How the Free-Music Doctrine Promotes Piracy and Hurts Artists

Cayocosta

Free-music advocates are no friends of artists. For when published, these people continue to nourish piracy through a relentless stream of extremely half-baked articles designed to program their readers into believing that music should be free; and even worse, that music will in fact be officially free very soon.

The primary problem with these individuals stems from the fact that they themselves don’t want to pay for music, so they write self-serving and populist propaganda founded upon completely unrealistic and illogical assumptions about business and markets, so as to make it appear that they are posing valid arguments justifying free-music; and thus by inference both promote and condone the use of piracy in retaliation against what they allege to be an "obstinate" and "inefficient" music industry, in the interim.

Essentially, these "piracy apologists" are directly responsible for fostering a free-music "entitlement" mindset within the public; and their selfishness is severely damaging both artists and the music industry in general. It’s high-time this nonsense comes to an end; and that artists, the music industry, and music-fans finally recognize the utter bullshit we’ve all been sold over the last several years.

Most everything I read forecasting the coming free-music-revolution is founded upon astonishingly ridiculous market assumptions, and justified with anti-industry propaganda; case in point: the following article, The Inevitable March of Recorded Music Towards Free by Michael Arrington of TechCrunch:

"2007 is turning out to be a terrible year for the music industry. Or rather, a terrible year for the the (sic) music labels."

This is actually the introduction. Notice how the author sets the stage for his pro free-music screed by calling attention to the fact that record labels are struggling, while taking care to make clear that the music industry in general is not necessarily in a similar fix. In other words: record labels are bad for the music industry.

Moving on:

"The economics of recorded music are fairly simple. Marginal production costs are zero: Like software, it doesn’t cost anything to produce another digital copy that is just as good as the original as soon as the first copy exists, and anyone can create those copies (meaning there is perfect competition and zero barriers to entry). Unless effective legal (copyright), technical (DRM) or other artificial impediments to production can be created, simple economic theory dictates that the price of music, like its marginal cost, must also fall to zero."

Just because the cost of digital distribution is very low, that has no bearing on the underlying value of the content distributed. (Just because you don’t tip the pizza delivery dude, doesn’t mean that the pie is free.) But the most amazing thing about this statement is that it assumes music appears out of thin air; that there are no costs incurred to create it, and no ongoing costs to promote and administer it. These conveniently overlooked costs are considerable.

Furthermore, if demand drops, supply drops; and the music supply will not only drop, it will crash if there is no demand for it in actual currency, for this is how the free-market system works. However, free-music proponents posit that demand stays high, while supply also stays high; even when producers lose money in the exchange.

Welcome to the free-music dimension; where the laws of business are stood on their head.

Next, we have this bit of wishful thinking:

"When the industry finally capitulates and realizes that they can no longer charge a meaningful amount of money for digital recorded music, a lot of good things can happen."

Here the reader is subjected to the spin of free-music being inevitable; that it’s just a matter of time before capitulation. Later, we’ll be offered a promising forecast whereby both artists and the industry might actually prosper under such conditions; although the author’s logic supporting the argument is completely bogus. This kind of statement infers that piracy is okay; because although music is not free just yet, it soon will be; and thusly, you may be pirates today, but you wont be tomorrow. So don’t worry about it. Besides, according to the author, there’s really no harm done, because both artists and labels will still turn a profit giving music away.

In other words: piracy is okay, because pirates represent nothing more than the invisible hand of the free-market, indicating just how "behind the curve" the artists and the music industry truly are in the digital age. Spun in this fashion, free-music advocates infer that artists and the industry are rightfully pillaged because they both refuse to give the market what it wants.

But the truth is, piracy does not participate in the free-market, for it neither buys nor sells anything. It just steals. Hence, piracy is devoid of any weight as an indicator or bellwether of market forces. To reiterate, according to free-music advocates; car theft is a major indicator that all cars should be free.

Moving on, we find more sophistry in this statement:

"First, other revenue sources can and will be exploited, particularly live music, merchandise and limited edition physical copies of music. The signs are already there - the live music industry is booming this year, and Radiohead is releasing a special edition box set of their new album for £40.00 simultaneous to the release of their "free" digital album."

Nothing new here, live performances, merchandising and box-sets have been around for decades. Furthermore, the author makes no mention of the fact that the price points for the revenue streams mentioned above will have to increase to offset the revenue lost from what used to come from music sales. Higher prices, in turn, will result in less market demand and would at best, be manifested in a zero-sum solution for the industry and artists on the bottom-line; however, the faithful music consumer will be forced to pay more for the same goods and or services.

This next statement illustrates how free-music advocates will grasp at any straw to make their argument:

"Second, artists and labels will stop thinking of digital music as a source of revenue and start thinking about it as a way to market their real products."

This specious statement is so vague that it undermines itself. There is absolutely no indication of what the "real" product(s) is/are supposed to be. I’ll assume this means music sold in hard copy format, which would of course be an untenable proposition if the content contained therein is also made available online for free – which of course, happens to be the authors central theme. Therefore, this empty statement represents nothing more than window-dressing.

