We hear the content industry and rights holders complaining about piracy everyday: file sharing, physical piracy, theft-of-services, derivative works, etc. But has anyone stopped to think about how many times consumers are asked to pay for the same content?

Computer files may be the final form factor, but that is not stopping media companies from extracting every last bit of value from each file. Because most media is delivered through walled gardens or physical copies, even files can be resold. For example: first you pay 99¢ to purchase a song on iTunes. Then you pay $2.49 to download a portion of that song as a ringtone. You can then pay $1.99 to use a portion of that song as a ringback tone--and $1.99 on iTunes to purchase a download of the video for that song.

Next comes a charge of $1.49--for a still image of the artist to use as wallpaper on your mobile device. You would rather download it for free from the Internet, but you can't get it into your phone. (Some people actually take a picture of the computer screen with their cell phone cameras to avoid this charge, but not many.) You may pay $14.99 for the DVD of the movie that features that song and, if you are truly out of your mind, you will pay $19.99 for the CD of the album that includes that song. Then you will pay $3.95 to watch the pay-per-view or video-on-demand version of the movie--and another $6.95 for the HD VOD concert that features the same song.

If the media company has its way, you will pay $12.95 per month for the subscription to HBO that will broadcast the movie and the concert on the cable company¹s linear and VOD channels. Ultimately, part of your basic cable or satellite package will go to pay a per-subscriber fee to Music Choice, where you will hear the song. You may also pay $12.95 per month to a satellite radio company where you can hear the song and, if Apple continues its world dominance over the personal music player world, you will ultimately purchase a co-branded iPod with the complete collected works of this artist (including this same song) for about $200.

How many times can you sell the same master file? There doesn¹t seem to be any limit. You just have to keep the walls in the walled gardens up and keep the formats incompatible.

How many times will you buy the same master file? That question is being answered every day on P2P networks, via email and podcasts. Obviously, some consumers are willing to pay for the convenience of not having to bother converting their own files to be used in all of their devices. But there are far more consumers who would rather not pay for the same thing over and over again. Is there a middle ground? I doubt it, but I'd like to hear your thoughts.

Comments

[Shaun Abrahamson]

Shelly, I think the problem may go a little further. For example: how will consumers feel when the need to move their iTunes library to the next new shiny non-Apple device? (to a psp or a Nokia phone?) A European survey from a few months back suggests that consumers dont really understand DRM and its implications (http://www.indicare.org/tiki-read_article.php?articleId=109). It might be interesting to look at the Software licensing model. Once I have purchased a license, I am free to install, uninstall and re-install and often they are kind enough to maintain an account to enable me to retriev my license. Maybe this model could be applied elsewhere? I can take my phone number with me now - shouldn't I be able to bring my licenses along too? - Shaun

[Dave Meehan]

Ok, how about this. I buy a once off, lifetime licence to access a particular peice of material, and then a service charge to have it converted into the format of my choice. Let say I pay $1 for the licence, then $1 for each format, iPod, WMA, CD, DVD etc. I have no issue with paying where a service is delivered, although the amount has to be fair. Each format has a 'service charge', in that each time it must be transcoded, or stored, into the medium I prefer. For digital services (ie. downloads in different audio formats), this should be a fairly low charge, as the process is simple. For CD to SACD transfers, there is a physical disk involved, which I'm happy to pay the mastering and distribution costs. Now the media industry will tell you that's what they are charging for at the moment. Your paying for each expression of the content. You never owned a right to use the material in 'any' format of your choice for life. Fair use in copyright meant that you could make certain copies for your own personal enjoyment, and I agree that copy protection schemes on digital media infringe on that right, but then digital media is much easier to pirate as well. The question for me is is the price for each media type fair. Is 99c fair for a download, when I can get it on a CD (as part of an album) for the same price? My feeling is that this should be worth more like 25c. And then I wouldn't feel the inclination to make illegal copies, and would be happy not to be able to, knowing that I could access the next format of my choice at a fair price.

