Posts tagged ‘economics’

In a post-scarcity publishing world, the key is to own the most relevant copy

March 17th, 2008

The title of this post sounds a bit cryptic, agreed. Let me try to explain what I mean. The point I’m trying to make is actually very simple. The Web is a giant copying machine. And yet, if people can avoid having to copy something, they will. The problem is that today, the music industry suffers quite a bit from illegal file sharing–a giant copy party. What is going to happen over the coming years is that this copy fest will wind down. Yes, it will! And the reason for that is that there will be services that let people listen to their music without having to copy files and manage them.
Ok, so what matters in a world where p2p is irrelevant? In this world we will instead share and discover music in a giant link-passing frenzy. This is already becoming a reality, only it’s “not evenly distributed yet”.

Here are a number of popular links to Flickermood, a song I released under the alias Forss on Berlin-based Sonar Kollektiv:

…oh, here’s a link where you can buy the song, complete with drm and in worse quality. Feel free to go there and, nevermind.

And then we have Let’s go back to the cryptic title of this post. Since Flickermood seems to be available all over the place, the key, being a music service or a label or an artist in this world of link-passing, is to own the most relevant copy. With most relevant I mean the most happening copy, the most accessible copy, the most usable copy, the coolest copy, the earliest copy, the most exclusive copy, the copy with the best sound quality, the most permanent copy, the most social copy, the most remixed copy, the most authentic copy, the most interoperable copy, etc.

Although the above links are all cool I’ll focus on the last one to further highlight what I mean. It’s a link to the track on SoundCloud, a service I’m currently working on, where you can listen to the full song in a pretty cool player with discussions happening inside the track through “timed” comments. I’m there too, discussing samples with friends and fans. What’s also interesting about this link is this:

  • type or .aiff to get an mp3 or an aiff, etc.
  • type, .xspf, .rss or .atom to get a playlist with all my releases
  • to get a feed of comments
  • sniff the audio with an haudio compatible app
  • go to the url with your iPhone to play it
  • embed the track on MySpace or just about any other place, in a player that is better than any other out there.
  • and to do just about anything with the track.
  • and there is in fact much more… (some of these features are still in development, in case you’re a lucky beta tester)

Good song permalinks is the shit. All this really means is that the track is so accessible, it’s impossible to top. The problem today is that the vast majority of “relevant” copies of songs are in places where labels and artists and other commercial players have little or no control over them. 1% of the listeners may be in a place where labels/artists/platforms are, they may pay, etc, but the other 99% are somewhere else–on p2p nets, on russian pirate sites, on trashy yasn sites, heck, even in their own music players. The key to survival on the emerging media web is to make these copies irrelevant by being drastically more relevant. Downloads won’t survive long in a post-scarcity publishing world–it’s making yet another irrelevant copy of an irrelevant, un-sexy copy to begin with. Just contrast iTunes with SoundCloud. Right now, I just see a lot of lost ad dollars.

Alf Rehn on the tongue in economy

August 31st, 2006

Entertaining post on economics research and the tongue by my current supervisor, Alf Rehn. From the post:

The tongue, slithering and moist, is instead both real and Real, for even though its physical reality is obvious and uncontested, its place in economy is something that traditionalist thinking of the economic would wish to hide away. The tongue simply does not fit the dry and ordered thinking of academic discourse, particularly not in the fields that want to talk of economy.

Bloggforum 3

November 15th, 2005

Will be in a panel on copyright and blogs at Bloggforum 3, 19th of November in Stockholm. I’ve really enjoyed reading the other participants blogs; Markus Fleischer, Simon Winter, and Oscar Swartz. They’re all better bloggers than I am, they also know more about copyright. Hopefully by saturday, I’ll be able to connect these issues with music and economics in some clever way, hmm…I will ask my smart friends for help.

Magnatune and Double Moral Hazards

September 3rd, 2005

I just read a very inspiring article (part 1 and 2) by Umair Haque on why the business model of the music industry–which still is about selling records–is seriously flawed. Haque applies a theory in microeconomics referred to as Moral hazard to analyze the current market of labels and consumers.

In short, he concludes that we, as music consumers, are finding new ways to compensate for the value lost when we buy music that we realize we don’t like. Labels traditionally act as “quality assurance” agents, but it’s evident that these agents provide too little information to us as consumers about the products they are selling at a (more or less) fixed price; hence creating a typical moral hazard situation. Haque argues that p2p file sharing is mainly about a radical form of risk sharing; we eliminate the costs of buying music that we don’t know if we’ll like.

In part two of the article, he then proposes a number of solutions to the problem. One way to tackle it is to let consumers listen to a piece of music in its entirety before buying. Another way is to provide variable pricing, either on the buyer’s end (consumers get to choose how much to pay), or by the use of some clever algorithm that figures out the demand/value of a particular track or record and then chooses a price accordingly.

Now, Magnatune uses a combination of the above techniques to provide more information to its customers; one can listen to a full album in high quality before buying it to a price one gets to pick ($5-20). In this way, customers can reduce the risk of a “bad experience” by carefully listening to–and then choosing the price for–the music that they buy.

All good? Well, Magnatune’s way may be good enough, but in fact–just as Haque warns–some of the solutions to the problem can give rise to a double Moral hazard! In this case, it’s the listen-to-the-full-track feature that is problematic. Being the hobby hacker I am, I wrote a script that extracts all the mp3-files from the m3u files that Magnatune uses for their track preview feature. In a very short time, my computer had downloaded over 2GB of copyrighted music (Don’t worry, Magnatune, I deleted it again). And the servers over at Magnatune just think that I’ve previewed a lot of tracks, which means that now I’m the one responsible for the moral hazard!