Now That DRM Is Dead...

Commenter Eli Dourado asks this in response to my last post on DRM.

If the fixed cost of producing a record is tending toward zero (as it is), and the marginal cost of reproducing the record is very near zero, what happens to the price of music? It seems like eventually it will have to go way way down. It may be the case that musicians will give away the digital recordings to make money on tour. Labels provide a valuable service in promoting artists (and a less valuable service in screening them), but it's hard to see how they will be able to survive in their current incarnation.

I think that the price of music won't change all that much, at least at the top end. Assuming that copyright law doesn't change the artist ultimately owns his/her own destiny.

Artists won't have to compete on price because they are essentially monopolists - distribution companies (ultimately the iTunes, Napster, Launch and similar service) will have to compete on breadth of artists and features.

I think that ultimately the Labels will play a limited role in production if at all - their role will be replaced by small firms that will assist artists with production, PR and advocate services, negotiating compensation rates with the online service providers.

The days of controlling the music industry is coming to end - and not a moment too soon.

Tags: music, DRM

Inequality Doesn't Matter

Brad DeLong doesn't think inequality matters.

Nor should we worry a great deal that some people are richer than others. Some people work harder, apply their intelligence more skillfully or simply have been lucky enough to be in the right place at the right time. But I don't see how alternative political-economic arrangements could make individuals' relative wealth closely correspond to their relative moral or other merit.

Unless it can be used for political gain.

the increase in inequality that we have seen in the past generation is predominantly a result of failures of social investment and changes in regulations and expectations. It has not been accompanied by any acceleration in the overall rate of economic growth. For the most part, it looks like these changes in economy and society have not resulted in more wealth, but only in an upward redistribution of wealth -- a successful right-wing class war.

In a world where the poor make less than $1 a day inequality is just bad luck. In the US where most poor own their home, have a car, a refrigerator and cable TV its a problem that must be fixed because it just isn't fair.

Tags: inequality, democrats, economics

Odd Bedfellows

I don't know much about the details of the case, but the results of the vote in Cunningham v. California seem more than a little odd.

Her opinion was supported by Chief Justice John G. Roberts, Jr., and by Justices Antonin Scalia, David H. Souter, John Paul Stevens and Clarence Thomas There were two dissenting opinions -- one by Justice Anthony M. Kennedy, supported by Justice Stephen G. Breyer, and one by Justice Samuel A. Alito, Jr., joined by Kennedy and Breyer.

Scalia and Thomas agreeing with Ginsburg and Stevens with Breyer and Alito dissenting? How often does that happen - split decisions that split the liberal and conservative Justices?

Tags: Supreme Court

Is This Ad Hominem?

Someone states a position on an a topic. The reply is this:

I find it inconsistent that you think X but find that Y is ok.

Is that an ad hominem argument?

Tags: logical fallacy

Death of DRM Imminent

I've said previously that media companies that ditch DRM will find a goldmine at the end of the rainbow.

It is beginning to look like the Big Four may be starting to agree with me.

Most of the big players are experimenting with DRM-less distribution and the content providers: Amazon, Yahoo, and others are all providing MP3s for download.

Heck, EMI is even partnering with a company in China (the home of IP piracy of all stripes) to provide advertising supported downloads.

This is going to put Apple (and to a lesser extent Microsoft) in the lurch as they have spent huge amounts of capital propping up systems and devices that rely on DRM to lock consumers in.

I'll see this as damning evidence against the power of monopolies, though I doubt haters of capitalism will see it in quite the same way.

More thoughts on the NYT piece here.

Tags: DRM, MP3, Music

Another Silly Question

The right gets chastised for not evaluating Iraqi and American lives one-for-one.

The way you can tell that, fundamentally, the right's Iraq hawk pundits are deeply unserious people is that you'll see things like Reuel Marc Gerecht making this argument: "I can understand--though not appreciate--Americans who don't want to see Americans dying in Iraq because they value American lives more highly than they do Iraqi ones. This sentiment, more common on the right than on the left, inevitably leads to a bigoted isolationism that allows nefarious forces to run amok." The view that American lives are more valuable than Iraqi lives is obviously false. The view that the American government should value American lives more highly than it values Iraqi lives is, I think, quite different, fairly intuitive, and certainly not something that advocates of neoconservative foreign policy deny in anything resembling a consistent manner.

Isn't that the exact same argument that the left uses on trade - American jobs are more valuable than foreign jobs?

Tags: trade, politics

Hello Castro Part II

Does anyone really believe that this is only going to last for 1.5 years?

The National Assembly has given initial approval to a measure that would let President Hugo Chavez enact laws by decree for 1 1/2 years, a key step in what the leftist leader calls an accelerating march toward socialism.

