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Archive for June, 2012

Like many others, last week I waded into the emotionally charged debate set off by the blog post from NPR intern Emily White and the subsequent response from David Lowery.

I found myself conflicted. As a music fan, I was somewhat alarmed and really disappointed by Emily’s admission to piracy, but as a self-professed member of the Free Culture movement and fan of the Creative Commons, I despised the way David developed his argument, manipulating the truth and using scare tactics.

In both cases, I found the authors distracted from their central points with ancillary comments that set off the fire storm. I won’t get into the problems I have with David’s arguments, but I agree with his conclusions – artists are due some compensation for their creative works; piracy is wrong and illegal, and music fans should feel a moral obligation to pay for music, not pirate it.

As a reflection of the attitudes of her generation, Emily’s lack of attachment to the the physical mediums of music (e.g. CD’s) and preference for a limitless stream of digital content a-la Spotify was telling. The music industry should be listening; this is the markets telling you its demands. Her point was lost, however, because she admitted to piracy while remaining fully unaware of her actions and their implications. Ripping a CD you didn’t pay for is as much piracy as downloading from Pirate Bay. It’s just another form of P2P.

It would seem Emily has rationalized her actions as something other than piracy; I don’t think she or anyone else (reasonable) is saying piracy is ok. The real debate, as I understand it, centers on enforcement, not unlike the illegal immigration debate in thew news of late. Does it make sense to go after individual fans for file sharing or might everyone be better off spending less on lawyers and more on developing legitimate paid alternatives to piracy?

The music industry is in disruption; it’s not the only industry that has been disrupted by digital distribution. Unfortunately, sometimes “creative destruction” destroys more than it creates. At the macro level, this is how the free market works. At the micro level, real people are hurt in the process. As Keynes said, in the long term, we’re all dead.

Everyone affected by the music industry disruption would be better served to invest resources in the productive pursuit of new sources of value rather than expend resources on unproductive attempts to hold onto the past. I feel for the artist that has to work a second job or give up entirely on a career in music because he or she can’t make money, but none of us are simply entitled to make money from following our passions. It’s a lucky privilege for a very few.

Lots of people toil away at jobs they dislike, and this notion of career mobility, that is a modern phenomenon. It used to be that you became a farmer because your father was a farmer. Choice (too much of it anyway) has contributed to the general ethos of complacency and entitlement that is now catching up with generations of Americans (mine included). (Of course, people still aren’t taking responsibility; it’s the economy.)

Finding the new business models for making money from music requires first acknowledging that there simply may not be as much money in recorded music as there once was. I don’t know that this merits any great alarm or mourning; digital distribution changed the value chain, and other value added services are now in demand instead. The same thing has happened across countless industries throughout economic history.

Keep in mind that the recorded music industry is also a modern phenomenon. Musicians have been making music for thousands of years without worrying whether someone was buying or pirating their CD’s. Music will survive even this industry disruption. (Come to think of it, shouldn’t the purists be welcoming this change as expunging some of the corrupting influence of commercial interests on art?)

I still believe musicians have a right to control their works and realize a return on their investment of creativity. No one, however, is in a position to say how much compensation they are owed (at least not in a free market), and one cannot just expect recorded music to contribute the same returns as before.

The quickest and surest way to combat piracy at the individual level is to offer legitimate alternatives at an attractive price point given the consumer’s “job-to-be-done.” (Of course this still means using the legal system to prosecute large scale piracy where the cost/benefit makes more sense.)  Although I only have anecdotal evidence to prove it, I believe the majority of piracy happens at the edges of nonconsumption – individuals that otherwise would never have bought a particular CD at the regular price but might be willing to pay a price closer to the actual marginal cost of distributing another digital copy, which is to say something near zero.

What might artists and musicians learn from TED, where so much of the content is given away for free? Instead of fighting fans on piracy, how might artists take control over their creative works back from labels and record companies as OK Go and Louis C.K. did?  Opportunities to make money are still out there, if you don’t let yourself be distracted by the ones that have already passed us by.

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A conversation at work recently got me thinking a lot about the value of openness. The irony of that statement should become clear by the end of this post.

