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The Economics of P2P File-Sharing
Posted by
CowboyNeal
on Sat Nov 26, 2005 09:14 AM
from the give-and-take dept.
from the give-and-take dept.
brajesh writes "Does P2P file-sharing really affect music sales and in what ways? According to a blog entry at "The Long Tail", a paper from David Blackburn[.pdf], a Harvard PhD student, on the economics of P2P file-sharing concludes that it does indeed depress music sales overall. But the effect is not felt evenly. The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading. Form the paper - "Artists who are unknown, and thus most helped by file sharing, are those artists who sell relatively few albums, whereas artists who are harmed by file sharing and thus gain from its removal, the popular ones, are the artists whose sales are relatively high." But then "File sharing is reducing the probability that any act is able to sell millions of records, and if the success of the mega-star artists is what drives the investment in new acts, it might reduce the incentive to invest in new talent. This is, at its heart, an empirical question which is left to future work." There is also another compilation of studies on economics of P2P."
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Here come the flames! (Score:5, Funny)
The hits at the top of the charts lose sales, but the niche artists further down the popularity curve actually benefit from file-trading.
From each according to his abilities; to each according to his need. Lighten up--it's a joke!
Re:Here come the flames! (Score:5, Funny)
Parent
Re:Here come the flames! (Score:5, Funny)
Parent
Re:Here come the flames! (Score:5, Interesting)
Parent
Re:Here come the flames! (Score:3, Interesting)
Why should 90 percent of the revenue go to ten percent of the artists.
Here's to the musical middle class
It always seemed that copyright lengths should be getting shorter, not longer. After all the pace of commerce has increased.
Re:Here come the flames! (Score:3, Insightful)
The answer is not in the dictum of Marx nor in the Libertarian writings of Rand, nor is it in the advances of science or medicine, because all of those remedies fail to take into account the fundamental problem that underpins all human suffering--the brokenness of the human heart. It is our condition as children of this brokenness that leads us to seek procedural solutions to a spiritual problem.
In other words... (Score:4, Funny)
Re:In other words... (Score:3, Insightful)
Re:In other words... (Score:5, Insightful)
No, it is not. It is what opponents associate with socialism. Especially, when phrased the way you do. If formulated less biased, it can be one form of socialism. (Statecontrolled production with social-security networks)
> I'm not saying the music should be free, I am saying that the recording industry needs to be brought down to erect a new business model where the recording artist are the profit center, not the recording industry. Socialism my ass, this is a Revolution.
Bringing the owning class down and to empower those people actually working in some kind of revolution for the common good is a traditional socialist position. And even one of the more radical one. Calling it business model is nothing more than a fig leaf.
Parent
Re:In other words... (Score:5, Interesting)
The economic model with state-controlled and protected industry has for the most part been abandoned as a general principle, but not entirely. Many countries have some form of public transportation, public utilities and so on that are state-owned, because it is considered easier to socially optimalize it as owners than to regulate them as monopolies. For example, it is usually better for society as a whole to have more public transportation than is economically optimal for the transport company (less pollution, less congestion, less public roads to build and maintain and so on). They have for the most part been exposed to competition, but service goals and such maintain the social goals. Even China has pretty much abandoned socialism as an economic model in favor of a market economy.
Socialism is also a government model, where "the people" are in charge and thus there is no need for any other party. The basic lines of Marx that each worker should be represented in government, is more like a form of direct democracy than the one-party model that became the mark of communism. You also need to separate between the actual and formal government model. As an example, many parts of Europe have kings, queens but are still democracies. Just like the "People's republic of China" isn't much like a democratic republic.
As far as the rethoric against the RIAA goes, it sounds pretty socialist to me. It's all about how the captialists (RIAA) are exploiting the workers (artists), and how they should revolt and form some sort of people's republic (no large capitalists) where the workers (artists) all get their share of the profits. Let us assume that everyone trades by p2p, and music industry as we know it today crumbles. What do you see? In the old days, artists and composers were sponsored by kings and rich men. I think an new generation of "superstars" would appear, corporate shills sponsored by large corporations with massive promotion budgets. It would not matter if they are spread around because they are nothing but concealed corporate propaganda. That is the fallacy of most revolutions, the average man has rarely come to power. More often than not, he has simply paved the way for another master to take the same place.
