All Episodes
Previous Next
March 28, 2006 - Freedomain Radio - Stefan Molyneux
40:01
164 Intellectual Property Rights Part 1: Challenges
| Copy link to current segment

Time Text
Good afternoon, everybody.
It's Steph.
I figured out the date.
It's the 28th.
It's Tuesday.
It's March, and it is 2006.
So I hope you're doing well.
It's time to talk about intellectual property rights.
They're good.
We need them, and the free market will handle them.
Thank you.
Thank you very much.
Please, don't everybody get up at once.
I'll take my time to leave the stage.
So I'm going to give you my two cents worth on intellectual property rights, focusing on the area of highest contention at the moment, which is the music industry.
Also known as the fat, parasitical bastards who prey on young talent.
However, I wouldn't want to reveal any bias up front.
So, what have we got here?
Well, intellectual property rights have already made the case for property rights in another podcast.
And so, property rights, you know, we own our bodies, we own the effects of our bodies.
You know, which is sort of what morality means, right?
You own the effects of your actions.
You stab someone, it's you who stabbed them, and you who should pay.
And so, since we own the effects of our bodies, obviously we own the things that we make for better or for ill.
And so, you know, we own a house, we own the crops, we own the bow that we turn the tree limb into, and we own recordings, right?
If you're a singer, you own the vocal cords.
You own your vocal cords, of course.
And you therefore own the product of those vocal cords, and so on, so on, so on.
Things get complicated when you get a recording engineer involved and somebody's got to be paid for developing the CD format and so and so and so, but generally that collaborative kind of stuff can be worked out through royalty streams and so on.
But when it comes to intellectual property rights in the recording arts, it's sort of important to understand what we're talking about.
What we're talking about here, we're talking about the recording rights, the rights to the property of the singers and the musicians and so on, who record this kind of stuff, and not the rights of the middleman.
That's fairly important.
The middleman is optional.
The middleman is optional.
Now, the middleman is somebody who's always at threat.
He's always a threat in a free market society because, as I've mentioned in another podcast, free markets are always, always, always trying to ditch the middleman.
You and your customers should be able to communicate directly and the middleman should only be involved when it's absolutely economically advantageous for both parties.
And this is very rarely the case in the free market because the free market does everything possible To get rid of the middleman.
So that's why emails go directly from you to your recipient and they don't get housed in some central place where you both have to log in to get and that person, you know, monopoly and so on.
That may be how it would work in the free market situation and we'll talk about spam and Trojans and worms and viruses another time.
But that's not the most efficient way to do it, just in terms of the transfer of information.
Again, it may be economically advantageous to do it, but we have to remember that the Internet is a public medium.
So we'll deal with that in a minute or two.
But the middlemen are always vulnerable, and that's pretty important.
And you wouldn't have, for instance, file sharing.
You'd have CD copying, but you wouldn't have file sharing, or at least it would be very unlikely that you would have it.
In the absence of the Internet, and the Internet of course is a state-created medium of information exchange.
It's hard to imagine how a private market would ever make money out of the Internet itself.
So it probably wouldn't spend that much time and money to develop it, but because it was developed by the government and people can hook into it, it becomes then a medium which has caused, you know, some benefits and some problems.
I mean, I don't know what the cost-benefit is of the Internet as a whole, but It certainly is not something that you would see coming out of the free market.
I suspect that if you took all of the R&D money that was spent since the early 60s to develop the Internet and amortize that over this, that and the other, the lack of profit, it would not be something that would be created.
So again, the free market is in a sense inheriting a problem like nuclear weapons that would never be created by the free market from the government.
So that's sort of important to understand.
This is not a sort of purely free market phenomenon.
So there's no competition being set up particularly for the Internet other than private networks within companies because the Internet's like free roads, right?
You don't develop a lot of competitive competition to free roads as long as they remain free.
Now, it's also important to remember that recording contracts are the contracts that artists sign with recording companies.
I'll show my agents, say, record labels from time to time during this, but I'm not going to show my agents, say, 45s or maybe not even LPs.
