I’m amused by Stephan Kinsella’s posting of MPAA Copyright & Content “Theft” Propaganda that should remind us just how easily many people are hoodwinked into believing that monopoly based industries are highly ‘productive’.

Let’s imagine a country with a billion people, and a movie industry that produces a blockbuster movie for $1b in ‘movie production costs’, and prices it at a bargain price of $10 per copy.

To prevent copyright infringement hurting this highly productive industry, the government nationalises the Internet and freely distributes a copy of this movie to everyone, but deducts its $10 price via taxation. That means the movie industry has an ‘economic output’ of $9b ($10b revenue minus $1b costs).

Whereas, relying upon normal retail channels and good citizens to abstain from illicit file sharing, the movie industry is likely to have lost say $3b through infringement, leaving it with only $6b ‘economic output’.

Of course, anyone with any grasp of economics can readily translate ‘economic output’ as ‘revenue via extortion’, and ‘movie production costs’ as ‘costs at monopoly inflated pricing’.

Many people who propose ‘solving piracy’ with compulsory licensing schemes funded via ISP levies are unwittingly proposing such a scam (some wittingly), i.e. to solve copyright infringement by charging people a mulct via their ISP, and disbursing it back to ‘creators’ (copyright holding corporations) according to the popularity of the work.

Profits achieved via mulct or state granted monopolies are not benign profits such as may be achieved in a free market, but wholesale theft from the people.

In a free market (without monopoly), many movie production companies compete for the money of prospective viewers, i.e. haggling. The result is that there are modest profits, and actual/non-fabricated production costs drastically shrink to uninflated prices. In other words, your $1b blockbuster ends up costing $1m and is paid for by 100,000 fans subscribing at $10 each, and not being subject to copyright there are no reproduction/distribution/retail costs the producer can hide their ‘profits’ in.

Say goodbye to Queen Anne’s 18th century business model of extortion, and let us revert to the free market, as old as it is new. GOTO VODO for a glimpse of a new movie industry based on ancient, free market principles. Pay the artist for their work, not the monopolist for their copies.

Just as we are getting to grips with hyperlinking or streaming as a means of ‘sharing’ published works without daring to permanently copy them (risking copyright litigation), some authors are taking it upon themselves to copy their blog articles across the web (or are encouraging others to do so). I’m sure we’ll figure it all out eventually, when it’s appropriate to copy, link, or stream, and to do so without persuasion from an 18th century privilege.

So, as Eric Hellman’s article Bounty Markets for Open-Access eBooks has been copied into at least two other blogs, Center for the Study of Innovative Freedom and TeleRead: Bring the E-Books Home, I won’t copy it here. Pick a link!

When you have recognised that a monopoly in making and distributing copies of intellectual works is impossible (let alone unethical) in this information age, you must eliminate copyright from any role in the future of business models concerning the exchange of intellectual work. What’s left, however preposterous or incredible, must be the truth.

If you cannot sell copies, you must sell the intellectual work. It is obviously the latter work that is expensive and valuable, and the former that can be done with negligible skill, materials, and expense. What’s so amazing is the indoctrination that makes people insist the opposite, that artists should give their work to publishers for nothing, but the prospect of a royalty on sale of copies that all bar the publisher are prohibited from making. A royalty that often fails to materialise despite colossal monopoly profits ending up in publishers’ creatively accounted coffers (until the inertia of the monopoly is inexorably exhausted).

Forget the anachronism of the traditional 18th century publisher, a hangover from Queen Anne’s Stationers’ Company. It’s time to shift one’s paradigm to a more ethical relationship, one between artist and audience, that recognises that he who does the work should be paid the free market rate. Those fans who want the artist’s work pay the artist for it – at a price both agree on. The audience pay for the communications infrastructure and reproduction machinery that copies and distributes all artists’ work. What other work is left to pay for? Or are we supposed to keep publishing corporations forever in the lifestyle to which they would remain accustomed? Is copyright truly sacred?

Eric Hellman stands to cross the Rubicon, to shift paradigms from business based upon the unethical privilege of a reproduction monopoly in copies to a business based upon free market exchange of intellectual work. Perhaps you’ll join him?

Diaspora is another snowflake in hell.

It won’t be long before it’s snowing.

Thousands of true fans want the pop group that is the fab four comprising the Diaspora project team to buckle down and do some intellectual work this summer. In exchange for close to $200,000, they expect the copyleft publication of that intellectual work (copyright neutralised).

More facilities like Kickstarter will arise to make such exchanges ever more easier, and to refine the details of those exchanges.

So, who needs copyright? Who needs a monopoly on the sale of copies when you can sell your intellectual work directly to your customers? Answer: Only the traditional publishers utilising anything from Caxton’s press to modern CD and DVD duplication plants. Not intellectual workers.

The intellectual worker does not need a monopoly. Moreover, that’s the last thing they need if they wish their audience and commissioning fanbase to grow in size (and revenue). They must remove the © prohibition against making copies of their work. They also need their work to be exempt from the collection society thugs threatening people for performing their work in public (qv PRS). The modern intellectual worker must restore the public’s liberty to their work, enabling their free promotion, so that many among their audience might just be inclined to commission them to produce more good work.

Anyway, back off the hobby horse and down to Earth.

The first problem the Diaspora team needs to solve in developing a distributed system is the identity/reputation of the participating computers.

Freenet may have some pointers. I’ve also written an introductory article: Ideating Identity.

With that not insubstantial problem cracked they can build from there, optimising the distribution and replication of information according to interest.

On top of that you then have the users’ identity/reputation issues.

And then the icing on the cake (that must come last) are the matters of privacy, secrecy, confidentiality, and discretion.

