The downward spiral of ownership and value (happened to music, books are next) • Hacker News Board

Re: The downward spiral of ownership and value (happened to music, books are next)

#41

Post by RyanMcGreal » Tue, Jan 25, 2011, 3:23 PM UTC

tree_of_item wrote: post #19

RyanMcGreal wrote: post #5

> 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…

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 ad…

> 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.

Re: The downward spiral of ownership and value (happened to music, books are next)

#42

Post by CWuestefeld » Tue, Jan 25, 2011, 3:23 PM UTC

Musicians have always relied on other revenue sources. Performance is the big one, but merchandise and licensing matter too. Authors don’t have the same options. Dickens engineered a profitable reading tour of the United States, as new-model enthusiasts always point out. But how many authors could do that today?

The author never really addresses his own question, leaving us to assume that authors couldn't generally support themselves through reading tours.

I just finished "reading" (by way of audio book, while sitting in traffic) a biography of Mark Twain. He's relevant here in two ways.

First, he ushered in a new publishing model, wherein his books were sold by subscription, with sections serialized and delivered periodically. That's pretty alien now (except in some sci-fi magazines), but it shows that the economic realities of the times can dictate major changes in the book publishing business model.

Second, due to bad investments, he nearly went bankrupt. He was able to dig his way out of insolvency through a giant world-wide lecture tour. Apparently there were a great many people, across the entire planet (including many out-of-the-way places you'd never think of) who were willing to pay good money to see him lecture (this wasn't readings, but lectures). So it's clear that at least some authors can make a very tidy profit from lecture/reading tours.

Trivia note: OP mentions Dickens on a reading tour. It happens that Sam Clemens' first date with his future wife was to see Dickens reading.

EDIT: fixed wrong word, "novel" where I meant "model".

Re: The downward spiral of ownership and value (happened to music, books are next)

#43

Post by davidw » Tue, Jan 25, 2011, 3:24 PM UTC

_delirium wrote: post #35

davidw wrote: post #21

Earlier quoted context omitted.

Eh? Who pays up front? I think it's anything but "simple". There's a big incentive to free ride and let someone else pay.

"Anyone who wants to" is one model, perhaps with some goodies thrown in for those who do. A bunch of musicians have been using that in various forms for the past decade or so (e.g. http://www.neubauten.org/?q=supporters-english ), and Kickstarter now sort of formalizes it.

I'm not convinced that that sort of model can support as much production, and thus we might see a lower level of production of information goods, but I suppose only the future will tell. Musicians always have the fallback of concerts, as I mentioned in another comment.

Re: The downward spiral of ownership and value (happened to music, books are next)

#44

Post by tel » Tue, Jan 25, 2011, 3:25 PM UTC

tree_of_item wrote: post #19

RyanMcGreal wrote: post #5

> 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…

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 ad…

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?

Re: The downward spiral of ownership and value (happened to music, books are next)

#45

Post by bediger » Tue, Jan 25, 2011, 3:27 PM UTC

davidw wrote: post #13

bediger wrote: post #7

Earlier quoted context omitted.

You're denying basic free market economics with an emotional argument. In a competitive market, the cost of a good tends towards its marginal cost of production. We get all excited as the cost of solar cells tends lower and lower, as the marginal cost of their production gets smaller. Do we "value" solar cells less because of this? "the Internet is also breeding a generation of customers that used to value and suppor…

The problem is that there are two "costs" of production: * The cost of reproduction - which in terms of software, music, and now books, is essentially zero. * The cost of producing those goods in the first place, which is very high in many cases. These are called 'sunk costs'. Prices are tending towards the cost of reproducing stuff, and people are struggling to come up with ways to cover actual production costs, whi…

Yes, there are indeed two costs of production, and free market economics has terms to cover both:

"Sunk costs" and "marginal costs". Free market economics says that the price of a good in a competitive market falls to the marginal cost of production, not to the sunk cost of production.

