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How would this modern day business come to exist in a libertarian marketplace?

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Mike99 Posted: Sun, Oct 7 2012 9:02 PM

I am interested in how people would structure the following business in a theoretical Libertarian market place with no copyright or IP laws.

There is a large orchestral sound library based out of Vienna Austria. They make an enormous orchestral library. The founders invested a huge amount of time and money to record essentially in laymans terms almost every note at various volumes in the orchestra, and map that to a keyboard, mate it with software inside a computer and create a virtual orchestra that today is used in film scores, mockups and in educational institutions world wide, and many other uses. An individual customer can today buy a single license for roughly around the $10,000 mark for the full library. They can then produce any number of songs for as long as they like using those sounds and those songs are their own - they owe no further license to the library makers and for their one time fee are free to create with those individual notes, any combination of notes they want and on sell that material. Of course, they cannot on sell the individual notes or the library itself, or the software.

In order to make this possible, the library owners / creators - the company they formed - owns the "samples", sounds etc. You cannoy duplicate this library and sell it again. There is a hardware license key on a USB stick - if it's not plugged into your computer, or if you lose it, you lose your license and must buy another copy. Of cousre, the cost of the license is not "$10k" it's probably millions of dollars for all the orchestral time and man hours that was put into it. Without IP laws, they would never have been able to guage the risk of the project unless some rich buyer - a King perhaps (haha) commissioned it.

The library is an invaluable incredible modern day resource that means even novice composers can get a reasonably fast computer, even a portion of the library (they have scaled down versions for far less than the full price) and realise orchestral compositions in their home that otherwise would never have been heard. And of course there are many other uses.

 

How would this business potentially come about in a Libertarian society to the net effect that individuals in society would have the same access to this tool under the same or better conditions?

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This sounds like it would be an open source project supported by donations.

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Mike99 replied on Sun, Oct 7 2012 9:25 PM

How would you go about having creative control? What if there were differences of opinion? Large donors demanded more control over the project? Who would be "head chef"? etc. How would their wages and time be valued and decided on in an efficient manner, such that it could ever get off the ground?

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Do you know what open source is?

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Winder replied on Sun, Oct 7 2012 9:42 PM

I think you have provided the answer.  Instead of the state providing protection the creater of the content have developed a USB key that is required to operate the software.  

The creator of the content controls the access to the content.  Not a state law.

In a libertarian market this product would come to exist and evolve over time just like other massive projects.  Programs like Photoshop and AutoCAD did not start out as massive programs, they have grown over time and they too have had to deal with piracy.  They deal with it by releasing better product and staying ahead of the pirates.  In a competitive market nobody gets to sit on their butts and get rich.

In the case of art it is a little different.  There are many, many, many examples of art that only have value because of the artist that created it, not because of the content.  Art is about creating a brand and as Warhol said "Making money is Art and working is art and good business is the best art".  To quote Picasso, "Good artists copy, great artists steal".  Art really is not so much about content as it is about the brand.

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Mike99 replied on Sun, Oct 7 2012 10:03 PM

The protection key is a hurdle, not a brick wall. It is designed to make it hard, to deter, but it cannot entirely prevent. It only works because it is backed up by copyright law.

Photoshop did not deal with 100% piracy. Of the piracy out there I would venture a guess that about 10% of it were people who would have paid, but, finding a way to not pay, they went that route. The rest of the 90% are people who never would have paid if they had not obtained a free copy - ethically objectionable to Adobe perhaps but not an actual consequential loss of business. Therefore (very crudely I admit) we might be talking about 1% loss of business in real terms due to piracy. Even if you multiply that by 10 times it's 10%. They would have compensated for that in their sale price as it effectively raises their costs. Photoshop requires serial codes / locks and keys basically to access the proper software. Obtaining a cracked version is risky and difficult. And they have the law on their side to deter, and to prosecute / sue if necessary.

In your example, as soon as the key was broken it would be legally online for anyone to download free, negating the efforts of the creators and ruining their ability to recover at least their costs and time. I know how hard it is to crack this because I have a legitimate copy for which I lost the key and now can't get it activated again (it's many years old).

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Winder replied on Sun, Oct 7 2012 10:55 PM

Nothing can offer 100% prevention.  If that is your goal then there is no reason to debate.  Nothing will achieve that.  Copyright laws don't prevent piracy, if they did we would not be talking about this.

