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A Working Economy Without DRM? 686

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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  • 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.
  • by Anonymous Coward on Tuesday August 29, 2006 @11:54PM (#16004830)
    that's the real question.

    if you want the publishing company or the middle-man to make money.... you're raised the big question.
    if you want the creator to make money, then there's money to be had in licensing
    and if you want the actor/writer/musican to make money, then non-replicable experiences (personal talks, live concerts, live theatre, etc.) are the way to go.

    (personal appearances recommended by an anonymous coward.... i have nothing else to add to this one).
  • 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 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.

  • 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.
  • Ask Baen Books (Score:1, Interesting)

    by Anonymous Coward on Wednesday August 30, 2006 @12:04AM (#16004883) []

    Scroll through the obit, then go to the Library (Free Samples) section, and see what author Eric Flint has to say. Or, just pick a book and read it!

    Enormous, multi-year in some cases, initial creative effort? Check.
    Profit? CHECK!

    Baen gets it.
  • by thedletterman ( 926787 ) <> 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.

  • by Aqws ( 932918 ) on Wednesday August 30, 2006 @12:23AM (#16004957) Journal
    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 patches to the linux kernel. Obviously there are a lot of details to work out, but I think I've posted the gist of it.
  • 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?
  • Re:Biased question (Score:3, Interesting)

    by BadAnalogyGuy ( 945258 ) <> on Wednesday August 30, 2006 @12:30AM (#16004985)
    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, you could argue that DRM-encumbered media is less attractive than DRM-unencumbered media because the former restricts user actions while the latter does not. However the real problem for the artists is getting discovered, and that has nothing at all to do with whether the record labels apply DRM to label-produced content.
  • Ransom method (Score:1, Interesting)

    by Anonymous Coward on Wednesday August 30, 2006 @12:37AM (#16005016)
    Here is a method in which an artist can realize profit from creating a work. (Note: this may or may not apply to bigger budget media like movies). At first, the artist releases material (or whatever) and builds up a reputation. Maybe he makes a pitch and gets a bunch of consumers interested enough to contribute to a ransom fund. Until the fund reaches a high enough level - nothing really happens other than some promotion (which can be very cheap on the net).

    Those who contribute get the first crack at seeing the work or get immediate delivery once the work is finished. If they share afterwards, the author doesn't really care. He's already been paid by the ransom. In fact, it would be in his best interest for the work to spread as it can increase awareness and perhaps fund future ransoms.

    The value a contributor obtains can be from sponsoring the arts, possible bragging rights, front seat access, or whatever.

    ps. I can't claim any credit for the idea. I first came across it under an rpg context. []
  • 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.
  • 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.

  • Re:Biased question (Score:3, Interesting)

    by masklinn ( 823351 ) < .at.> on Wednesday August 30, 2006 @01:03AM (#16005099)

    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.

  • Just ask Linux (Score:4, Interesting)

    by Kamiza Ikioi ( 893310 ) on Wednesday August 30, 2006 @01:16AM (#16005142)
    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: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 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 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?
  • by jotaeleemeese ( 303437 ) on Wednesday August 30, 2006 @03:15AM (#16005479) Homepage Journal
    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 not a happy bunny, but the popularity of his works earned him a reputation that allowed him to teach in the nascent universities of his time and to be the scientist to the reach and famous. Heck, they even attracted the ire of the Inquisition.

    My point is that the only thing that is not reproduceable is the individual himself, ideas (which is what works of art and science essentially are) have this pesky habit to be propagated if they are interesting or useful. For bunnies sakes, that is what makes us human, our capacity to learn and propagate useful knowledge.

    Copyright is a completely artificial construct, has no base in how ideas are distributed, and is based in concepts first born around the Industrial Revolution, era in which everything, even ideas, became trinkets that could be traded. If there was no copyright wathsoever artists and scientists would still find ways to earn a living, their reputation would preceed them (notice that in a world without copyright you still keep the right to be recognized as the author of the ideas produced by you).

    Lets grant for a moment, for the sake of argument, that copyrights are a necessary construct. Organizations of intermediaries like the Record and Movie industries, authors guilds and unions, have pushed copyright to obscene lengths. What is the rationale to keep compensating a dead person's relatives (or legal entities that somehow manage to get hold of the copyrights) well after their deaths? What is the justification for keep extending creators rights ad nauseam to make them for all practical purposes, indefinite? (and there are some goverments that are even considering charging for using works in the public domain, because if it is public, then it must surely belong to the state, right?).

