
Neil Young is right — piracy is the new radio  - DealisIN
http://gigaom.com/2012/01/31/neil-young-is-right-piracy-is-the-new-radio/
======
InclinedPlane
We have come to accept a vast panoply of behaviors of sharing creative works
and of allowing people to "consume" music, art, movies, etc. without directly
compensating the creators. Radio, television, libraries, used books, etc. We
accept such things largely because we've grown used to them. We have lived
long enough in an era of libraries and radio to understand that they do not
destroy the ability of artists to make a living.

Uncompensated sharing in the digital age has been unmoored from some of the
traditional limits on sharing, moving it well outside the comfort zone for a
lot of people and causing a lot of backlash against the phenomenon. But even
though the returns on uncompensated sharing in the digital age are sometimes
more diffuse and indirect than for the more traditional forms of sharing we
are used to they still exist. Art will survive. Artists will not end up in the
poor house. And eventually people will grow as used to what gets labelled
"piracy" today as they have to libraries, museums, and radio.

~~~
vibrunazo
I agree, this goes in line with what Francis Ford Coppola recently said [1].
People refuse to accept it because they cannot understand how it could be
different.

Hollywood's model is broken because it has been dependent on scarcity of
distribution. This couldn't be sustainable forever. Internet fixed the
distribution so Hollywood is bleeding. Art is getting easier to access and to
create thanks to technology. (this is where we, startups, come in)

IMHO, art will become a commodity. In a few decades, you won't pay so much to
watch a movie that cost a few millions to produce. You'll pay almost nothing
for a movie that cost almost nothing to produce. And it will have much higher
quality than today's movies. Thanks to technology. Like you said, art will
survive.

[1] [http://the99percent.com/articles/6973/Francis-Ford-
Coppola-O...](http://the99percent.com/articles/6973/Francis-Ford-Coppola-On-
Risk-Money-Craft-Collaboration)

~~~
sausagefeet
Weren't 2009 and 2010 Hollywood's most profitable years?

~~~
PakG1
Meaning that Hollywood isn't bleeding because of the Internet, the Internet
has no negative impact on Hollywood, or you going further, that the Internet
actually helps Hollywood information get distributed even better? I'd say the
latter. It's so much easier for me to find movie trailers, reviews, and learn
about movies I didn't even know existed.

~~~
masklinn
Just that hollywood is full of shit when they claim the internet is killing
creative industries. There isn't enough hard evidence for the rest.

------
mekazu
Is radio dead in the USA? In Australia I think the radio culture is quite
vibrant. Personally I download music from time to time that sits on my phone
but I listen to the radio 99% of the time because it introduces and plays the
best music anyway. The radio stations that I listen to are govt funded[1] so
they don't have any ads and have a community focus of getting people to go see
live concerts and listen to good music.

We also have commercial radio stations that play disposable child-like pop
music (combined with horrible ads and drone-like presenters) that is well
suited to 13 year old girls but still becomes popular with the masses. So
there is something for everyone.

I don't support SOPA (not that it counts in Australia, or anywhere else for
that matter) but I think that artists should get some money from somewhere for
their efforts. People listen to the radio free but they still have the option
of buying the album. Downloading the album free makes that option redundant.

In Australia people typically pay $40 - $70 a month for their internet which -
if they use the allocated capacity - they are using to pirate music, movies
and TV without ads. I'd prefer to see part of that money going to an artist
fund rather than the ISPs and broadband resellers.

[1] triplej.net.au and www.abc.net.au/classic/

~~~
TylerE
Yes, it's dead. But basically minus the government stuff.

Well, there is NPR (National Public Radio) which is about 15-25% government
funded, but that's typically news/talk/classical. Some of the edgier NPR
stations might have an acoustic rock/folk set at midnight on a Friday...

~~~
mekazu
What do you think killed it? How do people find good music without having to
filter through all the rubbish? Does the industry rely on advertising to sell
bad music? Are "Top 40" artists built by record companies and sold on TV
and/or the internet? Does good music travel through word of mouth by people
in-the-know? iTunes is pretty and all but I can't picture people paying to
download without having heard the music somewhere else before.

Lots of generalising to do here to answer these questions I guess but I figure
there's opportunity out there for someone who can make something of the
answers.

~~~
krakensden
I don't work in radio, I'm not a radio historian, so there's a good chance I'm
violently wrong- but my pet theory is that advertising killed radio in the US.
You have to fit into a small number of surprisingly rigid categories in order
to participate in the big money advertising campaigns, and if you don't have
those, you're liable to go dark.

There are exceptions, like the Pacifica network and oddities like KPIG, but
they're few and far between.

If you're looking for some corroboration, you could check out documentaries
about the early days of hip hop.

