Results 1 to 18 of 18

Thread: Piracy versus the secondary market

  1. #1

    Default Piracy versus the secondary market

    So, a number of people have very strong opinions against media piracy. Be it games, anime, software, or even books, many people argue that piracy hurts artists and denies them the income necessary to survive and continue to make art.

    I don't wish to argue this point. I wish to discuss a related point: the secondary market.

    An artist is compensated equally whether someone pirates their movie, borrows said movie from a friend, or buys said movie second-hand. That is, not at all. The secondary market is not only legal, but it's recently been bolstered substantially by the Autodesk ruling in a federal court, which may pave the way to a full secondary market for older versions of, say, expensive Adobe software like Photoshop.

    More and more people are content to wait for their media, largely, I believe, due to the fact that there is simply so much more media now than there ever was. The urgency is gone for most things. Why buy a game new the day it comes out, when I can buy it for $5 less used a few days later? Why buy a game at all, when I can borrow it from my friend once he's finished it, and then lend it on to some other friend again?

    There's also the issue that many things, particularly software, have reached a sort of breaking point threshold of quality for most people. Old movies and old games are "good enough" for many, many people. I for example, could do just fine with a version of Photoshop even several years old. I need to buy the newest, expensive Creative Suite only because there is no way to buy an older version for less (yet). Once I can buy the old version on Ebay for whatever price the market bears, I disappear entirely from Adobe's customer pool. Their (possibly soon to disappear) artificial restriction on the secondary market is the only reason they can maintain such high prices.

    I believe that, even if piracy became entirely impossible, the secondary market will have the same long-term effect on all media. Durable goods, like the effectively indestructible modern forms of intellectual property, can be sold and re-sold, borrowed and lent, not just for a long time, but forever. A digital copy of a movie, so long as my first-sale rights are maintained, will exist forever, to be sold and traded again and again without restriction (even if no copies are ever made) for as long as there are people.

    Twenty years in the future, will I pay $20 to see the newest movie, or $0.00001 to see any of the thousands upon thousands of existing works to be borrowed and bought second-hand?

    The only way to prevent this is to take away our collective right to first-sale. Unlike with piracy, where there are valid moral arguments to be made, I see no such overwhelming case against first-sale.

  2. #2
    Bleda's Avatar Domesticus
    Join Date
    Jun 2007
    Location
    United States
    Posts
    2,278

    Default Re: Piracy versus the secondary market

    I think thats very intuitive. They counter the secondary market with programs like Steam, which in my opinion is a slap in the face to consumers. Nice post btw.


  3. #3

    Default Re: Piracy versus the secondary market

    The fundemental economic problem with the modern media market is the cost to produce one more unit is essentially nothing after the initial investment. And from a micro-economic perspective this means the price of the good should eventually go to zero.

    This is why black markets for media exist; the cost to produce a copy of AutoCAD, Titanic, Rick James' Greatest Hits etc. is nothing, so people will be willing to sell it for nothing. You can attach all the morality, legality you want to it, it is still a stark economic reality.

    Two techniques have been employed to change this reality 1.) Anti-piracy programs which require time and skill to crack, thus adding value to the good. (i.e. it "costs" something to get pirated media even if its not actual money) 2.) Open source, where the buisness model is to generate renevue through alternative sources other than the media itself, but the media promotes these alternate avenues (concerts for musicians, Sun systems support etc., open source "lite" versions, or online advertising a la the NY Times, product placement in movies)

    I personally think the open source model is going to prove more fruitful than the anti-piracy model as the latter is butting heads with a economic reality while the former is accepting that reality. The trouble is movies, music and PC apps have not really developed great models for doing this yet, with movies being the furthest behind.

    Product placement is the only way movies can make money while using an open source model, but that hasn't really been taken to the level where studio's get paid for every copy of a movie made.

    Steam is the only real model for making money from open source gaming, but they still rely heavily on selling apps, even if they have learned to draw people in using open source games.

    Music is the only industry that has a model that can turn pirated media into big bucks, because the more popular you make an artist/band the more you can pack concerts, the more you can demand for product endorsement and other gigs. Movies can't work like this because basically what you get from a pirated copy is basically what you get at a movie theatre.
    Last edited by Sphere; October 09, 2009 at 11:57 AM.

