Virtual Economics

Andrew Lloyd Webber is right about Internet piracy

Via Techdirt; Andrew Lloyd Webber has apparently condemned the Internet (yup, the whole thing) as "the Somalia of unregulated theft and piracy".

It's a fascinating claim, and over at Techdirt Mike has already demolished the wilder misconceptions about the Internet and music business models that it implies.

But the claim also belies a curiously one-sided and ultimately misleading view of Somalian piracy. There is, of course, a simplified view of the Somalian naval situation in which evil pirates seize peaceful international shipping and hold it to ransom. So far, so obviously over-simplified as to offer no insights at all. A rather more nuanced view of at least some of Somalia's "pirates" - see eg here in the Independent - points out that much of their activity concentrates on protecting Somalian waters and interests from foreign companies dumping nuclear waste and stealing much-needed seafood off the Somalian coast. Others have pointed out that the so-called pirates have taken on the role of coast-guards (an official function not carried out by the state in decades) in order to prevent arms smuggling. Sure, some of them are just bandits. It is equally clear that many are not, and are ordinary people who have taken up arms to defend Somalia in absence of any sort of formal naval protection.

Begin to sound at all familiar? Sure, there are people who just download music off the Internet because it's free and they don't want to have to pay for it. But the situation, like the situation off the Somalian coast, is vastly more complicated and richer than that single view, and many of those branded "pirates" are actually trying to carry out a valuable public services. In fact, Andrew Lloyd Webber may have had a point.

If only he knew.

Settle now?

I'm going to take it as read for this post (and probably hereafter) that the music companies are finished. In my opinion we've had that debate and it's done. They capture value but create none; the deal they used to offer artists, where the company bore up-front reproduction and marketing costs in return for a (hefty) slice of future profits, no longer makes any sense at all from the artists' point of view; and the thing from which they captured value, the once-scarce reproduction of music, is finished.

When they finally get around to folding the things, though, we - as online music consumers - are all going to encounter a serious problem. Because one of the few remaining assets the receivers will have to sell off is the companies' "right" to sue people who have used p2p file-sharing networks to share the music those companies once owned. That "right" will get sold off to the highest bidder, and I think it's pretty safe to predict that the highest bidder in each case will be some sort of parasite organisation that looks a lot like a patent-trolling (or EULA-trolling) outfit, formed purely to extract the maximum revenues from buying up the right to sue the ex-consumers of a dead industry's alleged IP.

So one idea I'm toying with right now is that it would be far cheaper for almost anyone who has used a file-sharing network to try and come to some sort of settlement, provided it was reliably "full and final", with the RIAA or local equivalent now rather than after the industry finally splutters out its last. The industry as it currently stands appears to still have some hope that we are its "customers" - that we might one day go back to paying it for the chance to get hold of things that are in fact now infinite in their supply. One day soon, when both that hope and the industry behind it dies, we'll be dealing instead with IP holders who have no agenda whatsoever but to extract every penny possible from us through the courts. So maybe - and I am just saying maybe - the prudent course, for people who get the offer, is to settle now.   

Tesco Digital

In one of my occasional Actually Buying Things Legally Online experiments I bought some music from Tesco Digital (on grounds it was the legal download site that happened to come top of my Google search at the time) more than a week ago. Needless to say, I still can't listen to it. Of the four computers I've had a stab at downloading it to (with the exception of my EEE all bog-standard Windows machines), only one of them was even able to successfully capture the files and the route from there to my mobile phone - where I actually want to listen to the things - is so labyrinthine I have essentially abandoned the attempt. My email to technical support took a week to answer, and the answer was the sort of templated, multi-fit request for clarification that may as well have just said outright "please do not ask for technical support as having your throat torn out by a savage bird while a disembodied hand smashes your head against the bar often offends".

If I understand it aright, the point of DRM is to prevent theft (or if you're being pedantic copyright violation of intellectual property). Currently Tesco has £16 of my money and has given me nothing in return. It is pretty clear to me where the theft lies in this relationship.

It is of course not an original observation that ten sodding years ago Napster was much, much better than this. That I'd happily even pay Actual Money for access to something that good, convenient and DRM-free today. But I would. And in the meantime, I'll go back to the marginally less laborious work-around of buying and ripping CDs.

Oh, and the music? A couple of Bob Marley albums. Don't worry about a thing indeed.

But everybody's doing it...

