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A Working Economy Without DRM? 686

Posted by Cliff
from the what-would-alfred-marshall-do dept.
Tilted Equilibrium asks: "In a few weeks, our school will be hosting a panel on DRM with several respected individuals. In advance of the panel, I have been doing some research on the topic and thinking about it in my free time. In economics, we learn that the price of a product is determined essentially by supply and demand. Without a DRM in place, we are capable of making as many copies of a piece of content as we want and seeding it onto the net. How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"
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A Working Economy Without DRM?

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  • Biased question (Score:5, Insightful)

    by swillden (191260) * <shawn-ds@willden.org> on Tuesday August 29, 2006 @11:47PM (#16004799) Homepage Journal
    How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

    Most likely, you don't. But in large part you're creating a strawman, by specifying exactly the situation in which it is most difficult to make a profit.

    It's entirely possible that the Internet will mean the end of $200M productions, because unless you can get your money back in the theater (I'm focusing on movies because they're the only things that fit your specifications), you can't make it back.

    Maybe. I'm not absolutely convinced of that. I think DVD releases with lots of extras, including some that aren't digital, are a good model. Obviously, movie theaters have a workable model. There may be other approaches that can work. Any approach that offers the consumer real value for their money will work. People *want* to spend money on entertainment.

    And, honestly, outside of movies, what other media meets your requirements? Not music. Music is cheap to make. Sure, it's likely that in a fully DRM-free Internet age that musicians won't be mega-millionaires, but I consider that a good thing. I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris.

    I agree with Eric Flint's essay, found in the Free Library on baen.com: Until there's some way to make music/movies/books that doesn't require musicians/actors/directors/authors, and until people stop wanting those materials, there *will* be ways to make money off of them. It's just a matter of finding them. And, perhaps, accepting that people don't really need millions for doing what they love.

    • Re: (Score:3, Insightful)

      by BadAnalogyGuy (945258)
      I disagree with the whole idea that it's unnecessary to protect the works of content creators. DRM is a necessary evil and assuming a world without it is simply pissing in the wind. What we need to work towards is a DRM model that preserves as much of our rights as possible while still effectively preventing the widespread copying of content.

      DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will
      • DRM is a necessary evil and assuming a world without it is simply pissing in the wind. What we need to work towards is a DRM model that preserves as much of our rights as possible while still effectively preventing the widespread copying of content.

        But until you take control of my computer away from me, we won't be able to reach something that prevents widespread copying, because at the end of the day, I am still the lord and master of all of the bits in my little reality.

        Then we get into Trusted Computin

        • Re:Biased question (Score:5, Insightful)

          by BadAnalogyGuy (945258) <BadAnalogyGuy@gmail.com> on Wednesday August 30, 2006 @12:53AM (#16005064)
          We're not really talking about Trusted Computing here, though it may be interesting to see how TC impacts the availability of DRM-stripping software on mainstream operating systems.

          Once the upcoming crop of DRM-enabled operating systems (Mac and Windows) only support media playback through OS API-level function calls, your "control of your computer" will have reached its conclusion. As system APIs become more plentiful, more useful, and easier to use, control is slowly creeping away from the now-productive developer and towards the central programming model/operating system.

          You have every reason to be worried about losing control.

          "I'll run Linux!"

          With DRM implemented as an encrypted datastream and licensed to hardware/software makers, who is going to be able to bring DRM playback capabilities to Linux without also being tied to strict licensing restrictions that prohibit DRM-stripping as a feature or side-effect? These DRM systems are of course already running on Linux, just look at your favorite DVR which already implements such a system. Does this translate to your PC being able disable DRM content? Unfortunately, no. Not unless a DRM-licensee decides to break their license and provide the tools to do so. It's not out of the realm of possibility that a rogue employee may do such a thing, but the financial hardship he would face would typically be a sufficient deterrent.
      • Re:Biased question (Score:5, Insightful)

        by aussie_a (778472) on Wednesday August 30, 2006 @12:44AM (#16005041) Journal
        You assume DRM is necessary, but in actuality, it isn't. These people [fictionwise.com] somehow make a profit without DRM (otherwise they wouldn't bother releasing the e-books). As does these people [penny-arcade.com] as well as these people. [girlgeniusonline.com]

        Perhaps multi-million dollar movies aren't capable without DRM or Britney Spears being profitable without DRM, but the truth is that the big media cartels aren't the only people in town no matter how much they want you to think they are. And DRM isn't necessary for artists to not only make a profit, but to make a living. Not all artists will be able to make a profit or a living, but then again not all artists deserve a profit or a living. DRM isn't a necessary evil, it's just an evil.
        • Re:Biased question (Score:5, Insightful)

          by gfxguy (98788) on Wednesday August 30, 2006 @01:12AM (#16005132)
          I tend to agree and more.

          I honestly believe people should be more honest with themselves and their wallets. If something is worth buying, it's worth buying. If it's not worth buying, don't buy it. Just because you don't like the arbitrary amount someone has set for the product doesn't mean you should be able to just take it. I mean, come on! We're not exactly talking about stealing bread to feed starving children! We're talking about movies!

          However, I don't agree with DRM at all, either, because if you do shell out the cash, you should be rewarded with a lot of freedoms with that content. You should be allowed to make backups, you should be allowed to listen/watch on different devices and so forth.

          Now the reality - the more these idiots apply DRM, the more worthwhile it is to STEAL the content because the stolen content gives you the freedoms you should have had to begin with. I make the analogy with software copy protection, specificly from the 80s and early 90s. The copy protection became so bad, I'd buy a game and the first thing I'd do is look up on the internet (through ftp sites, at the time) how to break it. Damned code wheels and all that crap. Forget it! It's the guys that stole the game that didn't have to put up with that crap, and it's the people illegally copying the movies that can do whatever they want with it.

          I'll make these analogies as well: when cassette tapes hit the markets as a cheap, convenient means to copy recordings, the RIAA complained it would put them out of business. Instead, sale of prerecorded cassettes opened up a whole new revenue stream for them. When consumer grade video recording hit the market, the MPAA cried it would put them out of business. Instead, the video sales and rental market opened up a whole new revenue stream for them; movies that wouldn't ever even have seen the light of day began returning at least some money, and movies that made hundreds of millions were making another hundred million in rentals when, if the MPAA had it's way, they'd be making nothing.

          Then the RIAA complained about CDs. CDs sound so good, that cassette recordings made from them sound better than vinyl. Yeah. CD sales skyrocketed and the RIAA increased it's revenue again. Then there was DVDs and how people would record this high quality content on VHS, and they were wrong there, too - the sale of DVD quickly overtook VHS sales; the discs cost less to produce, but people payed more for them.

          The bottom line is that if you give the people what they want, they will pay for it. I can download mp3s illegally, or I can pay for them. I choose to pay for them when I think it's worth it. Otherwise I simply don't download them at all.

          I realize few people out there are as honest (my wife calls it brain dead honest) as I am; even people who are generally honest might not mind downloading a few things here and there. So yes, copyright violations will continue to happen, but there has to be an "acceptable" rate, which you would calculate by figuring out how much the cost of enforcement is versus how much is lost.

          Frankly, the worst part about DRM is that we pay for it. We pay extra for licensing fees so that our DVD player will be crippled, and we pay extra for content itself so that it can be crippled. WE are the ones who pay for lost functionality and freedoms, and the more they squeeze us, the more ONLY HONEST consumers are hurt.

          If that's not ass-backwards, I don't know what is.