  4. #4

    Default Re: Piracy versus the secondary market

    Hmm, a mod starting a thread on piracy. I'm sensing a trap, so I shall tread carefully.

    The secondary market is a sketchy thing and both sides hold valid legal claims on re-selling products. The reason companies fight hard on this, and to an extent I agree with them, is they want to be the ones determining the market price and value of their product. Using software as an example, if after a month after release everyone who bought a brand new copy decides to go off and sell it for half the price of the retail tag. Well so long as there are no ill effects from buying the used product, there is no reason for people to spend twice as much on a new one. In order for the new copies to compete retailers must lower there prices much earlier then what is typically seen in the secondary market in order to actually push sales. Personally I don't not like it when the consumer has a majority say in the price of a product simply because the consumer is typically ignorant to the actual value of a product.

    This also would have ill-effects for the creators of the products in question. Developers, studios, authors, ect. the vast majority of their value determined by publishers and producers is volume sold. Losing a quarter of sales because of the secondary market could cost them millions of dollars or flat our rejection for their next project. As there is no legit way, and no real reason, to track the movement of used copies you fudge up the actual success of a particular product.

    Of course there are valid reasons from the consumer side as well. I bought the product, I now own this individual product, hence I have the right to do whatever I want with it weather it's to play it forever, pass it onto my grandkids, sell it on EBAY, or the little hole in the middle I have a particular right to do whatever I want with it.

    It becomes a shady legal area in reality, both sides have valid and legal claims. Do you actually own a product that has unlimited use of content created by another or is it simply a lease. Some companies like Stardock and there new GOO system attempted to find a middle ground. A publisher uses the GOO system, the consumer buys said product, the consumer may in turn sell there right to the product back to Stardock based on a pre-determined value, the product is then in a sense resold to another individual at the market price with no loss to the developer, publisher, and no real loss to the retailer. It's an interesting system and once perfected could make be a middle ground for the majority of both sides to stand on.
    Last edited by Cougar109; October 09, 2009 at 12:00 PM.

  5. #5

    Default Re: Piracy versus the secondary market

    This phrase comes up in many discussions of copyright: "Artists should be compensated for their art." It is assumed that a) Artists are inherently entitled to monetary compensation for their Art, and b) copyright is a mechanism for this compensation.

    I challenge both assumptions.

    Of course, what people actually say is usually "Artists should be compensated for their work". Below I'm going to distinguish between Art and Work, because confusing the two is exactly the problem.

    a) Artists are inherently entitled to monetary compensation for their work.

    I agree that artists are entitled to payment FOR THEIR WORK.

    WORK is labor exchanged for money. Employer and worker negotiate a fee, the labor is performed, and the worker is paid. Many artists are workers: they are waiters, baristas, truck drivers. They should be compensated for their work, and they are, which is why they work.

    Some artists perform a kind of skilled labor for money. This type of pre-negotiated labor is called a commission. Commissioned work is work, and artists are compensated for it, which is why artists take commissions.

    But artists are not inherently entitled to monetary compensation FOR THEIR ART.

    Art is a gift. An artist creates Art (not to be confused with skilled labor) on their own initiative. An artist "labors" in service of their vision, their Muse, the Art itself. The Muse alone is the Artist's employer. It's debatable whether the Artist can negotiate with their Muse before performing the labor — I certainly try to — but like most labor, terms are dictated by necessity. Just as economic necessity forces many workers into hard labor for low wages on their employer's terms, so does suffering force many Artists into labor on the Muse's terms. But unlike corporations and human employers, the Muse turns out to always have the artist's best interests at heart. I'd much rather serve the Muse than an employer; but the Muse doesn't negotiate a moneyed wage. Monetary compensation is not part of the deal.

    The Muse "pays" me in Life. "Do this," she says, "and you will Live. Turn away, and at best you will only survive." I do have a choice: I can make the Art, or not. I accept the Muse's terms. I perform the labor, and receive my "payment": Life.

    ART is negotiated with the MUSE. The "payment" is LIFE.
    WORK is negotiated with an EMPLOYER. The payment is MONEY.

