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Music Media

The Economics of File Sharing 342

Posted by michael
from the buy-one-get-one-free dept.
Howzer writes "A great Salon article popped up today, and it appears Stan Liebowitz at the Cato Institute is having second thoughts about his paper that was published on May 15. It seems the facts simply don't support his earlier assertion (& the well-known position of all the major recording labels) that downloading hurts music sales. It's good to see this argued from another angle, especially by a guy like Liebowitz."
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The Economics of File Sharing

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  • This pops up on slashdot right after i submitted this [com.com] cnet story about sony and universal lowering the prices of there online digital music, as well as alowing downloading to mp3 players and burning on cd. Wich a least suggests these companies aren't as afraid of piracy as they where before.
  • by PhxBlue (562201) on Thursday June 13, 2002 @09:54AM (#3693286) Homepage Journal

    ". . .That's the beauty of the market. That's why it can't get too far afield. If they get every consumer mad at them, they'll be in big trouble."

    Are you listening, RIAA? Either the mainstream is starting to realize just how full of it you really are, or this guy didn't get his payola check for the month.

  • by mcwop (31034) on Thursday June 13, 2002 @09:54AM (#3693288) Homepage
    I would like to see more in depth details on how the music industry gathers its pirated music data. Surveys are not very accurate. Other than measuring the actual sales by pirates, it seems as if the industry pulls numbers out of thin air. Measuring downloads of music from Kazaa and equating that to lost sales is bunk as well. One must match that users downloads to their purchases of music.

    Personally, I have purchased more music since buying a cd burner. My interest in music has increased as well. Now only if the iPod would drop in price.

    • by Reziac (43301) on Thursday June 13, 2002 @10:13AM (#3693393) Homepage Journal
      My own experiences with free vs purchased music:

      Back around 1980, I was a DJ. I had access to a HUGE vinyl library and a high-end cassette recorder -- so I could tape whatever I wished.

      Until a year ago I had better online access, and could download whatever I wished. Since then I've moved and my connexion speed went to hell, so I've stopped downloading music.

      There have been two periods in my life when I *bought* a lot of music: when I was DJing, and when I had good download access. Conversely, I *didn't* buy any music when I had NO access to free music.

      On thinking about it, the reason is simple: when I have good access to free music, I also get to sample lots of stuff I've never heard before, that I can listen to when I'm in the mood to care about it (not just when some crap radio station sneaks a song in between commercials). And I want to own what I want listen to.

      Since I've not been able to reasonably download music (26k tops is not "reasonable"), I've not bought a single CD. Coincidence? You decide.

  • Now that I've downloaded the entire soundtrack to Glitter, I won't buy the CD! Ha!
  • Is this another one of those high-profile pronouncements with a small-type retraction later? Will the RIAA and fellow-travellers publicise both, or will they just grab the headline?

    I would hope that authors and organizations have more respect for their reputations than to play this game.

  • I'm sick and tired of people arguing that this doesn't hurt sales. But while I believe it hurts sales, I don't believe it hurts them as much as the Record companies have been saying.

    I haven't bought more than 2 or 3 CD's in the last 3 years. I have downloaded probably 1000 or more mp3 files in that same time period. But this does NOT mean that I would have bought those files had I not downloaded them. I may have bought 10 or 12, but not all of them.

    So should they stop mass file sharing? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.

    Also in other news I heard yesterday on the radio that a couple of the labels will be selling singles online for $.99 and albums for under 10 bucks. If that happens, I wouldn't mind forking over the cash every now and then when there's something actually worth buying.

    Just my $.02
    • by SirSlud (67381) on Thursday June 13, 2002 @10:17AM (#3693414) Homepage
      Of course file sharing hurts sales. Just like double tape decks hurt sales. Just like not having a law preventing people from owning two VCRs hurts video sales. Just like photocopiers hurt the sales of sheet music.

      Technology changes things. In some ways better, in some ways worse. It changes peoples behaviour, and it changes the machanics of society.

      The question everybody should have been asking all along is, "Does it hurt sales so badly that nobody will want to make music?" The answer seems to be an overwhelming NO, so if thats the case, history suggests that we are should tolerate it until it finds its natural 'fit' within social behaviour and the economy. Just because it facilitates illegal behaviour does not mean that this illegal behaviour is going to have a negative impact on the market - and if you think about it, many discoveries, social patterns and values we hold up as examples of our progressive society started up as being illegal behaviour until we came to terms with its perceived threat and realized that many things we perceive as threatening or damaging can be channeled in a positive socioeconomic direction.
    • I'm sick and tired of people arguing that this doesn't hurt sales

      Well thats interesting, but are you going to tell us why? Just because _you_ have bought fewer CDs because of your access to downloaded music doesn't mean others have. Personally speaking I can say honestly that I have bought more music as a result of first sampling it from downloads. Many of my friends do the same.

      What I have said here proves nothing. It's just one single anecdotal example, just as your example is.

      I'm not saying you're wrong about downloads hurting sales, just that you haven't provided any convincing argument or evidence to back up what you say. "I buy less therefore everyone must buy less" is not enough and doesn't convince me.
      • There is no direct link between the number of CD's downloaded and the number bought, but there is a different type of evidence: in 1999, Music sales were up 10% in the us, and there wasn't WIDESPREAD piracy. In 2001, for the first time ever, CD sales were down, (by 5%) and the reduction in growth rate only dates to 2000, as pirating began to gain popularity.

        Are the prices fair? no.
        Is stealing wrong? yes.
        Is there some middle ground? probably.
        (Do I pirate Music? Not Anymore.)
        Of course, in reality, piracy increases music sales, industry is good for the environment, and smoking is good for your health, so this is all irrelevant.

        PS. Are you really dumb enough not to be able to figure this out yourself? or are you just being a jerk asking someone to produce documentation?
        • by Dephex Twin (416238) on Thursday June 13, 2002 @11:05AM (#3693797) Homepage
          but there is a different type of evidence: in 1999, Music sales were up 10% in the us, and there wasn't WIDESPREAD piracy. In 2001, for the first time ever, CD sales were down, (by 5%) and the reduction in growth rate only dates to 2000, as pirating began to gain popularity.
          ...
          Of course, in reality, piracy increases music sales, industry is good for the environment, and smoking is good for your health, so this is all irrelevant.

          Of course, everything is black and white and nothing is complicated. So when the music sales went down in 2001, of course the first recession in years after a long economic boom and a drop in the quality of music, as well as people getting increasingly pissed at the music industry couldn't have had anything to do with any of this. It's obvious what was the real cause. No reason to even consider the possibility of anything else.

          mark
          • If you want evidence, you have it. during the many other recessions that have occured, CD sales didn't even slowdown (the growth rate in sales continued to increase, in fact.) Historically economic Slowdowns only reflect themselves in certain types of luxury sales, esp. High ticket items. Entertainment usually does well. And of course, people are only pissed at the industry now, since they realized they didn't have to pay money...

            As for a drop in the quality of music, I'm not saure what yuo are referring to, because music could not get any worse then it has been in the last 20 years, throught the 80's and most of the 90's. In any case, the evidence is NOT straightforward, but it IS evidence, and that's all I ever said it was. If you want proofs, try math instead of the humanities.
            • My examples were not meant as direct counter-arguments, they were only ideas that show how there are a lot of factors involved.

              Yes, normally the entertainment industry doesn't get hurt in a recession like other industries. But don't forget that there had not been this kind of attack on American soil since the civil war in the mid 1800s. Don't forget that CD prices are actually continuing to rise.

              My point was there are a bunch of factors, and there are a bunch more that I didn't mention.

              So saying that there was a 5% drop in music sales, or however much, doesn't mean anything. It is not even an argument in favor of the idea that MP3s are hurting the industry. Perhaps, with everything else going on, the fact that there is only a 5% drop is an argument that this isn't the case (like what was stated in the article).

              I'm not saying my ideas prove things, I'm saying that the record sales data really aren't that simple, whether they are intended to prove anything or not.

              mark
        • something for you to think about.

          10% is much higher than the increase rate of the population.
          If it did stay at 10% can you work out what would eventually happen? Not so long in the future that would mean everyone buying every cd that comes out. shortly after, it would mean some people buying two copies, and so on.