          So my question to these idiots is: honest consumers are paying extra for products with reduced functionality, while people with illegal copies of the content seem to have the most freedoms. How does that make any sense at all?
          • Re:Biased question (Score:5, Insightful)

            by NeutronCowboy (896098) on Wednesday August 30, 2006 @02:35AM (#16005387)
            Not only are we paying in terms of money, we are paying in terms of culture that is being locked up and lost forever because there is no legal way of archiving it. That, in my opinion, is the biggest cost of all and the prime reason DRM is Evil.
            • None of those people in grandparent (penny arcade, etc) would be making ANY money without the banking institutions - that is, unles they could ifnd a way to convince people to shove their money in envelopes, stamp it and mail it. Oh, but then they'd still be at the mercy of the post office, so if they were offering something the ever increasingly fundamentalist world governments dislike they could be cut off in an instant and hauled in front of some kangaroo court on "mail fraud" charges - or something much
              • Re: (Score:3, Insightful)

                by NeutronCowboy (896098)
                Let's keep the discussion on-topic and the insults out of it, shall we? My post wasn't about DRM, it wasn't about who makes money or how (which what the first paragraph is about, I think), it was about current copyright law. You provided a fine example of finding a specific album that you were interested in. Good for you. But that's not the scenario that I was referring to.

                In your example, the album is fairly recent (1985). The company who produced it is still around, and the original rights holder is still
        • Re: (Score:3, Informative)

          by Alioth (221270)
          Also emusic http://www.emusic.com/ [emusic.com] seem to make plenty of money, and are the no.2 online music store only after iTMS. They sell music in unencrypted MP3 files. They may not have Britney Spears, but they have a lot of labels and artists with chart music - people like the White Stripes, Paul Weller etc.
      • Re:Biased question (Score:4, Insightful)

        by SanityInAnarchy (655584) <ninja@slaphack.com> on Wednesday August 30, 2006 @02:29AM (#16005370) Journal

        You are repeating the same misconceptions in the same ways. Look at your language:

        I disagree with the whole idea that it's unnecessary to protect the works of content creators.

        No one is arguing "that it's unnecessary to protect the works of content creators." We're arguing that DRM, specifically, in any form, is not worth the harm it causes, and that content creators can make a profit without it. After all, they did before DRM existed.

        DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will support DRM standards. If the data stream is protected, the media appliance will acknowledge and honor the DRM lock and you will be unable to do more with the content than is allowed by the DRM lock. This is reality and it is already here.

        If you are astroturf, you need to listen here: If that is really and truly the reality, I will wean myself off modern media. I simply refuse to spend any money on anything that has unreasonable "protection" on it. If there are enough of us, you will lose money on DRM.

        That is why I refuse to buy anything Blu-Ray until I am convinced that it's permanently cracked.

        If not, I simply don't care enough. There is enough entertainment in the world that comes without strings attached.

        What we want to do is make sure that things like machine-local data can be transmitted from one machine to another (deleting the original data as it moves to the next device) are preserved while things like forward-lock (which prevents copying at all) are eliminated.

        Current DRM models have two problems: In order to enforce any kind of protection, they require specific software/hardware stacks, which reduces user choice -- for instance, it becomes essentially impossible to have a proper open-source media center, or even to run a closed media center on an open OS.

        The second problem is, much of it is online. For instance, the music subscription services -- pay $x/mo and get as much music as you can download, but if you stop paying, they stop playing. Another example is Steam: You only pay once, but it insists on connecting to the Internet periodically to get updates and to be able to shut you down if they find two copies from the same purchase online at once. The problem with this is, I'm essentially trusting the content provider not to unfairly revoke my right to use my content -- Valve could one day decide not to let me play at all, or their servers could go down, and I'd be stuck without a game.

        This puts things entirely too much out of control of the consumer, who, in a very real sense, no longer owns their stuff. Think of it this way -- the rights to a book are owned by the author, and only licensed to a publisher for a finite amount of time. If you buy a book, you own that copy, and may do whatever you want with it, other than distribute copies of significant portions of the book. Yet I never hear authors screaming about how they're being completely ripped off by those damned libraries with their damned copy machines, not to mention kids with OCR who just throw the stuff up on the Internet.

        Now, look at the Music industry. No real, provable signs that Internet piracy does a thing to their sales, yet publishers own artists' song rights forever, and now they want consumers to give up any concept of owning a song, the way we have for software. Oh no, now you own a license to play this song, which they can invalidate any damn time they please.

        Working against the system when you are completely outside the system is futile.

        Wrong. Almost all attempts at DRM are futile. No DRM will make it completely impossible to pirate something. If it does, it will be so oppressive that consumers won't take it anymore.

        Here is the system that really works for everyone: For media, make it more con

        • Re: (Score:3, Insightful)

          No one is arguing "that [DRM is] unnecessary to protect the works of content creators."

          I am. We still have copyright law, after all. Ultimately, that's why the content creators are still making money, even though every DRM system in widespread use has been broken (or fixed, depending on your point of view) to date.

          I have yet to see an argument that DRM is necessary that is grounded firmly on evidence, rather than speculation. From what I've seen, the evidence suggests that DRM is unnecessary.

      • by pen (7191) * on Wednesday August 30, 2006 @03:06AM (#16005460)
        Let's say I just heard a song I really liked. I liked it so much that I want a copy of it to listen to again. Maybe even the whole album. Ok, what are my options?

        I can buy a CD from a store or order it from Amazon. This means I have to either put on some pants or wait for days. And my computer doesn't have a CD-ROM drive. And this is really inconvenient.

        I can sign on to iTunes or similar and buy the song. Except it's DRMed so I can't get an MP3. And that album was released by a label that doesn't participate in iTunes.

        I can buy the MP3s from a grey market place online such as allofmp3.com. This is pretty much illegal, I have to pay for it, and the artist still doesn't get jack. Oh, and their selection is better than most stores but still sucks.

        Finally, I can log on to my P2P network of choice and more than likely download whatever I want, in decent quality, pretty much instantly.

        Now, should I support a corrupt, backwards, outdated industry that is working overtime to make my life a pain in the ass by lobbying for all kinds of crazy laws and filing lawsuits left and right, even if this is less convenient to me?
        • Re: (Score:3, Insightful)

          by BadAnalogyGuy (945258)
          Please accept my sincerest apologies for the inconvenience of not breaking the law. Is it inconvenient for you to wear pants? I apologize profusely and wave my magic wand (no, mine not yours, you sicko) and you can now walk around pantsless all you like outside.

          Do you find it inconvenient that you don't have a CD-ROM drive? I don't know what kind of cheap-ass system you have there, but by all means go ahead amble into your local Best Buy with your dick swinging free and grab whichever stereo system grabs yo
      • You are speaking from the perspective of somebody that would seem to have a vested interest in the succcess of DRM.

        For millenia "content creators", as you call artists and thinkers, in a very RIAA-MPAA-ish kind of way, had zilch protection against the unaauthorized copy and dissemination of their output, and yet many of them have always found ways to make a living, very handsome at times.

        Galileo's works for example were copied all around Europe and translated, more often than not without his consent. He was
      • Re: (Score:3, Insightful)

        by visualight (468005)


        DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will support DRM standards

        Why do people keep saying that? Is that supposed to be some kind of self fulfulling prophecy? Like, if you say it enough it'll be true? The truth of your statement is entirely dependent on what people accept. I, and everyone I know, will never accept a computer or purchase media that is restricted/crippled/trusted.

