Free Distribution

[The future of copyright for the creators who make a living by selling copies.]

1 Idealism and reality

I am an idealist, though I am not so idealistic as to ignore the necessity of "making a living," at least a modest one. People constantly encourage me to sell copies of my software as a means of making a living. The conversation goes something like this:

Person: 300,000 people have downloaded MUTE? Jeez, if only you had charged $1 per download, you would be rich.

Me: But if I had charged $1 per download, not all 300,000 people would have downloaded it, and far fewer people would be using MUTE right now.

Person: Well, you do need to make a living somehow.

Sure, I need to make a living, but I am idealistic enough to believe that there is more to life than just making a living. I feel that the means of making a living should be productive and helpful to society. There are many different ways to "make money." Some of these methods focus just on making money (for example, playing the stock market), while others focus on helping people in exchange for money (for example, building houses). If everyone chose to work strictly at making money (for example, we all made our livings by playing the stock market), our entire society would collapse, since all true productivity would halt. On the other hand, if we all made our livings in productive ways, and none of us worked strictly at making money, our society would continue running smoothly and perhaps even flourish. Thus, all of those pure "money makers" are not necessary players in society---in fact, they are a parasitic burden.

In addition to the pure act of "making money" being counter-productive, I also find it to be unfulfilling, because the process never ends. If money is the goal, you can never really have enough of it, so you can never reach your goal. No matter how rich you are, there will always be something that you cannot quite afford, some desirable purchase that is just out of reach. On the other hand, if your goal is to build a house, you can certainly achieve that goal and move on.

If I am going to make a living, I want it to be in a way that is both productive and fulfilling.

2 The business of selling copies

I do not view "selling copies of software" as a productive means of making a living. If you try to live by selling software as a solo programmer, you do productive, unpaid work for an extended period of time as you write the software. Finally, after the software has been written, you try to make money by selling as many copies as possible. But, during the second, money-making phase, you are no longer doing productive work. In fact, the amount of money you make during the second phase might be unbounded (if you sell copies for many years) and is not correlated with how hard you worked during the first phase---you never run out of copies to sell.

Compare the business of selling copies (of software, music, or movies) to almost any other kind of job. With most work, you get paid as you go, perhaps even by the hour or by the piece. You work a bit, you get paid a bit. You work more, you get paid more. You get paid while you are doing productive work, and you never do unpaid work in hope of striking a big payoff down the road.

Compare the business of selling software to the business of farming. Like the solo programmer, the small-scale farmer does productive, unpaid work for a long time, throughout the planting and growing season. Only after the harvest does the farmer make money. However, the amount of money made during the second phase is bounded by and directly correlated with the amount of work done during the planting and growing phases. If she plants 100 tomato plants, she can sell $2000 worth of tomatoes. If she does twice as much work and plants 200 plants, she can sell $4000 worth of tomatoes. She eventually runs out of tomatoes and is forced to do productive work again if she wants to make more money.

On the other hand, the solo programmer can stop being productive indefinitely while selling copy after copy of a popular software application. Of course, only the lucky (or extremely talented) programmers strike it rich by writing popular applications. Many more do unpaid work only to produce software that never becomes popular, and they see no payoff at all. The same goes for anyone doing creative work and relying on copyright to make a living after the fact. Therefore, "selling copies" is worse than just "not productive": it is also not a reliable way to make a living. We can place all methods of making money on two spectrums: productivity and reliability. The business of selling copies measures poorly in both regards.

There is a subtle distinction here, because I do feel that writing software is a productive and fulfilling act. I am not saying that a proper living cannot be made by writing software, but I am saying that selling copies of the finished work is not a productive way to make money. In fact, selling copies of the finished work actually reduces the productivity (measured by the number of people who benefit) of the creative work. Consider the following points:

If I charge money for my software, then
  • only the people who can afford my price will be able to legally use my software,
  • the clever people who don't want to pay for my software will obtain copies of my software anyway without paying (illegally, from their friends),
  • the less clever people who don't want to pay will simply not use my software,
  • I might actually make enough money to support myself, and
  • if I can support myself in this way, I am essentially making a living by selling people something that they could actually get for free from their friends, if only they were clever.

3 Redefining "theft"

Selling software (or copies of anything, for that matter) is really quite a bit like selling sunlight. How can you charge someone money for something that they can get for free and then call the sale an ethical business practice?