          In any case, there is a classic logical fallacy in what you said.

          "If a happened it would cause B. B happened, therefore A caused it"

          "If an increase in piracy happened it would cause sales to increase less. Sales increased less, therefore an increase in piracy caused it"

          A classic logical mistake.

    • Assuming that "selling online" means in mp3 format, and that they will probably be 128 kbps, then there is no way I am going to pay $10 for something that is of inferior quality.

      I too, haven't bought more than 2 or 3 CD's in recent years, but it has nothing to do with downloading music. I have a 4 gig mp3 collection; all of which are my music cds converted to mp3s. I only have 1 cd that was downloaded and ripped; however, that is because I lost the cd I originally purchased.

      So, why haven't I bought many cds recently? Because there isn't anything out there that appeals to me right now. None of my favorite bands have put out anything new and exciting, and the rest of it is basically crap that I don't care to listen to.

      I blame those producing the music for not making me like it enough to want to buy it for their "loss" of income.
    • Read the article again. If every download was a lost sale, as they record industry claims (and as you appear to believe), then record sales for the last year should have been in NEGATIVE tens of billions. Obviously that hasn't happened. Wake the fuck up and smell the coffee.
      So should they stop mass file sharing? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.
      No, "they" fucking shouldn't. Anytime you say something like that, ask who "they" are. Because they become the watchers, and who is going to watch them? No one, and then "they" will be charging you to transfer tapes that you yourself made of your brother's wedding (via convenient micropayments, natch). If you don't see a problem with that, please do the world a favor and wear a helmet 24/7.

      This dude's argument on fair use is also total fucking horseshit, once you realize that it's not about text. Consider the Mona Lisa. To translate fair use as he understands it for text (read a paragraph, retype it) into images, audio, or video, you'd have to repaint the painting yourself or reshoot the movie yourself. Wow, that's great policy, legislate technology back into the dark ages! That's the hallmark of good policy! Bring back the buggy whips! Hey, let's make this whole thing really simple and just shoot those whining academics! Those dangerous intellectuals!

      I'm so sick of neanderthals like you requesting that we legislate away the future in order to preserve the questionable past. Go crawl back in your cave, caveman.

      • Oh, I get it, you like not having to pay for things!
        OK, that AND cursing.

        TANSTAAFB (There Ain't No Such Thing As A Free Beer!)
        Basically, what you are advocating (aside from your request that the previous poster move out of his house or apartment and into a cave that I assume is conveniently nearby) is that you should get free music because the music industry is overprotective.

        However, your logic is as bad as your command of Invective:

        You refuted an arguement different than the one presented (because HE did not say that each download = a lost sale, "The Industry" did, supposedly.)
        You then Argued by exageration that preventing theft is a slippery slope, a position I don't understand, as no-one has discussed methods of preventing theft at this point in the discussion.
        You once again Argued by exaggeration that fair use is... something, which I don't quite follow, as it does not proceed from the post before yours.

        So, to synopsoize your comment, basically you:
        A) Enjoy insulting others
        B) Have nothing original to say

        (Ob.Re-digression.back.to.the.subject.at.hand)

        Why do people not understand that most people are not really interested in finding "new and exciting" music, and just want to listen to bands and songs they hear all day on the radio. (Has anyone noticed the proliferation of Boy bands and Eminem on Kazaa or whatever sharing software you use?) Oce the 5 CD's someone wants are burned for them, they do not need to buy the CD, and therefore don't. Lost Sale.

        Obviously this is not the only paradigm out there, and many people are legitimately looking for new music, but for everyone else (a vast majority, I should add) downloading is simply theft of music you want anyways, but would prefer not to pay for.
    • ...and have been quite vocal about it here (and been modded down into hades ;), I don't think the problem is the sales getting hurt. More to the point it is people ignoring the laws surrounding the distribution of the product.

      I have and will continue to feel that it isn't right to do this. That aside, it seems to me that the best way to step forward both for the industry and the consumer is for the record companies to provide this music for download at a reduced price. This could save people significant dollars. When considering the retail market, most of the cost is not in making the product, but in bringing the product to you.

      Once the CDs no longer have to be made and trucks no longer need to run around the country in order to get music in our hands we will be able to see savings. No more inflated retail rents, electricity bills, payroll and health benefits to pay. Sounds good to me. This doesn't even start to cover the amount spent in advertising dollars.

      I think the way to accomplish this is to vote with our dollars. Don't buy any more music. Write a letter here and there to the record companies stating that you would buy music if it weren't so expensive and that you will be looking forward to signing up for their download service.

      Anyways...it's just a thought.

    • I presume the irony was unintended. You rant how people are being selfishly obtuse arguing that downloads don't hurt the record companies, then end the post with ".....I heard on the radio....." Compensating artists for air play is a relatively recent development in the history of radio. For decades prior the industry did exactly what you say should have caused the music industry fatal damage, shared their product for free. I think we'd both agree it didn't. Your argument states a case and then provides one of the most effective counter examples as an aside.
    • Radio has given me 'free' access to thousands of songs, grouped by genre. It may not be entirely free, since there are adverts, but I change stations during commercials (I know, I'm a thief...). If I didn't have access to this 'free' music, I would never get to sample different artists / genres, and wouldn't purchase any of their music. File sharing works much the same. Say I hear about artist 'x', in a review, on the radio, whatever. If I can sample more of this artist's music without forking over $20, that's great. If I like it, I buy it. If not, I don't. This pisses off the RIAA since they've been using this business ploy for years. They hook you with one good song, and never tell you that the rest of the disc is utter trash. They want you to spend your money to find that out. This is how they make money. Downloading music is no different than me going and standing in a record store to preview a disc, except that I get to keep copies of what I download. Mind you, most of them are 128 kbit garbage, but I have them. They're not a substitute for a cd. If these idiots would realize that they're getting free advertising out of this, we could end the nonsense. But they don't want you to find out their product sucks until after you buy it, and that's why they'll fight tooth and nail over file sharing.
    • by pubjames (468013) on Thursday June 13, 2002 @10:46AM (#3693636)
      I'm sick and tired of people arguing that this doesn't hurt sales. [...]

      I don't own a lawnmower. I borrow my neighbours. This affects sales of lawnmowers.

      So should they stop sharing of lawnmowers? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.

      I sometimes hitch a lift with a friend rather than use my own car. This affects petrol sales.

      Should they stop people hitching lifts? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.

      I often drink water out of the tap, rather than buying it. This affects bottled water sales.

      Should they stop people drinking out of taps? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.

      I sometimes think about naughty things, rather than looking at porn. This affects porn sales.

      Should they stop people thinking naughty things? Yeah probably. Will I be happy about it? Not one bit, but I'll accept it.

      (I'm not sure what my point is. Draw your own conclusions...)
    • I'm sick and tired of people arguing that this doesn't hurt sales. But while I believe it hurts sales, I don't believe it hurts them as much as the Record companies have been saying.

      I haven't bought more than 2 or 3 CD's in the last 3 years. I have downloaded probably 1000 or more mp3 files in that same time period. But this does NOT mean that I would have bought those files had I not downloaded them. I may have bought 10 or 12, but not all of them.

      Well, then that proves it!

      What if I said that the time when I was buying the most CDs was during and right up until the end of Napster? I used to download songs from all sorts of different artists... songs I had heard at one time and liked, people I was always meaning to get into but never got around to it, etc. And I ended up having a constant flow of new CDs coming in from CDNow. When Napster died then I didn't feel like finding a new service, and then I went down to 56k. I didn't buy any CDs up until a couple weeks ago. And I just got broadband a month ago. Whaddya know?

      What the heck is going on? My story is totally different. We have some sort of paradox!

      Or...

      Maybe a single person's anecdote is worth absolutely nothing as far as proving or disproving the MP3 situation. Maybe you really don't know whether music sales are really hurting or not. Yes, there might be certain instances where you would have bought a CD, but downloaded an MP3. Then there is another instance where the MP3 leads to a download. Nobody knows if this evens out, or perhaps even causes more CD sales. You just don't know, ok?