But when I say LPs, I am referring, in fact, to long-playing discs, not the Libertarian Party, which I'm sure can rock on pretty well, but is not what we're talking about here.
The question then becomes, well, how have recording contracts been negotiated?
Well, they've been negotiated among existing state entities.
And so this is a solution, right?
These recording contracts are a solution that has been created by the government.
And it's a solution also that has been somewhat predicated on a monopoly.
of distribution technology on the part of the recording contracts.
So originally when you could not create your own LPs, well you had to rely on a recording studio and a record company to create your LPs and then you couldn't distribute them very easily and then these guys had a monopoly on the radio stations and of course the radio stations were licensed by the FCC since I believe the 1920s.
And so there again you have state monopolies being handed out to to record companies, sorry, to radio stations, who then have relationships with record companies.
And so there's a lot of state involvement in this kind of stuff.
So that's sort of important to understand that the existing system is not a purely free market solution.
Now, let's have a look at some of the cost benefits around dealing with CDs.
Now, if you want, you know, you hear a song on the radio, and you're like, "Hey, I like that song." And you then, in order to get that song, if you want to go and buy a CD, given that CD singles aren't exactly the rage these days, or anymore, if you want that song, what you have to do is you have to drive to the record store, the CD store, or take a bus.
And it's going to take you like an hour, say 20 bucks an hour for your leisure time or whatever.
And you're going to have to buy a $20 to $25 CD.
And that CD, for the one song, you may or may not like the other songs.
They might be filler, they might be junk.
Or they may be good, right?
It's rare, but maybe.
And so then you've spent, in combined total, $40 to $45, a little bit of gas and whatever, right?
Maybe $50 to go and buy a song.
And you get as a freebie bonus, you may or may not want, all these other songs and so on.
Now, if you look at that sort of $40 to $50 economic transaction to buy a song, well, how much of that goes to the artist?
Well, you know, it varies.
But let's just say, on average, $2.
I mean, it's usually a little less.
For a big act, it can be a little more.
But let's just say $2.
Let's be generous.
So we'll take the low end of the CD price.
So $20 CD, you get $2 going to the artist.
Now, if you then break that down to, let's say there's four people in the band, and just for the sake of ease of math, we'll just make those four people equal in terms of royalties.
I know that's not often the case, but because usually there's a singer or a songwriter or whatever, right?
So, you have two dollars going to the artists and four people in the band, so they're each getting 50 cents per CD.
And then when you break that down that you got ten tracks on the CD and you kind of really only wanted one, the economically essential interaction is five cents per band member per song.
So you want to pay a grand total of twenty cents for a song.
And that is what, at the moment, or I guess up until recently, that was the economic interaction.
That was essential, right?
That's what people created music for, for that 20 cents a song or 5 cents per band member.
And that is the transfer that creates music.
So, because the question is, would you pay for that?
Would you pay 20 cents for a high-quality song that you could, you know, instantly get on CD or burn to your mp3 player or whatever, right?
So that's really the economically essential interaction, and that's what the optimum delivery mechanism would look like.
20 cents, boom, you've got it, and off you go.
So you don't need this sort of $20, $25 CD with packaging and blah, blah, blah.
You might want it, or maybe you order a booklet or whatever, a PDF printed out, or maybe it comes to you in hardcover.
But it's not essential, and you really want the tunes, right?
And so that is the essential interaction.
You don't need to drive to the record store.
You don't need to browse.
You don't need to pick it up.
You don't need to pay tax.
And of course governments don't like the 20 cent song because you don't get to tax it nearly as much.
Now that's pretty important to understand that the free market is always going to try and eliminate the middleman to whittle the costs down, to whittle the transfer of money down to the most essential interaction.
So from the person producing to the person consuming, it is always and forever going to try to eliminate The middleman.
So, as I've mentioned before, if we had a teleportation device, trucking and couriers would not do so well.
When you get the car, the people who make horse and carriages, and whips, and the people who go around cleaning up horse crap off the streets, don't do so well.
