Pandora’s Westergren Offers Odd Valuation of Music

Last week, Pandora CEO Tim Westergren, appearing on a forum called PandoMonthly, said a strange thing while defending against criticisms streaming services received in 2013 from name-brand artists.  He said the following:  “The industry has for a long time been propped up by a product where you’re paying $20 for something you really wanted to pay $1 for.  Maybe you could argue that the bad guy was the one who made it possible?  That’s a little bit of an unfair label I think.”

It’s one of those statements that, on the surface, sounds reasonable but not so much after a moment’s thought. What I hear him saying is that at some point in the pre-internet past, let’s pick circa 1988, we consumers felt ripped off by music prices and we can now thank technologists like him for driving the market to reflect prices more demonstrative of honest value. It should be stated that it is very difficult to assess consumer appreciation for products whose value is unavoidably skewed by the gravitational pull of a black market (a.k.a. piracy), but let’s assume Westergren is comparing apples to apples (i.e. paying customers to other paying customers) and not referring to those who value music at zero dollars.

I will also assume that the 20:1 ratio to which Westergren refers is not a mathematical error — we rarely paid $20 for a whole album and never paid that much for a single track — but that he’s echoing a 1990s-era complaint that fans felt “forced” to buy a whole album of songs they didn’t like in order to get one or two tracks they wanted.  To the extent that this complaint is valid, it is one about the music itself and not the consumer’s instinctual sense of the correct price point for a song. Although iTunes has more or less established the face-value for a track at between $1 and $1.29, how much has the consumer’s perceived value of the music he buys really changed since pre-internet days?

In real-dollar terms, factoring only for inflation, a single that would have cost $1.50 in 1988 should cost about $3 today.  While we can certainly give some credit to the low cost of digital distribution for pricing the average single at 1/3 of what inflation says it should be, there are other factors in the market that affect what people are willing to pay for discretionary items.  Globalization, for better or worse, is why we pay less for a toaster at WalMart than we probably should; and raw marketing is why we pay more for a latte at Starbucks than we probably should. But what makes a latte that lasts fifteen minutes worth more than twice the price of a song the consumer gets to theoretically keep forever?  If anyone knows the answer to that, there’s an economics prize in his/her future, but suffice to say that the consumer’s sense of value can be tough to assess, with or without certain technology’s influence.

I believe it’s also relevant to look at wages and the perceived value of income in a pre and post internet market.  If ten bucks was easier to come by in 1988 than it is today, which is the case for many 20-somethings, and the cost of living is higher, then the price for a discretionary purchase like music is logically a more significant psychological barrier than it was 20 years ago. And again, technology has almost nothing to do with it.  Digital downloads and streaming music services afford us the opportunity to preview new work before buying it, an opportunity to buy on a whim, or the option of buying one song in lieu of a whole album; but this legal, digital distribution alone cannot claim to have dramatically affected the value we paying customers place on the music we want.  Moreover, if in fact, money is more dear to certain consumers, one could argue that the social value of music for the paying customer is greater than it was in more flush times; and the fact that the paying customer opts not pirate when he could get away with it also suggests that his purchase reflects a very strong personal value being placed on the music.

Whatever role legal, digital distribution has played in the prices we now pay for music, it’s a strange, time-traveling leap for Westergren to insist that that today’s prices are the prices we all had in mind 20 years ago.  The face value we’re paying today is actually about the same as it was in 1988, so prices are only lower if we factor for inflation; and I’m reasonably confident Westergren wasn’t doing this math in his head when he made his somewhat cryptic statement.

We are taught that when technology makes processes more efficient or products more widely available that prices must go down.  And while this is true to an extent, the principle is not easily applied to products like entertainment media, particularly because their production requires skilled labor that cannot be replaced or replicated by technology.  Also, we see a market in which production costs have almost nothing to do with purchase price.  A ticket for a $100 million-dollar movie is the same price as a ticket for a $1 million-dollar movie; and this phenomenon is generally true for music, where the consumer can expect to pay between a buck and a buck fifty for a popular song no matter what it cost the artist to produce it.  Despite this relative uniformity in pricing, dramatic differences in sales from one creator to another make it clear that music is not a generic commodity with uniform value.  Regardless, technologists tend to homogenize all media with the term content and then propose the economic principle that more volume must lower prices as though music were like mineral deposits or crude oil.

