In P2P And Putting In Place A Workable Business Model Chris Gilbey is right to observe that the obvious alternative or adjunct to a monopoly on the manufacturing and distribution of copies is a tax on the distribution of copies. In other words, if people start ignoring the monopoly by making and giving away their own copies they can be taxed for the copies they distribute.

Unfortunately, all this is ‘obvious’ only from the perspective of a monopolist publisher. What those publishers and their friends in high places don’t want to recognise is that not only was the monopoly of copyright an iniquitous piece of legislation in the first place, but a tax would compound it.

Instead we should recognise that the publishers are being rightly ejected from their privileged position in the value chain. They aren’t needed for manufacturing copies, distributing them, retailing them, or even promoting them. The public can do this all by themselves thanks to the Internet, or as Chris describes it: ‘super-distribution’.

What may easily slip one’s notice is that hand in hand with super-distribution goes super-communication. In fact the former came from the latter.

One of the key commercial advantages of copyright in the 18th century was that it removed the then considerable costs involved in what should have been communication/negotiation between the customers of books (words, not paper) and the authors thereof. The printers (in pursuing their monopolies) were thus in an ideal position to commission the author’s work – to negotiate a price of the work on one hand, and the price of each copy on the other.

Now just as super-distribution renders the monopoly of copyright ineffective, super-communication also renders the prospect of an author negotiating with their readership feasible. They can eliminate the costs imposed on the value chain by the printer, publisher, distributor, and retailer, eliminate the promotional costs of copyright, and thus negotiate what may well be a more lucrative commission from their readers directly. The market for printed copies is thus free and independent of the market for the intellectual work (qv WikiTravel & WikiTravelPress).

What should have happened in the 18th century was that the readers commissioned the author directly (via subscription), and then printers competed with each other in a free market to print copies of the author’s work. No doubt subscription technologies would have improved no end in the absence of copyright – and the price of books would have been a tad lower.

Today, with copyright ineffective, necessity is spurring the invention of efficient subscription or negotiation facilities. This is what I’m working on (ContingencyMarket.com), a means of enabling the author to haggle with readers, the audience to haggle with the artist, to make a collective bargain concerning the exchange of art for money, money for art. After all, it’s art the audience wants to pay for, not copies.

So, I don’t think the future business model for intellectual work will be quite as complicated as Chris suggests (no compulsion, levy or tax should be necessary). It should actually be rather simple, e.g. the author says “I’ll sell my book for $10,000”, and 9,000 readers say “We’ll buy your book for $1” and then the author says “Aw, alright then, done!”. Well, perhaps that’s an oversimplification. The negotiations and exchanges will no doubt be far more subtle and fluid (low friction) – or will be when this approach takes off. But, the point is, the author no longer needs to pay the publisher for printing, distribution, and promotion. They simply need a tadette of money from their readers, their customers. In exchange, the readers get the author’s words, and their liberty restored to share and build upon published works.

As Chris says, we need to “get people to the table to negotiate”, and that’s the artist and their audience: the negotiator with the art, and the negotiator with the money. Having enabled their negotiations, and once their deal is done, both sides have what they want. The artist has their audience’s money. The audience has the artist’s art – and both retain their liberty (there’s no longer any motive to preserve the monopoly in the production of copies). As with WikiTravelPress, if any CD manufacturer reckons there’s still a market for copies of the art, there’s no monopoly stopping them. After all, you can still buy CD copies of Red Hat Linux, and there’s no monopoly to prevent anyone else making and selling copies of that.

We could call this direct exchange of art and money between artist and audience super-negotiation.

In NOT AN UPGRADE — AN UPHEAVAL Clay Shirky begins to warm to the idea of micropatronage – the radical idea that an author’s most interested readers might pay them to write and publish their writings.

If the journalist has already been paid for their writing, who needs to pay the manufacturer and distributor of copies of their writings? Does the public really need to continue paying the publisher a hundred times the revenue that they’d pay the journalist?

If the publisher truly does add 99% of the value of a published copy, then with a free market in copies, there’s no copyright monopoly to prevent the publisher producing a copy of the author’s work (at $0.0001), adding their value ($0.0099), and then selling it at $0.01 a copy.

I have a sneaking suspicion the publisher adds very little. We’ll find out what happens when the audience commissions the artist directly.

