Megan McArdle’s piece in The Atlantic, “The Freeloaders” would be far more engaging if it weren’t chock-a-block with misinformation and specious logic. Pretty much every one of her points can be disassembled with most casual counter-argument. Whether this reflects an arrogance that her word is bond or intellectual laziness, I’m not sure.
I should note that I detest blog posts that devolve into rants. They’re the drunk old uncle at Thanksgiving: abrasive, awkward, and annoying. So I hope my criticisms here engender more thoughtful discussion, not less. I’m also fully aware of the humor (and the performative nature) of responding to an article like “The Freeloaders” via blog.
First, McArdle betrays a willful ignorance of history. Her timeline for the music industry is couched in vague terms without recognizable milestones: “Until recordings came along, songs, not singers, were Big Business.” Cory Doctorow’s Content is illuminating here. He reminds us of the rise of the player piano, when band leaders like John Philips Sousa told Congress, “These talking machines are going to ruin the artistic development of music in this country.” What Sousa meant was it would destroy his concert fees. Congress invented song licenses. This same cycle repeated itself with radio. Somehow the world didn’t end.
Radio is an important precedent to keep in mind when McArdle writes, “We kept to our rules about IP as long as it was attached to a physical object: a book, a CD, a videotape. Now that it consists of endlessly replicable electrons, we are ethically unmoored.” The implication that ephemeral IP leads to widespread kleptomania is downright offensive. If this were true, why did people keep buying vinyl or popping quarters into jukeboxes when they could just listen to the radio for free?
Steve Knopper’s excellent Appetite for Self-Destruction: The Spectacular Crash of the Record Industry in the Digital Age is another book I would urge the journalist to read. Knopper makes explicit what McArdle hints at and then discards: the music industry, as defined by the major labels (pre-merger frenzy) were cratering in the early 1990s. Then CDs were positioned as a value-add to listeners and they went about repurchasing their music library all over again. also points out these same labels abandoned the singles model in the 1990s (slim profit margins) and forced listeners to pay $15.98 for OMC’s How Bizarre the LP just to listen to “How Bizarre” the one-hit wonder. Yes, I know the song’s stuck in your head now. I’m sorry.
Knopper adds that the mp3s corrected this business model and made singles wildly popular. Don’t believe me? Ask Steve Jobs.
The present system does kneecap the music industry, if we again limit our definition to a few major labels. Just because these labels didn’t think to invest in concert festivals (or ad-servers for music blogs, or concert venues, etc.), doesn’t mean our culture’s dying or the new generation is a bunch of freeloaders. (If you’ll forgive me a short tangent: it’s a zero-sum game. While people bought fewer CDs, they bought a hell of a lot of headphones, iPods, and external hard drives.)
What peer-to-peer file sharing has changed is merely a lower barrier to entry. This disruptive effect spells more cannibalized sales at the top, but a much broader and more lucrative middle base, as Tim O’Reilly’s noted. To illustrate, let’s cite McArdle’s examples.
In 2007, Radiohead famously allowed their extremely loyal fan base to download their new album, In Rainbows, on a pay-what-you-like scheme. Sixty-two percent of those who did so liked to pay nothing. The rest paid an average of just $6 apiece. And more fans downloaded the album from file-sharing services than from the band’s Web site.
Many point fingers to Radiohead’s fan base, culled from years of major label support, as essential for the success of In Rainbows. This parasitic approach belies the fact that Radiohead’s In Rainbows experiment happened to sell 1.75 million discs, which came out several months after their online giveaway. This was far more successful for the band than their previous, traditionally-released LP, Hail to the Thief, and the band said their take-home was greater than any previous albums. (Even the #1 Billboard-debuting Kid A.) A fan base is crucial to success in the online age… just like every other decade of the past century.
Or to look at the Vampire Weekend case study. How does McArdle think they went from a passed-around, “pirated” demo of the first LP to a #1 Billboard debut for Contra? This, by the way, was a first by an indie label since Liz Phair’s Exile in Guyville.
As Knopper points out, the old system made money for the labels, not the artists. Also see the documentary Dig! and check out a recent NPR Planet Money podcast with OK Go’s Damian Kulash. In short: major labels willingly lost money on 9 out of 10 bands because the successful one paid for the rest. My friends in touring bands claim to take home much more money from touring, digital sales, and licensing than they ever did before. (John Philips Sousa would be proud.)
Moving beyond the music industry, McArdle ropes the film and publishing industries into her argument: “I doubt that YouTube can substitute for Hollywood in a world where ‘cheap’ indie films can cost millions. Children’s films might be made at a loss to sell action figures—but how do you finance The Godfather? With a co-branded line of frozen cannoli?”
That quote pretty much disembowels itself. I’ll simply point to a fact I’ve mentioned before: two out of the three highest-grossing films of all time were released in the past two years. Oh, and one of them, Avatar, happens to be most pirated film of all time. I’m not sure where her fixation on action figures comes from, but last I checked, Hollywood’s been setting year-on-year box office records since 2008.
This all comes back to the article’s odious assumption that an increase in sharing of cultural products will destroy those same products. The best counter-argument to this line of thinking I can think of is Clay Shirky’s Cognitive Surplus. (7x20x21 plug!) Shirky intelligently deconstructs the hand-wringing around the reign of Napster: people don’t share music online because of a generational change toward anarchism or community-mindedness. (But it makes for such attention-grabbing copy!) Rather, it’s a case of fundamental attribution error.
The old saying goes: You’ll never go broke underestimating the American public. Apparently you’ll also get plenty of magazine work.
Related: “What ‘The Death of the Music Industry’ Really Sounds Like” (Flavorwire)