Doing it right

It's great to read a story where fan-sourced content is appreciated by the original work's author instead of stomped on. I'd seen the blog for the "Game of Thrones" cookbook after one of its bloggers visited here after I'd posted on food stores in Westeros. But I hadn't read the backstory of how they moved from blog to publication. The Wall Street Journal gives the story.

The book began as the brainchild of Chelsea Monroe-Cassel and Sariann Lehrer, two Boston twenty-something housemates who are “pretty obsessed” with the Martin books and the HBO series, Ms. Monroe-Cassel said.  Last March, the friends decided to blog about making food inspired by Mr. Martin’s books.  In May, they emailed Mr. Martin to let him know about their blog, and were stunned when he wrote back, saying he would mention the project to his publishers.

For his part, Mr. Martin was interested, because though readers over the years had suggested he write a companion cookbook to his series—detailed food descriptions run throughout the books—“I can’t cook,” Mr. Martin admitted in his forward to the cookbook.

With a penchant for taking creative projects to the extreme, Ms. Cassel-Monroe said she “organized a conspiracy” for Mr. Martin’s “A Dance with Dragons” book tour last summer, delivering baskets of pork pies, and oat and lemon cakes and organizing fellow fans to deliver similar baskets to Mr. Martin as he traveled the country.

And so they went from blogging to writing the official Game of Thrones cookbook.

There's also an unofficial Game of Thrones cookbook.

If you read TechDirt too much*, it's easy to get a bit depressed about rights-holders who seem more interested in stomping on their fans than in encouraging projects that are complementary to their product. It's great that George R.R. Martin gets it.

I'm looking forward to feasting when the book ships end-May. I wonder if David Friedman will review it.

* Today's edition of how-not-to-do-it: Hasbro, whose toys are now less likely to wind up in my shopping basket.

Court Costs

Remember the absurd copyright trolls Larrikin Music? The ones who went after Men At Work for including a short flute riff in "Land Down Under" as part of its homage to all things Australian?

Here's the tragic denouement [ht: @lawgeeknz].

Two years on and it seems the musician was still affected by the court decision, which is believed to have had a significant impact on his financial situation. The 58-year-old's body was discovered by friends at his North Carlton home yesterday - in a modest house he recently moved into after being forced to sell a grand property nearby bought during the Men At Work days and later turned into a studio where Archie Roach's Charcoal Lane was recorded.

Detective Senior Sergeant Shane O'Connell said there were several unexplained circumstances surrounding the death, but would not go into detail.

The cause of death remains unknown, but a close friend of Ham's told The Age last night that he believed Ham had begun using heroin heavily and also abusing alcohol after the Kookaburra case. ''The whole case had undone him,'' said the friend, who asked not to be named.

Dragging people senselessly through the courts has costs.

Congratulations, Larrikin.

USTR on NZ

The USTR has words of praise, and some minor critique, of New Zealand.* I read some of their critique also as praise.

Here's some praise:

Tariff rates in New Zealand are generally low as a result of several rounds of unilateral tariff cuts that began in the mid-1980s.  At 2.1 percent, New Zealand has one of the lowest average most favored nation (MFN) applied tariff rates among industrialized countries.  The average applied MFN tariff rate was 1.5 percent for agricultural products in 2009 and 2.2 percent for industrial goods.  In 2010, approximately 95 percent of all imports to New Zealand (by value) entered duty free.  Approximately 47.5 percent of New Zealand's MFN tariff lines are bound at zero duty rates, and 63.1 percent of lines are applied at zero.  The New Zealand government has stated that import tariffs will not be reviewed until 2013 and will remain at their current levels until at least 2015.

But they've a few critiques. They rightly note that our investment screening regime is a trade barrier to foreign investment in land; they're right. It's become politically arbitrary and needs to be fixed.

But I disagree rather strongly with two other assessments. They reckon it a bad thing that the draft patent reform bill would ban software patents; I don't. But I also don't expect that part of the bill to survive US pressure via TPP.

They also don't like that we let ISPs charge rights-holders, US or otherwise, NZ$25 for issuing an infringement notice. If each infringer really causes substantial damages, as rights-holders like to claim, the $25 shouldn't be an issue. But USTR says "The cost has deterred some rights holders from using the system."