In essence, I would argue that, among paying consumers, the value we place on music today is not that different, and may even be greater, than it was more than twenty years ago.  Additionally, it is ironic that as Tim Westergren attempts to claim credit for the price points, he overvalues Pandora’s role in the market.  His streaming service is pretty cool, and Spotify is a little cooler in my opinion, but both can be replaced in the blink of an eye by a competitor, and consumers won’t really care.  Seriously, if we lost sleep every time a tech company went down . . .  So, before making such unconsidered statements about the value of music, Westergren should remember that it’s the musicians who have the fans, not Pandora.

Shorten copyright terms? Okay, then what?

The subject of copyright terms kept popping up last week, so I’ll take the message and dive in.  I should be clear that I don’t have a strong opinion as to exactly what terms would be optimal at this point. Or to be more accurate, I don’t have the legal experience to account for all the implications of moving the needle by a specific value in either direction, but then neither do many of the voices insisting that terms must be shortened in the name of all that is holy, so take that for what it’s worth. Absent specifics, I’m not particularly impressed with the twin arguments, “copyright must be shortened because the Internet,” and “copyright terms are too long because they’re too long.”  The first generalization and second tautology are remarkably common and almost never supported by specific examples of the social value that would be derived by insisting upon more works’ early entry in to the public domain.

On the occasion of the new year, the Duke University Center for the Study of the Public Domain released this post woefully presenting a list of several classic and mediocre-but-famous works that might have entered the public domain on January 1 had it not been for the 1976 Copyright Extension Act.  As is typical of these articles, though, the post merely presents titles of familiar works and leaves the reader to conclude on face value that of course it’s a shame these things are still protected by copyright as though this fact has entombed them in impenetrable permafrost for the next 40 years.  To the contrary, nearly all of the works listed, especially the best ones, are freely or cheaply available for your enjoyment right now, so an implication that their continued copyrights are barring access can’t be what the author(s) are trying to convey.

Granted, a place that calls itself a center for the study of something should not require the reader to guess what its thesis might be, but I am guessing the folks at Duke want us to imagine secondary or derivative uses of these works.  If so, I will argue that one of the reasons their article and many just like it never offer particularly concrete ideas in this regard is that there aren’t that many good ideas to be had in this regard.  What, for example, might the study group at Duke suggest be done with Ingmar Bergman’s classic film The Seventh Seal other than, y’know, to watch it?  Or were they imagining the loss to cultural and economic diversity that might bloom from an unholy mating in a YouTube mashup with clips from Leave it to Beaver, all set to the song “Great Balls of Fire?” Even if such a video were to be produced and be brilliant and generate a billion hits, the service to the public would be little more than a fleeting diversion while Google monetizes the traffic, and we hope that someone still chooses to preserve The Seventh Seal in its original form despite owning no rights to its distribution.

On the subject of what might or might not be done with these works that can’t be done right now, the post lists Samuel Beckett’s play Endgame, and as a Beckett fan, I’m trying again to imagine without wincing what might be done with any of his plays other than to produce them in the manner in which they were intended.  In fact, the Beckett estate supposedly enforces strict control over the ways in which these shows are produced, and if you know the plays, you know why.  Beckett’s minimalist masterworks are conceived as a whole, with very precise direction, timing, and stagecraft written into the script.  Stray too far from the author’s instructions and you may have a play, but you won’t have a Beckett play.  This example begs a philosophical question about rights management that has nothing to do with money and certainly nothing to do with digital technology.  In fact, Beckett may be one of the best examples the Duke folks could have presented as a case for infinite copyright.  They and those who echo their positions should have to prove both culturally and economically the public value to be gained by curtailing the Beckett estate’s stewardship of these works.  NOTE:  The silence that follows is fair use (nerdy Beckett/copright joke).

Conjuring the theatrical antithesis of Beckett, the post also invokes the works of Shakespeare, whose plays were in some cases outright plagiarized, and they have also been produced in every conceivable (and several inconceivable) styles and media that take no end of creative license with the original texts.  And we do have to concede that even after a couple centuries worth of remixing The Bard, the original plays remain intact and eternally produceable in what one might call their classic form. Interestingly, though, invoking Elizabethan theater also provides a rationale for creating and preserving strong copyrights. Although Shakespeare and his contemporaries were very skilled, they were not necessarily original by contemporary standards.

