The Noisy Channel

 

Why Buy The Cow When You Can Hear It Moo For Free?

March 17th, 2009 · 3 Comments · General

The NPD Group, a market research firm specializing in the entertainment industry, reported that in 2008, compared to 2007:

  • The number of Internet users paying for digital music increased to 36 million from 28 million.
  • Purchases of online digital music downloads increased by 29 percent and now account for a third of all music tracks purchased in the United States.
  • The number of people buying CDs decreased by 17 million.
  • The number of people buying music at all decreased by 13 million.
  • Among internet users, the number purchasing¬† CDs or digital music decreased from 65% to 58%.

You can see more coverage on ZDNet, MediaMemo, and paidContent.org.

Of course, it’s the last two of these statistics that should be freaking out the music industry. Not only are they trading analog dollars for digital dimes, but the swap may be worse than one for one! Moreover, perfectly legal distribution channels like MySpace Music and Pandora may be significant factors in the decline of music purchases.

I don’t think any of this should come as a big surprise to anyone. But I suspect it will break the last strongholds of denial for some. Stay tuned for when video starts to suffer the same fate.

3 responses so far ↓

  • 1 Josh Young // Mar 17, 2009 at 2:16 pm

    Isn’t the obvious, if facile, answer to your question that you might want its milk too? It’s much harder to make a satisfying digital representation of matter for a lactophile than it is to make one of sound for an audiophile.

  • 2 Daniel Tunkelang // Mar 17, 2009 at 3:30 pm

    Point taken. So should we simply accept the inevitability that content that can be reproduced for free will be reproduced for free? It certainly would simplify the discussion.

  • 3 Josh Young // Mar 17, 2009 at 4:23 pm

    The short answer, by my lights, is yes, absolutely. But note that what drives the price of the moo to zero is more than that it’s free to copy. It’s an “experience good,” in the economic jargon, meaning people don’t know whether it’s worth paying for till after they’ve heard it. It has close substitutes, meaning the horse’s bray is nearly as amusing. It’s “non-rivalrous,” meaning my enjoyment of it doesn’t impair yours. And it’s “non-excludable,” meaning you couldn’t really prevent my enjoyment even if you wanted to. The only characteristic the moo has going for it is maybe that it’s durable; unlike news, we never tire of our cow noises.

    Even if it’s not inevitable that content that can be reproduced for free will be free, I suspect that most of us would do well to accept it as inevitable anyhow.

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