I have wrung my hands in the past, in this space and elsewhere, about the collapse of a workable market for digital goods.  I find it hard to get people as excited about this as I am–if I still had enough hair for anyone to notice it would be on fire–but I have some help from Scott Timberg now  so I am going to try again.  Short version: buy this book, Culture Crash, and read it. Now. I believe it is the Piketty of 2015, and the first book I’ve stayed up to read straight through at one sitting–sometimes literally in tears, both of pain and of rage– in years.  It is not just about culture, but about whatever really big issue you lie awake worrying about.

Long post, get a cup of coffee (no, not a substitute for the book; read it) .

Backing up for a running start: digital goods are basically all text, images, audio, and video embodied in computer files.  Not physical first editions of books, not oil paintings on canvas, not live music performances, not live stage plays and dance, but: newspaper articles, mp3 files of music, Kindle books, movies, this blog post. These goods are only made for us by creators of various kinds (reporters, composers, novelists, actors, columnists, performers, etc.) who traditionally have had distinctive competences and vision that make their work special, whether art or the kind of journalism that kicks off hearings and indictments, or gets legislation passed.  Absolute necessities for these creators are a roof over their heads and bread on the table; if we don’t pay them for what they are good at, the ones who don’t have trust funds go to work at WalMart, or the local cafe, or a bank. Too bad for them, but also for us: it means less of it (or none) for us, and worse because the creators’ concentration and focus is constantly broken.

All this content used to be distributed as physical stuff like CDs, books, and newspapers that allowed publishers of various kinds to charge for the product and pay the creators. Newspapers and magazines had a more complicated scheme that sold consumers’ attention to advertisers.  We paid a quarter for a newspaper to get the content, Macy’s and hundreds of individuals paid the publisher to put their ads next to the content or in the classified section, the newspaper paid reporters, editors, artists, and printers to generate the stories and the physical product, and the system more or less worked. It delivered us so-so to excellent news and commentary, created by professionals who had time to interview, travel, read, and think, and did it full-time because they were paid enough for that work to put dinner on the table. Some of these pros were paid a lot, but most were middle-class with health insurance and some retirement.  Similar systems called forth and delivered us the Beatles, Of Mice and Men, Frank Sinatra, the New York Philharmonic, Partisan Review, and Casablanca.

It was protected from theft by copyright,  by reproduction technology, and the economic structure of the production process.  Copying music from a CD or vinyl (or the radio) was a real-time (slow) one-by-one business with a cassette recorder, that made an inferior copy that didn’t compete well with CDs. Copying text was a matter of standing in front of a copy machine and ending up with something much less convenient than a real book.  Industrial copying, even after offset printing which didn’t require resetting a book’s type, had a high fixed cost for presses and equipment, same with business-scale cd piracy.  So large-scale theft happened at a few places, and thus could be enforced against well enough to keep everyone fed.

Finally, the kludgy systems of the recent past carried price signals to creators that gave some idea of what to do more of (or less) to create the most value.  A big hit sold lots of records and royalties flowed, while money from a song few people liked dribbled in fitfully, and producers reacted.

These systems were far from perfect: musicians and writers were ripped off and tineared guys in suits had too much to say about what content would be published. The price signals were pretty noisy: to get a hit single, you had to buy a $14 CD with 11 b sides, and the CD you listened to over and over sent the same royalty signal as the one you heard one disappointing time and put on the shelf. But the systems worked–again, well enough.

When all this content became digital and the web and personal computers allowed instant free distribution and near-instant copying (Timberg enriches this one-chapter story usefully), the whole jury-rigged system fell apart, and Timberg’s book is a tour of the wreckage that is both heartbreaking and terrifying. Talented people, who want nothing but to give us the best art and news they can:  waiting on tables, losing their houses, and trying to make ends meet doing work that wastes their real abilities.  The personal cost, and basic injustice, of this slow catastrophe are reason enough to hit the street with pitchforks and torches, but there’s more, and worse.   Here’s an example from the world of music: as the income stream from recordings has dried up. Musicians (already beat about the head and shoulders by the operation of Baumol’s disease ) can only earn money from live performance.  Live performance is good, but requires an economically large audience in one place, so the great promise of the web, that artists could have small publics distributed around the world, is denied when web listening can’t be monetized. Furthermore, live performance doesn’t pay at all in small venues, so popular music (for example) is driven to acts that work in an arena so big that sound is a jumble and what you see is out of sync with what you hear.  String quartet, gal leaning on a piano singing a ballad? Fuggeddaboudid.

