I’ve long been interested in music, and over the years have sunk thousands of dollars into LPs, CDs, cassettes, 8-tracks, etc., all of which are media for the storage of recorded musical performances. My tastes are catholic, or, perhaps more accurately, I should say, agnostic, and run the gamut from hip-hop to opera. It’s not just individual artists, or performances, that I’m fond of (although, indeed, I have preferences just like everybody else); rather, also, the feeling of sound itself, the vibrations, if you will, as they waft through the air and into the tympanic membrane of my ear. Sound, not as some kind of abstract intellectual exercise, but rather, as the experience of sound per se. There are times when it feels as though the music goes straight through me, and I am but a passive receptacle, like one of those great SETI radar antennas, a conduit for the reception of pure sound. When that happens, the notes, the melody, the rhythm, they all just vanish.
Then along came the iPod, which I acquired right away, and dutifully begin ripping the aforementioned LPs and CDs into the computer. It’s a lower-fidelity device, certainly not suitable for use with any half-decent stereo, but it sounds remarkably good on its little speakers, and in the car, and its portability and compactness make for an overwhelming case.
It’s peculiar, though, because, in a miracle of self-replication, it actually proliferates two more copies of the original recording – that on the computer, and that on the device itself. Where there used to be one, now there are three. The ontological status of these copies is dubious; one might go so far as to say the iPod is ontologically “inefficient.”
In this respect, the iPod fundamentally is unlike, say, the iPhone, which is equipped to receive on-demand streamed musical performances from a central server. You don’t “own” a “thing,” like an LP, or a CD. Nor do you own a “download,” that is, a duplicated version. Rather, you have the ability to play the master sound recording itself (or a higher-order copy of it) any time of the day or night, whenever you want. It’s like a radio, but you get to decide exactly what is played, and when. So if you “own” anything at all, it’s more akin to an entitlement to hear (listen to) the sound recording, for so long as you pay for the right (subscribe) to do so.
Most likely, the mobile telephone will evolve into a kind of internet appliance; you always will be connected, and the internet automatically will find you as you walk around. And it won’t be a slow connection, like today’s Treo, rather, it’ll be at broad-band speeds. This evolution will take place in much the same way that broad-band replaced dial- up.
Even someone as profound about these issues as Martin Heidegger was unable to account for the ontological status of performances – music, theater, dance, etc. They certainly aren’t “things,” in the sense of being either ready-to-hand or present-at-hand. In Being and Time, at least, these are the only two categories of being he acknowledges, apart (of course) from Dasein. Although they would have floundered on shoals of mutual incomprehensibility, Heidegger’s view of “things” in Being and Time is a lot like Bertrand Russell’s (early) view of language: its purpose is to refer, and refer to objects, which are “things.”
Later, in What Is a Thing, Heidegger expanded his ontology to include “plans, decisions, reflections, loyalties, actions, historical things,” even, “anything else that is a something and not nothing,” What Is a Thing 6. Unquestionably this is over-broad, for the simple reason that processes and performances aren’t tangible, corporeal “things.” Rather, they’re “events” or “occurrences” – something ephemeral, or evanescent. Continuing with our analogy, it would take later philosophers such as J. L. Austin to recognize (re-recognize, of course) that language does far more than simply “refer.”
All of these activities may become embodied or instantiated in a thing. Details about a process, for example, might get written down, drawn up, and become subject to patent rights. You can copyright the expression of an idea once it’s iterated in a “work.” They are not, however, things in-and-of-themselves.
The two templates we’ve been discussing – streaming and downloading – are vying for dominance, even as we speak. How their struggle turns out will determine much of our media future. For example, will we carry songs around with us, on an iPod-like device, or simply tune into them, whenever and wherever we want? What about pictures, and documents, and files, and all of the other minutiae of our lives in thing-like format, that are susceptible to this mode of being (i.e., not tables and chairs, for example)? I have come to think of this as the “iconography of things” – objects, primarily those embodying or instantiating consumer entertainment software content, such as movies, books, pictures, songs, and the like.
Once, I was introduced to a person who was president of a leading auction house. Her whole world is based around things, and valuable things at that – transacting in them, buying them, selling them, and auctioning them off. But, typically, these are works of art, or, at least, works of design. They have acquired a status, a set of cultural associations and references, that go well beyond their thing-iness – that is, the inherent properties they have as things, such as mass, extension, and solidity. Furthermore, they are unique, which is what qualitatively differentiates them from ordinary, mundane things, like tables and chairs.
