The Illusion of Free Stuff

Yesterday’s New York Times offers a very well-articulated editorial by media writer David Carr on the larger economic cost of free media.  Using an example of buying fresh fruit at a neighborhood stand, Carr questions his own instinct to undervalue the price of a bunch of grapes in context to the way in which so much access to “free stuff” has skewed his own perceived value of goods and services in general. In a market like ours, value is reflected as price and always traces back to labor, someone’s labor somewhere.  So, I think Carr is right to ask whether or not the steady stream of free stuff in digital space corrupts our perception of value in other sectors of the economy, which can only have a cannibalizing effect on the value of our own labors whatever they may be.

We are taught in basic economics that goods have intrinsic value (i.e. cost of production + some margin of profit), and that they have perceived value (i.e. what the market will bear), with perceived value determining how wide that margin of profit can be.  I never formally studied economics, but it seems to me that when perceived value drops below intrinsic value, prices become “artificially” low in the sense that what the market will bear can no longer sustain production of the goods in question.  This, of course, depends partly on one’s definition of “sustainability.”  If, for instance, the price of socks at Walmart is “artificially” low because it can only be sustained by outsourcing sock production to a country with poverty-level wages and few workers rights, then this is certainly one kind of sustainability, but it is one that includes hidden costs we privileged consumers tend to ignore until it affects us directly.  The closer it gets to home (e.g. when we read about Walmart’s own employees working below the poverty line), we pay a little more attention.  A little.  And of course, prices can also be made artificially high based on perceived value. As anyone who’s ever marketed luxury goods can tell you, a wealthy buyer’s ego is worth several percentage points of mark-up.

One can extol the virtues of technology, invoke examples of historic transformations like the printing press, and cry Progress! from the rooftops in stream-of-consciousness editorials like this one by Bob Leftsetz, whose criticism of Carr reminds me of a slightly demented Kerouac, if Kerouac had hated music.   But if we clear away the smoke and dust from all that bluster, we might address the central point which is that the perceived value of a song (and we’ll let song stand for all media) has unquestionably reduced prices (or rates) to unsustainable levels for supporting the production of music itself.  So, the consequential question is whether or not we actually care.   Quite simply, the perceived value of recorded music was first reduced to zero by piracy (which is neither economic nor technological progress), then it was briefly and only partly resuscitated by digital downloads, and then it was dropped back to effectively zero by streaming services.  And one reason we know the perceived price is zero or near zero is that so many tech-utopians keep saying it is while they offer numbskull suggestions like more merchandise, more touring, and “adding value” to replace the inescapable loss of revenue from disappearing  sales.

When it comes to a products like albums or a motion pictures, prices are almost always flat so that the financial success of a given product is based entirely on volume of sales (i.e. popularity) and not on perceived or even intrinsic value (i.e. pricing) of each unique product.  But in a technological paradigm that has driven prices in the entire category to zero or near zero, champions of the “new models” are quick to say that producers of media will share smaller bits of a much bigger pie because the Internet makes the whole world a potential customer for no more than it costs to reach a local market.  Sounds good except for the fact that ten million times almost zero is still…y’know.  This argument always reminds me of the old joke about the guy selling cordwood for less than he buys it wholesale and figures the reason he’s losing money is that he needs a bigger truck.

But of course it’s all just progress, right?  Technological innovations that improve efficiency and availability of goods always lower prices for consumers, and there is usually a period of revenue shift from one class of workers to another.  It’s an unfortunate byproduct of change, but change is inevitable, so why shouldn’t we just embrace it and quit whining as Lefsetz and others insist we should?  Because the transformation is not holistic and because the initial and persistent, catalytic force of piracy normalized a black market, with which no legitimate industry in any sector can ever compete.  Both legal and illegal disruptions to media sales occur solely at the distribution end of the supply chain.  If the Lefsetz-like utopians were to say that the folks who used to package and ship physical CDs are just victims of natural progress, I’d have to agree; but further upstream in the supply chain that ends with a song in your ear or a movie in front of your eyes is a production process where all the costly labor, expertise, and capital are invested.  And when we devalue or become disconnected from the labor, expertise, and capital behind any product in any sector, this has that ripple effect to which I think Carr alludes in describing his gut reaction to the price of a pack of grapes.

Last week, songwriter/composer Van Dyke Parks wrote this editorial about the value of a song in the age of streaming, and I figured a guy like Lefsetz would go for the too-obvious criticism of this quote:   “Forty years ago, co-writing a song with Ringo Starr would have provided me a house and a pool. Now, estimating 100,000 plays on Spotify, we guessed we’d split about $80.”  The myopic reaction to a quote is to think either that a song should not be worth a house and a pool or that Parks and Starr have enough money; but both reactions entirely miss the economic implications of Parks’s point. If technological change drops the trade value of a popular good from a house and a pool to, say, a really nice car, then we might be looking at a modified but still sustainable market.  But if the trade value of a popular good drops from house and pool to less than a basket of groceries, sustainability has been eradicated, and I personally think anyone who views this as virtuous is the same kind of fool as the guy in the joke hauling cordwood.