Privacy is physical and a misnomer in the context of distributed systems – it’s best not to use the term at all (to avoid confusing people).

Secrecy can be contrived to a limited extent via cryptography.

Confidentiality and discretion are inclinations of people, matters of honour/reputation and cannot be enforced through technology (or law). However, they can still be informally measured and incorporated as part of a social reputation metric.

So really, what one ends up with is simply a means of assuring high availability of all the information that anyone is still interested in. Moreover, guarantees will still be expensive. People will have to pay for guarantees of persistence and prevalence – if you don’t pay, and your information is uninteresting, it may degrade to offline storage, ultimately to evaporate.

On one side we have artists apparently giving their work away, and on the other we have their fans apparently wanting to give their money away, to donate it to them.

The mistake on the part of FairTunes, TipJoy, Kachingle, Flattr, etc. is to perceive the fans’ wish to give as a demand for a donation facility – to match the Internet’s facility in helping artists give away their work. It’s a mistake in the same way that someone might think people jumping from a ship need a diving board instead of a liferaft.

There is a more fundamental need that developers of donation facilities are failing to recognise. This is the need for an exchange.

As has been demonstrated in mankind’s long history there is a far more efficient and productive means by which people exchange their work for the money of those who want it.

It’s known as a market. A place where people with work offer it in exchange for money, and people with money offer it in exchange for work. Neither adopts the approach of ‘give it away and pray’.

We are finally recognising that the market for copies has ended, that the monopoly of copyright can no longer protect the sale of that which everyone can illicitly produce themselves for nothing. The role of the intermediating publisher to convert their purchase of art from the artist into the sale of mass produced copies to a mass market is coming to an end. Artists must now look to the arrival (or return) of a disintermediated marketplace, one where the artist and their fans directly exchange art for money, money for art.

I’m working on such a market. I call it the Contingency Market. It enables deals such as “If you publish a new article, I’ll pay you $x”/“If you all pay me $X, I’ll publish a new article”.

There are three words that the record labels love people to conflate: Music, Recording, and Copy. These are glued together by corruption, by the labels’ 18th century privilege of copyright. They’re happy for you to believe that when you buy a CD you’re buying the music.

However, once you dissolve the despicable glue that creates that illusion, you can properly separate those three concepts and realise that the recording is not the music, and the copy is not the recording. You can also realise that the copy is not the music.

It is critical to distinguish between these elements in order to distinguish between the respective amounts of work that goes into their production. It’s then possible to figure out what the heck you as an artist should be selling, e.g. a piece of plastic that costs a penny for a thousand times that amount, or precious hours of your life preparing and performing in a recording studio for a goodly day rate.

I have been having this discussion with Suzanne Lainson on TechDirt.

The artist has traditionally sold their studio recording to the label (in exchange for whatever the contract stipulated), and this has been the case for decades. So, let’s agree that the artist is familiar with the process of selling the recording (of their music, in a studio performance).

Like a label, the artist is also familiar with the process of selling copies of their recording, e.g. CDs via mail order.

However, very few artists are familiar with the process of selling their recording to their fans.

The figure I use of $10,000 is just an example. Obviously the actual amount depends on the artist, the size of their audience, and the number of fans interested in commissioning them to make a recording.

But let’s say the artist did accept $10,000 from 1,000 fans in exchange for a studio performance, a recording thereof, and the (copyleft) release of that recording to those fans.

It becomes the property of all those fans (as well as the artist), and it becomes the property of whoever those fans distribute it to, whether for love or money, e.g. via public file-sharing networks.

• The artist gets paid $10,000.
• The fans get a new studio recording of the artist that they wanted.
• Everyone keeps their liberty (no-one gets prosecuted for file-sharing, playing it in public, or remixing it, etc.).

You may think $10,000 is too low. Sure, perhaps you have a thousand wealthy fans who can afford $100 each, or a million fans $1. The point is not the price, but the exchange of the recording with the fans for their money – and that it’s nothing to do with the sale of copies, or any monopoly.

And no, fans don’t sit in the studio. That would make it a live performance and ticketed event. The fans are only buying the recorded studio performance, and this enables the artist to sell their music via that recording to a global fanbase, without the hassle of everyone having to fly to a large stadium somewhere.

Once the deal has been done, the recording has to be delivered to the fans who commissioned it, e.g. FLAC files via BitTorrent, or even commemorative DVDs (for an additional amount). Those fans can then redistribute it as MP3s and/or remix it as they see fit.

Let’s recap

The copy is a means of communicating a music recording, but the copy is not the music, nor the recording – and the recording isn’t the music.

The music takes talent and is made by talented musicians, whose talent can obtain a high market value.

The recording is not the music. It is a recording OF the music.

The recording takes skill to get ‘just right’. Recording engineers’ skill can be highly valued.

The copy is not the recording. It is a copy OF the recording.

The copy takes zero skill to produce and takes a microsecond. There is no market for the skill or services of people who make digital copies – because everyone and their dog can make millions of them in double-quick time for next to nothing.

So sell what takes talent and skill – the music and the recording of it. Then the copies are as free as nature makes them.

And let’s not forget, so then are the people: Money for art, liberty for people.

Here are a couple of articles by Mike Masnick at TechDirt, well worth reading if you were losing hope that artists could do business without suing or taxing their fans:

• The Future Of Music Business Models
• Ten Good Reasons To Buy

Artists and fans are already connecting, already doing business without copyright. To institute compulsory license fees as many are now proposing will simply take money from fans with a tiny fraction ending up in the artist’s pocket. There is no point to such Internet taxes except to provide a paltry pension to retired artists, and ‘money for nothing’ to labels and collections societies.

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Hat tip Michael Castello