Myth Debunking: Fans Just Want Everything For Free

from the except-when-they-don't dept

The debate between Ben Sheffner and William Patry continues over at Patry's blog, and Sheffner has an interesting piece where he argues (delicately) that sometimes the customer isn't right. He admits upfront that this is a tricky position to defend, and he starts out with a more nuanced view as to why that is, but then he gets to this:

So everyone wants the product -- but too many don't want to pay for it. Hell, I don't want to pay for it. I would love it if I could get all the movies and music I want for free. And I would love it if I could get all the BMWs, houses in the hills, and meals at Urasawa I want for free as well. But of course I realize I can't. Just about everyone is with me on the BMWs and houses part. But too many think that movies and music should be free, and don't see anything wrong with taking them. I'm willing to say they're wrong.

Everyone understands why they can't have all the physical goods they want for free. But they have a much harder time understanding that with intangible goods like movies and music. IP is just harder to understand, and to explain, than physical property. We need theories to undergird it, special laws to define it, and special classes at law school to learn how to fight over it -- not to mention eight-volume treatises to tell us what the law actually is. So when people commit copyright infringement, they may think they're causing no harm -- but they are. They're undermining a system that enables those big, bad companies that everyone loves to hate, to finance the movies and albums that we all love.

This is a myth. It's a popular myth, and I'm quite sure that Sheffner and lots of folks on both sides of the debate think its entirely accurate. But it's a myth. The nature of a good economic transaction is one in which both parties are better off after the exchange. That means the people "paying" don't mind paying. They're happy to pay because they believe that what they have received is better than the cost it took to acquire it. But basic economics plays into the situation here: if the same thing can be made available by others in a better way, it's only natural for people to ask why they should have to pay.

But if you want real proof that there's a lot more at work than the idea that consumers just want everything for free and think that if it's not free they should just take it, look no further than the countless examples we've shown of people paying lots of money to support those providers who don't treat their fans as criminals, who don't try to prevent what the technology allows and who actually work to connect with those fans and give them a true reason to buy.

Everyone wants a good deal, and a fair deal, but people are more than willing to pay if it makes economic sense. Whether consciously or not, there are an awful lot of people who inherently recognize that the economics don't make sense when a good is infinitely available. As much as people have trouble understanding explicit economic concepts like supply and demand, instinctively many do, in fact, understand the very nature of abundance and what it means for pricing. It's not some nefarious story of a bunch of immoral "thieves" wanting stuff for free. It's an inherent understanding of competitive markets.

On top of that, Sheffner takes the position that paying for these things is necessary, because not paying for them "undermines the system," he is once again being misleading. It may undermine one particular way that the system works, but the false statement is implicit in his argument: that this is the only way of funding such creation. That is demonstrably false, as we've shown time and time again. I have no doubt that Sheffner is sincere in his argument, but it's based on a false premise that because the system used to work one way, back before technology changed the basic economics it relied on, that somehow we should all suffer by limiting what the technology allows and by ignoring basic economics.

It would be nice if it were possible, but I cannot find a single example of a modern society being able to successfully hold back or ignore what technology allows when it comes to economics.

Finally, way back when I was in high school, I worked at a bagel shop, which also sold other baked goods. The boss's position was that "the customer is always right" except for one particular issue: the customer could only get the next piece of coffee cake in order. We had this giant sheet cake coffee cake, and many customers didn't want "end pieces," and would ask for middle pieces instead. On more than one occasion, this resulted in angry customers stomping out -- and even once resulted in a fist fight between a customer and the owner's son. Over time, as more competition entered the neighborhood (a Dunkin' Donuts across the street, another bagel shop a block away), we lost a lot of business for our baked goods.

The point, which should be clear, is that you can say the customer is wrong all you want. But, in the end, the market will decide that the customer is right. Always. If you don't provide what the customer wants (a fair transaction) and others are able to do so, you will suffer.