Utopians like Lefsetz will say that the popular music and popular artists will still make plenty of money, and guys like Mike Masnick at Techdirt will preach the need for creators to embrace new lines of revenue.  And indeed, both are right in a way I personally wish they were not.  According to this brief post on Gawker, Grammy-winning pop star Pharrell not only performed at a recent Walmart shareholders meeting but apparently asked the crowd to “put your hands together for Walmart, guys, for making the world a happier place.”  In light of Walmart’s track record for its labor practices, my friends and I twenty years ago would certainly have called Pharrell a sell-out.  But today, anyone who loves free or almost free music and would still call him a sell-out is not only a tad hypocritical, but isn’t paying attention to what the market looks like when we break the transactional relationship between consumer and producer that ties price back to labor.  Pharrell is just one example.  We’re seeing a trend of popular artists take gigs to perform for sponsorships, corporate events, or private parties for wealthy individuals; and this move toward patronage by the elite is a direct response to the fact that we the people are no longer a source of revenue.  This will probably have the unfortunate effect of turning executives at Walmart or Pfizer or Shell Oil into the new tastemakers, which just personally makes me miss even the sleaziest producer who ever worked for a record label.  I don’t know whether or not a PR or communications person from Walmart fed that line about making the world happy to Pharrell, but my experience in corporate communications tells me it could have happened that way.  What’s for sure is that such  exchanges between execs and pop stars will happen soon, and  the pop stars will no longer dictate terms to these big patrons, who are their only paying customers.  I find it interesting that as angry as we seem to be over ceding political power to corporate interests because they can buy influence, that we are unwittingly going to cede cultural power as well, simply by abdicating our ability to vote with our pocketbooks.

© 2014, David Newhoff. All rights reserved.

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54 comments

  • Yeah well, I agree. Look, technology is devaluing human labor overall. The content industry is not to blame for the failure of copyright either. Some people will say “in retrospect, the recording industry could have made better decisions”. This is true! They could have totally made better decisions!!

    In retrospect, I could have also bought AAPL stock in the start of the century. It’s a bad decision that I didn’t! This is also true!!

    The point is, it’s really hard to predict the right decision in a future where there exists no tandem in human history. So I don’t think the record industry is [much] to blame here.

    Anyway, technological development deserves the real blame for largely breaking copyright, and to the general extent of devaluing human labor. The information age has put the tools of mass copying in the hands of ordinary people, something that was normally an industrial activity. Copyright was never designed as a low to regulate the ordinary dealings of the people, but rather the industrial activity of publishers and print houses. As such, it is incapable of effective enforcement in reality of the information age.

    That’s not a reason to eliminate information technology or technology in general mind you. But rather to look to alternative means of supporting a fair economy, other methods that make science in the information age, the age of where human labor becomes increasingly unnecessary. One obvious solution would be a universal basic income..

    • M says “One obvious solution would be a universal basic income..”

      …Right, because that worked out soooo well for the U.S.S.R…

    • In the olden days, mass copying of information was an industrial activity. To copy something you needed machines that were expensive. For example a printing press. These machines where not typically owned by individuals, but rather specialized businesses like publishers and print houses. Copyright chiefly exists to reserve the right of copying to the original author of a work. As mass copying was an industrial activity, copyright was an industrial regulation. Copyright worked very well.

      The main result of the information age is the invention of powerful copying machines which are created for the general public. These machines are owned by almost everyone (smartphones, computers, etc.). The tools for mass copying are now in the hands of the general public. Copyright is therefore no longer an industrial regulation, but a law that effects the ordinary dealings of the people wit large. The problem is copyright was never designed or intended to be anything more than an industrial regulation.

      • It isn’t the copying that is the problem, most actual copying is pretty damn close to fair-use The mischief lies in the mass distribution and making available of the resulting copies.

      • John,

        That power is also in the hands of the people. The thing is the truisms that made copyright work (expensive copying machines, specialized printing businesses, etc.) are no longer there. The barrier to copying and dissemination, even at a massive scale, is so very low. Therefore copyright has to be applied to the people writ large. We can’t treat copyright as a industrial regulation anymore. Which is not how it is supposed to work!!

        I’m trying to stress that all the problems with copyright, all the controversy, all the ways it is failing, like ALL the issues with modern copyright. They all come from this. They come from recent technological developments. To me it’s clear that copyright and like the information age are incompatible. We did to shelf it, and come up with something that works. That’s all.

      • Here is an idea brand the pirates. Tag their FB pages, twitter accounts with THIEF. Or if that seems too draconian. Disable all their SN and forum accounts. They’ll have spent years building up an online profile – wreck it.

    • *gack* Technology hasn’t devalued labour. This isn’t about putting van drivers out of business, or making available high street shops for some other purpose. The intrinsic value of the good hasn’t changed people still want the product. What we have here is a case where effectively the law says you don’t have to pay for these items. If it did that for cars you’d have no cars being manufactured.

      • Value isn’t tied to price. In fact the ratio of value to price is driven down by technology. I’d say my computer has far more value then the ENIAC, yet it costs orders of magnitude less.

        Technology is certainly devaluing human labor because it’s REPLACING human labor. This is stuff like industrial automation. Human labor is super important to the economy. That’s how most people make their living. What are we going when we automate away huge chunks of the job market? This is a real problem by the way, economists and industrial leaders have spoken in it. And if there is no solution soon, it’s going to fuck shit up. That’s just the end of it.

        The whole copyright thing is vaguely tied to this too by the way. No authors haven’t been “automated away”. But rather technology has harmed the ability to use existing economic processes like copyright as a way to earn revenues.

        What I am trying to say is there is a common theme here: technology is radically fucking up how economy is suppose to work. And this is dangerous to our future.

        Now the obvious answer is rid of technology, but that’s pretty stupid IMO. We need people in power to realize what is going on and try to think of new ways to keep people (not just authors btw, but ANYONE affected by technology) above the fucking poverty line while still allowing technological development to continue.

        All I say is: Good luck!!! It feels like we are gifted with one of most incompetent governments in our nation’s history. I have very little hope here. 🙂

  • David–
    I don’t have enough time right now to post anything with regard to your thesis overall, but I did note one thing which can be addressed quickly.