    Enters DRM.

    You paint DRM like if was giveth in the 10 commandements by god burning in a bush itself (do not correct me dear /.ers, this is poetic license).

    You are wrong. DRM is the construct of the companies that want to keep a monopoly in the distributions channels. If they were interested in the artists and creators at all, they would long time ago have demanded standarization of the DRM methods. If Apple could dump DRM, they would do it in a heartbit, the proof is that it is so simply to get non DMRed music from iTunes stuff that it is not even funny.

    What DRM provides is also a means of control of the artists, in a world were everything is DRMed, trying to provide content that isn't may become a competitive disadvantage due to the hassle that may probe to play such content.

    As things stand sites like emusic (2nd most popular after iTunes), magnatunes and the individual efforts of artists (musicians, writers, film makers) that distribute their content free of DRM bullshit, proof beyond doubt that DRM is not indispensable for artists and anybody producing ideas.

    It may be indispensable for the monopolists, but that does not mean we should assume is a given, specially if it inconvenience us, the consumer.

  • by Jah-Wren Ryel ( 80510 ) on Wednesday August 30, 2006 @03:59AM (#16005624)
    The rational consumer is a defective myth, people regularly pay for things they can have for free, just ask Evian.

    Indeed, the rational consumer is one of those things that only exists in the laboratory of the mind. Not because people are irrational - individuals may be irrational, but as a group they are rational - but because the environment is never so "clean" as in the economics text books. There are always real-world costs (and perceived costs due to bad information, like advertising, brand-loyalty, and bad risk evaluation (c.f. the lucrative market for extended warranties)) that the text books don't usually dwell on.

    But, for the most part, if you could measure all of these additional costs and factor them in, then the model of the rational consumer should still hold. It is just that it is almost impossible to measure ALL of those costs, that measurement itself being a cost that may dwarf some of the actual costs, which means that a rational consumer will often just "wing-it" as a cost-savings approach.

    The rational consumer argument breaks down quite quickly when you aren't dealing with super-huge commodities markets where the consumers and producers take great care to be dispassionate about the commodities they trade.

    That is essentially the same point I made when I mentioned feasible scale.

    However, I would argue that even niche markets are subject to the rational consumer model, its just that smaller markets allow for other cost factors - one of them being that if the niche is small enough, then people can feel comfortable that the risk of the "tragedy of the commons" kicking in and screwing up an "honesty" based approach is minimized, and so too the costs of "honesty" are reduced below the potential value of "honesty" - which really ought to be called cooperation at this level.
  • by Schraegstrichpunkt ( 931443 ) on Wednesday August 30, 2006 @04:17AM (#16005692) Homepage
    The rational consumer is a defective myth . . . just ask Evian.

    . . . or any advertiser.

  • by ben there... ( 946946 ) on Wednesday August 30, 2006 @04:28AM (#16005740) Journal
    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. So if you can sell 1,000 or freely redistribute 1,000,000 and convince 2,000 of those to pay for it, congratulations: you just made more money by letting people redistribute it.

    Does anyone find it odd that those that redistribute music are actually doing the record label's job, for free no less?
  • 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,
  • Re:Biased question (Score:2, Interesting)

    by PHPfanboy ( 841183 ) on Wednesday August 30, 2006 @04:41AM (#16005776)
    And on a slightly unrelated note...was it just me, or did Steal This Film fail to make any good justifications for piracy?

    I'm with you on this one. I watched the whole lot and the quotes were all from people in the street who offered very shallow justifications, if any.

    None of them backed themselves up with anything more than "copyright is against my morals" (WTF?) or "it's going to happen anyway" (yay for the moral collective consciousness of the internet!). Dan Glickman also didn't sound compelling. In short, it was an interesting movie about Pirate Bay, and how small countries can be pushed around by large ones (what's new?), but other than that, it was just a piece of propaganda/ advertising (which is why it is given away for free!)

  • by n0rr1s ( 768407 ) on Wednesday August 30, 2006 @04:48AM (#16005804)

    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.

