“Piracy Is Progressive Taxation, and Other Thoughts on the Evolution of Online Distribution: Seven Lessons from Tim O’Reilly’s Experience As an Author and Publisher”, 2002-12-11 (; backlinks; similar):
The continuing controversy over online file sharing sparks me to offer a few thoughts as an author and publisher. To be sure, I write and publish neither movies nor music, but books. But I think that some of the lessons of my experience still apply.
Lesson 1: Obscurity is a far greater threat to authors and creative artists than piracy.
…More than 100,000 books are published each year, with several million books in print, yet fewer than 10,000 of those new books have any substantial sales, and only a hundred thousand or so of all the books in print are carried in even the largest stores…The web has been a boon for readers, since it makes it easier to spread book recommendations and to purchase the books once you hear about them. But even then, few books survive their first year or two in print. Empty the warehouses and you couldn’t give many of them away…
Lesson 2: Piracy is progressive taxation
For all of these creative artists, most laboring in obscurity, being well-enough known to be pirated would be a crowning achievement. Piracy is a kind of progressive taxation, which may shave a few percentage points off the sales of well-known artists (and I say “may” because even that point is not proven), in exchange for massive benefits to the far greater number for whom exposure may lead to increased revenues…
Lesson 3: Customers want to do the right thing, if they can.
…We’ve found little or no abatement of sales of printed books that are also available for sale online…The simplest way to get customers to stop trading illicit digital copies of music and movies is to give those customers a legitimate alternative, at a fair price.
Lesson 4: Shoplifting is a bigger threat than piracy.
…What we have is a problem that is analogous, at best, to shoplifting, an annoying cost of doing business. And overall, as a book publisher who also makes many of our books available in electronic form, we rate the piracy problem as somewhere below shoplifting as a tax on our revenues. Consistent with my observation that obscurity is a greater danger than piracy, shoplifting of a single copy can lead to lost sales of many more. If a bookstore has only one copy of your book, or a music store one copy of your CD, a shoplifted copy essentially makes it disappear from the next potential buyer’s field of possibility. Because the store’s inventory control system says the product hasn’t been sold, it may not be reordered for weeks or months, perhaps not at all. I have many times asked a bookstore why they didn’t have copies of one of my books, only to be told, after a quick look at the inventory control system: “But we do. It says we still have one copy in stock, and it hasn’t sold in months, so we see no need to reorder.” It takes some prodding to force the point that perhaps it hasn’t sold because it is no longer on the shelf…
Lesson 5: File sharing networks don’t threaten book, music, or film publishing. They threaten existing publishers.
…The question before us is not whether technologies such as peer-to-peer file sharing will undermine the role of the creative artist or the publisher, but how creative artists can leverage new technologies to increase the visibility of their work. For publishers, the question is whether they will understand how to perform their role in the new medium before someone else does. Publishing is an ecological niche; new publishers will rush in to fill it if the old ones fail to do so…Over time, it may be that online music publishing services will replace CDs and other physical distribution media, much as recorded music relegated sheet music publishers to a niche and, for many, made household pianos a nostalgic affectation rather than the home entertainment center. But the role of the artist and the music publisher will remain. The question then, is not the death of book publishing, music publishing, or film production, but rather one of who will be the publishers.
Lesson 6: “Free” is eventually replaced by a higher-quality paid service
A question for my readers: How many of you still get your email via peer-to-peer UUCP dialups or the old “free” Internet, and how many of you pay $33.62$19.952002 a month or more to an ISP? How many of you watch “free” television over the airwaves, and how many of you pay $33.71$202002–$101.13$602002 a month for cable or satellite television? (Not to mention continue to rent movies on videotape and DVD, and purchasing physical copies of your favorites.) Services like Kazaa flourish in the absence of competitive alternatives. I confidently predict that once the music industry provides a service that provides access to all the same songs, freedom from onerous copy-restriction, more accurate metadata and other added value, there will be hundreds of millions of paying subscribers…Another lesson from television is that people prefer subscriptions to pay-per-view, except for very special events. What’s more, they prefer subscriptions to larger collections of content, rather than single channels. So, people subscribe to “the movie package”, “the sports package” and so on. The recording industry’s “per song” trial balloons may work, but I predict that in the long term, an “all-you-can-eat” monthly subscription service (perhaps segmented by musical genre) will prevail in the marketplace.
Lesson 7: There’s more than one way to do it.
A study of other media marketplaces shows, though, that there is no single silver-bullet solution. A smart company maximizes revenue through all its channels, realizing that its real opportunity comes when it serves the customer who ultimately pays its bills…Interestingly, some of our most successful print/online hybrids have come about where we present the same material in different ways for the print and online contexts. For example, much of the content of our bestselling book Programming Perl (more than 600,000 copies in print) is available online as part of the standard Perl documentation. But the entire package—not to mention the convenience of a paper copy, and the esthetic pleasure of the strongly branded packaging—is only available in print. Multiple ways to present the same information and the same product increase the overall size and richness of the market. And that’s the ultimate lesson. “Give the Wookiee what he wants!” as Han Solo said so memorably in the first Star Wars movie. Give it to him in as many ways as you can find, at a fair price, and let him choose which works best for him.