Steve Pavlina Possibly Misunderstanding Intellectual Monopoly Abolisionists?

[Tobias Zimpel]

Originally Posted by JimOfferman

I can't imagine an area of business where it would be considered unfair that company A would have to pay some compensation to company B, if B enabled A to make a (larger) profit.

I meant if it is fair that A makes a larger profit than B although B was the creative one.

However, A is the one who is distributing B's creative work and makes thousands or millions of people aware of its existence.

Of course B should be compensated for A's profit of B's work, there's no doubt about that for me.

[Keith]

Originally Posted by JimOfferman

Your assertion that the artist has more benefit is simply not true.

Let's bring in some numbers to illustrate. Here's my imaginary radio station:

* 1,000,000 listeners
* every hour of radio has:
- 5 mins. of commercials
- 20 mins. of DJ talking
- 35 mins. of music

Let's assume very conservatively that the station earns $50 per sec. on advertising, after deducting expenses (operational costs, DJ fees, etc). For every hour of radio produced, the station thus makes 5 x 60 x $50 = $15,000. That's a guaranteed income of $250 a minute for the radio!

So while my 3 minute song plays on this station, they make $750. Nice.

Listeners don't necessarily stick around after the song to hear the ads (I know I channel surf) but given that the estimate is conservative, that seems reasonable.

Originally Posted by JimOfferman

Let's assume the listeners of this station are very avid music buyers, where 1% (10,000 listeners) runs out immediately to buy the album of the song they just heard. Assuming I make a decent $1 profit from every album sold (for $10), this single exposure would earn me $10,000. You're right! I win!

But wait! A 1% conversion rate is completely and utterly unrealistic! With just 100 plays, all of the station's listeners would have bought my album. Highly unlikely! Not even a living legend like Madonna can match those numbers.

A slightly more realistic conversion number would probably be that between 10 and 100 out of every 1,000,000 listeners buy an album for every time my song is played on this station. Let's stay optimistic and go with that 100. Every time this station plays my song, I earn $100 from the resulting album sales. This is while the station makes $750.

You personally make $1 out of every $10 CD sale (which is a bit rough, IMO), but the radio station is still generating $10 of sales - it's just that your production company (and whoever else) pocket 90% of it. So the radio station deserves to get paid for that value, not just your cut. Of course, 90% of that payment should likewise come from your production company, not you personally.

So it's $1000:$750 at this point (or $900:$100:$750 if you prefer).

BTW, whether a listener buys immediately is beside the point. It's still a sale even if they don't remember to buy your album or single until weeks later.

BTW II, you're right that 1% per play for the rest of eternity is unrealistic. In practice, the station makes a constant amount per play, but you receive an income that spikes then slumps. Thus the two aren't really directly comparable, but we have to work with something.

Originally Posted by JimOfferman

Of course, I've conveniently left out royalties in the above picture. Let's add those back in, shall we? Suppose that artist royalties are very generous at $10 a minute, then I earn an additional $30 for every time the song is played. The station, on the other hand, has an additional cost of $350 to cover those 35 minutes of music. The final balance then becomes:

My profit: $130
Station profit: $400

(remember: this is for one single play of my song!)

Real conversion rates are even lower - much lower, in fact, because once people have bought my CD they will not buy it again and, realistically, my music is only going to appeal to a small percentage of the total market. Real royalty rates are lower. Real advertising rates are most likely higher.

Tell me now. Who gains more in this scenario? Me or the station?

Actually, it's looking very much like your record company who's still well in the lead at $900.

Perhaps, since they're taking such a big cut of the sales they should be paying the radio station. (Of course this brings us into payola territory which has a set of ethical issues all its own).

Originally Posted by JimOfferman

Admittedly, this is all very much back-of-a-napkin style and highly simplified, but I'm quite sure these numbers are at least somewhat in the ballpark.

An important element you've left out of the equation is the ongoing value of an introduction. A lot of people hearing your song on the radio wouldn't have heard it any other way. Some of those people not only buy your CD, but become loyal fans who buy more CDs and concert tickets (and maybe T-shirts etc.). Without the radio station, not only would you not have sold one CD, but you wouldn't have sold any of the CDs and concert tickets purchased by that fan.

[JimOfferman]

Originally Posted by Keith

You personally make $1 out of every $10 CD sale (which is a bit rough, IMO), but the radio station is still generating $10 of sales - it's just that your production company (and whoever else) pocket 90% of it. So the radio station deserves to get paid for that value, not just your cut. Of course, 90% of that payment should likewise come from your production company, not you personally.

Those $9 per album are to cover the costs I make to get the album into your hands: studio fees, manufacturing, shipping, retail, salaries, etc. You can't seriously be thinking that the radio deserves to be paid for all the costs that [i]I[/] make in producing and distributing the album?

Actually, it's looking very much like your record company who's still well in the lead at $900.

My label is me and no it's not, because you failed to factor in costs. You've assumed that someone is pocketing that $9 per album and then you compared the total sales value at retail against the net profit of the radio station. No wonder mine is the bigger number!.