    • Re:Biased question (Score:4, Insightful)

      by westlake (615356) on Wednesday August 30, 2006 @12:18AM (#16004937)
      Music is cheap to make.

      Talk to a classical musician: ask her the price of a fine solo instrument, a piano, a violin. The basic tools of her profession.

      • Not to mention decades of training.
      • Re:Biased question (Score:4, Interesting)

        by the_womble (580291) on Wednesday August 30, 2006 @12:50AM (#16005060) Homepage Journal
        It is still cheap to make compared with films.

        That is partly because Holywood's business model has pushed up the cost of making films, but it is also because films are expensive to make.

        What does make a lot of classical music quite instrinsically expensive to make (comapred to most other music) is the need for a full orchestra, so a lot of people's time is needed. The value of a good muscian's time is worth more than any insturment, even a Stradivarius (if you amortise the cost of the Stradivarius over all the performances it can be used for).

        A more important point is that the cost is still low enough for business models other than pay per copy to work. I have some legit free downloads of classical music, and there is no reason there cannot be more., funded the same way.

        With type of music that do not need large numbers of people alternative revenue models become even easier alternatives.
      • Clearly, that is why the classical music cd/dvds you can find in a store are the cheapest in the music section.
      • But you forget, the Major venue that a classical musician in these days will make his or living is in Performances. A mentionable chunk of those same musicians will also supplement thier income with Musical tutoring. a Cellist(for example) primarily makes his living working for an opera, an orchestra, or some other like institution. If they don't, they arent considered professionals. To a Classical Musician music is not something they own a copyright to. they perform the works of others, they provide music
      • Re: (Score:3, Interesting)

        by masklinn (823351)

        Uh, have you ever bought a record of classical music? As far as length/cost ratio goes, it's probably the best bang for your buck you can get unless you burn static noise on CDs and listen to that all day long.

        Because most classical music performances are actually concerts, and I doubt classical music requires a lot of post-prod work (sound engineers and such, as well as their hardware), lowering the cost of records compared to highly edited/remixed "popular" music.

    • Re:Biased question (Score:4, Insightful)

      by intrico (100334) on Wednesday August 30, 2006 @12:22AM (#16004955) Homepage
      "I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris."

      This is an excellent point about the music industry. The traditional business model is very inequitable to the average artist. The major record labels say that people are "hurting" these artists by downloading their music. But one can make a very strong, valid argument that by forcefully marketing a select few musicians to the massess, and creating huge barriers to entry to these marketing channels for thousands of other artists who may can be just as good or better, that they have have caused the general population to miss out on all of these other artists out there. This hurts all of these other artists by effectively denying them mindshare.
       
      Getting marketed by a major record label is simple a matter of being in the right place at the right time, and really is not correlated at all to the quality of the artist's work. The same of course, goes for the movie industry where quality does not necessarily equal production costs and or marketing clout. And again, the traditional setup of the movie industry ends up denying access to marketing channels for many smaller independent film producers, making it harder to get the word about their works out to the masses. In short, the RIAA-associated and MPAA-associated marketing powerhouses have fostered an anti-competitive environment at the artist level. DRM-Free media will not ruin the "working economy", but it will create a level playing field for the actual artists who produce content.
      • Re: (Score:3, Interesting)

        by BadAnalogyGuy (945258)
        Your last sentence is a complete non-sequitor.

        DRM-free media and the playing field for music artists are wholly unrelated. Artists that are not picked up by record companies (whether large or small) are not in any way prevented from producing their own music and publishing/selling it in a non-DRM format. There are no players that refuse to play non-DRM content. Non-DRM content is simply read as unprotected content and the full functionality of the device copying mechanism is available for that data.

        In fact,
        • by aussie_a (778472)
          There are no players that refuse to play non-DRM content.

          Yet. Wait a while, and it will be illegal to produce players that can play non-DRM content.
        • Re: (Score:3, Insightful)

          by vmcto (833771) *
          There are no players that refuse to play non-DRM content.

          Yes, but realistically how long will that last?

          Do you think the big manufacturers are going to continue to produce devices that play non-DRM content? What's in it for them?
        • Re: (Score:3, Insightful)

          by intrico (100334)
          You've read into that sentence too way deeply. I was referencing the question posed in the title of the original Slashdot posting, "A Working Economy Without DRM? [slashdot.org]". DRM was created by these major companies with the intent of controlling distribution of their media - part of an overall agenda to control distribution *as well as* the traditional marketing channels, two things which these very few huge media companies have obviously enjoyed a nice grip on for decades. Without these control-tactics exhibited
    • I've discussed this in other threads before, but I think the way that you make money without DRM is by not trying to make entertainment on speculation.

      Basically the entertainment companies go out right now, and make a movie/song/whatever, and spend a whole lot of money doing it, in hopes that they can then go and sell the end product over and over and over to make up the investment. There is really not any way to do this, without DRM. As I think DRM is fundamentally flawed, so is this business model. That doesn't mean it might not stick around for a few centuries, but it's eventually doomed.

      The problem is that DRM tries to artifically limit the supply of something that requires very little labor in order to reproduce. The n-th copy of a digitally delivered Brittany Spears album costs virtually nothing; it's only the first copy that really costs a lot to make. (Okay, so this sets aside that the net value of any given Brittany Spears album may in fact be negative.)

      In the past, since the recording companies basically controlled the means of producing more copies (vinyl/CD stamping factories), they could artificially inflate the cost of the marginal (that is, n-th) copy, in order to pay for a bit of that first one. The only reason this works is because they have a monopoly on the means of producing more copies. That's it.

      What digital delivery, and computers/the Internet in general, do is make widely available the means of production. (Apologies if I'm sounding a little Marxist here, but it's tough to avoid the terminology.) When anyone can make that 'one last' copy, you can't fix the price of it anymore. You just can't. DRM is an attempt to put a finger in the dike, to make it artificially hard again to make an additional copy, but they have a whole lot of information theory working against them. There is no practical way, that I can envision, to allow people access to digital media which does not inherently give them an opportunity to copy it, particularly since copying is inherent to the digital distribution process. And this is only going to get more difficult in the future.

      So given this, what to do? The answer is to make people pay in advance. There will always be a demand for new content; even with the entire past produce of human civilization on tap, it is the nature of people to want things that are fresh, that have been created specifically for them (whether individually or as a group). Rather than trying to make money up off of the marginal copies, which have little to no inherent value, charge for the first copy. Charge interested parties, in advance, for creation of the work. If people aren't interested in funding its creation, it doesn't get made. If fans want an artist to continue to produce, then they can pay to commission more albums. Rather than paying an inflated cost for each copy, which has some portion of the original labor's cost built into it, they will pay for the cost of that labor up front. It is the labor which is valuable, not the copies.

      This of course would force a re-evaluation of both how we think of the relationship between artists and their public, and also of how much art we as a society produce (right now I think it's clear that we produce a surplus; we produce more new art than the public really demands, and one must understand that in a pay-in-advance system, this would no longer be supportable), but I don't think there's anything fundamentally wrong with it. As people demand new content, they will pay for it to be created. Either they will pay what it costs to create it, or it will not be made.