This is a continual process.
If you want to get a message to someone and you've got an email, you're not going to write a letter.
The middleman is always, always, always being striven to be eliminated from the transaction.
The record companies, through a variety of mechanisms, Ended up with a monopoly on the distribution network of music.
I mean, not exactly a monopoly, but kind of like a monopoly, so they would sign artists up and get a monopoly on that artist's output and then they were the only ones able to create LPs and CDs and then they had the distribution networks locked up.
And that's all fine.
I mean, I'm not talking about all of the contract stuff and the stuff that was enforced by the free market and the copyrights and the patents and all this sort of stuff, which would probably be handled slightly differently or majorly differently in a DRO or anarchistic state sort of system.
I'm not going to talk about any of that.
I'm just going to talk about all the voluntary agreements That they got into.
So, you know, you've got volunteer agreements.
I'll pay you this if you play the song on the radio.
And I've got a locked in distribution network to the record stores.
And if anybody tries to muscle in, I'm going to be a bully and blah, blah, blah.
All of those, you know, vaguely mean, not exactly immoral, but kind of mean and not so nice tactics.
And also, I gotta tell ya, I don't know the economics of it, but I do have some suspicion with regards to overcharging from the record companies or the CD companies.
Just a little bit.
I've just got a little bit of concern about that.
Because, if you're like me, you may have paid for songs four times in your life.
The same songs.
You bought it on a 45, you liked it, you bought the album, you got the song anyway.
You bought a tape for your car and then you bought it on CD.
Now, that's paying four times for the same song.
I mean, there's no risk as far as developing a new artist.
It's usually not even new videos.
I mean, they're basically just doing some remixing, remastering and reissuing.
And I do remember being rather shocked that LPs were like $7 or $8 for a record.
And then CDs came out at like $20, $25.
Three times the price.
Almost four times the price.
And I was sort of shocked later on.
Like, oh, did you know that they're actually cheaper to make than LPs?
Cheaper to produce?
At that point I began to sort of not feel really benevolent As a consumer.
We generally like the artist.
We don't care about the record company.
I'm not saying that it's, I'm just talking about what actually is practical and works within society.
We generally like the artist.
We don't care about the record company.
We want the artist to make money so they'll produce more music, but we don't particularly want to get fairly gouged by the record companies.
And I don't know the economics of why, and maybe there's good economics, and I know that I've... You always hear this with oil companies and gas companies, but it's not really the case.
They keep doing investigations up here in Canada to find out why the price of gas is so high.
And, you know, as it turns out, it's because the price of gas is very high.
It has a lot to do with government regulation and taxation, but it tracks pretty closely.
Now, I don't know why it was that CDs were so expensive, especially for reissues, but I got to tell you that the record company never made a good case.
To me, right?
I mean, the oil companies, when I go fill my gas up here, they have a little pie chart, which is a small 2% sliver of profit, and the rest of it is You know, taxes and refining costs and crude oil costs and so on.
The record companies have never bothered to do that for me.
They've never tried to make a really good case for me about why I had to pay three or more times for exactly the same music in a format that was cheaper to produce, when they'd already made an enormous amount of profit off that existing format.
I never quite made the connection there.
But maybe there was one and I don't know about it.
I've tried looking it up, but I haven't had any luck.
Maybe somebody out there knows this business and can let me know more.
But I felt a little resentful.
I felt like I was kind of being ripped off.
And what that meant was that I was kind of keen to get rid of the middleman.
Love the artist.
No problem with the artist.
They don't set the CD prices.
Not such a big fan of, you know, Joe Raspi Voice, the fairly sleazy record producer of stereotypical legend.
So, Record companies, or CD companies, they kind of got bad reputations.
They got bad raps, so to speak, over the past sort of 20 years, maybe 25 years.
And you can use lots of examples of this.
Prince performs with the word SLAVE written on his cheek.
George Michael basically quits recording music for a couple of years because of a bad deal with Sony.
