Archive | January 2018

Economic Rust in the Metal Community

Opening Remarks:

Economic strife has far reaching implications that are not only financial, but also psychological and interpersonal. Markets experiencing disruptions in capital flow can also experience disruptions in cooperative behavior and the trajectories in which products and services take. This doesn’t just happen to businesses that produce widgets either. It also has a disturbing effect on the humanities as artists require a living wage as well. The Internet and the novel markets that emerged as a result of it’s advent have been destructively disruptive to the entertainment industry; which has rigidly defended it’s legacy models, rather than adapting. Heavy metal has felt the brunt of this. The uncertainty and the unhealthy level of competition has even effected the music itself via it’s influence on the people who write and perform it. Many musicians have taken on the responsibilities of duties that were once generally outsourced in the interest of cutting costs. An organized network of similar strategies might be a viable way for musicians to move forward.

The Technology:

While Internet 2.0 was under development, there was a specific point of contention that is now particularly interesting in hindsight. There was an extremely passionate debate over to approaches. Either the Internet would promote privacy with the liberated, “copy / paste” type mode of file transfer; or there would be a protocol that promoted “provenance” in file transfer. The former is the Internet of today. The latter might have been a tag of sorts that would point back to the origin of the file. Since Internet 2.0 was being developed with commerce (.com) in mind, the value of a protocol that ensures credit for what one uploads was of course a strong point.

Though there were a lot of heated discussions and sleepless nights over the decision, the privacy friendly Internet that was intended didn’t come to fruition. This doesn’t however mean that the wrong choice was made. The provenance protocol may have been just as easily stifled as privacy has been. The copy / paste model of file transfer originated in personal computers and local area networks. The protocol may have been gotten around by reproduction on local (home / private) machines.

Many of the serious issues that we have faced with the Internet were just completely unforeseen. I doubt that any degree of foresight would have been feasible in the late 80s. We’re still struggling with it. The emergence of crowdsourcing and crowdfunding technologies has generated new microeconomics networks that include models for barter, gift economics, direct donations and more recently crypto-currency and ICOs. It appears that it has only just begun to get complex and complicated. Lack of will to invest the time and effort to try to understand this obvious restructuring of the economic system has been a mistake that the entertainment industry has paid dearly for. Continuance of the defense of legacy models is a dangerous gamble.

The Economics:

The new digital formats and the machines and networks that produce and distribute them have created a system state that some have been referring to as “the race to the bottom”. It has cut costs in production to the point that it’s achievable at home. It’s also allowing self-publishing and even digital payment methods for e-commerce. This has had favorable and unfavorable effects on the entertainment industry. Though piracy has been a concerning problem, it may be more concerning that the market is reluctant to adjust.

There have been some not so significant strategies that have produced favorable results. For instance, when lyric videos became popular, some publishers took the initiative to produce them. This redirected attention back to them with a higher quality product. The traffic of course is potential ad revenue as well.

Less favorable results have come from the lack of will to invest in distribution methods that potential patrons have been gravitating toward. Having a well promoted presence on YouTube hasn’t exactly been at the forefront of many publishers two year plans. It seems likely that it’s due to YouTube being a competitor to existing partners (*coughs* cable companies). The fact that cable companies are also the major ISPs (Internet Service Providers) has created a serious conflict of interest. This may not seem that relevant to music now; but remember that music videos used to be on cable TV. The lessons that were learned from that experience have translated to more destructive strategies in recent years.

DRM (Digital Rights Management) is access control technologies for restricting access of proprietary products and copyrighted materials. Though there was illegal usage and redistribution of copyrighted works, DRM was infinitely more likely to punish the innocent than to prevent piracy. It’s easy to get around, it has failed over and over again; and it still exists… because those who are making the decision, don’t understand the problem. Many have pointed out (and rightly so) that the existence of an illegal copy is not equivalent to the loss of a sale. There are a lot of instances where shares result in new sales by newly gained patrons. It’s just a new complication that needs to be thought through and tested; rather than impulsively sullying the entire distribution method. This is likely to become more of a problem logistically as NAS (Network Attached Storage) systems become more popular. Having a local machine, with a lot of storage space for video and audio files, that can streamed directly to a television through HDMI, may become much more popular as data caps on Internet connections becomes more of a problem. DRM becomes more of a problem here; as pirated copies, DRM free copies, or copies that people have gotten around the DRM themselves would be populating NAS systems. This would of course be accompanied with less consumption on the Internet; which results in less hits on sites, and less chance for ad revenue.