      This is the way the market should work: as people desire novelty, the business models would be formed around the demand. Instead of a top-down approach, it's bottom-up; allowing consumer choice and demand to drive how people will make money. There are lots of ways that they could do it, from straight work-on-commission to more subtle crediting schemes, or donationware/threatware (e.g. "I'll write the next installment of the
      • by Xiroth (917768)
        Yep, this is pretty much the direction I see most creative medias taking. For an example, take a look at webcomics. Lots and lots of comics, all of them released for free - most of the creators do it for the fun of it. The better webcomic makers make a reasonable amount of money off it. The best make enough to live on. If you applied that model to music, then you'd get a similar result, but better: Artists would be making money from donations and swag, and the rest from touring. It seems like a good model w
      • by shmlco (594907) on Wednesday August 30, 2006 @02:28AM (#16005367) Homepage
        The basic problem with your premise is that now an author (let's say) need only convince a small, select number of people that they should finance his work for a year. Further, once that work is completed there are many mechanisms the market can be use to judge that work (reviews, word-of-mouth, ratings, picking it up in a store and flipping through it) and find out if it has value to them, and is worth the twenty bucks.

        Now, let's compare that with an assurance contract, where I have to convince a LOT of people that I can produce something of value, doesn't generate an advance so I can actually get on with creating it, and really provides no guarantee to the end user that it will be a quality product, or one suitable to you (you were expecting killer hard-code SciFi, not a time-travel romance novel). Once I produce it according to the contract, you have to pay for it, with no recourse.

        I don't see paying in advance as the answer either, as it limits the available selection to "known" authors who've already made a name for themselves. Stephen King might be able to get a 100,000 people to pay in advance for the next chapter of his new book. A new and unknown author certainly can not.

        Further, I tend to see it generating "more-of-the-same" content. Weber may be getting ready to branch out, but what happens when his fans only want to pay up front for more HH? How much of the storyline of The Matrix do I have to reveal before I can convince several million people to kick in $20 up front?

        Finally, the up-front "salary" kills the dream as far as I'm concerned. Every author, singer, actor, and director dreams of the "great american novel" or hit song or blockbuster movie. Those dreams convince them to take risks and experiment with new ideas. I don't want those dreams dampened with a "just a job" mentality, working for minimum wage...
        • Re: (Score:3, Informative)

          by JDisk (82627)

          Stephen King might be able to get a 100,000 people to pay in advance for the next chapter of his new book. A new and unknown author certainly can not.

          Well, not $100000, but even relatively unknown, 'midlist' authors can make money that way. An example would be
          Lawrence Watt-Evans, who published one of his books, The Spriggan Mirror [ethshar.com] in small pieces, only releasing the next chapter when he got enough money. We are talking $100 per short chapter here, so it is not in the order of millions, but he was happy wi

        • by arkhan_jg (618674) on Wednesday August 30, 2006 @03:40AM (#16005553)
          These problems are the same as any small business has getting off the ground. How do I get new customers when they could just go to the big chains they already know?

          The answers are the same. You take out loans to pay for marketing, promotions (giving stuff away free), and then pay them off when you're established and making a profit. You might even have to work two jobs to support yourself while you follow your dream and get established.
          Not everybody makes it. Either they have a product that not enough people want, or people didn't find out about it, and they go under. That's the free market.

          It's very little different to how artists work today. Unknown artists struggle to get exposure, so do bread-and-butter work and 2nd jobs to get by.
          Giving away some of your work for free, especially digitally where it costs you virtually nothing, is great marketing. The 'tip-jar' method does work sometimes, as does getting people to pay for higher quality versions of your material. Give away the low-res one, maybe with adverts embedded (hellooooo, radio) and use that to get people to pay for the high-res version. After a few cycles of that, people will pay in advance for the new one to get it made, or released if already made.

          The old method of charging many times what something cost to produce is dying. The whole point of the free market is for new businesses and new business methods to be tried out, and live or die in the attempt. DRM is the complete antithesis of the free market as it uses government law to prop up an artificial and failing business model, and removes the freedom of the customer to choose alternative providers. DRM on physical products warps the meaning of physical property itself for the purposes of the big media cartels.

          My singlle player version of Half-life 2 DVD is a great example of the evils of DRM on physical media. It's encrypted, so I can't use it without Valve unlocking it for me online. I can't resell it, as my key is now used. I can't even give it away, as the key is tied to my steam account which has other older versions of my games in, and I can't delete the key or move it. The physical DVD in my hand might as well be a blank piece of plastic with a number printed on it, and to add insult to injury, when the game was first released I had to put my DVD in the drive for the DRM check, while people who'd bought it online didn't. It's over a year later, and I'm still pissed at Valve.
        • Re: (Score:3, Insightful)

          by Dravik (699631)
          This is how all artists made there living until about a century ago. This kind of system created all the great artistic masters of history and fed the millions throughout time we have never hear of.
      • Re: (Score:3, Insightful)

        by SolitaryMan (538416)

        As I think DRM is fundamentally flawed, so is this business model. That doesn't mean it might not stick around for a few centuries, but it's eventually doomed. The problem is that DRM tries to artifically limit the supply of something that requires very little labor in order to reproduce.

        In other words, DRM tries to enforce conservation law on the matter that does not obey conservation law -- information. The problem is that for many years social laws were based on two fundamental principles: property

        • Re: (Score:3, Insightful)

          by Kadin2048 (468275)
          This is an excellent point. I honestly don't understand that much information theory, but when you put it in those terms, it makes the flaws in the "intellectual property" business model seem even more fundamental than they already are.

          There are certainly ways to monetize information, but attempting to simply force it into a 'conservative' (in the 'conservation law' sense, not the political or economic one) distribution and business model, as if "information" are widgets that can be bought and sold on somet
    • Just ask Linux (Score:4, Interesting)

      by Kamiza Ikioi (893310) on Wednesday August 30, 2006 @01:16AM (#16005142) Homepage
      Not a biased question at all. It's the question asked daily at Novell, RedHat, IBM, etc, etc. Some sell backend services and support (equivilant to live concerts for artists). Some only charge for hard copies, but give the content away for free download (buy the CD, but feel free to purchase the CD with art, lyrics, a wall poster, and extras). Some don't make money at all through their users, except for donations, and the jobs they get because of their expertise (think Christian musicians who basically give away their music to radio stations free, because most stations, like most people, aren't rich... but make money back at wildly sold out concerts of very devoted fans).

      There's an economy when the creation costs much, but manufacturing and distribution approach $0. Linux already does it. Music and Movies just need to figure it out as well. And, I have to say that the creative quality and scope in Linux far exceeds that of companies still under the old supply/demand model. Maybe the same could happen with media. Just look at all the crap music that's "popular" (I don't know with who, I suspect major $Payola$). The real break out artists are broke, indie, collaborators (including rotating band members) and just love what they do.

      I wasn't even going to mention The Grateful Dead... that'd be too redundant and obvious here, regardless of the fact that its exactly what I'm talking about.
    • Re: (Score:3, Insightful)

      by poot_rootbeer (188613)
      But in large part you're creating a strawman, by specifying exactly the situation in which it is most difficult to make a profit.

      I disagree. The high creative capital + no manufacturing cost + no distibution cost scenario is a real-world one, facing every creative artist in the digital age.

      People *want* to spend money on entertainment.

