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The music industry response

Unfortunately, the music industry's two responses so far have been the wrong ones: adding Digital Rights Management (DRM) and pushing for (and usually obtaining) Draconian legislation. DRM not only doesn't work – all such schemes are broken sooner or later, and once a single copy is on the Internet, it is effectively ubiquitous – they actually make the music they supposedly protect worth less than zero. After all, the copies freely available online cost nothing (whether legally or otherwise), DRM is plainly taking away rather than adding value, which means that DRM'd copies are worth less than zero.

Legislation, too, has signally failed to stop free copies being circulated. That's demonstrated not so much from the recording industry's claims about levels of piracy, which have been shown to be dubious both in Europe and in the US PDF – as by the fact that ever-more punitive measures are being called for. If the legislation were working, this would hardly be necessary.

But there is a third way – one pioneered by free software. Instead of trying to stop digital goods being circulated freely, businesses need to find ways of making money around those free goods. For free software, that has meant selling things like authorised versions and services. The recorded music industry already successfully sells authorised versions in competition with free versions, so that approach is being adopted, even if not consciously. On the services side, the crucial thing to recognise is that services mostly sell scarcity – people's expertise and time – and that there are equivalents in the world of music.

The most obvious of these is the live concert. These are scarce goods – even the most energetic or greedy band can only give so many gigs a year - which is why artists can charge such high prices for them. Indeed, as far back as 2006, top musicians were making far more money from concerts than from recordings:

"Only four of the top 35 income-earners made more money from recordings than live concerts," the paper says. "For the top 35 artists as a whole, income from touring exceeded income from record sales by a ratio of 7.5 to one in 2002."

It might be argued that this is fine for established musicians, but not an option for those less well-known. But the case of Jill Sobule argues otherwise. She adopted a donation model whereby fans paid her before the music existed, so that Sobule could spend time and money creating it. With great inventiveness, she came up with various kinds of goods that she gave those who financed her, priced according to their scarcity:

$10 - Unpolished Rock (but with potential) Level: A free digital download of the album, when it's released.

$25 - Polished Rock Level: An advance copy of the CD. Weeks before the masses.

$50 - Pewter Level: An advance copy and a "Thank You" on the CD.

$100 - Copper Level: All the above, plus a T-shirt saying you're a junior executive producer on the album.

$200 - Bronze Level: Free admission to my shows for 2008.

$250 - Silver Level: All the above, plus a membership to the "Secret Society Producer's Club," which means you'll get a secret password to a website where I'll post some rough tracks, or... something worthwhile.

$500 - Gold Level: This is where it gets good! At the end of my CD, I'll do a fun instrumental track where I'll mention your name and maybe rhyme with it. And if you don't want your name used, you can give me a loved one's instead. What a great gift!

$750 - Gold Doubloons Level: Exactly like the gold level, but you give me more money.

$1,000 - Platinum Level: How would you like to have a theme song written for you? I'll have a song you can put on your answering machine and show off. Again, this could be a gift.

$2,500 - Emerald Level: Mentioned as an executive producer of the album – whoop-di-doo!

$5,000 — Diamond Level: I will come and do a house concert for you. Invite your friends, serve some drinks, bring me out and I sing. Actually, this level is a smart choice economically. I've played many house concerts where the host has charged his guests and made his money back. I'd go for this if I were you.

$10,000 - Weapons-Grade Plutonium Level: You get to come and sing on my CD. Don't worry if you can't sing - we can fix that on our end. Also, you can always play the cowbell.

She later revealed that this approach garnered her $75,000 in just two months.

That might seem a long way from Stallman selling his GNU Emacs tapes, but it's not. Both he and Sobule found ways to make a living even though the basic digital goods they produced were freely available. Free software's ability to spawn successful companies based on this model is a vital data point that can be used – along with many newer ones like Sobule – to help industries come up with strategies for coping with the shift from businesses predicated around analogue scarcity to ones based on digital abundance.

Pointing out the absurdity of attempts like the Digital Economy Act or the Anti-Counterfeiting Trade Agreement to turn back the clock to a time when perfect copies weren't possible or freely available, probably won't achieve much; showing media companies that there is another option – one pioneered by Stallman 25 years ago, and getting stronger by the day – might be a better approach to defusing the increasingly tense stand-off between those on either side of the widening digital-analogue divide.

Follow me @glynmoody on Twitter or For other feature articles by Glyn Moody, please see the archive.

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