The movie industry and the music industry both have had numerous opportunities to embrace what the technology allows -- and to craft new business models that would be massive money makers in doing so. They have chosen not to do so. They have said that the customer is wrong, and, as Sheffner notes, they have no problem saying so. The problem is that, whether legal or not, the competition is springing up left and right. Sheffner and his former colleagues can stand on whatever principles they want. The market doesn't care. The market only cares for those who serve the customers' needs. Plenty of others are doing so (both legally and illegally). Those who want to survive in business would be smart to take lessons from those who are succeeding and looking to implement smart business models around them. Those who want to insist that "the customer can be wrong" may feel good when they look in the mirror, but they're going to have to contend with a rapidly diminishing customer base.

The customer can be wrong, but focusing on that doesn't get them to pay you.

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Dispensing With Some Myths About The Poor Poor Songwriters Decimated By Piracy

from the cry-me-a-river-of-song... dept

Entertainment industry lawyer (and big time copyright supporter) Ben Sheffner has a blog post pointing us to a rather amusing "interview" between two other copyright maximalists: Chris Castle, another music industry lawyer, and Rick Carnes, the head of the Songwriters Guild of America. Sheffner, amusingly, absolutely loves to nitpick any news article or blog post from those who believe that copyright law is too strict -- ridiculing minor misstatements or weaving in questionable legal theories to mock those who question the abuse of copyright. Yet, in writing about this interview between two people who share his worldview, apparently all skepticism or critical thinking goes right out the window. So, I guess we'll have to do it for him.

Now, I almost hesitated, because Castle has this friendly and inviting header to his blog:

Copyright 2006-2008, Christian L. Castle. All rights reserved. NOT subject to Creative Commons deed, license, or whatever it's called this week by the self-serving shilling for the self-absorbed on the short con.

Yes, you see that anyone who recognizes how to benefit from the sharing and promotion of content is apparently a "self-serving shill for the self-absorbed" as opposed to someone with some basic knowledge about the economics of information and how to craft successful business models around it. Clearly, Mr. Castle would prefer that no one ever bother to help promote his blog, and I'm tempted to oblige and ignore him -- but there are some important points in his post that need to be discussed. And, despite his slightly threatening header, I'm going to bet that fair use covers the following clips for the purpose of commentary. If he disagrees, we can discuss it and, who knows, maybe this post will disappear (save it now!). Oh, and by the way, Mr. Castle, it's 2009 now. You might want to update the date on your notice (which, as a lawyer, I'm sure you know -- you don't actually need to retain your copyright).

So, off we go. He starts off ever so nicely, tearing down all "Internet analysts, self-appointed futurists as well as self-annointed consumer advocates," claiming they all "misunderstand the role of songwriters and the negative effects that rampant piracy has had on them." Way to totally demonize and pigeonhole anyone who speaks up with alternative business models. But clearly, Castle (and Carnes later) are not interested in alternative business models. They really, really like the way the world used to be, and they're going to keep on wishing that it could go back to that. Then there's this:

People who just write songs don't sell t-shirts, don't play shows, don't have all the other income streams available to them that the EFFluviati point to as subsititute revenues for the cruel theft of labor value by companies like Kazaa, Morpheus, Limewire and the Pirate Bay.

I like the "EFFluviati" coinage. So eloquent. But, of course, he uses it to brush off what he hasn't bothered to understand (amusingly, right after insisting that it was everyone else who doesn't understand). This is, unfortunately, all too common among some (though, I would say definitely not all) of the copyright system defenders. Rather than understanding the basic economic principles at play, and using those to understand how to craft new business models, they simply look at one or two business models being used by some (t-shirts! concerts!) and insist that's really all there is. It amuses me that folks who apparently claim to represent the "creative" industries are so uncreative themselves. It also amuses me that they insist that no one outside of the music industry can comment on music business models, but they have no problem commenting on economics without any experience in that subject.

If they bothered to take the time to actually understand the economics at play, they would recognize that there are always scarcities to be leveraged, and business models can be crafted around those scarcities. With song writers, of course, there's the scarcity of their time and their skill -- all of which can be monetized with smart business models. It's not that difficult to figure out how this works, if you look at a few other industries that employ "writers" and realize that songwriting can be compensated in much the same way.

