Two Inane Suggestions For Compensating Artists Online

Guest post by Krzysztof 'Faza' Wiszniewski. This post was originally published at TheCynicalMusician.com.

The problem with hardcore geeks (meaning here people who know about computers, as opposed to the other kind¹) is while they are superhumanly knowledgable about their own area of expertise, they appear to be endearingly ignorant about everything else – humans especially. It should therefore come as no surprise that when one comes out with suggesting a solution to an essentially human problem, the results are staggeringly underwhelming.

The man is Richard Stallman and the proposal(s) in question today are Two Simple Suggestions for Properly Compensating Artists Online…² – as reported by Digital Music News. Now, if you have a complicated problem – and any problem that’s liable to “break” something that was originally designed to withstand a nuclear war is likely to be complicated – then any “simple” solution proposed isn’t likely to be very helpful. Nevertheless, Stallman knows all about computers and the internet, right? So what’s he got in the way of solutions?

1. Put a tax on internet connectivity, and divide the money among artists.

Okay, here’s where a cursory knowledge of economics goes a long way. Today we will learn about “externalising costs” – a concept that economics students will recognise as businesses acting badly.

In short, costs decrease your profits, so you want to keep them as low as possible. One way of doing it is to shift them onto someone else – doesn’t really matter who, as long as they’re not you. A typical example would be businesses that pollute – the degradation of the environment is a cost, surely? One that is borne by society as a whole and thus external to the business. Preventing pollution – on the other hand – is a cost that has to be borne by the business specifically. It is therefore unsurprising that an unscrupulous, profit-maximising business will prefer to dump pollutants any old where, rather than spend money on cleaning up the mess they’ve made. A more specific – and recent – example were the bailouts of the banking sector by governments. Here, the costs of poor financial decisions made by banks were externalised by shifting them onto tax-payers.

You should be guessing by now that it’s hard (if not impossible) to find examples of cost externalisation that aren’t worthy of condemnation – especially since the whole idea amounts to turning up at the bar, downing ten cold ones and then prancing out, leaving your friends with the tab. It is also the essence of the first of Stallman’s bright ideas.

To see how this proposition is a form of cost externalisation, let’s first consider who our beneficiaries (bad actors) are. There are two distinct classes: the freeloaders themselves and the businesses that facilitate file-bartering. The freeloaders’ cost-savings are obvious: they save the money they would have spent on purchasing the content legally. The businesses, on the other hand, save the money they would have to pay for licensing the content they distribute. In order to preserve this comfortable state of affairs, Stallman would have every single person with an internet connection foot the bill, regardless of whether they personally benefit from it or not.

This should be sufficient indication that the idea’s not so hot, even before we get into the whole mechanism of dividing the money. Stallman suggests using the cube root of an artist’s populartity figure as established by polling (red flag) in order to determine the proportions in which money is to be divided, as somehow “fairer” than linear appropriation. Doing so he demonstrates yet more endearing ignorance (or – more likely – lack of any deeper thought on the matter).

Let’s start off by saying that polling, as a method of determining popularity is in itself harshly regressive (as we know from seeing it used by collection societies). Once your initial sample – as determined by polling – is heavily skewed towards superstars, no amount of mathematical juggling will make your division mechanism more fair.

Time for some fun with statistics: the CIA World Factbook gives the U.S. population in the 15-64 age group as numbering roughly 209 million people.³ For our purposes, we’ll restrict our music-listening population to this number. Now consider an artist that has 10,000 fans – a number that should be able to sustain a career – not a particularly lavish one, but nevertheless.⁴ What is the chance of this artist even appearing in a random poll of, say, 5,000 people from our assumed population? I believe the correct statistical term is: a fluke. (Extra credit y’all: one in how many people in our general population is a fan of the artist?)

When using polls as your method of determining popularity, you’re bound to see pretty much the entire middle class of artists slip through the cracks.

