Downloading Is Correlated With CD Purchases

from the correlation-is-not-causation dept

There's a new study out (via Michael Geist) about the relationship between peer-to-peer downloading and CD purchases in Canada. The authors found a positive relationship between downloading and CD purchasing. That is, those who downloaded more music also tended to purchase more CDs. It's important to keep in mind that correlation does not prove causation. In particular, I suspect that much of what we're observing here is simply the fact that people have varying levels of interest in music, and those who are more interested in music are likely to both download more songs and purchase more CDs. So these results by no means prove that peer-to-peer file-sharing isn't hurting the recording industry. On the other hand, it certainly belies the recording industry's simplistic claim that no one will buy their music if it's available for free on peer-to-peer sites. Clearly, there are a lot of music fans in Canada who have access to peer-to-peer networks and choose to pay money for CDs anyway. That might be because they want the extras that come with the physical CD, because they feel good about supporting their favorite band, or because they expect the audio files on the CD to be higher quality than the music they find online. Whatever the reasons, the recording industry should be figuring out how to capitalize on them, by coming up with new products that offer perks you can't get from a peer-to-peer network.

Filed Under: business models, cds, correlation, downloading, music, p2p, recording industry

AP: The News Gatekeeper is Dead! Long Live The News Gatekeeper!

from the let's-try-this-again... dept

The CEO of the Associated Press, Tom Curley, gave a speech yesterday to a group of news executives supposedly calling on them to drop their antiquated ways, learn to embrace the new opportunities of the internet and, most importantly, ditch the mindset of being the gatekeepers of the news. At least, that's what the Associated Press's own writeup on his speech suggests. It's powerful stuff, but it seems a little odd. After all, isn't this the same Associate Press that less than a month ago sued Moreover for linking to AP articles? Isn't this the same Associated Press that pressured Google to pay for the same thing? That doesn't sound like an organization that's trying to stop being a gatekeeper and embracing the new opportunities of the internet. It sounds like the opposite.

So, let's go to the details. Thankfully, the AP also published the full text of Curley's speech so we can dig into the details a bit. While the AP reporter's coverage of his speech definitely does capture the gist of it, it leaves out some of the key (and somewhat contradictory) details. So, while Curley says: "Our focus must be on becoming the very best at filling people’s 24-hour news needs. That's a huge shift from the we-know-best, gatekeeper thinking" his own plan doesn't seem to agree with that. He later says: "we're coupling those initiatives with strong new efforts to protect news web sites from unauthorized scraping through tighter site protocols and content tagging." Sorry, but it's those protections against scraping that is part of the gatekeeper thinking. He also says: "Enforcement, too, must be a part. What we do comes at great cost and sacrifice, even death. We believe content should have wide distribution. We intend to be compensated for it." and "We have the power to control how our content flows on the Web. We must use that power...." In other words, we're going to restrict access to what we do in order to create artificial scarcity in order to charge for it. Restricting access is what might also be called gatekeeping. It seems like Curley's big wake up call to newspaper execs is really "say goodbye to the old gatekeeper, and say hello to the new gatekeeper."

There are plenty of business models that make sense for the Associated Press, but it's pretty amusing for the CEO of that organization to call for getting rid of the old way of thinking and then outline what's basically the same old thinking.

Filed Under: business models, gatekeeper, newspapers
Companies: associated press

The New York Times Finally Gets The Web

from the it's-about-time dept

Techdirt has beat up on the New York Times a lot over the years for its bone-headed use of the web. For years, it treated the website as an afterthought, serving up warmed-over versions of its print coverage and charging for the privilege. As we pointed out repeatedly, the web is different from older media. Success online requires that you be part of the conversation. Users expect a faster-paced, more connected experience from a website than you get from a newspaper. But in the last six months or so, the Times has made a series of decisions that suggests they're finally starting to understand that the web is its own medium with its own unique rules. They've dropped their paywall, launched a ton of great blogs, produced podcasts and videos, and added new personalization features. This summer, they unveiled Open, a blog by and for geeks about the use of open source technologies at the Times. And now they've launched Blogrunner, a news aggregator they snapped up last year and are integrated in various places around the site, starting with the technology section. Integrating links to other sites into their subject-specific pages makes it more likely that people will make that page their starting point for information on that subject. None of these developments are that Earthshaking by themselves, but when you add them all up it starts to look like the Grey Lady is finally taking the web seriously. Now if we can just get them to give us full-text RSS feeds of their blogs!

