A Working Economy Without DRM?

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?"

Merchandise

[Paul Slocum]

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.

Re:Folks still buy Hamlet

[kfg]

Why do folks still buy copies of Shakespeare's plays or Beethoven's symphonies?

Because the printed editions of the works are covered by copyright.

If you wish to make your own transcription of Beethoven you can do that, because Beethoven's orginal content is in the public domain, but you cannot photocopy the sheet music you buy in the store because that is covered by copyright. Just try to enter a music competition with a photocopy of a score. Unless you have some form of proof that you didn't "steal" that score you'll get tossed on your ass for having a "stolen" copy of a public domain work.

Ain't modern copyright law grand? Publishers have found dodges to keep works that have been in the public domain for centuries effectively locked up.

This is why Project Gutenberg is now covering sheet music as well as literature. Unless people make transcriptions and donate them to the public domain, public domain musical works are not freely available to the public.

KFG

Re:Biased question

[Flyboy Connor]

This will never happen on any sort of feasible scale. It isn't a matter of being "honest" (or as most people who take the same position you have, of being "moral") it is a simple matter of economics - rationale consumers will not pay for something they can get for free.

Weird. Computer games can be downloaded for free, or acquired for a very small fee from your neighbourhood copy-peddler. And still the game-development industry is steadily increasing its revenues. And music? People can download any song they want through eDonkey and such, and the music industry does not seem to suffer. Movies? The movie industry gets richer and richer by the day.

You might think it is rational what you say, but practice shows differently. It seems you are not taking everything into account. Probably, if you scan this thread a little more, you'll find out what that is.

Re:Biased question

[Alioth]

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:Pay for labor, not for copies.

[JDisk]

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 with the result and is thinking about doing it again.

Note that he is a professional writer and did not do this as a hobby.
 

Re:Folks still buy Hamlet

[esme]

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 sources.

For example, I'd love to buy music from iTunes Music Store. The integration with iTunes and my iPod is wonderful. The selection is good, and the experience overall can't be beat. Except for the DRM. The first time my computer wouldn't let me play one of my songs, because it had gotten confused about how many computers were authorized, I realized the music wasn't really mine as long as it was DRM'd. Hymn/JHymn break the old iTunes DRM, but the new DRM is still uncracked (for now...).

So what do I do? I go to a lot more effort and inconvenience to get my music elsewhere, so I can do with it as I please. If I want MP3s so I can play them on my linux box, too, why does Apple have a problem with that. If I reinstall my OS and forget to deauthorize before, why do I need to convince Apple of this? It's this kind of crap that has convinced me that I'll never buy any content with (unbroken) DRM again.

-Esme

Financing the "Star Trek" society

[Paul Fernhout]

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). "

Re:Biased question

[Jah-Wren Ryel]

I can't give you an example where 'honesty' trumps economic principles, mainly because honesty IS an economic principle.

Only in niche markets where there is a direct cost associated with being 'dishonest.'

Your example from Freakonimcs is a case of the iterated prisoner's dilemma [wikipedia.org] because each day is a new iteration and thus is only 'scalable' in that you have a group of niche markets (each office) that are effectively independent of each other.

That model may possibly scale to large numbers of individual offices, but Levitt's own reporting on Feldman's bagel business indicated that the larger the individual office, the less 'honest' people were.

Essentialy, you have just proved my point with your own example.