Is piracy killing the music industry?

I discussed this issue in a rather oblique way the other week and now I thought I’d have another crack at it in a slightly more concerted way.

Why is stealing music bad? I write and I give what I write away. But I wish I could make a living writing and currently that’s not feasible. I am writing this blog largely because I have always:

a) considered myself a writer

And

b) never liked the idea of having to say, “well I’m working on my first novel” like every other writer seems to say without ever really doing any work on it at all.

So this blog was a way that when people asked I could point at and say, “this is what I write, but I’m also working on a novel but don’t worry about that”.

But one day, I’d like to write my novel and I’d like you to buy it. I’d love to be able to give it to you but there are two problems with that

a) it’s really annoying having to wake up at 5:45 every morning just so I have time to write for you, much as I love you all. If writing was my job I’d be able to have a lie in. And writing can’t be my job if people won’t buy my book

And

b) there is the concept of ascribed value to deal with. People don’t like to value things in isolation. In fact untrained humans are terrible at this concept in all areas.* Basically it means that if I tell you that my book costs 12 pounds some people will say, “okay I’ll buy that” and some people will say, “no that’s too expensive I’ll wait for paperback” (of course a few people might say it’s cheap at half the price let me buy 100 copies) – but that’s unlikely. The point being that if you give something away people assume that pretty much it’s worthless. And similarly if you can steal something without risk of being caught then you assume the same thing, but I’m getting ahead of myself.

Basically people think that it’s okay to steal music because it’s very difficult to be caught and also the music industry has been exploiting its monopoly position for far too long (each record label has a monopoly on their artist for example). There is a very inelastic demand** for artists which ignores the label they are on. I can’t say I don’t like X band because they are on Universal, generally I don’t even know what label they’re on – and further I don’t care. I want their song and I don’t want to be ripped off because they have a monopoly on X’s music.

My favourite argument for the stealing of music is the following: Music costs very little to record professionally now, musicians have the ability to sell live concerts, people who love making music will still make music, so lets force the music industry to it’s knees and we’d have far fewer crap acts. Only people who are committed to music and love it for itself will keep performing. Usually at this point, for some reason people invoke Britney Spears:

If you can tell me the world would be a better place without Toxic then you don’t appreciate good music. Honestly it’s a catchy piece of pop that certainly the world of music would be poorer without and I don’t care who knows it. And yes the song would not exist if the music industry was at its knees.***

The model also falls down the moment that you look beyond the music industry. Yes you can make movies cheaply now on digital formats. But there is no way that you can make a movie for anything like the price at which you could make an album. And even if you did only make cheap movies imagine how much of the scope of the world of cinema you would loose if you restricted yourself to only that. No epics, no stunts, just people in a room talking. Yes many great movies have involved people in a room just talking but it can’t be right the most stolen movies are exactly the movies that cost the most to make (Action / Adventure / Fantasy).

The problem, of course, comes back to externalities. Sorry for the economics lecture here but externalities are one of the most important things in our society. The economic system rules our lives pretty much, external costs (externalities) are the things that don’t have a value within the economic system. The things that fall between the cracks. Eg. The cost of driving a car is the cost of the car, the petrol etc, the external cost is pollution. Society pays (and you are part of society) but you don’t pay money cash when you drive your car. The petrol tax is an attempt in economics speak to internalise the externality, ie. To get you to pay for the pollution per gallon.

In music the externality is caused by the fact that each person thinks individually. You think that you are only one small person so how can you change the world. How can you stop pollution? Everyone has to do it before it takes effect right? Same in music. How can you change the music industry? You’re just stealing a couple of tracks, it’s not like they’re going to miss it. They’re all millionaires after all – right. But what if everyone else starts thinking the same way? Well the talented people will go and do something else.

The only problem is that unless people disrupt the network then there isn’t another solution? We don’t have a choice as we’re all inelastic consumers of music (we like what we like) and the price is set by a de-faco cartel. This protest is the surest way of bringing the price down to non-monopolistic prices. And it seems to be working. However you do have to worry about the community though. The community aren’t just in it to disrupt the market. The community want free music now they’ve had a taste for it. How do we know? Apple finally released DRM free music onto the internet. And most commentators slammed them for including the users details in the files that they were downloading. Why would any reasonable law abiding user be upset by this? The only reason to be upset would be if you were planning to by cheap pre-encoded files for sharing amongst your friends. A terrible own goal from the community.

I want music, movies and books to be cheaper. I want to be able to choose the format. And I want to be able to reasonable share them with my friends (if I lend a cd to a friend I can’t play it, why isn’t that how DRM works?). I’d prefer to be trusted by the company I buy from not told I’m a pirate (you only see the adverts if you aren’t). And I don’t think people should be able to milk the profits for ever. But I don’t want the industry to die. I want to be able to make money, survive, even do well in the industry. I don’t need to make millions to enjoy writing I just need to have some way of making money. Because if I don’t I’ll never be able to quit my job.

* You know that thing where you put your hand in some water and you can’t tell if it’s very cold or very hot you just know that it kind of stings. That’s the same thing, but if you put one hand in cold water you’ll instantly be able to tell which is hotter than the other. Same with weighing something same with value. Although the water thing is the one most likely to make you wet yourself if you’re asleep.

** People don’t stand stiff as a board when they’re ordering. Demand is on a scale of elasticicity. Which basically means for some things people are very sensitive to price (elastic demand) a small change in price means a big change in purchases and other things people simply have to have you can put the price up as much as you want people will still buy them (inelastic demand).

*** Don’t you love the way that I’ve included a pirated copy of a music video in an article supporting people paying for music? I do.

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