When Elephants Dance

Eugen Leitl eugen@leitl.org
Mon, 1 Apr 2002 16:05:59 +0200 (CEST)

---------- Forwarded message ----------
Date: Sat, 30 Mar 2002 16:07:49 -0800
From: Hal Finney <hal@finney.org>
Reply-To: extropians@extropy.org
To: extropians@extropy.org
Subject: Re: When Elephants Dance

Unfortunately I have to go out of town for a few days so I won't
be able to participate in this very interesting discussion.  A few
comments before I go:

There are many types of intellectual products which are threatened by the
Internet: books, music, movies & TV, software would be the main ones I can
think of.  Each has unique properties and each is likely to be affected
differently.  I think a full analysis of the impact of widespread,
unlimited sharing of data would require looking at each one separately.
You can't necessarily apply the lessons of one category to the others.

Software is unique in a couple of ways: a substantial part is sold to
businesses rather than end users.  At least in Western countries, it may
be practical to detect and deter much software piracy among businesses,
with whistle-blower rewards and such.  The Business Software Alliance
sends out threats every day.  Also, software is unique in that it is
"active" data.  It is the only one which actually could be protected
in principle, via encryption and tamper-proof hardware.  However, the
technology to do this is a long way off.

Software is way ahead of the other areas in that copy protection
has been around for a couple of decades now.  The consensus is that
it did not work.  However there is a widespread belief that it is
becoming impossible to make significant money solely via software sales.
Most software companies seem to be trying to position themselves to make
money from service and support rather than sales.  This is true both in
the open source and proprietary software models.

Books, and text in general, are probably the cheapest to produce of all
of these.  Also, in my experience, the ability to produce coherent writing
is more widespread than the talent needed to make good music or movies.
So this area may suffer less than some of the others if we have to go
to a system where people create for love and not for money.

Movies and TV are the most expensive to produce, especially considering
the limited marketing lifetime of the products.  (Maybe some big software
programs have similar costs over time, but the investment will last
longer.)  Also they involve huge numbers of people, each with talent
in their specialty.  I don't see how you could get actors, directors,
set builders, sound technicians, cinematographers, and all the other
people necessary to make a good quality movie to donate their time.

However, movies have the advantage of being experienced best in a
darkened, full-size movie theater.  That experience can't be pirated,
and movies make a substantial fraction of their revenues from the initial
theatrical release.  It's possible that even if they lose all their video
revenues to piracy, theatrical income will still fund the kind of movies
we have come to expect.

Finally, music is probably closer to text than to movies in terms of
costs and complexity.  You need a few musicians and a producer, the
rental of a music studio, the purchase of instruments.  If the right
people can come together and donate their time, the other expenses
will be a few thousand dollars.  It will be a lot of work to create,
record and mix high-quality music, but probably no more so than writing
good software.

Musicians and DJs can make money from live performances, with their
donated recordings being purely promotional.  But today, they can't
make much money that way; most live stage shows are meant to promote
record sales.  Maybe a few bands can charge a lot more for their live
performances, but most will see a significant drop in revenue.

Summing up, software is farther down the road to the transition.  For a
couple of years now I've been hearing "nobody can make money on software
anymore."  Thus Microsoft's switch to .NET and Internet services, with
the industry following suit.  Clearly music is the next place being hit,
with text following as well.  I believe within 10-15 years we will see
almost all music and writing being done purely on a voluntary basis, with
fewer successful bands and writers who can make money by live appearances.

Movies are fighting a pre-emptive action to try to retain video revenues,
but I think this is probably a losing battle, and in the long run they
should work on creating an unsurpassed theatrical experience.  Movie
theaters have gotten hugely better in the last 10 years around here,
with elevated seating and better sound.  Hopefully they will continue
this trend.  A blockbuster can still make hundreds of millions of dollars
from people who will pay to go out and enjoy it in a movie theater even
if they can watch it for free at home.