    If artists want to be paid in MONEY, they should negotiate a fee before performing their work. That is the proper condition for payment. Or they can create work with no pre-negotiated payment, without demanding payment after the fact. That's fine too. But to then demand payment after voluntarily working on your own terms — that is extortion.

    Consider the Squeegee Man. He wipes windshields unbidden, then demands payment. He did the work; does he "deserve to be compensated"? Most would say no; if we wanted our windshields cleaned, we would negotiate this service in advance.

    If I decide to sit behind a desk, take calls, devise flawed business plans, and lie, do I DESERVE to be compensated like a bank CEO? No. The bank CEO's work was pre-negotiated. He gets $25 million in salary and bonuses because that was the deal BEFORE he sat down at his desk and did the work.

    Does the bank CEO deserve his compensation? Well, most people are questioning that right now. I'm surprised it's taken a massive financial crisis for that to happen, but at least folks are asking.

    Since we've been in a massive artistic crisis for decades, maybe people have given up on asking whether the top .5% of artists deserve their monetary compensation. If I sing and prance around on stage, am I entitled to $110 million a year? It's the same work Madonna does, and that's what she makes. But Madonna arranged to be paid in advance of the singing and prancing, and performed it as work.

    And if artists deserve to be compensated, then how much do they deserve? Isn't art priceless? How do you determine how much it's worth?

    We could let the market decide. That could work... IF WE GET RID OF MONOPOLIES. The Free Market only works without monopolies. Information monopolies like copyright destroy that system. I'm all for allowing the Free Market to function, but it can only function without copyright.

    Indeed, Madonna is not compensated as an artist; she is reaping profits from her information monopoly — that is, the copyright that restricts her Art. So if Madonna is your model, you aren't rooting for artists; you are rooting for monopolists. If your mechanism for "compensating" artists requires them to become monopolists and to grow and position their monopolies as monopolists do, then you are championing monopolies, not Art.

    Art is not a commodity, it is a gift. If you want to produce a commodity, negotiate its worth in advance. Art is made on the initiative of the artist. Otherwise, it's commissioned work, which obviously compensates the worker. But the the commissioner is often a corporation or investment group, who will expect a monopolist's return on their investment. So the pro-copyright argument is simply in favor of maintaining the oligarchy whose elites happen to be the main patrons of art in our age. It's like supporting monarchies because kings and queens patronize artists.

    This may be hard to hear, but: many artists who claim they just want to eat and pay rent are lying (perhaps to themselves). Most artists don't want a living wage — they want to win the lottery. Suggest to most filmmakers and musicians that "success" is about $75,000 a year, and they'll turn up their noses. You call that a jackpot? They're only in it for the millions, baby. If that means working a day job and remaining obscure, so be it. Millions need to be poor so that one can be rich; they're willing to do their time being poor, so that one day they can be rich at the expense of others. Their turn will come, they think.

    I suggest playing a different game entirely, because the lottery is a tax on people who are bad at math. But those kinds of artists want to play the lottery more than they want their art to reach people.

    I do not mean to suggest that all artists have this attitude. There are also those who would be quite happy with a living wage; this is good, because that's a much more realistic expectation for even a very talented artist. The problem is that our copyright discourse is dominated by the lottery attitude, such that when people say "Artists should be paid for the work" what they really mean is "All Art should be monopolized, so that some Artists can have a tiny chance of maybe getting rich one day."

    The best way for art to "compete" in a "free market" is to flow freely. The Internet makes it easy for an artist to give their work to an audience. It also makes it easy for audiences to return the gift. Giving is quite different from paying or being extorted. Money given is different from money coerced. It is a free transaction.

    Not everyone will like a particular work of art. I don't think people who dislike a work should be obligated to pay for it. Certainly works that offend, nauseate, or bore me, don't inspire me to support their creators. But works that move and inspire me also move me to support their creators. I am touched by the Artist's love, and want to offer something in return. Money is an obvious choice: the Artist can almost certainly use it. But it's not always the right choice. I'm moved by many Beatles tunes, but I'm not inspired to send a check to Paul McCartney. He doesn't need the money (not to mention he's a big time monopolist). However, money is almost always an appropriate gift for a non-rich (read: typical) artist. It will be appreciated, and it's not so personal as to be disturbing or threatening.