Carnes and Castle jointly bemoan the fact that there are fewer professional songwriters these days, and it's just not like the old days anymore. They also take time to trash "amateur" songwriters as being not worth a dime. It's as if someone let Andrew Keen into the conversation. Carnes and Castle conveniently ignore that more music than ever before is being made today -- and, yes, a large percentage of that music is terrible, but there's a ton of excellent music mixed in. The real trick is just getting better filters. But, of course, rather than do that, Castle puts up this bogus experiment:

Lock yourself in a room for an hour with a continuous playback loop of "Chocolate Rain". Then try it with Gershwin, Cole Porter, Lennon-McCartney, Diane Warren, Carol King. See which you like better.

Right, pick a dreadful amateur song, and then pick wonderful (but all very old) professional musicians. Of course, Castle doesn't bother to note the obvious. I could pick some current indie songwriters, and suggest you spend an hour listening to... say... Corey Smith or Jonathan Coulton or occasional Techdirt author Blaise Alleyne or Techdirt reader and free culture success story Adam Singer or (my personal favorite) Vic Ruggiero (start with this song) or some other top indie songwriters... and then try it with NSync or New Kids On The Block or any other teenie bopper sensation from the past twenty years -- all using "professional" songwriters -- and see which you like better. See? The "point" is no point at all.

Then Carnes jumps in to blame all the troubles of songwriters on their unwillingness to recognize the way technology had changed the market, ignoring all sorts of new opportunities to make money... oh wait, no. He blames everything on those darn pirates, and the fact that things just "aren't the way they used to be." Yeah, and we all used to walk uphill both ways 10 miles there and back to school in the snow:

There are multiple causes for this situation but most of the damage was wrought by two specific problems. The first being that the internet has turned into a Cyber-Somalia.

Professional songwriters used to live on advances from their music publisher. These advances were to be recouped from record sales only ("mechanicals" is the industry term for these revenues). Music piracy killed record sales so that made it impossible for music publishers to recoup the advances they paid songwriters so they stopped signing writers and let go of the ones they had when their contracts ran out.

In other words, the market changed, and Carnes is screaming about how the world needs to stop and go back to the way it was. I guess Carnes wishes that we went back to an age when you picked up the telephone and had to speak to an operator. Eventually, phone technology reached a point where we could all make those connections ourselves, putting lots of phone operators out of work -- thanks to those darn "calling pirates" (but also enabling a communications and technology revolution). Oh wait, what am I talking about... the phone put all those old telegraph operators out of work, so it was probably evil too.

By the way, if you want a shorthand way to know of any business or industry that's in serious trouble, it's when you ask them what their main purpose or mission is, and they talk about "protecting" anything, rather than adding value and expanding the market. So, Carnes, what's your number one job at SGA?

The mission statement of the SGA is two words "Protect Songwriters". That lack of specificity has forced me to show up in all kinds of places I never thought I would be! I was the lead witness in the latest Copyright Rate Board hearing. I have testified on behalf of songwriters in both the Senate and the House of Representatives on many issues concerning song writers rights, and I have spent the last ten years flying all over the country talking to people about the harm that is being done to American music by the widespread theft of songs on the internet by a mob of anonymous looters.

Maybe, rather than than focusing on "protecting" them, you might want to look at enabling them to adapt and capture some of the massive new opportunities out there.

Then there's this rather interesting interpretation of the Constitutional clause that resulted in copyright (you know, the one that's "to promote the progress"). According to Carnes, it's not about promoting the progress, but about raising the standard of living of songwriters:

"At least the [Congressional] Members I have talked to understand that the Constitution includes provisions for royalties for creators because without them the quality of life suffers."

Interesting. Makes you wonder why Congress didn't mandate full protection for telegraph and phone operators when technologies changed how those professions worked as well. After all, I'm sure -- temporarily -- those workers saw their quality of life decline. But, of course, we all know that eventually, their quality of life improved greatly, thanks to all of the wonderful things enabled by those new technologies.

Then Carnes goes on to rip on basically everyone else for causing problems for songwriters -- never once recognizing that maybe the problem is that the rest of the world has moved on, while he and his group haven't even tried. He blames the record labels (well, we agree on that one), every internet service out there (not kidding: "I am not a fan of any particular online company since I have had to spend the last three years of my life fighting them...."), and, of course, Google: "I am not a fan of Google because I believe their search algorithm reduces all art to the lowest common denominator. That's a real culture-killer if I ever saw one."