USTR needs to think hard about optimal enforcement; it would be surprising if it were worthwhile to pursue enforcement action - which does impose real costs on both the ISP and the accused - where the damaged party doesn't reckon it worth $25. Heck, our small claims court charges $36.30 as its smallest possible fee for dispute resolution.

You need to pay the following fee to the Tribunal when you lodge your claim from 1 July 2011.
If the total amount sought under the claim is less than $1,000	$36.30
If the total amount sought under the claim is $1,000 or more but less than $5,000	$60.40
If the total amount sought under the claim is $5,000 or more	$120.80

If $25 deters US copyright giants from pursuing claims against alleged Kiwi infringers, it's amazing that anybody here is able to access our small claims system. Especially if infringements cost rights-holders $150k.

*HT: @PiratePartyNZ

Copyright updates

Paul Heald's excellent graph has brought commentary from all over the web; it's been fun watching where it's popped up since he gave the talk here at Canterbury. If I had to guess, a talk for 15 economists at Canterbury hit an audience, for that graph, in the hundreds of thousands.*

TechDirt usefully notes that things are even worse than pictured. While copyright protection extends back to the 1920s, that's only for works where the rights-holder has renewed his copyright. Rights to most works aren't renewed. But it isn't always easy to figure out whether or not the rights-holder has renewed the rights, and getting it wrong can be costly. Masnick writes:

This is something most copyright supporters ignore: entering the public domain can actually renew the value of art, and can (and does) stimulate the economy by allowing others to exploit additional commercial value from a work beyond what was possible under copyright. The commercial usefulness of a monopoly on a book has a shorter shelf-life than the monopoly actually granted by copyright law. Based on Patry's findings, that shelf life is somewhere under 28 years, otherwise more people would have renewed their registration—but copyright lasts much longer than 28 years. Thus you get the giant gulf on Heald's chart: in between the pre-1923 public domain books and the books that are new enough to still be actively sold, there are several decades of titles that are no longer worth anything to their rightsholders, but can't be offered by anyone else because they are still effectively under copyright.

Yes, just effectively—not actually. As you may have noticed, there seems to be a contradiction here: if the majority of copyright registrations went un-renewed, then the majority of books published between 1923 and 1963 have lapsed into the public domain alongside the books from 1922 and earlier, so the drop-off in Heald's chart should be much, much smaller. This is not a conflict in the data, it's a symptom another massive and entirely separate problem with copyright law which I discussed in a recent post: the difficulty of determining a work's status.

Copyright is a good thing. But not at its current duration or its current scope.

*An incomplete summary: Marginal Revolution, Matthew Yglesias, Kevin Drum, Rebecca Rosen [made the most popular on The Atlantic's front page on the Saturday after posting], Brian Doherty, Kevin Kelly, and FAIR. It's hit Memeorandum, Reddit, Hacker News, The Glittering Eye, the CEI's Open Economy Blog, Politikon, and LISNews. Topsy tracks the tweets; here are the +Ripples. And TechDirt and Information Liberation and Right to Read and Habr. At 15000 post views and counting, if the click-through rate to Offsetting from the other sources is maybe 5%, then multiply my views by 20 to get a ballpark audience of 300k.

Copyright stagnation

Paul Heald demonstrated the effect of the stagnant US copyright wall in seminar at Canterbury last week.

Recall that books published through 1922 are in the public domain in the US; those published since then are covered by copyright.

Heald dug through some Amazon stats to see what happens to books as they come out of copyright. Here's the rather stunning graph.

So any arguments about underexploitation of unprotected works seem untenable.

If this were a moving wall, maybe it wouldn't be so bad: eventually, books would come out of copyright and be released in new editions. But Disney does keep going back and insisting that nothing can ever be returned to the Commons from which they so liberally drew, and Congress loves Disney; we might reasonably expect another copyright term extension act to keep the wall fairly rigid.

So while I can get Pride and Prejudice in remix with either vampires or zombies,* I'm not betting on being able to read a version of Good-bye, Mr. Chips in which he protects his students from the werewolf menace as well as offering them solace through the Great War. The werewolf version practically writes itself - the Germans infect some injured British soldiers with lycanthropy just after a full moon, knowing they'll be back in Britain by the next full moon....

Here's Paul's SSRN page. The chart above isn't in any of his released papers, but is an update to some of the matters he covered here. His talk for the department is embedded below; the audio isn't fantastic, but all the slides are there.