And, you know, you hear all of the legends of the early Motown singers, Aaron Nevils and so on.
They just got reamed by the record companies.
Queen wrote a pretty ferocious song called Death on Two Legs about their manager at the time, who was charging them a hundred thousand dollars, a hundred thousand pounds, which was a lot of money back then.
To get out of their contract, and they just started to make money.
It's like their second album, and they wanted out of their contract.
And there's lots of ire, I guess you could say, from musicians towards their companies, right?
They're not considered to be very good.
And the other thing that the record companies have done, which I can probably fairly say, with some legitimacy, which has not endeared them to the dear consumer, is that when faced with this new challenge, like Basically, people have a feeling ripped off.
They're feeling resentful.
They realize how little money is going to the actual artist.
They don't want to pay for yet another head office for Sony or BMG or Atlantic or whatever.
And so, you know, this medium comes along where you can share music and this and that.
Well, the music industry faced a real challenge.
I mean, how were they going to add value To this problem of free distribution of music.
Well, there's lots of things that they could have done.
They could have improved the quality of the recording process and given people exclusive and fast download sites to get that music for a pretty cheap price.
So they could have done this.
They could have done this in the 90s, right?
Because, you know, if you're on Napster back then and you spend like, I don't know, 20 minutes trying to dig up a song, it takes you another 20 minutes to download it.
It turns out to be some guy's karaoke version of the song recorded at 96k per second and, you know, that kind of stuff.
It really wasn't a very efficient thing.
It's just that it could run in the background so you didn't really care that much about it.
And I hear, of course, all of this from a friend of mine who used Napster and I told him not to.
So, this issue of Everything that you are the middleman, and making all this profit providing, is now available without you.
Now it's available in pretty rough quality, and it takes quite a long time, and it's inconsistent, and it may not have the ID3 tags on it set properly, it doesn't have any album art, it doesn't have any lyrics, it doesn't have whatever.
That stuff's all, I think, pretty important.
So when you look at this The reaction of the record company, the CD company, they may have not done quite the right thing by going after the consumers in the way that they did.
I mean, if you could have sued all the consumers and got a legal battle and scared everyone, then that would have made a big difference, I think.
I don't think in the long run, but in the short run they would have kept the problem at bay.
But by going after little old ladies in Pasadena who don't even know how to download anything but just had their grandson set up a computer for them, by going after 12-year-old kids and hitting them with multi-thousand dollar fines, they really didn't make themselves look particularly good in that way.
In Canada, what they did up here was they applied to the government and got a fairly hefty tax on storage devices which can be used for mp3 files.
So for the hard disks that go into the portable mp3 players and the flash ram.
And so what happened was they got a pretty significant tax on those things.
And what did they do?
Well, Like of every dollar they collect.
Like a penny goes into a fund for artists.
It's so ridiculous that many artists in Canada have never even signed up for it.
It's a pure money grab through the violent power of the state to get money from the consumer and not to go to the artist.
If they turned all the money over to the artist, I'd feel like, okay, I can live with that.
But I can't live with the force, but I can at least live with what they're doing.
But of course they take all the money for themselves and turn over like shavings of a penny.
It's like you put a bunch of pennies in a bag, you shake it, they take out all the pennies and you get the dust that's left if you're the artist.
So they didn't really endear themselves to consumers that way.
And I mean that's not unimportant.
I mean public image, the perception of you as a consumer is somewhat important.
You know, there's no signs in Starbucks that say, you've got to leave after 20 minutes, you bum.
You know, you can stay there as long as you want.
I know that because I've written books and articles there.
And yeah, OK, it's like four bucks for a latte, but it's, you know, quality stuff.
They're pleasant people.
They're nice.
You know, they've given their part-time workers health care insurance.
They're, you know, a nice company.
They sort of seem to produce or try and have this sort of fair trade thing going on.
And I don't mind that.
I mean, that's fine with me.
So you have this kind of stuff, Ben and Jerry's, they devote part of their money to charity, and you know, these kinds of things are important.