~~~
mekazu
You paint a pretty bleak picture. Does anybody have any examples of USA radio
that is intelligent, artist focused, youth oriented, community driven, ad
free, subscription free, streaming on-line, etc? There are plenty to choose
from on tunein.com but I'm looking for highlights. Sorry if this is heading
too far from the topic.

~~~
krakensden
That's a lot of qualifiers there.

KPIG is pretty great, but they have ads.

There are lots of college radio stations (check out KDVS and KALX) that are
pretty amusing, but they're not so much "community driven" as "driven by the
people who show up and pay their dues". That may seem like nitpicking to you,
but it seems very relevant after an hour of frogs and Star Trek samples.

NPR stations, Pacifica stations, kind of sort of don't have ads, but they do
have sponsors and pledge drives. They are pretty old-people oriented.

I'm sure someone who is slightly less NorCal centric can improve on this list.

------
Apocryphon
Interestingly enough, he defends record companies as well here. He's in a very
compromise position:

[http://blogs.wsj.com/speakeasy/2012/01/31/neil-young-
defends...](http://blogs.wsj.com/speakeasy/2012/01/31/neil-young-defends-both-
record-companies-and-piracy/)

~~~
ethank
To be fair: Neil always had a great relationship with his record company since
being with Reprise. He'd come in and hand deliver every record, staying for
playback in our artists lounge.

A great guy, super fun and always a joy to hang out with. A true music fan and
appreciative of those that worked on his records. His manager Eliot is a great
guy too.

------
res0nat0r
Can you really equate piracy to radio when you can listen to what you want on-
demand? This is a big difference from radio and services like Pandora which
don't allow you to listen to exactly what you want when you want.

~~~
ChuckMcM
So the challenge is 'listen to what you want' versus 'discover new music'.

People will listen to something for 'free' even if they aren't sure they will
like it, but they won't pay any money for something that they don't know
whether or not they will like it.

Radio was a way to introduce new music, but with an iPod/iPhone/mp3 player
people can carry around _days_ of music that they already know they like, and
it has no annoying adverts in it, so they don't listen to the radio any more.
Thus a source of discovery is cut off from them.

'Pirates', listening to music and then giving a copy to a friend who they
think might like it, allows new music to be discovered. That seeding is
required for artists to develop a following. Pandora does similar seeding, but
like radio injects advertisements which are annoying to many.

~~~
mohene1
The issue of compensation for the artist never seems to come up in these
conversations. Neil Young can charge $75 for his cheapest concert tickets. So
record sales mean very little to him. For younger artists this is not the
case.

> but they won't pay any money for something that they don't know whether or
> not they will like it.

people bought albums for decades without knowing what songs were on the album.

I don't see how it's fair to justify the acquisition of someones property with
the pretense that it's gonna be better for you. Even under extreme cases like
nationalisation and imminent domain, the owners are compensated. I made this
comment on the Neil Young link, but it was censored. If we are so certain that
the artist will benefit under the 'new' system, fine, but if he or she doesn't
they have to be compensated to bridge the earnings gap.

