Re:Oh, for God's sake (Score 1)

The "stock market" might be the wrong analogy. A "currency market" might be the right one.

If there was a way to make digital rights transferrable, then a secondary market for digital rights to a file could be formed, in which buyers would have to pair off one for one with sellers to obtain digital rights. A "Seller" is broadly defined, including both record labels and people that previously had bought digital rights from a record label (or anyone else for that matter).

In this way a record label would look a lot like a government trying to decide how much new money to print. If they print too much, they know they will depress the price; holding product off the market will help increase the price. If the product they're selling isn't in demand, it doesn't matter how much they make, it won't attract much of a price. In this way the secondary market would price each song offered by a label, with popular songs fetching higher prices (depending on demand) and less popular album-fillers fetching low prices.

The supply/demand conundrum is easy. If the record labels offer an unpopular song for 99c that nobody buys, revenue is zero. If they subsequently reduce the price so say, 25c, and they get some sales, they get revenue. Dropping it further to 1c might increase quantity further, but the price is so low that their revenue would drop. This mechanic would result in record labels "right pricing" new offerings eventually to maximize revenue, with the help of the sellers in the secondary market.

If a distribution channel like iTunes stays out there, you could easily envision a Treasury auction mechanic in which the labels offer songs to dealers, who bid prices for a quantity of licenses. The label decides how much it wants to sell, and sets everyone's price at the price where the "book" is completely filled.

The key concept is that DR have to be transferrable and secure; no proliferation of non-authorized licenses. And there can't be a secondary distribution channel (i.e. stores) or you have something akin to a black market, resulting in price distortion. The logical outcome of such a construct is that buyers will only have to pay a "market" value for what they want to hear, supply (in some circumstances) will be limited, and all those "album-fillers" will disappear, along with secondary distribution channels.

Doesn't sound like a win-win from the point of view of the incumbents. And in this case you need their cooperation to accomplish the "deregulation" that is being proposed.