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?

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

Dear recording artists, please at least consider the possibility of selling your recordings directly to your fans rather than to a record label, or worse, rather than trying to make and sell your own copies.

As yet, very few musicians have sold their recordings directly to their fans. There aren’t many facilities to do so either. You could certainly have a go tomorrow, but given a dearth of facilities and the unfamiliarity you and your fan base will have in purchasing or commissioning your recordings, at this stage you are as much likely to find it a damp squib as a roaring success.

There are two discrete situations in which one could sell a recording:

1. You have already produced a recording, but have not yet released/published it. You are interested in your fans’ best offer in case it may be better than that of a record label.
2. You are interested in producing a recording, and invite record labels and your fans to tender their offers of commission.

There is also a continuous process of selling one’s recordings:

3. You regularly produce and release recordings to your audience by way of ‘priming the pump’. You invite your keenest fans to commission the release of subsequent recordings. The initial releases are thus promotional loss-leaders to build the fan base to a size where their subsequent commissions match and possibly exceed your costs of production.

In all cases 1-3, the purchaser of the recording effectively ends up with the right to make copies. If you sell a recording to a label, they get any copyright (the privilege that suspends everyone else’s liberty to reproduce it). If you sell a recording to your fan base, any copyright is neutralised (your fans’ and everyone else’s liberty to reproduce it is restored). Indeed, when selling recordings to your fans, copyright becomes a redundant nuisance to be disposed of, rather than a privilege to be sold to those unscrupulous labels who’d exploit it in their sale of copies.

At least when an artist sells a recording to their fans, they retain all their (natural) rights. When an artist sells a recording to a label the artist loses their liberty to make copies by transferring away the privilege that suspends it. When an artist sells a recording to their fans they retain their liberty to make copies because this is a consequence of neutralising rather than transferring their privilege of copyright. In other words, the artist is also a fan (their own fan) and so similarly enjoys the restoration of their liberty to share and build upon their own work.

The recording (as deliverable) comprises the digital master and all components thereof as would typically be expected by a record label. If sold to one’s fans, then at the point of exchange this must be supplied or made available to the purchaser (one’s fans), e.g. as FLAC files via BitTorrent. Anyone (including the recording producer) can then sell material copies (media and delivery costs) in instances where such delivery of the recording is preferred, e.g. on DVD-ROM.

In the other direction, the sale price that the artist agrees is equitable in exchange for the recording (say $10,000) is provided from each fan (say $10 from each of 1,000) and delivered to the artist (or the company representing all those involved in the production of the recording). Typically, each fan will pay the same amount, but some schemes may involve variations.

There are umpteen other issues, but I’ll keep things brief.

This is not an investment in the artist, but the sale of a recording. The fans get the recording they want. The artist gets the money they want. Moreover, everyone gets their liberty restored.

In terms of facilities that exist today, one could attempt to shoehorn eBay’s Dutch auction to sell 1,000 ‘shares’ in a recording – if you reckon you’d easily sell out and the minimum bid price was around $10 (if you hoped for at least $10k). This also has to pass eBay’s scrutiny as the sort of auction it’s happy to see (doubtful).

Alternatively you could try Kickstarter. See Pros and Cons of the Kickstarter Model by Kristen Strezo. For background reading see 1,000 True Fans by Kevin Kelly and my article Selling Music Recordings.

Predictably, the more artists that start selling their recordings to their fans, the more facilities will be developed, and the more familiar fans will be with this means of encouraging their favourite artists to produce recordings for them.

However, it is important to note that ‘more facilities’ means ‘less overhead’. The more facilities there are to enable artists to sell their recordings to their fans, the more competition there is to provide artists with more efficient service at ever lower prices. Contrast that with a single taxation and disbursement administration that has every incentive to ratchet up the costs and overheads of its inefficient and uncompetitive service.

As we should learn from history, privileged cartels and government backed central services are the entities to establish ONLY if you want less rather than more of your fans’ money.

So, cut out the middleman! Or at least ensure that there’s a highly competitive environment such that any middlemen have to be extremely fit, lean and cost conscious if they expect you to use them in selling your recordings to your fans. If you create a tax instead, you’re creating one humongous Jabba the Hutt and very little prospect of seeing much more than a tiny trickle of treasure leak from its greedy clutches.