Yup, hand this man one of the greatest tools for promoting, discovering and distributing new music for songwriters, and he hates it. It's a "culture-killer." Actually, what he really means is that it's a killer of legacy structures, and apparently he'd rather not recognize what it enables, but will complain about what it's taken away.

Carnes goes on to complain (again) about certain business models that don't work for songwriters (concerts, t-shirts), again apparently not creative enough to recognize the scarcities offered by songwriters, and then comes my favorite part:

The most infuriating thing about being lectured to by anti-copyright groups about how songwriters need to get a new 'business plan' is who gave them the right to tell us how to make a living? Who are they to say we shouldn't fight to defend our rights? In truth, I find their suggestions are unbelievably arrogant and self-serving.

This is a common complaint that we hear, and I'd like to address it head on, because it's 100% strawman, and it needs to be debunked and discarded. No one is telling them they "need" to get a new business plan. All we're doing is (a) explaining the changes in the economic and technological landscape and (b) explaining how that opens up new possibilities and (c) noting that if they choose (and it's their choice) not to adjust, they're going to be in trouble. The problem is that part (c) is happening, and rather than recognizing part (a) and (b) they're lashing out at those of us who tried to show them that there is a better way. If it's self-serving to show songwriters and musicians better ways to make a living and warning them that fundamental changes in the marketplace mean the old way can't survive, then so be it. But it's not, as Carnes and others (including Sheffner) seem to believe, an attempt to harm musicians. Songwriters don't need to change at all, but then they'll go out of business. The problem is that Carnes wants to blame everyone else -- including those who tried to suggest a better way. No good deed goes unpunished, of course.

I'm sure buggy whip makers were upset, as well, when people suggested they needed a new business model, but how many of us are really that upset about the diminished buggy whip industry these days?

Both Castle and Carnes take separate turns to suggest that anyone who's never put out a song shouldn't be allowed to comment on the matter at all -- which I'd argue could (again) easily be flipped around. Those who have never bothered to understand basic economics shouldn't be allowed to comment on business models either. Musicians are free to talk about music -- and I'd never try talking about what makes a great song, since that's not my area of expertise -- but it's somewhat ridiculous to claim that only musicians understand the economics that impact music creation. Besides -- as we've seen from our own Blaise Alleyne and Adam Singer -- there are plenty of real musicians who do, in fact, recognize the power of these issues.

And, finally, Carnes' big finale is quoting a totally unnamed "real economist" who claimed that "nothing competes with free." I could come up with a pretty long list of of examples showing musicians and songwriters who have, in point of fact, successfully competed with free and earned millions doing so. But, why let reality seep into a discussion when some unnamed "real economist" says it's impossible. But, if Carnes and Castle apparently only take lessons from real economists, rather than reality (which, of course, goes against what they said earlier in their discussion), I'd be more than willing to point them to various real economists who have shown how to compete with free -- including our most recent Nobel Prize winner.

So, of course, now that we have both real world examples and "real economists" showing how it works, I'm sure Carnes and Castle will admit that perhaps they were a little closed-minded? Or... maybe not. Cognitive dissonance will probably seep in and we'll hear about how economists don't know anything, but only real songwriters can comment on it. Well, okay, let's go back and look at the songwriters who, rather than whining and complaining about times gone by, actually bothered to understand basic economics and do something about it. How about Corey Smith, who not only figured out how to "compete with free" but figured out how to use free to make $4.2 million last year.

And then there's Trent Reznor. He figured out how to make $1.6 million in a single week for music he gave away under that "self-serving shilling for the self-absorbed on the short con" of a Creative Commons license. And, you know what? It didn't even involve t-shirts or concerts. But, you know, according to Carnes, Castle and Sheffner, that's impossible. And, we're all thieves or something. Now, Reznor and Smith are both performers as well as songwriters, but both employ a number of folks to help them do what they do (managers, tech guys, other musicians, etc.). If you're bringing in that much money "competing with free" I'd imagine spending some of it on songwriting help (for those who need it, of course) isn't that big a stretch, is it? Reality's a bitch, sometimes, ain't it?

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