    “If technological change drops the trade value of a popular good from a house and a pool to, say, a really nice car, then we might be looking at a modified but still sustainable market. But if the trade value of a popular good drops from house and pool to less than a basket of groceries, sustainability has been eradicated, and I personally think anyone who views this as virtuous is the same kind of fool as the guy in the joke hauling cordwood.”

    Napoleon III, Emperor of France in the mid-19th century, possessed a set of tableware made from an extremely rare and precious metal. He used it, and some of his honored guests did too, but the less fortunate who nevertheless managed to dine with him had to make do with mere gold or silver. The metal in question was aluminum, which had only recently been discovered, and because of the difficulty in smelting it, cost a great deal. It was generally regarded as a sort of lightweight silver derived from clay, and was basically only used for luxury items. A bit of googling will reveal some beautiful 19th century pieces.

    Then the Hall–Héroult smelting process was invented in the late 19th century, and the stuff is cheap enough to not give a second thought to. It’s also become far more valuable, though, since we can make enough of it for use in industrial applications. There’s a bit of a downside in terms of the electricity required to smelt it, but this is mitigated by its easy recyclability. I’m sure there are numerous other examples (there’s an old saying about how a modern day person with a low income, but a tv, a car, a microwave, running water, and access to modern medicine is basically living a better life than most of history’s kings and emperors) but this instantly sprang to mind as a technological change that utterly destroyed value based in a good’s rarity, yet has been on the whole positive. If I had to suggest another one, lest you think this an isolated example, how about non-landline phones and the associated network?

    Sustainability is nice for the people being sustained, but there is a bigger picture.

    • In the case of aluminium the issue is that it became cheaper to smelt it. In the case of phones it became cheaper to make phones. None of which is true of content creation. Unlesxs you want to import “sweat of brow” into US copyright, that it is less laborious to fix something in a tangible medium, does not interfere with a copyrightable creation. The value of “War and Peace” is not contingent on word processors.

      • David Newhoff

        John makes exactly the right point, not that I don’t legitimately appreciate the Napoleon flatware story. The only thing I’ll add, and it’s the overall point of the post, is that sustainability is nice for nearly everyone or it isn’t sustainability. The devaluation of human labor is visible in other places besides entertainment media.

      • Content creation doesn’t cost less now? People make records for *substantially* less than they used to with full creative control.

      • David Newhoff

        Anonymous, this “creation costs less” is a complete fallacy promoted by vested interests. It has no basis in truth as a general statement, but I cannot answer fully right now. Suffice to say that the cost of entry can be lower. The cost of production across the board is not, not in music, and WAY not in film.

      • No, a cheap album used to cost $10-15k to record, and distro cost more on top. A good record was $50k+. All at 1990 prices.
        A good record can now be made for less than $5k, mastered. I’m not saying that there’s no reason to spend $50k now – there is – but it will compete on a fairly level playing field to one made for less than $10k in all but the top pop market. Distro starts at free, and goes up from there.
        As a person who has been involved in making records for over 20 years I can assure that the cost has come down. Way, way down. To the level that most bands can afford to make a record incurring little to no debt, while maintaining 100% creative control.

      • A good record can now be made for less than $5k,

        Specifics, please. What record are you talking about?

      • Crickets?

        It was kind of a trick question anyway. Making a record for less than $10,000 has been possible since at least the ’70s, if not earlier.

        Home studios have been everywhere since the mid ’70s when production gear began to fall to a price point attainable by a dedicated hobbyist. Most small cities already had dedicated by-the-hour studios, anyway. Where do you think jingles for the local car wash came from?

        Commercial production costs began to fall in the ’80s with the ubiquity of drum machines, coupled with bean counter logic brought on by Wall St. investors who couldn’t tell the difference between a drum machine and a human drummer, and assumed that audiences couldn’t either. (This reminds me of all those stories about how the average person can’t tell the difference between a $1,000 bottle of wine and a Trader Joe’s $5 bottle, which then leads people to proclaim that there is no difference, when in fact such a study only proves that most people are not savvy wine tasters.)

        My Aim is True was recorded for less than $3K (platinum). Bleach was famously recorded for only $606.17, and it has gone platinum. Boston, the version that was eventually released, was recorded in Tom Dowd’s basement (17x platinum). One of my all-time favorite albums, Husker Du’s Zen Arcade was recorded over 80 hours for only $3,400. Double Nickels on the Dime cost $1,100. The entire SST catalog of the ’80s consists of albums recorded for well under $10K. Might as well throw Sub Pop’s ’80s catalog in there, too.

        Of course, I’m sure I don’t have to explain this to someone who has been working in the industry for twenty years.

        I’ll link to an article that goes into detail about why the “recording costs nothing” myth is just that, a myth. Now, I know this guy only has ten years experience behind his non-anonymous name, and credits to boot, which I know isn’t much to an anonymous twenty year veteran, but then I see no reason to believe that you actually thrive in an industry of creatives when you are on record regarding them as milk cows.

        http://www.trustmeimascientist.com/2013/05/06/how-long-is-this-gonna-take-recording-an-album-in-the-21st-century/

        From the article:
        “Over the past few decades, the costs of recording equipment have plummeted. Today $5,000 to $10,000 in funds can allow you to assemble a recording system that might have required a half-million dollar investment in 1993.

        There are some things that don’t change, however. In 2013, the most expensive parts of the recording process remain time, talent and labor. Although the costs of transducers and microprocessors may go down, the price of rent, utilities and soundproof construction will always rise.

