[DMCA-Activists] On the RIAA and the Destruction of Value

[Seth Johnson]

(Forwarded from Pho list)

-----Original Message-----
From: Kevin Marks <address@hidden>
Date: Tue, 16 Sep 2003 00:56:04 -0700
Subject: pho: Tim Oren: Rant: The RIAA and the destruction of value

http://www.pacificavc.com/blog/2003/09/12.html#a353

Rant: The RIAA and the destruction of value

So here I am, back again to flog the RIAA.  Why, one might ask?  After 
all, I've got the word 'capitalist' in my job title, unreservedly 
support private property rights, and don't have ethical issues with the
concept of intellectual property (some implementation details aside).  
I don't copy music I don't own, nor do I encourage others to do so.  
Yet I boycott the RIAA and take frequent opportunity to trash them 
publicly.

  Call me naive - [Chorus:  You're a hopeless naif.] - but I've got
this 
quaint idea that the idea of a business is to add value.  And that the 
value is judged by the customer, not the seller.  By its obstinate and 
culpably idiotic refusal to understand that technology has changed the 
way in which the value of music is delivered and understood by 
listeners, the RIAA and the labels it stands for have turned from value
creators into value destroyers, in many different ways.  They are well 
on the way to permanently damaging an industry that has been part of 
America's cultural heritage, as well as a decent part of our exports to
the rest of the world.  The bill of particulars...

  ...starts with the obvious: digital music and the Internet.  From the
customer's side the value is overwhelming - no more stacks of 
polycarbonate discs, access to a world of choice instantly, removal of 
most of the risks of format obsolescence.  Even from the selling side 
there are advantages: no more inventory holding costs, more packaging 
flexibility, no more takebacks on unsold product.  But, it does require
that you rebuild your model for creating value from one based on 
scarcity, to one based on abundance.  Something the industry apparently
can't deal with until it's rammed down its throat by a customer revolt.

  The industry's response?  While the P2P systems grew, built on 
networks of machinery operated by its customers, it went off on a tail 
chase, seeking digital rights management (DRM) approaches to locking up
digital music.  In other words, to restore the scarcity value model, 
regardless of the benefits to its customers.  Kevin Marks has for some 
time been saying 'DRM destroys value'.  If value is in the customer's 
eyes, shouldn't that be obvious?  Is a locked piece of music more or 
less convenient to use, and more or less likely to be a problem to copy
to other devices?  Which version would you value more?  It's amazing 
that it's even a question that artificial scarcity is a stupid idea.  
How much more obvious should that be,  when the customers already know 
there's an alternative, and have it in their hands?

  Abundance presents its own opportunities to create customer value.   
Google, just to take an example, owns an insignificant amount of 
content, but is valuable because of the overwhelming abundance of it on
the Internet.  The music fan in a world of abundance has problems as 
well.  How do I organize my songs?  Is there new music I should know 
about?  Are any of my favorite artists coming to town, and how do I get
tickets?  Are there new acts that I might like?  Where can I find 
like-minded fans to hang out with?  How do I make sure I can get the 
music I want anytime, anywhere, on any gadget, and don't lose it?  All 
of these are opportunities to create value, and potential ways to 
extract revenue and rebuild a business model in a post-scarcity world.

  The recording industry has blown off every one.  It allowed the
venues 
business to fall into the hands of a  rapacious monopolist.  My music 
is organized by iTunes and Gracenote, little thanks to the labels, and 
inter-device portability has been colonized by open standards and 
operating systems vendors.  There's more value in the free 
recommendations and reviews on Amazon than the entire RIAA's output.  I
get more use from free concert indexing sites than the entire 
Top-10-hit-worshipping industry.  Is there anyone still in there that 
loves the music, or is it lawyers all the way down?  It doesn't seem to
bother them that they have created llittle to no customer value that 
can survive in the face of abundance.

  Customers value and will pay for convenience.  Apparent convenience 
changes with the technology.  Once upon a time, the size of 33 1/3 RPM 
vinyl records defined the convenient 'bundle' called an album, then 
later the limits of a CD.  But when digital music makes physical limits
an anachronism, there is no longer a convenience value, and the 
one-hit-wonder album must die.  Still, the industry tried to maintain 
an obsolete, overpriced bundling strategy until its channel began to 
collapse.  Meanwhile, it took other convenience values such as 
subscriptions, and crippled them with unworkable DRM schemes, 
proprietary formats, and limited catalogs.

  The RIAA did not stop there in its search for value to destroy. 
There 
were the whole industries of consumer electronics, computing, and 
communications, all exacerbating the problem of abundance.  They must 
be stopped, and scarcity restored.  Fortunately, entire industries are 
able to fight back, and have bribery lobbying budgets that they can put
on the line, but this game is still in doubt.  But will you be more or 
less likely to buy a new computer - or operating system - if it's got 
DRM inextricably built in?

  There are values beyond commercial exchange.  Little matters like
free 
speech and the freedom to invent.  The RIAA took the profits derived 
from its customers, and bought the influence to help ram through the 
DMCA.  Now we have a most peculiar sort of thought police - something 
even Orwell failed to imagine - to track you if you dare to subvert 
artificial scarcity.  Again, why is there any question at all that this
has destroyed both customer and social values?  If the buggy whip 
industry had had the gall and resources of the music industry, we might
still be scraping horse dung from our streets, and hiding gasoline 
engine projects from the enforcement cops in our basements.

  For its repeated and unremitting stupidity, the music industry has 
earned my contempt as a business person.  For its willingness to 
infringe rights, corrupt the political process, and attack other 
businesses to save its own sorry neck, it's earned my direct enmity.  
It's a sorry, dying beast, but quite able to savage us and our society 
as it goes.  As money is energy, the best way to limit the damage is to
cut off the profits, and the cash flow.  I'm boycotting the RIAA, 
please join me.

  (Next up in this occasional series of rants: some thoughts on 
business models to take the fight to the heart of the music market, 
rather than nibble at the small acts.)

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