[BigKeithO]

This discussion is getting a little side tracked now. We should keep in mind that the story was about the "Special 301 Report" from the USTR. Everyone on this board is aware that the Canadian Government (yes, the Fed's) doesn't recognize this report because it is basically a joke? Official word from the Canadian Government:

"In regard to the watch list, Canada does not recognize the 301 watch list process. It basically lacks reliable and objective analysis. It's driven entirely by U.S. industry. We have repeatedly raised this issue of the lack of objective analysis in the 301 watch list process with our U.S. counterparts."

The US Trade Office is upset Canada hasn't put into place a mini-DMCA. They don't like the fact that we make our own laws up here, don't fall for the industry BS around this issue.

For a detailed breakdown on this "301 Report" check out Michael Geist's take on it (a law prof from Ontario):

http://www.michaelgeist.ca/content/view/4997/125/

[Proculation]

BigKeithO BigKeithO:

Proculation Proculation:

The music industry is another thing, I know. They can sell items, make concerts, etc. But still, without the creation which is the song itself, their would not be any of that.

The movie industry is also another thing. What if people never cares about watching a movie in a theater and prefer to just download it. Let's say the movie is 1GB and 1GB download costs 0.50$ with your ISP. Does that mean the movie only worths that ? Plus, that 0.50$ won't go to the producer but to the ISP.

As I said, you can argue about the big profits they make. But, you can't argue that the creators have some rights on their creation. It costs money.

I won't talk about the Pharma industry here. Patents and copyright are similar but they don't both belong in this debate. As to your other points however...

"Without the creation which is the song itself..." That, my friend, is the crux of the argument. Don't get me wrong, I don't believe that artists shouldn't get paid, quite the opposite in fact. All that I am arguing is that the "old" recording industry contract no longer works to get the artist paid. The recording industry is in decline here people, NOT the artists. That is why people talk business models when they talk P2P. The recording industry (or the IFPI in this example) are not in the business of "making music". The musicians make the music, and the IFPI hardly represents the musicians. The IFPI is the "recording industry" and they represent the interests of the record labels who, while they may claim are in the music business, appear to believe they're really in the "music selling business" rather than (as they really are) the "music entertainment business." They believe their job is to distribute music, promote it, and get people to buy it. They make money by keeping that system closed and locked down. If they recognized they were really in the "entertaining people with music business" they should only be ecstatic about new technologies and services that make their job easier. In the case of file sharing systems, that was a tremendous new distribution and promotion system all rolled up in one -- and it cost them nothing. What a tremendous resource -- if they were actually in the music entertainment business and wanted to make it easier to promote and distribute music. They could leverage that infinitely available, free resource to promote and distribute music and musicians, and then use that to make money in other ways (concerts, sponsorships, endorsements, appearances, fan clubs, etc., etc., etc.,) But by limiting the definition of what business they were in by what their existing business model said they were selling, they chose to fight it.

The same is very much true of the MPAA, who represents the movie studios, and still seems to think they're in the business of selling movies. That's not true. People don't go out to the movies because it's "a movie." They go out to the movies to be entertained. They're in the entertainment business, and the industry is falling down miserably by making the movie going experience dreadful. They've taken the entertainment part out of the entertainment business as they focus so desperately on holding onto the "movie selling business" and in the process, they're finding it actually tougher to sell movies.

Oh I understand the model is old and needs to be refreshed.

I was more talking about your use of economics to prove your point.

[Lemmy]

Scape Scape:

Drug companies have patents but they expire. Music industry doesn't because the copyright is forever, that is not sustainable and requires reform. Creative commons would be a way around that issue but I doubt someone who is trying to have a monopoly is truly interested in such a distribution.

Actually, copyright expires too. In most cases, it expires 50 years after the death of the artist. Some states have extended that to 70 years.

[RUEZ]

bootlegga bootlegga:

Only if you play it on an iPod. Try and play it on anything else...nada.

The iTunes movies aren't DRM free either, IMHO. I can watch them on my PC, but if I want to download it onto a stick and play it on my TV (or Blu-Ray), I can't. That is because of compatibility issues (iTunes formats in a format my Blu-Ray player/TV isn't capable of playing). You can argue that that is the TV's fault, but I see it as ITunes locking my file to prevent me from watching it where I want.