• Micropatronage = Disintermediation

It’s about time.

Traditional (Copyright+Publisher)

1,000,000 readers pay a publisher $1 for a journal comprising articles from 100 journalists. Each journalist gets $100 for their article. The publisher takes $990,000 from which they cover their modest costs.

Micropatronage (Copyleft/Abolition+Disintermediation)

Each blogger has 1,000 keen readers paying them a penny for each blog item they publish. That nets them $100 every ten blog items (for argument’s sake qualitatively equivalent to a single journal article).

An online journal, being free to copy the work of 1,000 bloggers (copyleft) and republish them, erects a paywall charging punters $1 to download a PDF containing 1,000 of the best blog items. Now each blogger has already been paid $10 for each item by their keen readership. The $10,000 it would normally have cost the journal to pay their writers has already been paid. They now get their writing free. The journal can also make and distribute copies at a fraction of a penny. So the $1 is now closer to 99.99% added value.

If the publisher sells a million copies they take $999,900 with negligible costs. Laughing all the way to the bank eh? That is, of course, assuming the market for copies hasn’t ended…

If it has ended there will still be a market for selectors. I suggest the selector is going to enjoy micropatronage as much as each writer. Thus the online journal (sans paywall) will actually get a penny from each of their 10,000 keen readers for each issue ($100). That journal may even state that it gives a 50% commission to each blogger it publishes – after all, it needs to encourage the production of good writing in order to be able to select it.

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.

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.

From comments on a P2PNet article entitled We are the walrus. Or, thank you Lily Allen.

Here’s the choice that Billy Bragg and others in the FAC (Featured Artists Coalition) face.

There are two perspectives that one can take with regard to the business of music recordings. Either the artist and production engineers are paid to make a studio recording and that’s the end of their interest in the matter – they have their money, the customer has their recording, OR the artist is a budding monopolist (their own record label) and will begrudge anyone who makes a further copy of their published recording who didn’t pay for it.

It comes down to whether you believe in copyright or not. Are you in the business of performing and recording music, or are you in the business of selling copies and broadcast privileges?

Do you believe that recording artists should be content that they have been amply paid for their studio recording, or would you go further and say that you will not rest until everyone who makes and sells or gives away an unauthorised copy (or performance thereof) is properly punished, and a severe deterrent is thus in place for anyone who even thinks of joining them?

It’s the difference between the equitable exchange of work for money, and the jealous guarding of a lucrative state granted monopoly.

The record labels are the ones in the business of selling copies and broadcast privileges. It is they who pay session musicians and studio engineers for their work, and they who say that should be the end of the matter. It is the labels who are in the business of selling copies and enforcing their monopolies, now to a draconian degree.

I suggest FAC should represent the artists who no longer wish the labels to pretend to represent them. FAC should comprise those artists who are indeed satisfied if they are amply paid for their studio recordings, AND that copyright is neutralised on those recordings such that the audience is then free to share and build upon them, without fear of prosecution or demands for royalty. FAC should comprise those artists in the business of performing and recording music. It should not comprise artists interested in getting into the business of selling copies and broadcast privileges (that business is ending).

FAC’s customer is their audience, their fans. FAC’s customer is not one or more record labels.

Sell your live and studio performances, and the recordings thereof.

That’s as far as you can go.

You can’t sell copies of those performances or recordings without a monopoly that suspends the liberty of your audience to make such copies themselves. It is that 18th century suspension of liberty that is so unethical. The audience and artists among them have a fundamental, natural right to copy and build upon mankind’s culture. It is that right to copy that was suspended three centuries ago and granted as the exclusive privilege of the ‘copyright’ holder. So you should recognise that this right to copy does not belong to the musician, but to the individual, to the members of the audience, to the public, to everyone. Be careful before you start talking quite so possessively in terms of your copyrights.

Sell your recordings. Do not sell uncopyable copies.

You’ve sold your recordings to labels for years, so it’s not like you’re unfamiliar with the concept. Start selling them to your audience instead.

