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Making Friends with the Pirates

Some thoughts on music piracy and making a career in a world where music has lost much of it's value

I know this is an old subject and discussing it is a bit like beating on a dead horse, but I've been asked to elaborate on my views because I've stated that I don't feel piracy poses any serious threat to the musicians. A lot of digital content creators love to complain about piracy. Sure, it may be easy for me to talk as a stock audio musician. I know my stuff is not likely to ever be a target, but I think that's beside the point that I have to make.

First thing's first, I don't support the act of piracy and I would like to dismiss the old pirate mantras of "I wasn't going to pay for it anyway!" and "It's not stealing because I'm not taking anything away from anybody!" Those arguments are shallow and the logic behind them fails to address the central problem of piracy. If you're getting a commercial product for free against the will of it's creator, you're stealing. It's that simple. That said, I don't think piracy has to be a problem to those digital content creators that have a deeper understanding of the situation. I think the prominence of piracy is a sign of big changes that are occurring in the domain of digital content. As a musician I think we need to pay attention to those changes and try to understand them.

I'm going to focus on music here because that's the field that I'm most familiar with, but I feel these views apply to some extent to all forms of digital content. Let's take a quick look at the world of music, where it's been and where it's going.

There was once a time when producing an album had to be an expensive process. You needed to buy a lot of time with expensive recording studio equipment. Any musician that made it to the recording stage would have likely already made some successful rounds as a live performer and may have already caught the attention of a record label.

Contrast that with today's software driven recording environment. You can have a pretty powerful home recording studio for a very low price. This has connected the amateurs to the kind of equipment that only professionals had access to a mere decade ago. I'm not saying that producing an album has become easy and anyone can do it, but it has become a lot cheaper and everyone has access to the tools they need to do it. The result is more music. The number of albums being written per year has grown exponentially and we are now drowning in new music. Previous generations wouldn't have been able to imagine the kind of selection we have today. This over abundance has shifted the public role of music to being a sort of background noise, a consumer commodity that just doesn't tend to get the kind of undivided attention that it once did.

Now let's look at distribution. In order to reach your target audience in the pre-internet revolution era you had to rely on a record label to advertise, buy your radio air time, and put your music on the shelves of the relevant retail chains. As you can imagine, distribution was really expensive in the past. Contrast that with today's internet driven distribution and advertisement model. With the internet we have a distribution platform that is nearly perfect. An artist can use the internet to hone in on his or her target audience and distribute content to them for a price that is so low that it may as well be considered free. PR and advertisement may be time consuming, but with the internet it can cost little to nothing. If you have the time and knowledge you can cut the label out entirely.

Keeping those observations in mind let's look at them in the context of economics. Economics is the study of the forces that arise within markets operating in a capitalist system. If you are a smart business man that is creating a new product and preparing it for the market place, you don't simply apply a price that you think seems appropriate and hope it sells. If your price is just a little too high then your product won't sell, if it's too low then you will have supply problems. Instead you do market research to pin down a good price. After you have found your price point you put it on the shelves and allow the market forces to adjust the price for you over time. In other words, the economic forces will dictate the optimal selling price.

What specific economic forces dictate pricing? You can boil it down to the interaction between supply / demand, and production / distribution costs. Today the abundant supply of music is greater than the demand, production and distribution costs have hit the floor. What does this mean from the economist's perspective? The price of the good involved, digital audio recordings, has been driven down to zero. Notice that I'm not making any kind of moral judgement here and I'm certainly not asserting that a work of art that was painstakingly crafted by an artist holds no value whatsoever. I know as well as anyone that this stuff takes a lot of effort to create. I'm simply stating that, in terms of monetary value, digital music recordings should be free based on the current state of the market.

That is why piracy has become so prominent and unstoppable in today's world. Even good people that have never done wrong in their life are downloading music without a single shred of guilt. Yes, these people are technically stealing, but I'm calling into question the validity of putting a price on the stuff in the first place. Musicians that are still trying to operate under this outdated model by selling their music are trying to fix an artificial price to their work. Digital recordings, purely from an economist's perspective, are worthless in terms of monetary value and it is slowly becoming an accepted fact. I think we'll eventually reach a point in the future where it will seem somewhat audacious to request money for a digital recording.

So where does this put modern musicians that are trying to make a living by doing what they enjoy? This may sound like a bleak diagnosis at first, but it's really not. In fact, as a musician I would have to say that I prefer the new model. In a way we're going back to our roots and we're acquiring a greater degree of freedom. Do you think Mozart or Beethoven relied on album sales to live? No they didn't. They used a subsidy based model. The money they earned from giving music lessons and accepting commission offers from churches and opera houses were at the core of their musical careers. Since the word subsidy can have a pretty broad definition, lets define what we mean by it here.

sub•si•dy - Money generated by indirect means to cover production costs of a particular good or service

Here is a short summary of the subsidy model. Give your music away freely to build up your fan base, sell something that is commercially viable to these fans, use this money to cover production costs of new music. But wasn't that model a lot more cumbersome for the musician? No, in fact, it never even went away. In most cases when a musician working in the record label dominated world of twenty years ago recorded an album, they didn't see much income from it. The label often paid so much to record, distribute, and advertise the album that they ended up keeping the majority of the profits. That money has to come from somewhere. I've even heard of many cases where the artist ended up in debt to the label because the sales weren't enough to cover these costs.

The most important contribution that the label made to the career of the artist was in the form of increased exposure, i.e., attracting a much bigger fan base. The artist could then turn around and subsidize on this fan base by selling concert tickets, merchandise, licensing rights, ect. The thing that the internet changed was the relationship between the label and the artist. It destroyed a lot of the power that the label previously had and put that power into the hands of the musicians. The musician now has the power to record, advertise, and distribute their work and they are no longer forced to hand important rights to a record label to get the job done.

Many musicians don't understand this and they're still attempting to operate under the outdated model that they're more familiar with. They fail to sell albums and they end up in debt to the label, so they blame the pirates. What we're seeing is darwinism of the musicians. In order to make it in today's market you have to be smart enough to understand the current state of the industry and you need enough business sense to be able to handle your own career and dictate the work accordingly and intelligently.

My personal interests are in stock audio and licensing so I want to wrap this up with some thoughts about that. I don't sell audio recordings, I sell the rights to use an audio recording. Licensing is still a very healthy market. In fact, it's a very lucrative one that is expanding rapidly. Recall what I wrote about music production increasing due to cheaper software based tools? How about the way the internet has given everyone a cheap and easy way to distribute content? This isn't just true of music. It's also true of film, video games, and many other mediums. User generated content has exploded into the mainstream of our culture. I believe this is a big part of what defines our current generation. We're no longer consumers, we're the creators. All of us. We create the content that previously could only be created by the big commercial studios. More content means more demand for resources such as music and artwork. More jobs for all of us creators, and it doesn't look like this trend is going to slow down anytime soon.

I think it's a great new world. Yes, it's exceedingly difficult to make a name for yourself and begin to make an honest living in this new internet based model, but I think it's a worthwhile trade off. This model is fair to the musicians and it's full of opportunities for the people that are willing to put the extra time and effort into utilizing it.

Anyone that is interested in reading more on this subject, I encourage you to check out a wonderful book called Free: The Future of a Radical Price by Chris Anderson. It really changed my views on the business side of digital media. I would recommend this book to anyone that creates digital content, even if you are not interested in selling it. It beautifully illustrates the new media landscape that formed from the chaos caused by the rise of the internet.

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