        Non-musicians are often surprised to find that despite all of our cost-saving advances in technology, records aren’t that much cheaper to make these days. And for all of our time-saving advances, they aren’t made that much quicker, either. “

      • lol, even if you got everyone to work for free, dismissed the decade[s] of expenditure of dedication/time/money that got said person to the point to where they can make something anyone would even want to listen to… that the engineers and session musicians and producer and mastering house all internetmagically decided not to charge their usual fee …PROMOTION alone costs are up to astronomical numbers even for a so called indie release. If you’re not spending 5, 6 or sometimes 7 figures for promotion, you’re one of the albums that sells to immediate family only…

  • “Forty years ago, co-writing a song with Ringo Starr would have provided me a house and a pool. Now, estimating 100,000 plays on Spotify, we guessed we’d split about $80.”

    The very next line in the article:
    “When we got home, we found out, we were way too optimistic…”

    meaning the $80 was a pipe dream comparee to the actual rate.

    In my honest opinion, i dont think streaming is a viable business. They dont have a business model that makes the company money, and they are putting the people who supply their only product out of work..

  • David–
    “The only thing I’ll add, and it’s the overall point of the post, is that sustainability is nice for nearly everyone or it isn’t sustainability. The devaluation of human labor is visible in other places besides entertainment media.”

    Yes, I’ve noticed this Panglossian position before: That the state of the publishing industries in the 20th century was the best of all possible worlds. Forgive me for not taking your word for it. I’d rather we see what other points of stability exist, in case there’s a better one. The worst thing that happens is that we don’t find one, in which case we can just go back to the status quo ante if we all want to.

    As for the aluminum, I think that you and John missed the point. You nicely addressed what you called intrinsic value and perceived value, and pointed out that making up for lost perceived value on quantity may not work well, and that alternative forms of revenue with higher perceived value may not function as an adequate substitute in light of the sunk costs and desired profit margin that factor into intrinsic value.

    But you overlooked another option: If you need intrinsic value to be less than or equal to perceived value, and perceived value is dropping, why not also try lowering intrinsic value? Make music more cheaply, and accept lower profit margins. (As well as all the other stuff, so that you’re working the problem from both ends)

    You may decry the quality of cheaper music as being as poor as that of Walmart socks, but that’s arbitrary. For all we know, the production budgets in the record industry back in the 80s and early 90s produced far inferior music compared to what we would’ve gotten if only we had doled out a billion dollars to every signed musician.

    It seems pretty clear that the overall tendency is for effectively weaker copyrights as to the general public. Some people, like David Lowery, seem to think that this can be changed with the flip of a switch. I don’t think so. We’re seeing the value that people actually perceive works to have, when the copyright monopoly can’t be used to prop things up. As M has pointed out, wide scale piracy is going to occur, cannot be stopped if people want to do it, and as people have developed a taste for it, there’s every reason for it to continue.

    And much of the secondary sources of income used to support publishing are drying up too, but for perfectly innocent reasons, mainly that advertising is being pulled out of its traditional haunts because it has more effective places to go. Spotify may pay bupkis, but there’s no reason to believe that it’s even possible to make money in that area. I suspect that if songwriters and musicians successfully get bigger pieces of the pie, the pie will just go away, potentially leaving them worse off. And that goes for satellite and terrestrial radio too. (The NAB really should never have sided with the publishers; it was an obvious divide and conquer strategy)

    Given this, and given that, as you say, labor is not doing well in other places, we may want to look for a radical change in how people make enough money to live on. I also support the idea of a universal basic income, as I believe I’ve mentioned before.

    • [That the state of the publishing industries in the 20th century was the best of all possible worlds. Forgive me for not taking your word for it.]

      *sigh* it isn’t the publishing industry that is the issue. You could publish a work for zero cost and it won’t affect the real cost of the work, which isn’t the final stages of printing pages or pressing vinyl.

      Years ago when I was working in the chemical industry the CEO used to rail against the government and their emphasis on rates of pay. As he said its not pay rates in this industry that is the problem its the damn energy costs. We can’t compete against our US counterparts when they are paying 50c a gallon on subsidized fuel whilst we are paying an equivalent of $4.

      That is the issue with music and films. The cost of the inputs to the process haven’t changed, it was never about the cost of pressing vinyl or delivery. I can buy a mango weighing several times more than a CD, that has been transported half way across the globe for less than a $1, weight for weight the delivery cost of a CD to a store is about 10-15c. It really surprises me that intelligent people think that the price of music was ever about distribution costs.

      What has changed is that a distribution method has arisen that pays nothing for its inputs. No one in the tech industries cares because their short-term business isn’t dependent on new works. Effectively they don’t care of the spring upstream has ceased to flow, as they have a huge lake to exploit.

      • Of course distro matters in this equation! Most people want apples, so an apple seller can confidently ship them to any town. Of course there will be waste, but it will get figured out. Do people want a copy of Echo & The Bunnymen’s “Porcupine?” How do you know? Ship it to a record store. If it sells, ship more. If it doesn’t, and too many were pressed, it gets shipped *back* to the warehouse, made into a cut out, shipped out again, and sold in a bin at fire sale price, all being picked up by the band through recoupables.
        Conflating CDs with mangoes makes as much sense as comparing digital theft to terrestrial. The latter removes an item from inventory whereas the former has been replicated without cost.

      • David Newhoff

        Anonymous, there is simply no realistic way to support the generalization that “production is cheaper,” and I’ve been making this argument for 20 years. Certain types of production can be cheaper, and the barriers to entry for individual creators have been broken down, which is fantastic. But the cost of a specific work is, as it should be, is based on the amount of skilled labor it takes to produce it; and the cost of skilled labor does not go down because certain tools of production are in theory a little cheaper. College Humor makes great sketch comedy exclusively for web distribution; House of Cards is a top-notch production made exclusively for Netflix distribution. It costs more to make House of Cards because it physically takes more skilled labor to produce a show that works the way that one does than it takes to produce good sketch comedy. If you want The Avengers, it costs even more skilled professionals to make it. Moreover, there are several ways in which digital technology has made film production at the big picture level more expensive (i.e. more labor intensive) to produce. As I have summarized for years, the cost of the camera doesn’t mean shit because the most expensive line items on any budget are the people. So, the only way to reduce costs of production is to lower wages, and if that’s your position, I’m revoking your liberal card.