Treat your audience like your new record label. They will take care of A&R, promotion, reproduction, and distribution. That’s why the labels are squealing blue murder – because their customers for copies are now able to disintermediate them and make their own for nothing. However, that shouldn’t upset you because you’re not in the business of making and selling copies. You’re in the business of making and selling music, performances, recordings. Your paradigm shift is that you’re now selling to your audience directly instead of via a record label. But, critically, your audience can’t make your music instead of you. That’s why, unlike the labels, you’re not confronting the inevitable end of your business. So you don’t need a law to prohibit your audience making their own music instead of paying you for it. You certainly don’t need a law prohibiting your audience making and distributing copies. Heck, unlike record labels, your audience aren’t even charging you for that service.

So, what’s it going to be?

Is FAC going to stick to the business of making and selling music?

Or is FAC going to continue this nonsense of ‘educating’ their audience against making unauthorised copies?

What business is FAC in? Music or copies?

Billy Bragg replies:

Crosbie,

Thanks for offering your opinion of the state of play. I have to tell you that I don’t agree.

For instance, you can’t tell me “That’s as far as you can go”, no more than I can tell you you can share these files but no more.It simply doesn’t work like that. Who knows what means I might have of finding a niche where I can sell my work directly to people willing to pay for it? I doubt the new models for doing business will be either/or.

Your stated position is that of a diehard P2P user. In some ways it echoes the comments that FAC get from diehard record industry executives. Both of you expect us to be on one side or the other and are quick to condemn if we don’t show the same dedication as you do. Well, Crosbie, I have to tell you that FAC aren’t one your side to that extent – neither are we on the side of the labels. We seek to represent the third component of this relationship, the voice of the artists. What we want to do, as you’ll see from our website, is to ensure that artists can continue to make a living doing what they love most – making music. I’m talking especially here of new artists. We see it as being in all our interests to open a dialogue between the various parts of the new digital industry. As a result we talk to labels – Big 4 mostly – and we talk to ISPs. We talk to the Musicians Union in the UK and to the songwriters and producers unions too. We have so far never been able to have an ongoing dialogue with the P2P community, which is why Jon’s initiative is so interesting. If we can start to build confidence in this process, I believe that we all will benefit from your input.

Billy, I’m not telling you “That’s as far as you can go” as an edict, but as friendly advice to inform you and others in FAC as to your natural limitations.

I’m trying to help you realise that you can only hope to sell that which people are interested in buying from you.

Of course, you can try and sell copies if you want to. You can even attempt to enforce your monopolies against those who would promote your music to their friends by making and distributing unauthorised copies. You can try to do that, but I don’t recommend it as a business to get into because it doesn’t have a future.

To say you cannot sell snow to Sami, or sand to Saharans, is not a forbidding, but business advice.

I’m trying to tell you in the nicest way possible that you can’t sell copies to your audience.

I vaguely recall there was some ludicrous legislation in a South American country a few years ago that made it illegal to collect rainwater in order to protect the revenues of the local water supply companies, but really, to think that legislation against copying is going to create you a market to sell copies, is something either a pre-schooler or a mafioso would come up with as a viable business model. When the heavies are the state, and only a very few printing press owners can make copies, then perhaps such a protection racket has a hope of working, but those days are over.

If you read my previous comment again, more carefully, you will realise that I’m in complete agreement with you that you can sell your work directly to your enthusiastic audience willing and able to pay for it. But you don’t seem to be able to read that in what I write. All you can see is that I’m telling you that you can’t sell copies of your work.

I neither represent artists nor audiences. I champion individuals and their natural rights, against the anachronistic privileges granted for the benefit of publishing corporations. We are all artists, and all members of audiences of the artists we appreciate. Artists are individuals, as is everyone in an artist’s audience, so I champion all, indistinguishably. All have the same rights. None have rights that others do not. We are all equals on this planet. It is the anachronistic privilege of copyright that interferes with that natural equality. It is that privilege that sets publisher against public, artist against audience, and that privilege that should be abolished.

However, that’s just my position. What is of concern here is the position of FAC and its members.

The choice I’ve suggested that faces you is not whose side you are on, but what business you are in.

Are you in the business of making music, selling compositions, songs, performances, and recordings, OR are you in the business of making and distributing monopoly protected copies and broadcasts thereof?

When you’ve decided what business you’re in, perhaps then it will be clearer to you whether you need to sue your customers for disrespecting your monopoly, or whether you should explore ways of selling your music to your audience instead of to record labels.

