Comments (26)

• Valerio

  It's quite hard to imagine how MP3 sharing of music files may result in increased revenues. I am not sure that Professor Kirkpatrick would advise Sony or EMI to give away their catalogues for free to make profit out of file sharing.

  Published: May 21, 2007 9:39 AM

• Anonymous Pirate

  I can think of plenty of new bands that I first experienced through illicit downloads. I went on to buy entire discographies several of those bands. It is a way to determine if the band deserves my money.

  Published: May 21, 2007 10:05 AM

• livingplanet

  good piece. open source is the most dynamic. also, buyers are not static in time and place. as they earn more, they will eventually pay for quality, be it service or product. customized services/products are the way to go.

  Published: May 21, 2007 10:13 AM

• TLWP Sam

  Isn't this a case of blurring the line between free samples and theft? Of course there's plenty of people who don't want to pay squat for legimate products so that means they steal it if they want to? Or in a physical version of software piracy, B steals farmer A's cartload of apples that A was going to take to market to sell, but B knows that C, D & E don't want pay the rate for which compensates A for going to the bother of growing apples so B sells apples to C, D & E for 10% the usual retail value for apples and A can just blame himself for being too greedy and B merely give the public what they want, dirt cheap apples?

  Published: May 21, 2007 10:53 AM

• Michael A. Clem

  I suppose that it IS blurring the line, but if the result is more sales of the cd or dvd than there otherwise would be, should the company really be complaining about the theft? Would they rather have no thefts and fewer sales?

  Published: May 21, 2007 12:12 PM

• Adam Hazdra

  You might be interested..
  
  http://free-culture.cc/freecontent

  Published: May 21, 2007 12:13 PM

• RWW

  It's not theft in any meaningful sense anyway, TLWP.

  Published: May 21, 2007 12:44 PM

• JIMB

  Talk about an oxymoron. Should have named it the 'market functions of theft' or 'how painting the fence green makes it white'.

  Published: May 21, 2007 12:52 PM

• rtr

  Valerio: "It's quite hard to imagine how MP3 sharing of music files may result in increased revenues."

  It's quite simple, really. You get more songs in return than you can produce. Language exists, people talk, because by definition they increase their subjective valuation from inventing such. So when you download a song, strictly economically speaking, "increase your revenue", profit. Do we shed tears because one can't exclusively control what one posts on an internet blog? The lack of copyright protection for public speech has not resulted in its absence. How else would one explain that? Talk is cheap. And so is music.

  How else does one explain celebrity endorsements of products? How does one explain people talking about movies and television shows at the office water cooler, without explicit authorization to do so from the creators of that entertainment? Perhaps that's why, historically, if one wanted to garner a salary from the entertainment professions, one sought to be paid in advance, and not after the show.

  The joke is on those who thought they could patent the joke, or copyright a specific version of a joke. We are all laughing at them now. But it's ok for jokesters to rip off the Three Stooges and pretend it is their own original work? It's ok for musicians to rip off notes and chords and references, and pretend it is their own original work? It's ok for authors to rip off letters and words and pretend it is their own original work? Kids can't replay athletic accomplishments in their heads in dirveway fantasies without express written authorization? If they can't compete for a select spot as a political pundit, then as the judge from Caddyshack said, "the world needs ditch diggers too." Far too many musical "hobbyists" have been paid as "professionals". This is just the market assigning the correct value to their "leisure activity hobby work". The market especially does not want to pay for 10-12 songs they don't want when they only want one song. And there'd still likely be plenty of competition for fame and a decent advertising/patronage paid salary, from local "talent shows" to "the big leagues". And if they can't sell 10 million copies of a single song, that just means they're that much more rich, right?, as they have the market value of those 10 million copies all to themselves. lol

  Published: May 21, 2007 1:17 PM

• Jerry Kirkpatrick

  There are two issues underlying my article.

  The first is a practical one: what's a marketer to do when hit with a price attack? Use the legal system to defeat the competition (which in the past has included using antitrust laws and lobbying Congress to pass new laws) or creatively come up with new entrepreneurial ways of offering greater overall value to prospects than the competition? The RIAA could have been a leader in P2P file sharing technology; instead, they have become just another example of an industry using the legal system to maintain a leg up on innovative competitors.

  In Mozart's day, to give a contrast from before the age of copyright law, it was common to arrange popular opera tunes for wind ensembles, which tunes then became the rock'n'roll hits of the day. Mozart wrote his father once that he had to get busy arranging one of his operas (Marriage of Figaro?) before the copiers got to it. Mozart was interested in making money, so he did do his own arrangements.

