4 ms·

> The role of piracy. I think we know. And the trends are negative, for both readers and authors. Except that the role of piracy is anything but clearcut. As T

> The role of piracy. I think we know. And the trends are negative, for both readers and authors. Except that the role of piracy is anything but clearcut. As Tim O'Reilly famously said in 2002 [1]: "Obscurity is a far greater threat to authors and creative artists than piracy." Again and again over the past several years, we have seen both studies and anecdotal stories from artists finding that file sharing produced a net economic benefit. If "piracy" increases ten times and sales double, that still means doubled sales. [1] http://tim.oreilly.com/pub/a/p2p/2002/12/11/piracy.html http://tim.oreilly.com/pub/a/p2p/2002/12/11/piracy.html

tree_of_item 16y ago
The author quotes Tim O'Reilly and shows why he isn't necessarily correct. > Don’t need to take my word for it. Just look at all the other industries that have gone digital. Take music. Physical music sales have been declining steadily for more than a decade, and while digital sales rise, they make up only a fraction of the loss. (They’re not even rising much anymore either.) Revenue from Pandora, Spotify, YouTube ads and the like are loose change next to CD sales declines. > What’s the shortfall? All told, the United States recorded music industry is worth less than half of what it was a decade ago, and the downward slope is only getting steeper. Outside of the big markets, the declines are greater. The Spanish music industry fell 55% in the last five years alone. In China rampant CD copying and file sharing have left a nation of 1.3 billion people with a $75 million recorded-music industry. As a recent Economist report put it, the “worst-case scenario has already come to pass.” Sales are not doubling everywhere. The industry has shrunk to a fraction of its previous size.
- DennisP 16y ago
  He says "obscurity is a far greater threat to authors and creative artists than piracy." The industry is another matter. Its main contribution is file distribution, a function which we can perform for free now. I expect the industry to ultimately shrink to zero, while authors and creative artists do just fine. Over ninety percent of the money we pay for music used to go to the industry, and we thought that was fine because they were pressing all those vinyls and CDs. Now the industry thinks they still deserve that ninety percent, just because they used to press all those vinyls and CDs. Free markets don't work that way.
  - NickPollard 16y ago
    Exactly. Many musicians are doing better than before, due to getting a larger portion of income through live performance than recorded music. [1] The recording industry might be shrinking, but the music industry is growing. [1] http://www.economist.com/node/17199460 http://www.economist.com/node/17199460
- pmichaud 16y ago
  I don't think those figures are really meaningful. What about the mushroom cloud of new and different bands who are all unsigned, all selling CDs and shirts, and booking shows, etc, while the giants fall? Those are the growth areas, not the giants. It's easier to measure the downfall of the giant and say that's what's happening to "music," but really what we're looking at is corporate revenue. We need a better way to measure the actual music industry, instead of just the dying players who used to dominate it.
- RyanMcGreal 16y ago
  > The industry has shrunk to a fraction of its previous size. And by "the industry" you mean the large corporations that don't create art (the artists do that) but extract most of the value of the art products that are sold by acting as gatekeepers to the market.
- tel 16y ago
  There's no doubt at all that the music market is transforming. I'm not sure why people are so surprised that it will probably transform into something smaller. The power shifted from music executives to musicians who always wanted something more genuine. It's necessary to consider that the number of music listeners who genuinely like some bands is a smaller market than anyone with a radio/tv/ear who could be pumped full of American Idol promotions and Top 20 Lists. I think there will probably be oscillations, though. As whatever the new form of music takes more cohesive shape, musicians learn how to monetize it, consumers learn how to invest in it, the market will probably grow again. Not to it's previous towering height, no, but perhaps to a more efficient structure that actually does have bands making money relative to the value of their work. I'm definitely pretty optimistic. Then again, I've also learned to love music in the middle of this transformation and have invested thousands of dollars over many years buying music from artists. I'm only tempted to search for torrents when I see people signed to bigger labels. After all, they're cushy right?
- hxa7241 16y ago
  But whether the industry is shrinking, or sales are down, is not really the question. That is really what the industries themselves care about. The important thing is whether we, the public, have sufficient production, which is a somewhat different thing. And various measures show production has not fallen, in fact it has risen, significantly. One example: http://www.unifr.ch/controlling/seminar/2009-2010/oberholzer_harvard_File-Sharing_and_Copyright_2010-01-12.pdf http://www.unifr.ch/controlling/seminar/2009-2010/oberholzer... . And does it seem like we have less music, films, books now? It seems quite the opposite to me. If we are currently living through 'the worst case scenario' and an industry 'a fraction of its previous size', we seem to be doing pretty damn well.
jimbokun 16y ago
Did you see the chart where revenue from music sales for the entire industry is down more than half? http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/ http://money.cnn.com/2010/02/02/news/companies/napster_music... How can you argue that piracy increases revenues when revenue for an entire industry is plummeting? Is there another chart somewhere that shows aggregate revenues increasing for some category of media that has been digitized? Is there revenue that that chart does not capture that more than makes up for the lost sales, and that is positively affected by piracy?