If a theater company in Elizabethan or Jacobean London wanted to thrive and remain in the good graces of the monarch, it had to put on new shows at a fairly rapid pace.  After all, most of the population, working sixteen-hour days and dodging between plagues, had a life expectancy of 35, so there wasn’t much time to waste.  The stories and sources of stories were treated by the highly-collaborative theater companies as something like the Creative Commons of its time.  This helped produced fast theater, but not always fresh writing.  Still, the churn of 16th century drama serves the point emphasized in the Duke article when it quotes Judge Richard Posner, an occasional critic of IP laws, who says, “Romeo and Juliet itself would have infringed Arthur Brooke’s The Tragicall Historye of Romeo and Juliet…which in turn would have infringed several earlier Romeo and Juliets, all of which probably would have infringed Ovid’s story of Pyramus and Thisbe.”

Art is derivative of art. We all understand that. But to limit this principle to focus on any particular work or works is to misconstrue and belittle the creative capacity of nearly all artists.  It is common for people like the author(s) of this Duke article to provoke the half-thought with statements like “Imagine if Shakespeare hadn’t been able to borrow from the late poet Arthur Brooke,” but they always forget that the hypothetical notion cuts both ways.  We short circuit the thought exercise by only imagining the work that didn’t come to exist and never imagine the work that might have existed instead.  Shakespeare didn’t lack for imagination when he needed it, so yes, let’s absolutely imagine what he might have produced had Romeo and Juliet somehow been off limits; it might have been extraordinary.  Artists are always overcoming obstacles, and you will be hard-pressed to find a serious artist who says, “I simply can’t produce anything. It’s all been done, and it’s all restricted.” To the contrary, witness the diverse explosion of works and media in the countries that established and protected copyrights.

Of course, underlying the whole movement to reverse, limit, or abolish creator rights is the oft-asserted premise that the technological age in which we now live can only thrive and best serve society if we remove or restrict some of these old notions that creative works can be property.  And in their ebullient cheerleading, some of the messengers can get ahead of themselves as was the case when Julie Samuels of the Electronic Frontier Foundation claimed on a panel in New York City last year, “We want to see a thousand YouTubes.”  This statement is untrue in every direction, and even if we are to believe that Google might welcome 999 competitors, their existence isn’t economically feasible — and not because of copyrights.  If there are solid grounds for shortening the copyright terms for authors, let the case be made.  But let’s not get distracted by the vague prognostications of an industry that is unlikely to produce so much as two YouTubes when we can say for certain that copyright has produced a lot more than a thousand Shakespeares.

See related article:  “How Copyright Law Gave Us Star Wars” by Devin Faraci

Family Copyrights with William Hammerstein (Podcast)

Will Hammerstein Part I
Will Hammerstein Part II

As the debate will no doubt rage (or stomp its feet) on the subject of copyright review in the coming year, one subject that will assuredly be on the table will be the terms of copyright (i.e. how long ownership can last). There is a persistent assumption that these terms are somehow the exclusive privilege of large corporations.  As Robert Levine will point out, of course, right now “copyright terms last about ten minutes” because that’s how long it takes for work to be poached on the Internet, but it should also be understood that families and other legacy rights holders have played an important role in preserving the integrity, purpose, and continuity of works for the benefit of generations born long after the creators are gone.  One body of work that has remained relevant and popular are the musicals of Oscar Hammerstein II.

William is the grandson of Oscar II, who gave us some of the most famous musicals in the world, including Show Boat, Oklahoma, South Pacific, and The Sound of Music.  The most renowned of these were of course produced with long-time partner, composer Richard Rogers.  Today, Will Hammerstein is an environmental lawyer, who  sees a link between the stewardship of natural treasures and artistic ones.  Will is also the Executive Director of the Oscar Hammerstein’s Highland Farm, which is a project to turn the home where Oscar wrote most of his work into a museum about the man and the medium.

Will spoke to me via Skype from his home in New York City.

Theme music by Sandy Davis.