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A Working Economy Without DRM?

Cliff posted more than 8 years ago | from the what-would-alfred-marshall-do dept.

686

Tilted Equilibrium asks: "In a few weeks, our school will be hosting a panel on DRM with several respected individuals. In advance of the panel, I have been doing some research on the topic and thinking about it in my free time. In economics, we learn that the price of a product is determined essentially by supply and demand. Without a DRM in place, we are capable of making as many copies of a piece of content as we want and seeding it onto the net. How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

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Biased question (5, Insightful)

swillden (191260) | more than 8 years ago | (#16004799)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

Most likely, you don't. But in large part you're creating a strawman, by specifying exactly the situation in which it is most difficult to make a profit.

It's entirely possible that the Internet will mean the end of $200M productions, because unless you can get your money back in the theater (I'm focusing on movies because they're the only things that fit your specifications), you can't make it back.

Maybe. I'm not absolutely convinced of that. I think DVD releases with lots of extras, including some that aren't digital, are a good model. Obviously, movie theaters have a workable model. There may be other approaches that can work. Any approach that offers the consumer real value for their money will work. People *want* to spend money on entertainment.

And, honestly, outside of movies, what other media meets your requirements? Not music. Music is cheap to make. Sure, it's likely that in a fully DRM-free Internet age that musicians won't be mega-millionaires, but I consider that a good thing. I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris.

I agree with Eric Flint's essay, found in the Free Library on baen.com: Until there's some way to make music/movies/books that doesn't require musicians/actors/directors/authors, and until people stop wanting those materials, there *will* be ways to make money off of them. It's just a matter of finding them. And, perhaps, accepting that people don't really need millions for doing what they love.

Re:Biased question (3, Insightful)

BadAnalogyGuy (945258) | more than 8 years ago | (#16004926)

I disagree with the whole idea that it's unnecessary to protect the works of content creators. DRM is a necessary evil and assuming a world without it is simply pissing in the wind. What we need to work towards is a DRM model that preserves as much of our rights as possible while still effectively preventing the widespread copying of content.

DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks. All new hardware from major manufacturers will support DRM standards. If the data stream is protected, the media appliance will acknowledge and honor the DRM lock and you will be unable to do more with the content than is allowed by the DRM lock. This is reality and it is already here. What we want to do is make sure that things like machine-local data can be transmitted from one machine to another (deleting the original data as it moves to the next device) are preserved while things like forward-lock (which prevents copying at all) are eliminated. Working against the system when you are completely outside the system is futile.

Re:Biased question (1)

Nicholas Evans (731773) | more than 8 years ago | (#16005012)

DRM is a necessary evil and assuming a world without it is simply pissing in the wind. What we need to work towards is a DRM model that preserves as much of our rights as possible while still effectively preventing the widespread copying of content.

But until you take control of my computer away from me, we won't be able to reach something that prevents widespread copying, because at the end of the day, I am still the lord and master of all of the bits in my little reality.

Then we get into Trusted Computing, and the whole discussion goes down hill.

I recently watched Steal This Film. They're all about copying everything and handing it out, because the don't seem to think it actually hurts artists. Do I think that this is wrong? Sure. They worked to produce it, and its very reasonable for them to want compensation for their work. You don't do TBS reports for nothing, eh?

But can we prevent people from uploading CDs and movies? No, not really.

And on a slightly unrelated note...was it just me, or did Steal This Film fail to make any good justifications for piracy? Just because you can != the right thing to do.

Re:Biased question (5, Insightful)

BadAnalogyGuy (945258) | more than 8 years ago | (#16005064)

We're not really talking about Trusted Computing here, though it may be interesting to see how TC impacts the availability of DRM-stripping software on mainstream operating systems.

Once the upcoming crop of DRM-enabled operating systems (Mac and Windows) only support media playback through OS API-level function calls, your "control of your computer" will have reached its conclusion. As system APIs become more plentiful, more useful, and easier to use, control is slowly creeping away from the now-productive developer and towards the central programming model/operating system.

You have every reason to be worried about losing control.

"I'll run Linux!"

With DRM implemented as an encrypted datastream and licensed to hardware/software makers, who is going to be able to bring DRM playback capabilities to Linux without also being tied to strict licensing restrictions that prohibit DRM-stripping as a feature or side-effect? These DRM systems are of course already running on Linux, just look at your favorite DVR which already implements such a system. Does this translate to your PC being able disable DRM content? Unfortunately, no. Not unless a DRM-licensee decides to break their license and provide the tools to do so. It's not out of the realm of possibility that a rogue employee may do such a thing, but the financial hardship he would face would typically be a sufficient deterrent.

Re:Biased question (5, Insightful)

aussie_a (778472) | more than 8 years ago | (#16005041)

You assume DRM is necessary, but in actuality, it isn't. These people [fictionwise.com] somehow make a profit without DRM (otherwise they wouldn't bother releasing the e-books). As does these people [penny-arcade.com] as well as these people. [girlgeniusonline.com]

Perhaps multi-million dollar movies aren't capable without DRM or Britney Spears being profitable without DRM, but the truth is that the big media cartels aren't the only people in town no matter how much they want you to think they are. And DRM isn't necessary for artists to not only make a profit, but to make a living. Not all artists will be able to make a profit or a living, but then again not all artists deserve a profit or a living. DRM isn't a necessary evil, it's just an evil.

Re:Biased question (1)

Shambhu (198415) | more than 8 years ago | (#16005059)

DRM is a reality and to deny this is to be simply ignorant of current trends in media playback software/hardware stacks.


True. It is also a reality that DRM will always be broken. It only takes one copy to be broken and put on the network. But that still leaves the person who bought a DVD or Blu-Ray or whatever with media that will be a hassle to deal with. Maybe I'm wrong, maybe it will be brilliant and completely stay out of the user's way. I doubt it. Regardless, that pirated, DRM-free, copy will still be out there floating on the net. If you can't stop people from breaking it and putting it on the net, way hassle your regular customers?

Here [craphound.com] is a speech that Cory Doctorow gave at Microsoft a while back. It goes into more detail and generally presents the argument better.

I don't say that content owners shouldn't be allowed to put DRM (of the non-rootkit variety) on their media, I just think they would be better off persuing other business strategies.

Re:Biased question (3, Insightful)

westlake (615356) | more than 8 years ago | (#16004937)

Music is cheap to make.

Talk to a classical musician: ask her the price of a fine solo instrument, a piano, a violin. The basic tools of her profession.

Re:Biased question (1)

BorgCopyeditor (590345) | more than 8 years ago | (#16005034)

Not to mention decades of training.

Re:Biased question (3, Interesting)

the_womble (580291) | more than 8 years ago | (#16005060)

It is still cheap to make compared with films.

That is partly because Holywood's business model has pushed up the cost of making films, but it is also because films are expensive to make.

What does make a lot of classical music quite instrinsically expensive to make (comapred to most other music) is the need for a full orchestra, so a lot of people's time is needed. The value of a good muscian's time is worth more than any insturment, even a Stradivarius (if you amortise the cost of the Stradivarius over all the performances it can be used for).

A more important point is that the cost is still low enough for business models other than pay per copy to work. I have some legit free downloads of classical music, and there is no reason there cannot be more., funded the same way.

With type of music that do not need large numbers of people alternative revenue models become even easier alternatives.

Re:Biased question (1)

A beautiful mind (821714) | more than 8 years ago | (#16005061)

Clearly, that is why the classical music cd/dvds you can find in a store are the cheapest in the music section.

Don't be too quick to draw that line. (2, Insightful)

Shivani1141 (996696) | more than 8 years ago | (#16005074)

But you forget, the Major venue that a classical musician in these days will make his or living is in Performances. A mentionable chunk of those same musicians will also supplement thier income with Musical tutoring. a Cellist(for example) primarily makes his living working for an opera, an orchestra, or some other like institution. If they don't, they arent considered professionals. To a Classical Musician music is not something they own a copyright to. they perform the works of others, they provide music as a SERVICE. And as for the extremely expensive, rare instruments? Afaik, and I am not an expert on such matters, those rare instruments are provided to classical musicians by patrons of the arts.

Re:Biased question (2, Interesting)

masklinn (823351) | more than 8 years ago | (#16005099)

Uh, have you ever bought a record of classical music? As far as length/cost ratio goes, it's probably the best bang for your buck you can get unless you burn static noise on CDs and listen to that all day long.