An important element you've left out of the equation is the ongoing value of an introduction. A lot of people hearing your song on the radio wouldn't have heard it any other way. Some of those people not only buy your CD, but become loyal fans who buy more CDs and concert tickets (and maybe T-shirts etc.). Without the radio station, not only would you not have sold one CD, but you wouldn't have sold any of the CDs and concert tickets purchased by that fan.

Yes, once a fan has been introduced to my music through a radio station, I stand to make more profit out of it than just the initial sale. But why should the radio station receive any compensation for that? How is any of that to their credit?

Let's say you blog about one of Steve's articles and then, as a result, some of your visitors also visit Steve's blog. Should Steve start paying you if those visitors keep coming back to his blog? Because that is what you are saying effectively: you introduced these guys to Steve's blog, so he'd better give you a share of all future profits he makes from your visitors!

You have some interesting views on economics, Keith!

[JimOfferman]

Originally Posted by Tobias Zimpel

I meant if it is fair that A makes a larger profit than B although B was the creative one.

Ah, right. Well, I don't think that creativity alone merits a larger part of the pie. Things like risk, longevity, scale, added value, etc. all tend to factor into the reasons why one party in the chain makes a bigger profit than another.

Of course B should be compensated for A's profit of B's work, there's no doubt about that for me.

Yeah, I misread you there, because my head was still a little wrapped up in my attempt to prove to Keith why B should not be paying A.

[Keith]

Originally Posted by JimOfferman

Those $9 per album are to cover the costs I make to get the album into your hands: studio fees, manufacturing, shipping, retail, salaries, etc. You can't seriously be thinking that the radio deserves to be paid for all the costs that [i]I[/] make in producing and distributing the album?

Wow, I hadn't realised overheads were so expensive! Given how cheap CDs are to purchase and copy that's pretty scary.

Hang on a minute, don't you sell your music over the internet? What shipping and manufacturing costs?

Anyhow, it's genuinely been interesting discussing this with you, and you may have swayed me just a teensy bit from my former position. However this discussion is eating up more of my time than I can continue to justify.

The best of luck with your music. I hope to hear you all over the radio some time soon.

P.S. I've just noticed that the audio widget you're using for your music has push buttons that look like knobs (I realise that the volume one is a knob). That's a little weird. Not a big thing, but if it's not a hassle to fix, it'd make the interface a little more elegant. If you want the ye olde look something like these buttons might be appropriate. Or maybe even smaller round buttons like this. Just a thought...

[EDIT] Hey, I just noticed! The business model you're using here is the ransom model I was talking about, except that you don't Free the music when the target is reached.

[JimOfferman]

Originally Posted by Keith

Wow, I hadn't realised overheads were so expensive! Given how cheap CDs are to purchase and copy that's pretty scary.

I guess that's one of the reasons that CDs are slowly going the way of the Dodo

Hang on a minute, don't you sell your music over the internet? What shipping and manufacturing costs?

I sell both CDs and downloads. For downloads, there are no shipping and manufacturing costs, but instead there's the cost of hosting/bandwidth (which are considerably lower). The biggest cost, for me at least, is still in the actual making of the recordings.

Anyhow, it's genuinely been interesting discussing this with you, and you may have swayed me just a teensy bit from my former position. However this discussion is eating up more of my time than I can continue to justify.

I guess that teensy bit of sway will have to do for now. Thanks for listening

The best of luck with your music. I hope to hear you all over the radio some time soon.

Thanks! And thanks for the knob suggestions!

[EDIT] Hey, I just noticed! The business model you're using here is the ransom model I was talking about, except that you don't Free the music when the target is reached.

That's actually not my business model, but Sellaband's. I tried it on for size, but it doesn't really suit me. I'm working on something that serves both me and my fans better...

[gberardi]

Please forgive me for not reading all five pages of this, but I also took issue with Steve's statement:

While some people take issue with the concept of intellectual property and believe that all content should be free, I don’t count myself among them. In fact, for the most part I consider the anti-copyright fanatics rather juvenile and intellectually immature. Too often their utopian language is merely a hollow shell around the desire to get something for nothing.

"All software should be free" is different from believing that people shouldn't get paid for their work. It's funny how people talk about free software as "utopian" and communist when it is a lot more free market than artificial government-issued monopolies on ideas.

We have a free market, but no one assumes that "free" here means that everything is available at no cost. So why is it when people talk about free software, it is assumed that they are talking about cost? Even when they insist it has nothing to do with cost? Repeatedly?

Because free means two different things, and most people associate it with cost when talking about software. And then they say, "Ok, I get it, but I will still pay for software if it is the right software for the job" which shows that they don't get it.

I have rarely come across people who think that if you create something, it should be given away to everyone at no cost. That's something for nothing.

I have seen people who argue that current copyright law is too draconian, but they aren't asking for something for nothing. In fact, the belief is that the copyright owners actually are at fault for taking something (the rights of individuals) for nothing. I see nothing wrong with copyright reform, but I don't see why asking for it associates you with the juvenile and intellectually immature.

I'm sure there are people who would love to get everything they can for nothing, but they are moochers, and they are separate from people who support free software. Free software, again, isn't about getting software at no cost. It's about ensuring that certain freedoms will continue to exist for people who get access to such software.