      I disagree. People want entertainment, period. They are willing to spend money on it, but it is merely a means to an end. There's a reason why broadcast TV networks have v
  • How? Ask Apple (Score:5, Interesting)

    by SuperKendall (25149) on Tuesday August 29, 2006 @11:49PM (#16004805)
    How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

    Ask Apple, they are doing so today. Sure they use DRM but the way they work sales would not really be hampered much by them not doing so - after all, I can download any song for free today but I choose to buy through ITMS.
    • Re: (Score:3, Funny)

      by EnsilZah (575600)
      So basically what apple is selling is not the song itself, but rather the assurance that it would be of a certain quality, the time saved on searching for it, and also the assurance that RIAA commandos won't break into your house in the middle of the night and proceed to fuck you in the ass.
      • I'd say so. If I download a song, I have that, an MP3 file of a song. If I buy a CD, I have a physical back up of all the songs, a case in which to store it (which often looks snappy if placed correctly) and a mirade of other features and bonus work that, while not essential, is nice to have. The same can go for movies. Plus, it avoids, for better or worse, things like the "DO NOT WANT!" version of SW:EP3.

        I've often followed the tradition of only downloading either to sample a group (how I met some of my fa
      • So basically what apple is selling is not the song itself, but rather the assurance that it would be of a certain quality, the time saved on searching for it, and also the assurance that RIAA commandos won't break into your house in the middle of the night and proceed to fuck you in the ass.

        Yes, except for the whole "assurance/commandos" thing can be replaced by "feel good knowing the artist gets some money for their work".

        Many people buy legally out of love for music, not fear of reprisal. We still use P2
        • Re: (Score:3, Insightful)

          by gfxguy (98788)
          Yeah, that's great, I feel so good that the artist makes $0.001 for each song downloaded, while the RIAA gets the lion's share so that they can hire more lawyers pay more royalties to companies coming up with new and better DRM.

          No, I don't illegally copy music, I do use itms (and other legal services), I mostly have just stopped buying music because I realized that full CDs are almost always a rip off (yes, I've bought CDs where I like every song on them, but they are few and far between), and downloads are
    • by aussie_a (778472)
      but the way they work sales would not really be hampered much by them not doing

      And yet if asked to stop, they would refuse to. Funny how that works.
  • you don't... (Score:5, Insightful)

    by twiggy (104320) on Tuesday August 29, 2006 @11:49PM (#16004808) Homepage
    You don't.. you sell something other than the tracks.

    You create a completely different model now that people expect the tracks in digital form for free (or will risk an RIAA lawsuit to get them).

    you make your money on tours, tshirts, or making amazingly badass CD packaging (see: Tool - 10,000 Days) that makes it worth picking up a hard copy.

    Or, you make your money by giving people valuable merchandise or preferred seating at concerts for joining your fan club.

    You can't create demand for something that can be infinitely and freely copied.
    • Re:you don't... (Score:5, Insightful)

      by QuantumG (50515) <qg@biodome.org> on Tuesday August 29, 2006 @11:54PM (#16004831) Homepage Journal
      You can't create demand for something that can be infinitely and freely copied.

      Wow. How can you say all that and still miss the point. There's no problem "creating demand", there's only the problem of "limiting supply" and you can actually do that, but to do so requires you to be so fuckin' evil that you're willing to get in everyone's face and prevent them from helping others.
      • You're right in a sense that there's no problem creating demand. There is a problem limiting supply.

        But another important aspect of the equation is that "something that can be infinitely and freely copied" costs nothing to the artist to (re-)distribute. Whether 1,000 people or 1,000,000 people hear it, that costs the same. It is no more work for the artist.

        Like any business you can make more money by selling your products for less (on average--only some people actually buy it) but selling many more of them.
    • by shawb (16347)
      So... kinda like musicians make their money today. There are a very few artists that actually see some money from CD sales, but most of them really don't. It's touring and merchandising that gives them money, and CD sales are seen more as advertising. On the other hand, record companies view tours as advertising for the CD sales.
  • The thing is, if you market the shiny case, people will buy it. At least, the market thus far proves that to be true. Me, myself, I tend to be a huge "pirate", but I'll pay for something I think is worth it, even after getting it for free. That can't be said for most. But, irregardless, the masses will pay for it. At least so far. I guess my point is, make quality, make people think it's worth paying for, and I'd hope most would. Maybe I'm an idealist though......
  • The answer is scale, or rather lack of it.
    I think the future landscape is better suited for small players, unless of course the landscape is ruined.

    Doesn't that sound familiar?
  • extra's (Score:2, Insightful)

    by bm_luethke (253362)
    To a large extent I think there is some truth to having an issue with making money by selling the virtual parts. It becomes even truer the more that is what you are selling.

    However there is something to be said for convenience. I'm willing to pay some premium for always high quality recordings, no viruses, good selection, and other things that file swapping has a great deal of difficulty with. This depends on what you time is worth and how much is charged. Itunes has made pretty good with this even though m
  • Public goods (Score:3, Interesting)

    by SiliconEntity (448450) on Wednesday August 30, 2006 @12:02AM (#16004869)
    Without DRM, information goods are what economists call "public goods". Public goods are non-excludable, which means that if you supply them to one person you are effectively supplying them to everyone. And they are non-rival, meaning that if you give them away, you still have them.

    Public goods sound nice, but unfortunately they cause big economic problems. It is a classic theorem of economics that public goods are under-produced. There is no effective way to get paid for the investment needed to produce them because there is no way to charge for them. A canonical public good is clean air. Pretty hard to get people to pay money to clean the air, because clean air benefits everyone and cannot be limited to just certain people.

    DRM turns information goods into private goods. Now they can be sold and owned. They become excludable. The investment needed to produce them can be recovered by charging for their sale.

    Further, it is a theorem of economics that in the long run, competition will force prices to the level of manufacturing costs. As goods become popular, the investment needed to produce them will dwindle in proportion to the number of goods produced, and their prices will fall. In a DRM system, popular information goods will be inexpensive, and well supplied. There will be no shortages.

    DRM is an optimal way to manage information goods.
    • by Anonymous Coward
      But those theories are all based around ideals of perfect or near-perfect competition. We are, obviously, nowhere near that in most markets. This is especially true of the entertainment field. The music industry is best described as an oligopoly, with there being a small number of major labels who hold a vast portion of the market. Sure, there are minor labels, but they push nowhere near the volume of the major labels.

      It's questionable how well such elementary theories hold up when you consider the often co
    • by abb3w (696381)

      Further, it is a theorem of economics that in the long run, competition will force prices to the level of manufacturing costs. As goods become popular, the investment needed to produce them will dwindle in proportion to the number of goods produced, and their prices will fall. In a DRM system, popular information goods will be inexpensive, and well supplied. There will be no shortages. DRM is an optimal way to manage information goods.

      ...provided that you have no externalities, neglect information costs

    • by twitter (104583) on Wednesday August 30, 2006 @01:01AM (#16005092) Homepage Journal

      It is a classic theorem of economics that public goods are under-produced.

      Oh, do tell. You obviously have the public good formost in your mind. Still, I don't think your abstractions hold up beyond themselves and are meaningless.

      How do you explain music, poetry, stories and all that which people created before machine presses and copyright? People have been singing and dancing forever and they will continue to do so despite your inability to profit from or diminish their joy.

      DRM turns information goods into private goods. Now they can be sold and owned. They become excludable. The investment needed to produce them can be recovered by charging for their sale. ... DRM is an optimal way to manage information goods.

      Let's turn this on it's head. If it were possible to effortlessly and infinitely reproduce bread, would you degrade that process? Do you think it's more important for big commercial makers of wheat and bread to profit than it is for others to eat? Why do you want to do that to information? Music and knowledge are bread for the mind and soul. It is insane to limit their distribution for the benefit of "owners." Ideas are not property and trying to make them so is stupid and wasteful.

      I'd like to tell you that DRM will be circumvented by customers, but the market will do it first. Companies that cling to DRM will have no customers when confronted by reasonable competition. Now that's an optimal way to manage information.

