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Tuesday
Mar132012

Who wins the race for investment money, the artist with the epic song or the software developer with the snazzy iPhone app?

There’s a portion of the population that doesn’t respect, doesn’t believe in, or that simply desires to abolish copyrights altogether; they have their non-rivalrous resource argument to bring to the debate; now here’s something to toss back at them…

Every investor wants to invest in ventures where the incremental costs of scaling to infinity and beyond are minimal to zero.  In other words, $100 buys you the first 100 widgets, but the cost of producing the next 100 widgets is de minimis.  In fact, the competition for investment capital is often won or lost on a cost-to-scale analysis basis.
 
The problem with the “fuck copyrights, you can make money from live performances” argument is that this thinking limits an artist’s ability to scale to: his or her capacity to perform (live) on a consistent basis.  If music (for example) is consistently stolen borrowed or free, where does the capacity to scale through minimal additional investment come from?  T-shirts?
 
One might argue that if you reach the top tier of the profession that the capacity to generate easy, incremental income scales far beyond the income generated via performances.  However nobody wants to invest in a business or an industry where the only way to obtain a financial exit is to hit a home run.  There are far too many investment alternatives where you can pile up rewards by hitting singles and doubles…while preserving the opportunity to hit a home run also.

Art requires investment, as somebody always has to pay the bills.  Investing in artists has to appear attractive on a cost-to-scale analysis basis.  Every attempt: legal, cultural or otherwise, to weaken copyrights is an assault on every artist’s capacity to scale via minimal incremental investments, and thus the capacity to compete for investment dollars.  

Who wins the race for investment money, the artist with the epic song or the software developer with the snazzy iPhone app?  Which took more time and skill to create?  It’s all software to me.

For those of you that detest dumping art into an investor equation, simply substitute the concept of investment dollars with a personal time-cost / benefit analysis and ask yourself why so many artists become hobbyists prior to obtaining traction; the key reason is: the lack of copyright respect results in the sinking perception that scaling one’s digital entertainment business by shoveling time (or investor money) at it, often results in a negative return.  For many, there simply ends up being…better ways to make a living.

@brucewarila

Reader Comments (7)

Well said. So true.

March 13 | Unregistered CommenterLior

Paul Graham, a Y-Combinator founder just wrote a tidy anti-copyright essay titled Defining Property. Unfortunately Paul convolutes the tactics of the RIAA and the MPPA with the practical / impractical debate over copyrights.

For rightsholders I have this to say: copyrights enable you to scale via minimal increment investments. Recorded music is an instantiation of your musical works; it's an instantiation of your software and your source code. As the rightsholder of your source code you should expect respect of your copyright wishes.

To all the Y-Combinator startups: release all of your source code tomorrow so anyone can freely profit from it. Or enable anyone to freely embed (stream) your engineering - unencumbered by your terms of service - into any app or site that can freely profit from it. After all, you can scale by selling t-shirts or by performing live on stage to pirated organ music; with small monkeys, on large tricycles, and whilst wearing little blue hats.

March 13 | Registered CommenterBruce Warila

Consider that IP is 178 billion dollars worth of US Exports and that US MADE MUSIC used to be the largest part of our exports by twice the amount of film and software.

However because of the haliburtionization of the entertainment sector and independent artists buying the notion that US MUSIC STORES don't exist we have just failed to produce content that the rest of the world is still happily consuming.

So add this starting fact to your considering on this issue. Last year US MADE MUSIC only accounted for 10 percent of the world music market that just so happened to grow by 2.7 percent. So if we want as a nation to win the future and be part of that 2ND HALF IN AMERICA we'll need to get back to ole fashion US MADE MUSIC in all formats.

ps pay no heed to the digital distributors that are now merging with physical distributors and if they aren't their investors will be asking how come no CLICKS AND BRICKS DISTRIBUTION

March 13 | Unregistered CommenterNelson

My god, that post from Graham is awful. First, he screws up his analogy, possibly on purpose, when he equates smelling food to downloading music and movies. Smelling the food of a restaurant you're not patronizing is the equivalent of listening to music while at a bar, or as a car passes. It's not at all like infringing on someone's property rights. Once you realize the sleight of hand he plays, his whole argument is nonsense.

Second, information is certainly not like air now. I'm sure there are plenty of research scientists who would argue that information can be extremely hard to come by. And last time I checked, breathable oxygen was created by a natural cycle of Earth's ecosystem, whereas art is the product of human labor. We don't pay for air because that won't fund the creation of more of it, conversely, we reward human labor because it encourages better labor. You can't pay for rain, but you can pay for an irrigation system.

A venture capitalist *certainly* already knows this, so what gives?

He also does the classic "I'm reminded of a story..." trope that is so common with anti-IP arguments. It's akin to people who take their life lessons from TV shows, or think that Star Trek is scientifically accurate.

Dear Paul Graham, I'm reminded of a non-fiction story based on real life events where most of an industry acts entitled to the work of others in order to pad their own pocket books. It's not a parable, and it has lessons that actually pertain to the real world. You're one of the villains, too. I'd send you a copy, but I'm trying to earn a living here. Thanks.

March 13 | Unregistered CommenterP

I rarely comment on the IP debates because I don't think arguing pro or con is worth my energy. However, this article just came out and is worth sharing here.

It occurred to me not too long ago that some of the anti-copyright arguments primarily made sense from Google's point of view. It wasn't really about the value of free content to the world but rather a corporate decision to make the company's life simpler. If Google didn't have to deal with copyright, it would eliminate quite a few problems for itself. Then when I read how much Google has been paying lobbyists these days, I realized the extent to which all the tech companies (e.g., Google, Apple, Facebook) are operating in their interests rather than ours. They are today's big companies, with a lot of similarities to big companies of the past.

And then yesterday, this came out:

The Ruthless Overlords Of Silicon Valley - The Daily Beast

This reminds me of the allegory posted to hypebot about a very similar notion last week. It was so well said, all about the way the up-and-coming app industry is starting to resemble the music industry.

The last sentence really hits home for me... how can you invest your time and money in something that you know has virtually no (monetary) ROI? I was recently imagining a parallel universe in which I would be able to generate revenue by selling of downloads of my music, reinvest it in my music business and in myself, dedicate more time to creating music and a better product (because of the profits from my initial venture), and scale it. I'd be able to go part time at my day job and focus on bettering my product.

Sadly, the landscape seems dismal - maybe I'm going about it wrong. Maybe I should just sell T-shirts and stickers... everyone seems to think the music should take a backseat to that.

March 13 | Unregistered CommenterMark

well put.

March 14 | Unregistered CommenterGavin

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