    The Internet makes it very easy for fans to voluntarily send money to artists.

    It's really simple. Art competes with other art on the basis of quality. The Internet allows it to spread, to reach as many people as possible. Those who enjoy it have an easy mechanism to give back to the Artist if they are so moved. Not everyone will be so moved, nor should they be. Not everyone has to like everything. Not everything can touch us.

    In conclusion:

    Artists are NOT inherently entitled to monetary compensation for their Art. However we as a society can decide to support the Arts. The problem with this is that 95% of the Arts sucks. Most of us don't want to be supporting artists that suck, nor allowing government committees to determine what is and is not worthy of support. My NYSCA grant rejection and its attendant comments have taught me never to trust government arts agencies. I'll gladly accept funds from them, but I'm acutely aware that they aren't reliably competent to separate the wheat from the chaff.

    The best way society can support the Arts is to allow Art to spread, and to continue to encourage giving money to artists. That seems pretty natural to most people anyway, and it doesn't infringe on anyone's freedom.
    http://questioncopyright.org/compensation

  6. #6
    Opifex
    Join Date
    Feb 2005
    Location
    New York, USA
    Posts
    15,154

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by Sphere View Post
    The fundemental economic problem with the modern media market is the cost to produce one more unit is essentially nothing after the initial investment. And from a micro-economic perspective this means the price of the good should eventually go to zero.
    That doesn't follow at all. The 'good' is not just the CD object, but the media that's stored on it, and that takes a vast amount of money to produce. That investment is entirely front-loaded, and is paid off through the sale of a large number of cheap copies.

    I personally think the open source model is going to prove more fruitful than the anti-piracy model as the latter is butting heads with a economic reality while the former is accepting that reality. The trouble is movies, music and PC apps have not really developed great models for doing this yet, with movies being the furthest behind.
    There is no way getting around the fact that great movies cost $100 million dollars to produce. The open source industry has produced almost nil profit, after 20 years of trying to perfect its model.

    Even with all the piracy the studios still make money, which shows that the current model is the way to go, and only needs to be optimized further: DRM music, no-copy DVDs, content-protection mechanisms, etc.

    For instance, DRM music is almost 100% in place. It already has all of the necessary copy protections from the operating system (Windows will simply forbid you to copy it). You have no where to go. The only remaining way around it is to burn and rip off a CD, but once the Burning-software companies, or DVD manufacturers, get on board there that will be the end of pirating music.
    Last edited by SigniferOne; October 09, 2009 at 12:54 PM.


    "If ye love wealth greater than liberty,
    the tranquility of servitude greater than
    the animating contest for freedom, go
    home from us in peace. We seek not
    your counsel, nor your arms. Crouch
    down and lick the hand that feeds you,
    and may posterity forget that ye were
    our countrymen."
    -Samuel Adams

  7. #7
    Denny Crane!'s Avatar Comes Rei Militaris
    Join Date
    Sep 2005
    Location
    Newcastle, England
    Posts
    24,462

    Default Re: Piracy versus the secondary market

    I'd agree with the quote.

    If a carpenter makes a chair and sells it on he loses all rights to that chair, even if it is a work of art.

    If society is to determine and give special protection to artists then why does that special protection guaruntee the biggest sellers so much money, why does it grant them exclusivity to monopolise the sales of their copyright with a certain state, if it is imported it is still being sold under copyright regardless. Unfortunately like with any government intervention you have distorted markets and people ending up ridiculously rich off the back of it. I've no problem with wealthy people but when it happens due to government market distortions then I do. A genuine business model that did not require special protections would evolve if government got out of the way.

    Why would it evolve? Well people like movies and games, and if they stop getting made then demand will stimulate a business model that works. Piracy with the internet is here to stay, you can't stop it. Therefore at some stage business models must adapt to it. What we have is a dinosaur clinging to life and being helped along by the doddering steps of the state

    The G man: ''ISP's you must ban them!!!!''

    ISP's: ''Well I guess we could''

    The G man: ''Another victory for the labour party and the G man, saving the economic world one bit at a time!''

