Artificial Scarcity

March 13, 2001 Artificial Scarcity of Intelectual Property In the world of analog information, everything had to be conveyed by some physical medium. For example, books had to have paper and ink, music had to have records or tapes, and movies had to have reels or cassettes. When someone wanted any of these things they had to go and buy the physical item that contained the content they wanted. They never want the actual item, they just wanted the information that it contained. In the new world of digital communications, content is no longer tied to what it is printed on. The sounds of a musician can be converted to digital signals, sent over a wire along with email, web pages, and all the other bits of information out there to be converted on the other end back into sound. The consumer no longer has to buy a piece of vinyl or plastic in order to hear the music they like, they can download it off the net. This concept is utterly foreign to established companies. They have operated in a system where consumers had no choice but to buy their content on a physical item. They don't understand the way things are now. And it scares them. Let's look at mp3's, specifically. mp3's are songs that have been compressed into a small file that can be easily transfered between people. The sound can be played by any modern computer and can be played by a host of new products that offer quality similar to CD's. The biggest difference is the number of songs available on the same medium. A normal audio CD contains less than 74 minutes of music. That same CD filed with mp3's containes over 10 hours of music. mp3's were develped in 1996 by a german group that creates compression algorithms for sounds and videos. For the first time, people were able to transfer songs between people instantly and globally. You no longer had to go to the store to buy a song, you merely needed to search the net to find it. Since the music companies didn't understand what was happening, they did not offer any way for people to legally buy music online. Therefore, piracy became rampant. Now they are locked in legal battles because they don't control the distribution of their music anymore. Content companies like to make use of a concept called Artifical Scarcity. This means that they intentionally limit the amount of items available in order to drive up their price. Music, again as an example; the record companies only market a certain number of bands per year. They only make a certain amount of CD's and music videos per year. They intentionally keep the market small in order to maintain control of the market. In the digital world it is different. Once one person has a copy of something, everyone else in the world can have access to it at nearly free rates. The only cost incurred is the connection to the internet. This destroys the price of an item because it is incredibly easy to pirate it once sone person has bought it. Companies are trying to fight this by bringing the concept of artificial scarcity into the net -- they try to limit the number of copies that are out there. The idea doesn't work, and the companies are getting pissed off. The only way they know to make money is to control the market and tell people what they are going to pay for something, regardless of what that item is actually worth. Artificical scarcity is wrong. Information needs to be available to everyone. If the companies would simply make it cheaper and easier to get their content legally then more people would use it. It is only when people feel like they're being screwed by the company that they will resort to piracy. Travis Puderbaugh

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