Parent
A brutal dictatorship put first man in space (Score:5, Insightful)
Uh huh. When the Soviet Union is offered as evidence of the failure of communism the commies
The first man in space was put there by brilliant hardworking scientists and engineers. Too bad circumstances forced them to serve such an abomination of a government. They deserved better.
Parent
Re:A brutal dictatorship put first man in space (Score:4, Insightful)
Don't forget a blatant disregard for safety and human life, that certainly made things easier.
Parent
Re:A brutal dictatorship put first man in space (Score:3, Insightful)
Don't forget a blatant disregard for safety and human life, that certainly made things easier.
And which human cosmonauts or astronauts were conscripts rather than volunteers? How many of the scientists or engineers would have volunteered to go themselves? Exploration is risky, space exploration extremely high risk, yet there is no shortage of volunteers. The restrictions imposed by the state that made Soviet spac
Re:A brutal dictatorship put first man in space (Score:5, Informative)
Parent
Socialism allows profits (Score:3, Interesting)
It's anti-communist but not anti-socialist. Socialism allows profits, it merely taxes the profits into insignificance to redistribute wealth from producers to non-producers. It merely looks like communism since the the would be producers say why bother and don't even try.
Note to flamers: anything taken to an extreme is bad, pure capitalism or pure sociali
Investment in new acts? (Score:5, Insightful)
So what this is saying is, P2P helps smaller independent artists and is detrimental to large "manufactured" pop acts. Which is pretty much common sense, and is why the corporate music industry is so against it.
The argument that "lack of investment" will produce a shortage of talent is clearly ridiculous. How many of the great, truly talented acts we all know and love were the product of "investment" by the music industry? And how many struggled in poverty for years because they loved making music, before finally being signed up by a label and exploited for all they were worth...?
Re:Investment in new acts? (Score:4, Insightful)
It's called an investment. If you don't like the way record labels are investing their money then why don't you start your own record label and show us all how it's done? Hell, why don't you answer your own question instead of simply leaving it as an assumed suggestion that your second option is the only possible answer?
The paper's argument is correct in its analysis. If P2P helps smaller artists by giving away their work then it's goingto be extremely difficult to jump from there to asking people to pay for music they traditionally got for free. The internet has proven that pay services don't work if the service was free initially. Even the New York Times' free subscription sends many slashbots into fits of rage.
Parent
Re:Investment in new acts? (Score:3, Interesting)
Without the labels as middlemen who shift 90% of the overall revenue into overhead costs, artists would need little if any outside "investment". Now that publishing music no longer technically requires centralized control, the industry should move to a system where artists do direct online sales th
Re:Investment in new acts? (Score:3, Insightful)
Which is strange because they will happily pay for most other forms of fiction...
Seriously, the "NYT" has far more serious problems at the moment than the way they deliver their product, such as the product itself. If there was ever a time to open up to keep as many readers as they can, it is now.
Missing the point (Score:5, Interesting)
Talking about not hearing the other sides argument. The point is that small artists don't *need* a record label any more. So we don't care how they invest their money - except that suing grandmothers doesn't seem like the best use.
We also have the classic "free" vs. "free" equivocation. I don't want to get music for free. I want to support the artist. But I much prefer to buy albums directly from the artists. And I hate stupid restrictions. "Liberian Acapella" is one of my favorites. They sing at churches and sell their self produced albums. I have many albums from Magnatune [magnatune.com] (a "record label" that does distribution only). Another favorite is David Bellugi from Italy.
That said, I am a copyright Nazi. I confiscate and destroy illegally copied RIAA music whenever I find it, give my teenage daughters a lecture on "playing by their rules if your going to listen to their music", and threaten to take the $3000 out of their bank account if they get caught distributing copies (I realize the lawsuits are for online distribution, but the principal is the same). Of course, the fact that I can't stand most of the music has *nothing* to do with this...
What I really need is some official RIAA materials on copyright violation, so that we can be clear that the copyright Nazi thing is part and parcel of RIAA music, and not something I am making up.
Parent
Re:Investment in new acts? (Score:3, Insightful)
The internet has proven that pay services don't work if the service was free initially.