      What we do know is that the music industry execs are currently still filthy rich, and if they remain filthy rich, then I'm not really interested in finding out if they could have possibly been 5% richer and filthier if only there weren't MP3s.

      mark
      • I'm sick and tired of people arguing that this doesn't hurt sales

      Prove that it does. Find any evidence - any evidence - that it has reduced sales. Anecdotes don't count. Common sense doesn't count. Your opinion doesn't count.

      Show us the evidence.

      • Also in other news I heard yesterday on the radio that a couple of the labels will be selling singles online for $.99

      No, they will be renting you access to SDMI secured data stored on your hard drive. Download the Liquid Audio [liquidaudio.com] player and read the license. Access to the tracks is conditional on a renewable license tied to your credit card. It's a rental locker system, and they can take away the keys at any time. Wake us up when they actually offer mp3's, will you?

  • I firmly believe that (based on what I've seen) that mp3 sharing does hurt the industy.

    Yet, at the same time, they post record profits and album sales.

    I'm sorry, but I don't buy into the idea that the majority of people use mp3's as a taster and then go and buy the product. It just doesn't, well, sit right with me.

    But at the same time, they are boasting these profits. Sure, there are people who use mp3's as a sampler before purchasing the products but I seriously can't believe they are in the majority.

    It's a case of what would appear to be the logical reason sounding ... well ... wrong. Am I the only one confused by it all?

    • In the past few years since digital piracy has been made accessible to the masses, the record industry has debuted several VERY popular bands.

      The popularity of Britney Spears, N'Sync, The Backstreet Boys, Eminem, and others has brought them many CD buying-fans. Not to mention that the economy during this time was booming and disposable income was trickling down to the preteen and teen age groups.

      No numbers have ever been released that show that groups other than those most popular (and hence crappy, by some definitions) have increased their record sales one iota.
    • by o'reor (581921)
      Well, same for me. However, I'm wondering if there is a clear correspondance between the kinds of music that sell less than expected and the kinds of music that are actually downloaded and burnt on CDs. What I mean is that the RIAA probably expects some types of artists to produce hits, yet they fail to do so, and nobody even cares to download their junk ; and others are expected to sell just fairly well, but they may really produce big hits on P2P networks.

      So, is there a correlation between the kinds of music that fail to sell as expected and the kinds of music that are massively downloaded ?
      We seriously lack solid figures on these points, both due to the fact that expected sales figures are confidential marketing data, and P2P traffic is everything but public and official.

      And your average congressperson will (probably) just listen to the RIAA drivel and vote the Hollings Bills as they are told, which won't help.

      • I doubt Mariah Carey is more downloaded than Britney Spears. Mariah Careys album didn't sell because people who would otherwise have bought it thought it sucked.
    • I'm sorry, but I don't buy into the idea that the majority of people use mp3's as a taster and then go and buy the product. It just doesn't, well, sit right with me.

      So what? Your feelings do not define the facts. Get over it, unless you want to continue to live in fantasy-land. But don't expect rational people to take you seriously.
      • So what? Your feelings do not define the facts. Get over it, unless you want to continue to live in fantasy-land. But don't expect rational people to take you seriously.

        Actually rather than getting over it, I prefer the comment made by someone else that the bulk of the money made by the industries is of the bland tasteless sort.

        Which would mean that other artists are suffering with people downloading their music. It's just that the industry makes it's money from 14 year olds with dubious tastes in mainstream music.

        Of course, unless we get some decent stats from the music industry about profit and how it relates to which artists/cd's then we'll never know. But it wouldn't surprise me to see that the money came from a small number of big names which outweighs the losses of the others.

        By the way, what you read in the comments section of Slashdot isn't always the "facts". Thinking that puts your address firmly in fantasy-land.

  • of course not (Score:5, Insightful)

    by YanceyAI (192279) <yanceyai@yahoo.com> on Thursday June 13, 2002 @10:02AM (#3693329)
    File sharing doesn't hurt record labels any more than radio play. I can hear new music anytime I turn on the radio, but I still want to go buy the CD for the art, the tactile experience, and the addition to my collection.

    I can tape the song off the radio just like I can download it off the Internet, but I still want to buy, buy, buy.

    Why does this not register with label execs, economists, etc.?

    • I can tape the song off the radio just like I can download it off the Internet

      And part of the cost of blank cassette tapes goes to the artists to offset that loss of revenue.

  • Since downloading doesn't seem to affect music sales much/at all, shouldn't the RIAA think of it as free advertising? People hear a song and maybe they buy the cd and maybe not. It doesn't seem to matter if they hear it on the radio, at a friends house or as an mp3, so a smart record company should at least allow downloads, even if they don't encourage them.

    Unfortunately, smart record companies seem to be few and far between. The big corporate culture doesn't seem to allow anything that could even potentially threaten the bottom line, whether it's not panicking about downloads or promoting commercially risky bands. I thought all these big corporations were supposed to be more likely to support marginal acts and moderately risky ventures?
  • by kirkjobsluder (520465) <kirk@j[ ]luder.net ['obs' in gap]> on Thursday June 13, 2002 @10:06AM (#3693349) Homepage
    Perhaps one of the reasons why downloads are not hurting CD sales is because people are not substituting downloaded music for personally-owned CDs but for broadcast music.
  • by psxndc (105904) on Thursday June 13, 2002 @10:06AM (#3693351) Journal
    From the article: I got a nasty letter from someone, who said he took a videotape of his brother's wedding, and then he tried to transfer the sound to the digital audiotape that he had, and it wouldn't do it. He blamed DRM for that.

    I wrote him back and said, look, be mad at the Digital Home Recording Act. That's what said you can't record from a digital source onto a digital audiotape. It has nothing to do with DRM.

    I can see how this is not a DRM issue, but why can't someone record from a digital source to a digital tape? Can someone please explain this? I did a google search but nothing really explained what this law entails and what I am and am not allowed to do. Thanks.

    psxndc

    • It's not a DRM issue becaue he defined DRM to mean what he felt it should be, not what it is. If you get to make up the meaning of words, you can win any argument.

      -jon

      • It's not a DRM issue becaue he defined DRM to mean what he felt it should be, not what it is. If you get to make up the meaning of words, you can win any argument.

        Precisely:

        DRM, as I see it, is merely the protection in the software, on a CD or whatever, that would allow micro-payments.
        OK, that's nice. Perhaps while you're on the subject, you could tell us the meanings of the words "alone", "sex", and "is" as you see it.

        I agree with the previous poster who noted that Liebowitz was doing so well until this howler.

  • I like this quote:

    I try to let data tell me what's actually happening in the world. And when the theory says one thing and things don't work that way, then I say something's missing in the theory.

    He's not afraid to admit when he's wrong. That's a rare quality I think. I suspect many people (in his position) would rather keep quiet if they already stated their opinion and then found that the data didn't support it. But he's honest enough to admit he may have been wrong.
  • by SirSlud (67381) on Thursday June 13, 2002 @10:07AM (#3693355) Homepage
    > There are a bunch of potential reasons. It may wind up that people just like to purchase because it's the honest thing to do. There's another possible explanation though, which is something that I'm trying to get harder data on. If we had a degree of copying [now] not that different from in the past, and it's just switched from audiotapes to downloads, then we may not notice an impact on CD sales.

    Look, I hate to say it, but for every person on this website who has dismissed:

    a) people dont like to freeload
    b) there was always piracy going on, audio tapes, etc
    c) its all good, chill. remember the vcr, the cd, all these things were supposed to spell the demise of music. guess what - humans couldn't live without some form of (even if its economically motivated) altruism! oh, the horror!

    I told you so. If this ends up being the magic 'discovery' of filesharing, I'm going to cry. I've been saying this all along.
  • The music industry seems to think that all people have unlimited money and that they go through the hassle of getting music online just for fun. The simple tuth is that most people has x amount of money to spend and after it is spent thay cant buy something else. If say a person has 10 % of his income to spend on records and there are more records released than he can afford he dont "take" money from the record labels if he dl's mp3's that he cant afford to buy. Since he wouldnt be able to buy any more records than for the amount of 10% of his income it doesnt directly hurts record companies. That is if he don give a fsk in electric bills and taxes and spend that money on records. We all have limited money and we cant spend more than we have (aleast not we non enron). Record companies need to lower there prices if they want to sell more copies but the overall sales wont go much higher. Sure they want us to put all our money on records but hey, that's what every other company wants too.
  • You think this justifies stealing?
    • You think this justifies stealing?