Filed Under: business models, newspapers, open source, websites
Companies: ny times

Yet Another Newspaper Paywall Dropped

from the not-too-many-left dept

Newspaper paywalls keep coming down. Just a month and a half after the NY Times dropped its paywall for TimesSelect, the Sacramento Bee is freeing its Capitol Alert service. This was actually a more interesting experiment. Launched in January of this year, it wasn't (like most paywalls) about taking content from the newspaper and hiding it behind walls, but creating a separate new service for political insiders. It was pricey, but the idea is that it would be worth it for folks like lobbying firms as it would be information that wasn't available elsewhere. Apparently, though, not enough people really were interested in paying -- especially compared to the prospect of increasing online ad revenues. So, Capitol Alert is ditching the paywall and going ad supported as of next week.

Filed Under: business models, newspapers, paywall
Companies: sacramento bee

Pharmaceutical Firms Finally Realizing They Need To Innovate Beyond Pills

from the squeezed-those-monopolies-dry dept

Last week we wrote about a proposed bill that would push pharmaceutical firms to turn their patents over to the public domain in exchange for prizes. As we noted in the post (and the ensuing discussion), there are some serious problems with the way the current patent system sets up incentives for the healthcare industry. It really focuses research dollars into pharmaceuticals, rather than other types of technology that would not only be cheaper to make and to use, but also much more effective in helping and saving lives. It's a fascinating area that I've been researching for a separate project, trying to help design better business models for the healthcare industry that will still allow for massive profits, but do so in a way that creates better incentives for actually keeping people healthy. There's been some interesting research in this area, and I plan to share some of my own results when they're ready (hopefully early next year).

The key, as always, is to recognize the real market that the business is in. For too long, pharmaceutical firms have believed they're in the pill making business -- rather than the "saving lives" business (even if they use the "saving lives" claim to get an emotional response when trying to push for legislation in their favor). The good news, though, is that it appears that some pharma firms are finally recognizing this. As Against Monopoly points out, the Economist notes that pharmaceutical firms are finally starting to experiment with new business models that go "beyond the pill." They're changing how they market and sell pills as well as starting to look into other areas of healthcare as well, from biotech to medical devices. The other interesting thing is that they're starting to look at interesting ways to drastically reduce the costs and time of clinical trials using technology. While this won't change their reliance on patents, it is a step in the right direction. With that diversification underway, it will hopefully be easier to show them additional new business models that can help them become more innovative, creating new opportunities to profit, without having to rely on artificial scarcity.

Filed Under: business models, patents, pharmaceuticals

Bands Big And Small Finding New Business Models That Work

from the and-it-all-comes-together dept

There's been renewed interest in music industry business models now that we're seeing a number of top musicians experimenting with changing business models. The backlash to those early reports was somewhat amusing and seemed to fall into one of two camps. First, there were those who said that these business models would only work for big, well-known bands, despite plenty of evidence to the contrary. Then, there were those who would pick apart each business model to point out why that particular business model wouldn't work for other bands. One of the things that we've tried to do around here is make it clear that there no longer is just one business model that works -- but that there are many different business models that all are based around the idea of the music being free and then charging only for scarce goods. However, if we gave an example of bands making money off of concerts, people would say that some bands don't like to tour. If we gave an example of a band making money through merchandise, we'd hear that some bands don't want to sell merchandise. That's fine. The point is that there are lots of different business models, and bands can find the ones that work for them. Two articles that came out over the weekend help to highlight this.

The first is in the NY Times, and it talks about how big bands are embracing all kinds of new business models from having their music used in TV commercials to selling other related goods (beyond the typical t-shirts and CDs), such as branded drinks. The second article focuses on less well known bands, and how they're adopting all kinds of new business models that focus on getting fans to pay up. In fact, it mentions one band that appears to be using a close variation on the subscription fan club model we suggested years ago. What these two articles show, however, is that both big and small bands are learning there are all sorts of ways to make money in making music even if the music itself isn't where the money comes from. You provide the music to build up a fan base, which helps build up the value of lots of other things as well. It's nice to see more musicians recognizing this trend -- even if the RIAA continues to deny it.

Filed Under: business models, music

UK Considers Forcing ISPs To Block File Sharing

from the as-if-that-will-work dept

Following the recent UK shutdowns of OiNK and tv-links, Lord Triesman, the parliamentary Under Secretary for Innovation, Universities and Skills, is now threatening to regulate ISPs if they don't stop file sharing. Unfortunately, Lord Triesman seems a bit confused both about technology and economics here -- which is disappointing, as his thoughts on regulations would impact both negatively. He seems to think that this would involve an easy technology fix saying that "it is quite possible to know where it is happening and who it is happening with." Then he follows that up with: "we will be able to match data banks of that music to music going out and being exchanged on the net." That sounds good, but unfortunately, he's been misinformed. While it is true that many people do reveal who they are, those who are serious about this stuff know how to remain mostly hidden. Triesman says that they're not concerned with 14-year-olds sharing files, but only the professionals who are making "multiple copies for profit." The problem is that those are exactly the people who won't be caught by these methods.