If you are a celebrity, and every time somebody comes up to you to ask for an autograph, you tell them exactly what to do with their pen, in a proctology sense, then you're probably going to face some negative repercussions to your career.
And if when I got emails, I mean to scale down the level of celebrity to atomic levels, if I got emails that questioned or criticized or made incorrect assumptions about what it is that I was podcasting, if I basically replied to them like, you stupid a-hole, who could imagine typing something that moronic, blah blah blah blah blah, Well, I just don't think that it would be as friendly or inviting an environment.
And I don't think we'd be getting, as we did yesterday, you know, 2,000 shows downloaded in a single day, which I think is kind of cool.
So, there is a fair amount of perception that is involved in economic advantage, right?
If you sort of find out that your celebrity is doing something that's horrible, like not just like the Paris Hilton stuff with the porn tapes or anything, but just, you know, like they beat up someone in a wheelchair or something, you know, you're probably not going to feel quite the same way about them in terms of going to see their movies or listening to whatever their songs.
I mean, I guess unless they're a rap artist, in which case that might be beneficial.
I don't know.
But the record companies, instead of trying to reinvent themselves, and they could have done it, of course, instead of trying to reinvent themselves and say, okay, there's this crap that's out there and we need to stop it.
And the best way to stop it is to figure out a way of digital rights management that's going to work, but do it in such a way that does not appear predatory.
So you could do digital rights management such that You downloaded songs that couldn't be transferred, were only valid on one computer, or whatever, right?
There's two levels.
You can listen to it on three levels.
Listen to it on your computer, you can burn it on a CD, or you can transfer it to your portable player.
All of those things have rights, and they could have done all of that kind of stuff if they'd all gotten together with the operating system manufacturers.
But they didn't.
They didn't do that.
What they did was they began suing the customers and they also began, at least in Canada, aiming to get taxes on the consumer electronic pieces or components that played MP3s.
And then kept all those taxes for themselves, right?
So they've just become sort of another mercantilist arm of the state taxing for their own benefit and the artists who are the people that we really like, right?
The people that we really want to give our money to and the people that we really have a relationship with are the artists.
And because the CDs from each of the different CD companies or agencies, they sort of sound the same.
It's not like a CD from BMG sounds wildly different in terms of technology from another CD from another company.
And so we don't care that much about the middleman.
We do care about the artist.
So every time the middleman imposes himself upon us in a greedy and belligerent and bullying manner, using the power of the state, Then, you know, the record companies, which didn't exactly have a great reputation to begin with, it sort of becomes like a state of nature.
Now again, I'm not talking about the base ethics of the situation.
I'm talking about the practical ethics.
Like, yes, if you have an employee and you have a contract that says, I can ask you to work overtime, Mr. Employee, and you've kind of got to work overtime, then you can ask that person to work 100 hours a week.
And you're legally sort of within your rights, and if the person refuses, then they're kind of breaking their contract.
But contracts don't manage human relationships.
Human beings manage human relationships.
Contracts are really a worst-case scenario.
And so the sort of letter of the law, the spirit of the law, there's complicated things.
And I don't have any real hard and fast answers to all this because all this needs to be worked out to be optimized by a DRO system.
But the perception that people have of you as a business person is kind of important.
So if I'm a really exploitive boss, like I tell everyone just to keep working late, and I come in at 9.30, and I roll out at 3, and I take a two-hour lunch, and I just snap at people about, then yeah, I mean, I still have, they still have to produce for me, and so on, and they can quit, and so on.
But it's not really a very productive relationship to have that kind of a setup with your employees.
And that's sort of what it is that I'm trying to get at here, that, you know, it's just not how you want to do things in the long run.
You can jack up prices and you can bully your employees and you can, what they call in sales, stuff the pipe, right?
Which is where you just offer discounts to everyone to raise your numbers and then, you know, those numbers come in and you've shot yourself in the foot for next quarter.
Or you can even undercharge clients to get deals with the promises, say, in software future upgrades.
But of course, if you're undercharging clients, how are you going to fund all of the R&D that's required for those future upgrades?
