Digital Music Industry

Earlier this week, the Supreme Court ruled that the creators of file sharing software can be held liable for copyrights infringement. This decision will likely set of a chain of events as file sharing services either restrict their offering or accept the possibility of prosecution. Although much of the near term focus will be on these events, longer term the industry dynamics have likely changed to make this decision and file sharing in general irrelevant.

Illegal music sharing gained popularity in the late 1990's as a host of internet software became available. The driving reason music was one of the major applications to gain popularity stems from the fact that most consumers believed that to obtain music through legal channels was too expensive. The music industry regularly charged more than $15 for a CD where the customer only really want a couple of songs. As Courtney Love points out, the majority of this is captured by recording companies and various middle men, with relatively little going to the artists.

Looking at the division of functions in this arrangement, recording companies provide financing, marketing (through direct promotion and relationships with radio stations), and distribution (through relationships with record stores). The artist just creates the product (with the help of producers). The digital technology changes this dynamic in two ways: 1. Distribution costs fall almost to zero; and 2. Recording costs fall and will continue to fall as technology advances. In short the product the value that record companies bring to the table is being replaced by technological advance.

The one piece of the equation that is not directly effected is marketing; consumers still have to learn about a new song or artist before they will want to make a purchase. The question is how will these new marketing channels operate? One possibility is that consumers will develop trust in opinion leaders directly through the use of the internet, possibly in conjunction with online music distributors.

Assuming alternate marketing channels can be established, artist will have much less incentive to pursue contracts with traditional record companies. This will broaden the playing field and allow more opportunity for non-superstar artists. Currently the vast majority of music sold is created by very small subset of artists. With the wide variety of taste in music in this country and the world, there is no reason to believe that all music listeners will continue to patronize this small group of people. The likely result will be an overall increase in revenue for the music industry, with more of the value finding its way to a much larger group of artists. Far from destroying the incentive to produce new music the internet will greatly expand the revenue potential for the industry and choice for consumers.

Social Security Transition Costs

My friend Dobber offered an interesting post on Social Security on his Dobber's World Bog a little while back. In the comments section Travis asks the question,

Why is SS necessary? SS was a socialistic (mandatory) pyramid scheme set up
by FDR. Before that people seemed to get along nicely without it.

That may be, but it got me to thinking about the social contract that we have now that Social Security has been in existence for three generations. Specifically we now have a very large transfer payment scheme set up so that a portion of each worker's income supports a retiree, who has previously contributed to the program. Each generation contributes to the wellbeing of
their elders with the assumption that Social Security will provide for their wellbeing in retirement, paid for by the output of a future generation of workers.

Getting back to Travis' comment, how did people get along without Social Security? Well it is pretty much the same model as Social Security except that there was no government intermediary. Each worker supported not only their children but also his parents and expected his children's support in old age. Is it possible that Social Security has actually weakened the extended family and substituted the State in its place?

That is one of the messages that I took from this article by Rachel Reynolds in Notre Dame Business. Although Rachel's point is that Social Security indirectly benefits even those people who have no chance of directly benefiting from SS (through supporting their parents and grandparents) the fact remains that the existence of a massive state sponsored program has changed this country's social fabric. An interesting question is, is it possible to go back? Is it possible for people to be responsible for themselves and their families without the government intervening? Is there some level of poverty that we, as a society, are not comfortable accepting? And is that a problem best solved at the local, federal, or state level?

Just some of the questions that I have been thinking as we hope to have an honest conversation on this topic.

Two Eulogies

In the past few months, I have lost two of the great women in my life, my grandmother (Nanny) and her sister (Aunt Eva). These two women each made a major impact on my life. In recognition of this, I delivered eulogies at their funerals. The next two posts contain the text of those two eulogies. I like the juxtaposition of these together because it contrasts two women who loved their families deeply, but expressed themselves in somewhat different ways.

I am better off for experiencing both of them in my life and will sincerely miss them both.

Aunt Eva's Eulogy

Before my Aunt Eva moved to Charlestown, she and my Uncle Ed lived in a fantastic house. They decorated one particular wall with tribal masks from around the world. My parents tell me that as a baby, I used to stare at these masks. I must have wondered about all those odd faces. As I grew older, although I remained fascinated with those masks on the wall, I also began to explore the many other wonderful objects that decorated my Aunt’s house. Now I see these things for what they are: the trophies collected during the course of a “charmed life”.