It’s one of those red pill/blue pill dichotomies. Bear in mind that the software industry is already well divided by such a schism, and those on each side regard the others as having an alien mindset. That’s how deep the paradigm shift goes.

Don’t write it off as ‘freeloaders wanting stuff for nothing’ – that’s pure propaganda. We’re talking free as in speech, not as in beer. This is the cultural liberty of an emancipated people, not an impoverished and culturally stagnant cultist commune.

So, have you made up your mind yet?

Music or copies?

Billy Bragg replies:

Crosbie,

This two pill thing…. its not such a black and white issue. Many musicians do both and manage to make a living. I know it would make things much more easy for you if you could force me to chose between music or copies, but we’re going to have to be a little more open to debate if we want to create an environment in which P2P is recognised as a powerful promotional tool. That’s what I want from our discussions here. You interested?

Billy, I’m always interested in discussion of the issues and progress toward solutions, especially where solutions restore people’s liberty to share and build upon published works, and enable people to exchange their labour in a free market.

I daresay there are many who would like to portray this clash of perspectives as an encounter between artists trying to make a decent living and a den of thieves. It’s a little more fundamental than that. It’s a conflict between unnatural law that says that information can’t be copied and natural law that says it can. The outcome of that conflict is obvious to anyone familiar with the schism concerning geo vs heliocentricity.

What we’re left with is the problem of a lack of facilities that enable artists to exchange their work for the money of their audience. It’s a problem caused through the neglect of three centuries, a period in which no-one needed such facilities because of the reproduction monopoly known as copyright. Artists sold their work to printers, and printers sold copies that no-one else could legally produce. Copyright didn’t have to be legislated, but it was, and as a consequence the evolution of facilities for exchanges between artists and their audiences ground to a halt.

That’s why I’m trying to be upfront with you that this is the situation. We are all interested in how to buy and sell intellectual work in a world in which one can no longer sell copies at monopoly protected prices. If kids can make copies for nothing, you’re not going to be able to change that through holy fiat, education, or bandwidth squeezing, and so you’re not going to be able to sell them copies. Fortunately, kids can’t make your music (at least not without years of effort), so you can at least sell them that.

If this rapprochement is to discover how to stop kids file-sharing you’re barking up the wrong tree. If it’s to discover how to sell your music to your audience, well, come on up.

In Transformative Vs Incremental Change Steve Lawson produces a good summation of the crisis facing the recording industry, and why this isn’t a crisis for the artist, but an opportunity (one that publishing corporations do not want artists to take).

When you take an industry that has 4 big costs – recording, manufacture, distribution, promotion – and remove 3 of them, that changes everything.

Costs have been removed from the picture, but this only represents a loss in revenue to the publishing corporations – not to artists. Artists can now take advantage of this all being done for free – instead of signing to a label in order pay them their rates that were inflated in the first place.

Both ends were overcharged. The fan was overcharged for a copy, and the artist was overcharged for the label to produce, promote, distribute, and retail their art.

Now that the extortionate costs have been removed, what will happen when both ends meet directly?

Advertising is completely broken. Recording tech is better and cheaper than it has ever been, fans are more and more willing to talk about and share your music, and far more happy to buy physical product from you than from a third party. Website merch is easy to do, either in short run, big order or even one-offs.

The record industry before the internet was built on the assumption that to have a chance of making it ‘big’, you needed to have deep pockets to risk the kind of gambling collateral needed to have a shot at being in the 0.1% who ended up rich. The labels funded their gambling by owning the services they were charging you for, by keeping you in debt so they didn’t have to pay you, by keeping product prices artificially high, and by perpetuating myths about what it was that we all wanted and needed, as both artists and consumers.

Everything has changed. If you look at the current possibilities as an incremental change to the industry – that is, if you see the infrastructure as still being the same, and see MP3s as ‘invisible CDs’, you are truly truly screwed. It’s awful. That’s why the industry says ‘the sky is falling’. They aren’t willing to let go of that old infrastructure.

If you see the real changes, throw all the cards in the air, and realise that instead of hundreds of artists making millions of pounds, we can how have millions of artists making hundreds of pounds (and a straight, shallow line on the curve up from there), we’re all in good shape.

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