Many people say that using restricted software without paying for it is stealing, but I feel that this is an inappropriate application of terminology. Stealing, in common parlance, applies to a crime where there is both a perpetrator (the thief) and a victim (the true owner of the stolen item). There are two features that are important in ordinary theft. First, the victim is usually well aware that the theft has taken place, or at least capable of eventually discovering the theft (an owner of 1,000,000 diamonds could discover that one has been stolen by counting them). Second, the victim is hurt directly by the theft, since the victim can no longer derive use or enjoyment from the stolen item.

Neither of the above features is part of a copyright "theft." First, millions of unlicensed copies could be made of a creator's work without that creator ever noticing---in fact, the creator might not even be capable of discovering that such copies have been made. Second, the creator is not hurt directly when people make copies of his or her work without permission, as the creator can still derive full use and enjoyment from the work. Certainly, creators might be hurt indirectly, since they might sell fewer copies if unlicensed copies are being circulated. However, a creator has no guarantee of selling any copies at all and cannot prove that he or she would have sold more copies if fewer unlicensed copies had been circulating. In some cases, circulation of unlicensed copies actually increases the sale of licensed copies by building public awareness of a work. Thus, we may have a case in which the "owner" is not hurt directly and may actually be helped indirectly---a very different outcome from that of common-parlance theft.

4 Copyright law distilled

By invoking copyright, a creator is essentially trying to control the private actions of other people. Copyright law forbids certain victimless activities that might take place behind closed doors between two consenting adults (for example, you might visit my house and might I burn a copy of my favorite music CD for you). Free societies should not restrict the private, victimless activities of their citizens for any reason---copyright laws can thus be seen as enemies of personal freedom. On the other hand, creators who cherish the ideal of freedom should stop trying to wield power over the actions of others. The private activities of others are impossible to control anyway, so the power of copyright is at best illusory and at worst delusional.

Once we recognize copyright for what it is---an attempt at one-over-many social control---we can begin the internal process of reform. For creators, this process involves learning to let go. Creations can be viewed like children, and creators like parents. Parents can only control their children for a short while: eventually children live their own, separate lives, and parents struggle with a dwindling sense of influence and power. The "childhood" of a creation, the period during which a creator can control what happens with that creation, lasts only as long as the creator keeps that creation to him- or herself. As soon as the creation is published or released, true control fades, and any remaining sense of control (through copyright law, or otherwise) is completely illusory. Like parents, creators must learn to let go, or they will feel forever frustrated in their attempts to limit the distribution of their works.

The illusion of copy control has been sustained in the past because only small groups of people had the equipment for making copies (for example, printing presses and vinyl record fabrication facilities). These groups were wealthy, powerful, and high-profile, which made them easy to police: when one record company sold copies of another company's material without permission, the breach would be detected quickly and remedied either in or out of court. Of course, the fact that control was possible in practice did not mean that undetectable breaches were impossible in theory. As technology changed, the practicality of control began to crumble. The Internet, which put mass-scale copying and publication into the hands of almost everyone, served as a final blow to the already derelict illusion of copy control.

In the face of the Internet, control over copying through copyright, or through any other means, is hopeless. Those creators that learn to let go now will maintain the best composure for future survival, while those that fight to maintain control will spend boundless amounts of energy---their energy will be wasted in a battle that they will ultimately lose.

5 How a creator will make a living post-copyright

Now we come to the hard part. No creator who depends on copyright for a living likes to face the fact that copyright is crumbling. Making a living without copyright may seem impossible at first: how can a creator survive without selling copies? I will first examine the solutions that have been proposed so far.

Since the recent copyright debate has focused on the medium of recorded music, only one solution has been widely discussed. Musicians will make money the way they currently make most of their money anyway: they will play live shows. Since it is impossible to make a copy of a live experience, let alone distribute copies of that experience in a free fashion, musicians will be able to make adequate livings without copyright. And, if you place this means of making a living on the reliability and productivity spectrums discussed earlier, it measures quite well: musicians are paid ahead of time (at the ticket booth) for doing immediate, productive work (rendering a live performance on stage). Also, the amount of money made from a live performance is tightly correlated with how many people benefit from that performance (in other words, how many people are in the audience).

However, this particular post-copyright "solution" leaves most other creators out in the cold. Programmers and book writers cannot give live performances, at least not performances that will sell many tickets. The same goes, in general, for painters, sculptors, photographers, and graphic artists. During the recent copyright debate, a catch-all solution has been proposed for non-musicians: donations. These creators will supposedly eke out livings post-copyright with the online equivalent of the tip jars commonly used by bar and street performers. Of course, the online equivalents will work better, since an online audience can be so much bigger than a bar or street audience (if just 1% of 1,000,000 visitors give a $1 donation, we have already started approaching a livable income for a year).