* Pride and Prejudice is unreadable except in remix.


Update: Paul Heald clarifies the chart source data:

Hi, I just wanted to note that Amazon does not know when a book it sells was first published. It only knows the date of publication of the volume that it is selling, e.g. Treasure Island could have a date of 2002, if that’s the edition Amazon is selling. I had to check each of the 2500 books at the Library of Congress to determine the actual initial publication date. This is why stats taken from an Amazon “year of publication” stats don’t match up. Cheers, Paul Heald

See also discussion at Marginal Revolution, Matthew Yglesias, Kevin Drum, Rebecca Rosen [made 8th most popular on The Atlantic's front page], Brian Doherty, Kevin Kelly, and FAIR. It's hit Memeorandum, Reddit, Hacker News, The Glittering Eye, the CEI's Open Economy Blog, Politikon, and LISNews. Topsy tracks the tweets; here are the +Ripples. And TechDirt.

Base rates and piracy

Since NZ's anti-downloading regime came into force, we've seen a big drop in total Torrent traffic and a big increase in secure tunnelling and remote access protocol use. The latter two are much less likely to draw infringement notices from rights-holders.

Does this mean that downloaders have just shifted tactics? It's impossible to tell from the National Business Review's article. Here's the graphic:

But as we can't tell anything about the ex ante base rates for tunnelling or remote access, we can't tell whether those increases are effectively replacing Bittorrent use. Total downloading could be up, down, or constant; we just can't tell. I'd be surprised if that many people were tunnelling prior to the law change; I'd bet on total downloading consequently being down.

Downloading and not paying for copyrighted works that are legally available in New Zealand when you would have paid for the works were the free version unavailable seems unambiguously wrong. But I have a hard time seeing where we move from "right and fine" to "wrong" in this continuum.

Protagoras: Let us agree that enjoying copyrighted works for which we could have paid but chose not to pay is wrong.

Glaucon: Yes, let us agree to that, Protagoras. But you borrowed my legitimately purchased DVD of Idiocracy last week. You enjoyed it, and returned it to me.

Protagoras: Yes indeed. The sleeping man's struggle, and failure, to teach virtue and wisdom to the diminished men of the future was instructive. But when you purchased that DVD, you also purchased the right to lend it to me. Consequently, you paid more for the DVD than you otherwise would have paid; the rights-holder was compensated.

Glaucon: Indeed he was, Protagoras. Know too though that I have been ripping my DVDs onto hard discs: to protect against the failure of physical media when the children have sticky fingers, to save room in the bookshelves, and to avoid the irritating copyright warnings which the DVD-makers in their wisdom will not allow us to skip.

Protagoras: Is such "ripping" here allowed?

Glaucon: Shifting the format of a purchased file is entirely legal for music. Let us restrict ourselves to consideration of the old Portishead CD I lent you a month ago, the return of which I still await.

Protagoras: So stipulated. And I will return the CD to you Monday hence.

Glaucon: That is appreciated. But know too that I ripped the CD to my hard disc some time ago. Does my having ripped the CD make my lending of it immoral?

Protagoras: If you did not listen to the ripped copy of the CD while the CD was in my possession, it is hard to see what harm could have been done to the rights-holder. It would have been wrong to sell the CD after ripping it, but I see no harm in your having lent it.

Glaucon: I am heartened to find we have not acted immorally, at least thus far. Suppose now that, instead of lending you the physical media, I lent you a thumb-drive with the files along with a promise that I would not listen to the music on the CD while you were listening to the mp3s?

Protagoras: The form of the lending ought matter not. If we were not both listening to the same song at the same time, the situation is analogous to your having lent me the physical media.

Glaucon: I agree, Protagoras. Not suppose that, instead of lending you a thumb-drive with only that CD, it were more convenient for me to lend you my backup hard drive with my entire music library - all of which consists of ripped versions of CDs I legitimately purchased. Does anything change?

Protagoras: So long as neither of us are listening to the same song at the same time, I see not the difference between this case and the case in which we meet frequently and you lend me CDs.

Glaucon: Now, suppose that I quickly require the return of my backup drive that I might update its contents. If you have not had the time yet to listen to that Portishead album, would it be wrong for you to make a copy of the backup drive for later listening?