New research into benefit fraud, designed to accompany the existing literature on tax evasion, perhaps throws a little additional light on the whole weary "stealing music isn't wrong" debate. From the paper

"Our results suggest that moral values evolve endogenously and are determined by prices (i.e. the cost of acting morally). Citizens who have comparably more opportunities and low cost to commit a certain offense, develop the attitude that it is a minor offense. This suggests that citizens excuse or rationalize their own deviant behavior. Put differently, they self-servingly adjust their moral values." (HT Tim Harford)

One thing is reminds me of, of course, is Scott Adams's old experiment to produce cognitive dissonance in people who habitually ignore copyright laws but refuse to think of themselves as doing anything wrong. Snippet:

"The fascinating thing about cognitive dissonance is that it’s immune to intelligence. No matter how smart you are, you can’t think your way out of it. Once your actions and your self image get out of sync, the result is an absurd rationalization."

But the thing it most reminds me of is Alexander Pope's "Essay on Man":

Safe in the hand of one disposing Pow'r,
Or in the natal, or the moral hour.
All Nature is but Art, unknown to thee;
All chance, direction, which thou canst not see
All discord, harmony not understood,
All partial evil, universal good:
And, spite of pride, in erring reason's spite,
One truth is clear, whatever is, is right.

If there are low costs and easy opportunities to do commit an offence, we're more likely to commit it; and once we've committed it, so long as we think of ourselves as good people (the sort of people who don't commit offences) we'll find a way of rationalising it. It regularly amuses me how furious it's possible to make people by pointing out that copyright violations could be considered in any way (legally, morally) wrong. But the music industry are just parasites (sure);  but some artists are doing pretty well distributing their work copyright-free (true); but we need to develop new models that are relevant to the digital age (of course we do).

Or in other words...whatever is, is right - because once we do a thing, we find a way to make it right, at least to ourselves.

Comprising it

More from Spook Country - this time protagonist Hubertus Bigend is explaining the state of the music industry to an ex-musician from a band called The Curfew. It is probably the best short history of the industry I've seen.

"In the early 1920s," Bigend said, "there were still some people in this country who hadn't yet heard recorded music. Not many, but a few. That's less than a hundred years ago. Your career as a 'recording artist'" - making the quotes with his hands - "took place towards the end of a technological window that lasted less than a hundred years, a window during which consumers of recorded music lacked the means of producing that which they consumed. They could buy recordings, but they couldn't reproduce them. The Curfew came in as that monopoly on the means of production was starting to erode. Prior to that monopoly, musicians were paid for performing, published and sold sheet music, or had patrons. The pop star, as we knew her" - and here he bowed slightly, in her direction - "was actually an artifact of preubiquitous media."

"Of-?"

"Of a state in which 'mass' media existed, if you will, within the world."

"As opposed to?"

"Comprising it."

Much (most) of what we call media is currently in an - historically - anomalous situation. Pretty much all of the major forms of popular entertainment can be instantly and endlessly reproduced by amateurs. TV, film, music, even a lot of games, to the point that they become effectively public goods. The market for cinemas is broken because - beyond the advantages of the size of the screen - the business is all about gatekeeping something that has become ubiquitous. So for TV, so for music, so - we seem forever on the verge of finding - for books.

But this apparently natural, allegedly inevitable transition to ubiquitous media - media as "free as the air", as Prince liked to say before he realised the real fun was in suing his fans - could be the merest blip in the history of media technology. You can at least envisage the beginnings of a swing of the pendulum the other way when watching Beowulf in 3D at the Imax (try downloading that experience off the Internet to watch at home). Sure, a big room in which you show films that you pretend are new or exclusive is now obvious nonsense...but envisage a media technology that really provides an experience that can't be replicated at home, at least for the next thirty years (except by millionaires), and you've suddenly got a business model again.

Not that this will help the music industry a jot. Charging money to reproduce music was indeed "a technological window that lasted less than a hundred years". But we draw the wrong conclusion if we try to learn from that the - beguilingly attractive - lesson that all media is on the road to becoming inevitably as free as the air. All you need to believe today is that more media technologies are already on their way. Of course they are.

"Where we're from the birds sing a pretty song and there's music in the air"

If you'd asked me ten years ago whether it would be a good thing to have music playing everywhere I went I'd have answered with a pretty unqualified "yes". And yet, for some reason, people playing music over their phones* in public places are considered a nuisance or possibly even a menace.

I can't believe this is merely because the quality of sound reproduction currently achievable via phone speakers is currently so poor. If the speakers improve - and they will, of course - to the point at which it sounded as good as your hifi at home, people would still protest.