      Of course not. Nor does it justify rape, murder, vandalism, terrorism, or denial of service attacks (the last of which some RIAA member firms are guilty of on current P2P networks even as I type this). All of these things are as illegal as copyright violation, but clearly none of them are equal to one another.

      The data show that widespread copyright violations, contrary to common intuition and the propoganda we have been hearing from the Copyright Cartels for the last several decades, doesn't appear to significantly harm sales. The evidence of this is overwhelming, especially if you include all of the media that has permitted widespread copyright violation in the past ... from the player piano through cassette tape, xerox copiers, and, most recently, the internet.

      We don't know for certain why sales of copyrighted materials, be they books, records, CDs, or software, increase even as copyright violations against those same products increase, but the data are unequivocable and convincing, down to the lockstep graphs of Napster activity vs. RIAA profits.

      Perhaps it is because copyright violations are really little more than free advertising, something that radio has been doing since day one.

      Perhaps it is because we are conditioned to want to buy stuff, and when we're shopping we think to buy that which we've been listening to the whole time (but don't "own" yet).

      Perhaps it is because those who violate copyrights on a particular product develop a deeper interest in that genre of products, and hence by more of that product, even if they don't by a copy of one particular song they happen to have downloaded.

      Perhaps people have a deeply ingrained sense of fair play and want to support the artists they listen to.

      Perhaps it is because owning the music (or a xerox of a book) isn't enough. People want the cover art, the nice shiny package, and the shiny disk to put on their shelf (just like people like the feel of a book in their hand, rather than a sheaf of stapled papers containing the same thrilling novel).

      No studies have looked into the details of why this phenomenon works the way it does, due in no small part to the fact that the Copyright and Media Cartels have been denying the phenomenon exists despite a century of hard data contradicting them, so we don't know why the profits of these very same cartels jump another notch each time a new technology emerges that permits even more widespread violations of their copyrights, we only know that it happens.

      Perhaps now that the Media and Copyright Cartels' deceptions are being seen for what they are someone will do an indepth study into the consumer dynamics that are responsible for this, admittedly suprising and unintuitive effect. You would think the Copyright Cartels would do such a study themselves, since it so clearly relates to their own profits, but instead they have a deep seated mindset and political agenda to protect, and the last thing they can afford is a scientifically unbiased study that repudiates everything they have used to justify such draconian legislation as the Sony Bono Copyright Extention Act and the DMCA, not to mention some twenty-odd other copyright extentions over the last quarter century.
  • This is a serious challenge, folks. We need a new strategy.

    At first, it seemed that filesharing really would destroy the RIAA. Then, just as it became clear that this was never going to happen, they started throwing fits sufficient to make me think it didn't need to - they were going to destroy themselves. Now, it looks like they may wise up.

    So, we have to ask ourselves - since the RIAA has developed some means of distinguishing it's collective ass from the hole they've dug themselves into, what can we do to ensure their destruction? I think filesharing can still be an important part of that plan, but really, we need to look into alternative methods of eroding their strangehold on popular music discourse and promotion. Even if CD sales stay up, if we can really bring people into a genuinely alternative culture of music - free from the RIAA - that can accomplish the same goals. While we're at it, if we can continue to fool the major labels into thinking that Kazaa will somehow eradicate them from the face of the earth, that would be wonderful.

    I think we need to start a letter writing campaign! Everyone, assume some l33t speak teenage hacker monicker, and inundate random e-mail addresses at the RIAA/major lables with threatening e-mails about how you've developed a new file sharing app that will somehow cause people to pirate more music. Sensical explanations are not required, or even desirable, but we need a lot of DIVERSITY in the messages so that the RIAA becomes convinved that there's a huge conspiracy out to get them. Brag about the number of your friends that you've convinced never to buy another CD.

    If we work together, we can keep them frothing at the mouth until they've lost what little remains of their credibility, and deflect their attention from genuine threats to their hegemony.

    A certain element of humor was intentional.
  • Interesting idea in there - that perhaps the music companies should have negotiated with Napster, found some way to change the "rules". The example he gives is that in order to download, you have to upload. Would this have worked? Obviously what you upload in a P2P system is partially dependent on people actually taking stuff FROM you. But could they have said "If you want to download, you need to have at least 1/5 of your d/l amount available for others." Might have kept the leeches away. Reminds me of the BBS days, and the U/D ratios many had.
  • DRM can't keep you from reading the material, as long as you pay the price. Some say, Well, how can you take a paragraph and copy it anymore? That's what we normally consider to be fair use. But the fact is, you can still do that. You might not be able to cut and paste but as long as you can read it, you can type it... It's just not as easy as it could be but it's not any harder than it was 30 years ago.

    True, there is no way to plug the "analog hole." However, to revert back to it as the only mechanism for copying is to effectively undo 30 or more years of productivity enhancement through technology and features such as copy/paste. The point of technological advancement is to automate manual processes such as transcription.

    Estimating the lack of productivity seems popularly acceptable for damages alleged by computer viruses. If we did a calculation for the lost productivity costs of DRM difficulties imposed on legitimate copying in business and academic work, it would likely be a large number, perhaps dwarfing the revenues protected by DRM. Therefore, Mr. Liebowitz's argument founders on a zero, or perhaps even negative, sum.
  • I'm just waiting for the usual /. story at the end of the year where the RIAA comes up with their mysterious numbers and bitch about piracy reducing sales, blah, blah, blah. But I wonder if the RIAA will actually bring 9-11 into the equation, factoring that most of the nation was too shaken up to worry about buying the latest CD's for the last few months of 2001. I'm curious because almost everyone has been using 9-11 as an excuse for everything lately (bad sales, security, etc) but I think most of the /. population understands that issue already, so I'll leave it at that.
  • Salon: So far, why do you think people are both purchasing music and downloading it?

    Liebowitz: It may be the cost of putting these collections of songs together. Even though it seems low, it's more effort than the typical person is willing to go through. That may be what the salvation of the record industry is -- that it's simply too hard to do on your own what they do for you.

    Something I haven't seen anyone (in the press) really correlate directly:

    • Outside of geekdom, there are not that many people (when compared with the CD-listening population) who can take their MP3 collections and successfully and reliably burn CDs that play in CD players;
    • again, outside of geekdom, not many folks have their good stereo systems hooked up to their computers;
    • while people listen to mp3s on their computers, they want to listen to the music that they *like* on their stereos, in their cars, etcetera, and they also want to be able to lend it to friends and be reasonably sure that said friends will be able to listen to it also.

    Put those together, and I think you have a more powerful impetus for buying CDs than the "people are honest" and "sample before you buy" theories represent. It's much easier to buy the music than it is to figure out how to get good sound from your MP3 collection.

    Now, if the studios partnered with, say, Adaptec or Nero to create an application that could burn traditional CDs from uncompressed (or extremely high-quality MP3) sources bought and downloaded at burn-time from the labels, that provided a way for the average computer owner to burn mixed CDs that would play in her stereo, I think you'd see huge uptake. (You'd also see the death of the much-decried "album" with one decent tune and nine crap filler tracks, which is the pigfeed trough^W^Wbusiness model the RIAA member companies are fighting so hard to maintain...)

    Ole
    • Put those together, and I think you have a more powerful impetus for buying CDs than the "people are honest" and "sample before you buy" theories represent.

      And that's why the fight we have right now isn't going to be solved. The fact of the matter is that P2P networks have the potential to destroy the industry. If left unchecked, that's exactly what they'd do. But, because the RIAA et. al. sue out of existence anyone who tries to profit from these P2P networks, there is no incentive to build products which make filesharing simple and convenient for the masses.

      So, yes, P2P filesharing likely does not have a significant negative impact on CD sales. But that's only because napster was sued out of existence, and others are afraid of following in napster's footsteps.

      The RIAA realises this, and that's why they haven't sued small-time individual traders. They don't want to stop piracy, they just want to keep it controlled.

  • Noticed something he said in there:

    "While it's true that there's always been a balance, we don't know if it's been a particularly good or even balance."

