[This is part two to Wednesday’s article. If you haven’t seen that one, you might want to start there. I reference back to it a few times. Also, for the sake of convenience, I’m using music as my example. But the same principles apply to movies, writing, and to a lesser extent to photography and visual art as well. Substitute concepts as required.]

Discussing music piracy is tricky business. On the one hand, it’s illegal. On the other hand, every single person violates copyright every day. Singing Happy Birthday violates copyright. Singing along to a song in your car with the windows down violates copyright. Copying and forwarding an email violates the copyright of the person who original wrote the email. But disregarding these mundane violations (some of which may fall under fair use, anyway), almost everyone pirates music or movies, too. The vast majority of the material on YouTube is pirated. Anyone who puts popular, published music on their MySpace page has violated copyright, and every time you view something on a webpage, a copy is made in your cache, violating copyright. Every person on the internet is a criminal—and no one cares.

What is going on here? Why do labels suing people turn our stomachs even though they’re right in terms of the law? The only time we see such a widespread disregard of what is “right” and “wrong” is when the law itself is wrong.

“Every single person violates copyright every day.”

It’s somewhat outside the scope of this particular article to discuss why copyright law is outdated. I do believe it is, but other people, such as Larry Lessig have discussed it better than I could ever hope to. (By the way, if you had to choose, I’d rather you watch Lessig’s talk than read my article. In all seriousness, this man’s arguments are so lucid and powerful they make me cry. Watch it.) But regardless of the particulars of copyright law, let’s proceed from the assumption that something is wrong; the laws are not working correctly; and they don’t reflect the “morality” of purchasing music in any meaningful way.

If this is true—and I fully believe it is based on the aforementioned behaviors—then it raises an extremely important question which must be answered before we can hope to make any headway in marketing art. If people think that it’s morally justifiable to take the song and listen to it without paying, why does anyone pay at all? Because even people who steal a lot of music still buy music. There must be something other than the music itself that compels people to pay money for it, otherwise the business would be doing much worse. What are people really buying when they buy music?

Before I answer that, let me tie in the convenience factor.

I’ve been saying this for years and the evidence continues to support it: the vast majority of people only change their way of life if it’s more convenient to do things the new way than doing them the old way. Enormous amounts of human behavior can be explained by this. Few people are going to move to save the environment until its more convenient to be green than how they live now. (Though it’s important to note that some people will put up with a lot of inconvenience if the overall end result is more convenient in some other way, i.e. driving all over town to save a few cents on gas. After cost, convenience is the second most important consideration for most people, although in a sense, how much something costs is a form of (in)convenience, too.)

Downloading music is more convenient than buying it. After In Rainbows was released, a considerable number of people who should have known better expressed bemusement as to why half as many people downloaded the album illegally as got it through the website. After all, you’re downloading it either way, and costs were zero! This article from Forbes nails it. One quote says, “It’s quite simply easier for folks to get the illegal version than the legal version.” And that’s really all you need to know.

I tried downloading In Rainbows off Radiohead’s site. Worst user experience ever! Holy cow, that’s an unbelievably terrible website. Vague instructions, head-ache inducing backgrounds, hard to read type, links timing out all over the place, and then to top it all off, they ask for every piece of personal data short of your fingerprints. This is why the music isn’t “free”, by the way. My personal information is very important to me, but I can’t put a dollar figure to it. For this reason, I find it absurd that I would use it in lieu money in an exchange. I’d rather pay money for something anonymously than give up personal information to get something for “free”. It doesn’t make sense. But I’m not sure many people worry about that besides me.

Regardless, the point should be clear. Hundreds of thousands of people downloaded the Radiohead album for free because it was much more convenient to do so. In other words, the price of the music has little, if anything, to do with how people choose to obtain it.

