You know Richard Stallman's "Free as in speech, not free as in beer"? I think we could stand to add one more: Free as in peanuts.This is a useful way of considering the problem of file-sharing specifically, and of intellectual creations in general. We heard last week from Doug Morris, the chief executive at Universal Music, essentially that if any residual or secondary value is created based on a product they originally produced, they should be paid.
If you're in a bar, speaking freely and paying for beer, the bartender sometimes will put out a dish of peanuts for free. I know that I'm capable of eating an entire bowlful and then eying the bartender waifishly until s/he refills it. But, I generally won't buy peanuts in a bar, even if they're reasonably priced. I get value from eating them, yet I won't pay for them.
He said he was keen to avoid repeating the 'mistake' made when cable music channel MTV was set up 25 years ago, and record companies allowed their artists' music to be aired for free.Unfortunately, Mr. Morris did not learn the correct lesson from the MTV experience. By serving up "free peanuts," MTV created a much wider demand for Universal Music's "beer" that MTV's viewers bought and paid for in droves. Not only that, but it seems to me that Universal Music might be making a few pennies here and there on music video DVDs, thanks to a genre made popular by MTV's innovation.
He added that that MTV had 'built a multi-billion-dollar company on our [music]...for virtually nothing. We learned a hard lesson'.
It's not surprising that the recording industry should want to be paid for residuals. But, carried over to almost any other aspect of life, the logic falls apart. Should the brick company be paid a portion of the capital gains of said executive's home when it increases in value? Should the professor be paid a portion of the student's income when the student applies the knowledge learned in the class (hey, considering that's where I'm heading, that's not a bad idea!)?
Creating secondary and tertiary value is what innovation is about. I wouldn't pay for peanuts in a bar either - and, more important, I would choose a bar that doesn't demand payment for the peanuts over one that forces me to pay for every peanut I consume, even if it's offered by a friend. (Or worse, one that might reach down my throat and remove an already consumed peanut.)
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