With iTunes, you can only use it on an iPod. Hardly DRM free...

I buy music in iTunes, copy it to CD and play it in my truck. I don't know what you are talking about. The movies I am not sure about. Music is transferable.

[BigKeithO]

Lemmy Lemmy:

BigKeithO BigKeithO:

Ah where to start?... How about with economics 101? Basic economics says that as supply of something increases the cost of said item decreases. Now let's take digital music files. A digital file costs nothing more than time and a tiny little bit of electricity to duplicate, I can create as many copies of the file as I choose at the click of a button. According to economics 101 a supply that great must mean that the cost is now going to go down, correct? Funny you don't seem to see the costs of music files dropping now do you? Oh wait, P2P is free. Market forces at work. The business model does indeed seem to be outdated, you cannot artificially force a high price on an abundant resource.

Not to nitpick, but "cost" and "price" are different things. If you're gonna teach economics, teach it properly. And you certainly CAN "force a high price on an abundant resource". You've glossed over too many of the determinants of price (market structure, cost curves, capitalization, elasticity, etc). Maybe you'll get into all of that next September when you enroll in Economics 201.

Getting back to my series of posts on understanding economics when scarcity is removed from some goods, I wanted to address the ridiculousness of the "can't compete with free" statements that people love to throw out. If we break down the statement carefully, anyone who says that is really saying that they can't compete at all. The free part is actually meaningless -- but the zero is blinding everyone.

To explain this, it helps to go back to your basic economics class and recognize that, in a competitive market, the price of a good is always going to get pushed towards its marginal cost. That actually makes a lot of sense. As competition continues, it puts pressure on profits, but producers aren't willing (or can't for very long) keep selling goods at a direct loss. Sunk (or fixed) costs don't matter, because they've already been paid -- so everything gets pushed to marginal cost. That's pretty well accepted by most folks -- but it's still misinterpreted by many. They tend to look at it and say that if price equals marginal cost, then no one would ever produce anything. That's a misconception that is at the heart of this whole debate. The problem is that they don't add in the element of time, and the idea that what drives innovation is the constant efforts by the producers in the space to add fleeting competitive advantages (what some economists have annoyingly called "monopolistic competition," a name that I think is misleading). In other words, companies look to add some value to the goods that makes their goods better than the competition in some way -- and that unique value helps them command a profit. But, the nature of the competitive market is that it's always shifting, so that everyone needs to keep on innovating, or any innovation will be matched (and usually surpassed) by competitors. That's good for everyone. It keeps a market dynamic and growing and helps out everyone.

So, let's go back to the "can't compete with free" statement. Anyone who says that is effectively saying that they can't figure out a way to add value that will make someone buy something above marginal cost -- but it's no different if the good is free or at a cost. Let's take a simple example. Say I own a factory that cost me $100 million to build (fixed cost) and it produces cars that each cost $20,000 to build (marginal cost). If the market is perfectly competitive, then eventually I'm going to be forced to sell those cars at $20,000 -- leaving no profit. Now, let's look at a different situation. Let's say that I want to make a movie. It costs me $100 million to make the movie (fixed cost) and copies of that movie each cost me $0 (marginal cost -- assuming digital distribution and that bandwidth and computing power are also fixed costs). Now, again, if the market is competitive and I'm forced to price at marginal cost, then the scenario is identical to the automobile factory. My net outlay is $100 million. My profit is zero. Every new item I make brings back in cash exactly what it costs to make the copy -- so the net result is the same. It's no different that the good is priced at $0 or $20,000 -- so long as the market is competitive.

So why aren't the same people who insist that you can't compete with free whining about any other competitive market situation? Because they know that, left unfettered, the market adjusts. The makers of automobiles keep trying to adjust and differentiate their cars through real and perceived benefits (such as brand) -- and that lets them add value in a way that they can make money and not have to worry about having products priced at marginal cost. If a company can't do that, it goes out of business -- and most people consider that a good thing. If you can't compete, you should go out of business. But, when it comes to goods with a $0 marginal cost, even though the net result is identical to goods with a higher marginal cost, suddenly people think that you can't compete? The $0 price makes no difference. All that matters is the difference in price you can charge to the marginal cost. Everyone else learns to differentiate -- why can't those who produce infinite goods do the same?