        Music is of course not as labor-intensive as film, but it can be labor-intensive depending on what one wants. If you want to limit the possibilities to what one or two semi-hobbyists can do in their living room, that’s pretty limiting. If you need a handful of skilled collaborators, they should cost money no matter what the equipment does.

    • [It seems pretty clear that the overall tendency is for effectively weaker copyrights as to the general public. Some people, like David Lowery, seem to think that this can be changed with the flip of a switch. I don’t think so.]

      That remains to be seen. It is also quite likely that people will come to see the weakening of copyrights as an anti-social thing. Much the same as allowing dogs to crap in the streets. There is somewhat of a stigma anyway about people that don’t pay for their round at the bar, who ride the bus and avoid paying the fare, and recently I’ve been hearing sharp criticism of people in the workplace that get demos of equipment in high street stores and then buy online. Society has a deep rooted sense of fairness. Within the general populace the weakening of copyrights isn’t taking hold. you see this when they make awards for infringement. Normal people aren’t seeing mass piracy as something that is harmless.

      • If people actually supported copyright, then copyright infringement wouldn’t be the serious problem the content industry makes it out to be.

        Even so. The only thing keeping copyright in any way operational right now, keeping people on the “up and up”, is the availability of mainstream pirate-like services like Spotify, YouTube, Netflix, and Pandora.

        Seriously, right now, I can pretty much listen to any song ever recorded. Instantly. For free. You never actually got rid of Napster, you just made it legal.

      • No you can’t listen to every song ever recorded. I just ripped 50+ vinyl records that you won’t find anywhere, here are three albums

        Revolutionary Blues Band
        The Word Is Hugga Mugga Chugga Lugga Humbugga Boom Chit
        Farewell to Foggy Hills

        I suspect that within a few years people will look upon piracy the same as they now do about smoking in restaurants and bars. The only question is how much damage is done in the meanwhile.

    • David Newhoff

      Anonymous, your proposal to “make music more cheaply” misses several points, not the least of which is that we’re talking about perceived value as somewhere between zero and nearly zero. There is nothing on earth that can be produced cheaply enough to sustain itself on those prices, if what’s being produced is the commodity being sold. With music, there is nowhere lower to go, either in production or pricing. As such, the recorded track/album is no longer the commodity but is rather a very costly (at least in labor) gift to fans used to generate an audience the producer hopes might come to shows, buy some merchandise, license a track for commercial purposes, etc. You also miss the fact that production costs are irrelevant except to the producer(s), as these are never reflected in retail price to the consumer. If a singer/songwriter bangs out a tune he came up with in an afternoon, records it in his living room, and has a hit, the retail price for that song has always been the same as a pop song that might be overproduced and cost many thousands of dollars. Moreover, if you don’t produce works of this nature, it’s a bit presumptuous to make generalizations like “produce it cheaper.” As for my Panglossian position, it’s simply a well-established phenomenon that when we see substantial job loss in one sector, we invariably see job loss in other sectors. Concurrently, when work is devalued at the “highest levels” (e.g. the rockstars), this a ripple-effect on rates and wages in related industries. Ebbing tides strand all ships as it were. None of this has anything to do with making value judgments about the quality of the works. And I’m certainly not talking about minimum basic incomes for subsistence. This is about a broad spectrum of middle-class jobs, freelance workers, and entrepreneurs.

  • “I find it interesting that as angry as we seem to be over ceding political power to corporate interests because they can buy influence, that we are unwittingly going to cede cultural power as well, simply by abdicating our ability to vote with our pocketbooks.”

    And this is truly upsetting. The worst part is that is that it seems–at least to me–that some _want_ this to happen.

    • So at the most general level, is technology as a whole has made “owning the means of production” (or rather, in the content sense, “owning the means of discovery”) far, far more valuable then labor. So the so called capitalists are getting a lot richer then they used to be, and have a lot more power then they used to. I don’t have any fucking solution to this, by the way. Just pointing that it’s a problem and it’s going to get worse.

  • Lefsetz a utopian? What world would you be referring to?

  • John–
    “You could publish a work for zero cost and it won’t affect the real cost of the work, which isn’t the final stages of printing pages or pressing vinyl.”

    ‘Publishing industries’ is a shorthand, which is inclusive of authors. I apologize if I wasn’t clear. I was not only talking about the marginal costs of copies and distribution. In fact, I really wasn’t discussing that at all — I was saying that the costs of creating works should drop if they cannot realistically be recouped due to how little the copyrights on those works can be exploited for.

    “The cost of the inputs to the process haven’t changed”

    They have, they always do, and they should continue to do so. Downwards, apparently.

    “That remains to be seen. It is also quite likely that people will come to see the weakening of copyrights as an anti-social thing.”

    Maybe, but so far, all signs point to no.

    “Society has a deep rooted sense of fairness.”

    I agree. This is part of the reason why I think that some form of copyright will exist in the future, but that it will not be the same as the current form of copyright. In my experience, when I have discussed the current state of the law with laypeople, they generally agree that it’s excessive; their previous acceptance of the law stemmed from not realizing that it was unfair.