Like, there's lots of ways to gain short-term gains within business.
They're not immoral.
I mean, you might have a contract that entirely protects you.
They're just not very smart.
Because what you don't want in any sort of business or personal relationship is for it to become Like a state of nature.
You don't want things to become like, oh yeah?
You're going to make me work overtime all the time?
Well, that's just fine.
I'll work your damn overtime, and then I'm going to X, Y, and Z. What am I going to do?
Well, I'm going to look for work on company time.
I'm going to not be really that careful about quality.
I'm not going to be very polite if I'm talking to clients.
I'm just going to feel resentful.
And I'm not even going to talk about things like professionalism because it's a complex topic.
But trust me, I've been a manager for over 10 years now, and if you can't make people enjoy what it is that they have to do, then you're going to have a significant problem.
Getting the money, getting the productivity out of people.
I mean, to take sort of a tiny example, I mean, I'm just finishing up a project, delivering a project this week, and I have all of the normal tensions between the testers and the coders.
If you work in software, you know all about this, and the testers say it's a bug, the coders say it's not, or it's not relevant, or it doesn't matter, or never going to happen, and the coders are like, well, that doesn't matter, it's still a bug, you have to fix it, and the coders want to ship, and blah, blah, blah.
So all these tensions, right?
So I sort of stroll in, and we have these meetings, and I sort of make jokes, it's like, well, The testing environment at our company really works on a cash-only basis, so it's no good just telling them.
It's not a bug.
You actually have to slip them something, right?
And I've got a list of prices and all this and so on.
So, it sort of breaks the tension and I'm pretty upfront about the issues that people are facing and, you know, try and find a way to make it enjoyable for people.
And sort of with the caveat that at the end of the road, I'm the one who has to make the final decision and live with it because I'm the one who has to communicate with the client positively or negatively about their experiences.
So, I mean, that's sort of a minor example wherein you just try and make things easier and more pleasant for people, more productive people, because if they enjoy their job, they're going to Go that extra mile when you ask them to and blah blah blah.
So the relationship between a vendor and a consumer is a pretty important one.
Just as it is between an employee and an employer.
Because if you start to not be generous, if you start to not be helpful, if you start to sort of hedge and to be stingy, and this is very true in marriage of course as well, right?
Marriage is not 50-50, but 100%, 100%, actually 150, 150.
but 100%, 100%, actually 150, 150.
And that's why the sum of it is so much greater than its parts.
But you don't want to end in these kinds of situations where it's like, well, I'm not going to do the laundry because you didn't do the dishes.
No, no, no.
That's kind of stuff, right?
I mean, you just do the laundry, then do the dishes.
And if you're at the right person, then they will do, you know, six different other things.
And then you'll do 12 other things.
And you end up with this escalation of positive interactions that's, you know, it's kind of cool.
It's kind of wonderful.
So this is a very long-winded way of saying that the record companies, by taking the power of the state and dealing with what in many ways could be considered perfectly legitimately an outright theft, by dealing with that theft... So theft already means you have a problem.
Right?
This is what the record companies didn't understand.
The fact that people are stealing songs mean you already have a problem.
That people do not have loyalty to you as an organization.
And yes, you can say, well, it was abstract and it's a mouse click and this and that and the other, but that's, you know, people use PayPal, they donate, they, you know, they're more than happy to do these kinds of things.
And when you have people just sort of out and out stealing from you, Let's just say that it's perfect theft and, you know, you shouldn't do it.
But then you already have a problem with the consumers.
They're stealing from you.
Which, you know, if you look at the movie theaters, you can sort of understand some of this stuff as well, right?
So the movie theaters, we can have a separate conversation about that.
But just to analogize it from this standpoint, if you are a movie maker and if you saw the Oscars, of course, you know, you realize that people are not happy with downloading and they're certainly not happy with home theaters, right?
Because the middleman is being It's being sort of knocked out, right?
The cinemas are being sort of knocked out.
Because you always want to eliminate the middleman.