    • Tell it, patriot!

      No profit means no music.

      That's been true since the dawn of time.

      [parody off]
    • Re: (Score:3, Interesting)

      by Jesrad (716567)
      Information is a public good, you say. I see nothing implying it shouldn't be a public good. You define under-production as a problem for information, are you so sure of that ? For one, information can be infinitely and freely reproduced, unlike the public goods studied by economics that suffer the "tragedy of the commons". Also, you're wrong in assuming there is no way to charge for it: material support for information is not a public good. I mean this in the very large sense. There always has to exist a p
    • Re: (Score:3, Insightful)

      by medarby (757929)
      ...competition will force prices to the level of manufacturing costs.

      IANAE(conomics)M(ajor)

      Competition? What competition? Aren't we really facing multiple monopolies? It's not like Big Summer Movie #1 is offered by multiple companies. It's only offered by one. Competition is good if you consider the demand for ALL movies, but that's not really what happens. If I really want to see 3 movies this summer, I'll save my money and go to them, and not the 97 others that are released. Big Summer Movie

  • stupid question (Score:5, Insightful)

    by RelliK (4466) on Wednesday August 30, 2006 @12:03AM (#16004871)
    How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

    The same way it worked before DRM. You are making a ridiculous assumption that DRM is the only thing that prevents someone from distriduting copies of copyrighted works. That is utterly false. There is this thing called copyright law that works just fine without DRM. Photocopiers didn't kill the book publishers. Tape recorders didn't kill music industry. VCRs *multiplied* the profits of the movie industry, despite the fact that certain studios nearly had them outlawed.

    For this reason your question is either biased or stupid or both. Turns out it is entirely possible to have a viable economy without infringing on the consumers' fair use rights or first sale doctrine. Who would have thunk!

    • Re:stupid question (Score:4, Interesting)

      by Dhalka226 (559740) on Wednesday August 30, 2006 @01:17AM (#16005151)

      For this reason your question is either biased or stupid or both.

      Well then let's be fair: I think your comparisons are biased or stupid or both.

      Photocopiers didn't kill the book publishers.

      Because there is a significant time investment in standing around and copying all of the pages of a book. Not to mention that when you're finished, you end up with a stack of papers, not a book.

      Tape recorders didn't kill music industry.

      No, they didn't. Then again, tape recorders--in terms of piracy (which is what we're really talking about when we talk DRM--require that I know you and live nearby you. They require that I be able to hand you the physical copy. This is still a problem with CDs.

      VCRs *multiplied* the profits of the movie industry

      Again, for me to pirate you a movie, I have to be able to give it to you. Sure, I could mail it or something, but that's more work and expense for me. That fact means it's largely limited to me pirating things for my close friends, family or neighbors.

      The issue with digital piracy is that you can create as many exact copies as you want with no quality issues, and distribute them around the globe with essentially no effort. It also costs essentially the same to make and share one copy with one friend as it would to make 10,000 copies to share with 10,000 random people (ignoring data transfer costs--which most people, at least in the US, don't pay specifically for anyway; they pay for the speeds of their lines, not how much data they squeeze through those lines in a month).

      I don't support DRM for many reasons, but to pretend that my ability to make exact digital duplicates of a CD (or DVD or what have you) and distribute those copies to anybody in the world with a 'net connection is somehow akin to what I could do similarly with VHS tapes or cassettes is naive at best and disingenuous at worst.

      To avoid having to make a second post, I'm going to go ahead and give my answer to the submitter's questions:

      I'm perfectly willing to pay for, for example, music downloads, assuming that the price is fair. Here is clue #1 for music companies: If it would cost me roughly the same amount of money to buy each track on a CD digitally as to go to the store and buy the actual CD, you're charging too much. I should not have to pay the same amount for lower-quality copies of songs with no case, no insert, no artwork and no CD-pressing manufacturing costs, that I would for higher-quality versions with all that. That is just plain silly.

      Clue #2: I want to be able to choose the quality of the song I download. If I really love a song, I want to be able to get a high-quality rip. On the contrary, if I don't really love a song, or if I'm just downloading it again for some reason (for example I took my laptop to school and noticed a few songs I had forgotten to transfer over, I re-downloaded those), I'd like to be able to get a lower bitrate--and to pay a lower price accordingly. A bit rate range of 128 to 320 (for MP3) seems fair. If you want to offer lossless options, hey, more power--but I personally could not hear a difference between 320 and lossless, so it means very little to me.

      Clue #3: Choosing formats is nice. It's not particularly important to me, but I know it can be to a lot of people--and really, when you get right down to it, if you're doing steps #1 and #2 already, then letting people chose their format in addition to their bitrate is simply not that much more work, neither to code for nor on the server doing the jobs.

      Clue #4: Probably the most important one, and the one that most specifically addresses the question posed in the submission: Once I buy the song from you, IT IS MINE. Get the hell off my back about what I can do with it. I don't want DRM. I don't want you to tell me how many different CDs I can burn it to, or what devices I can play it back on. If you charge reasonable prices, permit me to choose my for

  • by Spazmania (174582) on Wednesday August 30, 2006 @12:03AM (#16004872) Homepage
    Why do folks still buy copies of Shakespeare's plays or Beethoven's symphonies? They aren't even protected by copyright let alone by DRM.

    There is always a business to be made out of selling value, even if the content itself is free.

    Besides, given a reasonable choice most people will be mostly honest most of the time. If they're able to buy music or a movie they want at a price they consider fair in the format they want most will choose to do so. Take the money where you can get it; don't worry about the rest. As for the rest of the folks, most of them wouldn't buy your music or movie if they couldn't copy it. Its not important to them; that's why they were willing to make do with a mere copy.

    • Re: (Score:3, Informative)

      by esme (17526)

      If they're able to buy music or a movie they want at a price they consider fair in the format they want most will choose to do so.

      This is the point that I think most often gets lost in DRM discussions.

      DRM allows media companies to set unreasonable limits on movies and music -- limits we'd never tolerate in a grocery store, clothing store, etc. Instead of relying on the basic goodness of the average user, the media companies are driving many people away from DRM'd content and into the P2P and other so

  • by macadamia_harold (947445) on Wednesday August 30, 2006 @12:04AM (#16004876) Homepage
    How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

    Simple: in addition to selling the music, you give people something else that requires no manufacturing cost, but is in finite supply, such as special "pre-sale" access to concert tickets. Fans are a lot more willing to give you their money when you offer a carrot, rather than threaten the stick.
  • by CrazyJim1 (809850) on Wednesday August 30, 2006 @12:04AM (#16004881) Journal
    Only thing I saw DRM do is stop a Backstreet Boys CD from working on my exgf's portable CD/DVD player.

    DRM doesn't stop online piracy anymore than a speedbump in your driveway slows interstate traffic.
    • by deek (22697)

      Only thing I saw DRM do is stop a Backstreet Boys CD from working on my exgf's portable CD/DVD player.


      Yeah, but what about the negative side of DRM?
  • 1. Alturism
    2. Advertising
    3. Entertainment of the creator (hobby, appreciation of fame, etc.)
  • by thedletterman (926787) <<thedletterman> <at> <hotmail.com>> on Wednesday August 30, 2006 @12:19AM (#16004938) Homepage
    Given the presented variables, there are serveral ways to still make money.


    1. Distribute the product yourself for free, request donations.
    2. Merchandise goods that do not meet the same criteria.
    3. Recreate the initial (creative creation) stage in live venues.
    4. Control physical access to content.