What is 100% piracy.  It has always been a small percentage of the population.  The person who burns  a CD of music probably would not have bought the original anyway, so there is no loss to the original IP owner.  What percentage of people who pirate would have bought the original if piracy was not possible?  

The people who are using pirated versions of Photoshop or CS6 probably don't have the $1,200 needed to buy a licensed version.  These are people who who have never bought in the first place so there is no loss.  Photoshop is a huge progam that even if you had a free version you need to spend several hundred dollars on training just to be able to use it.  I'm a photographer and I have been using Adobe products for years.  I have seen lots of pirated copies of Photoshop owned by people who have no clue how to use it.  I have yet to see a professional photographer using a pirated version of Photoshop.  If you make your living in the field the cost of the software is nominal and the value of having support and improved RAW processing vastly outweigths the cost.   I do know a couple of people who's first experience with Photoshop was with a pirated version and they later advanced to the point where it was in their best interest to buy a licensed copy, but this was back in the disk era before you could download a trial copy.  In that situation the pirated copies benefited Adobe.  If you make a product that people want, people will pay for it.  

Will there people people who go chose to pirate?  Sure.  Laws remove the responsibility from the public.  People don't have to act because it is no longer their responsibility to do so.  If laws worked we would not have the highest incarceration rate in the world.

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If the company thought it had a way to make it very difficult to pirate a copy, it might spend money developing that. Maybe it would only let you run the software through the cloud, from their servers, so as to make it nearly impossible for anyone to make a coy without them knowing, and thus, without permission. 

Maybe the business wouldn't come about at all. If it didn't, then it's not a big deal. The only reason it wouldn't come about is because the potential investors didn't think it could sell in the market for a profit. This means that most wouldn't value it very highly. And if society didn't value it very highly, then it didn't come into existence, and its no big deal. 

As stated by another, there is no 100% guarantee of protection, and that means that there is also no 100% guarantee that certain current business models can exist in a free society. After all, a company like the one in this example gets extra protection today, and in a free society, it wouldn't be treated special.

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Mike99 replied on Mon, Oct 8 2012 11:49 AM

@Winder: You just reconfirmed most of what I already said. I agree, most piraters wouldn't buy it. No loss. Those that would, are a small minority. Small loss if worth considering in reality. But why is that? Because of software protections, and IP law. If there was no law, it's like saying "Go for it". You WILL THEN HAVE almost 100% piracy. Only the very first buyers will pay - those who are desperate and direly in need of some new feature - but that is only hypothetical. The software would not exist because Adobe would not be able to make any money. You said "If your goal is 100% prevent / no reason to debate" - where did I say that was my goal? I said, and admitted, there is no way to 100% prevent it, but that doesn't negate the 98% of legitimate sales that take place (given my rough formula for guestimating piracy vs legitimate sales in the earlier post).

@Phi "The company may develop protected cloud version" - Totally impractical at the time it was concieved and now and probably for another 10 years at least. This is a highly intensive library that requires direct hardware access to the computer. Wouldn't happen. "Maybe the business would not come about at all / therefore has no value". ??? It has value, it's a multi million dollar company and has contributed immensly to music and film in a whole variety of ways from school students to film scorers. Top Hollywood composers use this library (and others).

And I just want to repeat, I never and am not asking for 100% protection. I stated the opposite in my earlier post so I don't know why you are both seemingly asserting that as though I'm asking for the unreasonable and impossible.

Simply by protecting that creation as property, and enforcing the license between the buyer and the seller, but also excluding third parties from the agreement necessarily - you allow that project to come into existance.

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MaikU replied on Mon, Oct 8 2012 11:55 AM

Who fuckin cares. Your bad and unsuccessful business model is not my problem. That still doesn't make IP more legitimate. It's up for entrepreneurs to imagine how this could happen without IP, not ordinary anarcho-libertarians, who probably don't care about it.

"Dude... Roderick Long is the most anarchisty anarchist that has ever anarchisted!" - Evilsceptic

(english is not my native language, sorry for grammar.)

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Winder replied on Mon, Oct 8 2012 12:45 PM

@Mike

So the first person pays $1,200 for a licensed version of Photoshop only to make free copies for everyone else?  I am competitive in my business.  I am not going to pay $1,200 for a legal copy only to give it to my competitors for free.  I don't see that happening.  And what you are describing is a cultural problem where piracy is accepted and property rights ignored.  Laws fail miserably at solving cultural problems.  Drug abuse being a prime example.

