Note from Shepherd: This article was originally posted by Geoff Wilson on the Wall Street Journal discussion group, Libertarians. The topic of the discussion was: “What do you think of musician Neil Young’s proposal that reconciles piracy and the “intellectual property” right of record companies?”
I actually understand what he is saying: let go of unlimited defense of intellectual property and accept that buzz and market recognition will be created by pirated and un-reimbursed versions of songs, and restrict the revenue stream to higher quality and therefore much larger versions of artist’s creations.
Putting aside his intellectually lazy and cavalier assumptions (that the average listener could even discern the difference between a higher sample rate digital copy of a song versus his gigabytes-large high quality versions, that there would be enough audiophiles willing to pay high dollar amounts for these audiophile quality versions to provide an adequate revenue stream to keep the music industry and its large saprophytic marketing bureacracy intact, that “rich guys” invent technology rather than poor guys inventing splendid technology that other people want and then get rich providing a desired and useful service to their fellow man), and at root he still has an interesting concept: someone has to pay the bill.
By this, I mean that someone has to feed resources to the system in order to keep the system functioning. So far, this cost has been completely born by the consumer. It is a cost hidden to those who don’t think much about it, which makes those who pay this cost unthinkingly the ideal customer. This cost is time. Roughly 25% of the time on “free” TV and radio is marketing. Marketing results in higher sales, which makes it worthwhile for advertisers to spend the money to reimburse the media companies who then reimburse the musicians for their efforts. In the end, the cost for the whole process is born by the consumer, who obliging listens to marketing and purchases more products as a result.
This paradigm is very much still an industrial revolution level of efficiency, which means not very efficient. Mass produced marketing, much like mass produced goods, assumes a homogenous and compliant population, which really means a population that is satisfied with intellectual conformity and with allowing someone else to tell them how to dress, talk, act, and purchase. But, our society has matured, and is no longer content with mass conformity. Industrial production no longer satisfies us.
This in turn means that the days of a few media companies who mass produce entertainment and then beam an identical product out to the entire population are gone, because the population is no longer content to all purchase the same black Model T. And, as the market for the product collapses, so too collapses the marketing strategy and the revenue source for the media companies, who have heretofore been dependent on a complaint consumer who will pay the serreptitious time tax without complaint. A new paradigm for revenue is required, one which values more highly the time of the listener and the specifics of their tastes.
Young suggests a revenue stream dependent on the high end boutique customer, which will not be adequate to keep the media companies afloat in their current form. I suspect that instead we will see a relative decline in the status of “rock stars” as the market breaks apart into much smaller segments, relative decline in the power and status of the media companies who used to broker their products, and a reorientation of the musician revenue stream back towards what they really do, which is create live music. He is implicitly acknowledging a shift in the market, such that it is now a buyers rather than a sellers market. This shift actually represents the movement of the market towards a more efficient model, if you recognize that the purpose of the market is to provide individuals with what they want rather than what they are told they should have. The digital revolution did not “cause” this, it simply gave individuals the tools they needed in order to accomplish what they desired, which was to find products more suited to their individual tastes.
Note from Shepherd: Mr. Wilson added the following comment in the same discussion thread.
Who said that’s the only possible outcome? What if digital music files themselves become the advertisement, but they become the advertisement for the real product, which is the live performance? I mean, do you like to watch tapes of old NFL games? Sure, some people do, but most value the live performance.
Grateful Dead understood this long ago. They would tape each performance live, and then offer the tapes for that specific performance, each of which was a one of a kind masterpiece, for sale to concert goers as they exited the stadium. So, you could purchase a clean copy of the specific concert you attended, and it would be unlike any other concert out there. They honored the creative process that musicians are capable of, and capitalized on it.