Downloading is about unmet demand
My weekly column in Spanish financial daily Expansión this week is called “Unmet demand” (pdf, in Spanish) and was prompted by Neelie Kroes’ comments during an event held this week at the offices of Spanish social networking site Tuenti in Madrid, as well as after having carefully read a recent report by the London School of Economics called “Copyright & creation: a case for promoting inclusive online sharing”, which makes it clear that downloading copyrighted content without permission is not harming the entertainment industries, and that the legislation by the powerful lobbies associated with film and music, among other others, has been completely unjustified and has proved worthless.
The restrictive laws that governments all over the world have rolled out to supposedly protect the arts and creators and to stop theft are simply the ways that an industry protects itself and artificially prolongs a situation whereby it is able to make money without really offering anything of any tangible value. In the same way that it handled the transition from vinyl to CD, the entertainment industry is trying to create a situation whereby artists’ earnings and production, distribution and promotion costs are reduced in an order of magnitude, but the intermediary’s cut is maintained. The entertainment industry has done this by drastically reducing supply, creating unmet demand in the process, and which is why people download material without permission. Fighting against practices that the entertainment industry itself is responsible for makes no sense at all.
Does this mean that nothing can be done? Obviously not. Downloading will die out when consumers have a reasonable range of options to meet demand, and when they have access to a full catalogue at prices they deem acceptable. In other words, what we have called for time and time again: the client should be able to access a work quickly within a competitive market, either by a free download subsidized by advertising, pay-per-view, streaming, subscription, or any other options the market considers viable. As far as the supplier is concerned, this new revenue stream will mean that the creator of the work in question will see some real benefit, and that downloading sites are not forced to establish prices that make them unviable in the long run.
The situation can be summed up thus: by protecting the intermediaries, governments are making themselves part of the problem.
Below is my weekly column, published in Expansión on Friday, October 11.
Unmet demand
It is gratifying to hear Neelie Kroes, the Vice President of the European Commission and the organization’s digital commissioner, defend arguments that anybody with an ounce of common sense has been able to see for years: that there is no such thing as “piracy”, and that the real issue here is that consumers are unable to find what they want by unacceptable means.
But what is really unacceptable is a bunch of intermediaries who are determined by any means possible to hold onto their profit margins when the advance of technology means that any value they may have offered has practically disappeared. Unacceptable means that these intermediaries want to continue making the same profits, when many of their costs have either disappeared or been significantly reduced. Unacceptable is that they are prepared to sacrifice creators’ already slim margins to hold onto their own. And most unacceptable of all is that they are boycotting market alternatives, and creating an artificial shortage, which in the final analysis is what makes people download illegally.
Kroes’ comments are just further proof of something we have known all along. But if we add them to a recent survey by the London School of Economics which shows that downloading is not “devastating” any industry, and that the complaints of the entertainment industry’s intermediaries are unfounded and unjustified, then we have a scandalous situation before us.
This is a scandal that has been around for many years now, wherein a disgraceful lobby has spent millions of dollars, written countless worthless reports, and worn out hundreds of miles of carpet to convince ignorant and corrupt politicians of something that has now been definitively proved to be a bunch of lies.
Pirates? They aren’t the cause of the problem; the problem is called unmet demand.