Ah, that explains why the iTunes Music Store has failed so miserably. [vnunet.com]
Re:Investment in new acts? (Score:5, Insightful)
Parent
the not so nice way to state the obvious (Score:5, Insightful)
This will be good for everyone but the current three monopoly publishers. Popular taste will do a better job of finding talent than payolla in the form of coke and whores. A more distributed music distribution system will be more competitive for artists and the money that now flows into a few hands will flow into many. The job will get done and people will still pay the piper.
Parent
Hopes (Score:5, Insightful)
Maybe the records industry could somehow start promoting clusters of artists and whole genres instead of one mega artist? Hmm..
Promote? (Score:2)
the industry has their priorities wrong (Score:5, Insightful)
I think the industry's biggest problem is a lack of diversity. Right now, everything on mainstream radio sounds exactly the same. Even ten years ago, radio was still crap, but at least you could differentiate the music better. Personally, I rarely even listen to the radio at all anymore, and when I do, it's a classic rock station.
Record companies want to go with what's "safe" these days. No one wants to take a risk on signing and promoting an artist that's "different." However, the big rewards come with big risk. I really wish these huge, billionaire conglomerates like WEA and SonyBMG would gamble a little bit more. They're actually losing a lot of good acts who are moving to smaller labels like Koch and Sanctuary. Audium (a Koch label) has become one of the best labels in country music by signing artists who got cut by the majors, like Dwight Yoakam, Merle Haggard, and Dale Watson. Sanctuary is now home to the likes of Iron Maiden and Morrissey, two of England's best sellers ever, who still are putting out good albums. It just kills me how labels will not settle for "just" platinum anymore. You have to go multi-platinum to be a success now. I remember how Capitol was getting disappointed with Garth Brooks when his albums started selling "only" two million copies. This is the same Garth Brooks who single-handedly saved Capitol/EMI from bankruptcy with No Fences and Ropin' the Wind, each of which sold something like over 10 million two consecutive years. He had the top 3 albums in the U.S. for over a year. But if he's only two-times platinum and not ten-times platinum, then he's no good to Capitol! This is the kind of moronic thinking that drives the recording industry. It is pure, unadulterated greed. So much greed that it completely clouds any sensibility they might have.
Parent
Re:the industry has their priorities wrong (Score:3, Funny)
Welcome to the USA. And it's only getting better.
Re:the industry has their priorities wrong (Score:3, Insightful)
Balancing the scales (Score:4, Insightful)
It's here and it isn't going away (Score:5, Insightful)
"Nothing, not all the armies of the world, can stop an idea whose time has come." - Victor Hugo
P2P is here. It's not going away and you can't even legislate it out of existance. For right or wrong, there is nothing the various copyright industries can do except adapt to the change. Everything else is just hot air.
Simon
Re:It's here and it isn't going away (Score:5, Funny)
Parent
Re:Taking it like a victim. (Score:5, Insightful)
Free market ensures that if some fat exec having a hissy fit says 'I'm not playing with you anymore', someone else will be happy to provide the same service (probably at lower cost).
If P2P kills huge record monopolies, and instead we have numerous small companies who make money from selling CDs and un-DRMed downloads *regardless* of P2P, that's free market pwning artificial monopolies right there.
It might very well be that current huge and bloated 'content creation industry' will be 'damaged' by P2P, but it's luridicious to claim that everyone would stop making music, movies and TV just because of P2P's 'effect' on making money with the content.
I'm still convinced that if the 'content business' would just bite the bullet, restructure to lower expectations (their current legal offerings are grossly overpriced) and instead put down unDRMed DL service with all the content in the world, at uber download speeds, they'd make gigabucks *regardless* of the fact that people would copy the stuff. Why bother with P2P sites and untrustworthy files if you can get a 'legal' proper version, perfect quality, no strings, use as you like within the framework of current law, at a reasonable price?
I know if my choices were 'DL from uberfast official site, 10Mbit/sec, perfect quality, 3-5$ for the full contents of a DVD, ready to be burned to disc if I so choose' and 'grab dvdrip with no extras off P2P at crappy speed and no guarantee of quality', I'd pay a few bucks for no hassle.
