Comments (25)

• Jay D

  What is the business model for a digital-age anarcho-capitalist music industry?

  There are live concerts, I guess, but why would musicians sit down in a studio?

  Published: October 9, 2007 11:57 AM

• scott t

  i wondered the same thing. perhaps studio releases could be coupled with admissio to light shows at imax theaters for debuts.

  or selling autographed compact discs as keepsakes.

  micheal jackson could package a cd in an autographed white glove or something, maybe with a vial of cologne?

  Published: October 9, 2007 1:54 PM

• Kevin B

  I could be wrong, but from what I've heard musicians make the majority of their money from endorsements, sponsors, and shows. I've been told that the bulk of the profit from record sales goes to the label and distributors, etc.

  Published: October 9, 2007 2:07 PM

• RWW

  There are live concerts, I guess, but why would musicians sit down in a studio?

  Why would they need to? Their fans could record the concerts (if allowed to enter with a recording device) and provide free advertising.

  Published: October 9, 2007 5:29 PM

• IMHO

  This situation is ridiculous. They were acting as if the mechanics were burning discs and distributing them to the customers. Since the term "personal radios" was used, I assume the music was being received over the airwaves. Now I don't know what's involved when radio stations make arrangements with the record companies prior to broadcasting; but if the music was being sent over the airwaves, then it should be reasonable to expect that people are going to hear it.

  According to this kind of logic, any person or company owning a piece of artwork could be forced to hang a drape over it before granting someone access to the viewing area. I suspect that would result in a lot of bare walls.

  Published: October 9, 2007 6:26 PM

• kgderrick

  "Now I don't know what's involved when radio stations make arrangements with the record companies prior to broadcasting..."
  
  
  
  Artists receive a royalty of about six cents every time an artist's song is played on the radio (US market).
  
  
  
  BTW - is there anything wrong with the free market establishing copyrights for music? That is, a copyright that is not enforced by government. No one seems to ask or answer this question when it comes to IP, copyrights, etc.
  
  
  
  I would think that the free market would establish some sort of copyright system. Organizations now exists like ASCAP and BMI that monitor the radio, commercials, baseball parks, etc. that play music and make sure that the artist is getting compensated. Why wouldn't such a situation exists in absence of government? And if they would exists in absence of government force, is there anything wrong with it?
  
  
  
  It seems to me that such a discussion never happens or is just simply dismissed.
  

  Published: October 9, 2007 10:23 PM

• Anthony

  Full-blown IP could certainly occur in nonlibertarian societies under anarchy.

  Copyright etc. can exist in absence of the State, but they'd have to be contractually negotiated, something nowhere as potent as current IP laws.

  Published: October 9, 2007 10:27 PM

• kgderrick

  Exactly...but that never gets discussed here. It's always the same blog over and over again when it comes to this subject.

  Why is it that a group of 200 or so people can sit through Walter Block at the ASC explaining how someone can tunnel under his house to complete a private road and be taken seriously and a free market copyright system is never explored?

  Is it because it is just easier to write things like car mechanics being sued for copyright infringement? How many articles does Kinsella need to write that say the same thing. Yeah...I get it, IP is bad.

  Entire books have been devoted to private roads, private defense, private courts ect. but nothing devoted to free market copyrights. Why is that? (If there is something on the subject please let me know because I would love to read something thoughtful and new on the subject.)

  It's very easy to be sarcastic in a blog, but why not an intelligent post on the entrepreneurial possibilities?

  BTW - Radiohead is allowing consumers to download their new CD for whatever the consumer wants to pay. Why isn't there a blog on such a development? As far as I know, a major recording artist has never done something like this before.

  Published: October 9, 2007 11:04 PM

• Jean Paul

  I think lots has been written on how the world might look without state-enforced copyrights.

  Direct contract with everyone you want to abstain from copying is one way.

  Turning access to IP into a pure service model (such as live music performances, big screen movie theaters, or online services like hotmail) is another route.

  It should also be noted that the cost to acquire IP 'illegally' is not zero - the 'thief' must spend time and effort searching for, waiting for the download of, and probably doublechecking the quality of the acquired IP. Bandwidth feels free but it isn't, which also puts a finite cost on distribution. Despite the convenience of filesharing, illegal downloading still carries a palpable nonzero cost. High-quality IP with the endorsement of the producer could easily be distributed legally for a small monetary price that undercuts the time-and-effort cost of 'stealing'.

  I think there's tons of approaches to protecting IP on the free market, and it would be very cool to have a free market where they could be tried, free from involuntary interventions and aggression.

  I think that's the key point that bears repeating and I applaud the stream of articles that continue to do so.