    ISP's: ''You know we looked at the idea of banning and while we like the idea in principle we're just not going to do it, we could be forced I guess and eventually we might get around to tracing a user thus losing his money and sending him to a rival ISP.....right''

  8. #8
    CarbEast's Avatar Senator
    Join Date
    Aug 2007
    Location
    The best place on planet Earth - Russia obviously.
    Posts
    1,053

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by SigniferOne View Post
    For instance, DRM music is almost 100% in place. It already has all of the necessary copy protections from the operating system (Windows will simply forbid you to copy it).
    That's until you forbid Windows to forbid you to copy it.

    It's all in a day's work for bicycle repairman.

  9. #9
    Denny Crane!'s Avatar Comes Rei Militaris
    Join Date
    Sep 2005
    Location
    Newcastle, England
    Posts
    24,462

    Default Re: Piracy versus the secondary market

    DRM is being dropped not expanded.

  10. #10

    Default Re: Piracy versus the secondary market

    Games cost around 10-20 million dollars to make. But that really isn't much if you compare it to how much are going to be bought. Pirating digital games aren't like stealing a game from the shop. The hard copied games cost money to produce and manufacture. But digital copies are unlimited. Thats why when you go to Gamestop.com you never see a digital copy of a game out of stock. So in that case pirating a copy of a game isn't lost sales. Your taking Intellectual Property without permission but it is not stealing. Its Copyright Infringement.

    I do not condone piracy though. Its just the fact I like to point out.

    Here is a good way to reduce piracy in my opinion in P2P related issues.

    Many people will and are willing to pay a monthly price for all you can eat downloading. Just like most people go for the all you can eat foods rather then seperate purchases. Similar to when you buy something in larger quantities, you pay less then when you buy something in less quantities.

    So if you put a monthly price on P2P like about $100-300 a month for all you can download such as (Games, music, movies). This equates to quite alot.

    70,000,000 p2p users (40,000,000 alone in America). So 70,000,000 * $100-300 (The 300 depends, but ill put down $100) = 7,000,000,000

    Thats a 7 billion dollars a month. WOW

    But not every single p2p user will pay so lets cut the number down to 40,000,000 users.

    40,000,000 * $100-300 (Depends) So thats gonna be a wopping $4 billion a month which equates to a wopping 40 billion a year in income from p2p.

    All that is going to have to be done is that the music, game, movie industries negotiate with p2p company owners and make a deal.
    Work with Piracy, not against it.

    Right now, the industries make jack off of p2p.

  11. #11
    Denny Crane!'s Avatar Comes Rei Militaris
    Join Date
    Sep 2005
    Location
    Newcastle, England
    Posts
    24,462

    Default Re: Piracy versus the secondary market

    No one is going to pay 100-300 dollars to use a P2P.

    They would pay 10 to 15 pound with perhaps another 5 to 10 pound per month in advertising revenue per person equating to about 1 billion dollars per 40 million users. That is 12 billion per year which considering the gaming industry is worth approximately 10.5 billion per year makes it extremely worthwhile.

    As a business model it is raising that much money but that is just one potential source for revenue streams. Music models are rapidly being developed that would function effectively, such as free downloads/donations/limited editions/treasure hunts and of course the legitimate sources of income like concerts.

    Movies/digital media probably stretches into larger figures somewhere in the region of 10 billion a year for movies and another 10 billion for the TV industry in the USA alone. What amuses me is that people assume that this is an A or B situation. Legalising torrents would not automatically eradicate all revenue streams. Considering revenue streams are fairly static now with little loss and some growth despite the fact that torrents are easily available and risk free.

    I'd make the arguement that a legalised torrent system would actually stimulate growth and demand. It would increase revenue and demand.

  12. #12

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by Denny Crane! View Post
    No one is going to pay 100-300 dollars to use a P2P.

    They would pay 10 to 15 pound with perhaps another 5 to 10 pound per month in advertising revenue per person equating to about 1 billion dollars per 40 million users. That is 12 billion per year which considering the gaming industry is worth approximately 10.5 billion per year makes it extremely worthwhile.

    As a business model it is raising that much money but that is just one potential source for revenue streams. Music models are rapidly being developed that would function effectively, such as free downloads/donations/limited editions/treasure hunts and of course the legitimate sources of income like concerts.