    First, that's true for current authors/artists too: it's very difficult to get a company to back your multi-million $currency movie without some prior work to show them. In this new system, artists would have to produce their first works out of their own pocket or with a loan, and gradually work their way up, much like an entrepreneur starting a small business (as another reply pointed out).

    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?

    Then he has the choice of working for the money and doing what the fans want, or pursuing his own interest and working for less this time. Sure, many will follow the money, but those who feel most passionately about their art will not. And again, this is similar to today's situation in which we see many movie remakes, sound-alike artists, etc.

    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...

    I don't think it would "kill the dream": an established artist in great demand could charge a large upfront fee for their work. Many artists make a great deal of money from their fame in other ways too. And if does turn out to make them less rich, I'm ok with that: I'd prefer them to be in it for the art rather than the money anyway.

    I think grandparent is on the right track. I'd love to see that sort of system in place, though I know it will take many years for that to happen (if it ever does).

  • Re:Public goods (Score:3, Interesting)

    by Jesrad ( 716567 ) on Wednesday August 30, 2006 @05:05AM (#16005853) Journal
    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 physical support for information for it to reach one's mind, and that's how you charge for it, be it through concert tickets, a paper copy, a DVD, electrical signal down your phone line or whatever means currently exist for that.

    There is demand for new information, so there is money to be made in the production of this new content. Once distribution of an "old" work is done, very little money can be made on its distribution, so production of new information is desireable by the distributors. That's where the concept of "first publication right" of the author becomes useful. This is a concept put forward by some members of both the french and german Pirate Parties. In practice, it goes like this:

    Authors (whether promising new ones or established old ones, there's market for both) get hired for creating works by, for example, a private P2P network (where money is made through subscriptions, because people are paying for being the first to get their hands on some known artist's works, or because they value the selection that the network does), or a public ad-supported P2P network. Once the works are distributed, the network's users can record, copy, share for free or even distribute them for profit.

    Think this model cannot work ? Think again, that's how television channels work, although I'm not allowed to sell DVDs of my recordings of series... yet.
  • by Anonymous Coward on Wednesday August 30, 2006 @05:13AM (#16005878)
    The rational consumer is a defective myth
    No, it's a statistically valid theory (i.e. is a better predictor of consumer behaviour than random selection of outcomes), but it doesn't fully explain consumer behaviour by any means. I very much doubt you could find a single economist anywhere in the world who would claim that consumers are perfectly rational, and thus that a rational behaviour model perfectly explains consumer behaviour.

    If history has shown anything then it's that ... consumers aren't rational.
    Not at all. You have three basic relationships that are possible w.r.t. the rationality of consumer behaviour:

    1. Consumers are perfectly rational: the rational consumer model correctly explains/predicts consumer behaviour 100% of the time

    2. Consumers are neither rational nor irrational: the rational consumer model explains/predicts no better than random selection of outcomes

    3. Consumers are perfectly irrational: the rational consumer model incorrectly explains/predicts consumer behaviour 100% of the time

    As with most theories, the reality is likely to be either 2 (the default assumption), or some point between either 1 and 2, or between 2 and 3. If the explanatory/predictive power of the theory is anywhere other than 2, based on statistical tests, then it is a valid theory, and should be used for explaining/predicting consumer behaviour until such time as a more valid theory (i.e. one with a higher level of statistical significance, or alternatively, with greater explanatory/predictive power whilst remaining statistically significant) is found.

    As an aside, the use of game theory in economic models has helped to explain how the expected reactions of other market participants can lead rational consumers to make sub-optimal choices. This doesn't mean they're not rational, only that expectations of the way in which other participants will behave are important variables in any model attempting to explain or predict rational behaviour.
  • Product Integration (Score:2, Interesting)

    by jacobw ( 975909 ) <{} {at} {}> on Wednesday August 30, 2006 @05:51AM (#16005990) Homepage
    Actually, the entertainment industry has several decades of experience in making a profit from two products that can be infinitely reproduced with no marginal cost. Those products are called "TV" and "radio."

    Think about it. The cost to broadcast The Jack Benny Show were the same whether one person had his radio turned on or a million--and once those listeners had bought their radios, they could listen to radio all day long without paying any additional costs.

    So how did Jack Benny make a living? Advertising.