  Published: October 9, 2007 11:49 PM

• kgderrick

  Jean Paul - I'd love to read some scholarly articles on free market copyrights. Maybe I'm not looking hard enough. I've been reading mises.org for as long as I can remember and have gone to the last 4 or 5 Austrian Scholar Conferences, but I really can't remember anything on the subject that is related to a free market copyrights or protecting IP on the free market.

  It's nice to see that the ASC for 2008 will include such topics. I only hope these type of issues are examined and not more of the same. That is, picking a ridiculous story and showing how ridiculous it is. Or cheerleading for people who download mp3s or file share.

  BTW - I believe turning IP into a pure service model is a very viable route with regard to the free market and music. The most successful musicians make most of their money touring and selling merchandise. Most musicians can't even recoup their costs from the production of their CDs that are produced by the record company. However, in most music contracts record companies cannot recoup their costs from the artists merchandise and live shows. Therefore, it seems logical that artists would be able to use their CDs (mp3s) as advertisement to get people to buy their concert tickets and merchandise. Maybe that is what Radiohead is thinking when they put their new CD up on their website and are allowing people to pay what they want for the mp3s. That is, use the mp3s as advertisement costs and then sell out 20,000 seat arenas 5 nights a week at $100 a ticket. Spend $1 million to make their CD and gross $1 million to $2 million a night on live shows.

  Published: October 10, 2007 12:34 AM

• IMHO

  kgderrick,

  (If there is something on the subject please let me know because I would love to read something thoughtful and new on the subject.)

  I know a libertarian who is a copyright/patent attorney. I will ask him if he knows of any literature the next time I see him.

  Published: October 10, 2007 12:38 AM

• Anthony

  Derrick, you'd also be advised to ask Stephan Kinsella for some sources on the matter. I am sure he can provide some.

  Re CDs, I am not sure how long they will stay around. MP3s are taking over fast, especially with the advent of things such as the iPod and iTunes.

  Published: October 10, 2007 9:03 AM

• IMHO

  Anthony,

  In terms of quality, I was under the impression CD's were preferable because when you download an MP3, the file is compressed, and as a result, the sound is not as clean. Or am I wrong on this?

  Published: October 10, 2007 12:32 PM

• Kevin B

  IMHO,

  Different compression ratios are available, from high compression (for faster downloads) to lossless.

  I would say any difference in sound quality between a CD and an mp3 bit rate of 320kbps would be hardly noticable, if at all.

  Published: October 10, 2007 2:16 PM

• IMHO

  Thanks, Kevin

  Published: October 10, 2007 6:49 PM

• kgderrick

  Actually the difference between a CD and an mp3 is quite different. Mp3s are lossless and a lot of data is lost in the sound file when compressed into mp3 format. Mp3s roll off on the high end and the low end to save file size (along with other measures to decrease the file size).

  The interesting issue is that today's youth have grown up listening to mp3s; and therefore, are used to the sound quality being poor. Their ears have adapted to this poor sound quality. It is also interesting to note that recording quality has increased significantly, so the artist can record in sound quality that has never been reproduced before. So sound quality has increased but the public wants the poorer quality but more portable substitute...and the record industry is finding it very hard to adapt; and thus, are losing out on a huge potential market. The consumers have switched preference but the record industry is stuck in their old paradigm.

  Further, some artists are offering their new albums on DVD and using the higher quality standard that cannot be put on a CD. This is another example of artists being ahead of the industry. The other example being Radiohead offering their new album as an mp3 download and asking the consumer to choose what price they want to pay.

  Clearly, some artists see that they need to change the way they do business. And these new ways have potential when we talk about a free market in copyrights.

  Published: October 10, 2007 8:12 PM

• Justin

  "Mp3s are lossless"

  Mp3s are not lossless-- they are lossy.

  Published: October 10, 2007 9:40 PM

• kgderrick

  You are correct...I flipped the term (i didn't re-read my statement), but the analysis remains the same.

  Published: October 10, 2007 10:07 PM

• Peter

  BTW - Radiohead is allowing consumers to download their new CD for whatever the consumer wants to pay. Why isn't there a blog on such a development? As far as I know, a major recording artist has never done something like this before.

  FWIW, The Grateful Dead were well known for encouraging people to record and share their performances.

  Published: October 14, 2007 2:30 AM

• Peter

  The interesting issue is that today's youth have grown up listening to mp3s; and therefore, are used to the sound quality being poor.

