April 5, 2008
The Undercover Economist: Piracy’s hidden treasures
What should top record labels, software giants and other media companies do about digital piracy? There are two obvious options: get tough and defend intellectual property rights with every legal and technological trick in the book, or tolerate some illegal copying in the hope of generating buzz and making money in some other way.
This is a debate that generates strong opinions, and where you stand seems to depend on whether you’re an industry accountant or a new economy guru. (Chris Anderson, editor-in-chief, Wired magazine, coined the phrase “Freeconomics” to describe giving cheap things away for free in order to create buzz.)
But look closer and you realise that the corporate suits aren’t all adopting the same strategy. The music industry doesn’t seem able to make up its mind: first it turned a blind eye to traditional mix-tape piracy, then it cracked down on illegal file-sharing while raising the price of CDs, and finally it slashed the price of CDs in an attempt to compete head-on with downloads, legal and illegal.
The remainder of this column can be read here. Please post comments below.
I was wondering about the application of these strategies to your own newspaper. The print version has gone up significantly in price recently, yet we can read the articles online for free.
Posted by: John Eustace | April 6th, 2008 at 6:34 pm | Report this commentIs it assumed that online readers will also buy the print version?
Your last strategy is all very well, but if there existed a way to sell music with “tight security”, then the decision whether to tolerate piracy would not be nearly so pressing.
There is no technical security against music copying - DRM for music is pretty much dead, although Apple will hold out for a while because they own both ends of the channel, so can get away with locking them together.
The only measures which can last are legal, so the strategy boils down to, “only prosecute people for file-sharing if they’re sharing high-quality encodings, but prosecute those effectively”. As with the technical means, if the labels had the ability to prosecute file-sharers effectively, then they wouldn’t be in this mess in the first place. Asking governments to turn the job over to ISPs seems to the most promising approach at the moment, which should tell us all we need to know…
Posted by: SteveJ | April 6th, 2008 at 8:25 pm | Report this commentThere is a much bigger issue here than whether the record companies can make the same profit out of digital delivery as they make out of physical cds. Do they actually have a roll to play in the new digital world?
Posted by: Bristlemouth | April 8th, 2008 at 3:34 am | Report this commentThese businesses have been built by controlling distribution and thereby controlling what’s popular and what’s not. As a content generator, you didn’t have any choice but to pay the distributor a huge percentage of the value of your intellectual property.
The internet has arrived, and the musicians can sell straight to their customers. Why do we need some executive in a suit to tell us what we should be listening to in the era of web 2.0? I’ll let my peers decide that for me, thanks.
Maybe the music companies are more worried about becoming completely redundant than they are about getting the pricing structure right.