  One more example from the late nineteenth century. Sheet music publishers tried to silence, or demand royalties from, the phonograph and player piano industries. In fact both technologies increased the sale of sheet music. From a marketing perspective, the latter should have paid the former a sales commission.

  The other issue underlying my article is the question of ethics: is piracy unethical or are copyrights and patents instances of monopoly power and privilege? Piracy means making copies; the innovator still has the originals to sell. Is piracy theft? It depends on your theory of property.

  I admit in this issue to being a long-time Objectivist who was weened on intellectual property as property. I'm not so sure it is anymore. Creative people are notoriously un-entrepreneurial. Could it be that they (feel that they) need government protection and monopoly prices because they do not know how, or do not want, to get down in the trenches of marketing and actually sell their products?? "God forbid," I can see many creatives saying, "that I should have to rub shoulders with those grubby sales people!"

  Mark Twain and Jack Valenti both advocated copyright in perpetuity. That's essentially what we have today: lifetime plus seventy years. That may kill creativity, so say Lawrence Lessig in Free Culture and Siva Vaidhyanathan in Copyrights and Copywrongs.

  Published: May 21, 2007 3:07 PM

• Jerry Kirkpatrick

  Mark Helprin in yesterday's NY Times argued for perpetual copyright. Lawrence Lessig has set up a wiki to rebut it.

  Published: May 21, 2007 6:34 PM

• Paleotechnic

  And so the argument goes—albeit mostly from those who are either employee programmers or have some small shareware business. Market research be damned; they take a righteous position. I find it interesting that two major players a.k.a. Microsoft and Adobe had earlier versions of their software that were patently simple to copy. Once the market matured however this was and is not the case. Neither company employs fools. Plausible deniability is claiming lack of adequate DRM technology at the time. Trouble is, this argument does not stand up to close scrutiny.

  Published: May 21, 2007 11:43 PM

• Flyer

  Firstly
  
  I get so annoyed by all these stupid "theft" posts/comments. - When will you people see that file sharing copyrighted material is NOT theft? - Ask yourself why NO file sharer EVER has been brought to trial and convicted for theft on this issue - the answer is clear - because it's not theft.

  Secondly
  
  Look at the word - "File SHARING" - personally I see the whole thing as a SOCIAL kind of activity - it's fun - and it's nice that so many persons are willing to SHARE the things they have on their hard dirives - completely for free. - Why should such an activity be criminalized - so the content industry can hold it's grip on - and keep control of us consumers?

  Thirdly
  
  The content industry claims that they're just protecting the artists. What artists? - Like Madonna - and other well known artist? - Ask yourself why someone should make millions - year after year - yes - even 75 year after their dead. Surely the work effort they've put into recording a particular CD can't be worth that much pay? - Besides - unknown artists don't earn a dime cause of copyright - they see P2P as a way to promote themselves - get more fame - and that way get better payed gigs - that's the way it should be - why should known artists live their life in leisure? - they should be out there - doing concerts - work like others.

  Thirdly
  
  The content industry claims heavy losses - There are howeven NO objective studies who can back up their claims - on the contrary -the few studies conducted - clearly show that file sharing hardly has any effect on sales - it has positive effect for the consumers however - cause now many can listen to music they else never would have listened to - or see a movie - the else may not have seen.

  Fourthly
  
  The whole copyright issue has gotten out of hand. - The content industry succesfully has lobbyd politicians and the press - the result is less freedom and less privacy on the web. - Ask yourself - has the FBI nothing better to do then hunting down students and other file sharers just to please content industry? - like maybe check out terrorists? - it's your tax $$$ in meaningless work - all these efforts just to prevent a phenomen that can't be stopped - not in the long run anyway

  OK - these are just a few of my opinions on the whole "file sharing" issue - and I'm sure that if people look more into it - they'll find additional arguments why the copyright act should be reviewed - this time for the benefit of internet users - rather than for some few big companies who try to keep status quo using ALL means. - Let people file share as much as they like - whatever material they like - as long no one makes profits out of it.

  Published: May 22, 2007 2:14 AM

• Rod Maingot

  If someone consumes the product of my work for anything less than the price I demand, it is theft. The argument over whether piracy may or may not have an economic function is irrelevant.