  The sound quality is hardly "poor". Most of the MP3s I see are encoded at 192..320kbps; at 192kbps MP3 is supposedly indistinguishable from the original, even to experts. You can get a lower bitrate (= smaller file) with the same or better quality using Vorbis ("Ogg"). There are also lossless codecs that typically provide 40-50% compression with no signal degradation (e.g., FLAC)

  "It is also interesting to note that recording quality has increased significantly, so the artist can record in sound quality that has never been reproduced before."

  True - which is to say that listening to even low-birtate MP3 is better quality than anything available for merely tens of thousands of dollars worth of audio equipment not many years ago...

  
  Further, some artists are offering their new albums on DVD and using the higher quality standard that cannot be put on a CD.

  Higher quality? DVD audio is usually rather lower quality than CD audio - MP3, in fact, or another lossy compression scheme (AAC).

  Published: October 14, 2007 2:41 AM

• kgderrick

  Peter - CDs can only store 44.1 kHz/16-bit audio; whereas DVDs can hold bit depths at 24-bit and sample rates above 96 kHz. Thus, the audio quality is much better than a CD! In fact, most artists record at 96 kHz/24-bit and then have to apply dithering (adding noise to the recording) at the last stage of mastering to convert it to a CD audio format of 44.1 kHz/16-bit. Therefore, audio quality is lost!

  Then after dither is applied to the mastered audio the audio is further degraded by encoding it to mp3. Yes...that quality might not seem like much but it is certainly far below the quality that the original audio was recorded. Mp3s generally leave "artifacts" when encoding and roll off the high and low end of the file; thus the sub woofer stuff is not heard (actually "felt") and the highs aren't so "airy."

  To further complicate matters the "loudness wars" (that is, making a bands CD louder than another bands) is further degrading the final product. Record companies want their artists to be the loudest when you put their CD into your player. This has caused masterers to limit the music during the mastering process. Limiting cuts the tops off the musical wave; thus, causing more distortion in the final product.

  So, the music that starts in 96kHz/24-bit quality when recorded and mixed has dither applied to it (adding noise to the recording) to get it down to 44.1 kHz/16-bit. Masterers limit the audio signal to get the track really loud (cut the tops off the audio's wave thereby adding distortion to the audio) and then the audio is encoded in mp3 format where the mp3 encoder throws away musical information to cut the file size down to a smaller size. This all adds up to the quality of the original music being degraded significantly.

  The fact you do not think the sound quality is poor as a result of the above process shows how the public has become used to the poorer sound quality. Thus, my statement that this is an interesting scenario between high quality recordings but lower quality recordings demanded.

  However, the point of my original statement was to ask why there isn't any discussion about a free market in copyrights occurring. The blogs tend to point to how ridiculous IP, patents, copyrights,etc. are (which I agree are ridiculous) but hardly ever talk about how a free market might go about establishing copyrights.

  The example of Radiohead was to show how turning IP into a pure service market might actually work. That is, artist would use their music as advertisement for their live shows. Yes...The Grateful Dead have encouraged their fans to record their shows and other bands have done this as well...but I've never heard of a major recording artist ask the consumers to pay whatever they want for their music.

  Finally, correct me if I'm wrong but I believe The Grateful Dead released one of their CDs in DVD Audio (the album name escapes me) and the quality was much better than the original recordings.

  Published: October 14, 2007 3:04 PM

• Peter

  CDs can only store 44.1 kHz/16-bit audio, whereas DVDs can hold bit depths at 24-bit and sample rates above 96 kHz

  Red book (audio) CDs, yes; of course data CDs can hold anything you want - and many CD players can play at least some content on data CDs (i.e., some MP3 files). The only DVDs I've seen have 48kHz MP3, AC3 or DTS audio - all lossy formats. The only real advantage is more channels (surround sound).

  The fact you do not think the sound quality is poor as a result of the above process shows how the public has become used to the poorer sound quality.

  But the public never had 96kHz 24-bit audio devices, and thus was never used to better audio quality and has not "become used to poorer sound quality" - quite the contrary; until the CD became popular, we were used to much worse quality. Agreed, many recent rock CDs suck for the reason you mention above under "loudness wars" - being overly compressed and peak-limited - but that has nothing to do with the format.

  Recording above 44kHz seems to me entirely pointless - normal humans can't hear above about 20kHz (and most people out of their teens can't hear anything near that high - hence those "stealth" 17kHz cell phone ringtones that are supposed to be inaudible to adults). All compression artifacts due to MP3 that matter (i.e., are audible) vanish at around 200kbps, so 320kbps MP3 might as well be lossless as far as playback is concerned (just don't use it for editing, where you're repeatedly recompressing).

  Not that I'm advocating MP3 - I much prefer Vorbis.