Because most classical music performances are actually concerts, and I doubt classical music requires a lot of post-prod work (sound engineers and such, as well as their hardware), lowering the cost of records compared to highly edited/remixed "popular" music.

Re:Biased question (3, Insightful)

intrico (100334) | more than 8 years ago | (#16004955)

"I think it would be great if we could support more musicians with decent incomes, instead of the smaller number with insane incomes. Heck, even if there aren't more of them, maybe they'll live longer and make more great music if we don't give them heroin and Ferraris."

This is an excellent point about the music industry. The traditional business model is very inequitable to the average artist. The major record labels say that people are "hurting" these artists by downloading their music. But one can make a very strong, valid argument that by forcefully marketing a select few musicians to the massess, and creating huge barriers to entry to these marketing channels for thousands of other artists who may can be just as good or better, that they have have caused the general population to miss out on all of these other artists out there. This hurts all of these other artists by effectively denying them mindshare.
 
Getting marketed by a major record label is simple a matter of being in the right place at the right time, and really is not correlated at all to the quality of the artist's work. The same of course, goes for the movie industry where quality does not necessarily equal production costs and or marketing clout. And again, the traditional setup of the movie industry ends up denying access to marketing channels for many smaller independent film producers, making it harder to get the word about their works out to the masses. In short, the RIAA-associated and MPAA-associated marketing powerhouses have fostered an anti-competitive environment at the artist level. DRM-Free media will not ruin the "working economy", but it will create a level playing field for the actual artists who produce content.

Re:Biased question (3, Interesting)

BadAnalogyGuy (945258) | more than 8 years ago | (#16004985)

Your last sentence is a complete non-sequitor.

DRM-free media and the playing field for music artists are wholly unrelated. Artists that are not picked up by record companies (whether large or small) are not in any way prevented from producing their own music and publishing/selling it in a non-DRM format. There are no players that refuse to play non-DRM content. Non-DRM content is simply read as unprotected content and the full functionality of the device copying mechanism is available for that data.

In fact, you could argue that DRM-encumbered media is less attractive than DRM-unencumbered media because the former restricts user actions while the latter does not. However the real problem for the artists is getting discovered, and that has nothing at all to do with whether the record labels apply DRM to label-produced content.

Re:Biased question (1)

aussie_a (778472) | more than 8 years ago | (#16005083)

There are no players that refuse to play non-DRM content.

Yet. Wait a while, and it will be illegal to produce players that can play non-DRM content.

Re:Biased question (2, Insightful)

vmcto (833771) | more than 8 years ago | (#16005127)

There are no players that refuse to play non-DRM content.

Yes, but realistically how long will that last?

Do you think the big manufacturers are going to continue to produce devices that play non-DRM content? What's in it for them?

Pay for labor, not for copies. (5, Insightful)

Kadin2048 (468275) | more than 8 years ago | (#16004994)

I've discussed this in other threads before, but I think the way that you make money without DRM is by not trying to make entertainment on speculation.

Basically the entertainment companies go out right now, and make a movie/song/whatever, and spend a whole lot of money doing it, in hopes that they can then go and sell the end product over and over and over to make up the investment. There is really not any way to do this, without DRM. As I think DRM is fundamentally flawed, so is this business model. That doesn't mean it might not stick around for a few centuries, but it's eventually doomed.

The problem is that DRM tries to artifically limit the supply of something that requires very little labor in order to reproduce. The n-th copy of a digitally delivered Brittany Spears album costs virtually nothing; it's only the first copy that really costs a lot to make. (Okay, so this sets aside that the net value of any given Brittany Spears album may in fact be negative.)

In the past, since the recording companies basically controlled the means of producing more copies (vinyl/CD stamping factories), they could artificially inflate the cost of the marginal (that is, n-th) copy, in order to pay for a bit of that first one. The only reason this works is because they have a monopoly on the means of producing more copies. That's it.

What digital delivery, and computers/the Internet in general, do is make widely available the means of production. (Apologies if I'm sounding a little Marxist here, but it's tough to avoid the terminology.) When anyone can make that 'one last' copy, you can't fix the price of it anymore. You just can't. DRM is an attempt to put a finger in the dike, to make it artificially hard again to make an additional copy, but they have a whole lot of information theory working against them. There is no practical way, that I can envision, to allow people access to digital media which does not inherently give them an opportunity to copy it, particularly since copying is inherent to the digital distribution process. And this is only going to get more difficult in the future.

So given this, what to do? The answer is to make people pay in advance. There will always be a demand for new content; even with the entire past produce of human civilization on tap, it is the nature of people to want things that are fresh, that have been created specifically for them (whether individually or as a group). Rather than trying to make money up off of the marginal copies, which have little to no inherent value, charge for the first copy. Charge interested parties, in advance, for creation of the work. If people aren't interested in funding its creation, it doesn't get made. If fans want an artist to continue to produce, then they can pay to commission more albums. Rather than paying an inflated cost for each copy, which has some portion of the original labor's cost built into it, they will pay for the cost of that labor up front. It is the labor which is valuable, not the copies.

This of course would force a re-evaluation of both how we think of the relationship between artists and their public, and also of how much art we as a society produce (right now I think it's clear that we produce a surplus; we produce more new art than the public really demands, and one must understand that in a pay-in-advance system, this would no longer be supportable), but I don't think there's anything fundamentally wrong with it. As people demand new content, they will pay for it to be created. Either they will pay what it costs to create it, or it will not be made.

This is the way the market should work: as people desire novelty, the business models would be formed around the demand. Instead of a top-down approach, it's bottom-up; allowing consumer choice and demand to drive how people will make money. There are lots of ways that they could do it, from straight work-on-commission to more subtle crediting schemes, or donationware/threatware (e.g. "I'll write the next installment of the series only if I receive $10,000 by the end of the year..."). I could easily see whole systems of escrow and loans being set up, to ensure that consumers didn't get ripped off, while letting the creator know that they'll be paid upon completion of the work.

In short, there are ways to make the system work, in fact I think the demand for art in general is so great, you cannot possibly fail. DRM is only a necessity when you are wed to the industrial-age business model of both physical goods and centralized control of information-reproduction. When you shift the value from "intellectual property" to labor, everything becomes much simpler.

Mod parent up (0)

Anonymous Coward | more than 8 years ago | (#16005058)

.... he said it much more eloquently than I did

Re:Pay for labor, not for copies. (1)

Xiroth (917768) | more than 8 years ago | (#16005095)

Yep, this is pretty much the direction I see most creative medias taking. For an example, take a look at webcomics. Lots and lots of comics, all of them released for free - most of the creators do it for the fun of it. The better webcomic makers make a reasonable amount of money off it. The best make enough to live on. If you applied that model to music, then you'd get a similar result, but better: Artists would be making money from donations and swag, and the rest from touring. It seems like a good model which works for all involved - except the music labels, of course, but that's life, I'm afraid.

Biased question my ass (0)

Anonymous Coward | more than 8 years ago | (#16005049)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?
Most likely, you don't... (I'm focusing on movies because they're the only things that fit your specifications), you can't make it back.

Yeah, right. If "huge" were an absolute term, that is. Huge is not just the Star Wars billion dollar budget. For a writer that needs a year full time to write a novel or a textbook, even the money to live a NORMAL life (=no private jet, beverly Hills manor, Rolls Roice: just a normal apartment, internet connection, food, utilities...) for that one year is "a huge initial creative investment". And even recovering just that money (or getting somebody to pay that to you in advance, that is the mytical "work on commission") is something that would be very difficult, or impossible, to achieve without any copyright. And if you just rely on commissions from governments and mecenate millionaires, you'll only get the creations that billionaires and governments want you to have.

All the "Screw drm, let's abolish copyright, there will be other ways to make money like live performances" arguments invariably come from those with so little brain, imagination, education and good taste that they almost never read, and only "consume" bad Hollywood movies or Britney Spears-like music (that the establishment ADORES because they dumb the masses down). Because the latter are the ONLY cases in which these arguments work. A complete abolition of copyright and DRM would indeed hurt authors and culture in many other cases.