Protagoras: I see where you are headed with this line of argument, Glaucon. You will attempt to argue that we each could be in possession of copies of each others' files, without loss of virtue, so long as we are not listening to the same files at the same time. And, with sufficiently large music libraries, the likelihood of our listening to the same file at the same time is so small as not to merit consideration.

Glaucon: Indeed. The argument seems to imply that we may all share .mp3 copies of CDs we have legitimately acquired, so long as we share sufficiently large numbers of .mp3s that the likelihood of simultaneous listening to any particular track is very small.

Protagoras: Whether the law allows it is not necessarily a measure of the virtue of a thing, but would the law allow me to make a copy of your backup drive?

Glaucon: No, it does not.

Protagoras: I think I have identified a flaw in your argument. When you lend me a CD, you remove from yourself the option of listening to the CD, even if would not have exercised that option. You feel the loss of the CD and it pains you; had you not the backup copy, you surely would earlier have demanded the return of the Portishead CD. An extensive music library provides option value. Lending the CD diminishes that value for the entire period that the CD is in my possession, while only restricting yourself against listening to the file when I might also be listening to the file barely affects that option value.

Glaucon: But, by your earlier argument, the ability to lend you the CD increased the amount by which I valued the CD, did it not? So being able to lend you a song for only three minutes, rather than for the months you tend to take to return CDs, surely increases that CD's value and increases the price I would then have been willing to pay for it at the outset. Imagine now a virtuous music-borrowing service. We each upload our CD libraries to the service and listen to the music through a specially configured music player that prevents more than one person from listening to any particular uploaded file at the same time. Surely this is akin to a very efficient borrowing regime.

Protagoras: I must admit the force of your logic here. And we can take it one step farther. Where once it was the CD or the album that was the natural musical unit, it now is tracks. But we could similarly view the natural unit as being tiny measures of a song. So long as none listened to the same tiny measure of a song at the same time, the analogy to borrowing seems to hold. And so the virtuous player need only slightly stagger individuals' playing such that very small units of time separate each listener's enjoyment of the song. If we both wish to listen to the same song, the player might delay my song initiation by a second such that we are not delivered the same tone at the same time.

Glaucon: Now, Protagoras, is there any practical difference between the regime you describe and your simply copying my backup drive? It is impossibly unlikely that we could ever decide to begin listening to the same song at exactly the same time.

Protagoras: I see none. And external hard drives are now about $0.10 per gigabyte.

Glaucon: I still fear we have erred in our logic. But I see not how. Shall we go shopping?

Protagoras: Agreed. But we should also be sure not to lend our backup drives to too many people; if a very very large number of people all share the same files, the chances that two individuals might listen to the same tone from the same song at the same time potentially becomes non-trivial. And moral responsibility for the act of theft then becomes more difficult to determine than responsibility for the death of one killed accidentally by a thrown javelin.

What, if anything, have Protagoras and Glaucon missed?

Nothing in this post ought be interpreted as advocating anything deemed illegal in the jurisdiction in which you might happen to live.

An interesting counterfactual

Start by thinking about the US movie industry. Now take away copyright protection - the government gives up on trying to police it. Next, get rid of most of the country's movie theatres so that the one place where the industry can most securely monetize content is gone. Next, cut per capita income to about $1000. And, get rid of most of the infrastructure that's complementary to the film industry. Finally, make sure that there's no government support of the industry to make up for all the other problems.

There'd be no movie industry at all, right?

Except Nigeria's already there and producing more films per capita than the average for developed countries. Olufunmilayo Arewa documents Nollywood's success.

The rise of the film sector in Nigeria runs counter to existing trends in the film sector in which developing countries, which produce 1.2 films per million inhabitant annually, lag developed countries, which produce 6.3 films per million inhabitants annually.¹⁷³ At current Nollywood production levels, Nigeria produces approximately 6.7 films per million inhabitants annually.¹⁷⁴ Bridging the developing country film production gap remains challenging, particularly because the optimal ways to create domestic film industries remain elusive in many instances. Prior to the proliferation of Nollywood films, at least one commentator suggested that government takeover of the film industry would be the only means by which Nigeria could develop a film industry.¹⁷⁵ 

Notably, although many countries have sought to incentivize particular types of film production through direct government funding, subsidies, or film protection schemas involving film quotas,¹⁷⁶ many of these industries have not been commercially viable in the absence of subsidies or other support schemes. In contrast, Nollywood has created significant volume of local video film content with virtually no government involvement or subsidies. The success of Nollywood may in many respects be attributable to a lack of government involvement and its decentralized nature, which has permitted Nollywood participants to be highly entrepreneurial, adaptive and innovative. Nollywood now may employ as many as 200,000 people directly with estimates of indirect employment as high as 1 million.¹⁷⁷ The market-driven Nollywood approach is less costly than existing models of film production and distribution and may offer a new model for developing countries that wish to develop domestic film industries. [emphasis added; number does seem high, Nigeria population about 158 million...]