    Given the current "stage" with no shortage of supply of talented musicians, cheap manufacturing, and distribution mechanisms available, I'd personally like to see a revolution of internet radio where artists upload their tracks for free, stations stream their tracks to users, users rate their favorite tracks, and the station's advertising revenue distributes royalities to the artists and station manager. It creates like a democratic system of which artists get paid the most on which stations, and creates a very populist system for music completely destroying the 'mainstream' or even 'indy' model where station managers pick and choose their playlist and present that as the only options. As someone in the executive side of the music industry there's just way too much good talent and cheap processes for the ivory tower industries to remain standing. The business model is going to have to shift and adapt, or the people will throw everyone out of the ivory towers. No amount of intellectual property laws and drm is going to stop that.

    • InterWeb, as well (Score:3, Insightful)

      by kripkenstein (913150)
      Given the presented variables, there are serveral ways to still make money.

      1. Distribute the product yourself for free, request donations.
      2. Merchandise goods that do not meet the same criteria.
      3. Recreate the initial (creative creation) stage in live venues.
      4. Control physical access to content.


      Let me add

      5. Monetize the website

      - which seems forgotten in the other responses to this thread, as well. How would this be done? In many ways:

      a) Ads.
      b) Paid subscriptions for early access to materi
  • The core problem is the base assumption that record companies and via them, that music and movie stars deserve to make tens of million of dollars for doing what they do.

    Sure you can talk about limited talent that drives up demand... and I can point you at any technical or challanging industries where that is true also but where the salaries for pop stars are not dished out to the coroprate IT guys.

    Sure you can talk about how hard it is to train up for and performn in an action movie... and I can point you
  • Early in the 20th Century the state of transportation was suddenly improved with something called the "automobile."

    Similarly, early in the 21st Century the state of information exchange was suddenly improved with something called the "internet."

    The article title will be as laughable in the future, as something from 1906 titled "A Working Economy Without Buggy Manufacturers?" is now. Because if the buggy manufacturers had their way, instead of properly evolving or dying as conditions changes, by causing Fede
  • Try holding your items hostage until your price is met ala "Free The Maps" [redjar.org].

    If your work is of enough value, people will make enough small contributions to pay off.
  • Plays and music have, until recent times, been about performance.

    I am friends with a signed band, and it seems common knowledge that the artist makes the most money from concerts and live performances (not to mention the merchandise sold at these shows).

    For film, I admit it is a bit trickier situation.

    You have to offer something that the recorded medium alone does not.

    The way I see it, a recording is just a memory, albeit a great memory, but a memory nonetheless.

    A great memory will prompt you to recreate th
  • OK, just a heads up. I havn't fully thought this out, but here goes.

    Data is not like apples and oranges, there is (almost) nothing lost when someone gives someone else data. All the cost is in the initial development. How about people pool their money together, as sort of a bounty for a certain product. And when someone writes that piece of software, they get that money. I know, who decides if they meet the requirements? How about having some kind of review board, like the lieutenants who deal with the p
  • The answer (for music at least) really seems to be a return to the "business models" that existed long before the advent of pre-recorded media with worldwide distribution. Musical artists need to stop emphasizing the packaged album concept and go back to emphasizing live performances. People will obviously pay (often through the nose) for the live performance and the whole concert atmosphere. If you think back to classical music as an example, composers were generally paid for live performances and for t
  • by Swordfish (86310) on Wednesday August 30, 2006 @12:29AM (#16004979) Homepage
    The whole purpose of copyright was originally to protect those people who invested in the typesetting of printed works against unscrupulous printers who would then set up their printers only for the proven best-sellers of the other printers who took risks.

    Nowadays, the cost of typesetting and printing (or composition, arrangement, recording etc.) is borne by the artists, and the publishers do nothing of value that a kid in a garage can't do. So there is no further need of copyright to protect the printing investment. Anyone can record, print and distribute for essentially nothing.

    The question is now whether monopolies should be retained when the cost of publishing is essentially zero. The answer is clearly no. If all copyright on music is removed, the result will be a flowering of music and literature from artists who otherwise would have been strangled and suffocated by the dominance of the monopolists.

    In short, technology has made the protected markets of music and literature publishers obsolete. Considering the trashy sounds that pass for published music these days, I don't know why anyone keeps buying that rubbish. At least 10% of people nowadays can produce much better music in their garage. So why not just stop buying the commercial garbage and just get unencumbered music off the net for free?
  • Like liner notes in CDs and manuals in games and ease of access and reliability of service and certianty of availablility.

    The same way that Red Hat sells Linux.

    And T-shirts at the concert.

    It's not that tough people.

    The premise of your confab is a bit slanted to be a "so see, we need DRM" failure. For the most part the signal isn't a comodity, and it shouldn't be.

    There is a P2P model where you make the content free at a degraded rate, and bind it directly to a means to buy full quality while the share would
  • Your assumption is that people only buy product. In short, the aim of a creative company is to build up a back catalog of items to sell, where in fact, customers are actually interested in future content. Thus, people will buy copies of Firefly, even after having watched downloaded copies, because they are intent on sending a signal that future content along the lines of Firefly should be produced.
  • As far as I can tell, things have been mechanically reproducible, with little overhead, since Gutenberg. What has made book and news publishing a viable business is the quality of the works they publish and the widespread demand for leisure, informational, and research reading. While copies of any work are in limitless supply now that they are in digital form, the supply of *quality* work is definitely limited, and as such the price for good works will remain high even if it can be infinitely reproduced. T
  • ... just like anyone else who performs a service. Performing songs, filming movies, etc. can use the same business model as fixing cars, preparing tax forms, or painting houses.

    The only real difference is that creating an artistic work tends to involve a lot more effort, so it's hard for one person to fund an entire album out of his own pocket. But that's not really a problem, because you can assemble a group of people who are all interested in the album and have them pool their money together to fund it. (
  • Instead of looking at the old models which is "Please give us money so you can enjoy what we make", we need to switch it round so it's more like the musicians on the street (or Jonathan Coulton if you perfer), so "heres my music, I hope you like it. If you like it would you mind giving me some money so I can continue to play?"

    Instead of asking for money for something you ask for money so you can continue to do something. The problem with this is things become their real value (instead of super expensive thi
  • "we learn that the price of a product is determined essentially by supply and demand"

    That isn't quite true. What you should have learned in economics is that "all other things being equal, the price of a product is determined by supply and demand" which basically means "in this incredibly simplified model that we have built, things probably work like this." Generalizing outwards from the models used in economics is dangerous at best, because in general all other things are almost never equal.

    There are numer
  • Merchandise (Score:3, Informative)

    by Paul Slocum (598127) on Wednesday August 30, 2006 @01:04AM (#16005102) Homepage Journal
    Here's [homestarrunner.com] a good example. 95% of their content is free on the internet -- 5% accounting for extra content on the DVDs and CDs. Never even had any ads on their site. And they make a healthy living off merch. They quit their day jobs on just T-shirts!

    As people have said, no DRM doesn't mean everybody's going to throw a pirate party and that selling digital content is over. But there are even business models that allow for giving the content away.
  • There's a couple of things that you clearly should not allow the possessor to duplicate; 'dollar bills', and 'theater tickets'. From there on, things get less clear. Bands can (if they are good) make a living playing concerts; and there's no reason why the 'traditional' copyright laws should fail to hold. DRM (and criminalisation such as the DMCA) strengthens the position of the rights-holders to the detriment of everybody else; to the point where I can't reasonably allow DRM material in the house, in case
  • What's The Question? (Score:3, Interesting)

    by Bob9113 (14996) on Wednesday August 30, 2006 @04:33AM (#16005753) Homepage
    How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

    What is the product you are attempting to sell? What question are you asking?