Re:Biased question my ass (1, Insightful)

Anonymous Coward | more than 8 years ago | (#16005069)

All the "Screw drm, let's abolish copyright,

Odd. I have never seen anybody say that copyright should be abolished. In fact, just the opposite. There are many who wish to do away with method patents (esp as it relates to software), but not copyrights. Now, there are a NUMBER of ppl who want to see the copyright laws as laid out originally adhered to. That is, a limited lifetime, as well as they want their rights to fairuse be re-enforced. I would bet that 99% of everybody has no issue with copyrights.

Re:Biased question my ass (0)

Anonymous Coward | more than 8 years ago | (#16005103)

Odd. I have never seen anybody say that copyright should be abolished... I would bet that 99% of everybody has no issue with copyrights.

That may depend from the context. 99% of the general public simply doesn't understand the difference between copyright and Fermat's last teorem. I was thinking to the Slashdot and file sharing crowd. And in that case you would surely be wrong.

In these circles, the idea that copyright (in the sense of being right that one can restrict redistribution and claim money for EVERY single copy of a work, no matter how easy and cheap it is to make them) is always, surely, completely stupid, evil and harmful is deeply rooted. Even if they don't say it explicitly, it's just written between the lines of most posts. Just look at this thread: the idiocy that "money should NOT come from simple copies" (and that this would surely not harm culture) has already popped up. And what is that if not an assumption and hidden opinion/request that copyright be abolished??

YOU DON'T, YOU FUCKING FAGGOTS (1)

CmdrTaco (troll) (578383) | more than 8 years ago | (#16004800)

Case closed.

Re:YOU DON'T, YOU FUCKING FAGGOTS (-1, Troll)

Anonymous Coward | more than 8 years ago | (#16004814)

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How? Ask Apple (5, Interesting)

SuperKendall (25149) | more than 8 years ago | (#16004805)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

Ask Apple, they are doing so today. Sure they use DRM but the way they work sales would not really be hampered much by them not doing so - after all, I can download any song for free today but I choose to buy through ITMS.

Re:How? Ask Apple (2, Funny)

EnsilZah (575600) | more than 8 years ago | (#16004843)

So basically what apple is selling is not the song itself, but rather the assurance that it would be of a certain quality, the time saved on searching for it, and also the assurance that RIAA commandos won't break into your house in the middle of the night and proceed to fuck you in the ass.

Re:How? Ask Apple (1)

BakaHoushi (786009) | more than 8 years ago | (#16004987)

I'd say so. If I download a song, I have that, an MP3 file of a song. If I buy a CD, I have a physical back up of all the songs, a case in which to store it (which often looks snappy if placed correctly) and a mirade of other features and bonus work that, while not essential, is nice to have. The same can go for movies. Plus, it avoids, for better or worse, things like the "DO NOT WANT!" version of SW:EP3.

I've often followed the tradition of only downloading either to sample a group (how I met some of my favorite bands, like Bad Religion and Weird Al), or when the CD isn't easily available or sold in America at all. I know not everyone follows this model, but it does show some people will at least always be willing to support that which we like.

Love, not fear (1)

SuperKendall (25149) | more than 8 years ago | (#16004989)

So basically what apple is selling is not the song itself, but rather the assurance that it would be of a certain quality, the time saved on searching for it, and also the assurance that RIAA commandos won't break into your house in the middle of the night and proceed to fuck you in the ass.

Yes, except for the whole "assurance/commandos" thing can be replaced by "feel good knowing the artist gets some money for their work".

Many people buy legally out of love for music, not fear of reprisal. We still use P2P for other things...

Re:How? Ask Apple (1)

aussie_a (778472) | more than 8 years ago | (#16005090)

but the way they work sales would not really be hampered much by them not doing

And yet if asked to stop, they would refuse to. Funny how that works.

you don't... (5, Insightful)

twiggy (104320) | more than 8 years ago | (#16004808)

You don't.. you sell something other than the tracks.

You create a completely different model now that people expect the tracks in digital form for free (or will risk an RIAA lawsuit to get them).

you make your money on tours, tshirts, or making amazingly badass CD packaging (see: Tool - 10,000 Days) that makes it worth picking up a hard copy.

Or, you make your money by giving people valuable merchandise or preferred seating at concerts for joining your fan club.

You can't create demand for something that can be infinitely and freely copied.

Re:you don't... (4, Insightful)

QuantumG (50515) | more than 8 years ago | (#16004831)

You can't create demand for something that can be infinitely and freely copied.

Wow. How can you say all that and still miss the point. There's no problem "creating demand", there's only the problem of "limiting supply" and you can actually do that, but to do so requires you to be so fuckin' evil that you're willing to get in everyone's face and prevent them from helping others.

Re:you don't... (1)

shawb (16347) | more than 8 years ago | (#16004950)

So... kinda like musicians make their money today. There are a very few artists that actually see some money from CD sales, but most of them really don't. It's touring and merchandising that gives them money, and CD sales are seen more as advertising. On the other hand, record companies view tours as advertising for the CD sales.

This is a question that has begged discussion. (0)

Anonymous Coward | more than 8 years ago | (#16004822)

How will we ever be free of our music executive overlords if we don't offer something *tenable* in terms of a workable economy...will people be moved to support the artists beyond having a "warm, fuzzy feeling?"

Potentially no marketing cost...... (2, Insightful)

nbehary (140745) | more than 8 years ago | (#16004829)

The thing is, if you market the shiny case, people will buy it. At least, the market thus far proves that to be true. Me, myself, I tend to be a huge "pirate", but I'll pay for something I think is worth it, even after getting it for free. That can't be said for most. But, irregardless, the masses will pay for it. At least so far. I guess my point is, make quality, make people think it's worth paying for, and I'd hope most would. Maybe I'm an idealist though......

Re:Potentially no marketing cost...... (1)

xoran99 (745620) | more than 8 years ago | (#16004953)

Me, myself, I tend to be a huge "pirate", but I'll pay for something I think is worth it, even after getting it for free. That can't be said for most.
Sorry if this seems to be directed at you, but I'm going to rant a bit. I can't help but roll my eyes at people who freely admit to pirating copyrighted material as though it were nothing wrong, and immediately afterwards cast themselves in a noble light by saying that they pay for it if they like it. YOU WERE SUPPOSED TO PAY FOR IT IN THE FIRST PLACE. If it's worth it to you to keep it on your hard drive, it's worth obtaining legitimately.

Re:Potentially no marketing cost...... (1)

nbehary (140745) | more than 8 years ago | (#16004997)

If I keep it on my hard drive (or burn it off to disc).....I do pay for it. Hell, if I watch, or listen to all of it, I pay for it. (unless I'm really bored and sit through crap. sometimes I do, but it's not that often)

I agree with you though....that's where my "most wouldn't" comment comes in. And, it's true. I guess that's the submitter's question. What about them? I did answer that. Again, I'd hope most people weren't "evil".

Re:Potentially no marketing cost...... (1)

supersocialist (884820) | more than 8 years ago | (#16005005)

Piracy hurts Blockbuster a lot more than it hurts Miramax. I'm willing to download just about anything; I'm willing to pay only for things I like. If I watch something more than once, chances are the second time is off an honest-to-god physical disc. Your outdated ethics are not compatible with these new-fangled internets.

Re:Potentially no marketing cost...... (1)

AP2k (991160) | more than 8 years ago | (#16005007)

I believe this to be true as well. As far as music goes, I have pirated around 5k songs. I would only consider buying the albums for the best bands, and one of the main reasons is the cover art (not to mention the CDs have better sound quality).

I would be interested in how people would repsond to the same question if music was replaced with software? The absolute only reason I would ever consider buying software was if it was subscription based (DRM, obviously), had great non-digital extras, or was from a company I respect (id for example). As easy as it wuld be to get a completely working copy of all three original Doom games, I still bought the trilogy pack because the game is so great. Same with Quake4. I loved the extras on the DVD version so I ran out and got that, nevermind the fact that my computer didnt have DX9 hardware support, I still enjoyed the bonus Quake 2 and its expansions.

