You are talking about a different pie, and in fact your pie not only stays the same but gets bigger - and the artist is still screwed. For the size of the pie I was talking about only the producer’s (artist, record label, distributor) profits – but if you want to talk about the whole pie we can do that. The correct term is economic surplus – I have already posted a link.
To illustrate, in the old world let’s say consumers spent $100 on music that they valued at $150, so they have a consumer surplus of $50. Producer’s make a profit, a Producers Surplus, of $50 which will be split 3 ways. Consumer Surplus + Producers Surplus = Economic Surplus of $100.
Today, pick out individual tracks or use Spotify (which pays out less then radio) and spends $80 (because they can buy the individual tracks they want, or they listen online which generates less ad revenue then the radio, etc.) on music that they value at $200, for a consumer surplus of $120. Technology helps cut the costs – but not that much – producers make a profit of $35. Total Economic Surplus is now $155. So, yes, society is better off with a bigger pie, but the producer’s slice is now smaller.
But that’s o.k. you contend – the magic of the internet will wipe out the middle men – leaving the virtues artist with all of the profit. Expect that is probably not happening in the real world. Anecdotally, from the independent artist I have talked to, the higher margins they are earning because they own more of the distribution channel does not make up for the falling revenue.
I tend to prefer the consumer over the producer, but I am aware that market structure is important. Starve the producers of all profits and they will collapse.
So Artist are in complete control? So what? 100% of nothing is still nothing. It’s not that bad but take a look at the industry.
There are fewer major acts (which I know is subjective, but I go hard numbers) and profits are getting concentrated in fewer, older acts. It is easier to sell a $400 ticket with nostalgia to a middle age affluent guy then to a new college band.
I am seeing some people do interesting things with distribution and Kickstarter – but it is a far cry from the salad days when CDs ruled.
In the old days of the 80s, the artist would get about 7% of the retail value. Or about a $1 on a $15 CD.
In the new days, the artist gets about 25% (if they are lucky) of the retail value, or $.25 on a $.99 download.
Consumers are spending less, buying only the popular tracks and not whole CDs. In this case, decreased revenue swamps the increased margins. And yeah, there is the whole wide world now, but international revenue has not made up decreased domestic revenue.
Profits going to artists, record companies, and distributes have been falling for the past 30 years. That’s the shrinking pie that I am talking about.
As for more music being produced – maybe – it depends on your detention. The number of professional touring musicians and the number of major record label releases have been falling for the past 30 years in the North America and Europe market. And yes, it misses a wide swath, but it is hard data.
Back in the 80s, selling physical CDs with 1 or 2 good songs for $15 was a great way to extract money from the consumers – maximizing producer surplus going to artists, record companies, and distributors. That changed - You may say it was because of iTunes or Spotify – I say internet and technology - but the result is the same - producer surplus shrank.
As for artists, I think you are wrong. Being able to write a good song does not mean you have a good voice – just look at Bob Dylan. Or are you saying (almost) all symphony players and opera singers are not musicians because they play dead peoples songs? Like you, I tend to prefer singer / songwriters but I recognize they are two separate talents that lie along different axis.
First, there is music that I want to listen to that does not travel well. Sometimes the original artist is dead. Sometimes, like “Einstein on the Beach” – is a 5 hour beast which requires symphony, singers, narrator, choir, and dances. It’s done about once every 10 years or so. I worked with the tour manager. Kind of fascinating on how much work it took for a performance.
Back to the point. Some things travel better than other. It is easier to tour with a girl and a guitar then to tour with a four piece band, which is easier to tour then something that has a brass section.
Second I live in fly over land so shows are far and few between. And when I want to spend my money I want to spend it on music – not another t-shirt – I have too many already.
The problem is that the internet has shifted more power to the consumers and away from the producers – be they artists or record companies. Complaining that the record companies are taking a too large slice of the pie does not address the issue of the shrinking pie.
Sure, but I am not sure how much IP work they are doing.
First, I will point out that even in Africa’s 200 million poverty bound woman, those woman who produce superior results get ahead economically. Sadly, African culture tends to discount heavily the value of woman and “woman’s work”.
Second, I would point out that a Free Market is not a magical wand. In order for it to work you need the right social institutions, like equal access to the court system to enforce contracts (and to protect your IP, to keep this vaguely on topic), infrastructure, land registry, etc.
Third, I mentioned superior results, not just hard work. This is to reflect human capital and in this regard you have been screwed by the government.
