The Case Against Free

The free economy is no economy. It’s pretty basic maths.

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[UPDATE, April 10]: This piece has generated so much discussion, Elmo Keep wrote a companion piece: ‘Combating The Cost Of The Free Economy‘.

“Information wants to be free.” How rich we’d all be if we had a dollar for every time we’d come across that phrase on the Internet!

The problem is that that’s only half of it: “Information wants to be free. Information also wants to be expensive. That tension will not go away,” is the full quote.

In his excellent book, Freeloading, Chris Ruen articulately argues a case for how the free digital economy is white-anting creative industries. Be that websites with business models predicated on not paying contributors, streaming music services which actively underpay artists, or our disinclination to pay for things at all when we can steal them for free. This is all rapidly approaching a crisis point where entire industries will function completely on free labor, or cease to exist altogether. And we as consumers are totally culpable. We’re the ones who are choosing to attribute no value to what people create.

Far from heralding some kind of techno-utopia where the playing field would be leveled for everyone (although it looked that way for a while), the free culture movement ended up putting extraordinary amounts of power into the hands of the few: the new boss is the same as the old boss. The companies who grew fat off the serving of this content were the ones that were enormous already, like Apple and Google. Many more hoping to be made in their image cropped up, “disrupting” (see: destroying, Spotify) traditional industries. And the enormity of those established companies allowed them to set terms far more punitive than the record labels they have all but replaced. All for merely hosting content, not for creating or funding the creation of anything.

This is not a better world for new artists and producers. It’s worse.

Let’s go back.

0 + 0 = 0

The basic tenet of the Free Economy is that you can’t compete with free. As the Internet made it so easy to replicate information (in the form of culture: music, films, television, books) endlessly, it forced the value of everything that could be copied down to zero. Ruen argues in Freeloading that even to refer to cultural artifacts as  “information” was the first step in the devaluing of them. This was a kind of Darwinian reduction of what is a very complex and expensive process (creation) to mere bytes of data (information), which made it very easy for us to then rationalise to ourselves when we weren’t paying for something. It’s only ones and zeroes, endlessly copied (even though flagrantly breaking copyright law), after all. Who is it hurting?

Well, everyone.

Analyse This

Our ability to rationalise our behaviour is one of our most powerful psychological tools. On the Internet, it now comes paired with one of our most difficult to resist impulses: to be gratified, instantly. These things together, balled up in anonymity, have conspired to create a behaviour that is extremely hard for us to overcome: If no one will ever see me taking this thing for free that I want right now, why would I ever not take it?

This is a moral nightmare. It didn’t used to be possible to just take what you wanted: that was called stealing and you would be punished. But now it’s a cultural norm to be a petty thief in your everyday life. And this is where the biggest rationalisation of them all comes into it: Everyone else is doing it, so why would I be hurting anyone?

Why don’t you try it for yourself: when the new season of Game of Thrones starts, don’t torrent it. Get a pay TV subscription (you can get one on Xbox for $19 per month.) Or an iTunes season pass. These options will put you one single day behind the US. You don’t want to do either of those things? Why? Subscription television was never free, just like it says on the box. What would you say to someone who worked on the show that you love so much that you won’t pay for it?

Would you say to them, “Thank you so much, I love your show! It’s worth zero dollars to me, though. And so is your time”? You might think  that through pirating the show you are somehow admonishing local networks for not fast-tracking their content to meet your immediate need, but actually you’re just being an overly entitled asshole. It’s what we have all become. We’re infantilised, like babies who need their every desire met this very instant or shit will get real.

To Play With The Big Boys You Have To Be Big

Myths become law on the Internet with swift brutality. For example: I posted a link on Twitter to this story at the Verge, which quotes Thom Yorke as saying that, with the benefit of hindsight, he regrets the pay-as-you-want model Radiohead pioneered with In Rainbows, because it taught people that music was worth little or nothing. He is also unhappy to have fed the bottom lines of tech companies. And he isn’t alone in revising his stance. Trent Reznor was about as supportive of the free model as an artist could be, and he too is now of the opinion that giving away your work for free will mean that it then has no value to anyone. (This seems a fairly obvious correlation.)

This story was greeted with replies from people eager to point out that paying artists direct is the best way to compensate them, holding up Amanda Palmer and Louis C.K. as examples. This idea that you can fund someone directly has really taken root in people’s minds, as if it were a long-term sustainable model (it can work for the percentage of people whose project is successful, but asking for funding repeatedly, for small artists, will likely produce diminishing returns). However, they fail to make the connection that not only are these artists exceptions to the rule, but that, much like Radiohead and Nine Inch Nails, their careers were built on the back of the financial support system provided by major labels and network positions. It was only their ensuing huge profiles that allowed them to shun the big companies who had initially fostered their talents and invested in their careers. While it might be true to say that torrenting U2 records won’t hurt their career because they are of such massive stature, like downloading Game of Thrones won’t hurt HBO, it being true doesn’t make it ethical. The producers don’t want you to do it. And that logic certainly doesn’t work when applied to new and emerging artists embarking on careers today.

“The next band who deserves it is never going to get the chance that we did,” Gene Simmons of KISS told me in a recent interview. And this is someone who called bullshit on In Rainbows at the time. “We work hard, this is what we do for a living and it’s not for free. I will be damned if some kid living in his mother’s basement is going to decide whether or not I should be able to charge for what I do.”

