The downward spiral of ownership and value (happened to music, books are next)
librarything.com
librarything.com
The same is happening to the book publishing industry. We don't really need them anymore. Instead of giving $15 to a publisher who then gives $1.50 to the author, we can just give $1.50 to the author directly and be done with it.
In the process, we'll see lots of articles like this bemoaning the 90% shrinkage of the publishing industry, while actual authors make more money than ever.
What the Internet is really doing away with is a giant industry
that used to be useful, but now is merely parasitic.
we can just give $1.50 to the author directly
Musicians who embrace the new reality are doing fine.
I would also love a functional gift economy, instead of one of scarcity ... but on the Internet a gift economy doesn't really work, because most users are not giving back. How many users of open-source software are giving back contributions and donations?
Even when your software is used by lots of corporations; you either have to beg, or your software has to be broken (in need of a fix).
And I quote from http://www.undeadly.org/cgi?action=article&sid=200603210... ...
OpenSSH is in use by millions around the world
however the revenue stream just simply isn't there.
No, it isn't several hundreds of dollars, since many people who are downloading from PirateBay would not buy the songs even if the free option wouldn't be available.
And some would. So where does that leave the overall argument?
"the Internet is also breeding a generation of customers that used to value and support music & books, but now is merely parasitic."
To borrow a phrase, "Citation needed".
* 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, which haven't really changed much.
Now, certainly, in the past, there were no guarantees that if you wrote a book over the course of a year, that you'd be able to make up for a lost year's worth of wages, but at least you had a shot at it - and also a shot at earning several times that if you had a hit.
If, instead, you spent a year writing a book, and it were easy, legal and acceptable (we're not quite there with all three) to just copy it all over the internet once it was released... where would you get your money from?
This is all described pretty well here:
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, requires much less capital investment than putting out a decent-sounding record in 1975 would have, or even a decent-sounding CD in 1990.
Sure, home recording on a Macbook isn't going to get you the quality a professional studio would get you, but the quality gap is much less than it used to be, especially for someone who spent some time reading (free) documentation on the subject. Rather than home recording producing unreleasable cassette demos, they're now often good enough to upload to YouTube or sell directly to fans. As a result, the people who've paid for professional studio time now have to compete directly with all those home recordings, whereas previously they could more or less ignore them. That drives down prices.
Related, many artists actually put a negative value on their time: 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).
Musicians can at least do concerts, which are excludable and rivalrous, and so make for a pretty good 'traditional' product that they'll get paid for.
Writing a book is likely a bit faster than 50 years ago due to computers, but not that much, as most of it's in your head. Isn't it Neal Stephenson who says he writes everything freehand?
It does lead to different economics, since it rewards a writer by how many ardent fans they have (preferably well-off ardent fans who're collector types), rather than total readership.
Not sure how many total writers it'll be able to support; I suppose we'll see. But then, I'm not sure how many total writers traditional publishing would be able to support either, even absent piracy; the industry seems to be converging on a model that picks and heavily advertises relatively few large blockbusters per year, which only serves to support a fairly small number of writers, though it admittedly supports each of the lucky few quite handsomely.
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?
Contrast with waiting tables, where people do not enjoy doing it enough to do it for free. If there were a lot of people who loved it so much that they were willing to wait tables for free in their spare time, wages would probably go down there too...
Were films something people could freely and legally copy, we might see a shift to handycam amateur efforts funded by table waiting, and fewer things like Avatar, which would require approximately 281328282 man-years of table waiting to produce. I think that we would lose something in that transition (although other things would be gained).
Not strictly true. Thanks to digital camera availability there are a near infinite amount of people willing to do your family portrait but I suspect you'll have no issue with paying to have it done.
>Contrast with waiting tables, where people do not enjoy doing it enough to do it for free. If there were a lot of people who loved it so much that they were willing to wait tables for free in their spare time, wages would probably go down there too...
That sounds like an incredibly awful world to live in where people can only get paid for things that no one likes doing and everything fun has to be given away. I mean, I don't mind doing what I love to do for free so long as I don't have to pay for food, rent, etc.