Since open innovation entered business parlance, one of the unsolved challenges has been intellectual property rights.  In a more open world, who owns the rights to an idea?  How can we more efficiently share rights and returns on our ideas?

Lawrence Lessig has written eloquently on the subject in books such as Free Culture: The Nature and Future of Creativity, and solutions such as Creative Commons have emerged to address the issue.  Still, this problem of who has the rightful claim to an idea seems to persist.

Undoubtedly, in a capitalist system, great thinkers need to be assured of some return on their ideas to maintain the incentive for sharing their great thinking.  On the other hand, “no man is an island.”  The myth of the sole inventor is just that – a myth.  The instances of simultaneous innovation are numerous and well documented, despite the predilection of popular consciousness to selectively remember only inventors such as Edison over Tesla.

The true origins of an idea are diffuse and imprecise.  The “aha!” moment is as much as fallacy as the myth of the sole inventor.  Insight comes from a pattern of multiple connections in more than one very real sense.

In neural activity, it is characterized by the gamma-waves commonly attributed to the formation of new neural connections in the brain.  The brain holds all sorts of disparate ideas in memory, and the “aha!” moment of insight and innovation is the experience of finally connecting those ideas together in some novel way.  (For a more accessible discussion of the neuroscience than the Beeman and Kounios article, I recommend a quick read of Imagine by John Lehrer.)

Steve Johnson was spot on when he said, “Chance favors the connected mind.”  Of course, Johnson was also referring to social connections, which is the other very real sense in which insight comes from connections. Social interactions expose us to ideas, the same ideas that are held in the memory of our brain.  There they sit, lying in wait for a pattern to emerge when one idea connects to another and still another – what Johnson terms, “the slow hunch.”

I think about innovation as a chemical reaction.  A chemical reaction isn’t something you do; rather it’s more like something that happens.  You can manipulate the conditions for a chemical reaction, by adding catalysts or energy in the form of heat or motion, but you cannot will it into being.  A chemical reaction occurs when the molecules and elements collide, breaking old bonds and forming new ones.  The more collisions are created, the faster the chemical reaction.

Innovation is the serendipitous collision of ideas.  Those ideas originate from different places and at different times – intense brainstorming sessions at work, a good read on a long flight, a relaxing stroll on the beach.  If one of those ideas came from a conversation with a coworker, does my employer have claim to my insight?  (Now do you see the irony?)

If we want to innovate, it seems counter-intuitive that we would also want to reduce the number of collisions by talking only among ourselves in soft tones.  The Internet has been such a fabulous engine of ingenuity because it is such a transparent and highly visible medium.

I suppose some compounds are more reactive than others and don’t need to be spurred on; some problems can be solved in the walled off gardens of R&D labs or stealth start-ups.  I’m not convinced that’s the case with the really big game changers though.

AnnaLee Saxenian wrote a very interesting book on why Silicon Valley is in California today instead of along Route 128.  Her argument that the openness of Silicon Valley (e.g. non-proprietary standards, decentralized organization, and cooperative exchange)  was its advantage is very compelling.

Look at the example of the Homebrew Computer Club.  Apple wasn’t invented in secret; the technology that Wozniak and Jobs used to revolutionize the computer industry was shared freely among like minded hobbyists.  Indeed, if you read Walter Isaacson’s Steve Jobs it seems much of what contributed to the early success of Apple did not actually originate within Apple but PARC.

Apple out executed.  That’s why being the most innovative doesn’t actually matter.  It’s getting the business model right that wins.  If you can’t do that, it doesn’t matter how long you hide your light under a rock. When you finally do start marketing to customers, another fast follower is going to eat your lunch.

Let me reiterate: I am not denying the risk that someone else could be more successful with your idea than you.  I am questioning if that is a bad thing – exposing people that risk and letting the best person win.  Wouldn’t that make for a more efficient market?  It’s the only way you are going to get out of the building and be sure you are onto something.  It’s the only way you are going to avoid group think and positive illusion about your own ideas.

Stop wasting time and energy trying to keep your ideas from other.  Focus instead on unlocking the value from those ideas – before someone else does.

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