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.

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

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

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.