But lets take two pieces of software that I didnt pay for and wont: O&O Defrag Pro and Partition Magic. Partition magic f!cked up my partition, so I sure as hell wont be buying it. But despite how well O&O does its job, I simply cant find it in me to pay for it. (Sorry, guys)

The only possible way to get me to buy a software program that doenst have extras, would be to have fully working trial versions. Considering that is DRM, it hardly solves the topic's issue.

depends on who is trying to make the money... (1, Interesting)

Anonymous Coward | more than 8 years ago | (#16004830)

that's the real question.

if you want the publishing company or the middle-man to make money.... you're raised the big question.
if you want the creator to make money, then there's money to be had in licensing
and if you want the actor/writer/musican to make money, then non-replicable experiences (personal talks, live concerts, live theatre, etc.) are the way to go.

(personal appearances recommended by an anonymous coward.... i have nothing else to add to this one).

scale? (1)

Yaa 101 (664725) | more than 8 years ago | (#16004833)

The answer is scale, or rather lack of it.
I think the future landscape is better suited for small players, unless of course the landscape is ruined.

Doesn't that sound familiar?

Target profit (1)

in2mind (988476) | more than 8 years ago | (#16004844)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

IMO,you set a target profit amount for the product & once that is achieved,the company should not worry about the no. of copies that has been made.

My 2c.

Re:Target profit (0)

Anonymous Coward | more than 8 years ago | (#16004990)

Economics 101...
1. If your marginal cost of producing a unit is zero then any marginal revenue above this amount will earn you a profit on each unit sold.
2. If demand for your product is elastic, lowering price will increase volume so that total revenue increases.
3. So don't charge $0.99 per track, charge $0.0027 and volumes will increase enough to increase your total revenue. At that price where is the incentive to pirate? Sure there's less money for the record company executives to spend on coke, but who cares?
4. Consider that Napster charges $9.95 for an all-you-can-listen subscription. Say you devote 8 hours every day to listening to music: 31 days * 8 hours * 15 songs/hour = 3,720 songs. $9.95/3,720 = $0.0027 revenue per song.

extra's (2, Insightful)

bm_luethke (253362) | more than 8 years ago | (#16004857)

To a large extent I think there is some truth to having an issue with making money by selling the virtual parts. It becomes even truer the more that is what you are selling.

However there is something to be said for convenience. I'm willing to pay some premium for always high quality recordings, no viruses, good selection, and other things that file swapping has a great deal of difficulty with. This depends on what you time is worth and how much is charged. Itunes has made pretty good with this even though many still do not use it (I don't - I don't like enough music to bother).

The other is many people (especially myself) like physical copies and the extra's that go with them. Nice jacket insets, quality backup (though this is much less the case now - most are skimping on quality control), hard copy manuals, all sorts of things. Just stuff I can not get by downloading.

And, lastly, support. For consumer items this may not be such a big deal - what support on downloaded MP3's? But for software with a business that can mean a whole lot. Really, what most businesses are paying Microsoft is thier support. This comes in several forms - large list of supported hardware, listening to important demands, and other types of things (little to none is getting phone support, you have your IT staff or another company to deal with that). For most businesses that switch to linux this also tends to be the case - Microsoft didn't listen to the demands, found some peice of hardware didn't really work well (for instance you need real time data encoding and you can not set the Kernel to the modes you need), or maybe need to dink with the code.

In short, there are lots of things to sell. In some markets it may not be that great, in others it may be where all the money is. It also depends on what you are viewing as your product - if it is only the string of bits being copied then you are screwed - DRM or not (it *will* be broken and once it is then back to unlimited supply, and probably broken quickly and much cheaper than the DRM that you produced). In the end, that is reality and you can not fight it succesfully. You can debate if it will end up good or not, but it will not stop it from occuring.

Public goods (2, Interesting)

SiliconEntity (448450) | more than 8 years ago | (#16004869)

Without DRM, information goods are what economists call "public goods". Public goods are non-excludable, which means that if you supply them to one person you are effectively supplying them to everyone. And they are non-rival, meaning that if you give them away, you still have them.

Public goods sound nice, but unfortunately they cause big economic problems. It is a classic theorem of economics that public goods are under-produced. There is no effective way to get paid for the investment needed to produce them because there is no way to charge for them. A canonical public good is clean air. Pretty hard to get people to pay money to clean the air, because clean air benefits everyone and cannot be limited to just certain people.

DRM turns information goods into private goods. Now they can be sold and owned. They become excludable. The investment needed to produce them can be recovered by charging for their sale.

Further, it is a theorem of economics that in the long run, competition will force prices to the level of manufacturing costs. As goods become popular, the investment needed to produce them will dwindle in proportion to the number of goods produced, and their prices will fall. In a DRM system, popular information goods will be inexpensive, and well supplied. There will be no shortages.

DRM is an optimal way to manage information goods.

But that's with ideal models. (2, Insightful)

Anonymous Coward | more than 8 years ago | (#16004922)

But those theories are all based around ideals of perfect or near-perfect competition. We are, obviously, nowhere near that in most markets. This is especially true of the entertainment field. The music industry is best described as an oligopoly, with there being a small number of major labels who hold a vast portion of the market. Sure, there are minor labels, but they push nowhere near the volume of the major labels.

It's questionable how well such elementary theories hold up when you consider the often convoluted legal and tax systems of many western nations. Those can have a significant impact on the ability of people to freely enter and leave markets, which in turn impacts directly on the validity of many of the Economics 101 theories.

Assume a spherical cow (2, Insightful)

abb3w (696381) | more than 8 years ago | (#16004982)

Further, it is a theorem of economics that in the long run, competition will force prices to the level of manufacturing costs. As goods become popular, the investment needed to produce them will dwindle in proportion to the number of goods produced, and their prices will fall. In a DRM system, popular information goods will be inexpensive, and well supplied. There will be no shortages. DRM is an optimal way to manage information goods.

...provided that you have no externalities, neglect information costs, have no economics of scale and scope, have goods that are homogeneous, all market utility is pecuniary-metric, time-value utility effects are neglected, and there are no barriers to market entry. Any takers?

Also note that one fundamental assumption of the original question (zero marginal manufacturing cost) is incorrect. Costs are de minimus, not zero; there are marked differences in economic effect.

Re:Assume a spherical cow (1)

xoran99 (745620) | more than 8 years ago | (#16004999)

BURN!

Because no one would write songs without DRM! (3, Interesting)

twitter (104583) | more than 8 years ago | (#16005092)

It is a classic theorem of economics that public goods are under-produced.

Oh, do tell. You obviously have the public good formost in your mind. Still, I don't think your abstractions hold up beyond themselves and are meaningless.

How do you explain music, poetry, stories and all that which people created before machine presses and copyright? People have been singing and dancing forever and they will continue to do so despite your inability to profit from or diminish their joy.

DRM turns information goods into private goods. Now they can be sold and owned. They become excludable. The investment needed to produce them can be recovered by charging for their sale. ... DRM is an optimal way to manage information goods.

Let's turn this on it's head. If it were possible to effortlessly and infinitely reproduce bread, would you degrade that process? Do you think it's more important for big commercial makers of wheat and bread to profit than it is for others to eat? Why do you want to do that to information? Music and knowledge are bread for the mind and soul. It is insane to limit their distribution for the benefit of "owners." Ideas are not property and trying to make them so is stupid and wasteful.

I'd like to tell you that DRM will be circumvented by customers, but the market will do it first. Companies that cling to DRM will have no customers when confronted by reasonable competition. Now that's an optimal way to manage information.

stupid question (5, Insightful)

RelliK (4466) | more than 8 years ago | (#16004871)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

The same way it worked before DRM. You are making a ridiculous assumption that DRM is the only thing that prevents someone from distriduting copies of copyrighted works. That is utterly false. There is this thing called copyright law that works just fine without DRM. Photocopiers didn't kill the book publishers. Tape recorders didn't kill music industry. VCRs *multiplied* the profits of the movie industry, despite the fact that certain studios nearly had them outlawed.

For this reason your question is either biased or stupid or both. Turns out it is entirely possible to have a viable economy without infringing on the consumers' fair use rights or first sale doctrine. Who would have thunk!

Re:stupid question (1)

nitrogenx (998730) | more than 8 years ago | (#16005109)

I think you are forgetting about the aspect of scale in your arguments. For every song bought legally online, there are at least 20 illegally downloaded. Has this scenario ever been the case with tape copy or paper copy? The shear ease of copying has created a situation very different from the Photocopy/VCR situation.

Folks still buy Hamlet (4, Interesting)

Spazmania (174582) | more than 8 years ago | (#16004872)

Why do folks still buy copies of Shakespeare's plays or Beethoven's symphonies? They aren't even protected by copyright let alone by DRM.