Some inequity drives the system. Too much inequity crushes all by the elite. You fall into the second category and you are being treated as second class citizens. This is not right.
If I start with nothing, work hard, and generate superior r results I get nothing?
If I raise a superior child, though time, dedication, and, yes, spending some extra dough, do they get nothing?
I think the key is the “OP” is a “little inequity”. Life is not always fair but it should be fairish. Hard work and bright ideas would be motivated with rewards, which will result in inequity. As for a “lot of inequity” - we should not live in a winner takes all, class bound gilded society – that takes away the incentive for hard work.
(I am still mulling the Supreme Court case. I think Myriad should be reward for the research it did but I think the patent may have been overly broad. )
Strike point 1 – we are talking about storage for grid generated by wind turbines. These things are out in the middle of nowhere. Size is not a major factor that would affect the storage cost. Even if built on prime corn land that is going for a thousand dollars an acre you can just burry these things and plow over the top.
You run these at relatively low pressure. That diminishes the impact of points 2 & 4.
That leaves 3. “Wind Alley” – from Texas to the Upper Mid-West is geologically stable.
This solution is only good for a very few select sites. You need wind and cheap caves. You can do the same with water – pumping it uphill, but the Wind Alley tends to lack water and hills.
No, using that logic, it is for the single cell creatures. IIRC they outrank beetles in both number of types and outranks in biomass multicellular creatures.
Yeah, that was my thought as well, but then I had another idea. The only advantage with something like this is to disassociate yourself with your accomplice.
So you and the victim go on a road trip to City B. Find a excuse to borrow the keys and fill up the gas tank at a 7-11. Transmit the data to City A where your accomplice makes the key and does the crime.
Now, I am guessing that there are easier ways to do this.
First, how much of a subsidy is the “Floor” worth? In America, where the floor is above the price of oil, quite a bit. In Brazil, where it is below the current price of oil, not as much.
Second, the subsidy is slanted against large efficient corporate producers and slanted towards small, inefficient co-ops. While it is a political sop, less so for the corporations.
Third, how long would such a subsidy last? If algae oil sold for $40 a barrel, how many years and how many dollars would the government spend?
It currently competes with oil, even after you pick apart the affects of Brazil’s agriculture policy.
IIRC the effect kicks in around $60 to $80 a barrel. These have only played a factor 3 times. The first was when the industry was getting off the ground in the 1970s. The other 2 times were short periods (3 to 5 years) when oil prices collapsed. If it were not for the subsides the infrastructure that supports ethanol.
Brazil, if I understand correctly, makes ethanol profitably for 2 reasons. First, equatorial cane makes a better feedstock then corn. Second, when the price of oil cratered Brazil did not yank the subsides from ethanol. This allowed long term research, development, and capital project to go forward during the slump. Normally I am against subsides but this might be the exception that proves the rule.
I have seen interesting R&D plus novel ethanol plants that could make the whole thing viable, even factoring in food displacement.
A minor nit, but the DJIA is based on the average price of 30 odd stocks, not the market cap.
Almost every other index is based on the value of the free float of shares which is almost, but not quite, the same things as market cap – which is based on the total value of shares. When the DJIA was invented computational power was expensive, in the sense “computers” was a job like a secretary, so they did just a simple average.
IRS interprets the rules and puts out regulations. The regulations have logical flaws that create abusive loopholes and are exploited by said tax lawyers. So the IRS puts out another layer of regulations on top of the first. FYI, these issues are my day job which is why I focus on the IRS and not congress.
No, I think I understand you. By the way, have you ever tried this in real life? It is slow, hard slog to find another counterparty. You can spend hours to weeks to find the right party. By that time prices may have moved or maybe the opportunity you are looking for has vanished. Rarely are there exactly the same number of people who want to buy and sell the exact same thing at the exact same price.
With no middle man the market comes to a standstill. This has been true since the days of Plato who recommended shepherds leave their sheep at market with a physically feeble middle man because they would be more productive in the fields. This is true today, where I have empirical studies quantifying the impact of illiquidity.
The depreciation of the mining equipment is an overhead expense that reduces reported profit appropriately. (The cost of energy is often the primary expense in gold mining.)
Bitcoin "mining" would seem similar, but it's a mistake to assume tax law follows any sort of logic or reason.
You almost got it – and you are right if you mine and sell coins the same year.
Let’s say in year 1 I have $1 million in cash (electricity) and non-cash expenses in mining bitcoins but I don’t sell any. Can’t reduce profit because I don’t have any. Can’t take a loss because I have not sold any bitcoins.
