stupid. P2P piracy was in full swing then, and if he were to try to get into the witness stand today and claim that he didn't know that eDonkey would be used primarily for piracy, that he didn't intend it to be used for piracy, or that he didn't intend to profit from piracy (eDonkey has had ads from the beginning), he would quite simply be laughed at. There's way too much circumstantial evidence to allow him to try to pull a fast one and claim that he was entirely naive to the existence of P2P piracy at the time. If you wouldn't buy such a ridiculous story, you can bet that the courts wouldn't, either.
"However, under the Grokster standard, either of the latter could be considered instruments for wanton copyright violation (despite the ridiculousness of it) and be banned...if they were new technologies."
I think two common Slashdot mistakes are exibihited here:
I'm aware that most people have better things to do with their time, but I think that anybody who's passionate about fair use, P2P, and the like should read the actual judgement rather than rely on a brief, misleading summary.
The bad news is that it's 55 pages, but the good news is that you don't need to read very far before the xerography / pen / camera analogy falls down.
Reading the judgement should also demonstrate that the SCOTUS did ask the right questions and does have an understanding of the technology. While it's our right and duty to challenge the rulings of the SCOTUS, let's not make the mistake that they lack cognative power.
"Does this mean I cant lend a DVD that I buy legally to my friend?"
The way the article was written, I can see why you'd ask, but this version of the article dropped an important word: screener. The AP version of the article is more accurate:
Your rights to loan or resell your regular old DVDs have not been trampled upon.
"Wouldn't embedding something in the movie and then giving the movie to people to watch--all while waiting for them to break the law... is this not entrapment?"
No... not hardly. Use a technological measure to track a stolen item is similar to putting a LoJack in your car. Installing a LoJack in your 911 and then leaving it in a parking lot -- even if you leave the doors unlocked and park it in the worst neighborhood in town -- is not entrapment. It may be risky behavior, as is distributing Academy Award screeners, but this does not absolve the person who chooses to steal that car or copy that screener. It is not inducement to break the law.
From the Wikipedia article (emphasis mine):
Nope -- here I think it's fair for the market to decide. As you stated, ultimately consumers have voted with their wallets, and they generally prefer to buy their CDs at Best Buy and Wal-Mart rather than at dedicated music stores. Bummer for the indies, but that's market Darwinism.
"So it's dismissed, but she still owes somewhere between a couple thousand and a hundred thousand dollars? She's fucked regardless."
Her lawyer claims that he was working for her pro bono. I imagine it was on a contingency. If the judge had ruled that the plaintiff must pay her fees, her lawyer would get paid, but since that didn't happen, she owes nothing.
"We the consumers were told that the price would drop as the production costs of CDs came down."
Are you sure?
"Well, I can produce a CD for about 25 cents in my house now. So why am I paying at least 50 times the price that I could produce the thing for?"
You're confusing the act of duplicating a CD, with the process of recording, engineering, producing, marketing, and distributing an album. Nobody -- not the artist, the engineer, the person who ran the register at the record store, or the dozens of other people involved -- does this for free. Nobody.
"Where is the price reduction that was promised? It never came."
What, have you been living in a vast network of caves? When CDs came out in the mid-80's they were $18. That's about $32 in today's dollars. If your theory were correct, we'd be paying $32 for our CDs now. The reality is that CD prices are in freefall -- the average price of a new CD is down to $13 and change.
Really, I can't believe you wrote that. Don't they teach people about inflation in high school nowadays? This isn't even Econ 1A stuff, guys -- you really should be smarter than that.
"Get a clue. Reduce your prices."
Irony!
"Good luck with your business."
I don't think they need it -- Apple recently sold their 50 millionth track on the iTMS and the online music biz is still growing.
"If music can be reproduced so cheaply, don't try to sell music - all the other business leaders have the smarts to do sustainable business that consumers can't "Just Do"."
Meanwhile, Apple has just sold its 50 millionth track on the iTMS, and the online music business is still growing. We can try to convince ourselves that it's not a viable market, but Apple has shown differently.
I fully acknowledge that it may be the case that you have no interest in buying music, since you can get all you want for free. It's probably even the case that all of your friends feel just the same way you do -- but remember that not everybody shares the same moral compass.
"You say you want to hold the cheapest songs on iTunes to .99 cents and raise the prices on the popular tracks? Was not this what you were trying to do when that pesky price fixing scheme was discovered back when you were at Universal?"
Kind of, but not quite.
This is how the price fixing thing went down:
The price fixing judgement was a win for Wal-Mart and Best Buy. The big losers were not the record companies (as the MAP programs did not affect the price at which they sold records into distribution), but indie record stores, which can no longer get co-op money from record labels. It's also a loss, indirectly, for people like me who remember and cherish indie record stores. They're a dying breed.
"he's trying to directly oppose the law of supply and demand."
What he's doing -- in this case, attempting to charge more for high-demand items to see what happens, rather than fixing the price at $0.99 -- is the essence of pricing theory. It is Steve Jobs who's directly opposing this, by fixing the price at $0.99 regardless of the demand.
