paid content means badly paid musicians

Jaron Lanier editorial in the New York Times:

How long must creative people wait for the Web’s new wealth to find a path to their doors? […] Information is free on the Internet because we created the system to be that way.

We could design information systems so that people can pay for content — so that anyone has the chance of becoming a widely read author and yet can also be paid. Information could be universally accessible but on an affordable instead of an absolutely free basis.

Lanier doesn’t understand music economics.

Advertising allows some people to specialize in attracting eyeballs and others to specialize in turning attention into revenue. Content creators, like musicians, do the attracting. Advertisers do the monetizing.

If you have the musicians do the monetizing, they will do very stupid things like sell $80 CD box sets, which have a high ticket value but don’t move enough units to be a great business. If you have the advertisers do the monetizing, and you take the ones who pay the highest prices, you will have an alliance with whoever is best at turning these eyeballs into a living.

If some musician is putting his music on the web because he wants to sell CDs, he’s competing with advertisers to monetize the eyeballs his music is attracting. Maybe he’s the natural winner of this competition, but probably not. Frozen peas are generally a better product than CDs. Cars are a better product. iPods are a better product. Pretty much anything is a better product than a CD.

And that applies to downloaded song files as well as songs on hard media. The packaging and distribution are not the issue. The issue is that not many people want to continually purchase music. It’s a small market.

The business of music is not to maximize the number of songs sold. It is to maximize the amount of money earned. And it happens that lots of people want to enjoy music in a transient context. They like a good DJ at the club. They like radio when they’re stuck in traffic. They are interested by whatever their friend plays when they visit. This is a market that’s big enough to matter.

Musicians will make less money from paid content than ad-sponsored content because there is less demand for paid content. Regardless of whether paying for music is a declining business, it was never much of a business in the first place. The economics have always sucked and they simply continue to suck. The rate of decline in the CD business just doesn’t matter because the CD business is so small in comparison with other businesses that music can complement via advertising.

Paid content means you sell the music. Ad sponsored content means you use the music to sell whatever is most profitable. Since paid content means that musicians are probably not selling the most profitable product, it’s a bad business.