Let’s say in year 2 you sell you bitcoins for $2 million. Now is the time you can use that $1 million in expenses from last year.
Now, one could argue that we are really talking about inventory costs which is technically not costs basis – but that is a subtle point.
That is a good question and one that the IRS has not clearly answered. Different offices have issued different opinions over different years. Sometimes it was $200 in profits or $2000 in revenue but don’t quote me on that. Sometimes it meant acting like a business. Sometimes it meant you were following a business plan to viability. Talk to a qualified tax expert. It is a CYA sort of thing. If the IRS figures differently you will owe back taxes and penalties, but not the I was willfully trying to defraud the government and I should go to jail penalties.
You don’t need to attribute to a specific bitcoin but you must be able to attribute to bitcoin mining.
I would guess the rules would be similar to how expenses are allocated for a home office or a pro rata basis. If you home office is 10% of your home, 10% of the your electricity, heating, depreciation, can be written off.
Note, the rules are a lot of subjective and complex rules, people abuse this all of the time, and the IRS loves auditing this type of stuff because it is abused so often. And this is kind of like manufacturing if you hold it for more than a year, so there would be another layer of rules on top of that.
I would look up the IRS’s “hobby” rules before I start deducting anything.
The example the IRS gives is dog breading. Real dog breeders can deduct subscriptions to dog magazines, cars, housing, dog food, travel to dog shows, etc. A sat-at-home spouse who takes the family dog to the occasional dog show and even sells a pup or two is not a real breeder and does not get to deduct the family’s SUV.
Slashdot Mirror
You are talking about a different pie, and in fact your pie not only stays the same but gets bigger - and the artist is still screwed. For the size of the pie I was talking about only the producer’s (artist, record label, distributor) profits – but if you want to talk about the whole pie we can do that. The correct term is economic surplus – I have already posted a link.
To illustrate, in the old world let’s say consumers spent $100 on music that they valued at $150, so they have a consumer surplus of $50. Producer’s make a profit, a Producers Surplus, of $50 which will be split 3 ways. Consumer Surplus + Producers Surplus = Economic Surplus of $100.
Today, pick out individual tracks or use Spotify (which pays out less then radio) and spends $80 (because they can buy the individual tracks they want, or they listen online which generates less ad revenue then the radio, etc.) on music that they value at $200, for a consumer surplus of $120. Technology helps cut the costs – but not that much – producers make a profit of $35. Total Economic Surplus is now $155. So, yes, society is better off with a bigger pie, but the producer’s slice is now smaller.
But that’s o.k. you contend – the magic of the internet will wipe out the middle men – leaving the virtues artist with all of the profit. Expect that is probably not happening in the real world. Anecdotally, from the independent artist I have talked to, the higher margins they are earning because they own more of the distribution channel does not make up for the falling revenue.
Sorry to rain on your parade.
I tend to prefer the consumer over the producer, but I am aware that market structure is important. Starve the producers of all profits and they will collapse.
So Artist are in complete control? So what? 100% of nothing is still nothing. It’s not that bad but take a look at the industry.
There are fewer major acts (which I know is subjective, but I go hard numbers) and profits are getting concentrated in fewer, older acts. It is easier to sell a $400 ticket with nostalgia to a middle age affluent guy then to a new college band.
I am seeing some people do interesting things with distribution and Kickstarter – but it is a far cry from the salad days when CDs ruled.
In the old days of the 80s, the artist would get about 7% of the retail value. Or about a $1 on a $15 CD.
In the new days, the artist gets about 25% (if they are lucky) of the retail value, or $.25 on a $.99 download.
Consumers are spending less, buying only the popular tracks and not whole CDs. In this case, decreased revenue swamps the increased margins. And yeah, there is the whole wide world now, but international revenue has not made up decreased domestic revenue.
Profits going to artists, record companies, and distributes have been falling for the past 30 years. That’s the shrinking pie that I am talking about.
As for more music being produced – maybe – it depends on your detention. The number of professional touring musicians and the number of major record label releases have been falling for the past 30 years in the North America and Europe market. And yes, it misses a wide swath, but it is hard data.
Saying t-shirts and live concerts is not the answer is not saying Spotify is the answer.
Look up economic surplus. http://en.wikipedia.org/wiki/Consumer_surplus
Back in the 80s, selling physical CDs with 1 or 2 good songs for $15 was a great way to extract money from the consumers – maximizing producer surplus going to artists, record companies, and distributors. That changed - You may say it was because of iTunes or Spotify – I say internet and technology - but the result is the same - producer surplus shrank.