The answer is that they already do -- even if they don't realize it. Why do movies still cost more than $0? Because there's additional value bundled with the movie itself. People don't buy "a movie." They buy the experience of going to the theater. People like to go out to the movies. They like the experience. Or people buy the convenience of a DVD (which is another feature bundled with the movie). They like to buy DVDs (or rent them) in order to get the more convenient delivery mechanism and the extra features that come with DVDs. In other words, they like the differentiated value they can get from bundled goods and services that helps justify a price that's more than $0. Just as people are willing to pay more than the marginal cost (in some cases a lot more) to get that car they want, they're willing to pay more for a bundled good or service with content -- if only the makers of that content would realize it.

So the next time someone says "you can't compete with free" ask them why? Every company that's in business today competes with those who aim to undercut the price of their product -- and the situation is absolutely no different when it's free. It's just that people get blinded by the zero and forget that the absolute price is meaningless compared to the marginal cost.

Not my work above - too lazy to explain it to you myself.

[Proculation]

BigKeithO BigKeithO:

Proculation Proculation:

Your point about supply and demand is only true with what you said: economics 101. We learn basic theoretical concepts in economics 101, to understand the concepts. But that's not real life.

We learn that in a truly competitive market with tons of same size companies who sell the exact same product, the price is where the supply and demand curves meet. That's theory. It doesn't happen in real life.

Here, follow this think and read the article. It will debunk your argument far more eloquently than I can:

Saying You Can't Compete With FREE Is Saying You Can't Compete Period
http://www.techdirt.com/articles/20070215/002923.shtml

That's why there are copyright laws.

[BigKeithO]

Proculation Proculation:

BigKeithO BigKeithO:

Proculation Proculation:

Your point about supply and demand is only true with what you said: economics 101. We learn basic theoretical concepts in economics 101, to understand the concepts. But that's not real life.

We learn that in a truly competitive market with tons of same size companies who sell the exact same product, the price is where the supply and demand curves meet. That's theory. It doesn't happen in real life.

Here, follow this think and read the article. It will debunk your argument far more eloquently than I can:

Saying You Can't Compete With FREE Is Saying You Can't Compete Period
http://www.techdirt.com/articles/20070215/002923.shtml

That's why there are copyright laws.

The same copyright laws that were enacted to:

"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries"

Those copyright laws? How does sending teenagers to jail and having ISP's snoop on your internet packets do that again? The same copyright that has been turned into a welfare program for the artists grand kids? Life PLUS 70 years in Canada? How does that promote anything?

Where is the public and the greater good in those laws? It seems to be they've been perverted beyond their original intent.

[Proculation]

Oh I've just seen I passed the 4000 posts mark ! wouhou

[PublicAnimalNo9]

RUEZ RUEZ:

PublicAnimalNo9 PublicAnimalNo9:

Nope, it's not considered to be theft in Canada. So I will continue to d/l whatever music I want, and do so LEGALLY until that changes

You can be proud to know you are depriving someone of their right to profit from their work.

Whatever colour you wanna paint it to maintian your point, whatever. The FACT is, it's NOT illegal in Canada. Period. Why should I give a shit about the rights of someone in another country to make a profit from the exploitation of other's talents?

As for the artists, I'd hardly call pennies a cd, "profit".
Artists make their money from concerts and merchandising. Record companies make money from cd's. And they rip people off in the process, artists and fans alike.

Back in the day when cassettes were where it was at, the Copyright Board of Canada(or whatever it's called) got a surcharge instituted into the price of blank cassettes that would be distributed to the record companies as an offset to the potential loss from dubbing blank cassettes with pre-recorded music.
The record companies still charged that offset in the price of their cassettes. It still goes on with cds today.

Part of their witholdings from the artists' royalties include a 25% packaging fee. This fee is ALSO included IN the price of a cd. So once again, they charge the same "fee" twice. Add to that, packaging doesn't account for anything close to 25% of the cost of the product.
Profit my ass. Shady business practice is more like it.