On the productivity spectrum, donations are not an ideal way to make a living, since new creators still do their primary productive work unpaid in hope of attracting donations after their works are released, while established creators attempt to live on the current streams of donations while they create their next works. And, I hardly need to mention how poorly donations measure in terms of reliability: just ask any street performer.

There are other ways that non-musician creators can make a living from their work after creation, though I will only mention two of them in passing, since I do not view them as productive. First, those creators whose work involves "original" renditions (like paintings, manuscripts, or signed-and-numbered prints) can sell those renditions to the highest bidder. Second, creators can sell branded physical objects (like t-shirts, coffee mugs, and hats) to their fans. Neither original renditions nor physical objects can be copied or freely distributed electronically, so selling such items will still be viable post-copyright.

Finally, many voices in the modern copyright debate have been clamoring for compulsory licensing as the end-all means of supporting creators. To enact a compulsory licensing scheme, the government must pass a two-pronged law. First, the law must force all creators to license their work for free distribution among the public (this is the "compulsory" part). Second, the law must force all citizens to pay a regular fee. These fees are pooled and then divided among all creators based on some kind of popularity measure, with more popular creators getting more money. One example of such a fee is the "blank media" tax imposed by the Audio Home Recording Act of 1992: for all blank digital audio media (for example, DAT tapes and CDRs) distributed in the U.S., 2% of the wholesale price must be paid as royalties to the recording industry. Where free, online distribution is concerned, the proposed compulsory licensing scheme would involve a tariff on all Internet access, and these tariffs would be divided among creators. Creators, in turn, would allow free distribution of their works online.

Compulsory licensing certainly would work: creators would get paid, and many could make a living. However, these schemes are so crude and broad-sweeping that they are unjust. For example, many people buy blank digital media to record their own musical creations (as I did for many years while running my record label), yet these people still pay royalties to the recording industry. These particular blank-media consumers are forced to pay a tax that essentially goes right into the pockets of their competitors. If we think about the proposed Internet access tax, we can see the same injustice lurking: many people who purchase Internet access never download any unlicensed content. In general, why should everyone be forced to pay a tax to cover the "illegal" activities of some people?

Since none of the above solutions are generally satisfying, we need to dig a bit deeper. When any social system begins to crumble, looking back into the past can often help us find a better system. Thus, to figure out how creators will make livings after copyright, we should think about how they made livings before copyright. In fact, past creators were supported by several mechanisms that are used by very few of today's creators, and I will discuss two of these techniques below. When we enhance these mechanisms with our modern infrastructure (primarily with the Internet), we can build very reliable systems to support creators.

5.1 Benefactors

One support system used in the past was the benefactor system. In this system, a few high-profile creators received ongoing financial support from wealthy donors. Certain creators forged support relationships with individual donors over many years, and in some cases, over entire lifetimes. Some of these benefactors gave money, while others provided food, housing, and other necessities directly.

For modern creators, the idea of receiving long-term support from a wealthy benefactor seems quaint and impractical, partially because the scope of the problem is so much larger. We have a larger sub-population of creators now than we did in the past, and it is reasonable to guess that the ratio of potential benefactors to creators is much smaller than it used to be. Even in the past, only a small fraction of creators were able to attract benefactors, so a pure benefactor system is obviously not a reliable support mechanism for modern creators. However, we can transform the historical system using modern infrastructure to make it reliable.

Instead of looking for single, wealthy supporters, we can think about how creators can be supported by large groups of people who each contribute a little. Any productive creative work is, by definition, affecting a relatively large group of people in society. This statement was also true in the past, but historically, connecting a creator directly with each member of his or her audience for financial support would have been impractical---the overhead involved in transferring a small donation would have been more than the value of that donation. With the Internet, we have a new infrastructure for transmitting small donations between donor and recipient with low overhead (this possibility is best demonstrated by what might be called the Howard Dean phenomenon).

So, we can transform the historical benefactor system into a system that gathers donations from the public at large. Many modern creators have already started collecting donations using the Internet, and some have had remarkable success with this approach. However, one aspect of the pure benefactor system is missing: the historical system provided ongoing support, not just single donations. Those creators who have been disappointed by their income from online donations might observe that, while some fans are willing to donate, the percentage of willing donors is small. For example, with the MUTE project, less than one tenth of one percent (0.04%, exactly) of downloaders actually donate. Many creators have focused on means of increasing the donor percentage, either through better donation box placement or heavy guilt shoveling. Despite whatever heroic begging measures we might employ, we may eventually face a rather cold reality: most people will never donate.

