Bits, Bands and Books, by Paul Krugman, Commentary, NY Times: Do you remember what it was like back in the old days when we had a New
Economy? In the 1990s, jobs were abundant, oil was cheap and information
technology was about to change everything.
Then the technology bubble popped. Many highly touted New Economy companies,
it turned out, were better at promoting their images than at making money —
although some of them did pioneer new forms of accounting fraud. ...
So much, then, for the digital revolution? Not so fast. The predictions of
’90s technology gurus are coming true more slowly than enthusiasts expected —
but the future they envisioned is still on the march.
In 1994, one of those gurus, Esther Dyson, made a striking prediction: that
the ease with which digital content can be copied and disseminated would
eventually force businesses to sell the results of creative activity cheaply, or
even give it away. Whatever the product — software, books, music, movies — the
cost of creation would have to be recouped indirectly: businesses would have to
“distribute intellectual property free in order to sell services and
For example, ... her most compelling illustration ... was that of the
Grateful Dead, who encouraged people to tape live performances because “...people who copy and listen to Grateful Dead tapes end up paying for hats,
T-shirts and performance tickets. In the new era, the ancillary market is the
Downloads are steadily undermining record sales — but today’s rock bands ...
are finding other sources of income. Even if record sales are modest, bands can
convert airplay and YouTube views into financial success indirectly, making
money through “publishing, touring, merchandising and licensing.”
What other creative activities will become mainly ways to promote side
businesses? How about writing books?
According to a report in The Times, the buzz at this year’s BookExpo America
was all about electronic books. ...[W]e may finally have reached the point at
which e-books are about to become a widely used alternative to paper and ink.
That’s certainly my impression after a couple of months’ experience with the ...
Amazon Kindle. ...
How will this affect the publishing business? Right now, publishers make as
much from a Kindle download as they do from the sale of a physical book. But the
experience of the music industry suggests that this won’t last: once digital
downloads of books become standard, it will be hard for publishers to keep
charging traditional prices.
Indeed, if e-books become the norm, the publishing industry as we know it may
wither away. Books may end up serving mainly as promotional material for
authors’ other activities, such as live readings with paid admission. Well, if
it was good enough for Charles Dickens, I guess it’s good enough for me.
Now, the strategy of giving intellectual property away so that people will
buy your paraphernalia won’t work equally well for everything...: news
organizations, very much including this one, have spent years trying to turn
large online readership into an adequately paying proposition, with limited
But they’ll have to find a way. Bit by bit, everything that can be digitized
will be digitized, making intellectual property ever easier to copy and ever
harder to sell for more than a nominal price. And we’ll have to find business
and economic models that take this reality into account.
It won’t all happen immediately. But in the long run, we are all the Grateful