    “Within the general populace the weakening of copyrights isn’t taking hold”

    If that were true, we would not be having this discussion. No one likes to think of themselves as a lawbreaker. If lots of people are engaging in illegal activity, this is a strong sign that the law may need to be changed in order to accomodate it. It’s not always true, but it’s often true.

    “you see this when they make awards for infringement”

    The relevant cases are rare, the juries are not particularly representative of the population (in Tenenbaum, the court excluded half a dozen potential jurors who admitted during voir dire to having pirated themselves), and they’re limited as to what they can do in making the award. In particular, in Tenenbaum, the jury instructions were actually wrong in a way that favored the plaintiffs, and I’ve long suspected that had the instructions correctly reflected the law, if I have correctly understood the intent of the jurors, that the award would be lower.

    David–
    “With music, there is nowhere lower to go, either in production or pricing.”

    I had not realized that cellphone audio fidelity was so good now as to permit recording an album on one. While I’m not a musician (If only this had been an option for middle school band! https://www.youtube.com/watch?v=ineYcKcfmJQ ) I’m pretty sure that production costs can go lower for a good while yet.

    “You also miss the fact that production costs are irrelevant except to the producer(s), as these are never reflected in retail price to the consumer.”

    If the author cannot recoup his costs due to the low perceived value of the work, he may stop making it. If he can recoup his costs, and maybe even profit a bit, he might. Depends of course on what alternatives are available, e.g. changing careers altogether.

    “Moreover, if you don’t produce works of this nature, it’s a bit presumptuous to make generalizations like ‘produce it cheaper.'”

    Yes, a little, but I don’t have to be a filmmaker to know that it’s possible to make a good movie without a cast of thousands and a hundred million dollars of special effects.

    • You are wrong if you think that people won’t switch to seeing copyright as something that applies to them. Ordinary people already do. If you spend any time on flickr you’ll see that people that have been posting their family snapshot albums, get totally freaked out by any ‘inappropriate’ reuse. They see it entirely in terms of having their wallet stolen, with the added mischief of violating their kids. Ordinary people have a deep personal relationship with the things they create. That until the moment it happens to them they don’t equate copying a song, or posting a photo to their FB page as problematic, i can assure you that they really aren’t keen on ‘their’ stuff being shared in ‘that’ way. There was an app that pitched one flickr photo against another people voted for teh one they liked. Howls of protests “its my photo, I didn’t give permission, my child/pet/wife is not a loser” etc, etc.

      • But the failure of copyright has been like this for like 15 years already. In this time, I’ve seen copyright go from an obvious, uncontroversial thing, to now, a world where ardent pro-copyright folks are finding themselves apologists and defenders of the very notion of copyright. There seems to be some kind of idea that copyright is controversial, even amongst pro-copyright folks. I find that interesting and novel. This new kind of defense of copyright, only really started post-SOPA from what I gather. SOPA/PIPA really showed that there is a huge publish disgust with copyright. No proposed law in human history stood more opposed. Of course, the cynical pro-copyright view is the people are not capable of thinking for themselves and just followed Google’s mind control. But that kinda would fly in the face of your premise now wouldn’t it?

        By the way, moral arguments are complicated. Many people don’t see their family photos as a copyright issue, but rather a privacy issue. As in it’s not something they wanted to publish in the first place. Copyright is (or was) a good economic tool, it is probably not the best tool for privacy. But yeah, I’ve seen that angle a lot yet, with pro-copyright arguments trying to appeal to the masses. But here is the thing, if you want a copyright like that, then why give it to Hollywood and corporations? Do they have family photos to protect? Do they need privacy for the latest blockbuster? Is that why copyright exists? It’s kinda like a trick, by conflating these two things. And I don’t think it really works.

        As far as I what I seen, I’ve noticed people are more likely to respect the copyright of indie artists and stuff like that compared for content that comes from Hollywood conglomerates or successful artists. Like if you want to make money on Kickstarter, flashing your indie creds is a must. In a sense, the failure of effective copyright has given people a way to use their money the way they want to instead of following how the market is suppose to work. If like this was true for the whole economy, you bet stuff like oil companies would be under really quickly.

        There is also very convincing moral arguments against copyright. Look, for the first time in human history, we have the technology to share all the world’s knowledge and culture with everyone. The only thing stopping this from happening is copyright. Do you see that? It’s only copyright stopping this! How awful!

        In fact, Google has this books service which they had to actively fuck up. They had to damage it and make it defective. Like they had to add features that make their service less useful by removing pages and obscuring shit in it. What the fuck is up with that? They had to actively work and put effort to make their service less useful. Because of copyright! Copyright is literately encouraging people to make stuff defective by design.

        To me, there is something morally reprehensible about that. It doesn’t sit well with me. If anything that bothers me about copyright on a moral level, it’s situations like this, situations where a technologist is trying to build this great service but has to spend all this effort to actually make what they are building less useful to the world. In a world where we try so hard to minimize defects and make technologies and services as great as possible, you are have these situations where you are actually working very hard to engineer intentional defects into your product. It’s feels incredibly sleazy. Makes me nauseated just thinking about it. Seriously. And this is entirely because of copyright law.

      • What has happened is some SV thieves have been running about giving away free stuff that never belong to them in the first place, and the law has been slow to catch up. Sooner or later a few heads are going to be stuck on poles along Golden Gate bridge. As it is they are overreaching such that it is becoming obvious that they stealing from everyone. Soon they’ll be like tobacco companies, and bankers.

      • Love the imaginary John.

      • If we development technology to solve world hunger, are we to stop it because it puts the farmer out of work? If we can cure human suffering, are we to put a stop to that because the doctor can longer practice? We have the technology to provide the sum of human knowledge and culture to all of humanity! It’s not academic! It’s here! Why do anything but make it happen?