    So the real difference between the pre-digital age and the post-digital age isn't the ability to make copies. It's the ability to fast forward. Seriously. If you couldn't skip the ads, then an additional million people watching Survivor over P2P would be just as profitable for CBS as an additional million people watching it on TV. (Obviously, CBS would need a way to measure the P2P viewership in order to charge advertisers, but they'd just pay Nielson to develop a way of doing it.)

    And that's why product placement is the way of the future. I chose Survivor as a deliberate example because there's already a lot of built-in placement there. Reward challenges don't just involve food or money; they involve Fritos and Visa credit cards.

    Now, there is still money to be made by interstitial ads, as evidenced by the fact that the broadcast networks still have them. But as more and more people get PVRs, or download shows via P2P with the ads already edited out, product placement is going to become a bigger and bigger percentage of media companies' profits. And at some point, we'll be back to the old days, when shows had titles like The Maxwell House Concert. (Yes, that really was the name of a show!)

    People in the entertainment industry know this already, which is why (for example) the union representing TV and film writers made a major push [] to be included in conversations about product placement. The Writers Guild didn't pick this issue at random--it's the way of of the future.

    An interesting question, though, is whether the networks and studios will own that future. I would argue that the most profitable entertainment product of the past several years didn't appear on TV or in the movie theaters. It appeared on I'm referring, of course, to the Eepybird Mentos Fountain video [], which cost $300 to make and had already generated $15,000 in advertising revenue for its creators by June [] (as well as an additional $15,000 for Revver.) By my estimate, it has since earned an additional $15,000 for the Eepybird guys, bringing their total profit to $29,700. That's 99 times their initial investment. By way of comparison, Pirates of the Caribbean 2 cost about $225 million to make. To be as profitable as the Eepybird video, it will need to make more than $22 BILLION.

    I don't think the major entertainment companies will vanish. Hollywood, as an institution, has proven remarkably resilient. But I do think that, 20 years from now, the entertainment industry is going to be a lot more decentralized, and a lot more driven by small groups of creators doing relatively low-budget stuff.
  • Re:"I'll run Linux!" (Score:2, Interesting)

    by JockTroll ( 996521 ) on Wednesday August 30, 2006 @06:45AM (#16006136)
    What did you expect? Did you really believe all that crap about the "digital revolution", "information taking the place of money" and so on? It took some years but the economy has reacted, so harshly that all your dreamy-eyed fantasies will be crushed totally. Your beloved computers will be, forever, your prisons. Those of us who haven't turned stupid machines into a reason to live will carry on as always, and nothing will change for us, while you computer geeks will have to resign yourself into having been utterly defeated. No more ridiculous revenge plans for your failed lives, no more parasocialist ideals, nothing more of that forever. The corporate geeks have caught the computer geeks, they have beaten them up and left them defeated and humiliated, as always. To paraphrase your beloved Orwell, the future is a jock, shitting on a nerd's face forever. Suck it up.
  • Re:Biased question (Score:3, Interesting)

    by Znork ( 31774 ) on Wednesday August 30, 2006 @06:53AM (#16006151)
    "Just because it is easy to copy music it doesn't make it right to do so."

    Just because it's easy to copy music it doesnt make it wrong to do so.

    If I buy a chair and then make one just like it, it's in no way wrong. If I had a chair-copying machine, and started churning out copies, it still wouldnt be wrong. Yet you somehow appear to believe that ease of duplication should merit legal prevention of such duplication?

    "but someone's lost something."

    Yes, the economy as a whole constantly loses because of intellectual property. The money that brother isnt spending on buying protected material is spent on other things. If he would have had to buy the material he wouldnt have been able to spend money on those other things. This in turn would mean less wealth was created within the economy as a whole (the other stuff _or_ the ip, as opposed to the other stuff _and_ the ip), leading to an actual loss to the economy.

    This problem is squarely tied to monopoly pricing. In a competetive market, the price falls towards cost of production, leading to a maximization of available wealth, and a fulfillment of as many consumers demand as possible while still being able to produce the product with a slight profit. With a monopoly right, pricing and revenue is maximized at a point where a whole lot of consumers cannot afford the product/will value it less than alternative products, even when it still could be produced with profit at a lower price, thus negating the whole point of a free market economy.