Perhaps the worst thing about where we are now is that we cannot see all the great stuff we don’t have, but could.  And young people can’t even remember what life was like when we did have lots of great stuff, and there were two real newspapers in town, both full of news reported, written, and edited by experts. When the LA Times model was “print it once and print it all.” We are frogs in a gently warming saucepan.

I think life without music and literature isn’t worth living. Your mileage may differ; fine; some people like Frescobaldi and some like football. But what about global warming; is that a big deal for you?  Do you think we need to do something about income inequality and refractory unemployment? Are you at all worried about US health care costing more and working worse than every other industrialized country’s? Care if we invade and occupy another Middle Eastern country? You might, then, think about how a democratic society (or any society, actually) can get on top of any of these problems in the absence of public deliberation and news (yes, that’s the aroma of burning hair).  I know, there’s a blogger with a readership that will fit in your living room out there, perhaps on an academic salary, saying something that needs to be heard to stabilize the climate, but it doesn’t matter, or help, if she can’t be found or read.  Deliberation, analysis, and plain news is what we’ve lost more than half of, by column inch or any other measure, as our newspapers, magazines, radio and TV news have crumpled and crumbled for want of a viable economic structure.

Impoverishing content creators, then, is not just a matter of hurting people who deserve better. It’s a matter of tearing at our own collective flesh like Saturn devouring his children. The crisis in media is not just a crisis of media, it is a creeping gangrene of the whole society. When we have no way to pay competent journalists to tell us the truth, the Koch brothers and Murdoch and the people they play golf with still have money to tell us what it’s good for them for us to hear, and what will get them a larger and larger slice of the pie.

Timberg has hit a home run here, but not a grand slam. His gritty, textured tour of desperate, stifled, sabotaged creators, maimed culture, and cheated audiences, arrayed on an erudite and thoughtful framework of intellectual/artistic/market convention trends is a tour de force, but it would have been even stronger if he had engaged with Howard Becker’s indispensable Art Worlds ).

His prescriptions get mushy and vague–not enough things someone can actually do, and too many hoped-for outcomes–partly because he never explains the basic economics of digital content, and because he doesn’t confront iron constraints on content consumption.  As to the first, we meet file-sharing teenagers as pirates who should somehow be paying to listen, but we aren’t reminded that people who breathe the common air and walk on the sidewalk for free aren’t thieves in anyone’s view.  Digital content, as Timberg would learn from an hour with an economist and a blackboard, is a public good, non-rival and pretty much non-excludible despite efforts at DRM technical fencing and RIAA own-foot-shooting litigation. It must be provided at a consumer price of zero, and it is that way essentially and intrinsically, not because someone decided it should be. The sidewalk would be a public good even if it didn’t exist, or if a crazy libertarian mayor tried to charge people to walk on it; gasoline is not a public good no matter how much of it Maduro gives away to Venezuelans.

Of course reporters are not going to write for us for free, any more than the contractor built the sidewalk out of charity. The other design specification for the salvation of a free society (sic) and world culture (sic) is to pay creators, with public funds, in a way that signals (more or less well) the value they create (and, of course, protects them from censorship and coercion and also preserves consumer privacy). I am mystified that Timberg never tripped on the work of Lawrence Lessig and Neil Netanel. Or Terry Fisher,  who sketched the first (and to my knowledge, only) model for a workable digital goods regime.

As regards consumption limits and how they constrain the size of content markets, the whole media economics world, as far as I know, regularly fails to recognize what it means that:

  • each consumer has only about 16 waking hours a day over a lifetime to listen, read, and do everything else;
  • each new consumer has to accumulate her own cultural and intellectual capital starting from scratch;
  • Ariadne auf Naxos to the contrary, Baumol’s disease on the demand-side precludes reading two books at a time, or listening to Handel’s Largo prestissimo, or seeing all of Vermeer at once by squashing thumbnails onto a single screen; and
  • it’s essential to culture that content be both shared (everyone should not have his own private novel and symphony–or newspaper) and cumulative.

Every new work thus has to displace something from this finite attention space–most tragically, something that the contemporary artist may be expecting us to know in order to best engage with his new work. The capacity of society to consume content (especially art) does not increase with population, and each generation has a larger repertory to winnow. We have to constantly let go of really precious stuff–not always old stuff–and this has fell implications for the content market.

Timberg hasn’t wrapped up this most-important policy-analytic challenge and tied it with a ribbon.  But if this book is taken the right way, he will have put the work before us in a way we can only ignore if we have both hearts and brains of stone.

[Cross-posted at The Reality-Based Community]

Michael O'Hare

Michael O'Hare is a Professor of Public Policy at the University of California, Berkeley.