  Published: October 14, 2007 9:20 PM

• Peter

  However, the point of my original statement was to ask why there isn't any discussion about a free market in copyrights occurring. The blogs tend to point to how ridiculous IP, patents, copyrights,etc. are (which I agree are ridiculous) but hardly ever talk about how a free market might go about establishing copyrights.

  What's to discuss? You can't have copyrights without government - i.e., in a free market.

  
  but I've never heard of a major recording artist ask the consumers to pay whatever they want for their music

  I think that's idiotic. Much better to suggest an amount. The way they're doing it, it sounds like they don't care (well, in fact, says so outright), in which case nobody else is going to care either, so they won't make any money.

  Finally, correct me if I'm wrong but I believe The Grateful Dead released one of their CDs in DVD Audio (the album name escapes me) and the quality was much better than the original recordings.

  How could it be better? It must have been sourced from the original recording.

  Published: October 14, 2007 9:30 PM

• kgderrick

  Of course I'm talking about Red Book Audio and not Data CDs. DVD-Audio is slowly coming around. Rush's new album is offering this format in Limited Edition as well as the aforementioned Grateful Dead album. Their are many more but it's pointless to list them all. A lot of artists are making their music available in this format to entice the consumer to purchase their new albums instead of downloading them or file sharing. It's a basic market response.

  I think the loudness wars has had an effect on the market. As quality increased in recording the loudness wars took over so the industry degraded their own sound quality. As people began listening to mp3s the degradation wasn't as pronounced, but pronounced nevertheless. People were used to the distortion in the audio. I find it hard to believe that some of the albums made in the 70s or early 80s don't sound good or better. ACDC's Back in Black still sounds fantastic as well as a bunch of Led Zeppelin albums. Even U2s Joshua Tree is fantastic (it was put on record, CD and tape).

  Mp3s don't just throw out the high and low end of an audio track that people can't hear...they discard a lot of the stereo image of an audio file. An mp3 only keeps the original stereo image when the left and right speaker are different, when the encoder believes that they are the same (and they rarely are) it discards the left and right info. An mp3 encoder also discards audio that appears to be masked by other instruments. So if a kick and bass hit at the same time (which they do a lot of the time) then the encoder will get rid of this info because it believes it is redundant. Of course it discards a lot more info...but that doesn't need to be discussed here.

  BTW - if mp3s "might as well be lossless" then why are artists recording their audio in 96 kHz/24-bit and not just converting their individual tracks to mp3?

  But in the end...it's just a matter of opinion and the public has spoken. They want their mp3s or other comparable format. When the consumer is listening to music with ear buds or in the car the poorer sound quality isn't that important.

  Also, thinking that Radiohead is "idiotic" is interesting. The "pay what you want" format will most likely create a buzz for their new album and I'm sure they will sell out all of their upcoming live shows (hence the idea of IP as a pure service industry). Selling tickets at roughly $100 a ticket and selling out 20,000 seat arenas surely will pay in the end. In fact, most artists make most of their money on touring and merchandise because the record company can't recoup their costs from these items, unless of course it is written in their contract (which I believe Marc Anthony did).

  Finally, why can't some form of copyrights exist in a free market. If it is contractual the government wouldn't be needed to enforce it. Why couldn't an artist sell his music with a contract attached to it?

  But then again, this goes back to my original complaint that these options are not explored. It is easier to point out the ridiculous as this original blog did, but not offer any sort of concept of how it might work in the future. If private defense, private roads, private courts, etc. can work than why can't private contracts in copyrights? I don't think the answer is they can't! Almost every time a blog comes up on this issue it devolves into something else or gets sidetracked like this one has. I think Jean Paul at the top of this blog offered some examples of how it might work (IP as a service industry).

  Published: October 14, 2007 11:20 PM

• Peter

  An mp3 only keeps the original stereo image when the left and right speaker are different, when the encoder believes that they are the same (and they rarely are) it discards the left and right info.

  Well, there are several options there: MP3 allows single channel audio (mono), dual channel (two independent mono channels), stereo and something called "joint stereo", which saves space by storing only one channel and the difference between that and the second channel, from which it can reconstruct the stereo signal. Joint stereo is the most common. AFAIK, joint stereo is "lossless", in the sense that the reconstructed stereo signal is bit-for-bit identical with an equivalent stereo MP3.

  Finally, why can't some form of copyrights exist in a free market. If it is contractual the government wouldn't be needed to enforce it. Why couldn't an artist sell his music with a contract attached to it?

  He could. But that's not what copyright is; and if that's all you meant I can't understand what you mean by "these options are not explored", since it's brought up every single time copyright is discussed.

  Published: October 14, 2007 11:53 PM