    Movies/digital media probably stretches into larger figures somewhere in the region of 10 billion a year for movies and another 10 billion for the TV industry in the USA alone. What amuses me is that people assume that this is an A or B situation. Legalising torrents would not automatically eradicate all revenue streams. Considering revenue streams are fairly static now with little loss and some growth despite the fact that torrents are easily available and risk free.

    I'd make the arguement that a legalised torrent system would actually stimulate growth and demand. It would increase revenue and demand.
    Ok. My mistake. About $50 a month would be better. Would generate a $25-20 billion a year. Working with piracy rather then killing it is much better.

  13. #13

    Default Re: Piracy versus the secondary market

    The concepts of "buying" and "owning" media are becoming just as antiquated as the concept of selling media as a product, rather than as a service. Software-as-a-service, or media-as-a-service, is replacing the old model. Microsoft and IBM are excellent examples of an industry moving to the SAAS model. Why should I buy a server, operating system, and software (that loses value immediately) when I can rent it all in the cloud? Why should I buy a movie when I have Netflix? Why should I buy music when I have Pandora? Why should I troll the virus-infested wasteland of the P2P scene when I can get Gamefly for $9/mo?
    "fools and fanatics are always so certain of themselves, but wiser people so full of doubts." -Bertrand Russel

    "allergic to groupthink" -FuZe

  14. #14

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by The Dromedary Phalanx View Post
    ... An artist is compensated equally whether someone pirates their movie, borrows said movie from a friend, or buys said movie second-hand.
    That is not, necessarily, true. It depends on exactly how the artist is compensated. There are also stock-options to consider, should that arise as part of a contractual agreement. I would imagine while bonuses for sales goals aren't something an artist would wish to negotiate for, they wouldn't be unheard of as a general practice for others involved. It also reaches farther than incidence compensation for performance. After all, if a company's profits are hit by piracy and it goes out of business because it can not keep its electric bill paid, isn't the artist effected in turn? The artist is out of a job.. IOW - There are things to consider other than the Friday paycheck regarding "compensation", IMO.

    More and more people are content to wait for their media, largely, I believe, due to the fact that there is simply so much more media now than there ever was. The urgency is gone for most things. Why buy a game new the day it comes out, when I can buy it for $5 less used a few days later? Why buy a game at all, when I can borrow it from my friend once he's finished it, and then lend it on to some other friend again?
    For some games, that may be true. For gaming in particular, that is a valid point - If you're happy now, you may not be as quick to jump at the newest game.

    But, when you purchase and install a product, many times you are forced to agree to a License Agreement. Many times, that agreement will not include third-party distribution. Now, I agree, this is a sticking point and despite some EULA agreements, it may not be legal to enforce it. Who say's I can't uninstall a game after I have finished playing it then give it to a friend? However, the company is usually legally entitled to limit certain services including revocation/limitation of licenses due to unauthorized third party transactions.

    The biggest block to third-party transactions is that the company, who has established themselves as the ultimate licensee/holder of the product, is not party to those negotiations so, is not limited by any agreement or lack of one. IOW - They can refuse the conditions of any agreement they aren't a part of including allowing the game/product to work if it is dependent upon their active participation. (ie: online logins)

    On general secondary market issues: While older versions of software are out there, the problem is that newer versions, supposedly, offer unique benefits and new features that rapidly become industry standards or indispensable to those who utilize them. The industry supports this with a vengeance, rapidly pushing through new developments as "standards" and dumping any support for, say, older file types, etc.. This way, they keep their newest products on the front-edge while older products are phased out by users because they simply don't work either as well or, in some case, can't work at all.

    Image editors (and similar) are a bit different as the final product usually complies with third-party standards. ie: .jpg/.gif/.png etc.. So, they may have locks on certain proprietary filetype versions and compatibility issues they say are "necessary" but, in essence, just provide incentives for people to buy new versions of the same software. The incentive for many users is simply not as great and can be heavily effected by price.