This is important to consider in terms of small, independent artists trying to make a living with microtransactions and a small fan base. If there is one thing that Bittorrent does poorly, it’s offer a range of material. There is a lot of stuff you can’t find on Bittorrent, and a lot more stuff that is apparently seeded by a single person, who logs on three times a year with their 56k. Bittorrent only works for popular archives, because it takes a lot of people passing data around before the decentralized distribution model starts working efficiently.

I don’t think small, independent artists are going to have to worry about piracy all that much for two reasons: if they make their website easy to use and not insult the visiting fan, that’s going to be the most convenient place to get their music. Anyone can set up a website that out-conveniences the already convenient file sharing services. But also, an artist with a small fan base is going to rely more on smaller, mouth-to-mouth marketing efforts of individuals to their friends (who will pass the music around—this can’t be avoided and shouldn’t be feared), rather than on proliferation through illegal copyright infringement means. In short, small artists are going to be hard enough to find on file-sharing sites that it will be easier to go straight to the source.

But convenience alone can’t explain the “sometimes we pay, sometimes we don’t” dichotomy. After all, no matter how convenient a payment system becomes, it’s still less convenient than paying nothing at all. Clearly something is worth paying for.

Many people use the reasoning that they want to reward artists for their work and give them fair compensation. It seems like the majority of people really do want to support artists, even if they can’t afford to. Obviously, we want the money to go directly to the artists rather than the labels, and we also want to pay what we think is fair (not necessarily what the artist thinks is fair). These are fine reasons, and don’t be mistaken: they are legitimate to a certain extent. They are the “reducing cognitive dissonance to satiate your conscience” reasons; nothing wrong with that. But humans seem to exhibit a few behaviors that negates these as the real reasons.

Let’s take the hypothetical example of “Fred”, who I didn’t just make up because I don’t want to possibly infringe myself when discussing activities still illegal, and who in no way stands in for me, and whose situation does not, in the slightest, relate to mine at all. Totally pretend.

Fred sometimes downloads music off Bittorrent. He tends to download entire discographies because that’s how the torrents come packaged. This is much more music than he cares to listen to from any particular band, but it doesn’t bother him that much because he has a lot of free space on his iPod.

He downloads the albums of two bands, let’s say Fluke and Gorillaz. He likes both bands a lot and listens to their music all the time. Fred is not poor; he could easily afford to purchase all these albums, even if the total runs over a hundred dollars. After listening to both bands’ music for months, he finally decides he’s going to go legit and buy a few albums. He tells himself that it’s because he can afford it, and he should pay for the music he downloaded because it’s the right thing to do—but a curious thing happens.

He buys all the Fluke albums, and none of the Gorillaz.

This bothers Fred, because he really likes both bands’ music, and he can afford it, and he has a perfectly good rationalization for buying the music, but his behavior doesn’t fit. He realizes that as much as he likes Gorillaz, he just doesn’t really care that much about buying the album. He still listens to their music and everything else, but buying it? Meh. Not a priority.

Even worse, he heard a few songs off Polyphonic Spree’s album The Fragile Army. He didn’t like it as much as Together We’re Heavy (which he also purchased after having downloaded first)—and he doesn’t like it nearly as much as either Gorillaz or Fluke—but he bought it anyway.

I think a lot of people do this sort of thing, although perhaps not everyone is so introspective that they’re concerned as to why their behaviors don’t match their rationalizations. How do we decide which albums to purchase? Furthermore, how many times have you bought an album, only to find it sucks—and now you have buyer’s remorse? Especially considering you could have downloaded it first and heard the crappiness beforehand, and saved a few bucks, even though this is illegal. And when we do have a few albums we downloaded, and we like them all about the same, how do we decide to buy one over the other?

Another interesting piece to the puzzle is how much we think songs should be worth. Many people think a dollar per song is fair, but the average payment for the In Rainbows album has been surmised to be less than that. Maybe sixty or seventy cents per song.