That's the basis of capitalism.
And the middleman, I'll give you one other basic axiom.
Wherever there's a state, whenever there's a middleman who's being threatened, the first place he goes to is the government.
It's sad, but it's true.
They just don't seem to have the capacity to reinvent themselves.
And there's so many examples in this, I could bore you literally, literally to tears, but I won't, because I also want you as a consumer of these podcasts to be having a good time with these podcasts.
So, the record companies already had this problem with the consumers, so the thing that you don't want to do then is go and sue them, and then impose taxes on them, and sort of confirm the predatory reputation that you already have.
I mean, yes, you can put out ads trying to make people guilty for stealing and so on, but that kind of nagging doesn't tend to work unless you actually are a Jewish or English mother.
It just doesn't work.
Because, yeah, people feel a little bit guilty, but then they'll feel resentful, and they'll go back to the state of nature, and they'll start to create these justifications for themselves.
So what you need to do is you need to create, if you're the middleman, you need to create a new value that can't be duplicated, right?
I'm not saying that's the easiest thing in the world, and I'm certainly not in the record industry, so I can't tell you exactly what that is, but you know it would be something like higher quality, faster bandwidth, DRM things, and more money going to the artist, and more money going to charity, and whatever.
You've got to take a big bite in your margins, because you've just been rendered non-monopolistic due to a new delivery mechanism.
So you as a middleman, a kind of host, economically.
And so you're going to have to take a hit in your profits, you're going to have to re-innovate yourself, you're going to have to lay a whole bunch of people off.
And that's part of the creative destruction of capitalism, right?
I mean, there's always these optimizations that are desired and aimed at.
And when they occur, there's lots of disruption and this and that.
But you have to do it, because the only other option is to engage in a losing battle with consumers that basically don't like you to begin with, view you as a necessary evil at best.
And then when you begin to show more aggressive tendencies, you're suing them, you're imposing taxes on them and so on, then, well, it's like, okay, it's more of a state of nature, right?
You already have a state of nature that people are willing to take stuff from you, let's call it stealing, they're willing to steal from you directly, and then...
So they already don't like you, and then you start suing them, and this and that, so then it's just a death spiral, right?
And it's a death spiral that absolutely ends with other people taking over as far as delivery mechanisms go.
So artists come up with their own websites, and you maybe get people like iTunes who have a more direct relationship with the artists, sort of bypassing the record companies completely.
You also have artists, the Barenaked Ladies have one out now, you have artists who start creating their own podcasts.
Which deal with things like publicity and new songs, advanced tracks, and so on.
And concert dates, so that they need the promoters just a little bit less.
They need that whole situation or system a little bit less.
And so, in that kind of circumstance, people are just going to find ways to bypass you.
And you can hang on to the state, and you can use the power of the state, and you can bully people, and you get angry at them, you can make them guilty, and so on.
But once you've lost the fundamental trust of the consumer, I've got to tell you, it's kind of like a downhill battle.
Now, the people who are already rich within the media industries, they're going to do fine.
They're just hanging on to their paychecks.
The real shame, in my sort of humble opinion, is the people who could have had Living in the media industry other than that and also the consumers who could have or should have I think had better options than inconsistent song qualities and you know cheesy blurry shot in the cinema kind of movies downloads and so on.
I think that's a real shame and I think that's what people are really missing when it comes to understanding what the options are in terms of intellectual property rights.
I mean, look at something like Blockbuster.
Blockbuster did their research.
Blockbuster Video.
They did their research and I bet you they found out that one of the ways in which they were losing, or one of the reasons they were losing to downloads was because People didn't like the pressure of having to return DVDs on time.
It's a source of controversy.
It's a source of conflict.
It's a source of fuss and fighting within relationships.
And did you do this?
And it's just another thing that people have to do.
And of course taking that pressure off them is the way that they decided to deal with this consumer issue.
So you want to make things more convenient for your consumers to come and deal with your services.
You don't want to start sicking the government on them and forcing them to pay money and then suing them and then whatever.