If you think piracy is wrong then you need to find a way to change the culture of the society that condones it.  If your arguments are strong and of value people will adopt your point of view.  If you have to resort to using the coercive powers of the state then you need to rethink your ideas.  I can agree with your ends, it is the means that you think we should employ that I disagree with.

 

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gotlucky replied on Mon, Oct 8 2012 12:57 PM

MaikU:

Who fuckin cares. Your bad and unsuccessful business model is not my problem. That still doesn't make IP more legitimate. It's up for entrepreneurs to imagine how this could happen without IP, not ordinary anarcho-libertarians, who probably don't care about it.

Bingo.

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Anenome replied on Mon, Oct 8 2012 3:32 PM
 
 

Winder:
I can agree with your ends, it is the means that you think we should employ that I disagree with.

If intellectual property does exist, then all that's needed to enforce it are free market courts, just like they would protect any property in a pure libertarian society. This does not require a minarchist solution, despite Mike's musings on that subject. He's not quite as far along on why minarchism fails as some of us. But I reject the notion that IP can only exist in a minarchist framework.

 
Autarchy: rule of the self by the self; the act of self ruling.
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Anenome replied on Mon, Oct 8 2012 3:34 PM

I think this question of IP is so vital that it could sink any new libertarian society if we get the answer wrong.

I'll tell you guys what, when I get my seastead going I'll create two separate versions of its legal code, one with free-market IP laws that accept the notion of intellectual property based on first use and discovery, and one which dispenses with the idea of IP entirely, and we'll see which one people choose to live under.

Autarchy: rule of the self by the self; the act of self ruling.
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http://musopen.org/

They have had kickstarters, bought orchestras to record classical pieces, and then released them public domain.

-- --- English I not so well sorry I will. I'm not native speaker.
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h.k. replied on Mon, Oct 8 2012 4:44 PM

Who fuckin cares. Your bad and unsuccessful business model is not my problem. That still doesn't make IP more legitimate. It's up for entrepreneurs to imagine how this could happen without IP, not ordinary anarcho-libertarians, who probably don't care about it

 

Oh that sounds really good. :P

 

Yep, it is the job of the entrepreneur to create scarcity in his product. Get a server and run your stuff through that.

In the meanwhile these unprofessional, uneconomic arguments for IP are pretty unsightly. I do not care about your morality, I want people to get off their asses and make USB keys, place commercial endorsements in their IP, etc, I am not your security guard or your property. You figure out how to make your non-scarce item work. I am only concerned with what the Austrian School teaches economically.

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Mike99 replied on Mon, Oct 8 2012 7:52 PM

Winder:

So the first person pays $1,200 for a licensed version of Photoshop only to make free copies for everyone else?  I am competitive in my business.  I am not going to pay $1,200 for a legal copy only to give it to my competitors for free.

Of course I'm not saying that. What's with people putting words in other people's mouths around here... First person may steal a legitimate copy, reverse engineer the copy protection, and then distribute it to all his friends, just to screw Adobe. He may sell copies on DVD for $20 a piece.

I don't see that happening.  And what you are describing is a cultural problem where piracy is accepted and property rights ignored.  Laws fail miserably at solving cultural problems.  Drug abuse being a prime example.

Now that's the first argument I've read that actually might make some sense to me. However the drug law is a failure because society is not behind it and they're trying to regulate something people like to do to themselves for pleasure. Selling stuff commercially that you didn't create isn't the same thing. Like I've said in another thread, ask anyone about stealing music, or a book, (and I'm not referring to samples or new performances) and they will say yes that's stealing.

If you think piracy is wrong then you need to find a way to change the culture of the society that condones it.  If your arguments are strong and of value people will adopt your point of view.  If you have to resort to using the coercive powers of the state then you need to rethink your ideas.  I can agree with your ends, it is the means that you think we should employ that I disagree with.

Looks like the shoe is on the other foot then? lol.

I'm not advocating police force to stop copyright. But recourse through the courts might be an option.

Anyway I did not start this thread to try to push my opinions, rather to see if anyone wanted to respond to a business example and how that might function in a free society if at all. There are no satisfactory answers - copy protection is a joke. It would have to be so laborious, so impossibly administered, and even then the makers would have no guarantee of protecting their investment. A server wouldn't work, we need a 20 year advance on technology and even then...