Instead of expending energy trying to convince more people to donate, creators should focus on making a reasonable living from the small subset of people who are already willing to donate. Here is where we can learn from the old benefactor system: we can move from single, one-shot donations to long-term subscriptions. Instead of giving one dollar today while passing through a website, patrons can sign up to automatically give one dollar per month. Monthly dollar donations barely register in the average patron's budget, but together, a relatively small group of loyal supporters can easily provide a creator with a livable income. Thus, we have gone from a single wealthy benefactor providing all support to a group of middle-class benefactors who each provide a small portion of support.

In terms of implementation, subscriptions are easy, since the infrastructure is already in place. PayPal, the most common system used to accept donations, also supports automatic subscriptions.

5.2 Commissioned works

Another historical support mechanism for creators was the commission system. As in the benefactor system, the key financial players are wealthy patrons, but the rules are slightly different. Instead of providing long-term support while giving the creator free reign, the patron would pay the creator in exchange for the creation of a specific work. The commissioned work was sometimes customized to meet the demands of the patron, though an overly-controlling patron was not common: most patrons were interested in supporting the production of a true work that was representative of the creator. The commission payments were often more than what the creator needed to survive during the creation of the commissioned work. Thus, in exchange for the work, the patrons were in effect providing a form of medium-term (though certainly not indefinite) support.

Again, we have a historical system that seems quaint and impractical by modern standards. Most creators probably laugh at the thought of a wealthy patron who might want a work created for the entranceway of a summer mansion. However, modern infrastructure can also transform this historical system into something usable.

When we move from a single wealthy patron to a mass-scale, online system, we can imagine the creator's audience, as a whole, somehow commissioning the creator to make another work. With this general goal in mind, there are many possible support systems that can fit the commission model. Other thinkers have done a lot of groundwork in this area, and I will point to the Digital Art Auction (TDAA) as one good example. The details of TDAA are somewhat complicated, but the essence is this:
  • a creator holds off on the release of her next work;
  • audience members bid what they are willing to pay to have the work released;
  • after the bid total reaches a satisfactory level, the creator picks a price and "sells" the work to those who have bid high enough; and
  • after the auction, the work is released into the public domain.
You can read more about these ideas, as applied to video game creation, in the Bedroom Coder's Business Model.

TDAA's bidding and payment system is a bit complicated and hard to understand, so I will propose a simpler derivative of the commission model. Creators can announce their next work and then post a fund-raising goal: the work will be released after the goal has been met through audience donations. In essence, a creator can say,

"I spent one month working on this creation, and my life costs me about $1000 per month, including rent and food. Thus, to support me and my work, I need $1000 in donations before I release this work."

Those audience members who are willing to donate will donate, and those who are not willing to donate will not donate. We could make various game-theoretic predictions about free-loading ("The work will be released for free in the end anyway, so why should I donate?"). However, the audience will quickly face the fact that a slow donation stream results in a delayed release. We would only have a true "tragedy of the commons" if would-be free-loaders receive the same benefit whether they donate or not, but an extra donation might actually bring the release closer by a day---an earlier release is beneficial to all. Thus, human impatience may trump the tendency to free-load. Also, for those who do donate, the cost is small compared to the retail price of a purchased copy in the old system. For example, instead of paying $20 for a copy of a CD, each loyal fan can donate $1 to have the music placed in the public domain.

Each new work can be accompanied by a new fund-raising goal. Eventually, after building a trust relationship with the audience, a creator can move from a "pay for release" model to a "pay for creation" model. The creator can describe the current work-in-progress and propose a fund-raising goal that will support her throughout the creation process.

5.3 Giving copies away and making a living

Recall that I have been discussing systems that will work post-copyright, that is, after copyright no longer exists (or at least no longer functions). Notice that both of my proposals, the benefactor system and the commission system, work fine without copyright: neither system involves selling copies.

If we do not depend on selling copies to survive, then all of our efforts at copy control become pointless. This means no more "All rights reserved" or even "Some rights reserved." This means no more FBI warnings. This means no more DRM or hardware dongles. This means no more "Please insert the original CD-ROM to continue." On the other side of the fence, this means no more cracking and no more warez. This means no more hiding in P2P networks and no more RIAA lawsuits. So much effort and energy has been wasted---one side trying to enforce copy controls, and the other side trying to work around those controls.

We can leave all of this behind us when we move to free distribution. And, using the schemes that I have described, or countless other schemes that others may propose, it is possible to make a living as a creator in a world of free distribution.

Jason Rohrer
Potsdam, NY
September 2004