When Microsoft or Oracle use EULAs telling you that you can't publish benchmarks involving their software, or that you can't figure out how to make it better, is this better than Red Hat or SuSe insisting that it won't limit your use? Windows Media Player is freely available and restricts your freedoms, but free software alternatives, which may be freely available and won't restrict your freedoms, are just people getting something for nothing? Sounds like screwy thinking to me.

It's depressing when Steve Pavlina dismisses free software by arguing that he'll use the best software for the job, whether it costs money or not, because such wording associates free software with freeware. To then refer to all people who have a different opinion fanatics? Well, you'll excuse me if it sounds like someone trying to impress his world view on others. There are plenty of people who make money with free software, in many more ways than patronage and service contracts, who aren't political operatives trying to bring down the establishment in order to get something for nothing.

To me, it is intellectually immature to make a decision on this based on encountering a moocher and associating his thinking with a completely separate system that just happens to produce things that this moocher can take advantage of. It would be like someone meeting Ebeneezer Scrooge and deciding that capitalism was completely evil, calling all capitalists cruel, cold-hearted, and greedy, with no concern for anything but their thirst for more money, no matter who it hurt, since capitalism can produce a Scrooge.

And that someone having a blog read by a great many people.

This isn't a "we'll agree to disagree" option for me. I think a different business model can be called for in a world where copying bits is really easy and preventing such copies is really hard. I'm not alone. Wired recently talked about it, and there have been a few articles published in the last month that refer to business models in a world where you need to compete with free. I think that having access to the source code of software I use is important, and just because someone else doesn't find it so important, he can call me a moocher. That's offensive and insulting.

• I don't think that it is OK to make copies of software when I don't have permission to do so.
• I am a fan of free software.

For some people here (and others, such as Alexey Pajitnov), it seems difficult to put these two statements together and make sense of it. I should either be a dirty, fanatic pirate who hates capitalism, or I should be a hard-working person who thinks that people should get paid for their work and should hate free software for making it more difficult for them to do so. Somehow the idea that free software is about freedom is forgotten because once again people think that there is a fundamental difference between commercial and free software when there isn't.

Now if you'll excuse me, I need to learn how to be concise. B-)

[Brutha]

There people out their who are fanatics. If you don't count yourself amoung them you might not be the target of the article.
Steve doesn't speak against people publishing their software as open source.

But there are also fanatics out there. Even if you are a fanatic that is not necessarly bad. Many people would call Steve a fanatic: Vegan? Subjective Reality?

If the purpose of your life in fantatic, that's your choice. Your responibilty.

Just accept other perspectives to get a better understanding of the world around you.

[sehall]

Originally Posted by Kiba

I reread this article.

Copyright and Intellectual Property

"While some people take issue with the concept of intellectual property and believe that all content should be free, I don’t count myself among them. In fact, for the most part I consider the anti-copyright fanatics rather juvenile and intellectually immature. Too often their utopian language is merely a hollow shell around the desire to get something for nothing."


I am one of these people who hated the current copyright regime. To thinks that my position is an empty hollow shell for the desire to get something for nothing offend me.

First of all, I am willing to buy concert tickets to see my favorite musicians, and is willing to purchase books that I like. For me, it is not about getting something for nothing. It is about defending certain rights that I believe is at stake. The freedom to share copies with one another and the freedom to create.

My position is my belief on what kind of laws serve humanity the best. I don't think copyright law provide that kind of benefit, especially given my knowledge of the history of copyright and the corruption that come with it. This is also reinforced by economists who done works on intellectual monopoly.


As much as I hate copyright laws, I still employ copyright in my works but not for making money, but rather to give benefits to the public that were deprived of them when they agree to the compromise that is a bad idea in the first place. So I gave them the freedom to copy, modify, and distribute my works without royalty in exchange at the very least attribution and at most responsibility to guarantee that very same freedom to new users.

I still make money, but I am not reliant on the crutch of copyright.

For me, people not playing my games is a much bigger threat than people who copy and distribute my games will ever be.

Hi,

I view it like this; Ideally, if I don't want it copied then I don't want it copied, for whatever reason I may have. If I don't care then have at it. It's all about respecting what I want.

[beattiek]

Truth is, with music at least, once it is on your iPod you feel like you own it, whether you paid for it or not. You are not coming back to the store later to pay some money after the fact. Hence, the businessman in me says I have one chance to make a buck of you when you are first downloading my stuff. So, I'll give you a free sample and nothing more.

You can only speak for yourself. I have purchased over half of the CD's that I first downloaded. If you are going to infer something about anyone other than yourself you should at least give a reference to credible sources. Many people have succeeded with optional payment methods with their CD release.

Usually what this issue comes down to is a mentality of scarcity vs. a mentality of abundance.

The law is what it is right now because the music industry spends millions lobbying for copyright protection.

Some people say it's illegal to copy a song from a CD you buy to your ipod to listen to it. They say that would be stealing because you only paid to have it in CD format. If the record industry could have it there way you would have to pay every time you listen to a song.

To me the whole issue is best summed up with the poster that says "When you download mp3's you're downloading COMMUNISM."