[Lemmy]

BigKeithO BigKeithO:

To explain this, it helps to go back to your basic economics class and recognize that, in a competitive market, the price of a good is always going to get pushed towards its marginal cost.

I don't know where you studied economics. You're talking about Marginal Cost without talking about all the other factors that determine price. In a competitive market, price is Marginal Revenue (all producers are price-takers). Marginal Cost just determines the quantity that each individual supplier will provide to the total market output.

BigKeithO BigKeithO:

Not my work above - too lazy to explain it to you myself.

Well, if you're gonna submit someone else's homework, you should check to make sure they got the answers right first.

[Proculation]

BigKeith, I've already said the model needs to be renewed, you don't have to convince me of that.
But as Lemmy said, you mixed the cost and the price of something. He explained it better than me. You put aside too much variables in your economic modelization.

[bootlegga]

BigKeithO BigKeithO:

bootlegga bootlegga:

Only if you play it on an iPod. Try and play it on anything else...nada.

The iTunes movies aren't DRM free either, IMHO. I can watch them on my PC, but if I want to download it onto a stick and play it on my TV (or Blu-Ray), I can't. That is because of compatibility issues (iTunes formats in a format my Blu-Ray player/TV isn't capable of playing). You can argue that that is the TV's fault, but I see it as ITunes locking my file to prevent me from watching it where I want.

With iTunes, you can only use it on an iPod. Hardly DRM free...

iTunes MUSIC is all DRM free now. DRM free means you can play it on any device you want, it is just a straight MP3 file. This move is... fairly recent I guess, you could be talking about old school iTunes.

Video files from iTunes are still full of DRM, you are correct about that.

Then it's changed from when I first tried iTunes. I stand corrected...

[BigKeithO]

Lemmy Lemmy:

BigKeithO BigKeithO:

To explain this, it helps to go back to your basic economics class and recognize that, in a competitive market, the price of a good is always going to get pushed towards its marginal cost.

I don't know where you studied economics. You're talking about Marginal Cost without talking about all the other factors that determine price. In a competitive market, price is Marginal Revenue (all producers are price-takers). Marginal Cost just determines the quantity that each individual supplier will provide to the total market output.

BigKeithO BigKeithO:

Not my work above - too lazy to explain it to you myself.

Well, if you're gonna submit someone else's homework, you should check to make sure they got the answers right first.

And the market will determine price. You seem to be confusing value with price. I value the air I breathe yet I won't pay for it. Same thing with file sharing, the market will determine the price. Your producers cannot force a price on consumers if they consumer doesn't think he is getting value.

We are talking about an infinetly copyable item here for $0 cost. So what ARE your other factors when it comes to digital music? Studio time? A mic, some free software and a laptop will do that. What else? Time to take a pay cut.

[Proculation]

BigKeithO BigKeithO:

Lemmy Lemmy:

BigKeithO BigKeithO:

To explain this, it helps to go back to your basic economics class and recognize that, in a competitive market, the price of a good is always going to get pushed towards its marginal cost.

I don't know where you studied economics. You're talking about Marginal Cost without talking about all the other factors that determine price. In a competitive market, price is Marginal Revenue (all producers are price-takers). Marginal Cost just determines the quantity that each individual supplier will provide to the total market output.

BigKeithO BigKeithO:

Not my work above - too lazy to explain it to you myself.

Well, if you're gonna submit someone else's homework, you should check to make sure they got the answers right first.

And the market will determine price. You seem to be confusing value with price. I value the air I breathe yet I won't pay for it. Same thing with file sharing, the market will determine the price. Your producers cannot force a price on consumers if they consumer doesn't think he is getting value. Time to take a pay cut.

Sure competition drives the price down. But in your model, you consider the price should be 0$ since the market is totally elastic and the supply curve is at 0. That's not true.

[BigKeithO]

Proculation Proculation:

Sure competition drives the price down. But in your model, you consider the price should be 0$ since the market is totally inelastic and the supply curve is at 0. That's not true.

Why not? You are competing against a free product. You name a song and anyone on this board could have it downloaded in seconds, that is competition even if the labels want to wish it away.

I don't believe that it should be free BTW, artist should get paid, they just need to find a way to convince people to pay them. Selling a music track in and of its self won't cut it anymore.