Wolff at the doorMichael Wolff sees how pay per view fails, and talks to media execs:
The thing that I always try to say to the movie and music executives frothing at the mouth about this stealing issue (accusing my children and, one might fairly suspect, their own) is that everybody can’t be an outlaw. If everybody does it, it’s normal rather than aberrant behavior. It’s not so much the consumer who is on the wrong side of the law, but the entertainment industry that’s on the wrong side of economic laws.
For better or worse, the media business has created a world where consumers feel content is worth less and less and they are entitled to more and more of it. And now the chickens have come home to roost.
The veins on the necks of these execs are distended and throbbing, and they really have a hideous look in their eyes.
Posted 12:55 AM by Kevin Marks
A VC on labels' failing business modelTim Oren extends the power law discussion to music. I wish I could get hold of SoundScan data or even mp3.com's download stats to plot some power-law charts. I've already pointed to Bentley and Maschner's study that shows album charts follow power laws.
As a guy who spends a lot of time thinking about business models, it's interesting to use the recent discussions on power laws to construct an explicit framework analyzing the MP3 challenge to the music biz. Probably little original here, but it's a way of seeing why these guys react so viscerally, and just how badly screwed they are if they keep along the same path.
[...]While we don't have rock solid proof, we certainly have suggestive evidence everywhere from the evolution of television, to the number of links pointing to blogs, that the small-audience tail of the power law distribution grows by displacing money and attention previously given to large audience plays, be they television broadcasters, AOL, or multi-platinum music albums. If the soundness of your business model, your portfolio risk management strategy, depends on the size of the big hits, then this is a scenario for being nibbled to death by ducks. The ducks being those harmless looking niche and back label artists and their low-rent business models. What our exec wants is 20 to 30 of them on his list. What he's going to get are 3000 of them, and none on his list. And the blogs? We're the word-of-mouth medium that's going to do the same thing to the media and promotional business that exists in symbiosis with the labels.
Whether the RIAA truly believes that direct theft by MP3 filesharing is the root of their problems, I have no way of knowing. There certainly seems to be evidence that it's a wash - displacing some sales, but causing others. What is certain is it's just collateral damage compared to the mortal threat of channel conflict pinning the labels into place, while their audience is eroded by a power law distribution with a much longer, commercially viable tail.
Posted 11:20 PM by Kevin Marks
Praise and QuestionsDerek Slater likes mediAgora, and then asks:
Kevin talks about sharing music as a promoter as being something done between friends. In actuality, file trading is done between complete strangers. It could take other shapes, particularly if there were media companies provided more legal avenues to download digital media. But, it's likely that a lot of the trading will still remain in a P2P, stranger-to-stranger medium.
This may be so; the point is to provide an incentive for ongoing identity and reputation among Promoters, as well as rewarding those who add value by commenting on music, or collating it well. The determined non-payers will always have an outlet. Also, the need for 'media companies' is less clear lower down the power law curve - their cost structures don't fit, but independent Creators can be rewarded directly.
If that's the case, why won't this end up like Altnet? If you get on KaZaA you can get legal content through Altnet, but no one really does. Why? Because all of the legal content, pay-for-use content appears right next to the illegal, free content.
Sure, the promotion fee will make some people work within the system. But, will it make enough people do so?
Well, that depends on your definition of enough. Depending on how it is implemented, it could be set up as a way to legitimate existing downloaded content - it would then be feasible to offer amnesties and have a carrot rather than a stick for the existing downloaders.
If the music and movie companies aren't licensing their content online right now, why would they do it under this system? I know, there's Listen.com and such - but, really, we've got MusicNet, PressPlay, and Movielink. That's about it. What's going to change that under mediAgora?
I would not expect them to do so immediately - I would expect the independent creators to adopt it first, as they are excluded from the current system. My power law paper linked below suggest that there would be a lot of them, and that in aggregate they may outweigh the existing media companies. I suspect that in time the media companies would adopt the mediAgora system, where it made sense for them as an alternative to existing expensive distribution channels.
And what's to stop media creators from using DRM to limit legitimate private/fair uses other than copying? How will we embed in the system an incentive to not do that? Is the fact that limiting private/fair uses makes a product less valuable to the consumer enough to prevent such controls from being employed?
If I were running a mediAgora service, I'd make 'no DRM' a condition of participation for Creators. I've expiated at length before now on its futility. However I fully believe that it's inherent value destruction is enough to deter Customers, and this prediction has been borne out by the successive failures of all media distribution companies who rely on DRM (LiquidAudio, DataPlay etc.)
Posted 7:53 PM by Kevin Marks
Distributions of weblogsI've done a detailed analysis of Power laws as applied to Weblogs, Newspapers and Movies.
The conclusions I come to are:
- Weblog links do follow a power law
- This saturates less quickly than other media, due to low barriers to entry
- Therefore the many lightly linked weblogs outnumber the few heavily linked ones
You can discuss it here.
Posted 4:50 AM by Kevin Marks
Small BetsDavid Weinberger explains the idea that the Internet provides a marketplace for small bets, and that there’s a lesson here for the recording industry.
[T]he recording industry isn't as dead yet as it should be. Recording companies make big bets. That's what they're best at: They invest heavily in marketing a Britney and slight the garage bands that are, well, better than Britney. The record labels have succeeded in their big bets by torquing the market through marketing and now through legislation. Meanwhile, the market for small groups is barely a market at all. You can sell your band's music over the Web, but it's hard for buyers and sellers -- musicians and listeners -- to find one another. If we had such a market, musicians would see no reason for sticking with the recording industry as it's currently constituted. Napster had the makings of a market. So does Kazaa. And the recording industry is right to fear file swapping, not because it's currently free but because the instant it gets monetized, it will become a genuine market that obviates the need for the recording industry and its big bets.
Posted 3:22 PM by Kevin Marks
Nationalising filesharingBennett Lincoff has proposed A Full, Fair And Feasible Solution To The Dilemma of Online Music Licensing
Overall, this is a very clear statement of the 'nationalize filesharing' model. It concedes a lot of the key points - that DRM doesn't work, that existing rights don't fit well, and that streaming and downloading are indistinguishable technically, and that the taxes should apply to actual use, not all computers.
However, it suffers heavily from the 'internet as broadcast system' meme that prevents clear thinking. On the net, we are all creators, and all promoters and distributors. Coming up with a new model like this one that doesn't scale down to individuals is not going to solve the problem.
It does not address derivative works, (mashups etc.). It does not offer an incentive to work within the system rather than without it for customers, implying complex registration procedures for anyone joining in.
(Comment on it at the link above - I made it a QuickTopic forum)
Posted 1:24 PM by Kevin Marks