economics of mp3 and microsound (was re:mp3 redux)

[Renick Bell <the3rd2nd@xxxxxxxxx>]

I admire Jan's moral imperative against theft. This kind of ethical backbone
seems to be in short supply at the moment. I don't mean to justify theft, but
economics seems largely amoral to me and relatively pointless to resist.

Jan, here's a reasonably well-written piece on the morality of mp3s:

http://www.furinkan.net/display.php?pageid=75

More, for information on the problems with copyright, written by Lawrence
Lessig, one of the foremost experts:

http://cyberlaw.stanford.edu/lessig/content/articles/

So, about the economics:

1. While Albini says most labels screw the artists, he will allow that there
are indie labels that treat artists well and keep costs low.

2. Jeff at Ninjatune says most of their artists don't have other jobs and like
the label.

3. Labels say that downloading is killing their business.

4. As access to the internet and broadband increase, downloading will increase.

5. Absent adopting a different business model (different income sources),
labels will cease operations.

6. Artists without other income will have to find other income.

If 1-4 above are correct, then the model for taking income for music must
change. What is the next step? What is the evolution? How can artists
materially benefit from their work in the future? Rather than resist the trend,
how can we harness the trend for financial gain? Must the relationship between
defeating scarcity (easily duplicated IP) and income be an inverse
relationship?

The reason I ask about income is to get all the facts on the table. Without
some evidence (e.g. Albini, others), it's just us tossing back and forth
completely subjective opinions. Not that I believe we'll get to the bottom of
this, but having some more data makes the discussion more interesting. Without
knowing for sure, I think the incomes run the range; there are those who have
become very wealthy through music (through the support of major label publicity
and their personal star-power), there are those who have reasonable
middle-class lives (successful indies, studio techs, small-time producers, and
others), and there are those who are very poor but doing music anyway (touring
indies without day jobs). Without being sure, I guess most makers of electronic
music have other primary sources of income.

According to this survey, many musicians are netting a loss and making less
money in 2002 than in 2001:

http://home.tiscali.no/hkrabye/musiciansreport/survey3.html
http://home.tiscali.no/hkrabye/musiciansreport/survey2.html

I'll be the first to pony up details: I'm comfortably middle class, with only a
very minor contribution being income from musical activity (about 1 percent).
If there are artists who are making all or the majority of their income from
(non-dance) electronic music, I'd like to know how. That's very interesting to
me. Kim said a bit comparing the profit from his indie days to now, and
Philippe said on the IDM list that consumers support his business and his
artists are happy. Does this mean you can eat macaroni and cheese every day (we
already know Kim is at least eating Thai and sushi ;) ), does it mean that you
can buy new G4s once a year as speeds increase, or does it mean that you can
buy Jags? What is the level of success, and how has it changed from the past to
the present and why? Is this a temporary situation that will change (see my
argument above), or does this music (microsound) exist in a different space
with different rules? 

Sure, this is an old issue. Google scarcity and mp3 and you can find essays
from before 1999. This was a hot topic in 2000. The trouble is that I haven't
heard anything new. I wondered if any of you knew of something I hadn't yet
heard about.

On alternative income sources, I found these old solutions:

http://www.tangrams.com/music/payments.html

Has anyone had any success with Paypal micropayment systems? If you are selling
a CD and have mp3s of the same material available for download, what is the
ratio of sales to downloads? Anyone read this information somewhere else?

Renick

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