The most interesting aspect of the changes in the economy in the past two decades is probably that it has become significantly decentralized. It has become not only more diverse but also more complex and complicated. A more centralized economy is more convenient due to having less choices to make with respect to outlet and service resources, but a more diverse market produces a more “Smithian” type of competition. It’s become increasingly more important to research new outlets an funding resources; not only because they are rapidly emerging, but also because they are rapidly turning over. The way that business management is done right now could become significantly irrelevant within the next ten years. Business models are quickly becoming agile, dynamic WIPs.

Social media has effected the music industry in a few interesting ways. Independent music can be produced, promoted and published entirely independently. It’s probably not the best solution for a touring band; but some aspects of it might be useful. There are a number of musicians that have used such resources to take on some of the responsibilities that used to be outsourced. This is an interesting development because it has enhanced the skill sets of musicians in general. This isn’t just a valuable quality for cutting costs internally within a singular band either. Now that there are so many resources for handling a wide variety of economic interactions, more cooperative organizations have become possible.

A model similar to a COOP may be possible with musicians selling or bartering their particular skill sets within an organization of musicians. This is similar to a COOP as it’s an organization and a network that is owned by musicians. Musicians could work together and trade internally and externally; with an interest to cooperatively secure projects and thus the flow of capital into the organization. Logistically it’s somewhat complex; however there are networks that handle bartering and ICOs that provide “smart contracts”. This allows individuals to negotiate directly with each other in much the same way that bands can now negotiate directly with their fans, through crowdfunding. Costs can even be cut with respect to legal fees. The interesting thing about ICOs is that the value of the coin base increases with added adoption. An ICO can be a security, an investment and a negotiating platform all in one package. It’s complex, but it’s interesting.

Organizing:

It might be best to take the “build it and they will come” approach. Since communities are complex and diverse in many aspects, it may be best to allow a high degree of self-organization. Beginning with some founding space for minds to meet, maybe a social media platform, organization can begin based upon the needs of the organization and amend as it grows. Bands are no stranger to organization with other bands. This is demonstrated in collaborations, touring and festivals. This is likely an issue with signed bands; so it’s probably more likely to be an approach for free agents. Thanks however to this economic emergence, free agents are numerous.

As the organization grows, the interests and aptitudes are likely to grow with it. The control of the outcome would of course be in the hands of those putting the rubber to the road. This isn’t however just a suggestion. There appears to be various environmental stimuli nudging musicians toward more independence, whether it be the trends toward self-management or increased loss of creative control.

As it stands, rather than investing in new models, and finding novel new ways to partner with creators, many promoters and publishers are avoiding the risk and watching their own market share decline as the market itself diversifies. It would not only be interesting, but also nice if there were some middle ground between signed and independent talent.

The uncertainty doesn’t appear to be tapering off. Much to the contrary, modern tech seems to be creating even more interesting complexity. It may be that organization in the form of distributed intelligence is the most viable approach for the sustenance of the humanities. The market does appear to be restructuring significantly. Who do you want to rebuild it?

Closing Remarks:

In the interest of transparency, this situation affects me personally. I’m not only an old geeky artist. I’m also an old metal head. I also have a long history of dislike of the whimsy of finance; that goes way back to my youth. I probably wouldn’t have written this without my own personal interest in it.

I’d very much like to see a more liberated environment for the creative process, that doesn’t keep the sympathetic nervous systems of artists active, due to being extremely concerned over how their next project will be funded. I’d like to see more free thought about the past, present and future; rather than the present self involvement that has coerced itself significantly into the diskography. I guess it’s just a sign of the times though. Many of the first, old, blues, lost love songs were a double entendre of the relationship between the artist and the plantation that they were working for. We are all fortunate that they had the good fortune of being able to make a few bucks belting them into a tin can.

This economic uncertainty may seem a bit bleak to us with our nose in it; but it’s difficult not to see that the standard of living is still on the rise. It has gotten better; and it will probably continue to. It’s probably going to require a lot of adjustment in the instances of punctuated equilibrium though.

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Open Naturalized Socioeconomics Alpha 0.9.1 Launch

The official write up is done and a license has been chosen. This write up is less suggesting and more spelled out. From now on a road map will be created and satiated before version updates.

A free PDF can be downloaded here:

https://www.dropbox.com/s/ypqjzfri0uv1142/onsa0.pdf?dl=0