Maiku:

Who fuckin cares. Your bad and unsuccessful business model is not my problem. That still doesn't make IP more legitimate. It's up for entrepreneurs to imagine how this could happen without IP, not ordinary anarcho-libertarians, who probably don't care about it.

But you don't say that it's entrepreneurs who have to come up with a way to protect other property rights. You advocate a system of law for disputes, police for crimes etc. The question is not if it's fair for me to ask for protection of my property just as you do, but whether copyright is property or not. That's what I'm trying to ascertain to my own satisfaction. Frankly so far I think it is.

You seem to think that pro copyrighters are like greedy monopolists who want government sanctions on their crummy market they otherwise couldn't keep, but I am starting to think that some of you anti-copyrighters are like hobo's who look at the guy with a house and say "what do I care if the government or a mob takes his house, property ownership doesn't concern me",  - just because you don't hold any copyrights.

anenome: If intellectual property does exist, then all that's needed to enforce it are free market courts, just like they would protect any property in a pure libertarian society. This does not require a minarchist solution, despite Mike's musings on that subject. He's not quite as far along on why minarchism fails as some of us. But I reject the notion that IP can only exist in a minarchist framework.

This ^^^^ In other words a whole lot of whining about what you want for your property. You don't see it as property, too hard to enforce. What about when there's a land dispute, or a property sale dispute, that's also complicated - and the system has to deal with it. Do I think it's right hte way things are? Of course not - the whole thing has been made a mockery of. Doesn't mean we should throw away people's legitimate ownership.

Anenome: I think this question of IP is so vital that it could sink any new libertarian society if we get the answer wrong.

YES. That's my concern. And I think it might be wrong the way things stand. Not to mention the fact that you're going to alienate a lot of people that you need to be on board. I'm not saying compromise on principles. I'm saying, get your principles straight. Or else it's me that has to get my principles straight, which is what I'm trying to do. I'll change if I can see I'm wrong.

@Chyd3nius: This is another thing. I'm sure that kind of thing would be very healthy in a free society, but I'm talking about larger more longer term projects and investments. What if you set up a movie studio, spent $150 million on a movie, and just as it was being completed somebody stole a copy and released it in full quality. Today, a few copies would get out, it would hit the pirate markets early, but not stores, and not theatres. In a free society all threatres would be playing it, free of charge (to them), all stores would have copies made by third parties, for low cost, etc. You can't say it wouldn't be any different than it is today. It would be enormously different.

@HK - What if I say the same to you? That I don't care about your morality? Isn't that what we have today? Hows that working for you? You have to care about my morality, because if my morality is screwed up that could be a problem for you societally. You know who else doesn't care about your morailty - theives, murderers, & government. And tha'ts why you have a problem today. That's why you're taxed, monitored, and live under a corporatist regime wherever you are on the planet. Because other people's lack of morailty is your problem. I'm here trying to find out the truth to my own standards, and I'm here with an open mind. It's got nothing to do with bleeding hearts but your own pragmatic concerns. I actually do care about your morailty, because hypothetically it affects me and everyone else and visa versa.

 

Anenome: I'll tell you guys what, when I get my seastead going I'll create two separate versions of its legal code, one with free-market IP laws that accept the notion of intellectual property based on first use and discovery, and one which dispenses with the idea of IP entirely, and we'll see which one people choose to live under.

That would certainly be a litmus test. I bet first most people would go to the non-IP one. Then when there was nothing but bad music and bad movies, and no new ideas they would move to the other one. Or maybe they would send a team to infiltrate the pro-IP camp, steal all their movies muisc and new inventions and take it back to pirate central where they could openly enjoy the spoils of war. haha

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Winder replied on Mon, Oct 8 2012 8:39 PM

I think you have to address the cultural side of the issue.  If people find it acceptable to steal the work of others and pass it off as their own, that is a social/cultural problem.  I don't think it is a problem that requires the state.  

In the case of photography where we have had people steal image of other photographers and use them to create a business website or create professional portfolios for images stolen from other people the photography community has actually taken action.  Cooperation from professional organizations and from even Google has been very strong.  

http://enticingthelight.com/2012/05/10/photography-theft-and-how-to-protect-your-work/

In one instance the web host terminated the offending thief's website and replaced it with a notice stating that the website had been terminated for the theft of images.  