- Goronmon 16y ago
  Is there some reference that states music sales should always go up and never go down? Maybe music sales just spiked? Also, how much of sales descreasing is because people no longer have to buy an entire collection of songs all at once (a CD, for example) and instead get to pick and choose their songs? I know my music purchasing habits have changed from when I was young. I rarely buy entire albums and usually just nab an individual song here and there.
- _delirium 16y ago
  It'd be nice to have some more specific data. How is the revenue loss distributed? For example, is it that: the kind of artist who used to bring in $10m in revenues is now bringing in only $5m? Or is it: artists who used to make $50k are now making $0 or losing money? Or if both, how much of each? Or to look at it differently, how many artists in absolute terms are there in each revenue range? Also: how is the decline in total music revenues distributed between: 1) the major labels; 2) indie labels; and 3) self-released musicians? Different people presumably have different preferences, but I'd be most worried about a decline in the total number of musicians above the "make enough to eat" threshhold, which may or may not be reflected by that data. I'm less worried by whether the top 40 musicians make $1m or $5m or $50m each, so if that's the main source of revenue loss, I would care less. I've tried to find that kind of data, but it doesn't seem to exist, at least anywhere I can get to it.
- lambda 16y ago
  What evidence has anyone shown that music revenues are down because purchases are being displaced by piracy, as opposed to other reasons like people spending their entertainment time and money elsewhere (videogames, movies, TV, free content available on the internet), or people no longer buying replacement records or tapes as CDs are more durable, or people not on a format upgrade treadmill since they can easily convert from their CDs to whatever format they want for their MP3 players? I'm sure that some of the decline is due to piracy, but I don't think that you can blame it for the whole thing. Also, I'm not terribly sympathetic to an industry which realized that it was losing sales to piracy, but took 8 years before it actually got around to offering what it's customers were looking for, such that their customers could actually pay for what they wanted. Napster was released in 1999, and while the fact that you could get music for free was nice, what was really appealing was that you could look for any song you wanted, find it instantly, download it, and stick it on your MP3 player. Since then, the music industry tried limiting the catalog of services (like Emusic, which offerred DRM-free MP3 downloads but had a lousy selection), or had incompatible DRM-encrusted services that meant that you would risk losing access to your music collection if you changed computers or MP3 players. It wasn't until Amazon MP3 came around in 2007 offering DRM-free MP3 downloads of a reasonably broad selection that they really offered anything at all competitive with piracy. Spending 8 years training consumers that piracy is not only cheaper, but also easier, more convenient, less hassle, and with a greater selection, and who's surprised that they lost customers in that time frame?
lsc 16y ago
The thing is, persecuting some piracy but not all is part of a complete price discrimination model. The idea is that the marginal cost of a copy of windows (or a electronic copy of a book) is zero. If the end user is unable to pay for a copy, it's definitely better for Microsoft (and, I believe, better for the publisher and author) for that user to get a free copy, understand it, and contribute to the reputation of the product as "the one to use" than for that user to use another alternate product. Where would Microsoft be if all the poor people just used Linux? in a world of hurt, I think. I believe the same could be said for book publishers and authors. The problem, from the point of view of those trying to make money off this zero marginal cost good, is that if it's just free, many people who could pay for it would take it for free. This is where enforcement comes in (and why it's in the interest of publishing companies to keep the penalties civil rather than criminal) If I have no money, generally, I'm going to be a lot less concerned about people suing me. You can't get blood from a stone. On the other hand, once I have some assets, suddenly the idea that you could take them away is a big deal, and maybe paying out a few dollars for insurance make sense. Now, obviously, suing a poor person is still a pain in the ass for the poor person, so you can't sue /everyone/ who pirates your work, but for those with assets, just suing some can get the fear juices running enough that they pay for nearly all their software. The IRS uses a very similar model; they trust you to calculate and pay the correct taxes, and then they check some small percentage of returns, and heavily punish people who cheat.
randall 16y ago
The only case where I can think of an example of this might be Photoshop or design software. I think many-a cash-strapped-highschooler pirates Photoshop, then picks up some good design skills, and in turn forces his/her professional workplace to pick up a copy of Photoshop. Hardly a data "smoking gun," and obviously software is different than media, but potentially food for thought.
Charuru 16y ago
Except that the role of piracy is anything but clearcut. As Tim O'Reilly famously said in 2002 [1]: "Obscurity is a far greater threat to authors and creative artists than piracy." False dichotomy much? I'm now an avowed ebook pirate, and my ebook library has ballooned seriously over the past 3 years. But I'm reading less than I did 5 years ago, when I used to frequent bookstores.