But wait… there’s more! The artists that actually have 10,000 fans already are arguably the 1% as it is. Using album sales as a proxy and working with Nielsen Soundscan figures for 2010, we see that only 1.6% of new releases sold more than 10,000 units.⁵ In other words, this solution isn’t even the Wall Street-approved transfer of money from the 99% to the 1% – it’s a transfer of money to a fraction of the 1%.

Even if we were to ditch polling and use the privacy-invading method of monitoring use directly, we still run into problems. For a start, the more people we have with a claim on a portion of the money (since we didn’t filter them out), the less everyone gets – right up to the point where nobody gets anything much at all (witness Spotify). The cube root division mechanism won’t help us here, because getting something is a lot less important than getting enough to live on – which means a minimum acceptable sum and that in turn implies a limit to how many people you can cover with a fixed pool of money. What about artists living outside the U.S.? Will they get a share? What about fans living outside the U.S.? Does the traffic they generate count for anything? Reciprocal agreements? Similar legislations in other countries? How much would the tax be? What about black-box income – money that cannot be distributed because the rights holder entitled to it hasn’t registered for collection? What about other content? It’s not like music is the only thing being pirated and movies are vastly more expensive to make than albums…

The list goes on. In a word: fuhggedaboutit.

2. Give each player device a button to send 50 cents anonymously to the artists.

Ah, a techy solution! So how is that supposed to work, exactly? For a start, you need every such player to be online all the time – or reasonably close. A geek’s wet dream, no doubt, but hardly practical with existing infrastructure. Then, you need someone to keep track of all that – including processing payments – and I can’t help but wonder who that might be… Next, how do we safeguard against accidental pressings, click-fraud and all that jazz? Every push of the button means money out of someone’s pocket. I could go on with these, but they’re mostly side-issues.

This idea suffers from exactly the same voluntary blindness as Emily White’s proposal for a “vast Spotify-like catalog”⁶ – such mechanisms already exist, including my personal favourite: paying for the content you consume. There isn’t a “I’d like to support my favourite artists, but have no way of doing so” problem that needs solving – we’ve had that solution for ages, it’s called the free market. It used to work rather well.

In the context of this idea Stallman says that:

[…] if the system is to support the artists, we need to stop the publishers (such as record companies) from taking this money for themselves

thus demonstrating that he’d do well first researching the problem before proposing the solution. It so happens that the majority of the material in question would not be available without the investment of these publishers. A label might spend considerable money on the recording of an album, by way of an advance to the artist. The artist will “owe” this money to the label (meaning that they won’t receive any royalties until they have recouped the advance). Now, if we take the labels out of the picture – saying they’re not entitled to any share of the donated money – what happens then? Does the label get the right to invoice the artist for unrecouped advances? If the album cost $100,000 to make, that’s gonna be a lot of half-dollars to collect (50 cents is Stallman’s preferred size of a single donation).

It’s probably redundant to say that this is yet another attempt at cost externalisation – this time aimed at those who will be mashing those “Donate” buttons. Actually, given that cost externalisation got us into this mess in the first place (piracy – and freeloading in general – is all about externalising costs), it shouldn’t come as a surprise that any attempt at solving the problem and preserving piracy eventually turns into a giant game of pass-the-parcel that I like to call the Hunt for the Big Dope.

Looking at suggestions like these, I’m inclined to throw a Winston and say that a copyright-based market is absolutely the worst system for supporting creativity and rewarding artists – except for all the others that have been tried or proposed.

¹ A carnival geek is a specialist eater of disgusting stuff. We live and we learn… ^[back]

² Two Simple Suggestions for Properly Compensating Artists Online… ^[back]

³ Source: CIA – The World Factbook: United States ^[back]

⁴ Actually, I’ll go a step further here – if you can’t make your business work with ten thousand regular customers, it’s a sure sign that your business model is horribly broken. ^[back]

⁵ Source: The Number of New Releases Is Suddenly Nosediving… @ Digital Music News ^[back]

⁶ See The Great Gig in the Cloud. Stallman’s comments are in the context of that discussion. ^[back]