    "but had your brother purchased said items the artist (and the rest of the chain from shop keepers to recording labels/studios/etc) would have got a share of the monies"

    Then again, if we scrapped the monopoly copyright and instituted an IP sales tax on those actually profiting from the sales (say, 50%-75% of the price in stores or on the net) with the proceeds going directly to the artists and composers, then the artists and composers would have gotten a much bigger share of the monies, and the whole chain in between would remain competetive.
  • Re:Biased question (Score:2, Interesting)

    by mencial ( 848314 ) on Wednesday August 30, 2006 @10:13AM (#16007110)
    Here in Spain, people do beautiful movies that get almost no money in movie theaters. How they do it? Government grants. They are shut off the theaters by the US majors. If there were no US big-budget, big-publicity-campaign movies, there would still be a ton of good movies to see.

    All those Clint Eastwood spaguetti westerns were pretty cheap. And they are amazing.
  • Re:Yeah sure. (Score:3, Interesting)

    by Kadin2048 ( 468275 ) <slashdot,kadin&xoxy,net> on Wednesday August 30, 2006 @10:51AM (#16007420) Homepage Journal
    I don't think there's any charity involved at all, necessarily.

    And I do think that people would pay an artist for future results; this isn't some stunningly new way or doing business, you pay people in advance of performance all the time. In fact, that's why contracts and contract law exists; it gives people a way of setting out the conditions for payment in advance, so that you can either pay and be relatively secure that the work will get done, or the worker can do the work and be secure that they'll be paid afterwards. Both would work with art; sometimes you might pay in advance, sometimes you might pay on or after delivery according to a contract that you had signed in advance. Either way, you'd want to agree on the terms beforehand, just like you'd do in any other business transaction.

    What I'm really trying to get to here, is that there's nothing special about art. Really, there isn't. A painter is a photographer is a machinist is a doctor; they're all skilled laborers. If you want one to do something for you, you pay them. There's nothing revolutionary here. None of them require the amortized business model that's so common today in entertainment in order to exist.

    And while you might not particularly like what's on YouTube, that's a personal value judgement. If that's all that was available, perhaps you'd feel it necessary to spend a few dollars in advance -- take a small risk, in other words -- and fund someone who would create the sort of entertainment that you'd want to watch. It's all about what people are interested in paying for.

    There is obviously a demand for entertainment, and there is a clear supply; the only thing we need to do is place as few barriers as possible in between those two groups, and let the problem work itself out.

    As to your comment about DRM not being funadmentally wrong, I disagree. I disagree not on moral terms, but because of the negative effects they have on our society in general, because they make it harder for people to interact normally and use the rights which they ought to have, and because such restrictions distort the market from what it ought to be naturally.
  • by dgatwood ( 11270 ) on Wednesday August 30, 2006 @05:09PM (#16010778) Homepage Journal

    Precisely. The fundamental reason that DRM cannot work is that you are protecting the same content millions of times. The law of averages says that if one in every hundred thousand is able to do it, there are ten people with a copy of a given work who can do it. It only takes one. More to the point, as soon as that scheme has been broken for one piece of media, it has been broken for -every- piece of DRMed media. It only has to be broken once before -every- piece of content encoded with that crypto scheme is available to people who haven't purchased it. The only way to avoid that problem would be to make the media do the first stage of decryption itself, which might happen someday, but not any time soon....

    You can make it harder for transient content (e.g. cable signals) to be cracked because it is of lower value after the data is stale since it cannot be readily stored until you're ready to decrypt it. In that way, all you have to do is provide a separate encrypted stream for every customer and it becomes a lot harder to decrypt. But that is literally what is required for DRM to have any real effectiveness: a separate copy for each person with a separate key for each person, coupled with never letting them store the data, even temporarily. For most content, this makes no sense, and until we have ubiquitous gigabit wireless networking everywhere in the world, it will never make sense. Even then, the cost of the computing overhead needed to encrypt millions of copies of a stream simultaneously with sufficiently strong crypto will likely exceed the benefits of doing so for the foreseeable future.

    Creating perfect DRM is a fundamentally unsolvable problem, and creating "good enough" DRM is never truly good enough. All you can really do is protect it for the short term to prevent initial sales from being cannibalized (and even then, only if your DRM scheme has never been used before). After that, all bets are off.

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