Read up a bit, I think you can find any number of good college freshman texts on "microeconomics". Then come back and argue.

Re: The downward spiral of ownership and value (happened to music, books are next)

#46

Post by _delirium » Tue, Jan 25, 2011, 3:32 PM UTC

jimbokun wrote: post #20

RyanMcGreal wrote: post #5

> 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…

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... 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 ch…

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.

Re: The downward spiral of ownership and value (happened to music, books are next)

#47

Post by davidw » Tue, Jan 25, 2011, 3:38 PM UTC

bediger wrote: post #45

davidw wrote: post #13

Earlier quoted context omitted.

The problem is that there are two "costs" of production: * The cost of reproduction - which in terms of software, music, and now books, is essentially zero. * The cost of producing those goods in the first place, which is very high in many cases. These are called 'sunk costs'. Prices are tending towards the cost of reproducing stuff, and people are struggling to come up with ways to cover actual production costs, whi…

Yes, there are indeed two costs of production, and free market economics has terms to cover both: "Sunk costs" and "marginal costs". Free market economics says that the price of a good in a competitive market falls to the marginal cost of production, not to the sunk cost of production. Read up a bit, I think you can find any number of good college freshman texts on "microeconomics". Then come back and argue.

You did not respond to the substance of my posting, which is echoed in the wikipedia article:

> Public goods provide a very important example of market failure, in which market-like behavior of individual gain-seeking does not produce efficient results. The production of public goods results in positive externalities which are not remunerated. If private organizations don't reap all the benefits of a public good which they have produced, their incentives to produce it voluntarily might be insufficient. Consumers can take advantage of public goods without contributing sufficiently to their creation. This is called the free rider problem, or occasionally, the "easy rider problem" (because consumer's contributions will be small but non-zero).

Re: The downward spiral of ownership and value (happened to music, books are next)

#48

Post by lambda » Tue, Jan 25, 2011, 3:43 PM UTC

jimbokun wrote: post #20

RyanMcGreal wrote: post #5

> 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…

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... 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 ch…

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?

Re: The downward spiral of ownership and value (happened to music, books are next)

#49

Post by loewenskind » Tue, Jan 25, 2011, 3:54 PM UTC

_delirium wrote: post #26

davidw wrote: post #13

Earlier quoted context omitted.

The problem is that there are two "costs" of production: * The cost of reproduction - which in terms of software, music, and now books, is essentially zero. * The cost of producing those goods in the first place, which is very high in many cases. These are called 'sunk costs'. Prices are tending towards the cost of reproducing stuff, and people are struggling to come up with ways to cover actual production costs, whi…

> struggling to come up with ways to cover actual production costs, which haven't really changed much The cost of buying food hasn't changed much, but the actual costs of doing the recording/release/distribution have decreased a lot, which lowers barriers to entry and increases supply. To produce a recording whose production values are seen by the average casual music fan as "good enough", and then sell an mp3, requi…

>there are quite a few people who love what they do so much that they're actually willing to subsidize their own art-production by working other jobs (e.g. waiting tables).

Do you really see this as a good thing? When the only way to make money is to do something that can't be given away and anything digital must be given away?

Re: The downward spiral of ownership and value (happened to music, books are next)

#50

Post by jfoutz » Tue, Jan 25, 2011, 3:56 PM UTC

jimbokun wrote: post #20

RyanMcGreal wrote: post #5

> 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…

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... 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 ch…

There aren't many technical barriers to entry. That dramatically increases competition on the production side. It seems at least some sources are passing those savings on to you the consumer.

The price of a gallon of gas in dollars has roughly tripled in the last 30 years. The price of a CD has held constant or declined. New technology allows people to get hit singles at a much lower cost. a cassingle would be in the $6 range, now you can get just the one song for a buck.

I can't see how revenue could go up with the dramatic decline in costs. It's not diamonds or oil, there's not some scarce resource that can be controlled. Making music is so much fun people do it for free. The technical barriers to doing so are pretty much gone.