Piracy: Books vs. Music
I don’t know how much I agree with the argument the WSJ is making about the differing responses of book publishers and music labels to electronic piracy. Let me start off with my personal feeling – most likely both the labels and publishers mainly face the problem of managing their decline. Both are organized as gatekeepers, and not because they are higher beings best-suited to sit atop their thrones of culture and decree what is ART.
No, they’re organized as gatekeepers because they’re sitting atop a gigantic physical infrastructure geared to produce stuff (records, books) and need to function primarily as gatekeepers to figure out what the most profit-maximizing use of that very expensive infrastructure is. In both the physical and digital world, the opportunity cost of not publishing Harry Potter is huge – but in the physical world, the actual cost of publishing something that flops is huge. The winners in print publishing were the houses that most effectively acted as curators and gatekeepers, because those were the firms that made most efficient use of that physical infrastructure.
So both of these business models are outmoded in the digital world, but the two industries, as the WSJ points out, have acted fairly differently. They’re grossly similar in size – books sold $13B retail in 2010 in the US and the music industry sold $15B in North America in 2010. Yet while the music industry is totally collapsing, the book industry is doing okay. Rob Reid, for the WSJ, attributes this to the difference between publishers embracing the Kindle format and the music publishers refusing to let anyone sell music online.
I would suggest instead that the markets really are just kind of different, and specifically the customer purchase cycle is extremely difficult. Music tastes are largely driven by peers, and rampant music sharing has been a part of youth culture since cassette tapes. Furthermore, the emotional investment in listening to an album is very different from sitting down to read a book. While everyone listens to music, most people are not particularly heavy book readers. It’s pretty easy to listen to 10 albums a year, whereas only 29% of Americans read that many books a year. The market is really concentrated among book lovers, while the music industry just isn’t. The purchase decision is just a much bigger commitment – I would suggest that the time required to read a book (let’s say 6+ hours) is a much bigger barrier than the sticker price. You don’t need to place a very high value on your time to make that calculation – if it’s worth 6 hours of your time, it’s worth ten dollars.
Music is much more of a commodity – it makes sense that the music publishers would have much more to fear from piracy.