There is always a business to be made out of selling value, even if the content itself is free.

Besides, given a reasonable choice most people will be mostly honest most of the time. If they're able to buy music or a movie they want at a price they consider fair in the format they want most will choose to do so. Take the money where you can get it; don't worry about the rest. As for the rest of the folks, most of them wouldn't buy your music or movie if they couldn't copy it. Its not important to them; that's why they were willing to make do with a mere copy.

the carrot rather than the stick (4, Interesting)

macadamia_harold (947445) | more than 8 years ago | (#16004876)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?

Simple: in addition to selling the music, you give people something else that requires no manufacturing cost, but is in finite supply, such as special "pre-sale" access to concert tickets. Fans are a lot more willing to give you their money when you offer a carrot, rather than threaten the stick.

Free for non-commercial use? (1)

A Nun Must Cow Herd (963630) | more than 8 years ago | (#16004880)

You could make money off of any companies that want to use your song/movie/whatever, while still providing it freely to the masses.

If your target audience is only joe six-pack, and you're providing something that can readily be duplicated (with the duplicate being just as good as the original), then I'd say you don't have a great business model anyway. I don't see a clear case for any inherent moral right to make money in that situation.

Since when has DRM done anything (4, Insightful)

CrazyJim1 (809850) | more than 8 years ago | (#16004881)

Only thing I saw DRM do is stop a Backstreet Boys CD from working on my exgf's portable CD/DVD player.

DRM doesn't stop online piracy anymore than a speedbump in your driveway slows interstate traffic.

Re:Since when has DRM done anything (1)

deek (22697) | more than 8 years ago | (#16005088)


Only thing I saw DRM do is stop a Backstreet Boys CD from working on my exgf's portable CD/DVD player.


Yeah, but what about the negative side of DRM?

Ask Baen Books (1, Interesting)

Anonymous Coward | more than 8 years ago | (#16004883)

http://www.baen.com./ [www.baen.com]

Scroll through the obit, then go to the Library (Free Samples) section, and see what author Eric Flint has to say. Or, just pick a book and read it!

Enormous, multi-year in some cases, initial creative effort? Check.
Profit? CHECK!

Baen gets it.

Three reasons (1)

Lord Ender (156273) | more than 8 years ago | (#16004887)

1. Alturism
2. Advertising
3. Entertainment of the creator (hobby, appreciation of fame, etc.)

Merchandising (1)

Venik (915777) | more than 8 years ago | (#16004893)

What would get me away from my computer and cause me to get my lazy ass over to a music store to buy some overpriced CD? Free apple-glazed jelly doughnuts. But seriously, I have thousands of MP3s (all of them absolutely legal, naturally...), well tagged and organized. However, there's little pride that comes with such a collection. Everyone and their uncle have tons of MP3s. I even sold my iPod on ebay ever since my boss got one.

Why do people collect stamps and not digital photos of stamps? Because there is some material value in the former and none in the latter. When someone comes over to my house and I wish to brag, I don't show them a CD folder and say: "Hey, here are the hundreds of movies I ripped." No, I show them my collection of thousands of DVDs that cost me lots of money.

Music CDs and CD cases look too utilitarian. There's no art there other than music on the CD. Perhaps the industry should think about redesigning the old and tired jewel case. Make it the size of an LP case. I am not joking: if I am to spend $20-30 on a CD album it might as well come with 12 x 12 cover art.

Re:Merchandising (1)

Hydroksyde (910948) | more than 8 years ago | (#16005068)

The problem with that is, when I buy music, I am primarily looking for music. A larger case is not only more delicate (law of mechanical advantage), but requires more storage space. Jewel cases fulfill their primary function quite well. It's one thing to add functionality, but doing so in a way that inhibits the primary function is ridiculous.

Make it easy. (0)

Anonymous Coward | more than 8 years ago | (#16004911)

With themarket, as with the law, your goal should be to make it easier to do what is right than to do what is wrong. If you do anything else, you encourage people to do wrong, and you reduce the level of respect for the 'wrong' distinction.

Witness Napster, Kazaa and other P2P software applications. They didn't win in the marketplace of people's time BECAUSE they had legal issues; they won IN SPITE of those issues. Look at how popular i-Tunes is. I-Tunes has a massive mark-up. I mean hell, you pay 75% or more of the same price required to support making and shipping and selling tons of plastic, without that overhead. And it has DRM, and lower quality than the CDs.

If you had a music sales system where:
  * Music could be sent to directly to _any_ player,
  * Where it was easier to find quality music that you wanted to hear than I-Tunes,
  * Where you didn't have to whip out your credit card every two minutes,
  * And you could have the high-quality music for your home stereo system, and the smaller, lower quality music for your portable, without restrictions ... why would you go to a P2P network without the administrative wherewithall to support that.

Compare spending 99 cents and getting a song and a squishy happy feeling to not spending any money and getting who knows what, but definitely not the squishy feeling.

economics? (0)

Anonymous Coward | more than 8 years ago | (#16004912)

Ultimately, as a whole human race, we are interested in producing capital, products, ideas, etc which are of some value to us. Economics is a fairly successful mode of organization, but ultimately we have no reason to be interested specifically in supply and demand, or other artefacts of economics, unless economics happens to be the way in which we choose to organize ourselves. The open source movement has shown that we can produce things of value without the guidance of traditional economics, so when looking to the future we must broaden the question that we ask: not "how can open source software take part in a traditional economy?", but "what can we learn from open source about different, non-economic modes of organizing a civilization?"

Product placement / in-art-advertisement (1)

jtogel (840879) | more than 8 years ago | (#16004919)

I don't see anything wrong with getting paid for mentioning / exhibiting brands (or even arguments) in your art. This is already commonplace in movies, and has been done on occasion by high-profile musicians and novelists.

Given that most people seem to have little against advertising, as long as the ads are good (but typically has a lot against many very bland commercials that litter our mass media), this seems like a win-win situation to me.

Contrast it to existing models (0)

Anonymous Coward | more than 8 years ago | (#16004923)

Music sale profits vs touring profits: Bands make more from touring than they do music sale profits.

Wow. (1)

Broken scope (973885) | more than 8 years ago | (#16004930)

I don't know this person. However im really suprised at some of the responses. A few were quite... rude almost. What ever. Don't assume someone really understands this whole issue. On subject. If there was no drm and everyone got free copies of stuff, people would still go and buy a hardcopy like a CD. I know many people who are still to lazy to go an download something. Many people I know still can barely put a song on their IPOD. The number of tech idiots around still make it very easy to make money in a DRM free market. People also still buy things that are public domain. As someone said earilier, shakespear is still paid for now a days.

P O R N P O R N P O R N H A S T H E A N S W E R (0)

Anonymous Coward | more than 8 years ago | (#16004934)

y e s t h a t i s t r i g h t p o r n i s d o i n g t h i s t o d a y a n d t h e y h a v e a l w a y s m a d e m o n e y

Four ways to make money. (4, Interesting)

thedletterman (926787) | more than 8 years ago | (#16004938)

Given the presented variables, there are serveral ways to still make money.


1. Distribute the product yourself for free, request donations.
2. Merchandise goods that do not meet the same criteria.
3. Recreate the initial (creative creation) stage in live venues.
4. Control physical access to content.

Given the current "stage" with no shortage of supply of talented musicians, cheap manufacturing, and distribution mechanisms available, I'd personally like to see a revolution of internet radio where artists upload their tracks for free, stations stream their tracks to users, users rate their favorite tracks, and the station's advertising revenue distributes royalities to the artists and station manager. It creates like a democratic system of which artists get paid the most on which stations, and creates a very populist system for music completely destroying the 'mainstream' or even 'indy' model where station managers pick and choose their playlist and present that as the only options. As someone in the executive side of the music industry there's just way too much good talent and cheap processes for the ivory tower industries to remain standing. The business model is going to have to shift and adapt, or the people will throw everyone out of the ivory towers. No amount of intellectual property laws and drm is going to stop that.

The problme isn't what it appears... (2, Insightful)

ThomasBHardy (827616) | more than 8 years ago | (#16004941)

The core problem is the base assumption that record companies and via them, that music and movie stars deserve to make tens of million of dollars for doing what they do.

