While I don't dispute the success of the album, I don't think this is as significant as it sounds. While the whole album was licensed for free distribution, only the first 9 of 36 tracks were available for free from the official source. For the rest, a person would have to either buy it or obtain it through file sharing networks where it would have been available anyway.
FTFA : "In March 2008, Trent Reznor's Nine Inch Nails released the first part of Ghosts I-IV via BitTorrent, and released all four albums under the Creative Commons Attribution-Noncommercial-Share Alike license."
So how would it be illegal to get it from some file-sharing site?
> obtain it through file sharing networks where it would have been available anyway.
when mentioning the legality.
Or to rephrase, if you looked on the filesharing network it would have been there regardless of the licensing, and some people would not download it if they weren't legally allowed to.
Yeah, that's the point. Legality and the sale price of $5 are the distinguishing features, not the fact that it was potentially available for free, as the article implies. It would have been available for free regardless, just as all of the other albums on that list are. From the consumer's perspective, downloading over a file-sharing network is the same whether it's legal or illegal. Making it legal to share it that way does not induce significantly more people to do so (some, yes, but not many); it only means the people who would have anyway are not infringing.
So I think that factor is less significant than the sale price of $5, which does induce more people to buy it than a higher price would.
This is one thing I'll never quite understand. Do users who buy it consider it a tip or donation? This is where economics goes from being a science to being an art. Economics is a great discipline, but it really doesn't explain human weirdness and how that weirdness comes into play with money.
Presumably not everyone realised that it was available for free. I imagine many of them bought it as it was rising up the charts fueled by people who had listened to it for free buying it (as a tip or a donation).
It seems like this model is still mostly a buzz machine which won't necessarily scale.
Well it also helped that the price of Ghosts was very reasonable. People who wanted to spend $300 on the limited edition everything-plus-trents-nail-clippings set could, and those of us that just wanted the mp3s only had to spend $5.
I think if most bands sold album mp3s at $5, people would be more likely to buy them. When I have to spend $10-20 for an album it starts to become worth the time to find it on a torrent tracker.
Edit: Meant to add that I did know how to get it for free, I paid for it because $5 is worth it for an uber-fast, high quality download, rather than dealing with bad rips and low bitrates and such.
I think that if albums were $5, 3 times the albums might be sold, but more dollars would not be spent. I don't see anything but punishment stopping illegal downloads.
Price vs demand relationships are complex and usually not liner.
Over a small range you can work out a price elasticity of demand. For something like bread it might be near zero (as price goes up, demand stays nearly constant) while for something like chocolate covered dwarf hookers it might approach infinity (as price goes up, demand drops to zero really fast).
With a PED of less than one, cutting prices will lower revenue. With a PED of greater than one cutting prices will increase revenue.
Music PED varies by band more than you might expect. For unknown bands it is huge, for established bands with large fan bases it is very, very low. If you are a U2 fanatic then there are no effective substitutes for your purchase so price is not relevant, whilst for X IN INTERESTING_INDY_BANDS there will be many other possibilities so you my as well pick the cheapest.
(Right now if you have a product with a negative PED you should be working hard on it. Anything (like VOIP, or rice, or medical care) where demand goes up as real price goes up (due to deflation/drop in income levels) is a good bet in a recession.)
Last para confusers price elasticity of demand with income elasticity of demand/ What you eventually say could be interpreted to mean something like Giffen goods, which I am sure is not what you meant.:
I'll admit to being one of the clueless ones, but I would have gladly paid for it despite knowing it available for free, had I known (a) how awesome it was and (b) how quick the download worked.
In this particular case, Trent has a very loyal fan base (I bought the $300 limited edition Ghosts set and saw him twice in concert during their most recent tour).
As far as the rationality behind it, personally I purchase items from artists and go to their shows to support them and to thank them for their hard work and their talent.
I want the bands I like to keep producing more music and hopefully my support will help.
Disclaimer: I attend 15-20 shows a year, have far too many band shirts, and am sure that I'm a statistical outlier.
(Disclaimer: I attended four concerts during the Lights in the Sky tour, as mentioned elsewhere) I have a question: Did you really go see them at two shows to support Trent or were you blown away by the quality of show? I'm sure it's a mix of the two, but I'm tempted to think it is more of the latter.
I think that being blown away and wanting to see a show again is a result of a quality production, the byproduct of which is support from fans (especially in this particular case).
To me, it seems to be a matter of convenience. The intersection of people who use iTunes and use torrent trackers is probably quite small. Is the cost of $0.99 worth the hassle of drastically increasing your computer literacy level to avoid? Probably not.
It's easy to forget on Hacker News that most of the population are not hackers.
Empirically, convenience seems to be a valuable good to sell. Why buy a shitty cheeseburger at a higher price than it would cost to make at home? Because its convenient. And so the world runs.
I knew the album was free and still purchased it, although not from Amazon, from the site NIN set up. I definitely still purchase albums of bands I like, why wouldn't you?
I would likely purchase some other product from a band that I like- say, a T-Shirt (which in turn advertises that band) vs. buying a music download that I could get for free. But the idea is the same- I am still supporting the musicians with my wallet.
The albums downloads included more than just music in this case. The Ghosts download included FLACs (as well as multiple encoding of mp3s) of all the songs and high quality art that was created for the release (I think it was $10 for everything, and more money for a limited-release vinyl). So had you known about the download, there would have been even more of an incentive to get it from nin.com
I definitely agree about supporting the band through merchandise and concerts. I ended up seeing NIN four times in 2008, dragging my parents to one of their shows. I can't say I did this because of purely wanting to support the band, but due to the Lights In The Sky tour being so jaw-droppingly amazing.
band t-shirts (zero)
"free albums" (zero)
albums of any type (zero)
Can we please spend less time talking about the music industry it's a small industry which most people don't buy anything from. Why do people find it so interesting?
It's extremely profitable, but that does not mean it's large. IBM made $10.4 billion USD it's got 386,558 people which is a large company, but the recording industry is significantly smaller than that.
PS: Your iPod is not part of the recording industry, the local band that's waiting for their break is not part of the recording industry even though they would like to be. The recording industry is focused on promoting and selling music and while they make a lot of money they don't really use vary many people.
I think what this is missing is that for people who know how to use BitTorrent, all the top albums were available for free. Hence, officially releasing it was a sign of good will which only increased their sales.