I mean, that's just not the way to do it if you have a problem.
And so if you have downloads occurring, then for Blockbuster you want to start giving rewards points, you want to make it cheaper, you want to make it easier.
You want to allow people to cut down on the number of trips that they have to make to the video store.
And so one of the ways that you do that, of course, is that you say, okay, you can come and you can rent these DVDs, and you can grab a whole fistful of them, and they don't all have to be back on the same day, and you don't have to pay us 20 bucks a day for the couple of DVDs that you have.
So that this allows people to take a bit more of a relaxed approach to renting.
So when you're out at the store anyway, you will go and get the DVDs for a week or whatever, and then you can take them back a little bit later.
The next time you're at the store, it's more convenient.
So that's sort of a minor example about how one particular company is dealing with the problem of People not wanting their product as much anymore, right?
So they've taken, obviously, it's taken a hit out of their profits, right?
Because when they had the exclusive rights to be able to get movies out there, I mean exclusive insofar as the technology went, then they could charge more.
And now that a strong competition has opened up in the situation, i.e.
internet downloads or, I guess, other people copying DVDs or something, I don't really know, but Now that that has opened up in the world, they just don't really have that choice anymore.
Now, if you look at something like the public sector, you don't see this, right?
So the rise of email has done nothing to fundamentally reform the postal services in Canada.
And for sure in the US, I'm pretty sure of it, right?
Just based on the laws of economic logic.
Now, something like email would represent a very large dip or bite into the revenue for a postal service, as did the invention of the fax, of course.
Now, none of these things have changed fundamentally at all.
And the prices are still going up.
They still have the same number of employees.
There hasn't been any economic efficiency.
Because when you are the postal person, you are the middleman, right?
If you are somebody who moves mail around, you are the middleman.
You're not somebody who's adding value to the content of the communications that people want to have.
You're just delivering a message, right?
You're like a chute, like those chutes in the movie 1984, where they jam these things up and down in these old chutes where they used to send messages around in buildings that way.
That's really your function.
You don't add anything to it.
And so the purpose is going to be to eliminate you as quickly as possible.
And in the public sector, this just doesn't work.
And I would submit that in the private sector, When you take the approach that you are going to start to look for legislation rather than improving your products and services to the point where it becomes valuable for people to deal with you, even if your competition is free, that still is going to be valuable.
I have access to free roads to get to work and back, but I choose to pay A private company to use their roads, and I pay $150 or $175 a month, Canadian, to use that road.
Because the alternative is to use the public roads, which are slow and congested and problematic and always under construction and, you know, just junk, right?
I mean, it's the sort of junk that you always expect to come from the public sector.
And so for $150, $175 a month, I buy like 20 hours of my time.
And that's well worth it to me, without a doubt.
And probably it's more than that, in fact.
And so, you will always find some way to compete, even with free.
You just have to be imaginative.
And of course, one of the things that this company does is, it always makes sure that it does not have any construction going on during the day.
And also it is very expensive for trucks to use it, right?
Trucks are the big slowdowns of traffic.
So they make a lot of improvements in their services and so on just to make sure that you can use this stuff even though they're competing with free and make it work.
And I'm sure that with enough imagination and creativity and marketing record companies and movie companies could do the same thing.
So that's sort of my take one on the problems that are generated in intellectual property, right?
It's all based on the state right now.
And so the solutions are all very difficult and problematic.
And because record companies have access to the state, then they tend to use the state to solve their problems.
And if they didn't have access to the state in a free market society, then they wouldn't end up taking that road and they'd have to be much more imaginative and creative in order to solve their problems.
Or they'd just quietly go out of business and let the real economic transaction take precedence, the one that everyone cares about, the one that's the only one that's really important, which is that between the end consumer and the artists themselves who are creating the music.
So with some small consideration paid to the electronics that deliver it.
So I I hope that makes sense to you.
We will pick this topic up in the morning, unless I get a particularly gripping email, or forget about it.
Actually, it's probably going to be the former, not the latter.
▲
Export Selection