Wednesday, July 26, 2006

Some thoughts on the RIAA

Alright, I've been confused about this for a while now. If you read Techdirt or Ars for any length of time, you will invariably run across a story about iTunes, or DRM, or Microsoft's upcoming Zune. But what will be mentioned in nearly all of these articles is how unhappy the record labels are with Jobs' flat-rate pricing. This is a position.... that quite honestly confounds me.

First, let's ignore the irony that because the RIAA's imposed DRM upon all digital download retailers, it granted Apple the very monopoly it's now fighting against.

Second, I can understand the motivations of the RIAA. As a trade group of record labels, they want to make as much money for themselves as possible. And hey, we all want to earn our way somehow. However, it appears that the RIAA in particular goes about it a bit less than completely honestly, like when they attempted to rewrite copyright law to make all songs from artists classified as "works made for hire" in essence drastically swinging the balance of power in favor of the record labels. Read up on the 1999 case, its worth reading (and noting that they lost).

On to the present. So the record labels want variable pricing. I understand that the economics would work out so that price discrimination on the more popular content would capture more of the dead weight loss as opposed to a flat pricing scheme given a sloped demand curve. And that's presuming all the content is bought equally. Given that popular content is bought more often, the numbers would probably add up even higher than simple dead weight loss for the labels. On the other hand, if consumers start to expect to pay only a dollar for the newest hit song, the reduced expectations will shrink the aggregate demand curve, which is bad any way you slice it for the labels.

But... ummm... that's on the retail supply and demand side of the equation. As I understand it, the labels are engaged in wholesale trade, licensing music to Apple. Last I checked, they can't dictate Apple's prices... I'm pretty sure that's illegal... price fixing or something of the sort. However they should be able to price discriminate themselves, license music to Apple at whatever cost they like. Normally it would then force Apple to raise its prices in turn, but apparently selling music as a loss leader changes your outlook on things.

Or... music licensing could be a flat fee regulated by the government. In which case the RIAA's actions would make much more sense.

I don't have the time to research this one thanks to the increasing difficulty of Japanese in these next few weeks. Can anyone shed some light on this subject? I'd very much appreciate it.

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Monday, July 17, 2006

Times are Tough

I'm afraid I have to put up another post that makes an excuse for a long delay in posting. For those that don't remember, times as a student are hard. For those who haven't taken Japanese as a foreign language, I'm afraid I'll just have to make vague allusions to its massive difficulty, because getting into the nuances of indirect passive humble verb conjugations probably wouldn't make any sense. I know they wouldn't have to me before I took this language.

That said, I do have some posts planned, no telling if I'll get to them though. I find it hard to simply cite a source and comment for a few sentences about it. I like to write longer mini-essays, but it seems that isn't very conducive to a busy everyday life. Ah well.

However, for those interested in a view of the world's state of affairs as can be applied to nearly every international situation right now be it the Israeli-Lebanese conflict, or another headline worthy story, check out Sam Harris' The End of Faith. It's been my gym reading for the past week and I'm not sure if I'll post on it or not, but it's certainly something worth kicking around if you've never read it.

I think that's all for now.

Monday, July 03, 2006

Cost/Benefit: A Rolling Stones Article

I got an email from the organizers of a leadership retreat I'm going to this fall a few days ago. Among the suggested readings was a recently published story in Rolling Stone magazine. To summarize briefly, the article made me very angry and forced me to take a walk before I could think clearly about what the implications of it were.

There are arguments against the factual accuracy of the piece on multiple levels ranging from sample size to the near exclusive use of hearsay as evidence. However, I want to look at this piece from an economical incentive point of view. Whether it made me angry or not, did this piece accomplish its goal as an article in Rolling Stone Magazine?

Part one of answering this question lies in discovering what its goals are to begin with. After checking several sources, I couldn't find an exact mission statement or declaration of purpose. In fact, the wikipedia page contains neither of these phrases in the entire entry. All wikipedia does provide on the subject is the following:
Rolling Stone is an American magazine devoted to music and popular culture.

This definition is open to two very different interpretations. The first says that Rolling Stone is a magazine devoted to reporting on music and pop culture. The second is that Rolling Stone is a reflection of popular culture (as borrowed form the Daily Nebraskan piece). The difference lies in that the first interpretation holds the magazine to a higher standard of factual accuracy, ie. The New York Times, whereas the second does not, ie. The National Enquirer.

The homepage of the magazine yields no real clues either, mixing in headlines of "Prez Bush Considers U2 Karaoke Career" next to a sit down interview with Al Gore on global warming. So, in absence of a stated purpose otherwise, I'm going to assume that the purpose of the magazine is simply to make money. Further I'll presume they decided there market to be arts and pop culture fans, and for extra credit I'll say that the magazine didn't start this way, but in the context of when the Duke article was written, this is the sole mission of the magazine.

Popular culture magazines should want to write about popular topics. As is appropriate, the article ties together a University recently in the news (Duke), along with its perceived problem (the sexual landscape), together with recent controversial book releases (Wolfe's I Am Charlotte Simmons), and even throws in some pop movie references (American Psycho). As such, the article has sufficiently covered popular topics and is worthy of inclusion in the magazine.

With appropriate references in hand, the article should then catch readers in some way. While many approaches exist, this author chose to utilize the idea of indecency to shock his readers. I would have to say that his approach is affective, in that while I stormed out of the room after reading the article, I did make a point to finish it. If the article angers a few (duke students and alumni) in the process of hooking many more in the story (the rest of the country), then the article has struck a good balance in attracting readers.

More readers turn into more copies of the magazine sold, and more copies sold means more profit. In terms of cost and revenue, the revenue generated by the story is significant.

The costs of the piece are harder to measure. There will be several from Duke who may refuse to purchase the magazine due to its less than shining appraisal. Others will find that the lack of journalistic quality will signal a degradation in the entire magazine and chose to put the magazine down for good. The reputation of the brand Rolling Stone has to be considered well, though one relatively minor story shouldn't pose too much of a negative impact on the brand's power. All in all, the costs are minimal as compared to revenues.

So, I must conclude that the "Sex & Scandal as Duke" article is an article which fulfills the aims and purposes of its employers. I applaud Janet Reitman's writing in generating profit for her employers.

With the analysis done, I'll go ahead and say on a personal note that I utterly hate this piece. I find it disingenuous, inaccurate, full of false assumptions and misleading statements, sensational, and missing key parts of Duke life that clearly relate to her story, such as the movement that works very hard to directly combat what she observes. I for one have never subscribed to the Rolling Stone, and don't intend to in the future.

Note: I picked this piece to analyze on purpose, precisely because I'd have to have a very level head and rely on my logic to come to a conclusion.

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