If you consider the amount of effort that goes into a song, this doesn’t make a whole lot of sense. Say a musician should be paid an hourly rate equal to a tradesman. Ballpark figure? $75/hr. A song probably takes—I really have no idea; I don’t track my time this closely—maybe ten to twenty hours to do? I’ll say 15. $75*15 hours = $1125. So the artist’s time to write a song, and by extension the song itself, is worth around $1125 in “cost”.

$1125 for a single song is absurd, but since a song is easily copied, you can get a lot of people to pay a little bit, and the artist still gets fair compensation. At 60 cents per paid download, you would need 1875 people to pay this for it to make a “skilled trade” wage of $75/hr. This seems more than fair and perfectly economical. Although finishing a new song every 15 hours is probably an unrealistic expectation, it does go to show that you don’t need huge super-star status to live off music.

But why do we value a song so low? It takes a considerable amount of time from someone whose time is obviously worth something, but the resulting product is only worth the price of a candy bar to us? I don’t think it makes sense to say that we’re paying for the music, because music is obviously worth more than this. I also don’t think it makes sense to say that we’re realistically rewarding the artist for their work when we flip them four bits and a Roosevelt. That’s like giving a homeless guy a nickel and telling him not to spend it all in one place. If you think about it, paying an artist a dollar per song is kind of insulting.

Besides, when you pay this money, you’re paying it after the fact. The song is already done, so your money isn’t going to help finance it. This is in opposition to almost every other job out there, where you pay at least part of the invoice before the job starts. If you’re commissioning an artist to write something for you, sure, then the money’s up front. (You’re also paying for the full value of their time, which probably will be in excess of $1000.) But when you think about buying an already-completed song, the fair price, in your mind, is a lot lower than the song is worth.

No, when people pay for a song, I believe they are—subconsciously—paying for something else. They’re expressing their desire, in the form of monetary compensation, for the artist to make more music.

When you buy a song, you’re paying for the next song.

I believe it makes sense to think of buying music less in terms of purchasing a physical thing like a CD, and more like optioning a script. There’s no guarantee that the artist will make more music, in the same way there’s no guarantee a studio will shoot an optioned screenplay, but you buy anyway, hoping there will be. You’re paying for the potential future productions.

This explains why Fred bought all of Fluke’s stuff, and none of Gorillaz’s stuff. When he sat down and thought about it, he realized that if Gorillaz never released another album ever again, he wouldn’t miss them. He didn’t really care about whether or not they would release more music, and so didn’t really care about buying the album. On the other hand, he really wants Fluke to keep making music. Upon discovering that the Fluke name might have been retired, he also bought Two Bit Pie, who is the same guy, collaborating with other artists. Whatever the artist calls himself, Fred wants to hear more. Additionally, even though he didn’t like Polyphonic Spree’s last album very much, he really wants to see what the next one is going to be like, hence he purchased Fragile Army over Demon Days, even though he liked the latter more. Given equal everything else, the band one wants to hear more of is the one they buy.

This also explains why folks can download so much art illegally without feeling like its stealing. It’s “try before you buy” in a quite literal sense. You’re trying out the band so far, to see if you want to buy more. You could “try out” the band indefinitely if you don’t care whether or not they produce more music. But if someone really likes the band and they’re interested to hear what their next thing might be, they’ll download and buy. (And even when they can’t afford it in some cases, despite this being the excuse for downloading it in the first place.)

Furthermore, humans have a hard time equating downloading music with stealing because nothing is lost. The song is a copy; the person you got it from still has it; the artist made money somewhere along the line or the music wouldn’t be available; they already invested their time in it; and the deed is, as they say, done. Nothing is really lost. Certainly a sale isn’t lost, right? Because once you start wondering what the artist’s next album is going to be like, this is about the same time you consider that it would be the right thing to do for you to pay for this one. If you don’t care about the artist’s next project, you won’t “option” it.

