Monday, December 19, 2011

Land of the "Free"

While rummaging through the National Public Radio (NPR) archives (yes I spend some of my free time listening to old NPR pieces -- don't judge), I ran across a three part series from August of 2009 focusing on the trend of free goods and services in the digital economy. No one sector of our economy is more acutely aware of this trend and the resulting outcomes than those of us who have made a living in the music industry. Well before the housing crises or the near-collapse of the banking system, the digitization of music content destroyed the music industry's longstanding business model.

Listening to the NPR coverage of the free-economy and thinking about my post from last week furthered my contemplation of the broader long-term legal, economic, and cultural ramifications of such an economy.

According to the first segment in the NPR series, many Internet businesses are attempting to follow the Google model of monetizing their service through add revenue. Yet, ask any journalist from any newspaper on the planet, this is not a viable solution for the vast number of online businesses. There are only so many advertising dollars available.

Others are offering many different levels of services or products. Usually a free basic service or product and a fee based premium service or product. Yet this business model has not been as successful as the free model. As many of my colleagues in the music industry like to ask: "How do you compete with Free?"

The difficulty of designing fee-based business models in the new digital online economy is redefining intellectual property law and maybe America. This developing "social norm" of free access to other persons' intellectual property is and will continue to influence how we view tangible property such as personal property and real property.

Could this developing social norm shift the culture of America? There have been many commentators who have examined whether, in the wake of our current economic crisis, the "rugged American individualism" has given way to a socialistic culture more identified with Europe. A while ago a Reuters columnist, Bernd Debusmann, had a very compelling blog entry on this topic, which can be found by clicking here.

I wonder, however, if the new social norm of the digital world's free economy set the stage for such a shift of the American culture well before the housing crash and the credit crunch? Could the communal view of intellectual property advocated by such corporate giants as Google be pushing America from a heavily individualistic ownership culture to a more communal "Europeanized" culture? 


  1. Ken, I enjoy your blog and your combined academic and real world perspective.

    In this post, I think you've veered too much to the academic rather than the nuts and bolts analysis.

    " ... the communal view of intellectual property advocated by such corporate giants as Google" has nothing to do with Europeanization of culture and rewards therefrom. In fact, it is the opposite of the European norm in royalty distribution, to take the performance right in sound recordings and authors' moral rights as 2 historic examples, besides the ethos and structure of MCPS, PRS, GEMA, etc. as opposed to the privately owned SESAC, broadcaster owned BMI and the "clubby" ASCAP besides the hapless Harry Fox Agency.

    Google represents the adaptation of the 1980's mantra "OPM", using other people's money for your own profit, to the new infinitely scalable paradigm, "OPP", using other people's property, whether it's music or tripadvisor type group think.

    As for individualism, once again look at what has happened in Europe. The behemoth BMG has abandoned the music field to individuals, the historically dominant EMI has been forced off the field of the play. In the UK, especially, individual upstart companies, think Creation, think Domino, have continued to define the industry. The last time that happened in the USA was with Epitaph in the late 1990's and they had the good sense to restrict themselves to a niche.

    The majors in the USA ... WMG, in particular, have been on life support provided by Wall Street as they fear losing control of content. For all their noise, the money men have decided the way to riches lies through facilitating the OPP paradigm, so long as they get a piece of the action.

    The question going forward in the music field is whether the sustenance now provided by the Apple, Inc. ethos of level playing field for all gets supplanted by the google/spotify/v.c. hucksterism of OPP.