Fat execs are unable to grasp the effect of internet and plentiful bandwidth. Their 'product' is PURE DATA, so *gasp*, internet will make distribution of said data much more efficient than their stupid 'manufacture shiny discs' business model.
Current record exces sound like scribes whining when someone invented the printing press, and started mass-producing books that earlier had to be scribed by hand (and were extremely expensive and rare). Today's internet makes reproducing of entertainment so much more efficient and cheaper, so those CD presses belong to the museum, and as costs go down, so must the prices. CD presses had so huge upfront investment required that the companies could create an efficient monopoly. Anyone can trump up a website, and while today the bandwidth is still not free, I expect the price of it to go down so rapidly that in a few years bandwidth costs of sending 10 GB movie file over the internet is fractions of a cent.
In which case you can no longer charge 20$ for a copy of a movie.
Movie theaters are in a deep doodoo as well. They will have to improve presentation quality and service - to make it more like a 'special thing' that movies used to be back at the start of the last century. Improving home theaters are pwning crap theaters, and their offering of 10$ movie showing + overpriced soda is no longer attractive to the customer. ADAPT OR DIE, just like every other business has to.
Parent
Bring the niche (Score:5, Insightful)
For the past 50-years the only way to be a "successful" musician was to write songs 2:50 long and sell 500,000 records. Ever wonder why everything on the radio sounds the same? If an artist can't break even, they're pretty much worthless in the eye of the label.
Legitimate online digital distribution of music could possibly replace the notion of rock stars with micro-stars in their respected genres. There just needs to be some sort of way to market these niche artists online so the cream rises to the top. A group who could make 80% off of their recordings is not so bad off considering the average signed artist only sees 5 - 15% per record.
Re:Bring the niche (Score:4, Insightful)
You mean something like... a record label?
Naah, that won't work. After reading this thread I've learned that running a record label involves a lot of being sucking blood and fucking people who don't deserve it. Oh, and being fat. Apparently musicians run on pure sucrose and signing them just turns you into some sort of serial vampire rapist. It's like Anne Rice on Viagra and corn syrup.
Parent
Who cares if Brittney loses potential. (Score:4, Interesting)
Remember, *nothing* was stolen during the p2p transaction, so she didnt actually *lose* anything, it is only a reduction in the vague concept of 'potential' ( i.e. unprovable ) sales.
but here it is, the article (Score:4, Informative)
Parent
Re:but here it is, the article (Score:4, Insightful)
No. There is something you must realize about the social sciences: they are not *hard* science. Very little in the social sciences can ever be "proven" or "disproven", because there is rarely a control in any study. You can't force people to naturally behave some way and use that as a control -- it is logically-impossible (and certainly in contradiction to the Heisenberg Uncertainty Principle).
Hypothesis-testing occurs on large datasets, but those datasets are generated by behavior which can never be simultaneously fully-controlled and fully-natural. Hence, the hypothesis is not fully-testable, unless it is so general as to be meaningless.
Economics is a powerful study, and I use its mindset all the time, but I would never call it a "science". It's a pseudo-science; a branch of applied mathematics and statistics that bases itself on uncontrollable natural processes. As such, "proof" never occurs, but strong suggestions (e.g. correlations, tendencies, etc.) do.
Parent
Re:People almost ALWAYS forget this... (Score:3, Insightful)
When every anyone argues that nothing is stolen, meaning that nothing is physically taken, they always seem to overlook one key factor...the person involved in the acquisition unquestionably now has something of value in their possession. I'd like to see someone justify the notion that by virtue of the fact that Persion A has
Good (Score:5, Insightful)
Re:Good (Score:5, Insightful)
As a non-musician, I really don't give a fuck about making a better society. Lets abolish all copyrights and motivate musicians into making music by raking them over hot coals if they don't. If they complain, let's remind them that it was their idea own idea to shove the utopian ideal of a level playing field up someones ass.
Or you can give a fuck about making a better society and I can give a fuck about it, in which case we both might get a better deal, or at least conduct a more constructive conversation. This is what the various copyright industries never seem to get: if you don't give a fuck when it's not your ass on the line, don't except anyone else to give a fuck when it is.
Parent
Hmmm (Score:5, Insightful)
How about file sharing is allowing people to sample the artificial crap the music industry churns out these days and they decide not to waste their money on the product?