[DoReMi]

When I buy music, I want to be able to buy the right to play music in whatever format I choose, wherever, and whenever I please as long as I live. [Below, I tried inserting line breaks between numbers, but couldn't figure out how.] 1. Ownership for life. I don't have to worry about losing the media because my purchase record would be saved in record company’s database. In a broadband era, I don't have to buy another CD that can rot. Instead, I can re-download from the record company with very small access fee in seconds (or better yet, they can take advantage of P2P networks to minimize the cost). If the artist has renditions of the same song, then my rights would be associated with the only the one(s) I paid for. 2. Freedom from format I want to be able to listen to it in any format I choose. Storage is cheap now and it is getting cheaper. Record companies can store all possible formats of the same song and use P2P networks to lower costs and speed distribution. Another way is that they can convert to whatever format I choose to be compatible with my target player. They can charge me a small fee for conversion or better yet, I can donate my CPU cycles if they use SETI@home approach to do conversions for free. Umm, on the second thought (after Sony rootkit fiasco), I don’t think it is such a good option. It would be better if they let me re-encode the music to whatever format I choose. If future technology allows higher bit rate for the same song, I would not need to pay for it all over again since I bought the right to listen to that song in any format. 3. Freedom of movement (I want my music to be with me) I don't want DRM to make it difficult for my music to be with me. I should be free to move my music from one device to another in various formats. I can imagine walking home listening to my iPod then be able to continue playing the same song on my stereo in lossless format, then listen to it in my car in another format. If someone comes up with a DRM scheme that allows me to do that easily, I am all for it. If not, it's not much different from the days of physical media. If I download purchased music to my PC, and computer crashes or gets infected by virus and destroys my music files (Just plug in your worst-case Sony rootkit scenario here), then I would have to pay for it all over again, just like destroyed CDs. 4. Flexible pricing Pricing should reflect demand. Let the market demand help determine the price but not completely: this should reward the artist with what they deserve. However, if the record company tries to take advantage of the demand and set the price too high for the consumer, then sales could decline and might increase file-swapping. For oldies which have much less demand, they should be much cheaper than the new songs. Just my $0.02.

[James Toledano]

So, I am with Shaun more or less. I do think that when a user buys a track that they should 'own' all iterations of it i.e. song and ringtone. The music business is obsessed with licensing and all around them they are being ripped-off royaly to piracy. To solve piracy, you need to give consumers what they want when they want it. Consumers do not want to rent music or be tied to a format. That said, Apple's DRM is pretty good versus the awful WM DRM. Whilst you are in trouble if you change your machine more than 5 times, they are pretty close to where things should be and this is verified in their market share. I do think that ultimately in the wi-fi world we live in, a user should be able to verify his legal entitlement to a music service without even knowing the licensing process is going on. It should be seemless. Take TV for example. If you moved home how would you react if you couldn't watch TV 'cause your licence wasn't cleared? I think music can learn from TV based subscription services. As media converges, I can foresee a scenario where users pay a monthly license fee for their home media centres and ancilliary devices. As long as the music biz tie everything to the CD and divisive multiples thereof - they will be stuck. What about ad-supported P2P - give consumers music for free, pay the labels their dues and kill piracy? P2P pirates are also consumers. Talk to any pirate you know, they also buy content. Locking down media and enforcing facist policies only serves to drive piracy. You have to fight fire with fire... If "video killed the radio star" then greed is killing the majors. This is what happens when lawyers run an industry and the creative types who know the consumer and the product get sidelined. LISTEN TO THE CONSUMER. DRM is not the future! Shouldn't DRM mean: Doesn't Really Matter!!!

[ian hobbs]

The value of the good is in the perception of value NOT the actual value. A person buys a ring tone for three dollars against 99 cents for the same itunes song because a ring-tone is audio jewellery. The fact that the file's DNA or composition ( i'm not sure that one can use the term composition in the context of codec/app/melody/speaker size/type) is identical to an itune song etc is irrelevant.