From: Alistair Davidson lord_inh@yahoo.co.uk Date: Sun, 09 Sep 2001 15:10:40 +0100

Now, if you think back to your economics classes, you'll remember that in an environment where competition exists, prices approach the marginal cost. So if it costs £100 to create a prototype, and £1 to produce each copy of that, the price shouldn't be too much higher than £1 once competition has come into play. Obviously, companies like to have a profit margin and need to recoup their initial investment, but certainly the cost of one unit should be under £1.50.

Imagine that what you're producing is music, or software, or some other form of information. Suddenly, the marginal cost is extremely close to 0. In fact, it may be 0, with a one-off cost to seed distribution of your music, and all further distribution performed by your listeners.

It seems ludicrous, in such an environment, to charge for distribution. The price tends towards the marginal cost, so the price of your music should be extremely low, if you allow listeners to make their own copies. What's needed is a way of covering that one-off cost. Companies and some individuals that profit from the sale of information would have us believe that a non-scarce resource should cost money. They try to enforce this idea by making a non-scarce resource scarce, using copyright laws. They talk of "intellectual property" and "copyright theft". But "intellectual property" is not like normal property. If I commit an act of "copyright theft", I don't deprive the owner of their "property", like with normal theft.

So, how do you cover the cost of creation (as opposed to the cost of production/marginal cost, which is effectively 0)? There are a number of ways. The most popular right now is to charge for additional value that is sold on top of your product- for example, making CDs and charging money for them is okay, because there is a significant marginal cost, and your listeners gain value from things like sleeve notes, and the benefits of having the music on a physical medium. Red Hat software gives away its Linux distribution (you can download it from their website, and it regularly appears on magazine cover-disks), but if you pay them money they will also provide technical support, and an automated update service. Richard M Stallman, founder of the Free Software Foundation (that's free-as-in-freedom, not free-as-in-beer), supported himself for some time by giving away the Emacs text editor- he only charged if you wanted it on disk. He also made money by customising the software for companies- if a company wanted feature x, they could pay him to add it.

Red Hat turned profitable earlier this year, in an environment where many established IT companies are struggling- even Microsoft is frantically trying to find new business models, because most people no longer see any need to upgrade to the latest version of Windows or Office or whatever, they had 95% of user's needs covered by Windows 98 + Office 97 + Internet Explorer 5.0.

There's a second method, which is slowly gaining ground. This is to distribute your product free of charge, and ask altruistic listeners/readers/users to give you small donations if they like what you do- kind of like a busker. It sometimes helps to point out that if you don't receive enough donations to break even, you won't be able to offer music or your comic or your software any more. Kuro5hin.org gets money from advertising, and also offers an advertisement-free version, if you pay a subscription fee. Many online comics and garage bands also make money from selling t-shirts and so on.

There's one final myth that needs to be exploded- that if there's no way to make money from software development / music / comics / book-writing / whatever, people will stop doing it. This is patently not true. You've been playing music for years, mostly at a loss. I have an online comic, which makes me no money but costs me none either. The world has thousands of garage bands and underground magazines and so on that barely cover their costs- why do they do it? The simple reason is that creating things is fun, and it's nice when people gain enjoyment from your work. Personally, I don't want art that's created solely for money- I'd rather have one decent amateur musician than a thousand Brittany Spears clones.

It's like "the Economist" was saying a while ago; the music industry wants to create artificial scarcity of information not because this is the best way of ensuring future creation of art, or because it's best for the artists, or the public. They want artificial scarcity in order to protect their existing business models.

I hope you can understand my position on copyright now. I don't necessarily want complete abolition, but huge reform is needed for copyright to keep in step with new technologies, and creating scarcity where none need exist is *not* the kind of reform I mean.

I'd ask that if you agree with any of my arguments here, you carefully consider the license under which your music will be published, think about using the Electronic Frontier Foundation's Open Audio License for the works that are copyrighted to Tarneybackle, and your interpretations of traditional songs (can performances of traditional songs be copyrighted?).

There's a FAQ about the license here: http://www.eff.org/IP/Open_licenses/20010421_eff_oal_faq.html

The license itself is here: http://www.eff.org/IP/Open_licenses/eff_oal.html

The GNU Free Documentation License, which is the license I intend to apply to the website, is here: http://www.gnu.org/copyleft/fdl.html

-- Alistair