    So how is an uneven balance a balance?

  • Not enough data (Score:2, Insightful)

    by Anonymous Coward
    This is one of those issues that defies easy analysis, simply because we're all so prone to assuming that the whole world does what we do. Are there people who use file sharing just to sample before they buy, thereby increasing sales? Yes. Are there people who only take from file sharing and never buy a CD, thereby lowering sales? Yes. What's the net effect of those two groups on overall sales? No one knows for sure, and we're all just guessing. I'm not even sure how you could get reliable data on the net effect, given that the people who download music would not answer a survey, or would blatantly lie.
  • I took note of Liebowitz's estimate that music downloads approximate five times the volume of CD's sold in the US. That's an impressive figure, and he correctly asks--if the volume is so huge, where's the dent in music sales?

    My tentative hypothesis to explain the disparity is that relatively few people are downloading all that music. Most of my friends are not heavy computer users and either do not download music at all, or maybe look for the occasional song now and again. But the two people I know who download music regularly go ridiculously overboard with it--they've got stacks of burned CDs and huge hard drives full of downloaded music.
    (Before you respond and say, "Hey, all of my friends download music and I do too," think--how many of your friends _aren't_ computer geeks?)

    I'd be really interested to see what the distribution is of the frequency and volume of music downloading. I suspect that maybe a tenth or twentieth part of the users are downloading most of the music--they're the ones who are stealing more than they're buying, but it doesn't matter much because everyone else is still buying CD's.

    hyacinthus.
  • by mesozoic (134277) on Thursday June 13, 2002 @10:30AM (#3693504)
    I'm glad to see an academic who is confident enough to be able to say, "I may have been wrong; I don't know." These days such professors are becoming a scarcity.

    He makes a very good point, too; you would expect CD sales to noticeably decline if people were using MP3s as a replacement for CDs. But they're not. The average computer illiterate still finds it difficult to turn an MP3 collection (which, more often than not, is a jumbled mess of files spanning a several directories) into CDs, because they just don't know how to sort them or how to keep track of them. So they keep the MP3s on their computer and buy the CDs for their Discman.

    Many (including myself) have bought a CD because they found a few tracks online, but couldn't get good copies of all of them, and they wanted all the songs in the original order. Other people are still buying CDs, but they're buying the ones they can't find online. I know many people who buy into the whole ultra-pop-star fad, but don't buy those albums because they're so easily available online. Instead, they buy music they like that they couldn't find online--and in the end, it's those artists who need to be bought the most.

    But the truth is that nobody can tell how much downloaded music is affecting record sales. It's hard to get the recording industry to ever release detailed statistics on what they sell, and when they do release information there are always doubts as to its validity. (They do have to make the shareholders happy, after all.)

    Normally I'd rant and rave about how file-sharing is going to be the death (or the rebirth) of the music industry, but I think at this point people have started to realize that on their own. Now it's just a matter of buying popcorn, sitting back, and enjoying the show, because over the next decade or two we'll get to see some of the biggest and richest corporations in the world die a fiery death.
  • Who cares (Score:2, Insightful)

    As a recording artist who has actually been suspect to a record deal in the retarded ass music industry. I can say that filesharing is nothing but a good thing.

    Labels and publishing companies will continue to hide under the umbrella that file swapping is hurting the artist.

    No.....what realy hurts the artist are slimy record execs who sign artists to crap deals and only give them a 10th of the profits. Which they then get the luxury of spliting amoung their bandmates and leaches like managers, business advisors, attorneys, and oh yeah and uncle sam. Not to mention they have to recoup every penny that were alotted for a recording budget before they see a dime.

    So who really loses? The industry has been screwing the artist for years. The only ones who benefits are the fortunate few who sell millions of albums and those are far and few between.

    Don't belive these cry baby record companies whose only real intent is protecting their old dusty business model.

    I say out with the old and in with the new! Believe me they got it coming!
  • While I am glad to see the man change his mind - it's nice to see an economist using the scientific method - 'cause the facts don't fit his original hypothesis, it's a shame that he's still clinging to his belief that micropayments make sense.

    Flat rate is the way to go - no matter what. People don't like to pay for what they use - causes way too much anxiety over what the next bill is going to be. Almost everyone has a budget, and budgets need fixed costs.

    The idea behind micropayments is to hide away paying for things - to make it small, unobtrusive, and in the background. No one I know of likes to be nickled and dimed to death, and we sure don't like not knowing **at the time** what we are being charged for (i.e. happening in the background). Even AOL went to flat rates and it wasn't to simplify their bookkeeping.

    Maybe he'll let go of micropayments in a few more months. The sooner that myth dies, the better
  • by EricEldred (175470) on Thursday June 13, 2002 @10:35AM (#3693538) Homepage
    I view the DMCA as draconian. I'm really quite unhappy about it. But I'm not unhappy with digital rights management, narrowly defined to software that keeps you from making copies; that doesn't extend the length of copyright; and certainly doesn't get rid of fair use.

    I wonder whether he understands DRM technology. If a DRM locks up a work, you certainly won't be able to go to a library and copy a page to cite in a paper, so goodbye fair use. (He seems to think the analog hole does away with DRM.) And whenever the copyright term is reached (if it ever is), the work will still be locked up--so the DRM effectively makes the copyright perpetual.
    • I think you need to reread teh article. Leibowitz explicitely states that fair use isn't gone, after all you can still copy the passage by hand, it's just not as easy as copy and paste. Nothing in copyright law states that copyright holders MUST make it as easy as possible to copy passages, images or parts of music.
  • I think this guy has a real blind spot when it comes to networking effects.

    He's famous for "disputing" the network effect for computers and now he can't explain why file sharing isn't hurting sales.

    Easy, it's a variation of the network effect. If there is more music, if people are hearing more artists and being exposed to music styles they've never heard before, naturally they'll spend more money on music. Some of that goes to hard drives, CD-R's, etc. but some (most?) goes to legal CD's and concert tickets.

    I think this guy needs to read Asimov's The Foundation series and take some pshycology courses before he becomes completely irrelevant!
  • I'm not sure what is more alarming, that it took this guy 6 months to crank out his piece for the Cato Institute or that someone at Salon actually imagined that anything coming out of there constitutes serious research.

    This guy is not worth this attention. His essay on QWERTY [utdallas.edu] hardly constitutes the rebuttal of path dependence he thinks it does. All it convinced me is that QWERTY isn't as inefficient as everyone claims. The logical gap between stating that and claiming that "lock-in" effects are trivial is enormous.

    But he gets press for ideological reasons. Once you admit to certain kinds of inefficiencies you invite the kind of public debates the Cato Institute hates: the merits of price-caps, or quality controls, or "open access" requirements on things like source code or cable lines.

    It all leads to a ridiculous faith in the efficiency of markets. Getting screwed by your local telephone company? It's not a monopoly! ANYONE could compete with them, so let 'em charge what they will.... i386 a standard? Microsoft?

    I'm personally waiting for this crowd to produce a piece of "serious research" teling us all that Enron really was perfectly efficient after all.... What were we thinking?
  • by sweatyboatman (457800) <sweatyboatman@NoSPaM.hotmail.com> on Thursday June 13, 2002 @10:48AM (#3693645) Homepage Journal
    The Salon article starts out okay; Liebowitz seems pretty level-headed and thoughtful on the subject of file-sharing and its effects on the recording industry. And then they ask him about DRM and he says (among other things):

    DRM, as I see it, is merely the protection in the software, on a CD or whatever, that would allow micro-payments. It doesn't do this yet, but in principle it could. That's what I view as closer to ideal. They can let you do a lot and you pay a higher price, or let you do only a little in which case you'd be paying a lower price.

    I read this with a sinking feeling in my stomach. What do you think he means by "higher" and "lower". In this case, I doubt that the price will be lower than the current cost of music. The record industry doesn't lower prices.

    If DRM with micro-payments is succesfully introduced (read legislated) it wont mean that I pay less for music. The record companies will charge me for my copies. They'll charge me for each time I play it. And though initially I paid 99 cents for that song, after a year, I've payed $5 for that one song and I will keep paying for that song in perpetuity.