tree_of_item 16y ago

The author quotes Tim O'Reilly and shows why he isn't necessarily correct. > Don’t need to take my word for it. Just look at all the other industries that have gone digital. Take music. Physical music sales have been declining steadily for more than a decade, and while digital sales rise, they make up only a fraction of the loss. (They’re not even rising much anymore either.) Revenue from Pandora, Spotify, YouTube ads and the like are loose change next to CD sales declines. > What’s the shortfall? All told, the United States recorded music industry is worth less than half of what it was a decade ago, and the downward slope is only getting steeper. Outside of the big markets, the declines are greater. The Spanish music industry fell 55% in the last five years alone. In China rampant CD copying and file sharing have left a nation of 1.3 billion people with a $75 million recorded-music industry. As a recent Economist report put it, the “worst-case scenario has already come to pass.” Sales are not doubling everywhere. The industry has shrunk to a fraction of its previous size.

DennisP 16y ago
He says "obscurity is a far greater threat to authors and creative artists than piracy." The industry is another matter. Its main contribution is file distribution, a function which we can perform for free now. I expect the industry to ultimately shrink to zero, while authors and creative artists do just fine. Over ninety percent of the money we pay for music used to go to the industry, and we thought that was fine because they were pressing all those vinyls and CDs. Now the industry thinks they still deserve that ninety percent, just because they used to press all those vinyls and CDs. Free markets don't work that way.
- NickPollard 16y ago
  Exactly. Many musicians are doing better than before, due to getting a larger portion of income through live performance than recorded music. [1] The recording industry might be shrinking, but the music industry is growing. [1] http://www.economist.com/node/17199460 http://www.economist.com/node/17199460
pmichaud 16y ago
I don't think those figures are really meaningful. What about the mushroom cloud of new and different bands who are all unsigned, all selling CDs and shirts, and booking shows, etc, while the giants fall? Those are the growth areas, not the giants. It's easier to measure the downfall of the giant and say that's what's happening to "music," but really what we're looking at is corporate revenue. We need a better way to measure the actual music industry, instead of just the dying players who used to dominate it.
RyanMcGreal 16y ago
> The industry has shrunk to a fraction of its previous size. And by "the industry" you mean the large corporations that don't create art (the artists do that) but extract most of the value of the art products that are sold by acting as gatekeepers to the market.
tel 16y ago
There's no doubt at all that the music market is transforming. I'm not sure why people are so surprised that it will probably transform into something smaller. The power shifted from music executives to musicians who always wanted something more genuine. It's necessary to consider that the number of music listeners who genuinely like some bands is a smaller market than anyone with a radio/tv/ear who could be pumped full of American Idol promotions and Top 20 Lists. I think there will probably be oscillations, though. As whatever the new form of music takes more cohesive shape, musicians learn how to monetize it, consumers learn how to invest in it, the market will probably grow again. Not to it's previous towering height, no, but perhaps to a more efficient structure that actually does have bands making money relative to the value of their work. I'm definitely pretty optimistic. Then again, I've also learned to love music in the middle of this transformation and have invested thousands of dollars over many years buying music from artists. I'm only tempted to search for torrents when I see people signed to bigger labels. After all, they're cushy right?
hxa7241 16y ago
But whether the industry is shrinking, or sales are down, is not really the question. That is really what the industries themselves care about. The important thing is whether we, the public, have sufficient production, which is a somewhat different thing. And various measures show production has not fallen, in fact it has risen, significantly. One example: http://www.unifr.ch/controlling/seminar/2009-2010/oberholzer_harvard_File-Sharing_and_Copyright_2010-01-12.pdf http://www.unifr.ch/controlling/seminar/2009-2010/oberholzer... . And does it seem like we have less music, films, books now? It seems quite the opposite to me. If we are currently living through 'the worst case scenario' and an industry 'a fraction of its previous size', we seem to be doing pretty damn well.

jimbokun 16y ago

Did you see the chart where revenue from music sales for the entire industry is down more than half? http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/ http://money.cnn.com/2010/02/02/news/companies/napster_music... How can you argue that piracy increases revenues when revenue for an entire industry is plummeting? Is there another chart somewhere that shows aggregate revenues increasing for some category of media that has been digitized? Is there revenue that that chart does not capture that more than makes up for the lost sales, and that is positively affected by piracy?