Although, perhaps the author is instead referring to the "crown-jewel" of the free-music doctrine -- that widely-held yet impossible concept that advocates: artists should cover their losses from giving their music away by selling some other merchandise; like tee-shirts.

Here’s how this "jewel" is flawed: the merchandise to be sold has to be marked-up over it’s nominal cost and surplus-value by an amount large enough to cover the cost of the creation (and all other associated costs) of the music and it’s surplus-value. This means that something like tee-shirts would have to be priced way beyond the amount people are accustomed to paying for them; and therefore, the demand for tee-shirts must fall. (A catch-22 situation.) However, if the price of tee-shirts is not inflated; then the artist’s fortunes hang in the balance of nothing more than the sheer faith that their fans will buy more tee-shirts then they normally would. Either way, artists are ultimately at the mercy of their fans: who must buy enough tee-shirts to cover the cost of their music; but of course, there is no guarantee that this will be the case.

Moreover, this primary tenet of the free-music argument suggests nothing more than the shifting of the cost of music onto something else; and because it is highly unlikely that everyone that downloads the artist’s free music will also opt to purchase the artist’s merchandise, the net result is that those who do pay will also be paying for those that don’t. Obviously, a proposition as inequitable as it is dubious.

Finally, we arrive at the author’s coup de grâce:

"Users will be encouraged (even paid, as radio stations are today) to download, listen to and share music. Passionate users who download music from the Internet and share it with others will become the most important customers, not targets for ridiculous lawsuits."

First off, labels do not pay radio stations a dime, in fact that’s illegal; rather, radio stations pay artists and labels for content via performance royalties.

Here the author resorts to floating a canard to support the crux of this statement. Can you see where he’s trying taking us? Were not only going to have free-music soon, but we’re actually going to get paid for listening to it! And where’s the money going to come from to pay for it all? Why, from record labels selling their real products, you silly fools. (Never mind that the author failed to clue us in as to what the real products are supposed to be, or took the trouble to outline the proposition and establish it’s viability.)

More importantly, in this statement piracy is supported once again, as it conveniently falls under the author’s definition of "passionate" customers. (Overlooking the fact that the author’s use of the term "customer" is not even relevant in this context.)

Therefore, according to Arrington; what used to be considered piracy will soon not only be encouraged, but even subsidized by the record companies themselves (pirates will soon be the darlings of the music industry!); paid for by the sale of mystery products, which have been marked up to such a point that they are effectively rendered cost-prohibitive; or otherwise, noncompetitive in the marketplace.

Summary:

In my opinion; advocates such as Michael Arrington want free-music so desperately that they’ll write any crack-pot bullshit they can dream-up to make it look like it’s a great idea for everyone; yet through such proselytizing all they really accomplish is the further justification for the looting of music based on false pretenses; and as such should be admonished as contributory with regard to compromising the livelihood of artists, undermining the quality of music, and jeopardizing the viability of the music industry in general.

To the question of the convergence of music and the internet, our free-music advocates once touted that digital-downloads for a buck was the answer; soon followed by the buzz that totally free-music was on it’s way; and now their latest solution? Make some other sucker pick-up my free-music tab, and actually pay me for pirating your property.

Right, I suppose then that artists should actually be thankful that pirates have not yet decided to start billing them for their services; for according to Arrington, these poor pirates are actually being taken advantage of by artists.

In closing; no matter what happens; people will continue to buy music, and the price of music will have to absorb any losses attributable to piracy. This is similar to how social entitlement programs work -- those who can afford to pay, also must cover the cost of those who cannot, or in this case, choose not to. Therefore, demand will change depending on price fluctuations dictated by market forces (and the absorption of the cost of piracy), and the supply will adjust commensurately in both quantity and quality. Ideally, if piracy could somehow be reduced, the price of music would likewise fall and demand would in turn, rise. (But of course, free-music advocates would never suggest that a reduction in piracy would bring down the cost of music; because, without piracy, they no longer have an argument for free-music.)

Let’s think about that for a moment: if free-music advocates spent their time disavowing piracy rather than condoning it, looting would be reduced; the result being that music could be sold for less than it currently is being sold for; and nobody would be made to feel obligated to buy a tee-shirt.

Now there’s a constructive argument.

Music is already pretty inexpensive, and could be even more so; but obviously, it will never be cheap enough for the free-music advocates. Alas, we can draw only one conclusion: these people think that any amount is too much to pay for music. Their arguments of "give us the music for free and we’ll buy something else from you" is a total grift; notice how they never say we’ll buy the box-set? No, it’s give us the music for free and sell the box-set; in other words: to some other sucker; for the reality is: they don’t intend to spend a dime.

Lastly, a looming potential side-effect of the cost of piracy may well be that artists, as a last resort in the effort to sustain themselves, begin to pen compositions that increasingly resemble advertisements for corporate sponsors; with lyrics twisted and subsequent promotional efforts framed in such a way as to promote whatever sponsor or sponsors that have elected to underwrite them. Talk about selling out -- we ain’t seen nothing yet.