Posts from the Why nobody buys your stuff Category


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I’ve done a several interviews in the last few weeks where journalists have asked about the value of music, as if this is a major cause for concern.

I’ve never really worried about this, and here’s why:

We just got our water bill. Water is clearly valuable – we would die without it – but it isn’t always expensive. In the last six months, we used 66,000 litres of tap water, at a price of just over £162 (including standing charges).

Water is fairly readily available where I live. It falls out of the sky. Indeed, an average of 736,000 litres of water land on my house and garden each year.*

There’s also a stream at the end of the street which must carry far more than that, and I live walking distance from the sea. Let’s forget about these sources though: the hundreds of millions of people around the world struggling to survive without clean drinking water wouldn’t appreciate it if we confuse this with the stuff coming out the tap.**

Still. In the park at the end of the street, there’s a drinking fountain. There’s also a cafe where you can get a plastic cup of water, free of charge. If these are closed, the reservoir is at the top of the hill. With some inconvenience and fewer baths, I could get free water if I wanted.

The water supplied to my house costs about 0.1 pence per litre. It’s metered, although some people are still on the “all you can drink” subscription. Whichever tariff you’re on, you’re allowed to put the water in a mobile device or “bottle” and take it out with you.

The bottled water we buy from the supermarket is 8.5p a litre***. I’m fairly sure this is tap water, marked up to more than 80 times the price, but it still seems hilariously cheap when you can pay ten or twenty times this amount for a glass bottle of fancy water, still or sparkling.

The cafe in the park offers bottled water at £3 a litre. This is 3,000 times the price of tap water, and it’s offered right next to the big jug of free stuff. Still, business is good. People buy the bottles. If you’re willing to leave the Shire, you can pay a lot more.

What I find really interesting about all this is that most of the bottled water brands (or at least the companies that currently own them) entered the market when cheap, good-quality tap water was already available to almost**** everybody in the country, apparently unfazed by this massive pricing disparity.*****

I’m surprised, then, when people tell me streaming music is somehow unsustainable, will completely replace downloads or is devaluing music. I don’t have to pay anything to listen to the radio. People give me free CDs. I can listen to most things on Spotify when I’m at my computer. I still buy music, both as downloads and occasionally as physical products in almost every imaginable format. I buy them with the money I make from selling recordings, and while I fully expect to have to keep looking for new ways to do it, I have no plans to change career.

With apologies to Information is Beautiful.



* You can figure this out yourself: multiply the length of your property by the width (in meters) and multiply this by the annual rainfall in mm. Then check the order of magnitude about six times because it seems like A LOT of water. I live in one of the least-rainy parts of the UK.

** With a big tank and a filter we could be self-sufficient, but this over-simplifies the clean water problem. To live off the grid, we’d also have to disconnect the sewer. That’s where things get problematic, especially if any of the neighbours were planning to use the water from the stream at the end of the street.

*** Including delivery.

**** The near ubiquitous availability of bottled water makes us less inclined to install drinking fountains in public places, which may not be a good thing.

***** My local water company announced a profit of £79.9m last year, up 147.7% on 2011. The global bottled water industry is doing fine.

Jolly Roger

The US Supreme Court is being asked to decide whether or not a $222,000 fine for sharing 24 songs in unconstitutional.

Readers may be surprised to learn that, in addition to gay marriage, abortion and semi-automatic weapons, the US constitution also remains frustratingly silent on the subject of Kazaa, so instead, I’d like to look at the more useful question of whether or not this sort of penalty is sensible.

As things stand, the statutory damages for copyright infringement are up to $150,000 per count of willful infringement. A count of wilful infringement is offering a work for download so that’s 150 grand per song.

The RIAA has already stopped suing individuals for file sharing. These lawsuits weren’t completely ineffective: pretty much everybody knows that filesharing is illegal now, but they weren’t terribly effective at preventing online piracy.

For a penalty to be a good deterrent, it has to be severe enough that wouldn’t want it to happen to you, and you have to believe you can get caught. When you’re doing a risk assessment, you might look at it like this:

Risk = Penalty x Chance of getting caught*

If the chance of getting caught is low, the penalty has to be more severe.**

The trouble with this line of thinking is that if the penalty is too harsh, it cannot be meted out more than once.

Let’s say, for example, you’re an intern at NPR and you’ve obtained 11,000 songs by dubious means. You’re on the hook for $1.6 billion in damages. If the RIAA comes knocking, you’re screwed. So screwed, in fact, that you won’t be in a substantially worse position if you do it one more time.

According to one source, about four billion songs are illegally downloaded in the US each year.

At $150,000 per count, the total exposure to damages is six hundred trillion dollars a year.

With only $1.08 trillion in circulation, there’s only enough US currency in existence to cover the fines on about fourteen and a half hours of US music piracy.

Constitutional or not, this is daft.

Something the framers of the US constitution certainly were familiar with, though, was real piracy.

From 1790 until 1897, piracy was punishable by death under US law, and the death penalty remained (at least technically) available under UK law until 1998.

Notorious captains aside, if you were going to catch somebody committing old-fashioned piracy on the high seas, you pretty much had to catch them in the act, which effectively gave the crime a very short statute of limitation. The one time you had to worry about getting executed for pillaging was right around the time you were deciding to do some pillaging.

This solved the $1.6 billion problem, and created an ongoing deterrent that worked (or didn’t) just as well for the 11,000th count as it had for the 10,999th: you knew that if you stopped now, you’d probably get away with it.

Now, this might seem like a rather harsh response to downloading a few songs, but there’s an argument to be made that all we need to do to fix piracy is to reintroduce the death penalty, contingent on actually catching people in the act.***

After all, it wasn’t until the UK abolished the death penalty for piracy 1998 that things started to go downhill…


…and that, my friends, is proof, if ever I saw it.

