Economics

Downloading has an Impact on Music Sales

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The impact, though, is very small and in some cases positive:

This estimated effect is statistically indistinguishable from zero despite a narrow standard error. The economic effect is also small. Even in the most pessimistic specification, five thousand downloads are needed to displace a single album sale. We also find that file sharing has a differential impact across sales categories. For example, high selling albums actually benefit from file
sharing.

So, as has been recently mentioned here the content providers and in particular the RIAA might want to take another look at their business models. Perhaps the artists should consider whether they really want to be involved with the RIAA members.
On the other hand Newmark’s Door links to this study which argues that there is a significant impact. I hope Craig does take a closer look at the two studies and write something on their comparative validity from a technical perspective.
Initial link to the Strumpf Oberholzer-gee study via Boing Boing.

Free Culture Discussion

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Read along with Lawrence Solum a he discusses Free Culture:

This is the first of eight posts on Lessig’s book–a sort of blogospheric book club. You are invited to read along, and to send your comments on the book, my posts, or on the comments of other readers.

The class reading schedule may be a bit agressive if you are not an academic (faculty or student) but if you are at all interested in intellectual property issues and the internet you will be well served to join in.
Via Lawrenc Lessig.
Update: Lawrence Lessig discusses the rationale for the free offering.
Update (3/31): Tech Law Advisor notes that a Wiki of Free Culture has been created.

A Lesson for the RIAA and MPAA

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Lost in their ongoing attempt to keep the music market constrained the RIAA continues to harrass music downloaders and the MPAA is attacking peer 2 peer applications and working to have anticopying technology built into consumer goods.
They would, perhaps, be better served to look at what is happening over at that bastion of capitalism on the web: the Ludwig von Mises Institute. Amongst other activities these folks sell books and an interesting thing has happened to the volumes that they have made available on the web: the sales of paper copies improve. For example, they recently made a book called Omnipotent Government available on the web:

What happened was precisely the reverse of what the publisher expected. Instead of lost sales, the sales of the book shot up. In the few weeks since the text went online, more copies of this book left our warehouse than during the whole of the last decade.

The RIAA and MPAA folks would do well to think about this:

The point is to expand the market and not assume a fixed number of consumers. Books online and offline reinforce the viability of each other, just as movies in theaters boost movies in rental, and free radio helps the market for CDs for purchase. It takes some thought and entrepreneurial judgement to understand why, but the history of technological development informs the case.

Read the rest of the article.
Via Hit and Run.

Contradictions

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Krispy Kreme’s announcement may reflect a rational attempt to broaden their market as well as a response to the obesity police:

Krispy Kreme Doughnuts, long known for its high-calorie treats, says it plans to offer a low-sugar doughnut to attract dieters and diabetics.
Exactly how low the sugar content would be was unclear Thursday.

However, if I’m going to buy a donut, which is not often, it is going to be the real thing. Otherwise, what’s the point?
Via The Storm.