There used to be a time when taking an ID photo would require you to go to a specialized photo studio, you know.
Waiting tables might still have a future though, since those robots from Japan are kind of creepy (for now at least).
Don't people always say to find something you love to do and then find a way to get paid to do it? I don't want a world where there is no way to get paid to do it unless nothing costs anything.
For instance, light houses are generally constructed by governments.
Do you want the government to be in charge of who gets paid to write or make music? I'm not a libertarian, but I don't really like that idea.
Intellectual property is another listed solution that, despite recent problems, has worked pretty well. As of late, enforcement costs may be exceeding benefits, although it's hard to say, really.
"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.
> 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).
http://blog.tunecore.com/2010/10/music-purchases-and-net-rev...
PS: At the sub 3$ a book range there is little reason to pirate. I tip waiters more than that let alone entertain me for a few hours.
Breadpig isn't the first publisher to do that, but it's going to be really hard convincing popular webcomic artists to take a typical book publishing deal.
And for now, there are still plenty of us who enjoy reading deadtree versions of our favorite webcomics - delicious irony!
How much of that would not have been produced had the publishing industry not existed? I'd wager that authors would still produce literature regardless; you'd have to be insane to write a book with the sole intention to live off the proceeds. It hardly ever happens NOW. You could make more money cleaning pools.
The loss of the entire publishing industry is not necessarily a great disaster.
Like publishers, the music industry never produced culture; it marketed the latest fad to teens relentlessly. That's a live-by-the-sword, die-by-the-sword business model. When teens decide you're no longer cool or necessary, there's no alternative but bankruptcy.
Now, if I could actually find physical copies of great new music that isn't compressed all to hell for not-outlandish prices, I'd buy it in quantity. But that's not what the music industry is selling.
Same for publishers; these people aren't providing the same value they used to, which is to cull through the crap and only offer the good stuff to the customer. The Internet does that for me now.
As for the financial incentive for the author to write, I really don't care. A patronage system could work. Public funding could work, and might even cost less than enforcing copyrights.
But nobody owes anyone else a living, least of all the middleman between the author and the audience.
If we're really worried about piracy and the book is that great, only sell paper copies. Self-publishing makes that possible too.
The real purpose is not to pay for 'books'. It is not to 'protect' author's 'rights. It is not to have 'ownership. The purpose here is to pay for production of books. Production does not essentially depend on 'ownership' or 'rights' at all.
Books are data. You do not 'own' data in the normal sense. It is an abundance, it is infinitely copyable. Gluing together the ideas of books and ownership no longer makes much sense. And similarly for 'rights': they were a practical means of funding production in a material world, but now they are not.
It is somewhat reasonable to observe the apparent lack of confirmed business model for funding book production in an internet world. But the undertone that we are slipping into doom and dread is funny when you think about it. Are we losing something? Has the internet taken something away? No, it has given us something. We do not have less now, we have more. So, we need new ways to organise ourselves and production. Why is that such an impossible thing to imagine? We can build the internet, but we cannot re-arrange what we do a little? We should have at least an iota of confidence in human capability.
You hardly even need optimism: simply look around. We have had at least a decade of 'piracy' of music. Oh no! Surely the world must have collapsed! Ask yourself: do you have less music to enjoy now than before? I very much doubt it. There is more music now than ever.
This whole 'end of the world' fantasy is largely just industry FUD. Stop perpetuating it, and instead celebrate the internet and think of ways to use it to do more than before.
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.
> 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.
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.
The recording industry might be shrinking, but the music industry is growing.
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.
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?
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... . 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.
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?
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.
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.
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?
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.
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.
Hardly a data "smoking gun," and obviously software is different than media, but potentially food for thought.
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".
Isn't that like what Manning does with its MEAP (early access program)?
http://money.cnn.com/2010/02/02/news/companies/napster_music...
"It's also a bit unfair to compare the 2000s with the 1990s, since the '90s enjoyed an unnatural sales boost when consumers replaced their cassette tapes and vinyl records en masse with CDs."
