I stumbled across this article by Tim O'Reilly yesterday, and thought I would share the high points with you. Each point has the the 1st paragraph or two of the lesson. I encourage you to visit the website and read the entire article. (the link is at the bottom of the page)

Lesson 1: Obscurity is a far greater threat to authors and creative artists than piracy.
Let me start with book publishing. More than 100,000 books are published each year, with several million books in print, yet fewer than 10,000 of those new books have any significant sales, and only a hundred thousand or so of all the books in print are carried in even the largest stores. Most books have a few months on the shelves of the major chains, and then wait in the darkness of warehouses from which they will move only to the recycling bin. Authors think that getting a publisher will be the realization of their dreams, but for so many, it's just the start of a long disappointment.

Lesson 2: Piracy is progressive taxation.
For all of these creative artists, most laboring in obscurity, being well-enough known to be pirated would be a crowning achievement. Piracy is a kind of progressive taxation, which may shave a few percentage points off the sales of well-known artists (and I say "may" because even that point is not proven), in exchange for massive benefits to the far greater number for whom exposure may lead to increased revenues.
Our current distribution systems for books, music, and movies are skewed heavily in favor of the "haves" against the "have nots." A few high-profile products receive the bulk of the promotional budget and are distributed in large quantities; the majority depend, in the words of Tennessee Williams' character Blanche DuBois, "on the kindness of strangers."

Lesson 3: Customers want to do the right thing, if they can.
Piracy is a loaded word, which we used to reserve for wholesale copying and resale of illegitimate product. The music and film industry usage, applying it to peer-to-peer file sharing, is a disservice to honest discussion.
Online file sharing is the work of enthusiasts who are trading their music because there is no legitimate alternative. Piracy is an illegal commercial activity that is typically a substantial problem only in countries without strong enforcement of existing copyright law.

Lesson 4: Shoplifting is a bigger threat than piracy.
While few of the people putting books on public web servers seek to profit from the activity, those who are putting up CDs for sale on eBay containing PDF or HTML copies of dozens of books are in fact practicing piracy--organized copying of content for resale.

But even so, we see no need for stronger copyright laws, or strong Digital Rights Management software, because existing law allows us to prosecute the few deliberate pirates.

Lesson 5: File sharing networks don't threaten book, music, or film publishing. They threaten existing publishers.
The music and film industries like to suggest that file sharing networks will destroy their industries.
Those who make this argument completely fail to understand the nature of publishing. Publishing is not a role that will be undone by any new technology, since its existence is mandated by mathematics. Millions of buyers and millions of sellers cannot find one another without one or more middlemen who, like a kind of step-down transformer, segment the market into more manageable pieces. In fact, there is usually a rich ecology of middlemen. Publishers aggregate authors for retailers. Retailers aggregate customers for publishers. Wholesalers aggregate small publishers for retailers and small retailers for publishers. Specialty distributors find ways into non-standard channels.

Lesson 6: "Free" is eventually replaced by a higher-quality paid service.
A question for my readers: How many of you still get your email via peer-to-peer UUCP dialups or the old "free" Internet, and how many of you pay $19.95 a month or more to an ISP? How many of you watch "free" television over the airwaves, and how many of you pay $20-$60 a month for cable or satellite television? (Not to mention continue to rent movies on videotape and DVD, and purchasing physical copies of your favorites.)

Services like Kazaa flourish in the absence of competitive alternatives. I confidently predict that once the music industry provides a service that provides access to all the same songs, freedom from onerous copy-restriction, more accurate metadata and other added value, there will be hundreds of millions of paying subscribers. That is, unless they wait too long, in which case, Kazaa itself will start to offer (and charge for) these advantages. (Or would, in the absence of legal challenges.) Much as AOL, MSN, Yahoo!, Cnet, and many others have collectively built a multi-billion dollar media business on the "free" web, "publishers" will evolve on file sharing networks.

Lesson 7: There's more than one way to do it.
A study of other media marketplaces shows, though, that there is no single silver-bullet solution. A smart company maximizes revenue through all its channels, realizing that its real opportunity comes when it serves the customer who ultimately pays its bills.

At O'Reilly, we've been experimenting with online distribution of our books for years. We know that we must offer a compelling online alternative before someone else does. As the Hawaiian proverb says, "No one promised us tomorrow." Competition with free alternatives forces us to explore new distribution media and new forms of publishing.

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Tim O'Reilly is the founder and CEO of O'Reilly & Associates, thought by many to be the best computer book publisher in the world. O'Reilly also publishes online through the O'Reilly Network (www.oreillynet.com) and hosts conferences on technology topics. Tim is an activist for open source and open standards, and an opponent of software patents and other incursions of new intellectual property laws into the public domain. Tim's long term vision for his company is to help change the world by capturing and transmitting the knowledge of innovators.