    Consider how most software engineers make money. We are performance artists. We are paid to perform a creative act. Most of the world's software (in terms of lines) is never sold on a per-copy basis. Most lines of code are written on a performance basis; custom enterprise code.

    Historically, this is also how musicians were paid. It is how most musicians are paid even today (far more musicians play in bar bands than have record deals). It is an extremely efficient economic model, because it is a free market model. Most musicians exchange their time performing music for compensation; playing out in bars across the country. A musician's time is a naturally limited commodity, and there is demand for it. Hence, there is a natural price. That price is reached almost perfectly in our currency-based free-market economy.

    One interesting recent development in this model is the ability to distribute music inexpensively. This grants the performing musician the ability to advertise for a very low price, recently approaching zero with the advent of the Internet. Musicians can now audition for gigs in distant cities at the drop of an email. They can build their local audience by giving away CDs at their shows - CDs that can be produced for far less than the total cost of producing and broadcasting a television, or even radio, commercial. (for additional material here, consider the potential for performance musicians to advertise by having their music played on the radio, and consider how the relationship between the record labels and the radio stations may affect that channel)

    In the past 100 years, another model of trade in the music industry has evolved; the sale of copies of performances. It is backed by a government enforced fiat monopoly. That is, it is not a free market model. The model remained fairly practical for the first 60 or 70 years, while the cost of duplication for the home consumer was high. As long as the cost of duplication was high for the majority of customers, the inefficiency of the monopoly was hidden. The monopoly price did not dramatically diverge from the consumer's perceived value, because the cost of small-scale reproduction was dramatically higher than the cost of large-scale reproduction. The monopoly market has always been enormously inefficient, but that inefficiency was hidden by the fact that the vast majority of consumers percieved themselves as paying for the duplication. The efficiencies of scale overwhelmed the inefficiency of the fiat monopoly.

    Now this is all changing. (for more material here, consider the lobbying and legislation that accompanied the invention of radio, and the subsequent symbiotic trust that has developed between radio and the record labels)

    After radio, the next big exposure of the fiat monopoly's inherent inefficiency came with audio and video cassettes. Another round of legal wrangling occured, but it was slightly different - Washington came out more on the side of the fiat monopolists this time. They instituted stricter copyright infringement legislation.

    In this, the latest round, cost of duplication has effectively hit zero. The inherent inefficiency of the fiat monopoly is now completely exposed to most of the target market of the music industry. Once again, there has been a great deal of wrangling in Washington. And it has shifted further in favor of the fiat monopolists. It has shifted so far, in fact, that many more consumers than during any previous shift are engaging in civil disobedience.

    All of which is to say, are you sure you are asking the right question? Should the question be, "How do we make this inherently anti-free-market model work?" Or should it be, "Why are we using police force to artificially support an economically inefficient model,
  • drm is snake oil (Score:3, Insightful)

    by orabidoo (9806) on Wednesday August 30, 2006 @08:04AM (#16006335) Homepage

    For all the noise about it, for and against, and all the moral high, low and middle grounds that the slashdot crowd so loves to argue about, the obvious fact is that RIGHT NOW we have a working economy without DRM. So obviously one is possible.

    Just look at it. The music industry's entire catalog is pretty much available on a digital, easily rippable, non-DRM'd medium: the good old CD. For all their noise and complaints, I don't see the labels shutting down CD stores to prevent "piracy"... and you can be sure that 99% of illegal music copying originates in CDs.

    And if you look at video, you have the same thing. The DVD was originally DRM'd, but that was broken a long time ago and DVD ripping programs abound these days, from reputable sources even. Do you see the industry putting a stop to DVD sales, or somehow trying to prevent computers from having DVD drives with ripping ability in them? Actually just the opposite is happening - until recently people didn't have much of a (legally bought) movie collection at home, because original VHS tapes of movies were way expensive, so people resorted to renting them. The industry has actually figured out that by pricing movie DVDs quite cheap, people will buy lots of them, and the industry makes a BIGGER PROFIT!

    So what's all this DRM noise then? Well, Yahoo themselves summed it up pretty well [ymusicblog.com], and considering their position in the industry, you'd think they know what they're talking about:

    DRM doesn't add any value for the artist, label (who are selling DRM-free music every day -- the Compact Disc), or consumer, the only people it adds value to are the technology companies who are interested in locking consumers to a particular technology platform.

    As far as I can tell, that's good news for all of us. DRM is now like cryptography export regulations were a decade ago: a big threat that we all get so worked up about, but is ultimately irrelevant on its own grounds.

    Just like there comes a point where crypto knowledge is "not that hard anymore" and cannot be kept in a box, in the long term, the greed of DRM vendors combined with the fear of audio-visual producers is just not enough to make something as techically broken *and* useless as DRM fly.

  • by jcdick1 (254644) on Wednesday August 30, 2006 @08:52AM (#16006562)
    As I see it, the problem is that the CD or the MP3 is what is being defined as the product. I have said it before, and I will say it again, the music is the product, and not the media used to distribute it. If the artists want to be musicians, then they need to be making music, not CDs. The goal should not be a platinum-selling album, but a 250,000 attendee concert series. I should be able to go out on any night of the week, with ten dollars in my hand, and have my choice of any style of live music by bands that aren't local, regardless of where I live. So I say to the musician, "Don't be a recording artist, just be an artist." Will there be tons of money to be made? In the case of the Grateful Dead, you betcha. But you better have the staying power. Is there decent money to be made? Absolutely. You won't be buying a Ferrari any time soon, but then, if you are in it for the money, most people probably don't want to hear you anyway.
  • by Paul Fernhout (109597) on Wednesday August 30, 2006 @08:59AM (#16006608) Homepage
    An essay I wrote in 2004:
        http://www.kurtz-fernhout.com/oscomak/AchievingASt arTrekSociety.html [kurtz-fernhout.com]
    An excerpt:
    "Now, let us move on to the question of where could more money for
    education and creativity come from -- such as to fund more creation of
    free copyrights and free patents? And where could budget cuts be made so
    US parents (and everyone else) could work less hours and devote more
    time to their families and charitable hobbies -- including informally
    educating their children? As we shall see, a hundred billion dollars
    here, a hundred billion dollars there, and soon we are talking real
    money. :-)

    Let us consider ways to free up money for the non-profit sector (or
    reducing working hours) by cutting wasteful government and consumer
    spending in these areas with (annual estimate of easy savings):
        * Healthcare ($800 billion),
        * Military ($200 billion),
        * Prisons ($125 billion),
        * Agriculture ($40 billion),
        * Transportation ($250+ billion),
        * Housing ($350+ billion),
        * Manufacturing (very variable),
        * Media (very variable),
        * Banking ($14000 billion up front, $320 billion annually), and
        * Education (very variable).
    This is a total of $14000 billion up front and at least another $2085
    billion per year. And this is even without considering any lifestyle
    changes such as from widespread adoption of Voluntary Simplicity:
        http://world.std.com/~habib/thegarden/simplicity/ [std.com]
    which will ultimately result in the largest savings in the US and
    worldwide (but I discuss no further here). "

We want to create puppets that pull their own strings. - Ann Marion

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