Comparing music now to music in the 1930's is not fair, artists got paid
almost nothing in the 1930-1950's. The whole industry was corrupt.

~~~
ChuckMcM
You know that old aphorism "If a tree falls in the woods and nobody hears it,
did it make a sound?" For "younger artists" that is code for 'nobody knows who
they are.' And that is a very important concept to internalize if you want to
understand the economics of information.

Lets say you offer to sell someone an 800 page hardcover book about a wizard
for $35 [1]. If they have never heard of the author they are going to politely
decline. Why? because they can spend $35 on a book from an author they know
they like and for whom perhaps their latest book was also read by their
friends who liked it. As an economic actor in this transaction they act in
their own self interest, to spend their earned income on entertainment for
which they have some prediction of enjoying it. Give them a $35 coupon good
for any book at Amazon and they might buy it on a whim, make them work half a
day to earn that much and they won't.

So your observation about Neil Diamond is absolutely correct, there are a lot
of people who have heard his music, like it, and will buy it. More importantly
because there are a lot of people who have heard it and like it, the
probability that a person knows someone directly who has bought it and likes
it is higher. The the perceived risk of the purchase is lower.

So now imagine that you've got got an artist producing a product. Initially,
there is this huge barrier to them selling their product because there are
many known artists out there (and the new artist is initially unknown), and
there are many 'purchase experience' consumers who are reinforcing the quality
analysis of the known artists. So our new artist has no way to communicate
their value to their potential customers.

So to overcome that lack of exposure, a new artist has to 'be heard' (if we're
talking about music) and they do things like play bars, clubs, go to 'amateur
night', and try to get a local group of people that like to hear what they
play. If they are successful at that they might be able to 'open' for a famous
act at their concerts, be the band that 'warms up' the crowd. Now they get to
expose themselves to the people who like the main act (and presumably their
musical style is similar so they feel they might be liked too) and if enough
folks do like them then maybe they can be their own 'headliners'. Of course
when you open for Neil Diamond and people are paying $75 to see Neil, not a
whole lot of that is going to you, the warm up band.

This whole 'getting the word out' is a process that was filled by radio for
years and years. It was so successful in fact that music labels would actually
pay the radio stations to play their signed acts music. It was a huge scandal.
But instead of thinking the money they paid the radio stations as 'lost
profits' they considered it a marketing expense. And they were right. They
knew, and pretty much anyone who has tried to market an 'art' product (which
is to say a creative work), that people don't buy things they don't know
about.

So you can ask what a new artist's work is 'worth' compared to an established
artist. And to understand that you have to include the cost of making the set
of customers who would buy this new artists work aware of the existence. That
is a huge sunk cost, and one that used to be born by a book publisher or a
record label. Once the artist is over that hump of course things are much
easier. What Neil has recognized is that 'piracy' as defined by the record
labels and book publishers is creating more artist awareness these days than
the older channels. That is a really really important change, and it is one
that artists, especially new artists, have to internalize.

Perhaps in the 'old' days your publisher would pay you $4K for a book, and if
that book took off they would make a huge 'profit' on it and you would not see
another dime. But on your second book with them you could negotiate better
terms. There are many examples of 'hollywood accounting' or 'record label
accounting' which show how they do this. The artist doesn't get any benefit
early on, and only after being established to they have any leverage in those
business negotiations. The 'new' way may be that the early works of the artist
get 'pirated' like crazy and spread far and wide. People get exposed to them
for 'free' and while the artist gets no monetary remuneration, they are
offsetting that barrier of not being a known entity. As they develop exposure
they will get more and more pricing control over their work, up to and
including the point where people will pay millions in advance to be the first
to get their next novel/song/movie what have you.

But the key to understanding this is understanding that 'value' is composed of
two parts 'awareness' and 'quality.' And they are multiplicative. So if either
is zero, value goes to zero. The thing that makes it still work is that the
marginal reproduction cost in a digital ecosystem is also nearly zero.

[1] [http://www.amazon.com/Harry-Potter-Deathly-Hallows-
Book/dp/0...](http://www.amazon.com/Harry-Potter-Deathly-Hallows-
Book/dp/0545010225)

~~~
teyc
I was listening to NPR where they said the record company made about $8m off
Kate Perry's record sales, whereas they were responsible for most of the
marketing expense (promoting to radio stations, etc). There was another show
about how much it costs record companies to try to get a summer hit, and they
didn't have much to show after [1]

There's now a trend for record companies to reposition themselves as marketing
agencies (which is what they actually do) where they take a cut of the total
revenue (including song writing and concert sales) called 360 contracts. [2]

It'd be interesting if the entire process of songmaking were like a creative
commons non-commercial project. You start with a song writer, different people
doing mixes, and then when it reaches a stage where it can be monetized all
people involved get paid. The question is "how to hell do you monetize this?"
iTunes? High Fidelity mp3 ? Live performances? Humble bundle $1 compilations?

[1]Songs of Summer [http://www.npr.org/blogs/money/2011/07/11/137705590/the-
frid...](http://www.npr.org/blogs/money/2011/07/11/137705590/the-friday-
podcast-manufacturing-the-song-of-the-summer)

[2] Kate Perry's Perfect Score
[http://www.npr.org/blogs/money/2012/01/20/145466007/katy-
per...](http://www.npr.org/blogs/money/2012/01/20/145466007/katy-perrys-
perfect-game)

------
marshray
"Information wants to be friction-free."

That's worth thinking about.

------
teyc
It is so true. Just as a busker would play music for anyone, and gets an
appreciative tip once in a while, pre-recorded music can be seen as a
leveraged way of busking.

In some way, the record industry is doing piracy a service by increasing the
perceived value of music. Too bad they don't get a cut for doing that.

------
scribu
A very apt analogy indeed. +1 for Neil Young.

------
jpdoctor
He should write a song about it. Here are some suggested lyrics:

    
    
      Hey hey, my my,
      Piracy will never die,
      There's more to the torrent
      Than meets the eye,
      Hey hey, my my.

------
Craiggybear
Its an interesting viewpoint, and one that is probably very true.

People often hear pirated material and like it so much they immediately
purchase it. Not only that one album, but even sometimes substantial amounts
of the artist's back catalogue. Which was and still is kind of the point with
music radio.

Same with movies.

I wonder how much cash piracy actually generates as substantial income --
quite a bit I believe. And probably more than it denies. Quite a lot of people
are exposed to material they would never have encountered, like it and pay up
for it.