Arewa says Nollywood succeeded, in part, because very lax copyright enforcement meant Nollywood films enjoyed early broad distribution, building demand for later works. Now that the brand has been established, more secure property rights could be useful. And, copyright enforcement has stepped up a bit; Arewa quotes the following:

Industry officials and government agencies have started paying closer attention to piracy, but so far there hasn’t been much of an effect. A recent police raid on a well-known DVD-copying operation resulted in a brief confrontation between police and piracy-ring leaders. The pirates stood their ground and burned a police truck, then went back to work making knock-off Nollywood copies. The only repercussion for the offenders? A bill for the damage to the police vehicle.²¹²

Films are low-budget, usually financed by friends and family, and distributed on DVD through informal networks. They don't earn much, and even with copyright, vendors couldn't charge more than the $2-4 they charge per disc: consumers couldn't afford it. But better protection would now yield higher returns through increased legitimate distribution.

Arewa sensibly suggests a few potential channels, like capitalizing on pirate distribution networks through in-film product placement and advertisement, where other alternatives like moving from informal to formal business environments and strengthening intellectual property protection might not be feasible. The lessons probably apply more broadly.

Update: Cowen previously pointed to more on Nollywood and online distribution of Nollywood films: Nollywood plus Netflix = profit.

Release windows and piracy

It takes a long time for movies to be released in New Zealand. How long? Mike Dickison's been trying to figure it out, while plotting his escape from Christchurch*. So far, it looks like about a 50 day wait on average. What's that like? I didn't know there was a remake of Girl With a Dragon Tattoo so figured the new posters up meant that the film we'd seen a couple years ago was finally having a broader theatrical release. Perhaps that's just me being dense, but it didn't seem crazy.

So while we're hearing all our friends tweet about the latest releases, the only way of staying in the conversation is piracy. Two-month delays in getting films here might have made sense when they had to be carried by steamship; it's perhaps a bit ridiculous when theatres with digital projection equipment can have the movie emailed to them.

I'd wondered whether these release windows explained New Zealand's robust file-sharing culture. Stealing content just doesn't seem that wrong where content providers refuse to provide a legal way of accessing it. So I started casting about for ways of getting data on NZ filesharing to test whether length of release delay explains filesharing volume.

Looks like I won't have to bother. Danaher and Waldfogel have an excellent paper up at SSRN. Here's TorrentFreak's summary. Long story short, the introduction of BitTorrent depressed box-office revenues outside of the US in a way that correlates with the length of the window between US and foreign release. Within the US, the introduction of BitTorrent hasn't sharpened the gradient for revenue drop off with weeks since first release, which we would have expected if greater online availability increased with time (which it does) and depressed box office revenues.

If studios delay the release of films that they expect to be less popular in a particular foreign market and rush in films they expect will have more viewers, then we'd see lower revenues for those longer-window films even in the absence of piracy. But, as they use a difference-in-difference approach with films released before and after BitTorrent, we'd need that studios suddenly became better at this post 2003 for the results to be contaminated. They also run a robustness check using a triple difference-in-difference approach exploiting that sci-fi and action movies are more heavily downloaded than, for example, romance films. Longer international release windows depress box office earnings, with the effect likely due to BitTorrent.

The paper also provides an very nice explanation for studios' use international windowing:

• Cost of physical prints is high, so it's cheaper to send films abroad after a first run in the US. This also goes some way toward explaining our sometimes grainy film quality at theatre: every theatre is effectively a second-run theatre.
• Most foreign markets are theatre-poor relative to the US, so they have to be more selective in which films to screen. Waiting to see what's successful in the States before committing to a run here can make sense. 
• Promotions centred around film star appearances require international windowing.