This fundamentally is unlike a work of consumer entertainment software. The distinguishing feature of such a work, as the theory goes, is low marginal duplication or reproduction cost, especially when contrasted with the cost to originate the work. A movie, for example, might cost $120 million to film, but DVDs can be manufactured inexpensively.
On top of that, the DVD has no “inherent” economic worth, because the value of the performances it embodies is impossible to quantify. Some people like the movie, some people don’t. This isn’t necessarily reflected in sales, though, because the people who like it, might not buy it. They might have any number of different reasons, such as the marginal utility of owning the DVD outweighs its marginal cost; they’re slow technological adopters, and don’t have a DVD player; or they just saw it on TV.
Which leads to the type of despair recently complained of by Joe Morgenstern, film critic for the Wall Street Journal. Says Mr. Morgenstern, “I own quite a few DVDs too. Nearly a thousand of them sit on 6-inch-deep shelves in a dedicated walk-in DVD closet off the living room. As dozens more arrive unbidden each week, the closet keeps overflowing onto the dining room table and the kitchen counter, so I keep organizing the overflow into piles of keepers and tossers, except that the keeper pile grows so fast that most of those get tossed too,” Morgenstern, J., “Buy, Rent — Or Toss? Not everything’s a keeper,” Wall St. J. (Jun. 23, 2007). In order to address this problem, Mr. Morgenstern has adopted elaborate triage criteria, which he goes on to outline in his article. He doesn’t say what happens to the rejects – many critics enjoy a nice source of extra income by selling them on Amazon.com or half.com.
The phenomenon of low-marginal-cost in relationship to high-fixed-cost is the main reason why record companies and movie studios get so exercised about file-sharing. It’s not so much that the file sharer is displacing the small profit attributable to the sale of the individual thing, although this is annoying. Rather, the file sharer is not making any contribution whatsoever to the fixed (and probably high) cost of creating the original, from which the thing is derived.
It also explains why record companies and movie studios require exclusivity in the marketplace. You never see the same record or movie, for example, being distributed by two different companies. This would be wholly untenable, because each competitor would be incentivized to undercut the other’s price, especially given the low marginal reproduction cost.
The economics of “things” versus “performances” also are completely different. No company better illustrates this than Apple. Its philosophy for its iTunes store is to sell downloaded songs for something close to marginal cost; the net revenue component is small. On the other hand, it makes a ton of money by selling iPods, which have a huge margin, probably approaching 100% of cost.
Which is the main reason why songs from iTunes only play on the iPod. Record companies find this to be so threatening, that at least one of them – Universal Music Group – is picking up its marbles and going home, Fritz, B., “UMG to sell songs sans DRM online – Move represents a direct jab at Apple’s iTunes,” Daily Variety (Aug 9, 2007).
This never is the correct strategy for a market leader, such as UMG. UMG and Apple are quasi-vertically-integrated, in that each supplies an essential component for the other. UMG supplies sound recordings to Apple, which Apple doesn’t have; and Apple supplies a market to UMG, which UMG doesn’t have. There is one considerable difference, though, which is that Apple is a bigger deal to UMG, than UMG is to Apple. All UMG has to sell is sound recordings, whereas Apple is selling a lot of different stuff. In addition to music, iTunes sells movies, TV shows, audio-books, podcasts, etc. Not to mention that Apple itself is a hardware behemoth; iTunes is only one of its many business interests.
Under these circumstances, it always will be more advantageous for the dominant (but less-diversified) firm to negotiate to conclusion with its counterpart, especially when the counterpart (Apple) also is the market leader (in the quasi-vertically-integrated technology relationship), and better diversified. UMG has made a serious mistake. Its strategy ought to be adopted only by a small but influential group, for example, a minority party in a Parliament, where a much larger party needs its votes in order to become the majority. Then, the minority party can extract concessions far disproportionate to its market share.
The iPhone, on the other hand, operates on economic principles that are the reverse of the iPod, in that the device itself is inexpensive in relationship to the cost of operating it. “Cellphone carriers in the United States generally subsidize the initial purchase of a phone and then work to keep customers paying the lucrative monthly fees. That is why operators offer incentives for loyalty and require long contracts,” Stone, B., “With Software and Soldering, a Non-AT&T iPhone,” New York Times (Aug. 25, 2007). It also explains why devices like the iPhone are designed to work only on one network (AT&T), and why both companies (that is, Apple and AT&T) are threatened by hackers who go to work on the device to make it more, shall we say, versatile.