And it also explains why the value of an individual song is so low. Consider: if you really can’t wait for the next song to the point where you’re going to commission the artist directly, this will cost you thousands. But you will get the song, no question about it. However, when the artist has no contractual obligation to ever do art again as long as they live, the payment becomes an investment with no guarantee of return. The amount paid for a song is a risk-management decision. It is, in essence, the least amount someone is willing to lose, while still feeling like it is significant enough to the artist (in aggregate, hopefully) that they want to continue making music.

I’ll bet this could even be tested, if an artist releases their album for free on their website, but states that it will absolutely be the last one they ever do. One of two things will happen, depending on the strength of their fanbase: either the artist won’t get very much for it if nobody is particularly excited by the current work; or he’ll get significantly more for it, from legions of fans who hope to change his mind. (In much the same way a devoted fan base rallied to bring back Star Trek in the 70’s.)

And it helps explain why the record companies are really screwed. Most artists are contractually obligated to create more music. By separating themselves from the creative process and consistently putting out crap, labels bring piracy on themselves. There is a twofold problem with “optioning” music from a label: the band is going to put out another album regardless of how much the previous one sells, and the album (in its haste to be produced) is often not very good. In other words, the band has to put out an album, and no one cares. Where’s the incentive? There is none, and indeed, the labels experience piracy at a higher rate than independent artists.

Finally, it explains what many people have been saying for years: that a download is not a lost sale. To the labels, this sounds ridiculous, because if someone hadn’t downloaded the music, how else would they get it? They would have had to buy it. But that’s not the point. The point is that we now have the ability to “audition” a band, via a download, then choose to “option” the band by paying for their music, in the expectation that they’ll produce more.

A download is not a lost sale because it never was a sale to begin with. In the past, purchasing music was obtaining a physical thing. Since that doesn’t need to happen anymore, buying an album unheard is tantamount to investing up front with no information on the business plan. (Assuming you’re buying from a band you haven’t heard before. If you have all previous albums from a given artist, you’re more likely to buy the new one without hearing it because you’re familiar with the work. Less risk is involved.) No one else works this way. Regular people and businesses have resumes and portfolios that you get to see before you commission them. There’s no reason that bands or any other type of artist should be any different; it’s only just now that technology is allowing this.

Together, I think these reasons support the idea that purchasing music is more akin to optioning the next piece of music than it is paying after the fact for the work that’s already been done. With this in mind, the strategies required to get people to pay for music in the digital age become clear. Make it easy to find and download, and easy to pay for if people choose to do so. Don’t insult people by telling them they’re stealing when nothing is being lost. Offer physical value in exchange for money (actual CDs, or the music on vinyl, if that’s practical, or a small booklet with trivia or something) if you want to make more than a dollar a song. People are more willing to pay more for a physical object. You could also offer the music in conjunction with other types of art, like prints of some visual work.

A song by itself is really representative of future potential. We have the problem today of market oversaturation, which also contributes to the low price of music. But the music itself isn’t what people are paying for. The worth of a song resides in what it promises for the future, and what is considered to be a fair price today clearly reflects that.

I haven’t even touched on a number of subjects. I think this explains perfectly why copyright should end upon death, as I wrote in Will Your Copyright. Why does someone get money on an artist’s behalf when the artist is dead? The payment no longer represents an optioning for more music because there will never be any more music from them—at which point the only sensible option is for it to be released into the public domain.

Neither have I talked about concerts or touring. Before music could be recorded, this was all that was available. The principle still applies, however. In essence, a concert is a “private” show where the artist plays his music “just” for the people in the venue. Not only are you getting a more encompassing physical experience out of it, you are quite literally going together with a few hundred or thousand other people in order to hire the artist to perform. This is reflected in higher costs to you than just optioning the songs.

Copyright law and the “traditional” music distribution model are completely out of touch with human behavior. I believe we’ll see many more artists make a successful living by directly interacting with fans and engaging in convenient microtransactions. I also think we can be even more successful if we think of our existing art as a portfolio, and the payment we receive as a type of commission or request for more. Hopefully with the death of millions, we’ll see a new birth of millions.

-Ted