        I can’t relate to your world view at all John, although the symbolism with the dark ages heads on pikes deal seems quite fitting.

      • Those are the wrong questions, M. The question is can you realistically end hunger without farmers? If you can’t, then the question is moot. All of this theory is predicated on the assumption that producers will still produce in the absence of a sustainable market, which is fantastical. Somebody will produce works, but you’re ignoring the trends that are happening right now that kinda suck for culture and the economy. Independent producers become hobbyists, and pop producers become the tools of the elite, corporate world you mistakenly believe is being eroded by the egalitarianism of technology.

      • David,

        I agree man. 100%, author’s should be able to make a living. It shouldn’t even be hard, like you shouldn’t have to even be a great author to make a living. The fact of the matter is, industrial jobs and stuff like that are in a permanent decline. Unemployment is not as problem anyone who wants to work should have, and it should be possible for a single person to support a family without having to worry about you know, paying the rent or buying food.

        These industrial jobs are NEVER coming back. So what to do? We need to encourage MORE jobs then there ever was in things like culture and knowledge creation and scientific research. These are the jobs that will still be relevant in the future..

        But we can’t just ignore the possibilities of technology either. We have the ability to share all that great knowledge and culture produced with all of humanity. This is the gift that modern technology has given us. We need to find a system that compliments this, not one that works against it!

      • I’m not saying I have the definite answer here David. It could be a million things. One possibility is statutory licensing combined with a basic income. You can tax Internet access or just take directly from the general fund, and distribute revenue to creators based on the relative popularity of their work in addition to some kind of standard basic income. You can still be your own boss in this system..

        For scientific research, it’s really as easy as pumping a lot more money into NASA, NSF, NIH, etc. literally there is no limit to high their budget can be. Scientific research never has a “supply-demand” problem, it’s not like you do “too much scientific research” like you can produce too many cars or wheat flour. Arguably why USSR was actually pretty decent in scientific research. It’s far easier to command-economy science then it is to like do same thing with like how many pony dolls to produce. What I’m saying is scientific patronage is one the very few things governments are well, pretty good at.

        Maybe you ask, why change anything about how we do things? The fact of the matter if we rely in our current employment driven economy, it’s going to hell very quickly as human work is slowly being replaced by computer and robotic work. Unemployment will shoot up, and unemployment is way too dangerous in this country. People live paycheck to paycheck. Even if you don’t live paycheck to paycheck, you probably don’t sit on like years of income. Nobody except the wealthy have that.

        Imagine in 10-20 years how much of a clusterfuck we’ll be in if we don’t drop the idea of an employment-driven economy. Can you see the problem? Even if people don’t lose their jobs, they go work 9-5 every day and do mostly nothing productive. That’s terrible for morale and happiness.

      • Issue is that most jobs now are related to IP that is inbuilt onto the manufacture of the products that are made overseas. I fail to see how weakening the concept of IP helps anyone.

      • [I can’t relate to your world view at all John, although the symbolism with the dark ages heads on pikes deal seems quite fitting.]

        You can’t relate to eh! I thought you would given that your solution is the reintroduction of patronage, something that was mainly prevalent during those days when heads were being stuck on pikes. The difference being that in those days the heads on the pikes where those that challenged the established system of patronage. And if it wasn’t their heads, because they’d displeased the feudal lords, it was their bodies being burned on pyres for having upset the religious orders.

        Patronage whether State, Religious, or Oligarchic silences voices. Hear this the internet is NOT a free communications system. It is nopw enclosed and subservient to the demands of its feudal overlords residing in SV.

      • John,

        It’s not like patronage because money can be distributed based on relative popularity, similar to what copyright is suppose to do.

      • Eh? WTF? A criticism of high culture (non popular), such as Opera, in the UK is that it is subsidized by the taxpayer. The criticism gets more strident when the work is modern art or abstract art, and quite visceral when the work is minority (LGBT) themed or political.

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  • anon wrote “I had not realized that cellphone audio fidelity was so good now as to permit recording an album on one. While I’m not a musician (If only this had been an option for middle school band! link to youtube.com ) I’m pretty sure that production costs can go lower for a good while yet.”

    This just shows a complete lack of understanding of the recording process and the economics involved. You can have an imaginary “best microphone” highest fidelity peice of gear, whether it’s on a phone or a computer or elsewhere, and that’s not going to make one ioda of difference to the cost of production. Especially when you consider the different types of music and genres out there and their differing needs. Even if the cost of the recording device was “free”, that wouldn’t make a dent in the cost of creation… Sorry, but the cost is in human labor and time.
    Trying to squeeze the creative process into an engineer’s quest for efficiency doesn’t work. Creation is always ‘messy’ and will always look strange to an engineers brain. I already have spent the 10’s of thousands of dollars necessary to build a home studio (no matter what argument you give, you can’t beat the laws of physics in room acoustics, even if we arent talkin gear..). That cost is fixed, it’s largely done (neverminding the ocassional upgrades or acquisitions). Guess what? That cost doesnt even figure into the equation of the price of production. You can exclude those figures, and creation is still largely expensive in terms of time and commitment. Can we be more effecient? not really, at least not in the terms you have floating around in your head… we are already operating at optimal effeciency.. the problem isnt on this side of the equation, it’s on the “returns” side, of which the current climate is largely unsustainable unless you reduce everyone down to ‘weekend warriors” and people who don’t care if they ever get paid… which isnt a future i want to see as a creator or Consumer…

  • AudioNomics–
    “Sorry, but the cost is in human labor and time.”

    Then try spending less time and investing less labor. If an author spent his whole life writing a novel, which only sold a few copies, he wasted his labor and time. Well, at least from an economic perspective. He should’ve done something else if he wanted to recoup his expenses and make a profit. At the very least, he might have tried dashing off a few short stories to test the waters, to see if he can make a go at it, and to avoid such a great loss if it doesn’t work out.