Sure you can talk about limited talent that drives up demand... and I can point you at any technical or challanging industries where that is true also but where the salaries for pop stars are not dished out to the coroprate IT guys.

Sure you can talk about how hard it is to train up for and performn in an action movie... and I can point you at any number of physically challanging and dangerous jobs. Just stop by the local fire station.

Somewhere in the past 60 years we developed the notion that stars deserve to be ridiculiously rich. Sure I wish them well, as much as any other person who does their jobs well. But they are not demigods. They are not superior human beings. They are just highly overpaid for their jobs.

The solution will be when a few things come together...

1) Digital distribution arrives fully, so that crowded theaters with annoying people and cell phones are a thing of the past unless you want to go to them, and can enjoy first run movies at home.

2) Prices of all media drop as the cost of perpetual CGI improvemnets removes the need for such extravagent movie costs

3) Stars of all types begin making more sane profits from their works than the current model.

Then we'll have the chance to listen to and watch what we want, in our own homes and it can be priced affordably enough that we won't mind paying for it versus downloading it illegally.

Like many, I do not mind paying for the content that I consume. But I do object to paying too much for it and for being forced to watch it in theaters (which I have come to detest) if I want to see it the same year it's released. And I am truly angered byu hamfisted DRM implementations that deny me the ability to enjoy what I paid for by telling me how I'm allowed to watch it.

The recording industries are sufering from clinging to the old model. They milked that model until it generated so much money that they are fat and deluded. They fight, and will continue to fight, the necessary revamping of the industry until their final breath. But in the end, progress happens, no matter how much you fight.

Holding back progress (1)

robogun (466062) | more than 8 years ago | (#16004943)

Early in the 20th Century the state of transportation was suddenly improved with something called the "automobile."

Similarly, early in the 21st Century the state of information exchange was suddenly improved with something called the "internet."

The article title will be as laughable in the future, as something from 1906 titled "A Working Economy Without Buggy Manufacturers?" is now. Because if the buggy manufacturers had their way, instead of properly evolving or dying as conditions changes, by causing Federal law to lock in their obsolete business models, the progress of the country would have been retarded to the extent that world history would have been changed.

Not that anyone has done this before but... (1)

JumperCable (673155) | more than 8 years ago | (#16004945)

Try holding your items hostage until your price is met ala "Free The Maps" [redjar.org] .

If your work is of enough value, people will make enough small contributions to pay off.

Maybe some things... (1)

kruhft (323362) | more than 8 years ago | (#16004949)

...can be made with little inital cost.

Undercutting the ones that need a huge investment are the ones that will dominate.

Supply and demand are important, but some of us can create with no investment.

Think about it.

We will pwn.

EOT.

--
kruhft

Real World Example (0)

Anonymous Coward | more than 8 years ago | (#16004952)

I hate the current trend in DRM. It literally is the end of individual freedom on the Internet and in using your own computer. Having said that, I know one important example where low cost copies helped distroy an entire creative community: Hong Kong cinema. Rember all those great Chinese language martial arts movies? Bruce Lee, Jackie Chan? That entire kind of film making ended because of piracy. The movies would be copied before they were shown. All those studios (Golden Harvest, if I remeber one name) are gone. So just saying that DRM is bad, and somehow there will be creative people doing big projects is naive. I'm NOT in any way a defender of the current Hollywood system, but movies cost money. Anyone who thinks different should try and make one...

See http://en.wikipedia.org/wiki/Hong_Kong_cinema [wikipedia.org] , and skip down to the section on Mid=1990 Post Boom: Rampant video piracy throughout East Asia. I've attended showings (at UCLA) where this issue was raised.

Smell sells the bread (1)

w33t (978574) | more than 8 years ago | (#16004954)

Plays and music have, until recent times, been about performance.

I am friends with a signed band, and it seems common knowledge that the artist makes the most money from concerts and live performances (not to mention the merchandise sold at these shows).

For film, I admit it is a bit trickier situation.

You have to offer something that the recorded medium alone does not.

The way I see it, a recording is just a memory, albeit a great memory, but a memory nonetheless.

A great memory will prompt you to recreate the situation which created that memory in the first place.

With movies it seems that the theaters are where the "performance" should take place - and that merchandise would likewise be the actual "bread" the the visual "scent" sells.

Basically, DRM is an attempt to force you to enter the store before you can smell the baking - when it is that very odor that should (and would) bring you into the store in the first place.

The industry should stop viewing the recordings as the product and instead the creators themselves.

I've been thinking about this (2, Interesting)

Aqws (932918) | more than 8 years ago | (#16004957)

OK, just a heads up. I havn't fully thought this out, but here goes.

Data is not like apples and oranges, there is (almost) nothing lost when someone gives someone else data. All the cost is in the initial development. How about people pool their money together, as sort of a bounty for a certain product. And when someone writes that piece of software, they get that money. I know, who decides if they meet the requirements? How about having some kind of review board, like the lieutenants who deal with the patches to the linux kernel. Obviously there are a lot of details to work out, but I think I've posted the gist of it.

Live Performances (1)

shawnmchorse (442605) | more than 8 years ago | (#16004961)

The answer (for music at least) really seems to be a return to the "business models" that existed long before the advent of pre-recorded media with worldwide distribution. Musical artists need to stop emphasizing the packaged album concept and go back to emphasizing live performances. People will obviously pay (often through the nose) for the live performance and the whole concert atmosphere. If you think back to classical music as an example, composers were generally paid for live performances and for teaching. The fact is that their actual music was widely copied and so that's not where they were even trying to make their money. If something has infinite supply, then it seems obvious that the money will not stem from that but instead will come from a scarce resource (each live show is unique).

History is your guide (1)

gaines (987885) | more than 8 years ago | (#16004967)

If you look back through history, there are many examples of people predicting that a technological revolution would put an end to an industry. We see it in everything from spinning/weaving to live performances. In the eighteenth century fabrics were made by a series of artisans who did everything from spin the wool to weaving the fabric. They were actually successful for a while at stopping the use of machinery for textile production, but now take it for granted that the industrial revolution in fact boosted the economy and provided jobs. When recorded music was first being made, musicians were worried that if you could record music then nobody would want to pay to hear a live performance. This has obviously proven to be false as this is now the primary method that most musicians receive an income from their music.

Copyright was invented to protect cost of printing (3, Interesting)

Swordfish (86310) | more than 8 years ago | (#16004979)

The whole purpose of copyright was originally to protect those people who invested in the typesetting of printed works against unscrupulous printers who would then set up their printers only for the proven best-sellers of the other printers who took risks.

Nowadays, the cost of typesetting and printing (or composition, arrangement, recording etc.) is borne by the artists, and the publishers do nothing of value that a kid in a garage can't do. So there is no further need of copyright to protect the printing investment. Anyone can record, print and distribute for essentially nothing.

The question is now whether monopolies should be retained when the cost of publishing is essentially zero. The answer is clearly no. If all copyright on music is removed, the result will be a flowering of music and literature from artists who otherwise would have been strangled and suffocated by the dominance of the monopolists.

In short, technology has made the protected markets of music and literature publishers obsolete. Considering the trashy sounds that pass for published music these days, I don't know why anyone keeps buying that rubbish. At least 10% of people nowadays can produce much better music in their garage. So why not just stop buying the commercial garbage and just get unencumbered music off the net for free?

Parent is the juggernaut, bitch! (1)

ruedesursulines (944991) | more than 8 years ago | (#16005032)

Mod up!!

Freaking Value Add, sheese... (1)

IBitOBear (410965) | more than 8 years ago | (#16004980)

Like liner notes in CDs and manuals in games and ease of access and reliability of service and certianty of availablility.

The same way that Red Hat sells Linux.

And T-shirts at the concert.

It's not that tough people.

The premise of your confab is a bit slanted to be a "so see, we need DRM" failure. For the most part the signal isn't a comodity, and it shouldn't be.

There is a P2P model where you make the content free at a degraded rate, and bind it directly to a means to buy full quality while the share would continue as "default" to the degraded image for non purchasers. (Build the player into the P2P client etc.) Soemone _could_ share the non-degraded image but that would be "Effort".

The P2P model virtually elliminates the distribution cost.

e-purchases would give you (essentially) coupons towards the purchase of related merchandise. Examples not just being T-Shirts but thinks like, if you buy a bunch of songs from an album, you end up being able get the actual CD mailed to you for a very deep discount. Then you can do tie-ins and clubs.