We need a better model. (Score:5, Interesting)
Any alternative would be better than the current system.
This didn't surprise me at all. (Score:3, Insightful)
I thought everyone already knew that.
Not all Labels are the Same Either (Score:3, Insightful)
E.g. Sony has a lot of big-name hits. So P2P == evil.
Koch Records has a lot of smaller-selling indies. P2P != evil.
However, I have a deep suspicion that RIAA is run by the likes of SONY, and not the ones like Koch.
Also, musicians are keenly aware of the differences: to get on Koch, you pretty much have to have your album finished and mixed. They produce and distribute it, and give you a big percentage. Other ones front tons of money for production and advertising, and give back a smaller percentage -- and they are the ones that stand to lose the most from P2P.
The most interesting thing in all of music these days are mixtapes and mashups. They are both illegal to sell -- no copyrights are cleared, so you'll hear samples, beats and so on from entirely different groups. You can now buy them over the web, or download them from P2P.
filesharing and economics (Score:5, Insightful)
1. True, filesharing might reduce the incentive to invest in new acts. But it definately reduces the need. If you don't need millions of dollars to launch your album, just a laptop and a podcasting site, then who needs investment? I think what will happen is that the promotional aspects of the music biz will survive in a substantially reduced form (after all, people still need to hear about you!) but the whole production and distribution megalith will go the way of the 8-track.
2. I agree, though, that P2P itself means next to nothing to a small unknown artist. Nobody is going to type your name into Limewire if they have never heard of you, obviously. Internet radio and podcasting are muhc more meaningful and useful tools for such artists. You get a podcaster to listen to your music, they play it for people, those peopel go to your website, etc.
3. It's said a lot, but it bears repeating : even Britney Spears makes only pennies per CD. The big name artists make all their money on touring. So there's no reason to worry about the ten cents you might be 'stealing' from Britney if you download a song. If you love her and want to support her, go to her concerts, buy her clothes, her perfumes, whatever. She gets a lot more money out of that.
Essentially, the music industry has reacheed the point where it is almost completely parisitical in nature. And like any parasite, it wants to control its host, and fears the light of day. Right now, they exploit the fact that the people and most importantly the legislators don't really grasp the issue at all. When you say to someone "Should they be allowed to steal our music?" and they know nothing of what is truly going on, it's hard to blame them for saying "Gee, I guess not!"
But we don't have to worry about that. This revolution requires no propaganda on our side. With every MP3 player, every iPod, every DVD player sold, our view sells itself. Eventually the RIAA and its bloodsucking ilk will be reduced to the level of rambling lunatic old men defending their collections of old cans and newspapers with bloodthirsty vehemence, oblivious to the fact that nobody wants them any more.
Observation use (Score:3, Insightful)
Although, he prefers to buy used because he thinks that the music industry has bigger issues than online file trading - such as controlled product marketing (marketing what it thinks is good music), the recent recession, an increase of used music sales, and an overall poor quality of the bands the music industry choose to promote.
Ultimately these guys are the middle men. THey jack up the price for the interest of the middle men, not the artist.
Perfect examples are the cost of the CD compared to the LP - and the forth coming increase of iTunes song prices.
He showed his work (Score:4, Funny)
Parent
Re:so what?...we knew this... (Score:4, Insightful)
I've not RTFA, but assuming he actually did some proper research, this might just be a useful piece of work; it would certainly make a change in this area.
Parent
Music has a network effect, sharing music not new (Score:3)
If I download an album and like it, I will buy it.
Music has a network effect. The more people who listen to a given artist the greater the demand for that artist.
It seems to me rather, that Blackburn suggests that the only reason the chart toppers top the charts is because consumers are focused on very few artists, as opposed to having their attention drawn to more artists via P2P.
There is too much music to listen to
Re:Just from a cursory review of the article. (Score:3, Insightful)
Lack of price response.
A lot of very good movies are on sale this weekend at $3. A lot of releases from the last year are either $5 or $8. Why the hell would I ever download a movie?
OTH, Music in the same add is on "sale" for $16.99. For that $16.99 I would get about 9 minutes of material I might listen to more than once. I know the physical cost of production was under 50 cents. I would have multiple reasons to p2p under that scenario