    “unsustainable unless you reduce everyone down to ‘weekend warriors” and people who don’t care if they ever get paid”

    If that’s all that people are willing to pay for — I don’t think it is, but that’s what y’all’ve been arguing — then so be it. If the public wants more professional artists, they’ll pay for them. If artists want to be professionals, they’ll find ways to make money. But it appears that you can’t just order this to happen.

    • “Then try spending less time and investing less labor.”

      sigh, it takes as long as it takes. It’s not like ‘type more words per minute’. The creative process is not one that can be forced… refer to my statement above on how an engineers mind will never understand the creative process.

      ” If an author spent his whole life writing a novel, which only sold a few copies, he wasted his labor and time. Well, at least from an economic perspective. ”

      That certainly is the very real risk one takes going into this field. it isn’t for the feint of heart…but at the same time if that same person spent that lifetime and the result was indeed consumed, i believe that person should be fairly compensated for that consumption. Let’s not get into the false argument that nobody seems to make (except the “anti” crowd). No one here is asking for a handout. Nobody is entitled an income if nobody consumes the work..

    • “Then try spending less time and investing less labor.” Seriously, that comment just completely disqualifies you from being taken seriously on any level whatsoever. You just demonstrated beyond a shadow of a doubt that you have no earthly idea what’s involved in artistic creation, let alone what it means to watch the thing you love and live for, this incredible gift that is MUSIC, being devalued to, as the author says, zero or next to zero.

  • From a historical perspective, the modern music industry is a late 19th and early 20th century phenomenon. Before radio and records, there were very, very few folks who could buy a house or car by writing down a few rhyming words and having thiose words performed by some famous person, playwrights not withstanding.

    Technology giveth, and technology taketh away. A fine timepiece used to take a month’s wages or more, and now a much more accurate watch can be had for an hour’s wages. Watch repair is essentially a dead profession, as well as TV and radio repair, and maybe shoe repair. How many video rental stores do you see in the neighborhood?

    The harsh truth is that if you create something that is digitally copied, it is GONE. Wave goodbye as it leaves, even though you will encounter it again for free. You won’t be buying a new house from the profits, or even a soda. That digitally copied work of art will spread throughout the world at the speed of light, and you won’t get a dime from it. That is the new fact of life in the digital age.

    Artists of all kinds need to find a completely new paradigm on payment for their creations. It’s just that simple. The old way of getting royalties is virtually broken. Your song was played 2,535,621 times on Pandora and you received $1.78 for it. That’s a common and true complaint, but folks act like stating that fact can lead to a change. It won’t. The digital age is burning out the old royalty paradigm like a blowtorch on tissue paper.

    How about telling Pandora et al that they can play your song as many times as they want for a one-time fee of $50.00? No pay no play. Get recording artists and song writers to band together to get paid UP FRONT, and dump the old royalty system altogether. The old system will not work in the new age.

    Sure, you can fight, fight, fight the piracy and the free digital downloads and streaming, but to what avail? A lot of time and grief and not much change. Energy taken away from creating music, and put into trying vainly to keep music from being freely distributed. It’s a losing fight.

    Use your creativity to find a new way of getting paid instead of lamenting about a dead paradigm.

    If artists don’t do that, most will end up like the corner video rental place that is now a Dollar Store.

  • It’s certainly true that all but a very few artists are making almost nothing in the new world of Internet — but I’m highly skeptical of whether that’s actually a change. There’s a strand of utopianism that says “Tons of money will appear from the internet by magic!” that’s clearly ridiculous. But there’s an equally ridiculous strand of nostalgia for an imagined past when making a decent living as an artist was actually an option available to more than a tiny handful of people.

    Were no aspiring musicians giving up their artistic dreams for cubicleland in the 80s? The article mentions writing a hit song for Ringo Starr; how many artists’ bills did _that_ pay?

    My impression is that if the internet is seriously hurting anyone, it’s the top 0.1% of artistic entrepreneurs, and the rest of us recording artists are not more in need of a day job than we were 30 years ago. If there’s a notable long-term change for musicians, it’s perhaps the decline of paid live gigs, which started in the 1940s with radio and TV.

    I’d like to see data on the total personal income of the bottom, say, 95% of musicians for the past 100 years compared to overall personal income.

    • The bottom line is that the internet as it currently exists is destroying the middle class of creatives and others. IT NEED NOT BE THIS WAY. There are a select few very powerful companies that benifit from the status qou. Bring content down to ‘firesale’ prices and scoop it all up. Just look at all the most powerful companies in the world who are clamoring and climbing over each other to get into the music biz… that is not a coincidence…

      • Again my point — please read the comment before responding! — is that I’m not sure the internet is “destroying the middle class of creatives” because I’m skeptical of the extent to which one actually existed in the 70s, 80s or 90s.

        This blog argues against mythologizing the future, and I concur. I also argue against mythologizing the past.

        My wish is for more data. Do you have any?

  • I’m a songwriter, not a good performer. People like my songs enough that they ask me to sing them, but I can’t afford to get recordings made that people might buy. It used to be that I might be able to do something with my songs, by sending out a simple demo to music publishers. But now, because the chances of making money are so low, publishers no longer accept unsolicited work. Look at the wonderful result – music that is at best pleasant to listen to, and that you wouldn’t know if you heard it again, or care if you did.

    This article touched on a topic I have been concerned about, the dependency of the music business today on the haves. It used to be that you could hear socially conscious music on the radio. No more. Clear Channel certainly won’t play it, and they own most of the radio stations.

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