January 07, 2004

RIAA TAKE NOTE: Apparently, free downloads don't do much to hurt sales of intellectual property goods. At least, that's the result of an informal experiment conducted by the Insta-Wife. I mentioned a while back that she was somewhat bemused to see used copies of her book on violent kids selling for $99.95. The solution was to put the book (which is out of print, and which won't see a new edition anytime soon because she's working on another project) up for free download in PDF form on her website.

You'd expect that offering the book for free would have depressed the price for used copies, but it doesn't seem to have done so -- in fact, the price seems to have gone up, as there's now somebody offering the book for sale for $105.84. Go figure. And although quite a few people have downloaded it for free (and even sent in donations), many of them have emailed to say that they'd rather pay cover price for the actual book than download it for no charge.

This seems to me to suggest that free downloads don't do much to cannibalize actual sales.

UPDATE: Wow, this post generated a lot of email, and I haven't had time to wade through it. (It's the first day of classes, and we're bringing in a lot of faculty candidates in the next couple of weeks, and it's my job to make the trains run on time.) But this email by Shane Blake seems to state the central objection to my experiment, above:

Not that I don't think RIAA shouldn't be pushed out of the nearest air-lock (I do) but you're missing a destinction between downloaded music and your wife's book.

I can download songs from the interenet and actualy create an exact copy of the physical media I would purchase in a store relatively cheaply. I cannot, however, recreate a properly bound book for anywhere near the listed price. And lets face it, the e-book idea just isn't catching on like many of us techno-geeks had predicted...

Still, I think RIAA's main problem is the proliferation of overpriced crap packaged as popular music...

Well, I agree that the analogy isn't perfect -- a PDF file isn't a book. Of course, a downloaded MP3 file isn't a CD, either -- even if you convert it back to .WAV and burn a CD. The quality is reduced, and you don't get cover art, liner notes, etc. Still, it's closer than a PDF file is to a book. (Note that Blake appears to own a lot of CDs!)

But a PDF file seems to me to be sufficiently close to a book that its availability for free should affect the used price somewhat. And maybe it is -- Steve Verdon thinks that free downloads may actually drive the price up. There's some evidence for that, as Baen Books gives a way a lot of top-drawer science fiction content in downloadable form, and says that doing so has helped its sales, rather than hurting them.

Are books so different from music that giving one away boosts the price of the for-sale product, while giving the other away destroys the market for the for-sale product? I find that hard to believe, but I suppose it's possible. . . .

ANOTHER UPDATE: Eric S. Raymond has had a similar experience with his books.

YET ANOTHER UPDATE: Intellectual Property attorney Scott Draeker emails:

First, your reader is misinformed. You cannot download music and create a
perfect copy of the retail product.

1) Music downloads are compressed using algorithms that discard "extra" information. It's called "lossy" compression, because you lose information. A downloaded MP3 converted to a Redbook (CD Audio) compliant AIFF file and written to a CDR contains significantly less music information than an original CD. The difference in audio quality is obvious to anyone, not just an audiophile.

2) Even a disk to disk copy of a retail audio CD to CDR results in lower audio quality. This is a result of physical differences in the media itself.

3) An audio CDR created from any source will not have a screen printed label, jewel case inserts, photos, lyrics and other packaging materials that are included in a retail product. This might not be a deal killer for many music lovers, but it does have *some* value. All other things equal, just about anyone would pay a buck for that extra stuff. Not many would pay $20.

And that is the entire point. Piracy (music or otherwise) is an economic issue 99% of the time. Copyright owners are free to charge whatever they like, of course. They just have to acknowledge the consequences. At $10,000 per CD they won't sell much music, and executing pirates in the public square won't change that.

As for downloads, that's not proper piracy anyway. The effect of music downloads on the market better resembles radio airplay--it sells more music. What the RIAA doesn't like is that, unlike radio play, they can't control what people download. For the big label exec who needs to make his NSYNC numbers this quarter the idea that people are downloading and listening to indy Jazz is horrifying.

I pretty much agree -- though the quality loss in a disk-to-disk copy is de minimis. You won't hear the difference on any player made in the past several years (and the older ones will just fail to work sometimes) but the CD-R will probably not last as long.

Interestingly, if CDs were still packaged like old vinyl records -- with big, pretty covers and liner notes -- I'll bet there would be less downloading.