Read the entire article:

Nice article

An intelligent forward-thinking piece suggests areas for further debate. Media conglomerates constrict some artists by legal serfdom, while greedy consumers bleed other artists by unchecked (and unpaid) distribution. The middle ground would seem to suggest artists try to protect themselves by taking some "rights" away from both labels and customers. Any other solution would probably only benefit one group at the expense of both the other and the artist (who is caught in the middle).

A very well thought out article, my thanks for bringing your insight into view.

Carpie has a point, there SHOULD be a middle ground where both sides are willing to surrender somewhat to the artist, so they increase their benefit. I, as a consumer, am more than willing to pay a fair rate for a fair deal. Until this happens, however, Carpie and artists like him, will have to understand that we, as consumers, will use the only weapon we have to bring about the shift in balance to an even position.

I will not buy a single thing a record label produces (and I am branching out into tv and movie entertainment conglomerates) until they concede and will deal with us fairly. I have no doubt the creators will do the same on their end. p2p is the engine for this, and I await, like the author of the article, for lesson 6 to come to pass.

In the LA music accounting hearings SENATOR BATTIN said "I was in the book publishing business, and we had NO ROYALTY PROBLEMS like this in dealing with the authors."

I consider Mr. O'Reilly's essay to be a seminal defining work. From a guy who has built a profitable business, there can be no counter-argument. And may I add, all sales are rung up as perfect factual receipts. No reason to sample survey is there? Or help ASCAP or the RIAA transport their corrupt Mob accounting practices to the digital realm.

But what I wish to dialogue with Leflaw concerns our fumbling efforts to define the new middleman's function.I have always hated the "PusherMan", and now I am growing into adulthood and resembling that which I hated! But Mr. O'Reilly makes a powerful case that the filter provided by Dmusic Store is a name you would trust. A brand, so to speak.

We have killed whole forests and spilled oceans of ink listening to dot-com technology guys with their filters, their MoodLogic, user-mod lists (all of which I deride as "mood rings.") Mr. O'Reilly therefore lays clear the parallel in the book publishing business, that too many works compete for the same viewer. This is an answer then to people like Dean Kay of ASCAP, who says all internet music is shit. And when did anyone become a star?

My opinion is that in the distant past you trusted a favorite DJ, or a favorite station. This of course degenerated into payola corruption and advertisement skewing of content; and the public drifted away from the grabage smell. The Golden Age of radio was killed.

But I attempt to draw a firm line against charging artists anything. Leflaw may evaluate his own options as he will; in fact, I may change my mind. That's why we're discussing this. Lef and I heard a persuasive argument from our friend at dinner who works for an important webcaster. And she says, a $35 dollar charge to the artist is an excellent value.

Well, this Dmusic space will be defined by all of you Dmusic pals.. Like all communities, it will shapeshift and change this way or that; drift and then rebound. I would suggest that your own music habits, reviews, and rating stars will bring attention to the artists who deserve it; and that most webcasters and internet stores have included the buy button.

This means that the fulfillment business has matured; it is simple, easy-use payment plans,and transparent. The best feauture is that all slaes are digitally accounted for. You see, if the buy button takes me to the artist site, or Amazon, or Ebay, or Yahoo, or Wells Fargo, it doesn't matter to me. I am not beholden to any particular brand.

Bravo!

I could easily poke holes in some of these arguments, but I believe that #6 can save the situation.

I pay (in my eyes) too much for cable channels in the UK and I believe I am paying too much on the net access too. These would be more justifiable if I knew a greater part of it was going to the people who actually did the hard work (i.e. not the end producers but the 'composers') but lesson #6 states 'HIGH QUALITY' which, I am afraid, normal cable TV for it's price is certainly NOT (at least, not here) - Now, if they said to us that a part of my net access fee was because of my high bandwidth usage on p2p (so far the best quality out there) then I would NOT have a problem with that (thinking as a consumer as well as an artist) because, and the industry knows it and ignores it, that p2p has the potential to make a total laughing stock of their business strategies and because they are not interested in co-existance, they want it down.

So far they have made quite poor examples of themselves and everyone else and listened to no-one. So far they are losing, whilst drowning in the shit at the bottom of the gutter, one can hear the Rosen Rat brigade squeeking rapidly distancing cries of 'pirates' and 'thieves' but whether this is/was just a leaving attack or an admittance to what they really do at that company, who knows?

in short, lesson #6 is acceptable to a lot more people, its a better deal, if they could only COMPROMISE........

lesson #6 states HIGHER quality. Heh

Think about it: why do some people, when confronted with a vending machine and a water fountain, pay money for the same stuff you can get for free?

go Tim!!! I like the idea about an alternative. Cool article

yes good article..

i still buy software and movies i can obtain for free, i will buy albums of music i know i can retrieve in seconds on the net..i buy software that i know is on file-sharing networks