Hi Ann,

2009/6/27 A.B.Thorpe <[log in to unmask]>:
> Dave,
> This is an interesting perspective. You mention the "mature and
> sophisticated 'direct marketing' to monetise artistic works that newer
> artists who weren't able to get publishing contracts have been perfecting."
> Have you got any good references for this?

Marillion are the single best case study of pioneers in this area I
know of. Then, Magnatune and Jamendo are record labels that permit P2P
sharing of all the tracks they publish, and the artists hey sign have
been pioneers; then we have Radiohead, Nine Inch Nails, and Advance
Patrol releasing their tracks on the net in the same way. Fleet Foxes
recently spoke out in support of P2P; the Arctic Monkeys let their
fans do 100% of their marketing, they didn't even know what MySpace
was when they were #1 in the charts. And then Oasis, Jamiroquai and
Madonna have all quit their publishers to sell direct, albeit without
permitting P2P.

> I'm interested from the standpoint of how design practice might
> function as a social enterprise where currently "intellectual property" is often
> seen as the basis for the "enterprise" part of the equation.

Design is integral to all kinds of businesses, so I'm not sure which
kinds of design practices you mean.

Here, though, are some more general thoughts on a lazy Satuday morning :-)

Fundamentally we have two kinds of businesses, product businesses and
service businesses. Product businesses have the potential for massive
profits compared to service businesses, because services involve
charging for individualised-customer processes in some respect, and
this limits their ability to scale up. However, they don't need
capital investment to design the product and mass produce it, they
just start proving a basic service and improve how good they are over
time; the journey of apprentice to mastery.

So the gas man who came to fix my central boiler this year makes a
good living, being self employed and good at what he does, but he's
hard pressed to double his income; he could start a firm and hire
other gas men and work on his marketing and cream profit off the gap
between his wage costs and his charges, like British Gas do, but then
he's likely to be outcompeted by people like his former self who
provide a more personable service for cheaper. Doctors and lawyer are
the high end of this kind of work; all are about hourly wages, and
reseller margins on products supplied during the service (pills,
boiler parts). Typically the money curve starts at zero (you got a job
as an apprentice), tapers upwards with experience, and levels off (no
doctors on the billionaire list, plenty of very rich doctors though.)

Product businesses, on the other hand, can scale up because they don't
customise their products for individual customers; they made generic
items that lots of people want. They have a money curve that follows
an inverse bell shape, where they need to borrow a lump sum, spend it
on R&D, and then start selling the product.

Here's a napkin drawing: http://dave.lab6.com/acid/dump/2009/biz.png

A key aspects of makes product business owners rich is that physical
products are "rival"; they can't be duplicated, and if you want your
own, you have to buy one, or borrow mine in which case I no longer
have it. But information itself is non-rival; it can be duplicated.
Obviously, when I tell you something, I don't forget it, but since
owning and operating a printing press isn't cheap and easy, there was
an illusion for a long time that a novel or a LP was a product; when
information is instantiated in physical media, it takes on the rival
nature of physical goods.

In the three-player game of authors, publishers and readers, the
publishers were the ones who converted information into physical form,
and reaped massive profits; typically they followed a product money
curve, paying authors and artists a lump sum to write/record the
novel/tune, and then started selling it as product.

In the 1970s the personal computer shows up, and changes the game:
Digital information is non-rival; we can share copies. This slowly
undoes the illusion that the physical media IS the work, and means
that the service of developing new works comes to the fore. Its taking
30-40 years, of course, but that's the overall trend as I see it.

Now, if you wanted to get rich, you don't want to hear this. You want
to pretend that a digital copy is like a physical copy, and can not be
duplicated by users at no cost. Copyright law makes it illegal to not
pretend, copy restriction features in software try to keep up the
illusion, and there is a huge propaganda campaign to persuade people
to accept the notion of "intellectual property."

But, of course, the publishers can duplicate copies at no cost. This
is what Mark Getty, chairman of Getty Images, meant when he said
"Intellectual Property is the oil of the 21st century" - who wouldn't
want a monopoly over a product which costs you nothing to produce...
And this is precisely how Bill Gates got to be the richest person on
the planet in record time. Gates first became famous when he got angry
that early personal computer owners wouldn't play along with the
charade and wrote "An Open Letter to Hobbyists" to all the computer
hobbyist magazines in 1973. The letter remains a lucid argument for
this position today, but stands in stark contrast to GNU/Linux and
companies like Red Hat 35 years later.

The reality is that digital information is not rival like a physical
product. In fact, it is "anti-rival," so that there is an overall
benefit when it is freely shared. This is what the Fleet Foxes guy is
on about - http://www.zeropaid.com/news/86428/band-praises-p2p-for-helping-artists-discover-music/
- more people listening to wider range of music encourages demand for
new music. Wikipedia grows on the same principle; as it got more
pages, the desire to add more pages increased.

In this way, a collection of service businesses can cooperate in the
creation of anti-rival digital information; no particular one has the
majority of the money flowing around the good, but there isn't the
same limit on scaling up. The napkin looks something like this:

http://dave.lab6.com/acid/dump/2009/antirival.png

Generally, I believe that approaches that discern the natural
properties of reality and work with them instead of against them win
out in the long term, and that while illusions can form concentrations
of power, that power will eventually wane because it has a hollow
base. I think that's what we're seeing with Windows vs GNU/Linux, and
what we will see in other areas over a long term.

I do think that it will take A LONG time to play out though.