Whither Information?

Opinion Journal carries a piece on MGM v. Grokster and the can of legal worms opened by it. The author offers a reasonable solution to the problem of illegal information-sharing:

It may seem quaintly old school to suggest that people should stop downloading culture without paying simply because it's the right thing to do. But that may be the best option available.

He also waxes nostalgic about the fate of many artists, current and potential, if record sales are replaced by illegal downloading. But InstantReplay would like to remind the world (if only they could hear us) that the concept of earning money by recording music or video is a new phenomenon. Actors, singers and others made their living for thousands of years in live performance only; we wouldn't find it a tragedy if that became the norm once again.

Why is it possible to download music for free? Why don't we have this problem with, say, oranges or legal opinions? The reason is obvious but is often missed: nothing new is created. Copying a piece of music onto a CD is only marginally more expensive than downloading it onto your memory space. In other words, musicians have made a profit by selling a one-time product many, many times. Economically, this worked reasonably well for both sides.

The new technology, however, removes the artificial barriers in the recorded music market. Since authorities have no reasonable way to crack down on free downloads, musicians and their handlers will have to seek other market structures or will be forced out of the recorded music market.

To keep the recorded music market at its current size, the only plausible market structure I can think of is one in which records cost thousands of dollars. Artists would sell only a few copies of their music, but the sales would be more akin to licensing. Online distributors would purchase the records and be forced to fend for themselves in order to protect their profit margins. Producers could easily keep the appetite for their music alive by giving or selling the music to radio stations. This is by no means flawless, but it has the distinct benefit of making the initial transaction - when the artist first sells a CD - a much fairer encounter.

Ultimately, the market for recorded music may simply be unsustainable at this level. Selling information only works when access to that information is limited, and in this world, that's a rare thing. In the long run, the Journal's advice may be the only way to protect the music world as we know it.

Does this affect other forms of information? Yes and no. What we're seeing with music now is just a warm-up for the fracas that will occur over movies once the technology for transmitting them easily saturates the market. Recorded music has always been readily available - on the radio. But films are expensive, have low re-usability compared to music, and are tightly controlled for years after release. Once they can be easily "shared" free and easily piped to your TV, the movie-rental market could hemorrhage faster than the Hoover Dam in a nuclear holocaust.

On the other hand, I suspect that the written word is the best insulated. Newspapers (like the Journal) can charge admission or use .pdf files to slow down free dissemination enough to make it a non-threat, if they so desire. And books are simply too long to read on a computer. Until screens are as readable, reliable, portable, and cozy as paperback books, the latter will continue to thrive. What's more, books aren't distributed in digitized format, so someone would have to type them up before distributing online, and the lack of profitability is ample disincentive. So I say, Long live the information revolution.

Disclaimer: I have never downloaded music illegally, nor do I recommend that readers do so. I also have not purchased a CD in the last two years.