And that is really the thing about piracy: it’s not up to us to decide that an artist’s work is worth nothing, whether they’re Amanda Palmer, KISS, Metallica, U2, Radiohead or Bed Wettin’ Bad Boys. If they decide they want to give it away, that’s one thing. For us to make the choice for them is to say: I do not care about what went into making this art that I am now enjoying. When we do that, we are living in a morally bankrupt society.

Supply and Demand: It Costs Money To Make Money

free economy 2-01

Another great rationalisation myth is people thinking that buying tickets and t-shirts somehow makes up for the loss of revenue from record sales. Here are some hard figures for you:

  • The record industry just posted its first gain in revenue for 13 years. A whopping 0.3% increase. This doesn’t mean everything is now great, it just means that the industry is not actively losing money for the first time in 13 years.
  • People are spending roughly half what they were on music 13 years ago: overall sales are at US$16b, down from $28b in 1998.

Yes, but! People have always pirated music! Taping songs off the radio! Please, tell me more about your friend in the ‘90s who was able to tape 40GB of music in the bat of an eye.

Making music is an expensive undertaking. So is making a film, or a television show, or producing a book. For now, let’s stick with music. Recording costs can be high (or they can be low, if that’s your vibe); several hundred dollars a day for studio time, a producer’s time, paying musicians, plus manufacturing and distribution costs, with everyone’s cut taken at each of those stages. This can total tens of thousands of dollars, or much more, or much less*. Touring can also be massively expensive (promotion, fuel, time off work, insurance, plane travel, accommodation, just for the basics), and t-shirts do not make themselves for free. In Australia, the average income for a professional contemporary musician is between seven and twelve thousand dollars per annum.

This is why record labels (and publishing houses, and television networks) exist: they invest in artists as they have the capital to support this enormous financial structure, and they hope to make a return on their investment. They are taking bets. If people are spending half what they did on music, labels are investing half what they were in artists. And they are certainly going to invest in sure bets (U2) over new, untested artists.

It’s also a myth that digitally serving content is somehow low cost, or cost-free. It isn’t. Apple will take a third of anything you make. That’s after you’ve digitised your content, engaged a certified reseller, had artwork made, taken out advertising to let people know they can now buy it, and then had them buy it at low cost. There is just much less money being generated in this model. People have been conditioned to pay less (or nothing) for digital content – poor forethought as digital content has now eclipsed physical in units sold. And now streaming models are making an even worse offer to artists.

Spotify offers the option to pay nothing, and be served ads. Or, pay a small fee and have unlimited music for one year, with no ads. If the casual music listener can be persuaded to part with $70 a year, and that is the total amount they spend on music in that year, then it will require 228,571,428 subscribers to generate the current annual global income from record sales (the service currently reports it has 20 million users, of which only four million are paying.) And that would only be the case if Spotify passed on 100% of its profits, which is does not. Spotify is still operating at a loss, and has paid out so far just $500 million to labels. The problems with this model are two-fold: the consistent devaluing of music, which pushes prices down across the market; and the miniscule amounts of money that artists actually end up with through the service. Spotify exists purely for itself, to turn itself in time into a profit-making enterprise. The people it hopes to enrich are its investors, shareholders and company directors, not artists or record labels.

“The question of when we’ll show a profit actually feels irrelevant,” said Spotify president Daniel Ek in April 2012. “Our focus is entirely on growth. It is priority one, two, three, four, and five.” Ek is now the UK’s tenth richest man. Spotify is speculatively valued at US$3 billion. Spotify announced two weeks ago that it (and Pandora) wants to pay artists even less.

You can’t compete with free.

Who Do We Want Our Artists To Be?

What is the difference between the writer who can’t sustain a career because of publishers who are unwilling to pay them because the next person will do it for free, and the musician who can’t afford to play in their band because taking time off work to play some shows makes their vocation unsustainable? Or the graphic designer expected to give away their work for little or nothing to build their reputation, and the photographer trying to compete with amateurs who give away their work? Or the newspaper unable to serve its community because people are so used to expecting online news for free, despite the knowledge of how expensive journalism is to produce?

In all of these scenarios, it means that eventually (soon? Perhaps you’d like to pay $25k to put out your book?) only people who can afford years making little or no money, or sustaining a loss, will be able to buy into these vocations.

Which isn’t to say that these industries haven’t always been overly potted with scions of privilege: they have. But the barriers to entry for people who were not to the manor born didn’t used to be so high. The Internet and its promise to democratise everything ended up working in reverse: it reinforced the power of the few who were already powerful. It made it more difficult, not less, to break through and sustain a career. The foundations that held up traditional industries have been rapidly eaten away, but it doesn’t mean there aren’t gatekeepers; there are just new ones holding on to the reins of power even more tightly than their predecessors. Do we really want only the rich to be our artists, writers, musicians and journalists?

Information wants to be expensive. Culture is expensive. Locally, for example, it costs more than $260,000 on average for one hour of Australian television drama, and more than $700,000 to produce one hour of Australian documentary film.

How can art’s aesthetic, political, philosophical or social value ever be awarded a dollar amount? It can’t. But it’s certainly worth much more than nothing.

Elmo Keep is a writer. She also works as a digital media producer, for clients including Channels Seven, Nine, Ten, the ABC, Foxtel and many other producers.
Illustrations by Matt Roden
* Thank you to the several Australian musicians and arts body administrators who shared their financials for this section of this piece.