    The record industry has a very bad record (no pun intended) at passing along savings to the consumer. The CD was supposed to make the whole process cheaper, lowering prices for the consumer. But that never happened. Instead, the prices went up (which they justified by saying that new technology costs money) and they stayed up.

    So, if they can release music digitally in a way that prevents copying and tracks your use of that music, the price wont drop. It will increase, despite their cost savings on distribution.

    sweat

  • if piracy really hurts the recording industry, why did i just read an article in last weekend's New York Times Mag. talking about a financial advisor for newly signed bands. his job is to help newly signed bands not spend their milions away.

    or why do i keep seeing all those 'Benzes on dubs' on cribs. if the industry is hurting they sure are not showing it. my stealing is going towards the benefit of curbing the outrageous spending habbits of the recording industry.

    this is fucking rediculous! in my mind, if a band is making an outrageous ammount of money like this, i will steal all of their music with no reget. its the sellout tax! as soon as you sell out its free game for me.

  • Sample and Buy (Score:2, Insightful)

    by Anonymous Coward
    C'mon. I know we like to trumpet this around as a pro-sharing platform and many of us (including me) have gone out to buy CD's only because we liked what we heard.

    But for almost all of the songs I've downloaded I never had any intention of buying the CD. This is because the CD is $15 for one friggin song. And frankly if the song was $1 I still wouldn't pay for it. The songs I download (as opposed to buy) are songs that I wanted to hear once or twice for some reason and never listen to again. Or, somebody told me about a cool song on a CD they bought, so they mail me a copy.

    I'd say about 90% of what I listen to/download in MP3 form is stuff that doesn't last on my machine for more than 24 hours. The other 10% generally becomes a CD purchase eventually. In fact, the main reason I haven't bought many CD's lately is as a quiet boycott of the industry.

    I like mindless trance. I listen to Digitally Imported, and if I could get those songs on a CD, I'd be willing to pay $10. Sadly I don't know the artists or songs, nor do I think that any of it could be had for $10. So it's Internet radio for me. No commercials, well-mixed.

    I dunno. I think the industry is stupid and paranoid and Hilary Rosen is a friggin idiot mouthpiece. On the other hand, the file-swapping community is defensive, hostile, self-righteous, and unwilling to obey the law. But then, CD's are monstrously overpriced and the quality stinks. In the end, people who want free copies of the music bad enough will get it and the industry can't stop them. Also in the end, the industry will find a way to protect their business model since it's easier to lobby politicians than try to ease their way into an ungodly lucrative market waiting to be tapped: a good on-line subscription service.

    If the RIAA had all its labels agree to a subscription service where you paid a flat fee of, say, $9/mo to use the service, and then a bandwidth fee (something minimal - like .05c/MB), I think we'd have people signing up. But it would have to include most/all of the labels. Nobody's paying $9 for Elektra, and then $9 for Colombia, and then $8 for .. you get the picture.

    Release some songs on the site only. Release some on the CD only. Cross-market. If you buy this CD for $10 you get, as a side benefit, $5 worth of free downloads on the subscription service. A month of no subscription fees. There's an endless marketing potential here, to speak nothing of the possible advertising revenue.
  • TANSTAAFL (Score:3, Troll)

    by toupsie (88295) on Thursday June 13, 2002 @11:05AM (#3693798) Homepage
    Anyone that thinks that appropriating another person's property without compensation or permission has no impact upon the victim is delusional even if that property is virtual/digital. Even if the lost is 1 penny, its still a loss, its still theft. Its not your place to tell the industry that "theft of your product is actually beneficial to you, so we are going to steal from you until the banks can't hold all your money". Its intellectual malpractice to justify these actions and we have read it all on this forum.

    My favorite specious argument is that the artists don't get money from their recordings. Too bad. Let me cry them a river while they are passed out on the Green Room floor with a needle in their arm. They should have signed a better contract with the record companies or been entrepreneurial enough to distribute the music themselves. However, P. Diddy seems to be up to his eardrums in Christal. Eminem still has enough cash on hand to bust off caps like its the 4th of July outside his recording studio.

    All in all, these arguments supporting theft of music are smoke screens to justify boorish behavior by people that are irresponsible and do not want to respect other's property. File sharing has just brought these people out from under the rock they hid before P2P became king -- I exclude the 5 of you that use P2P networks to gain digital copies of your Frampton [frampton.com] "Comes Alive!" LP which you bought in middle school.

    Its very simple. If you didn't buy it and you were not given the right to use by the copyright holder, its not yours to use and enjoy on your hard drive. Grow up, get a job and purchase your music so I don't have to deal with poorly planned copy protection schemes that cause my Mac to choke on Celine Dion CDs my fiancee forces me to listen too. If you don't like the method of distribution, contact the business and explain yourself. A smart business that receives feedback from enough customers will modify its business plan to compensate for the demand. If they don't, start up a Geocities web page and bitch -- just don't STEAL!

    Maybe Microsoft should just start appropriating GPL-ed code and justify it by saying that they wouldn't have purchased the code in the first place or the price of compliance with the GPL is just too high. That's about the same mentality. Property is to be respected and I surprised that someone from the Cato Institute saying otherwise. They aren't supposed to be communists with their whole property is theft concept.

    • "My favorite specious argument is that the artists don't get money from their recordings. Too bad. Let me cry them a river while they are passed out on the Green Room floor with a needle in their arm. They should have signed a better contract with the record companies or been entrepreneurial enough to distribute the music themselves."

      What work or addition of extra value does a "label" actually do to the resultant CD at the end of the day?
      Given that I believe the answer is "stuff-all", that music labels do nothing but own studios and know "contacts" who can push the "make millions of CDs" button, why is it folks at this point in the chain who are making *all* the money, sorry, noise?

      Maybe I *am* all in favour of a direct-to-listener 'Net-based approach after all...
      • What work or addition of extra value does a "label" actually do to the resultant CD at the end of the day? Given that I believe the answer is "stuff-all", that music labels do nothing but own studios and know "contacts" who can push the "make millions of CDs" button, why is it folks at this point in the chain who are making *all* the money, sorry, noise?

        Doesn't matter. The artist signs a contract. They should know better. Their lawyers should know better. If the labels were not valuable to the artists, they wouldn't associate with them in mass. No one is pointing a gun at the head of the muscian (outside of Shug Knight) and telling them to sign a contract. If a label is able to make millions off an artist that is stupid enough to sign a bad contract, more power to them.

        Maybe I *am* all in favour of a direct-to-listener 'Net-based approach after all...

        I am too. That is why I urge the artist to go it alone. If their music is good enough and generates a large enough fan base, they can make a killing getting rid of the label.

    • Re:TANSTAAFL (Score:3, Informative)

      by Rogerborg (306625)
      • Anyone that thinks that appropriating another person's property without compensation or permission has no impact upon the victim is delusional even if that property is virtual/digital. Even if the lost is 1 penny, its still a loss, its still theft.

      You're quite right. Now, explain how much Bertelsmann's bank balance drops if I download a bunch of data that a given application on a given OS might interpret as a "song" by Britney Spears. I want to know how much less money they have after I download that data, not how much more they might have gained if I had bought a license to obtain a copy of.

      Is it a penny? Is their bank balance one penny less if I download that data? No, it isn't. But, hey, that might be a rounding error, so what if I download it ten times, a hundred times, ten million times? Does their bank balance drop every time that I do that? Gosh, you know, it doesn't. How about that.

      The first part of your argument is flawed, but that's a common mistake. You are really arguing only that it's "right" that people should respect copyright law. Fine, let's argue that. Why? What "science or useful art" is being promotd by copyright law as applied to music?

      Don't just assert it, argue it. Convince us that protecting Bertelsmann's profits (and indirectly that of their meat puppet, Britney Spears) is what the Constitution intends, or what copyright law is supposed to achieve. Because I am having a hard time understanding how a law explicitely and clearly intended to improve the quality of content produced by talented individuals has any relevance to the law as it stands now, which largely protects the profits of huge publishers who buy and sell those individuals as commodities, while confidently asserting that the purpose of copyright law is to protect quantity of sales.

      Perhaps you believe that using DRM to leverage another few thousand sales of Britney Spears albums is "promoting the progress of a useful art", but I would argue (using your style of flat assertion) that it self evidently isn't. Convince me.