Personally, I hope that if the record companies persuade Apple to let them price tracks above $0.99, that the idea falls on its face. But that's the thing about pricing theory -- sometimes you have to just try things to see if they'll work, particularly in a new market like this one.
"I could be wrong, but isn't profit the money a business gets AFTER costs such as these are considered?"
You're correct. When the GP wrote "$100 profit" what he really meant was "$100 bill of materials cost." Here's the article where he got his info.
As counter-intuitive as this will surely sound, a 2:1 ratio of retail price to BOM cost is not great in this industry. I can think of at least five well-known, A-list PC peripheral and CE device companies who have a 3:1 ratio or greater.
You're correct that Sharman has an office in Australia; their address in Vanuatu is likely a PO box run by a mail forwarder.
Let's keep in mind that it's only conjecture that the WinMX shutdown is due to threatening letters from the RIAA. While my guess is that setting up an office in a particular country is liable to make things worse, one can still be subject to another country's laws if one is, as I mentioned in the GP, doing business in that country. In the case of WinMX (perhaps in some future incarnation), this might include selling ad space to US-based countries, or selling an upgrade d ad-free version of the client to customers in the US, or otherwise soliciting business from US citizens. I can't guess how such a case would turn out -- perhaps you're right that the Canadian courts would try to block extradition or enforce a judgement -- but there's precedent here.
That will only protect them if they're doing business only in Vanuatu -- only trying to sell ad space to Vanuatu businesses, taking steps to ensure that only Vanuatu residents can use their network, and so on. Sharman Networks, who run Kazaa, also print a Vanuatu address on their articles of incorporation, but this is for tax purposes only. As we all know, Kazaa was recently nailed in Australia, as they do business there and many of their executives live there.
"It should be especially hilighted that Kazaa has already moved to Vanuatu, so the island clearly has decent internet connectivity in place already."
Just to be clear... that's where Sharman Networks is headquartered for tax purposes. They don't have servers there. There are probably a dozen outfits on Vanuatu that'll set up a PO box for you and forward your mail.
Running afoul of the Berne Convention or local copyright laws was probably never a reason for Sharman's setting up in Vanuatu -- you can generally be nailed in any country in which you do business, regardless of the address printed on your articles of incorporation.
"Its strange that the RIAA would bother sending a letter to a Canadian company."
Because the company does business in the US. Generally speaking, if you're soliciting business in the US (including selling ad space), you're liable to run afoul of US laws.
It's this same principle which allowed Kazaa to be sued in Australia, even though they're headquartered in Vanuatu. While many folks are of the understanding that Kazaa located in Vanuatu to avoid violating the Berne Convention, the real reason is likely due to it being a tax haven.
"I think you are mistaken."
He's correct. Check the front few pages of some of your favorite books and look for the copyright statement. Some use the blanked "may not be reproduced in any form" but some have a longer version that specifically calls out storing in an electronic form.
"Publishers hold a lot of rights, but so do owners of a work. Libraries are allowed to make card catalogues of their books even going so far as to copy the title and the author without permission of the copyright holder. The law also says they can quote portions of the work, with special exemptions for academic endeavors."
The devil is in the details. In this case, quoting a few lines, or copying a few pages for academic use, are worlds apart from a for-profit business scanning entire books. This is precisely why (as the GP correctly pointed out) Amazon must get permission.
"Now Google, working with libraries, is enhancing that card catalogue to make it even easier to find the book you want. [...] Google is providing fair-use portions of books and working hard to make sure they don't violate any copyrights."
That's Google's defense. Many people disagree with them. You're right, this may go to court. Either way, the GP is correct that a for-profit business scanning a book and making it available to search is not under the popularly accepted understanding of fair use -- otherwise, Amazon would not be asking for permission.
"More important than the current law, however, does anyone doubt that having a searchable database of the contents of all books is a good thing for humanity? There is another exemption in the copyright laws, and that is for the library of Congress. Why the hell aren't they still collecting reference samples and providing a database like this for the good of the people?"
A similar case is often made for allowing the free availability of copyrighted music. I suppose one could make similar arguments for the world of print as are often made for music: "if authors ask to be paid for their work, they're businesspeople, not artists," and "the true authors will continue to write even after we throw out this ephemeral and outmoded 'one payment per copy'" system", et al.
"Google is providing a useful service that allows you to find the books you want, so that you can purchase them legally from bookshops."
Interestingly, this is also a common defense of using P2P programs to get music: we're all just "previewing" it so we can go "buy" it at the "store" .
"While I agree Google should probably have asked the publishers for permission, a lawsuit is just far beyond common decency."
While it's easy for me to say "if I made my living as an author, I would want my stuff scanned by Google," but ultimately I understand that I can't get into the head of these people. I submit that perhaps they have genuine concerns. Let's let them do their own thinking. I acknowldege that Slashdotters know what's best for musicians... but writers, too?