Next up, Triesman trots out the old and tired myth about how piracy will cause the music industry to disappear: "We have some simple choices to make. If creative artists can't earn a living as a result of the work they produce, then we will kill off creative artists and that would be a tragedy." Yes, it's true that if they can't earn a living from what they do, we will lose new creative content (I'm assuming he didn't really mean that it would kill the artists literally), but the big implicit assumption there is that piracy means they can't earn a living from the work they produce. As we've seen over and over again that's not true. If you understand the economics, you can use free file sharing to your advantage to make a bigger name for yourself and make more money from other sources. To imply that file sharing kills off creative content is clearly incorrect -- and it's about time that myth died off.

Filed Under: business models, copyright, file sharing, p2p, uk

Radiohead's Marketing Ploy Not A Stunt; Just Good Business

from the confused-people dept

Soon after Radiohead announced its plans to offer name-your-own-price downloads, the band's manager said in an interview with the Financial Times that they were doing so in order to boost CD sales. For some odd reason, this statement has apparently pissed off a bunch of people who keep submitting the FT article over and over again for weeks to say that Radiohead's decision is now suspect. However, that doesn't make any sense. As we said when Radiohead first made the announcement, it was clear from the beginning that they were trying to give them reasons to buy the CD. It wasn't a bait and switch situation at all, as they were quite upfront about it. It also isn't a bad thing. It shows the band is doing exactly what the economics suggests it should be doing: using the infinite goods (the music) to help make the scarce goods (CDs) more valuable. The band never said you had to buy the CD. It just said that you can pay what you want (including nothing at all) while also making it clear that the CD was going to be a lot more valuable to own. That seems like a smart business move. About the only mistake in there seems to be that the band accidentally made people think that it was somehow against selling CDs, even though it was clear from the beginning that the band still wanted to sell a CD version and make it worth owning.

Filed Under: business models, marketing, music, radiohead

Lawsuits Don't Create New Markets

from the kicking-and-screaming dept

The RIAA has apparently been getting a lot of negative publicity for its six-figure judgment against a single mother for file-sharing. RIAA president Cary Sherman has a taken to the Web to defend his organization's actions. Personally, I don't have a great deal of sympathy for Jammie Thomas given the strong evidence against her, but I did think Sherman made a couple of misleading arguments. First, Sherman claims that the lawsuits have "created a legal marketplace" for music. But the primary way you create a "legal marketplace" for your products is to offer better products. The market is growing because services like Apple's iTunes make it convenient for consumers to get the music they want in a convenient and flexible format. But the major labels can hardly take credit for that, since they had to be dragged kicking and screaming into signing on to the iTunes store. Sherman says he'd rather be "helping artists make great music that we can distribute in lots of exciting new ways that music fans want." But for the most part, their approach has been the opposite: doing their best to sue new music technologies out of existence and sharply limiting the ways consumers can listen to the music they want. Secondly, Sherman repeatedly equates copyright infringement with theft, going so far as to say that the jury found Thomas "liable for copyright theft." But of course there's no such thing as "copyright theft." As the Supreme Court and others have pointed out, copyright infringement and theft are two different crimes, and it's misleading to treat them as if they were identical.

Filed Under: business models, cary sherman, lawsuits, markets, recording industry
Companies: riaa

Grokster Case Lives On... Judge Debates How Best To Kill Streamcast

from the so-many-choices dept

Many people think that the Grokster lawsuit ended with the Supreme Court ruling over two years ago. However, that's not the case. The Supreme Court was simply ruling on an aspect of the case (whether software providers were liable for what their users for doing) and then sent the case back to the lower court to then review its original decision. Grokster, whose name the case is most identified with, shut down, but Streamcast was also involved in the case and it decided to fight on, claiming that it did not "induce" infringement, and therefore was not guilty of copyright infringement. Unfortunately, the judge wasn't convinced and still found the company guilty. Since then, there's been an ongoing process of determining just what the punishment should be. The judge clearly hoped that Streamcast would make life easy by settling, but the company is nothing if not persistent in standing by its various lawsuits. Ed Felten points out that the judge is now trying to carefully weigh the punishment options for Streamcast, which seems rather odd, because it's pretty clear that no matter what the punishment, Streamcast is done. There's basically no way for the company to stay in business after losing this case, so Felten can't figure out why the company would keep fighting this -- though, the longer it stays alive, the more chances the RIAA has to claim yet another victory over the company.

Filed Under: business models, copyright, file sharing, inducement, p2p
Companies: grokster, streamcast