Because - of course - it's not about the music, it's about the territoriality. Like birdsong and the less salubrious habits of dogs, playing music in a public space is just a form of territorial pissing, a cry of "this is my space".

I find that if you just treat it as free music the whole annoyance evaporates. Sure, it's poorly-reproduced music that you might not have chosen ideally for yourself but it's better than the muzak in most shops. Think of it not as a noise intended to signify that "this is my space" but some fool playing you music for free and it all seems oddly pleasanter.

(Update: Peter in comments suggests "they're buskers who don't expect a coin". Exactly what I was trying to say.)

*I think the "mobile" part of this term became redundant about two years ago when I got rid of my landline

Music tax

I'm currently very taken by the Music Business Group justifying their call for an iPod tax with the claim that "unquestionably, there is a value produced by the ability to format shift. It is imperative that creators and performers should benefit directly from this value."

Let's just say for the sake of argument that we don't demolish this argument on grounds that - as Shane Richmond points out - it isn't the creators or performers who stand to be enriched by the tax. (We can test this aspect of the claim trivially enough by asking  whether the MBG plans to waive the tax in the case of deceased performers. Anyone care to lay bets?)

Let's instead look at the implication that because value is created by the ability to format shift people should pay for that value. It's fair enough as far as it goes. Format-shifting does create value. I wouldn't buy CDs if I couldn't shift them on to my iPod-type-thingy and my phone.

And, right there, is the rub. The ability to format-shift is already incorporated into the market price of CDs. Remove that feature and the labels will have to drop prices or accept lower sales (and, in practice, more file-sharing as people find substitutes). Charge an additional fee for a feature that, frankly, we've been using for more than a decade and they'll create the same effect. Hence this fatuous demand for an iPod tax. Oh dear.

Brewers filling the innovation gap left by the music industry

We're past having to point out that the music labels aren't going to be at the forefront of creating a business model for music distribution that's relevant in a digital world. Interestingly, however, the latest people looking to fill that gap are Tennents lager, who have just launched The Tennent's Mutual. From the press release:

"Tennent’s will empower and enable music fans to shape the live music landscape with a start-up fund of £150,000. Fans will be allowed the unique power to decide democratically and collectively exactly how this money is invested, ultimately creating The Tennent’s Mutual live programme, which will begin in October / November 2008. Founding members will select artists, debate locations for gigs and call the shots on ticket prices by interacting as a community and voting for their preferences online – ultimately creating new and affordable access to live music in Scotland."

So there's an initial pot of £150k seed money, and bands that can drum up popular support can get funding from it to play.

There's two interesting things here. The first is a theme I've returned to again and again: that increasingly what in media we like to think of as "advertisers" are just getting on with building their own brands by creating their own media solutions. For the second, I turn to Craig McGill who originally pointed this out to me:

"The interesting thing will come from seeing how they stop people hijacking the site and/or the cash."

Online votes are notoriously hard to prevent from descending into farce. See, if you haven't already, what happened to the New York Mets when they put their new anthem out to an online vote. I think the question can probably be put as specifically as this - how is Tennent's going to prevent voters handing the whole £150k over to Rick Astley for singing Never Gonna Give You Up? 

"Pay us not to sue you"

You'll have seen the latest interpretation of the US "music tax" on TechCrunch by now. "Pay us not to sue you" indeed. The ISPs are bound to say no. first, it sets a disastrous precedent. Film makers, game studies etc et al will be next in line if this nonsense goes ahead. More to the point, ISPs going to be around a lot longer than the music labels and prosecution takes time - lots of time if one party wants to take things slowly. ISPs can call this bluff by dragging their feet and waiting for the music labels to die.

PS you rock my world

From now on, I'm going to stop being surprised that every time I see Eels they're even better than the last time. I'd have said Eels With Strings at the Royal Festival Hall last year was unimproveable. I'd have said the same about the solo performance at St James's Church on Picaddilly last month. So it's my own fault I was surprised again that last night's performance at (again) the Royal Festival Hall was even better still. E and Chett (or "the Chett", apparently) playing a thoughtful, mostly mellow set that hasn't changed much since the With Strings tour (indeed hasn't changed that much since Blinking Lights came out) that took in My Beloved Monster, Novocaine for the Soul with E on drums, the ever-popular I Like Birds, the lovely, soulful, post-Souljacker-incarnation version of Souljacker and ending on my own pre-Blinking Lights favourite PS You Rock My World. This guy just gets better and better.