On A Laffer Curve for Content Piracy

[danieldwilliam]

This thought occurred to me in the shower this morning whilst wondering if my dad was going to buy me Hydrogen Sonata for Christmas.  Does the level of piracy have an impact on content creators output and income?  If so, is the effect variable by the prior success of the content creator? In short, is there a Laffer Curve for content creators and piracy?

There is an argument that piracy of content has the overall effect of increasing revenues for content providers. That piracy acts as a try before you buy low-risk introduction to new work or new artists. Those who enjoyed the pirated copy are exposed to the work and more likely to pay money for future works.  I see this working most effectively with new artists who don’t have an existing supporter base. Sales would be low anyway and piracy acts as a free advertising.  So, even with quite high ratios of not-paid for consumption to paid for consumption the artists over all income is improved.

(Assuming a correlation (1) between artistic income and output high levels of piracy from low-sales volume artists would increase content creation.)

I suspect as an artist become more successful the piracy starts to cannibalise (2) sales that would have been for cash but are now for free. So a given ratio of piracy starts to affect marginal income.

This coupled with the decreasing marginal utility of more money for someone who is already well off and reservation wages suggests that more successful artists might be more likely to withhold their labour in response to a given level of piracy.

So my hypotheses is that early in an artist’s career piracy increases revenue and they would like the piracy rate set as high as possible to get all the free advertising and pick up as many contingent sales as possible.  Latter in their career the extra sales from piracy driven sales might be equal to cash sales lost to piracy, making the artist indifferent to the rate of piracy.  Latter on still, an artist might lose more sales from cannibalisation than they gain from additional exposure and so want a reduced rate of piracy.

When do we reach a point when Iain M Banks says fuck it, I’m rich enough already I can’t be arsed to write another Culture book just so it can be ripped off?

(1) Artists with no income can’t eat and therefore can’t produce art.

(2) there’s a cannibalisation – sales driver coefficient in here somewhere.

Comments

[f4f3.livejournal.com]

Do we describe "free" promotions on Amazon Kindle as legalised piracy? My friend Bill has had some interesting results with these sort of promotions on his books (briefly, they work well for books in a series, not so well for stand-alones).

I wonder how rare I am in now having ebook copies (paid for) of many books I already own in print?

I'd really like a model where you get a download code for a digital copy with each hard copy book you buy, but no one seems to be offering this yet.

[danieldwilliam.livejournal.com]

I think for the purposes of this post I think we do.

I see why series would benefit from a cheap / free introduction. MLW bought her 1st Kindle book for 20p. First of a series.

[andrewducker]

Various authors have said that releasing book 1 for free online a while after book 2 came out in paperback boosted their sales.

[andrewducker]

The question is what percentage of writers would stop writing once they were financially secure, if there was no additional gain to be made from it. A lot of people clearly write from the love of it - one wonders how much writing would be produced in a post-scarcity society. Also, how much TV, how many movies, etc.

[danieldwilliam.livejournal.com]

I think the large numbers of people doing amateur dramatics probably indicates quite a lot of art of all types would be made post-scarcity.

I suspect as we become richer and kit becomes cheaper we might see more in the way of armature film making.

When the RSC did a survey of the amateur dramatics scene in the UK they found there were tens of thousands of groups with several million participants. Including, hilariously an amateur group made up of RSC staff.

[andrewducker]

That is funny, if not surprising in retrospect.

Speaking of the Laffer Curve, I've been discussing Universal Credit elsewhere, and whether the 65% clawback rate on benefits is high enough to be counter-productive on benefits. PAYE should still prevent huge amounts of fraud, of course, but is keeping 35% of their pay enough to incentivise people to work?

[danieldwilliam.livejournal.com]

Generally folk on low incomes have a higher marginal preference for money (of which they are short) over time (of which they have more).

But there are generally good reasons why people who are on various forms of long term benefit are on it. I get the impression that many of these are to do with time factors such as childcare, caring for an adult dependent or having some medical condition that doesn’t fit in well with a classic 9-5. So I’m not sure that keeping 35% of, what I expect would be fairly modest increase in cash is going to have people joyously re-joining the labour market.