I feel great sympathy towards the citizens of Venezuela - they just lost their freedom today.

More thoughts at: Coyote Blog

Tags: socialism, Chavez, Venezuela

Sweet Justice

It would be sweet, sweet justice if Castro died prematurely because of the ineptitude of his own socialized medical system.

Cuban leader Fidel Castro has long prided himself on Cuba’s doctors and free public health care system, but that system seems to have let him down after he fell ill in July , U.S.-based doctors said on Tuesday.

Based on a report in Tuesday’s edition of Spain’s El Pais newspaper, the doctors – who have no first-hand knowledge of Castro’s condition – said Castro had received questionable or even botched care at the hands of health experts on his communist-ruled island.

But come on - how is the libertarian and conservative blogosphere even reporting this? Doctors that have no first-hand knowledge of Castro's condition? Its pure conjecture and I'm embarrassed to even be wasting the time on this.

Those that are quoting this as some sort of "proof" that socialized medicine doesn't work should be ashamed of themselves.

Tags: Castro, health care

Can't Beat 'Em So Just Beat 'Em Down

The Weather Channel’s most prominent climatologist is advocating that broadcast meteorologists be stripped of their scientific certification if they express skepticism about predictions of manmade catastrophic global warming.

I suppose its too much to ask to have The Weather Channel distance themselves to such a clearly anti-scientific stance isn't it?

If scientists that fall clearly on pro-global warming side of the debate can't distance themselves from people that want to bypass scientific process then expect the politicalization of the debate to continue.

Tags: global warming, politics

Profit Isn't the Problem

Canadian researches think they have found a non-toxic, very effective drug for cancer treatments.

A small, non-toxic molecule may soon be available as an inexpensive treatment for many forms of cancer, including lung, breast and brain tumours, say University of Alberta researchers.

But there's a catch: the drug isn't patented, and pharmaceutical companies may not be interested in funding further research if the treatment won't make them a profit.

You can almost hear the sneer associated with that dirty profit word can't you?

But profit isn't the problem here - the problem is the prohibitively expensive approval process that pharmaceuticals have to go through to get drugs to market.

If a drug company could get a drug to market without spending a billion dollars in research they would be falling over themselves to bring a non-toxic cancer drug to market.

So before you complain about those greedy drug companies remember that they can only make money by helping people - its the government that is preventing them from doing so.

Tags: health care, pharmaceuticals, government, FDA

Why Liberals Should Support Federalism

You can't always control the reigns of government - by crippling federalism and the commerce clause liberals have hamstrung their own efforts in the states.

The United States Court of Appeals for the Fourth Circuit today affirmed a district court decision to invalidate Maryland’s mandated health benefits law.

“Today’s Appeals Court decision makes clear that employer health plans are governed by federal law, not a patchwork of state and local laws,” said RILA President Sandy Kennedy. “The Court’s decision sends a strong message that similar bills under consideration in other states and municipalities also violate federal law,”

“Congress enacted ERISA, in part, to create uniformity in national health benefit plans,” said Stephen Cannon, outside General Counsel to RILA. “Differing state and local health benefit mandates would only increase health care costs and serve as a strong disincentive for employers to offer health coverage.

This is one of those bizarre cases where I agree with the outcome but despise the reasoning and methods. The anti Wal-Mart bill proposed by Maryland was ill conceived, but Congress should not be able to interfere with state rule making.

Maybe there is an equal protection clause argument, but the courts clearly didn't rule on those grounds and I'm not sure that such protections can (or even should) extend to corporations.

Either way, by fighting to eviscerated the Commerce Clause and give Congress nearly unfettered power liberals have shot themselves in the foot when trying to pursue progressive agendas at the state level.

I will continue to disagree with that progressive agenda, but it should be opposed by good arguments not federal fiat.

Tags: democrats, WalMart, politics, federalism

Just One Question

Dennis Kucinich wants to re-implement the "Fairness Doctrine."

We know the media has become the servant of a very narrow corporate agenda. We are now in a position to move a progressive agenda to where it is visible.

If the media only serves corporate interest how does minimum wage increases get passed with minimal opposition? How is SOX still good law? And how come I have never once seen a 60 Minutes on the evils of Capital Gains or Corporate Taxation?

NetFlix and Net Neutrality

This is why net neutrality is a bad idea:

Netflix offers subscribers the option of instantly watching movies on their PCs; New feature will be included in subscribers' monthly membership at no extra charge and will have a phased roll-out over next six months.

If (and I argue, when) the internet becomes so congested with video-on-demand services that none of it works any more the business model will die.

Consumers (and application owners) will consume as much bandwidth as they have available - at some point the median consumer will refuse to pay more for broadband services and top end consumers will suffer for it.