      • You're quite right. Now, explain how much Bertelsmann's bank balance drops if I download a bunch of data that a given application on a given OS might interpret as a "song" by Britney Spears. I want to know how much less money they have after I download that data, not how much more they might have gained if I had bought a license to obtain a copy of.

        Theft is theft, no matter how much perfume you spray around it. You are taking property from Bertelsmann without engaging in an economic transaction that Bertelsmann has set up to distribute their product. Its theirs, not yours. You do not have the right to dictate their distribution while their property is still under copyright protection. That is arrogance.

        Is it a penny? Is their bank balance one penny less if I download that data? No, it isn't. But, hey, that might be a rounding error, so what if I download it ten times, a hundred times, ten million times? Does their bank balance drop every time that I do that? Gosh, you know, it doesn't. How about that.

        Their bank balance does grow from your theft. That is the point. You are taking their product without compensation. That is the financial loss, that is the theft. Britney Spears and Bertelsmann are not in the music business to give away the product for free.

        To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries; Don't just assert it, argue it. Convince us that protecting Bertelsmann's profits (and indirectly that of their meat puppet, Britney Spears) is what the Constitution intends, or what copyright law is supposed to achieve.

        What part of "exclusive right to their respective writings" don't you understand? By your interpretation of this, no one would want to engage in "writings and discoveries" as their would be no financial benefit to the activity. This nation was set up as a Capitalistic society not an altruistic hippy land as much as some want it to be. The founding fathers realized that to promote the arts and sciences, there must be an incentive for the producer thus protections were afforded to the creator. Britney and Bertelsmann have exclusive right to their music and the method of distribution, not you, while its under copyright protection.

        Its amazing the lengths that people will go to justify intellectual property theft when it comes to music but jump up and down when the GPL is violated by Microsoft and other companies.

        • Re:TANSTAAFL (Score:3, Insightful)

          by mwa (26272)
          You are taking property from...

          Subtle difference, but no you are not. You are infringing on their copyright. The whole justification behind the constitutional protection of intellectual works is that the founding fathers could not reasonably ascribe to them the attributes necessary to be considered "property". Hence copyright law and property law are two distinctly different animals. "Theft" is a property law term and is not applicable when discussing copyrights.

          What part of "exclusive right... don't you understand?

          I don't think that's what the poster was challenging. I think they were arguing that a Britney Spears album does not qualify as a science or a useful art and therefor is unworthy of copyright protection. It's a good point, but do we want to turn judges into music critics (or, more frightening, vice versa)?

          Its amazing the lengths that people will go to justify intellectual property theft

          It's amazing that people don't understand that the term "intellectual property" is a phrase cooked up by interests vested with copyright to try to extend property protection to cover things that the consitution specifically forbids it to cover.

        • Re:TANSTAAFL (Score:3, Insightful)

          by bnenning (58349)
          Theft is theft, no matter how much perfume you spray around it. You are taking property from Bertelsmann


          And copyright infringement isn't theft, just like trespassing isn't armed robbery, even though both are wrong.


          >The founding fathers realized that to promote the arts and sciences, there must be an incentive for the producer thus protections were afforded to the creator.


          They also recognized that copyrights are a limitation on freedom of speech and a government-granted monopoly, and therefore should be restricted (note "limited times", which has been routinely ignored by Congress and will hopefully be restored by Eldred vs. Reno). By placing limits on copyright, the Constitution clearly emphasizes that intellectual property is not equivalent to physical property. (I just had this debate with Bush2000 on FR, scary. Obviously you're much more reasonable.)


          I agree that copyrights should be protected (although not in perpetuity), but overstating the impact of piracy plays right into the hands of those who would remove our rights for their benefit.

    • Copying information is not and cannot be stealing. It can be illegal, it can be copyright violation, but it is simply not theft and doesn't necessary mean a loss to the "victim." This ridiculous assertion, that there is no essential difference between making an unauthorized copy of music that could be bought for $10,000 and stealing a $10,000 car, has been repeated here many times, and every time people waste effort pointing out how it's obviously wrong.

      That is why you are being moderated down into oblivion. If you have no new arguments, what you're doing is the moral equivalent of stomping your feet and screaming at the people you disagree with.

      The moderation category "troll" at least gives you the credit of intentionally being obnoxious and trying to start an argument, rather than being so stupid you can't recognize the obvious illogic of your position.

      If you want to argue that copyright violation is wrong, go right ahead. However, don't expect any more respect for asserting that copyright violation is stealing than if you claimed it was vandalism, treason, murder, or rape.
  • A synopsis (Score:5, Insightful)

    by Rogerborg (306625) on Thursday June 13, 2002 @11:07AM (#3693811) Homepage

    Here, effectively, is what Stan Liebowitz has just said.

    • I was talking complete horseshit in my last Cato institute paper. My theory was wrong, and didn't agree with figures that were available then that any idiot could have pointed me at. Incidentally, I still don't have any suggestion as to why sales haven't dropped as much as I shrieked that they would; my only real point is that I was totally wrong, and I don't know why.
    • But wait, I have a shiny new bunch of theories based on my latest insights and suppositions! And because I screwed up last time, I'm bound to be right this time! Law of averages, right?
    • And my theory is... wait for it... that rights holders should be able to charge whatever they want, and use any DRM that they want, and the market will take care of everything.
    • I'm done now. When do I get my check?

    And I'm done with listening to egomaniacs like Liebowitz. I'll stick to my Magic 8 Ball for my predictions on how DRM and P2P will turn out. It might not be more accurate than chumps like Liebowitz, but at least it doesn't collect a fat fee every time it spouts a random prediction.

  • I was just talking to a friend of mine who is the manage of a local big name record chain. He wants to get out NOW because his profit margins are so low these days. He blames it on p2p and says that record sales have gone down in the last few years (he has been managing franchises in different locations over the last 7 years or so). Granted, his location is smack dab in the middle of a big city university campus and his biggest customers are students (who have the time and resources to burn music, but $15+ is too much to buy music).

    I told him, these companies need to adapt or die (taking a page from that article countering the deToqueville Institute FUD on OSS). I suggested either they need to offer a premium on the discs that you can't get through burning, lower the prices, or change their model to a kiosk stand where you pick and chose your music, and within a few minutes out comes a customized CD with nice linear notes, of what you want to hear, at a reasonable price.

    His responses were, they have tried offering better premiums, that has not worked; the price margin for the retailers is about $1 per new CD so he can't budge lower; and the companies don't want to offer a la carte music. They tried cd singles before and could not make a good margin on that, they tried kiosks before and took them away. Really it comes down to promotion, and they want to promote a whole unit where they can release singles at a time. He couldn't really argue against me when I said that before record companies had a monopoly on distribution, now with broadband, that monopoly on promotion and distribution is being altered.

    His choice on whether to adapt or die is he wants to get out of the music reatail biz and open other franchises.

    I still think kiosks in a mall would be a viable solution. It eliminates the retailers biggest cost and that is CDs go stale. If you can't sell them, you have physical property that cost money but is worthless, wheras electronic bits that cost per burn never go stale and don't take up shelf space.
  • 1. A lot of people who download music are not going to buy the CD anyway even if downloading is impossible. They simply don't have the habit of buying CDs.

    2. A lot of swapped songs are old, while you don't see the recording companies re-releasing 4-year-old songs all the time.

    3. Not all who download music have CD writers, and they need to play on their CD players too, so they buy the CD.

    4. (Related to #3) Not all who download music have PC speakers that rival their stereos.

    5. There are still people who buy CDs for the packaging, and for the tangibility.

    6. Despite the existence of Spears, Dion and the like, There are still good music people feel guilty not to buy.

  • If someone can come along who is able to accept small micro-payments -- one of the credit-card type companies -- then it could be viable. Right now, that's probably the biggest impediment: There's a fixed cost for using a credit card that's bigger than what a lot of these payments would be.

    Yeah SOMEONE needs to come along. He suggests "a credit-card type" company. Well gee, it's the year 2002 right about now. I wonder how long we're going to wait for this fucking genius solution to come tripping by. WTF?


