Friday, August 30, 2002

Outted by the Doc Doc challenged me to go public with the stuff he and I have been discussing, so now I face the obligation to write daily once started. I mean, you've got to be reluctant to blog unless there's something worth saying and, if there is, there's probably something there every day. Failing to post something is the blogging equivalent of link rot. My problem lies in having the persistence to dredge it out every day and, once exposed, face how shallow it is compared to the natural writers I enjoy, like Doc and Dave and David and all the rest. But it seems, well, lazy to sit on the sidelines. Lurking is shirking. The Discontented What do you call content companies - big media - when their content escapes their control? The discontented? On Monday Doc and I were discussing copyright. Since then I've been wondering if the current fight is a smoke screen. Maybe it's a ploy by the Discontented to keep their price fixing in place while calling it a copyright issue. Did you ever wonder why a 25 cent plastic disc costs $15-$25? Must be because the discontented are a cartel, like OPEC. Unlike OPEC, they're subject to US laws, which never seems to come up. The current copyright fight is crucial to our cultural viability, but if there's another agenda, it's worth recognizing. No matter, the digital revolution will finally expose the illusion that they're selling atoms and not bits. They're going down like every other cartel that couldn't embrace change. In 1877 Alexander Graham Bell offered his patent to Western Union for $100,000. They deliberated for a few seconds and concluded there was no future in voice over wires (pdf). Western Union thought they were in the Morse Code business, but they were really in the communications business. At that time, Western Union offices were monuments to the power of wired communications. Notice how impressive they are now. When airplanes started carrying a few passengers, the dominant railroads could easily have taken over all air travel but passed on the opportunity. I guess they thought they were in the business of filling railcars, not in the rapid delivery business. At that time, railroad stations were monuments to the power of connecting people with each other and the goods they cherish. Notice how impressive they are now. Now the music labels are reluctant to deliver digital content. They think they're in the plastic disc business but they're really in the music delivery business. (When music was on records, there was a vibrant industry producing and etching the vinyl to make records - companies that produced and delivered little black beads to the record factory; lawyers and managers and workers and jobbers who made sure the product was good and improving; R&D to produce better material for better hi-fi, and better record cutting machines and recycling of all the vinyl scraped out of the grooves, etc., etc. The CD put all those people out of business in a couple of years and the labels never looked back. George Lucas wants to do the same thing to photographic film. Where's the uproar?) Maybe it's time to stop fearing these whiners and start ridiculing them as the luddite dodos they are. Just because our medium-of-choice has evolved from the written word to music and video doesn't mean we're actually dependent on what they produce. They're dependent on our continuing perceived appetite for their stuff. Maybe we're just growing out of it, and that's what they're afraid of - and having to compete with each other. So much has changed so drastically since 911 that we're properly concerned everything will be changed, presumably in favor of powerful political contributors. But the natural enemies of the dozen or so discontented media companies are arousing themselves. Verizon has rejoined the fight they thought was settled by the DMCA, and the tech companies echo Andy Grove's resentment. Collectively, they're many times larger than the content pushers, which are pretty small potatoes compared to the traditional tech and industrial companies they propose to manipulate. No surprise: like many grownups, the people running big non-content companies (often sixty-somethings) don't have time to inundate themselves in the fruits of the Discontented. They think movies and CDs are peripheral to the "real world", and maybe they're right. If most of the content stopped overnight, would Andy Grove or Lou Gerstner or Gates or Jobs give a shit? Probably not. Announcement: The media companies are more afraid of each other than they are of teen pirates. Is that why they really don't want to offer comprehensive libraries for download on demand? The smart people in the business must know there's no future for entertainment intermediaries unless they can use copyright laws to fix prices online the way they have in meatspace. Even that's a long shot. Here's how it's likely to play out: Eventually the producers will offer legal digital content on line, just as it became available on VHS and cassette, despite their initial effort to kill the technology. Initially, download fees will reflect the price-fixed levels we're used to paying. if that's true, then... As the delivery means are refined, each company will eventually expose its entire inventory and then the competition will start in earnest. if that's true, then... Without the retail channel and physical production as counterweight, content prices will plummet. There's no cost for a download, and no barrier to specials, discounts or site memberships at decreasing prices. Like an airline seat near departure time, the risk to a content site in a competitive environment is to see a sale not made as midnight approaches. Unlike an airliner, there's no shortage of seats on a digital site. if that's true, then... With real competition, the price of a download will approach the marginal cost of delivering it: $0.00. if that's true, then... As someone pointed out, that's the end of the money, the parties, the girls, the drugs and the prestige. It all gets exposed as the bubble it really is. No wonder they're freaked. The only force that could prevent that price pressure would be OPEC-style price fixing. And that's where we the illusion of, cost-related non-fixed pricing breaks down. More bad news for Jack and Hilary: when we decide it's time to stream legal digital entertainment, we're not as brand-aware as the labels and studios would like. We don't have a clue what label or studio produces what. If Paramount or Columbia has a lousy download site or higher pricing, we'll be just as happy with something over at Sony or Virgin. And God forbid we re-discover classical or jazz! We'd get in the habit of comparing new content to stuff that's stood the test time. As we learn how to rate tracks and films, nothing keeps an artist from self-producing and self-serving. For the first time in history, artists could be as self-serving as their producer! 8:46:01 AM    comment []

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