"But industry insiders and experts argue that the main culprit for the industry's massive decline was the growing popularity of digital music."
Also:
"Last decade was the first ever in which sales were lower going out than coming in."
Or it could just be piracy!
For example UK cinema attendances fell from 1.6Bn/year in the 1940s to 55M/year in the early 80s - this was entirely sue to people seeing the future of being able to download movies - and not due to the crap films produced in the 70s and 80s.
Perhaps they can start writing by hand, copying the world of painting and sculpture, in which people happily 'invest' in products which have nominal future cashflow potential other than future speculation.
Huge opportunities for startups to be disruptive here.
Perhaps we'll see "life lease" companies - I'll have the mid-level engineer package please!
Additionally, as DennisP mentioned, if the author is actually getting more money from it, then we're just doing away with a middleman. That's what lot of startups are trying to do right now, after all, and it's a great opportunity. For creative writers, musicians, or designers and coders, there's more chance than before to get your content out there and sell it more seamlessly than before. That can't be all bad!
I'm not arguing it's all doom and gloom but, as the article discusses, I hear a lot of reflexive "Give it away; you'll gain visibility and make money somehow." I heard that plenty as a consultant by people trying to get me to speak or write for free and it mostly didn't work then either.
Audiobooks in particular, of the on-demand variety where I can instantly get them on my iPhone through the Audible app, have led to me reading a HELL of a lot more. It's easy and convenient.
eBooks also help because I buy more books and search through them. I can also read them on mobile devices while I take a shit in public washrooms.
Right now I am in the middle of:
* 2 non-fiction audiobooks
* 3 fiction audiobooks
* 4 standard ebooks
I task-switch between these 8 products based on my mood. I could never carry around 8 dead trees or fit 5 audiobooks onto my walkman. It just wouldn't happen.
Digitization has led to me spending way more money on authors. In the past I would just get dead trees from libraries or friends, or not buy them because they were too much money.
Now that I can get an audiobook for an ~$8 audible credit I try out new things way more.
That I can instantly buy an ebook I need for ~$10 means I read a lot more. If it's 2am and I want to read some particular book, I can instantly get it, I don't need to put it on the shopping list and waste so much time finding a bookstore and standing in line and searching through stacks of shelves.
I spend more time reading/listening and far less time deliberating, searching, planning, and waiting.
SO an eBook costs the same as the hardback - screwing you. But the contract with the author has the same clauses charging them a percentage of buy-backs and printing faults or damaged copies as the paper version - screwing them.
The publishers need to realize the game has changed - and quickly unless they want to end up like the record business
At the very least, there's a huge potential for a lucrative new market in cheaper eBooks, only it hasn't been fully realized yet because of existing publishers.
Extra anecdote: My girlfriend has always been an avid reader, but since she got a Nook, I'd estimate her book purchases have doubled because she can just buy a book at midnight while she's sitting in bed or when she's stuck home sick or on her lunch break.
I can't really say that the declining music sales of the last decade have effected the quality of music being put out in any noticeable way.
I guess the longer term problem is that it's creating a next generation that know no other way but to freely obtain content without contributing anything back.
I'm thinking of something like "Harry Potter and the Methods of Rationality" - obviously Yudkowsky can't sell that because of its fanfiction nature, but something of that quality level, I think I'd pay a buck to read 4-5 episodes of it. Especially if I got hooked by the first 10 chapters being free.
This should bring lots of new opportunities, especially for fiction writers. Hopefully, less fluff and more density too. Would you pay $2 to read a highly polished 20 page manual by Steve Blank? I would. Hopefully this becomes a way for content producers to get paid to craft high quality, dense content... I think this could lead to something of a revolution in quality, dense, though shorter content.
Where he screwed up: he promised to finish the book if his targets were met for the first two chapters. Naturally, for the first two chapters, they were. People were paying extra just to make sure. But after two, donations dropped dramatically. Ultimately, King broke his promise after seven chapters.
Nevertheless, he netted half a million bucks for an unedited novel that he didn't even bother to finish.