    I believe that, even if piracy became entirely impossible, the secondary market will have the same long-term effect on all media...
    I'd agree and disagree, depending on the media. The fact is that people WANT new things and will get them when they can afford to. For games, it depends on the individual. I'm happy with the games I have now but, if something I really want comes out and I can afford it, I'm going to buy it even if I could save %50 two years later. I don't want it two years later.. I want it NOW! If it happens to be a huge hit, I may be motivated not based on the price but on cultural/social issues. If all my friends are playing "OMGZBBQ MMORPG" because it's so spectacraptically awesome.... I will be that much more incentivised to buy it now. (Inventing words is fun..)

    For industrial applications, I'd have to disagree, mostly for the reasons I posted above. Competition amongst possible customers is fierce and if a new application comes out with great features, you're going to be interested in buying it not based on its price alone but by how much you could save or make if you had access to those features. So, the product's box price isn't so much of an issue - it's what you can do with the product itself. If a new render application allows real-time server-farm rendering at production quality and you can save millions in development costs and reap those rewards plus hit the market on time.. you're going to buy it, no matter how much you could save if you waited a year or two.

    Movies, music.. your's may be a valid point. Passive entertainment is passive.. there could be all sorts of things effecting that and it could be much broader than other forms. So, the chances it could be hit hardest are greater, IMO. I don't "need" the newest movie or song. However, I may also want to participate in the social/cultural stir created by the latest movie or song by actually owning a copy of it.

  15. #15

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by SigniferOne View Post
    For instance, DRM music is almost 100% in place. It already has all of the necessary copy protections from the operating system (Windows will simply forbid you to copy it). You have no where to go. The only remaining way around it is to burn and rip off a CD, but once the Burning-software companies, or DVD manufacturers, get on board there that will be the end of pirating music.
    Until someone makes an open source DVD burn software. Oh wait, it's already here.

    Hellenic Air Force - Death, Destruction and Mayhem!

  16. #16

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by Sphere View Post
    The fundemental economic problem with the modern media market is the cost to produce one more unit is essentially nothing after the initial investment. And from a micro-economic perspective this means the price of the good should eventually go to zero.

    Why is pricing information goods at their marginal cost of almost nothing a problem in your view?
    "Our opponent is an alien starship packed with atomic bombs," I said. "We have a protractor."

    Under Patronage of: Captain Blackadder

  17. #17

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by SigniferOne View Post
    That doesn't follow at all. The 'good' is not just the CD object, but the media that's stored on it, and that takes a vast amount of money to produce. That investment is entirely front-loaded, and is paid off through the sale of a large number of cheap copies.

    The difference in information goods, such as music or video games, is that the "vast amount of money to produce" is essentially a one-time cost.

    In other words, with music to copy a digital song that has already been produced costs next to nothing. This is dramatically different than classic manufacturing where production has a cost per unit for sale. With modern digital information goods, there is only the initial cost of production not a recurring cost every time an additional unit for sale is produced.
    "Our opponent is an alien starship packed with atomic bombs," I said. "We have a protractor."

    Under Patronage of: Captain Blackadder

  18. #18

    Default Re: Piracy versus the secondary market

    Quote Originally Posted by chilon View Post
    The difference in information goods, such as music or video games, is that the "vast amount of money to produce" is essentially a one-time cost.

    In other words, with music to copy a digital song that has already been produced costs next to nothing. This is dramatically different than classic manufacturing where production has a cost per unit for sale. With modern digital information goods, there is only the initial cost of production not a recurring cost every time an additional unit for sale is produced.
    (This post is more of a side-topic. But, within reason for the thread, I think.)

    In a sense, very true.

    In fact, if one looks at various industries and professions in the World, one would find that those with the highest incidence rate of "rich" people come from industries that specialize in a one-time-cost-manyfold-return products and services. Investment advisors, bankers, lawyers, etc.. These are people who's services (products) have a stable cost and it costs them the same amount to provide that service yet that service is used many times over OR it has the potential to have many returns.

    ie: It costs the same for a stockbroker to trade one share as it does for them to trade a bajillion shares- One keystroke.

    Successful artists benefit from this model. But, their profession can't be said to be as easily exploited by individuals. There are plenty of starving artists out there.

    (The book "The Black Swan - The Impact of the Highly Improbable" by Nassim Taleb is an excellent read if you're interested in that subject along with the effect of events, mostly unpredictable in their specifics, that have enormous significance. )

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •