[seriously serious sirius XM radio] IP reform thread

[Kuciwalker]

I expect a similar model would work for television.

edit: a similar model does work for television, even with huge inefficiencies

[KrazyHorse]

Kuci, we have 2 works. One is a modern piece of orchestral music with few substitutes. The potential audience is 1 million at a price of zero, but they value the work fairly highly. The other work is a piece of pop music with a large number of close substitutes. The potential audience is 10 million, but they do not value the work very much (if forced to substitute they could do so with little loss of utility).

Under your scheme you would give the pop piece 10X as much as the orchestral piece, even though the utility of the orchestral piece could easily be much higher.

[KrazyHorse]

Kuci, you seriously need to rethink. Not all television is sold the same way. The Wire was sold differently than Everybody Loves Raymond. Simple 0 cost viewings is a poor way to judge the relative utilities of the two.

[Ramo]

The cable model only works that way because the value is set by the amount time that a viewer is subject to advertising, not some comprehensive value to society. Which is completely irrelevant if the intellectual property were public. KH is right, a simply function of frequency/time of viewing wouldn't work.

[KrazyHorse]

My point isn't that the privately appropriable value (under the patent/copyright system) of a work is EXACTLY proportional to the social value; my point is that the privately appropriable value is probably a much better standin for the social value than is some formula which is simply dependent on the number of views.

Privately appropriable value as revealed through an auction mechanism allows for a spectrum of pricing schemes for IP holders to try to squeeze out as many dollars as possible. Simple viewership at a price of 0 is like enforcing a single pricing model. It reduces the flexibility of our utility guessing scheme to deal with different audience types (small and dedicated versus large and indifferent, for example)

[Ramo]

I agree with you, though I'm not sure there isn't a better solution than the auction proposal (or a variant).

[Kuciwalker]

Kuci, we have 2 works. One is a modern piece of orchestral music with few substitutes. The potential audience is 1 million at a price of zero, but they value the work fairly highly. The other work is a piece of pop music with a large number of close substitutes. The potential audience is 10 million, but they do not value the work very much (if forced to substitute they could do so with little loss of utility).

Under your scheme you would give the pop piece 10X as much as the orchestral piece, even though the utility of the orchestral piece could easily be much higher.

Yes, and I'm totally willing to make that concession. Especially since the orchestral piece will have the opportunity to differentiate itself when it comes to live performances.

Not to mention that the "charge people for the right to hear the work" model doesn't work at all.

[KrazyHorse]

Ramo:

I wasn't arguing with your last post; I was simply fleshing out the idea/trying to explain it a different way

By the way, I also don't disagree that there's likely a better way to guess utilities than with a fixed multiple of the value of IP rights on an idea. But right now I don't know of any way which is either:

a) Obviously better based on hand-waving arguments like the one I provided to show that the auction mechanism is better than a fixed pay-per-view system

or

b) Better based on empirical research

In fact, if you can think of something which falls under either of those (or even under c: isn't obviously worse) this thread is precisely the place to post it....

Like I said near the beginning: this is not supposed to be a preaching thread. This is a learning and brainstorming thread.

[KrazyHorse]

Yes, and I'm totally willing to make that concession. Especially since the orchestral piece will have the opportunity to differentiate itself when it comes to live performances.

Not to mention that the "charge people for the right to hear the work" model doesn't work at all.

So how come you want to apply a flat fee-per-view rather than something more flexible (like auction mechanism?)

[Kuciwalker]

How would you apply an auction mechanism?

[Kuciwalker]

Also, any approach to music that assumes you can charge people for it will be flawed.

[KrazyHorse]

Kuci, you're not really making any sense. You have fairly arbitrarily decided that number of listenings at a price of 0 is a better proxy for marginal utility of the work than is the amount of money that a monopolist can figure out how to extract from his audience. I gave you concrete examples of WHY that doesn't work properly. Specifically, it fails when the value per listen is drastically different for different types of music (aimed at different audiences). The best way to extract value out of some forms of music may well be with ads aimed at the lowest common denominator. For these pieces, paying per listen is basically equivalent to paying a fixed multiple of the appropriable value. But for other pieces it MIGHT WELL BE TRUE that the best way to extract value is different; either by running premium ads, or even by charging per listen. Either way, the same payment per listen for these pieces won't represent the additional value that each listen represents relative to the higher volume stuff.

[Kuciwalker]

KH, any mechanism that attempts to charge* listeners a price** other than 0 won't work.

*money or advertising
**marginal

[KrazyHorse]

Seriously, dude: think of it this way. Kelly Clarkson puts out her latest single. 10 million people want to listen to it, and each would be willing to pay a cent a listen. Of course, transactions costs overwhelm the 1 cent payments, so monopolists use advertisers to extract value. Similarly, 20 million people want to listen to the latest Miley Cyrus single. Maybe they'd be willing to pay 1.5 cents a listen, but again transactions costs overwhelm this. We probably use the same advertisers for both singles. Say these advertisers pay us 0.5 cents a listen. Rational bidders in an auction bid 50k for the Kelly Clarkson song and 100k for the Miley Cyrus song. The social value of the KC song is 100k and of MC is 300k. If we'd arbitrarily set M at 2, we would give KC 100k and MC 200k. Your per-listen payouts, assuming they're calibrated to the same total for the two songs together, give each creator the same amount as our auctioning process does. All right, so far so good. Our relative payouts are both off by the same amount, but at least they somewhat approximate the relative value of the two pieces.

The problem arises when you start talking about "premium" pieces, for example. Pieces which are targeted at an audience which may be willing to pay for listens, or which may be more highly valued by advertisers (say, because they have more money). The per-listen dollar value you applied earlier will understate ridiculously the social value of the piece! The Wire never gets made if it has to draw in the same size audience as Everybody Loves Raymond. It does get made because those who DO want to watch it gain MUCH more by watching it, on average, than does the audience of Raymond. Intelligent monopolists use different pricing schemes to extract value out of the different types of audiences or users or whatever that different products have. By enforcing a single pay-per-listen rate we throw away this flexibility (which again is not necessarily ideal, but which is a hell of a lot better than your approximation)

[KrazyHorse]

KH, any mechanism that attempts to charge* listeners a price** other than 0 won't work.

*money or advertising
**marginal

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Errr...the last I checked the music industry was still making money.