The only way to avoid this outcome is to allow companies like NetFlix to pay companies like Verizon for priority access - the alternative is that NetFlix will not be able to provide online movies and iTV will be merely a dream.

Then, when service providers don't fix this "problem" those that think government is the answer for everything will use this "failure" to justify government control of the tubes that the internet runs on.

I think that lovers of liberty everywhere can agree that is the last thing that we really need.

Tags: net neutrality, NetFlix, technology, economics

Beginning Of The End?

Once upon a time, I predicted that the record label industry may become obsolete:

This will also drastically change the way that the music industry markets it's material, possibly even making the industry obsolete. The costs associated with producing an album have been reduced drastically over recent years as computer technology places homegrown studios very near the quality of proffessional studios. Additionally, MP3 players are driving consumers to care more about single songs as opposed to full length albums. This change could push artists to release songs more regularly to maximize name recognition as opposed to spending a year or more producing an album with ten or more songs on it. This model can give artists near real time feedback on their product allowing them to react to what consumers want, this makes each venture less risky and maximizes the ability to experiment with their style.

We are approaching this reality very quickly:

Essex rock band Koopa could become the first unsigned group to land a UK top 40 hit thanks to new chart rules.

Their download-only single Blag, Steal & Borrow is on course to enter Sunday's top 40, early sales figures suggest.

If (well, when really) someone finally breaks the Top 40 (and then the Top 10) without the overhead of dealing with a record label little lightbulbs will go off over every artists head. You can make a lot more money when someone else isn't skimming off your profits.

That isn't to say that labels won't have a place - but I think that they will become more like management companies instead of leaches. I think that lovers of music and artists both would be much happier with that arrangement than the current system of labels getting decide what gets produced and what gets played and who becomes famous.

Hopefully, it will also end up with a bit better music at the end of the day as well.

Tags: music, internet, technology

The Problem With the Problem With Insurance

Predictably Cato Unbound has another great lead essay this month - Arnold Kling's Insulation vs. Insurance which talks about the state of the health industry and why the current model of all-encompassing health care is unsustainable.

Also predictably, I have to throw my two cents in.

The problem with such dire predictions is that they are nearly always wrong because they assume that trends are stagnate. If you separate the problem into separate components - Government Insulation and Private Insulation it should be clear that one is certainly unsustainable and one is self-correcting.

Governments cannot continue to pay pensions and health insurance indefinitely - I don't think that is controversial. California's bill for these benefits is going to approach $30 billion (from $160 million in 2000) within about a decade.

On the private provider side the case isn't quite so clear. Yes, insurance rates are rising. Yes, medical care is getting more expensive. Yes, employers are balking at picking up more of the bill. But you can already see the market starting to correct for some of these factors.

Deductibles are getting higher. Employers are passing more of the costs to employees. Employers are starting to offer high deductible plans. All of these responses to high costs are going to set the market in motion to find more attractive alternatives.

I think Kling falls into the Central Planner trap by thinking he must come up with a solution to get us from where we are to where he thinks we need to be. He should really know better - Central Planners are nearly always wrong.

The correct approach is to let the market do what it does best - adapt. Perhaps remove some regulatory barriers to innovation - up to and including rigid rules around what does and what does not constitute insurance. Relaxing FDA rules to make drug development cheaper would be nice. Perhaps lifting the AMA's monopoly on medical school accreditation.

Arnold is right that the current system of insulation doesn't work. Fortunately, the market "knows" that it doesn't work and is adjusting to the failure. The best that politicians can do is stay out of the way so that they don't prevent the correction and to pay attention for opportunities to roll back almost a century of regulations, tax breaks and market distortions.

The market will eventually make these government interventions obsolete - lets just sit back and watch with amazement at the innovation that happens by the invisible hand.

Tags: health care, cato unbound, insurance

Google Jobs

An interesting article in the New York Times talks about Google's hiring practices. To assist in filtering out its 100,000 job applicants each month they have written an algorithm to pick out the best applicants.

It is starting to ask job applicants to fill out an elaborate online survey that explores their attitudes, behavior, personality and biographical details going back to high school.

The questions range from the age when applicants first got excited about computers to whether they have ever tutored or ever established a nonprofit organization.

The answers are fed into a series of formulas created by Google’s mathematicians that calculate a score — from zero to 100 — meant to predict how well a person will fit into its chaotic and competitive culture.

The first thing jumped into my mind is that this is a fantastic research possibility - I almost wish that I was an academic so that I could look at the process.

Numbers cannot discriminate so it will be very interesting to determine how women and minorities are capable of making the cut.

There are those that swear that everyone - man, woman, black, white, yellow and green - is equally capable, I have a strong suspicion that the algorithm will show something quite different.

Tags: Google, discrimination