Those three things have to dominate the piracy cost of their windowing strategy, unless we want to assume the studios are idiots. The authors estimate that piracy reduced weekend box office returns by $240 million in 2005. I'd be a bit surprised if the gains coming from the three bullet points above outweigh that, but I'm not the one with money on the line in this game. Or it could be that the studios are pushing hard on legal solutions as a way of keeping the benefits of international windowing while avoiding piracy losses. I'm pretty sceptical that that's going to work.

Update: The OatMeal is on point.

* While we're thinking about things that aren't working, here's Mike's piece in the Herald. Depressing but realistic.

After the first quake shock had worn off, there was a unexpected elation in the air. People were itching to reclaim the rubble and turn destruction into a fresh start. The Gap Filler project screened outdoor movies in an empty lot, and made a book exchange out of an old fridge; Greening The Rubble built parks where there used to be buildings. The urge to help-to do something -filled community meetings and swamped the City Council with suggestions for the rebuild, giving rise to that utopian document the Central City Plan, which painted a picture of tree-lined cycleways, green markets, and inner-city apartments.

Not only would the quake damage be fixed, so would decades of urban sprawl and central city neglect. Ponies for everybody. Ponies with free wireless.
...
Apart from a fortnight when I was barred from my apartment by a police cordon, I've been living in the central city since the February quake, watching earthquake tourists circle the Red Zone on sunny weekends, and seeing buildings gradually disappear week by week. I've watched the crack in my wall get slowly wider, and energy and optimism leak away, replaced by frustration, cynicism, and a dawning realisation that bringing a heart and life back to the city will take a decade or longer. And that the only people who can speed that up are politicians and insurance companies, not the citizens.

I'm a bit more optimistic than Mike. New life is popping up all over the suburbs. EPIC will break ground downtown and provide an anchor for new development. So long as we can keep Council from stuffing it up...

Patronage

Everyone remembers Waldstein because he chose to patronize a great composer, Beethoven, who then named a rather nice Sonata for his patron. I doubt Count Waldstein would have made Wikipedia a hundred and eighty years after his death if he hadn't chosen to sponsor Beethoven.

Where copyright is the business model, illicit copies get stomped on because some small fraction of those copies might represent displaced sales. Under a patronage model, the greater the distribution of the work, the greater the fame and approbation accruing to the sponsor.

And so we find General Motors providing free MP3 downloads of their sponsored work: OK Go's genius new song, Needing/Getting. But for some insane reason (maybe because the car isn't yet here on sale?), they're not allowing downloads in New Zealand. But that's ok. The YouTube video has to be better. Here it is.



And here's the best analysis I've yet seen on both the video and OK Go's shift from copyright to patronage: from Car & Driver Magazine.

Some rock artistes would recoil at being known as “the treadmill band,” but it doesn’t seem to bother Kulash. “Every band has songs. Not every band has videos like this,” or, indeed, a music-industry backstory like this. It involves OK Go divorcing its big transnational record label—EMI—in 2010, starting its own label, and joining the great media democratization movement on the internet.

Since the separation, OK Go has pretty much done as it pleases artistically, distributing it all free at sites such as YouTube, one of the Tahrir Squares of the music-industry revolution, while relentlessly touring and partnering with corporate sponsors to pay the bills.

Proving that Brown University doesn’t hand out degrees to just anybody, the lanky, Mick Jagger–like Kulash is a manic thinker. His speech is so flushed with philosophical abstractions and conceptual idealism that it all keeps collapsing on itself as he works to convey everything at once. To wit: “The good side from a creativity and productivity standpoint is that we don’t have to abide by any of the—not only the rules but the definition of what last century or last decade, you know, what a musician does doesn’t have to only be to make recordings, it isn’t to make a seven-inch, 45-rpm piece of plastic, you know?”

The essential point is that OK Go peddles not singles or albums but audiovisual art intended to create “joy and wonder and surprise,” as he puts it. Corporations want to be involved, and that doesn’t bother Kulash, either. “If you want to spend your day making stuff, somebody is going to have to help you pay for it.” So far, Land Rover, Samsung, and State Farm Insurance have all paid to play along. “The crazier our ideas, the more likely we are to have interest” from sponsors, says Kulash.

Ideas such as figuring out how to make music with a car.

