Sunday, March 18, 2007

more on the impact of the viacom-youtube court case

Investor's Business Daily thinks the results could impact internet social-sites across the board.

I think this is all fascinating from an anthropological point of view.

There exists a "product" that can be reproduced easily at low cost and given away with little to no cost. Electronic media. This product can be inexpensive to produce (your haiku on your blog) or extraordinarily expensive (hollywood special effects blockbuster), but the cost of production and size of product has little relation to the ease of sharing.

People are built to enjoy sharing, helping. Ordinary people with limited resources understand that they can have access to a lot more media if they will share what they have. So they do- see p2p. And thus listen to more music, watch more tv shows and movies and look at more porn than they ever would be able to if they had to pay for it all at standard retail.

People are also built to enjoy accumulation. "Business" are smaller groups of people working hard to limit and control access to the products they make so that they can receive money in exchange for the product. Works moderately well with physical objects (see brand piracy, garage sales) and not at all well with electronic media products (see pirate bay).

My bet is that in the great long run, the functional solution would be to distribute the electronic forms very inexpensively , and charge more expensively for physical versions and in-person experience. Ie, to hold a book in your hands you pay 6 bucks, to read online, $1. To watch as a download on your pc or tv, $1, to attend the movie theater and see it on the giant screen with a crazy crowd, $10.00. Why do p2p if the legal cost is minimal and p2p runs you the risk of viral infection or affronts your self-view as an honest person? And the physical object or personal attendance is not effortlessly reproducible, and thus "worth" more to the individual. It is physically and realistically limited.

I am not sure how to calculate profit earnings with this model. How do you estimate the number of people who would be willing to legally download a movie for $5.00 versus $1.00, and the associated numbers of people who would find it worth their while to go to the trouble of p2p sharing in each case. Would the same number of people in total be interested in that movie in both cases? At what price is the number of people interested in the object who are willing to pay for access the highest? And how does that revenue compare to revenue achieved by a higher price with a greater number of recipients opting for no-cost sharing?

That seems to me to be it- how to find the price that people are willing, as opposed to coercively obligated, to pay for the product that they understand is not physically limited in copies. A whole new world.

On the other hand, there is a great deal I don't understand going on here, so it is going to be very interesting to watch what happens.

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