* There’s an argument to be made that this should have worked: if people were truly rational, they’d understand that you only need a one-in-150,000 chance of getting caught for stealing a song to be a bad deal. Even if it wasn’t effective as a deterrent, the RIAA should have been able to recover its losses: if the losses due to piracy account for $12.5 billion/year, the RIAA only needed to recover damages on one in every 48,000 counts of piracy. The trouble with both of these lines of reasoning is, as it turns out, people who steal music don’t have hundreds of thousands of dollars in assets lying about.

** Or you have to increase the perceived chance of getting caught, effectively tapping people on the shoulder and saying “we can see what you’re up to. This is what they do in France, and it really seems to work.

*** If this doesn’t end piracy, it will at least get us faster broadband.




















In this graph, total prices are based on a quick survey of items for sale. I haven’t included units or exact figures because different stores, labels and territories offer slightly different deals, and the goal here is to give you an idea of the general picture, not to give the illusion of an exact or universal formula. The splits are based on my experience* of typical indie classical deals, where a digital retailer gets to keep 30% of the retail price, and a digital distributor takes 10%-20% of what’s left. Labels generally set minimum wholesale prices and maximum markups which, in real terms, means they also control the retail price. There’s a lot of variation in both the distribution and retail markup for physical CDs, so I’ve gone for something typical of a medium-sized classical indie dealing with a big distributor and a big retailer, since this is where the majority of sales happen. The slice of revenue passed on to artists is entirely dependent on their deal with the label, and since this varies from “all of it” to “none of it” I haven’t tried to include it on this graph. It is, in any case, almost entirely irrelevant to the question of the relative pricing of the various digital formats.

Ok. That’s the disclaimers out the way. Now consider this:

Since the introduction of iTunes Plus, labels deliver the same files to iTunes and to the lossless download stores**. Mastered for iTunes requires the same deliverables as a hi-res download store. For the label, the fixed costs for all three are basically the same, and the variable costs are either the same or only increase if the label ups the wholesale price.

If lossless downloads cost more than CDs, it is because the labels want it that way.***

I can’t tell the difference anyway, but if I could, as a consumer, I’d probably buy CDs.


* I’m using myself as a primary source here, so you should at least consider that I may be lying or mistaken. This would, though, be easy for you to check.

** iTunes compresses the files before delivering them to customers. Lossless stores don’t.

*** If this was an article in Digital Music News, that probably would’ve been in the headline, and nobody would have read the two important but boring paragraphs explaining what this doesn’t tell you and which assumptions were made along the way.

People keep asking me to help them start a label.

The first question I ask is “why do you want to start a label?”

It’s astonishing how few people have a clear answer.

Source: It’s pretty obvious I just made this up

That’s not to say that there’s no good reason to start a label, or that nobody should do it, but if you don’t know what you’re hoping to achieve, it won’t be easy to achieve it.

“We heard about it at a conference”

This is a silly reason to do anything. A better reason would be “we heard somebody achieved specific measurable goals and we think we can do the same”.

“Somebody offered to pay for it”

Did they offer to pay for it in perpetuity? If not, you’ve got three options:

1) Treat the funding as start-up capital for a self-sustaining venture

2) Come up with a plan for long-term funding

3) Approach it as a short-term project, in which case “starting a label” might not be the best way to go about getting recordings to the public.

“It looks easy”

I frequently encounter a belief among orchestras that making records is the hard bit, and the rest is easy. While this might* be true for anybody who doesn’t have an orchestra at their disposal, those tend not to be the folks who fall for this mistake. Think about it like this: if getting a few dozen people you already employ to do something they already do is the hard bit, the easy bit had better be very easy.

The “easy” bit here is getting thousands of people you don’t even know, let alone employ, to give you money for something they don’t know they want. I’m quite good at this bit, but it’s not my idea of easy.

*I say “might” because in my experience, making the record isn’t the hard bit when you’re doing everything yourself, and it isn’t the expensive bit when you’re paying other people to do it all. I wish I could find an online source to back this up.

“It looks fun”

Making records is quite satisfying, because you get to say “Here: I finished it”. Getting people to buy records is quite hard work, and it is never done.

“Everybody else is doing it”

The way I see it, this is a good reason to seriously consider not doing something.

“A big boy did it”

Something that works for a large organisation might not necessarily work for a small one. We have to play to our strengths, and a smaller organisation enjoys freedoms a bigger one can only dream of.

“Because we can”

This isn’t a reason at all. A media project might be an experiment, but unless you know everything, what do you do that isn’t an experiment? There’s still a point to it. What are you hoping to find out? If you’re not going to give it a chance by doing it properly, you won’t learn anything at all. “Because we can” is often a weak excuse to go ahead without a real plan.

“It’s the best way to achieve a specific goal”

Ok. There are some upsides. Goals might include:

– Making the recordings you want to make (remembering these aren’t always the recordings people will buy)

– Taking ownership of your recorded media (remembering that this also generally means assuming some of the risk)

– Keeping all the profit (or eating all the losses)

– Controlling the way your brand is used (but having to do all the work)

– Reaching new marketing outlets (remembering you have to actually market to them)

– Reaching a global audience (and taking on the work of marketing to the whole world)

– Creating a durable record of what you played (and finding a way to pay for it)

Once you’ve defined the goals, it’s worth asking if investing in conventional music distribution is the only way of achieving them. Do you need to sell your recordings at all? If you want them to be available to the broadest possible audience and you weren’t approaching this as a for-profit enterprise, might it actually be less expensive to give them away? Could you ask for something other than money in return?

Taking charge of your media activity has to be an integral part of controlling your own future, and there are organisations who are ideally placed to start a successful label, but there’s more to an innovative media strategy than simply doing what everybody else does.