    Not to be pedantic, but here's section 8 of the US Constitution:


    Section 8. The Congress shall have power to . . . coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;

    It seriously pisses me off when asshole motherfuckers like this dumb Liebowitch bitch go throwing these off-the-cuff solutions about some mega corporation is going to come and save all our asses with a fair and reasonable micro payment system when he knows he's full of shit and that the US Government is responsible for the currency of the nation. What a cock sucker.
  • by freeBill (3843) on Thursday June 13, 2002 @12:39PM (#3694649) Homepage

    ...why this guy is so confused should read Paul Ormerod's book, Butterfly Economics [amazon.com]. The book (subtitled "A New General Theory of Social and Economic Behavior") outlines the mathematics which University of Chicago economists broke through the barrier which had prevented others from mathematizing economics.

    All they had to do was assume that all agents (that's you and me) in an economic system had an infinite ability to predict the future prices of goods (and they would all have to agree). Now, these economists didn't actually believe this was true, but they hoped further work with the math would allow them to make simpler, more believable assumptions.

    And further work did just that. Sort of.

    In 1968, it was proven that we could relax those assumptions so that different people could have different opinions about the future state of the world. The only assumption remaining which still flew in the face of common sense: All agents had to have access to an infinite amount of computing power. And it was proven that the math broke down if this requirement was relaxed.

    One might expect that this would mean the theory would be thrown out. But one would be wrong. Because orthodox economic theory requires that markets "clear" in this way.

    And from this orthodox economists have shown that the distribution of wealth and income which emerges from equilibrium markets cannot be altered without making someone else worse off. Which had implications for economic policy which greatly pleased those who were opposed to certain government tax policies and regulatory policies.

    And those people were rich. They funded organizations like The Hoover Institution, The Cato Institute, and Wendy Gramm's Let Enron Rip Off California Institute.

    Unfortunately for the theory, in 1982 David Newbery of Cambridge and Joseph Stiglitz of Princeton proved that in an uncertain world in which the future is allowed to exist, the conclusion that the distribution of income and wealth cannot be altered without harming someone is, in general, not true. Despite this finding, the old result continues to be taught to students the world over.
    --Paul Ormerod

    It is taught because before it was disproved it acquired a strong political following, which included politically motivated private individuals who were willing to fund research which produced the results they wanted produced. So organizations like the Cato Institute have to continue to act as if a theory which rests on absurd assumptions is true, even though we know it is not. If they do not continue to so act, they will stop getting money from wealthy conservatives. That is why the absurd theory was never thrown out.

    All of this would not make much difference except that an alternative set of theories have arisen, which take advantage of more recent developments in the mathematics of non-linear systems. They make no absurd assumptions, and (though incomplete) they do work. See Ormerod's book for more information.

    They new theories do not skew either to conservative or liberal biases. (Ormerod is even more critical of European attempts to micromanage their economies than he is of laissez-faire Reaganism.) One of the results of including non-linear systems into the mix has been the discovery of what is known as the "network effect." Although most of us have experienced the network effect personally, Stan Liebowitz has developed a little mini-career opposing it.

    It turns out there is money in this opposition. Microsoft is willing to pay good money for this obvious nonsense. And it fits right in with Cato's nervousness about a competing theory which does not rest on the absurd assumptions theirs requires.

    Which explains why Liebowitz has no clue as to why CD sales were up while Napster was booming and are down since it was shuttered. The Napster community was a classic network with people sharing their favorite music with others. Sure some used it to avoid purchasing CDs. But far more were able to hear music they might never have found otherwise. Liebowitz cannot afford to see this since it would cut off a lucrative source of income for him to admit the network effect has such power. But the rest of us are under no such limitation.

    When radio came along, record companies said the new technology was so different it would destroy the copyright economy they thrived on; 30 years later they were bribing DJs to play their records. Cassette tapes were similarly attacked. VCRs were supposed to be the end of the movie business; today they are an important part of their bottom line.

    Someday we'll probably see congressional investigations of record companies paying on-line music-sharing services to promote their products. And Stan Liebowitz will still be confused about why his absurd assumptions still don't predict real-world results.

    • My suspicions were pretty surface, thanks for the detail.

      My college exposure to economics left me deeply unimpressed. They make major unwarrented assumptions about human behaviour. My professor waved away my objections by appealing to the law of large numbers.
      The theories might be worth something if humans were linear elements, but we are not. Economics seems to be useless for predictions, so it's not really science, but they appropriate the language of science to gain credibility.

      -which take advantage of more recent developments in the mathematics of non-linear systems.

      Given that economics seems to have a shallow grasp of linear system dynamics, how much of this new book's useage of non-linear systems is really tough scientific thinking, and how much is appropriation of new buzz to get attention?

  • by Animats (122034) on Thursday June 13, 2002 @12:48PM (#3694731) Homepage
    Why? Because broadcast radio in the US is becoming so centralized. Clear Channel Radio daily reaches 54% of all people ages 18-49 in the U.S. [clearchannel.com] They're bigger and more powerful than the recording industry. They demand payment to put a song on the radio. They may also insist that the artist do live performances in one of the hundreds of venues they control. On their terms.

    File sharing and Internet radio may start to look like an attractive promotional channel to the music industry, as Clear Channel slowly tightens the screws.

  • by Sloppy (14984) on Thursday June 13, 2002 @01:10PM (#3694949) Homepage Journal

    The idea has caused a fair amount of hysteria in the academic community, because they think fair use is going to disappear. I think that's totally not true. Fair use is still there. DRM can't keep you from reading the material, as long as you pay the price. Some say, Well, how can you take a paragraph and copy it anymore? That's what we normally consider to be fair use. But the fact is, you can still do that. You might not be able to cut and paste but as long as you can read it, you can type it.

    In this presentation, I will show how my new compression method's artifacts are more subtle than the ones made by the excellent Sorenson codec. [Type type type] This ASCII-art representation of a scene from The Matrix is the source that I have started with. Notice how the curly-brace I typed on the right side of the image, is very well-defined and clear.

    Now I will show how it looks when encoded/decoded with Sorensen. [type type type] In the ASCII-art representation on the left, look at the loss of detail. The original curly brace is replaced with a square bracket...

  • by lawscactus (584943) on Thursday June 13, 2002 @01:11PM (#3694951)
    I believe the reason that we haven't seen a decrease in sales of audio CDs is because of convenience. I have many audio CDs purchased from retailers, many MP3 files downloaded from the internet, and a CD burner. I have copied only a small subset of my MP3 files onto CDs. Why is this?
    CD creation is a time consuming process that requires me to purchase consumables (blank CDs). Then I have to keep track of where my CDs are and what is on them. Also, a CD holds a relatively small amount of data(700MB). In short, I couldn't be bothered.
    I believe that you will see significant degradation in CD sales when hardware manufacturers standardize on a portable and inexpensive data storage media. This would allow consumers the ability to carry a "data storage widget" (compact flash perhaps..). It would store thousands of songs and plug into home audio systems or car stereos. It could store entire collections on something the size of a matchbook.
    The only thing supporting CD sales is the "network effect" of the CD format. Once we achieve an "inflection point" of the presence of standardized portable memory modules and devices that use them, I believe the bottom will fall out of the CD sales market. I also believe that the record companies have foreseen this.
    The CD market today survives on the "high viscosity" of data transfer from the internet to audio playback devices. New devices and technologies will lower that viscosity and change the media market forever.
  • by namespan (225296) <namespan AT elitemail DOT org> on Thursday June 13, 2002 @02:03PM (#3695409) Journal
    OK, our friend Leibowitits presents a reasonably convincing argument about file sharing.... file sharing is huge, and we don't see any appreciable change in sales, so something else must be going on. I buy that.

    I have to question his credibility just a little bit. No network effect? The term "path dependence" is fairly well distributed through the economic literature, and I can't recall the name, but I once tried to work through a paper on it from someone at the Santa Fe Institute [santafe.edu]... not exactly a bunch of intellectual lightweights (at the very least as credible as anyone from the Cato Institute). The paper supported the network effect.

    The Salon article almost presents Leibowitz as having debunked the concept rather than challenged it. Lots of handwaving if you ask me.

    But then again, that's been my experience with econ in general. : )

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