As for artists, I think you are wrong. Being able to write a good song does not mean you have a good voice – just look at Bob Dylan. Or are you saying (almost) all symphony players and opera singers are not musicians because they play dead peoples songs? Like you, I tend to prefer singer / songwriters but I recognize they are two separate talents that lie along different axis.
I will say no to that for 2 reasons.
First, there is music that I want to listen to that does not travel well. Sometimes the original artist is dead. Sometimes, like “Einstein on the Beach” – is a 5 hour beast which requires symphony, singers, narrator, choir, and dances. It’s done about once every 10 years or so. I worked with the tour manager. Kind of fascinating on how much work it took for a performance.
Back to the point. Some things travel better than other. It is easier to tour with a girl and a guitar then to tour with a four piece band, which is easier to tour then something that has a brass section.
Second I live in fly over land so shows are far and few between. And when I want to spend my money I want to spend it on music – not another t-shirt – I have too many already.
The problem is that the internet has shifted more power to the consumers and away from the producers – be they artists or record companies. Complaining that the record companies are taking a too large slice of the pie does not address the issue of the shrinking pie.
Sure, but I am not sure how much IP work they are doing.
First, I will point out that even in Africa’s 200 million poverty bound woman, those woman who produce superior results get ahead economically. Sadly, African culture tends to discount heavily the value of woman and “woman’s work”.
Second, I would point out that a Free Market is not a magical wand. In order for it to work you need the right social institutions, like equal access to the court system to enforce contracts (and to protect your IP, to keep this vaguely on topic), infrastructure, land registry, etc.
Third, I mentioned superior results, not just hard work. This is to reflect human capital and in this regard you have been screwed by the government.
Some inequity drives the system. Too much inequity crushes all by the elite. You fall into the second category and you are being treated as second class citizens. This is not right.
You may want to chat with Lysistrata. http://en.wikipedia.org/wiki/Lysistrata
Sigh. The death of hope. So sad.
Fortunately empirical studies show this is not true. (Class mobility looks to be declining but skill still seems to dominate.)
So, what's your point?
If I start with nothing, work hard, and generate superior r results I get nothing?
If I raise a superior child, though time, dedication, and, yes, spending some extra dough, do they get nothing?
I think the key is the “OP” is a “little inequity”. Life is not always fair but it should be fairish. Hard work and bright ideas would be motivated with rewards, which will result in inequity. As for a “lot of inequity” - we should not live in a winner takes all, class bound gilded society – that takes away the incentive for hard work.
(I am still mulling the Supreme Court case. I think Myriad should be reward for the research it did but I think the patent may have been overly broad. )
Strike point 1 – we are talking about storage for grid generated by wind turbines. These things are out in the middle of nowhere. Size is not a major factor that would affect the storage cost. Even if built on prime corn land that is going for a thousand dollars an acre you can just burry these things and plow over the top.
You run these at relatively low pressure. That diminishes the impact of points 2 & 4.
That leaves 3. “Wind Alley” – from Texas to the Upper Mid-West is geologically stable.
This solution is only good for a very few select sites. You need wind and cheap caves. You can do the same with water – pumping it uphill, but the Wind Alley tends to lack water and hills.
No, using that logic, it is for the single cell creatures. IIRC they outrank beetles in both number of types and outranks in biomass multicellular creatures.
Yeah, that was my thought as well, but then I had another idea. The only advantage with something like this is to disassociate yourself with your accomplice.
So you and the victim go on a road trip to City B. Find a excuse to borrow the keys and fill up the gas tank at a 7-11. Transmit the data to City A where your accomplice makes the key and does the crime.
Now, I am guessing that there are easier ways to do this.
Well, for 3 reasons.
First, how much of a subsidy is the “Floor” worth? In America, where the floor is above the price of oil, quite a bit. In Brazil, where it is below the current price of oil, not as much.
Second, the subsidy is slanted against large efficient corporate producers and slanted towards small, inefficient co-ops. While it is a political sop, less so for the corporations.
Third, how long would such a subsidy last? If algae oil sold for $40 a barrel, how many years and how many dollars would the government spend?
I wish Slashdot had a edit feature.
To clarify, the government subsides kick in when crude oil falls below the $60 to $80 dollar range.
It currently competes with oil, even after you pick apart the affects of Brazil’s agriculture policy.