My Aunt certainly led a charmed life. I have no problem listing her accolades: the daughter of immigrants; a star athlete; a participant in the greatest conflict mankind has ever known; a Doctor of Philosophy when her contemporaries barely finished high school; an acquaintance of presidents… It is hard to minimize that list of accomplishments.

But my Aunt did just that. She could have enjoyed her success on her own, but instead she chose to pull her family and friends along with her. All three of my grandmother’s children earned bachelors degrees. My sister and I did the same and all indications are that my three cousins are well on their way. Not only did we all succeed in our education, we are succeeding in life. What a great track record.

Speaking for myself, I can honestly say that I could not have achieved the things that I have with out Aunt Eva’s influence. My Aunt set high expectations, she certainly expected us to meet them, and she certainly was not shy about it. I can remember how many of our conversations went: first she recounted a list of my accolades and achievements and then she talked about how my current goal played into eventual success. Her message: with all that you have going for you, there is no reason for you to fail.

Those conversations fortified me for life’s challenges. When those challenges inevitably came, I easily could have turned away, but more often than not I choose the hard path that leads to accomplishment. I imagine that the same goes for the rest of my family. As Aunt Eva would have said, the great thing about this country is that if you want success, you can have it, but you have to earn it.

It turns out that my Aunt’s life was charmed in more ways than one. Although she achieve remarkable success for herself, she also charmed the lives of her family members and countless others. So now, whenever I face a challenge I will remember the lessons my Aunt Eva taught and whenever I collect one of my own trophies, in my mind, I will place it on the wall next to all those masks.

Originally delivered June 3, 2005

Nanny's Eulogy

The last time I spoke into a microphone here at Charlestown, was under slightly different circumstances. It happened this past Christmas when my youngest cousin, Lauren, and I led the family in singing Christmas carols. We took turns calling some unlucky family members up to the microphone to sing a song a cappella. We had a lot of fun that day and we expressed how lucky we are to be family and how much we loved each other.

Today we are here to express how much we love our Nanny. That is appropriate because Nanny loved each of us and being here today is a small gesture to show that we love her back. I think the things that Nanny loved most in the world were her grandchildren. Well, actually the one thing that nanny loved more than here grandchildren was a new grandchild. As the oldest of five grandchildren I found this fact out the hard way!

I had the privilege of having Nanny to myself for the first three years of my life. This was a really good time for me: being showered with attention, and affection, being spoiled with toys and treats, having Nanny listen attentively after saying to me, “Tell Nanny your troubles.” This all came to a crashing halt when my sister Ellen was born. Suddenly, Nanny started fawning over this new grandchild who wasn’t really even doing that much at the time. So, at three years old I asked Nanny why doesn’t she take the new baby home with her since she likes it so much?
A few years later Vincent was born followed by Nicolas and Lauren. With each new birth Nanny would become ecstatic – she could not wait to shower the new baby with love and affection. She would even go so far as to fly across the country to spend some time getting to know and taking care of her new baby. She would say that she was doing it to help out Aunt Christy, but in reality I think that she wanted to be among the first to welcome a new member into the family.

The most remarkable thing about our Nanny was that her love for her grandchildren was absolutely unconditional. She loved to hear about all of the things that we were doing with our lives and she would not hesitate to tell anyone and everyone who would listen about it. She loved us when everything was going great, but she also loved us when things were going bad. She even loved us at times when we did not deserve it. Through it all, the one constant was Nanny’s love.

I would like to say something to my cousins, now. To me, the real tragedy about the way our Nanny’s life ended is that you were not able to experience her love for as long as my sister and I did. I am sorry that her time with you was so brief. I hope that you realize that she loved you with all of her being and no matter what you did, Nanny would have loved you just the same. You can ask your parents about that. You can also ask Ellen or me.

Through her love for her sisters and her children and her grandchildren, Nanny created the family that had so much fun together last Christmas. That family will continue. We will continue, by having a good time, in light of the circumstances, this Easter, this Thanksgiving, and next Christmas. This ability to influence other people’s lives, even after death, characterizes unconditional love. That is the power of our Nanny.

Originally delivered March 14, 2005