  Published: May 22, 2007 2:37 AM

• Valerio

  Most probably, my initial comment was too dry. I will try to be more explicit. The article's author makes the point that it is in the entrepreneur's interest to release free samples. While I agree for I can observe it in everyday life, I would not agree with extending the argument too far, and for a very simple reason: As long as we tell entrepreneurs what they *should* do, we are miles away from the austrian approach to human action. Should anyone find profitable to give away something for free, we can infer a posteriori that such action was taken upon the expectation of increasing profit, but no more than that. Conversely, if file sharing were a profitable choice for any entrepreneur, we can be sure that he will be alert enough to take advantage from it, as some emerging rock bands do. I am really not contending whether copyright law is consistent with natural rights or not, but I am sure we cannot substitute entrepreneurs' views with ours. As an austrian economist, I do believe we must take human choices for granted. If we depart from this basic axiom, we are back again to the nightmare of social planning.

  Published: May 22, 2007 2:59 AM

• Stephen W. Carson

  This article has been posted at Slashdot. See the lengthy discussion: http://slashdot.org/articles/07/05/22/0046258.shtml

  Published: May 22, 2007 6:54 AM

• Stephen W. Carson

  This article has been posted at Slashdot. See the lengthy discussion: http://slashdot.org/articles/07/05/22/0046258.shtml

  Published: May 22, 2007 6:55 AM

• Stephen W. Carson

  This article just made it to the front page of Digg: http://digg.com/software/The_Market_Function_of_Piracy

  Published: May 22, 2007 6:56 AM

• RWW

  Rod Maingo:

  What's the price you demand for your comment? I just "consumed" it, after all. (Well, as much as it's possible to "consume" a blog comment, a song, a program, or anything else that isn't scarce...)

  Published: May 22, 2007 11:44 AM

• Michael A. Clem

  As RWW pointed out, intellectual "property" isn't really consumed. After reading it or playing it or running it, it's still there, undiminished by use.
  

  Published: May 22, 2007 12:40 PM

• C.S.O.

  For another concrete example of how free advertising increases sales, just go to the Baen Free Library (http://www.baen.com/library/ ). No reason for a publisher or authors to give away the books if it didn't also increase sales.

  Published: May 22, 2007 2:52 PM

• rtr

  It's quite remarkable to observe the evolution of ideas on the internet. There is just mountains and mountains of posts across enormous differing sites. But you see over time competition bring out the winning ideas, in ever sharper ever succinct form. No individual can compete against the entirety of voluntary contributions endlessly refining and polishing "originals".

  Here's a good example: "Microsoft Retracts Patent"

  http://yro.slashdot.org/article.pl?sid=07/01/29/1639239

  Lots of good insight into how ugly, how absurdly arbitrary and overlapping, deliberately ignorant the whole process already is. It's inefficient competitive "legal" violence to enforce silence upon others, or necessary use of violence to not be silenced by others. Everybody is already just wildly throwing anything and everything as quickly as they can at the patent office to get as much to stick as possible. There's just so much hypocricy oozing out from under the "intellectual property" rug. This is going to be a rout victory for the free market. This is the p2p revolution heard literally round the world.

  Published: May 22, 2007 4:28 PM

• jjr

  The marginal cost of pirated software is not nill. There is a substantial time and network commitment required to get and make functional pirated software in this day and age.
  

  
  

  
  I would also argue that the marginal cost of open source software is also not nill, since there is a substantial educational and time component that must be a precursor to effective utilization.

  Published: May 22, 2007 6:53 PM

• Software Reseller

  Let's face it, piracy can help promote a product on some level. However, in a perfect world software manufacturers offer trial versions to serve this very same purpose.

  Published: May 23, 2007 4:35 PM

• Alvaro Augusto

  I'm affraid piracy can be compared to the offering of free samples only to a certain extent. After all, I've never seen Prada or Apple or Ford offering free samples of their products!

  Published: May 29, 2007 11:58 AM

• Peter Andersson

  Free samples is fine as long as the full product offers a significant benefit from the sample. The software industry has been using that model for ages with Shareware and various trial ware. However for software in particular you get very little added value beyond the pirated product. In fact the pirated product will be free of certain obstructions legitimate users have to face in order to validate their copy. Thus it can be argued that the pirated product actually holds a higher value than the original.

  The same applies to music as well, what is the added value of a digital song track if it's legally obtained as opposed to one which is not? The pirated version will also be free of protection and be much easier to move between devices. Therefore this product will also have a higher value.

  Digital rights management in various forms adds no value for the customer, it simply diminishes it as it restricts the freedom of the customer.

  I think we're far from a practical solution and there has to be really sweeping changes regarding the openness of the Internet in order for it to change. It is very likely that the rampant piracy will wind up reducing the currently very free environment we are enjoying on the Internet. I'm not a fan of piracy at all as I believe in respecting the wishes of what the creator wants his work to be used for and what he wants to associate it with. Pirates in general are very selfish but such is human nature.

  Published: July 9, 2008 6:11 PM