IIRC the effect kicks in around $60 to $80 a barrel. These have only played a factor 3 times. The first was when the industry was getting off the ground in the 1970s. The other 2 times were short periods (3 to 5 years) when oil prices collapsed. If it were not for the subsides the infrastructure that supports ethanol.
Maybe, but not inherently so.
Brazil, if I understand correctly, makes ethanol profitably for 2 reasons. First, equatorial cane makes a better feedstock then corn. Second, when the price of oil cratered Brazil did not yank the subsides from ethanol. This allowed long term research, development, and capital project to go forward during the slump. Normally I am against subsides but this might be the exception that proves the rule.
I have seen interesting R&D plus novel ethanol plants that could make the whole thing viable, even factoring in food displacement.
A minor nit, but the DJIA is based on the average price of 30 odd stocks, not the market cap.
Almost every other index is based on the value of the free float of shares which is almost, but not quite, the same things as market cap – which is based on the total value of shares. When the DJIA was invented computational power was expensive, in the sense “computers” was a job like a secretary, so they did just a simple average.
Can we split the difference?
Congress makes the laws which includes loopholes.
IRS interprets the rules and puts out regulations. The regulations have logical flaws that create abusive loopholes and are exploited by said tax lawyers. So the IRS puts out another layer of regulations on top of the first. FYI, these issues are my day job which is why I focus on the IRS and not congress.
No, I think I understand you. By the way, have you ever tried this in real life? It is slow, hard slog to find another counterparty. You can spend hours to weeks to find the right party. By that time prices may have moved or maybe the opportunity you are looking for has vanished. Rarely are there exactly the same number of people who want to buy and sell the exact same thing at the exact same price.
With no middle man the market comes to a standstill. This has been true since the days of Plato who recommended shepherds leave their sheep at market with a physically feeble middle man because they would be more productive in the fields. This is true today, where I have empirical studies quantifying the impact of illiquidity.
Why is this better? No middle man, pay 5 to 10% spread. With market makes in the 90s, paid .5% to 1%. With HFT pay .01%
Or are you so opposed to the idea of middle men you are willing to cut off your nose to spite your face?
The depreciation of the mining equipment is an overhead expense that reduces reported profit appropriately. (The cost of energy is often the primary expense in gold mining.)
Bitcoin "mining" would seem similar, but it's a mistake to assume tax law follows any sort of logic or reason.
You almost got it – and you are right if you mine and sell coins the same year.
Let’s say in year 1 I have $1 million in cash (electricity) and non-cash expenses in mining bitcoins but I don’t sell any. Can’t reduce profit because I don’t have any. Can’t take a loss because I have not sold any bitcoins.
Let’s say in year 2 you sell you bitcoins for $2 million. Now is the time you can use that $1 million in expenses from last year.
Now, one could argue that we are really talking about inventory costs which is technically not costs basis – but that is a subtle point.
That is a good question and one that the IRS has not clearly answered. Different offices have issued different opinions over different years. Sometimes it was $200 in profits or $2000 in revenue but don’t quote me on that. Sometimes it meant acting like a business. Sometimes it meant you were following a business plan to viability. Talk to a qualified tax expert. It is a CYA sort of thing. If the IRS figures differently you will owe back taxes and penalties, but not the I was willfully trying to defraud the government and I should go to jail penalties.
You don’t need to attribute to a specific bitcoin but you must be able to attribute to bitcoin mining.
I would guess the rules would be similar to how expenses are allocated for a home office or a pro rata basis. If you home office is 10% of your home, 10% of the your electricity, heating, depreciation, can be written off.
Note, the rules are a lot of subjective and complex rules, people abuse this all of the time, and the IRS loves auditing this type of stuff because it is abused so often. And this is kind of like manufacturing if you hold it for more than a year, so there would be another layer of rules on top of that.
No, it has nothing to do with dollars.
There have been companies that paid with script, barter, coupons, barter coupons, etc.
If you trade one thing for another you have to pay taxes on the real economic value. You can’t avoid taxes by moving to an artificial currency.
The big difference is between “garage sale” transactions that fall into the hobby category,
I would look up the IRS’s “hobby” rules before I start deducting anything.
The example the IRS gives is dog breading. Real dog breeders can deduct subscriptions to dog magazines, cars, housing, dog food, travel to dog shows, etc. A sat-at-home spouse who takes the family dog to the occasional dog show and even sells a pup or two is not a real breeder and does not get to deduct the family’s SUV.