Goronmon 16y ago
Is there some reference that states music sales should always go up and never go down? Maybe music sales just spiked? Also, how much of sales descreasing is because people no longer have to buy an entire collection of songs all at once (a CD, for example) and instead get to pick and choose their songs? I know my music purchasing habits have changed from when I was young. I rarely buy entire albums and usually just nab an individual song here and there.
_delirium 16y ago
It'd be nice to have some more specific data. How is the revenue loss distributed? For example, is it that: the kind of artist who used to bring in $10m in revenues is now bringing in only $5m? Or is it: artists who used to make $50k are now making $0 or losing money? Or if both, how much of each? Or to look at it differently, how many artists in absolute terms are there in each revenue range? Also: how is the decline in total music revenues distributed between: 1) the major labels; 2) indie labels; and 3) self-released musicians? Different people presumably have different preferences, but I'd be most worried about a decline in the total number of musicians above the "make enough to eat" threshhold, which may or may not be reflected by that data. I'm less worried by whether the top 40 musicians make $1m or $5m or $50m each, so if that's the main source of revenue loss, I would care less. I've tried to find that kind of data, but it doesn't seem to exist, at least anywhere I can get to it.
lambda 16y ago
What evidence has anyone shown that music revenues are down because purchases are being displaced by piracy, as opposed to other reasons like people spending their entertainment time and money elsewhere (videogames, movies, TV, free content available on the internet), or people no longer buying replacement records or tapes as CDs are more durable, or people not on a format upgrade treadmill since they can easily convert from their CDs to whatever format they want for their MP3 players? I'm sure that some of the decline is due to piracy, but I don't think that you can blame it for the whole thing. Also, I'm not terribly sympathetic to an industry which realized that it was losing sales to piracy, but took 8 years before it actually got around to offering what it's customers were looking for, such that their customers could actually pay for what they wanted. Napster was released in 1999, and while the fact that you could get music for free was nice, what was really appealing was that you could look for any song you wanted, find it instantly, download it, and stick it on your MP3 player. Since then, the music industry tried limiting the catalog of services (like Emusic, which offerred DRM-free MP3 downloads but had a lousy selection), or had incompatible DRM-encrusted services that meant that you would risk losing access to your music collection if you changed computers or MP3 players. It wasn't until Amazon MP3 came around in 2007 offering DRM-free MP3 downloads of a reasonably broad selection that they really offered anything at all competitive with piracy. Spending 8 years training consumers that piracy is not only cheaper, but also easier, more convenient, less hassle, and with a greater selection, and who's surprised that they lost customers in that time frame?

lsc 16y ago

The thing is, persecuting some piracy but not all is part of a complete price discrimination model. The idea is that the marginal cost of a copy of windows (or a electronic copy of a book) is zero. If the end user is unable to pay for a copy, it's definitely better for Microsoft (and, I believe, better for the publisher and author) for that user to get a free copy, understand it, and contribute to the reputation of the product as "the one to use" than for that user to use another alternate product. Where would Microsoft be if all the poor people just used Linux? in a world of hurt, I think. I believe the same could be said for book publishers and authors. The problem, from the point of view of those trying to make money off this zero marginal cost good, is that if it's just free, many people who could pay for it would take it for free. This is where enforcement comes in (and why it's in the interest of publishing companies to keep the penalties civil rather than criminal) If I have no money, generally, I'm going to be a lot less concerned about people suing me. You can't get blood from a stone. On the other hand, once I have some assets, suddenly the idea that you could take them away is a big deal, and maybe paying out a few dollars for insurance make sense. Now, obviously, suing a poor person is still a pain in the ass for the poor person, so you can't sue /everyone/ who pirates your work, but for those with assets, just suing some can get the fear juices running enough that they pay for nearly all their software. The IRS uses a very similar model; they trust you to calculate and pay the correct taxes, and then they check some small percentage of returns, and heavily punish people who cheat.

randall 16y ago

The only case where I can think of an example of this might be Photoshop or design software. I think many-a cash-strapped-highschooler pirates Photoshop, then picks up some good design skills, and in turn forces his/her professional workplace to pick up a copy of Photoshop. Hardly a data "smoking gun," and obviously software is different than media, but potentially food for thought.

Charuru 16y ago

Except that the role of piracy is anything but clearcut. As Tim O'Reilly famously said in 2002 [1]: "Obscurity is a far greater threat to authors and creative artists than piracy." False dichotomy much? I'm now an avowed ebook pirate, and my ebook library has ballooned seriously over the past 3 years. But I'm reading less than I did 5 years ago, when I used to frequent bookstores.