In short, stop treating the signal as if it is precious and _start_ treating your customers _are_ precious. Get them involved. Spiff them to come to gigs and tie-in events. Get them buying your gear. Get "sponsers" to sponser things from their sites (buy these sunglasses and get a cupon off anything in the U2 collection.)

Buy five movies, get the poster for (ont of these hot new releases) for $10. You just got people to _buy_ an _advertisement_.

There is a reason that "free radio" worked.

Flawed assumption (1)

DMouse (7320) | more than 8 years ago | (#16004981)

Your assumption is that people only buy product. In short, the aim of a creative company is to build up a back catalog of items to sell, where in fact, customers are actually interested in future content. Thus, people will buy copies of Firefly, even after having watched downloaded copies, because they are intent on sending a signal that future content along the lines of Firefly should be produced.

totalitarian media marketing will become archaic (1)

ruedesursulines (944991) | more than 8 years ago | (#16004992)

In the future, it will be very difficult to make considerable profits off anything that can be put into digital form because piracy will be so pervasive.

The grand old idea that you can control the distribution of a film, a song, or a piece of software is coming to an end. But if you still want to attempt to control it top-down style, and keep all profits to yourself, make efforts to prevent others from having it unless they pay you, and basically be a gangster, then you could always go the avenue of embedding advertising, just as they do in films with product placement, but there is a limit to how much can be done before it becomes a nuisance and artistic abortion that nobody will be interested in.

Open source and other altruistic style collaborations are the future of software and media production in the long run, though big screen movie theatres will have their appeal for productions with a lot of spectacle.

Perhaps by not alienating your customers? (0)

Anonymous Coward | more than 8 years ago | (#16005000)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost

Perhaps (and I'm thinking of the music industry here although the motion picture industry isn't far behind) by selling the product at an honest price rather than be caught in price fixing scandals, by not cheating the artists who produce it and that the customer actually would like to support, by not crippling the product with DRM or infecting the customers computer secretely with rootkits, and by either offering the consumer what they want or at least not filling albums with 95% crap that they have to buy to get one song they like.

If people culd buy a CD quality single at a fair price I believe that many would. But when the only ways to get a single are to but an over price artifically price fixed album (that might be crippled), buy a DRM crippled low quality audio download with artifacts that will be lost not if but when their Ipod dies, or download an illegal copy that works on any player and can be moved to the next player they get. then I uderstand the impulse to download the illegal copy. I haven't bought or downloaded music in years, but I expect I never will buy an album again after what I've seen of the RIAA and their goons.

What does Richard Stallman have to say about this? (1, Insightful)

Anonymous Coward | more than 8 years ago | (#16005004)

Probably something about the 'long tail economy' kicking in.

Capitalism isn't the last stop on this train ride we call human history...

It's the end of the world as we know it and I feel fine...

create a community (0)

Anonymous Coward | more than 8 years ago | (#16005010)

The trick is to create a community. Baen (http://www.baen.com) shows how to do it.
You get contact to the authors, previews of the books while they are written, free ebooks (even from the bestsellers).
It is also possible to buy Tuckerization rights, ie your name in one of the future books (higher price for surviving characters :).

Ransom method (1, Interesting)

Anonymous Coward | more than 8 years ago | (#16005016)

Here is a method in which an artist can realize profit from creating a work. (Note: this may or may not apply to bigger budget media like movies). At first, the artist releases material (or whatever) and builds up a reputation. Maybe he makes a pitch and gets a bunch of consumers interested enough to contribute to a ransom fund. Until the fund reaches a high enough level - nothing really happens other than some promotion (which can be very cheap on the net).

Those who contribute get the first crack at seeing the work or get immediate delivery once the work is finished. If they share afterwards, the author doesn't really care. He's already been paid by the ransom. In fact, it would be in his best interest for the work to spread as it can increase awareness and perhaps fund future ransoms.

The value a contributor obtains can be from sponsoring the arts, possible bragging rights, front seat access, or whatever.

ps. I can't claim any credit for the idea. I first came across it under an rpg context. http://www.detwillerdesign.com/ [detwillerdesign.com]

miraculous multiplication of loaves (1)

ruedesursulines (944991) | more than 8 years ago | (#16005019)

Basically, it comes down to this:

if we had an unlimited supply of bread that could be reproduced and distributed to everyone at no cost, would we expect people to continue paying for it?

Sure, someone has to bake the initial batch, but that doesn't count for much as we approach infinity.

In other words, the rice ladle has gone down the river and it ain't comin' back!

How about... (0)

Anonymous Coward | more than 8 years ago | (#16005021)

Donations, except require a fixed ammount of before you release.

What huge initial creative investment (0)

Anonymous Coward | more than 8 years ago | (#16005046)

huge initial creative investment


What the??? Bands don't need $millions in marketing or $millions in music leasons to make music. Someone with exceptional creative skill and some borrowed equipment can make a decent album.

Maybe if there wasn't the marketing money chasing the stupid acts, the creative people would have a chance. There is no huge initial creative investment.

Infinite supply is not new (1)

monoqlith (610041) | more than 8 years ago | (#16005055)

As far as I can tell, things have been mechanically reproducible, with little overhead, since Gutenberg. What has made book and news publishing a viable business is the quality of the works they publish and the widespread demand for leisure, informational, and research reading. While copies of any work are in limitless supply now that they are in digital form, the supply of *quality* work is definitely limited, and as such the price for good works will remain high even if it can be infinitely reproduced. There will have to be slight changes to the music and movie business model, of course: for instance, one of the reasons why people buy and read books is because of the physical aura of the book. They like to hold it in their hands and rflip through the textured pages. On the internet, this physicality is lost, and so an investors' purchase of an item will have to depend on other things: the comprehensiveness of the inventory, the freshness of the inventory, on what variety of media devices it plays, how easy it is to transfer to those devices, how reliably it plays, and what additional content can be viewed when it gets to those devices. Music companies need to learn to deliver the best product possible, and have to stop depending on an artifical supply limit for their ability to charge premiums.

RIAA companies have been holding this specter of their defenseless, victimized interests over our head. Basically it's just a way for them to lock us into preserving their current business model: sign mediocre artists, over-produce mediocre music, sell it at inflated prices, reap most of the benefits, and screw (by underpaying) the parties responsible for their having any content at all. Now that the barriers to reproduction are gone, they'll have to innovate on their business model as I have already described. It's not rocket science. It's adapting to a new marketplace. All companies have to do it, and rigid DRM restrictions are not going to work forever.

I don't see DRM going away entirely - rightfully, I think, since reproduction is now virtually *free* and media formats are so versatile and transmissible over the Internet. It's the same reason why we have security systems at stores. But security systems aren't as conspicuous and constraining as the ridiculous DRM systems are now. Mostly stores rely on the inherent value of the product they are selling and the integrity of their customers. Likewise, the DRM just needs to be much more flexible. In other words, RIAA companies need to stop treating their customers like theives and more like the reason they stay alive. This, or else things are going to start moving more rapidly toward a long tail model where the independent publishers win(I vote for this, since it allows us to start taking things back from the oligopolies and re-democratize our economy.)

You charge for the time you spend working on it... (1)

Mr2001 (90979) | more than 8 years ago | (#16005056)

... just like anyone else who performs a service. Performing songs, filming movies, etc. can use the same business model as fixing cars, preparing tax forms, or painting houses.

The only real difference is that creating an artistic work tends to involve a lot more effort, so it's hard for one person to fund an entire album out of his own pocket. But that's not really a problem, because you can assemble a group of people who are all interested in the album and have them pool their money together to fund it. (Look at political campaigns for a working example: they raise millions of dollars from a lot of small contributions, and those contributors don't even get anything for their money unless their candidate wins!)

Ideas (1)

derEikopf (624124) | more than 8 years ago | (#16005066)

"In a few weeks, our school will be hosting a panel on DRM with several respected individuals. In advance of the panel, I have been doing some research on the topic and thinking about it in my free time. In economics, we learn that the price of a product is determined essentially by supply and demand. Without a DRM in place, we are capable of making as many copies of a piece of content as we want and seeding it onto the net. How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply?"