I don't think you would see a significant number $20.00 DVDs of Photoshop on the market even if it was legal.  Downloading pirated content is a great way to end up with a Trojan or Worm, and the people who would download it would not be professionals.  It would be downloaded by people who did not have the money to buy licensed copies.  It would be downloaded by people who did not even know how to really use the program beyond its most basic functions.  The real economic loss to Adobe would be minimal.  This is probably why Adobe does not invest in better encryption, the cost of advanced encryption is more than the loss from piracy.

I'm not in favor of piracy.  I think we need to work to improve society and increase respect for property rights.  I just think that using the power of the state to accomplish that is the wrong way to go about it.  Improve society through cooperation, not coercion.  

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Mike99 replied on Mon, Oct 8 2012 8:54 PM

But are you not thinking it through to conclusion? Apple could buy a copy, repackage it, and sell it for 10% of the original sale price *as is* *legally* on their website. They could legally have their own software engineers crack the copy protection on it. Now, maybe Adobe could do the same with Apple's software. Great. So now how is either of them going to make money? They can't! Game over.

They would have to police themselves you might say. Ok, lets say they do. Lets say these corporations say, look fellas, if we start a race to the bottom, we all know where that leads, so we need to make a mutual agreement. No stealing, and we'll sign up to an independent arbitration system, and we all agree to abide by the decisions it hands down in cases of disputes. Say they do that. What then. Well, then Jo blogs comes alone and he says damn, I can make some money, I'm no part of that arbitration thingy. I bought this copy of photoshop for $1200 if I pay a guy to break the copy protection (should only cost $2-3000 especially since it will be completely legal to do so), I rip copies, make a website, and sell each one for $50. Totally legal! Sweet! Now he starts selling thousands of copies, he's making huge money - Adobe's (the ones who invested in creating the thing) sales go to zero. Meanwhile this guy hasn't produced didley squat and he's making a killing. Adobe's investment: millions of dollars, Jo blogs investment $5000.

I'm not in favor of piracy.  I think we need to work to improve society and increase respect for property rights.  I just think that using the power of the state to accomplish that is the wrong way to go about it.  Improve society through cooperation, not coercion.

Believe it or not, that actually makes the most sense to me of all. Now you're speaking my language. But what do we do in the mean time? Like I said in an earlier post, if copyright has to go because it doesn't stand up to scrutiny on the principled basis, surely it's one of the later things to do. First three I think I said are corporate welfare, fiat currency system, and militarism. As I said, those alone would restore about 98% of societies wealth into the hands of the people through the natural balancing of the capitalist system within about a decade or two and from then on I highly suspect that if you folks are right about copyright it will simply become a thing of the past and completely ignored anyway. Prosperous, principled societies become politically interested and morally interested people. It's a sign of true wealth.

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Winder replied on Mon, Oct 8 2012 9:44 PM

Adobe is already moving to Cloud based software, so there is no software to steal.  You pay to use their "service".  We are still a ways away from that but that keeps people from pirating their software.  I am pretty fond of my stand alone software, but that is where it is going.  Music is headed the same way.  You wont "own" music, you will buy the rights to access a music cloud and you can listen to any song archived.  Nothing to download.  Band width will get there.  That only addresses one aspect of the complex problem.  

Here is a very recent case involving the U.S. Supreme Court and John Wiley & Sons (book publisher).

http://www.marketwatch.com/story/your-right-to-resell-your-own-stuff-is-in-peril-2012-10-04?pagenumber=1

A man buys books abroad and then sells them for less than what the publisher sells them for here in the USA.  He is being sued by the publisher for copyright infringement.  This is a case where the business is using copyright and government to limit competition.  The publisher sells book overseas for a fraction of what they charge Americans.  You can import the book back into the USA to sell in the secondary market and still make a huge amount of money.  The man being sued sold over $1.2 million in books from overseas.

Most of the cases I see for copyright or patent infringement involve the business abusing the power of law.  Dinsey made a millions from stories that exisited in the public domain for decades (often centuries) before Disney was even a company, but they now use the law to prevent others from doing the same.  Had modern copyright laws existed in 1697 Disney would have never been able to make "Sleeping Beauty" in 1959. Innovation has been lost to litigation.

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