The original concept for “Needing/Getting” grew out of a 2010 video for the song, “This Too Shall Pass.” In it, the so-called Rube Goldberg video, the band sings off a soundtrack while dominoes topple, balls and tires roll, umbrellas fly, TVs smash, and paint splatters in one continuous 3-minute 54-second take, all of which was underwritten by State Farm (look closely for the logos).

Some of the most innovative music is currently being made well outside of the traditional copyright funding model. Industry sponsorship is making content more creative.

Watch the video and hit the link above to see how they did it. Ridiculously fun.

Droit de Suite

A model of an artist's lifetime earnings is incomplete if it ignores complementary investments by early investors in the artist's works: the curators and collectors who buy early works and who work to make sure that it gets in front of the right people in the cultural elite. Unless you're born into an art family, you're just not likely to have the connections necessary for success.

And so I'm pretty sceptical about Droit de Suite - policies that seek to redistribute portions of realized capital appreciation in artworks back to the originating artist. At the margin, they reduce incentives for gallery owners, curators, and collectors to make complementary investments in new artists. What are the distributional effects?

• A windfall gain in the current period to established artists at the expense of those who made complementary investments in their success;
• A transfer to those artists who become successful from those who never do;
• For a successful artist, a transfer of income from when he's young and poor to when he's old and established.

None of these seem particularly desirable. The first has efficiency consequences as well as distributional effects. The latter two turn art into more of a winner-take-all market. Think of a work from a new artist as a lotto ticket that might or might not pay off if an investor makes a pile of ancillary investments. The value of that lotto ticket is lower if the winning tickets are taxed. So the initial price a new artist's works can attract is lower than it otherwise would be. So all new artists earn less on their early works while those who eventually become successful are paid back with interest. But that's when they're already well off and can supplement their income by doodling on folks' napkins at restaurants.

Note further that none of this requires that investors are only in it for the money; they're just less able to afford to keep making those investments where the returns are taxed. It wouldn't be surprising if the insult given by the implicit devaluation of their role were as motivating as the reduction in forward-looking returns. But budget constraints do bind too.

@CherylBernstein points to a newly introduced American bill that would implement Droit de Suite in the U.S.

The Equity for Visual Artists Act of 2011, would set aside 7% of the price for works resold for more than $10,000 at major auction houses, such as Christie’s and Sotheby’s, with half the proceeds going to the artists and half to non-profit art museums.

If the portion going to non-profit art museums goes into a common pool rather than to the museum that first exhibited the artist's work, or to the museum of the artist's choosing, recipient museums have free-rider problems in making investments in emerging artists. What do I mean? Consider two non-profit museums. The first makes large investments in figuring out which new artists in the community are worth promoting and works hard to help them become successful; the second spends the same amount of money hosting travelling exhibitions from other galleries. The first museum buys a lot of the emerging artists' work and hopes to use earnings from the small proportion that really pan out to help future emerging artists; the second just banks revenues from travelling exhibitions to fund later hosting of travelling exhibitions. The proposed policy takes money from the first museum and gives it to the second, reducing museums' incentives to invest in new artists.

The legislation, as it stands, would only apply to the resale of works at public auction houses “with more than $25 million in sales in the prior year”. Auction houses that operate only online would be excluded, as would private galleries.

Prediction: more sales shift to online and private galleries from public auction houses. I have no sense of how costly that is in terms of sale revenue foregone, but if most auctions are coordination games, and everyone's making the flip, it's probably not that bad. The big auction houses will be lobbying hard against the legislation and might find it worthwhile to flip to online-only auctions.

Update: Consider now the case in which curators and collectors really have no effect on an artist's success. In that case, the policy still results in reductions in the amount those folks are willing to pay for a new risky artwork and so still effects transfers from those artists who never become successful to those who do and from artists when they're young and poor to when they're old and successful. But there's less efficiency consequence as the ancillary investments by others are of less value.

Plagiarism

Novelist Jeremy Duns is on the warpath against plagiarism in spy fiction, his area of expertise.

Here he shows that Lenore Hart's "The Raven's Bride" drew heavily from a 1956 novel.

Lenore Hart's website says she's a fellow of the Virginia Center for the Creative Arts at Sweetbriar College, teaches in the graduate writing program at Wilkes University, and is Visiting Writer at Old Dominion University.

Duns is pushing St. Martin's Press to check into things, and notes a few other "rampant plagiarists" that they've published. The book is still available.