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This article is based on this comment in my discussion with Indiana Gregg at a2f2a.com

The idea that a publication retains value that creates an obligation upon the recipient to repay is an epiphenomenon of copyright. This is the peculiar idea that the maker or recipient of a copy of a published work extracts value from it which must be repaid to its copyright holder (or million dollar fines are liable).

It is certainly a lucrative prospect to the beneficiary publishing corporations, but it’s more akin to a baron’s tithe than the natural exchange of labour you’d find in any other form of craftsmanship. Once you’ve bought a basket that’s the end of the matter. The weaver has your money (your labour). You have their basket (their labour). Never shall you pay another penny however many times you use the basket, nor whether you sell it for twice the price you paid for it, nor even if you make copies or improvements. This is how intellectual work should have been exchanged with those who would pay good money for it too, but then the 18th century found monopolies too seductive to resist (consequent loss of individual liberty a trifling sacrifice).

As the wretched monopoly of copyright decomposes in the sunlight of the information age, the dust of its unnatural corpse blown away by the instantaneous diffusion of the digital public domain, we’re going to keep on seeing Kachingle type ideas cropping up that attempt to substitute for copyright’s anachronistic ineffectiveness by facilitating a guilt driven repayment mechanism. Hence propositions such as “Here’s how you can send me the royalty that you owe me for each copy of my work that you make”, or “Each time you enjoy my work here’s how you can repay me for the value you’ve received”.

That continuation of iniquitous privilege (publisher fealty) by misguided entrepreneurs who feel the more conscientious members of the public will still wish to subject themselves to copyright, in spirit if not in effect, misses the more natural exchange that we are now stumbling toward rediscovering: The exchange of intellectual work for money.

We should pay for the work to be produced, not for the value we extract from it. That gives us the biggest clue as to the proper foundation for future revenue mechanisms. They do not facilitate the salvation of guilt by individuals who make unauthorised copies. They do not facilitate charity from people who feel they are overdue in repaying some of the value they’ve received. They enable people to exchange their money for the intellectual work of those who will gladly produce it in exchange.

This should be obvious to anyone who looks at the copyleft market for free software. The software is published without privilege. Being so unencumbered by copyright it naturally belongs to the public as much as any basket belongs to its purchaser. You can use, share, and build upon this software guilt free. Of course it takes a while for those used to copyright ‘protected’ software to become comfortable with this radical yet ancient idea that a published work can belong to the public, but one gets there eventually. When free software stops being free is when the conversation of free speech runs dry and it becomes time to pay for the beer, time to pay for the labour of production. Those who want free software are the very ones who want to pay for its production. Those producers and those in want are the people in need of exchange facilities. They have no need for guilt nor need for conscience to be salved. They need a future as we all do, in which the people not only have their liberty restored to share and build upon their cultural commonwealth, but also the liberty to exchange that labour in a free market.

Is it a copyright infringement to link to the following press release by the Associated Press?

Associated Press to build news registry to protect content

Why do they appear to believe that to make money out of publishing news they must prevent anyone distributing it or discussing it, or even referencing it?

The answer is that nearly all those in the newspaper industry have become irreparably programmed by the ancient cult known as The Press. This brainwashes them to believe that they are in the business of selling copies of the news. That’s why they’ve become obsessed with the idea that if a large number of websites are making unauthorised copies of their news then they are consequently haemorrhaging revenue and must stamp on any copies that haven’t been paid for.

The privilege of copyright they still believe enables them to do this may have worked when a press was the size of smith’s forge or, until recently, the size of an aircraft hangar, but those days are long gone.

Copyright is now defunct and one can no longer sell copies. (Your fellow readers will have balked at this heresy and have now clicked away to an article on prison overcrowding).

So, the mind-bogglingly obvious solution for the producers of news is to sell their product, their news, not copies of it.

That’s because although the market for copies has ended, the market for intellectual work remains. In other words, people still want news, but they’re quite happy making their own copies for nothing thanks very much.

The thing is, if copies cost nothing to make (whoever makes them), then it’s probably time the press dared to reconsider whether the 18th century privilege that grants them a reproduction monopoly remains the best foundation for a 21st century business supposedly adapted to the digital domain and the instantaneous diffusion of the Internet.

I’d say it was time to get into the business of selling intellectual work – digital products for the digital domain. Supporting that is the business of Digital Productions.