The problem is you're assuming that content is something to which supply and demand are applicable. Supply and demand are inextricably linked to actual physical things. Content is basically ideas, and ideas can't be owned or bought or sold--they aren't tangible, and the only way for someone else to get an idea from you is through a physical representation of the idea (which is not the idea itself). Technology is testing the extremes of intellectual property, and the absurdities of IP are becoming clear to its victims, and probably even to those wielding it. In the case of digital music, the Internet provides an almost free and limitless physical medium with which to represent ideas (the music itself), and that is helping expose the absurdity of ownership of ideas or processes (in this case, sounds arranged in a certain order).

How about less pain? (1)

iknowcss (937215) | more than 8 years ago | (#16005070)

The thing that keeps me from legally downloading music as it is right now is pain. Pain from what you might ask? Pain in paying. It's not easy for me to purchase music right now as I'm not old enough to have a checking account, a credit card, or a paypal account. iTunes has the right idea with their pre-paid cards.

The more invisible you make the payment process, the more likely people are to forget how much they're spending anyways. I don't know how you'd pull off a more painless program, but that'd really get the cash flowing.

The concept of DRM isn't evil (1)

AntonDevious (879535) | more than 8 years ago | (#16005072)

How do you create a market for a product, and make money of a product that has a huge initial creative investment, but then no manufacturing cost, and is in infinite supply? I personally am not bothered by the concept of an artist in the electronic media being able to control sales of their product. Paying $0.99 a song is fair. If the artists don't get paid, they won't continue to produce work. A good example is compare the quality of paid television to YouTube. Sure there are enjoyable clips on YouTube, but they don't have the production value that our TV and Movies have. Where DRM fails is it doesn't protect the creative, it protects the device the creative is played on. I don't have a solution, but as a collective intellegence, we should be able to come up with a non-commerical standard of encrypting files that ties the unencryption to the user not to the device.

Re:The concept of DRM isn't evil (1)

databoss (702586) | more than 8 years ago | (#16005114)

Although I this DRM is evil, I just want to re-emphasize the above poster's extremely important point: current DRM technology does not protect creative works, but prevents them from being transferred legally from one device to another. The use of copy protection is debatable, but preventing interoperability is undeniably monopolistic. In my opinion, that is why current DRM technology is undebatably unacceptable.

You change the product (1)

Turn-X Alphonse (789240) | more than 8 years ago | (#16005078)

Instead of looking at the old models which is "Please give us money so you can enjoy what we make", we need to switch it round so it's more like the musicians on the street (or Jonathan Coulton if you perfer), so "heres my music, I hope you like it. If you like it would you mind giving me some money so I can continue to play?"

Instead of asking for money for something you ask for money so you can continue to do something. The problem with this is things become their real value (instead of super expensive things because of some famous name attached) and the low level bottom feeders (middle men) just get in the way of the system.

So in short. DRM is holding evolution back by shooting the bald monkeys, the few that escape get to evolve and become another thing entirely, which may or may not be a better set of monkeys. Sorry it's not cars, but it makes sense in my head at least.

Flawed use of economic concepts... (1)

mveloso (325617) | more than 8 years ago | (#16005079)

"we learn that the price of a product is determined essentially by supply and demand"

That isn't quite true. What you should have learned in economics is that "all other things being equal, the price of a product is determined by supply and demand" which basically means "in this incredibly simplified model that we have built, things probably work like this." Generalizing outwards from the models used in economics is dangerous at best, because in general all other things are almost never equal.

There are numerous examples in the Real World that show that price is not determined by supply and demand at all, except for commodity goods...and for many commodities, the perception of supply is more important than the supply itself.

You haven't followed tech advances (0)

Anonymous Coward | more than 8 years ago | (#16005086)

The stupid distributors are hanging onto prices from 15-20 years ago! That's why! Is it any wonder they are bitching about sales? Why the hell arent we seeing music cds for 2 bucks and dvd movies for 3$ on the shelves? They could do it and anyone who says they can't GO TO HELL YOU LIAR. Make it impulse item cost and you'll sell them, plenty of them, and still make profit. If you can't be content with making over 100%, then screw it! 2-3 dollars a disk would still make serious profit. they don't want a business, they want a contunation of a license to print money for doing *not much*. too bad, it's a new world out there, get with the program or get stuffed! GOUGING people when they know that either downloading is very cheap (even iTunes is a rip for pricing) or stamping out disks is very cheap is NOT the way to keep customers. Until those millioniare idiots understand they are GOUGERS, and change, they will continue to remain clueless and keep futzing with DRM schemes. It's their own fault, too, greedy bungholes never passed on the tech advance pricing models that they could have. People don't like being ripped off, so they react to THIEVES accordingly, as in "they don't care anymore". You get your "piracy" then. It's human nature, I didn't invent but you'd have to be a sub-moron to not know people don't care about ethics when it comes to dealing with thieves. The producers and distributors started it by being thieves, by arranging cartels, price fixing and seeking to restrict technological advances to themselves, to the point of perverting and subverting the legal system to cover their embedded thievery mindset. Tit for tat, they got what their karma deserved.

Me-I don't download, nor do I buy the cartels over priced crap, but if they want to know the "why" about filesharing and why they think they need DRM, they need look no further than into their own greed-is-good black hearts.

The Good Old Days (1)

Vinegar Joe (998110) | more than 8 years ago | (#16005098)

Only alittle over 100 years ago, musicians made their money and reputations by performing live. Of course, they didn't have private planes, live in Neverland or make $100,000,000+ per year.

Merchandise (2, Informative)

Paul Slocum (598127) | more than 8 years ago | (#16005102)

Here's [homestarrunner.com] a good example. 95% of their content is free on the internet -- 5% accounting for extra content on the DVDs and CDs. Never even had any ads on their site. And they make a healthy living off merch. They quit their day jobs on just T-shirts!

As people have said, no DRM doesn't mean everybody's going to throw a pirate party and that selling digital content is over. But there are even business models that allow for giving the content away.

You introduce a 'service' component (1)

Quiberon (633716) | more than 8 years ago | (#16005119)

There's a couple of things that you clearly should not allow the possessor to duplicate; 'dollar bills', and 'theater tickets'. From there on, things get less clear. Bands can (if they are good) make a living playing concerts; and there's no reason why the 'traditional' copyright laws should fail to hold. DRM (and criminalisation such as the DMCA) strengthens the position of the rights-holders to the detriment of everybody else; to the point where I can't reasonably allow DRM material in the house, in case I commit a crime with it.

Marketing, convenience, traceability, FUD (2, Insightful)

okoskimi (878708) | more than 8 years ago | (#16005121)

Like someone already said, you don't need DRM to protect copyright. It is just one method (albeit an efficient one) of enforcing it. You can also sell digital content without DRM and still sue people who try to sell it in an organized fashion. This is in fact how a lot of digital content is handled today. Effectively, the people supplying pirated copies are your competitors who have a huge advantage in price but suffer a similarly huge disadvantage in marketing, convenience and legal status. And the pirates actually also suffer a disadvantage in price, because they cannot get any money for the content itself (who would pay for pirated music?), although they can get some money from advertisements.

Hey, Apple sells lots of music, even though they same music is also available for free as pirated MP3's.

So, your basic formula for success is something like:

  1. Marketing. This is the only way to reach the great masses, and pirates can't do it efficiently (well, they can send spam...). Also, since the content is free to reproduce, you can keep you customers happy by frequent bonus offers, discount clubs, monthly freebies, and the like. A nice example of taking advantage of free reproduction is the DaZ3D [daz3d.com] website which sells Poser content. You have got to admire their marketing savvy. And the success - I mean come on, their business case is so good they have created a free version of Poser (DaZ|Studio) just to sell more content! And none of the content is copy protected mind you.
  2. Convenience. Giving the users convenience means you have to put effort into organizing the content, into web site design and management, making sure content installation is painless, etc. Effort requires money. If you are a pirate, you are likely not making enough money to do this.
  3. Traceability. Discourage people from copying your content to each other. If all content contains a hidden watermark which identifies the original buyer, people are a lot more reluctant to copy content even to their friends (how many of your friends do you trust not to copy the content any further?).
  4. Create as much FUD about pirated content as possible. Only legal content is virus-free. Pirate web sites install trojans which will steal your money. Etc. There is enough basis in fact to make it work. And it works in politics well enough...
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