Here and here we find Assassin of Secrets lifted from five books by Charles McCarry, as well as some Bond novels and Ludlum. The book seems no longer available and the author's fessed up.

If everything published now also comes in searchable electronic edition, and Google's digitizing the world's back catalogue, how long until somebody starts an automatic routine running everything through TurnItIn? 

I wonder though about efficiency. It's implausible that Hart's book substantially reduced demand for O'Neil's prior book. If anything, it's a fraud on the publisher by the author if the publisher contracted for a new rather than a derivative work, and perhaps a fraud on the reader if the reader enjoyed the book less for its having been derivative. But Dun talks about how he enjoyed Markham's "Assassin of Secrets" enough to have contributed a blurb for the book, before he noticed its heavy lifting from other books that he had previously read and enjoyed. If an expert gets new enjoyment from reading what feels like a new book, how different is this from remix artists creating new things from other songs? The same post has extensive discussion of other, more minor, literary appropriations that seemed acceptable.

Perhaps this kind of thing ought to be allowed on payment of licensing fees. Tyler wrote a few years back:

Plagiarism is least just when an idea is stolen before the creator can bring it to the public.  That said, some of these forms of plagiarism are efficient, if not always fair.  We can expect the "good executors" to steal from the "idea people"; not all of the latter can execute well, nor are they typically good at selling their ideas to the executors.

Optimal policy is not obvious.

An iTune

I've avoided iTunes. But there's a new Nirvana box set release with Butch Vig's original mix of Nevermind. And, StatChat gave me $40 in iTunes vouchers. So, off I went. After being unable to install iTunes for a couple of weeks because of some unfinished Apple install locked into my machine, I finally cleared things up. Then spent way too long setting up an iTunes account and re-logging in every time I turned around. But I first logged in as American. There, I saw the $1.29/song and $45 box set.

So I was surprised when my NZ account gave me a $2.39/song, $72 box set.

$1.29 US per song. Take a $0.75 exchange rate: NZ price then $1.72. Add GST*: $1.98. That's still a $0.41 price gap on an individual song. On a 70 song box set, that's $28.70 if you buy the tunes a-la carte.

What about the box set? $45 US = $60 NZ. Add GST*: $69. That's only $3 less! After you put in anything non-trivial for licencing fee differences or just the hassle of dealing with small market issues, the price is basically identical. [I only want the eleven Devonshire Mix tracks, so the box set doesn't much help me.]

If Bruce Hoult is right, things are worse: GST doesn't apply to iTunes because they count as an imported service rather than a good, and imported services are zero-rated. IRD suggests Hoult is right. The price gap is then $0.67 per song ($46.90 for a 70-song set) or $12 for the box set.

We'd always expect per-song pricing to be a worse deal than per album pricing. But I don't know why we'd expect the gap to be so much bigger here than in the States.

When I'd first seen the price gap per song, I'd figured price discrimination: maybe iTunes hits a richer part of the NZ demographic and so optimal price is higher. But surely it would be the high demanders who'd go for the box set over individual songs. It would be surprising for the bundle to sell for more than the components, but I wouldn't have figured a hefty box-set discount consistent with trying to hit the high demand high income cohort. Maybe those looking to buy a box set are more likely to engage in price search (setting up multiple iTunes accounts, comparison shopping with other online outlets) while those wanting individual tunes don't bother with those fixed costs.

Other candidate explanations:

• Less competition from other streaming sources in NZ than in the US.
• But we then require individual tunes are better substitutes than the box set for other streaming services.
• GST and licensing
• Definitely! But are there relatively more costly licensing arrangements for single songs than for box sets?
• Substitutes in form of physical media are way pricier here
• Sure. But why does that get us the box set for roughly the same price as in the States but not individual tunes?
• iTunes prices negotiated in $NZ, not $US, so currency fluctuations carry it.
• This one's pretty reasonable. If iTunes and the label have a set fixed per song price for everything, they'd just stick with that, but they'd need a separate price for a big compilation box set, and that could be negotiated in $NZ at more current exchange rates.
• High demanders have other options, like multiple iTunes accounts in different countries.
• That makes sense too - fixed costs in price search mean few would bother with the hassle for individual songs but might for a big purchase.
• Maybe the high demand, high income cohort, like me, only wants the Devonshire mix and doesn't need another set of mp3s of stuff they already otherwise have.

Other explanations?