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Air Guitaronomics

February 14, 2009

Five more pages today on chapter two – looks likely I’ll be able to post it tomorrow before I leave town on biz.  Alex “revealed” himself today as a character for the first time – it was a thrill, even though he doesn’t even have his proper name yet, nor said anything much of interest.  All the same, he exists now in a way he didn’t before I gave him his voice.  So there probably won’t be much posted tomorrow other than the chapter and a big “ta da!”

 Interesting Atlantic article on Guitar Hero/Rock band – how people are paying $2 a download, twice what they pay for a song on iTunes, for something they can’t port to an iPod or other device.  So, as with the iPhone programmer who made a million dollars on his game, we’re seeing that profits for creative work are coming more and more often from closed systems, i.e. the world of Guitar Hero or Rock Band, which require custom hardware investments (a Wii or other platform, the guitars and drums and microphone that work with the console and the game) before you can buy the third party content.  The game can be copied, but it’s no use without the guitar, which is sold with a “licensed” copy of the game.  So a smart company puts their profit in the end cost of the guitar, the purchase of which can’t be avoided, which makes pirating of the software less relevant.

“Cloud computing” is another instance of a closed system – when software is on a disc, and will run on any computer, the software loses its value because the disc can be duplicated, any protection can be cracked, and the consumer’s incentive to purchase it nears zero as the cost does.  And there’s no way for Microsoft in Redmond to track the millions of discs on the market in China.  But when the software doesn’t run in a local environment, is a web-based system running on a server, only those paying to access it can use it “in the cloud.”  So the economic incentive doesn’t shift software into “free” mode, but rather encourages anyone who wants to profit from it to turn it into a subscription service.  World of Warcraft and other MMORPGs are an instance of this as well – you can pirate the disc, but when you log on to the servers, you’re paying for monthly access to the “world” on the company servers, without which the game disc is just a coaster.

So just throwing the doors of copyright/IP open and ringing the dinner bell aren’t going to pour the spoils of future creativity into the masses’ trough; it’s only going to incentivize more of the creative class to code and design for closed systems.  Economics, not idealism, will triumph – people have to eat, and eating requires purchasing, and purchasing requires income.  The question facing creators will always be, “can I do this and eat?”  There are only two “yes” answers: yes, doing this will pay me and I can use that money to eat, or yes, I’m being paid to do something else that gives me money to eat, and I have the time and energy and can afford to do this for free, and to give it away.  I can’t help thinking the current economic collapse will stem the “free software” tide temporarily – we can afford to give away the fruits of our labor in good times, but in hard times, every billable hour counts.  A consultant making bank from a big company can write a great utility in his spare time and give it away, but when he’s forced to compete with Eastern European and Asian programmers underbidding him on Elance, the value of his time increases as the amount he’s paid for it decreases, since he needs to spend more time working to make as much money or less as he did before.

I do want to say more about the book I criticized yesterday, Against Intellectual Monopoly, especially as it’s gotten blurbed by people who’ve done better thinking on the subject, like Lawrence Lessig, and I’ve seen it pumped up on Reddit and thrown out in a Digg comment (on the EU’s likely extension of copyright on audio recordings) as a “good book on the subject.”  Just thinking more on the paragraph I quoted has me exercised, especially this sentence:

If, by selling her original copy of the idea in a competitive market and thereby establishing the root of the tree from which copies will come, the innovator earns her opportunity cost, that is: she earns as much or more than she could have earned while doing the second best thing she knows how to do, then efficient innovation is achieved, and we should all be happy.

So, the programmer who makes $100,00 a year and the busboy who makes $10,000 a year come up with the same program or novel or song, and yet the programmer makes ten times as much for a product of the same utility?  All this leads to is the busboy contracting with the programmer to allow the programmer to pass the work off as his own, which nets the busboy $50,000 for a year of his labor instead of ten, and the programmer $50,000 for nothing but his documentable “opportunity cost.”  It seems to me that the problem with this kind of academic theory is that it assumes a society much like a Hindu caste system, in which everyone is born to their role and knows their place, and nobody jumps the fence or breaks the rules (and in which busboys can’t possibly know how to program).  The programmer and the busboy will form their own economy in any realistic economic model, with the programmer possibly even having a farm system much like we see today with first world gamers, who enjoy the fruits of the labor of Chinese laborers who play WoW all day to accumulate weapons and money, which are then purchased by gamers who would have to have used up their own, more earnings-rich hours otherwise in their acquisition.

So I’ve downloaded a copy of the book, which the authors have, in the spirit of their title, provided for free.  It’s dated six months before the version which Cambridge University Press is selling for $30.00 list price, but I think it’s fair that the authors, given their premise, should be criticized on the basis of the publicly available copy.  I won’t be doing much outside my hotel on this biz trip, given the state of my own personal economy – possibly soon to be much worse, but I’ll talk about that if it happens – so I just might get some reading done after all.

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