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October 28, 2007

Music files may be abundant, but listener value and attention are still scarce.

Just came across this Techdirt article, in which Mike discusses the economics of abundance and therefore the virtues for an artist/band of making music available for free. This is an example of slightly muddled and mistaken thinking but before I show why, I wanna get a coupla things straight.

1) Yes, there can be benefits to giving away recordings. But, as Mike puts it rather succinctly: "Giving stuff away for free needs to be part of a complete business model that recognizes the economic realities." Don't assume that giving recordings away will necessarily get you anywhere.

2) The belief that music should be free and that if it's not people are perfectly justified in ripping it off is a blight on society and must be stamped out (not that it ever will be). I'm all for the cyberpunk ideal and breaking down barriers to progress, but I believe in those things because I think they make for a more reasonable set of conditions for mutual benefit and development. Stealing music, just like stealing bread, cars or life savings, is not being more reasonable. It is being completely one-sided and depriving the other party of the opportunity to renegotiate. If you don't like the price, send a signal by not buying - it has the same effect on the seller but retains your moral rectitude.

Having set that straight, there are a couple of points I take issue with in Mike's article. The first is his quote from Jefferson regarding an idea: "Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it". This refers to what economists call a "non-rivalrous" good. One person having or using it does not prevent another from having or using it. The best example of a non-rivalrous good is air - anyone can breathe it without preventing another from breathing it. However, anyone who's lived in a polluted city like, say Tokyo, LA or Beijing will know that not even air is perfectly non-rivalrous. One person's "use" of the air can make that air unbreathable to other people. Similar limits apply to roads, trains, mail, etc. In any real case there are limits to non-rivalry.

Where this causes problems with respect to ideas, however, is in assuming that each use of an idea is identical - or at least equivalent. Jefferson, like Newton and Einstein, was subsequently proved slightly wrong. One of the problems with ideas, modern psychology tells us, is that no two people have the same ones and, as any teacher will tell you, transferring an idea from one head to another is an imprecise and frustrating process (sometimes that’s a good thing). This is largely because everyone has a previously collected set of idea into which they must fit the new idea - and sometimes it doesn't fit at all. As the saying goes "a little knowledge is dangerous". The more complex the idea, the more difficult is its transferral from one to another.

When it comes to something as complex as artistic expression, as opposed to the sequence of ones and zeros that make up a digital file, the transfer is almost never perfect. While digital files may be perfectly reproducible (see my next point about that), music is not. The greatest art is ambiguous, and this is why it survives: it makes us question, debate and reconsider our lives and our place in the world. It does not supply answers, it asks questions, allowing us to find our own answers. This point lies at the core of why many of the arguments from those who talk up the virtues of "music like water" and treating music as a utility or paying for it via flat taxes or fees attached to digital player sales are just plain wrong: they assume that the value each consumer holds for each song, as with each digital file, is identical. It is not. In terms of their value to listeners, digital files are not songs, or games, or movies. They are merely the electronic embodiment of one version of them. To use the two interchangeably is to miss the entire point of human experience.

So when Mike says to "Redefine the market: the benefit is musical enjoyment" he is quite correct. But he is wrong in the next line - "the music itself" is NOT infinite. The value of the music, as opposed to the vehicle for the recording's distribution, lies in the experience of the listener - whether at a live show, or on the radio driving to work, at the time of a first kiss, watching a poignant moment on a favourite movie, or the birth of a child ... whatever. Even if you send me a copy of your favourite new song discovery, I may not attach the same value to it that you do, simply because of our mindsets at the time of discovery. And its value in an exchange between artist and fan lies in the relationship between those two, which does not necessarily lie in any particular song (or digital file). Radiohead understood this, and although many people (myself included) downloaded the album for free on a "try before you buy" basis, many others paid them handsomely. I have no doubt that they have more than recouped the costs of production.

The next point I want to object to is the use of the word "infinite" when talking about the economics of "abundance". Abundant and infinite are NOT the same thing. "Non-scarce" is closer to "abundant" than "infinite". And in any case, infinite does not exist, it can only ever be approached. Many web servers have crashed because of excess demand while attempting to distribute "infinite" digital goods - rendering them instantly finite as far as consumers are concerned. There are limits to bandwidth and many other factors involved in supply of digital goods. It is simply incorrect to refer to the goods as infinite.

Finally, releasing the "infinite good" does NOT necessarily increase marketsize. This is a well-documented furphy. The best it can hope to do is increase the potential marketsize, and many other activities will achieve the same thing. This is because in an abundant digital economy, marketsize is limited by attention scarcity. This is NOT a new condition for indies. Prince and Radiohead used this to great effect; their stunts garnered them huge amounts of attention. But it was not the giving away of the music they benefited from, it was the attention raised because of the novelty of that approach. Had Radiohead posted their new album as free streams for people to listen to before deciding to buy, they would have provided me with the same service and access - but would not have solved the attention scarcity problem because that's been done plenty of times before. Now that that novelty has been realised, it will not work so well again for them or for anyone else. Incidentally, Prince did NOT give his CD away - he sold it in bulk to a newspaper for more than he probably would have made at retail. He's a smart lad. On the other hand, the poster child for online music business, Jonathan Coulton, does NOT give his digital files away for free (though he's probably not about to sue file-swappers for copying it). Every posting of music on his site links to a pay-for download (one of them is the "pay what you like" site, SongSlide), and you can listen to the streams for free.

If you don't find some way to tell people that the music is available, and find some way to make it relate favourably to their lives, you will gain nothing. This has been the experience of many artists - myself included - whose music has been available for free for months and whose marketsize remains negligible and unsustainable. Similarly, making the music available will make no difference if it is bad. In fact, it may deter people from coming to shows and buying merchandise – such is the double-edged sword of attention.

The upshot of all of this is that what indies need to be discussing is the best means for overcoming attention scarcity, not devaluing music recordings by implying that giving them away is necessarily beneficial. As Bob Leftsetz points out, finding ways to overcome attention scarcity is one of the great assets that the major labels and big players retain. Giving away recordings without addressing the attention scarcity problem is playing back into the hands of "those who refuse to give up their old business models". The only way for indies to compete is to optimise all of their revenue streams, not compromise one in the hope of catching up with another.

Posted by Hughie at October 28, 2007 10:17 AM

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