The non-existence of intellectual property demands the existence of copyright. Observe:
Let’s begin from the assumption that there is no such thing as intellectual property – only physical property.
Pretend I have written some music, played it, and recorded it onto a CD at a material cost to myself of some £3000 and 40 hours of labour time. My CD is physical property only, and my estimation of its worth is £3000, plus let’s say £120 for labour (at £3 an hour, that’s a bargain), plus an ideal, though small, profit margin of 8% – a grand total of £3370.
I could make 337 copies of this CD, which would also be my property, and sell them for £10 apiece – fine. But it’s not in my interest to do so unless I sell all 337 copies at once. Because once I’ve sold the first copy, which is after all only physical property, the new owner of that CD and duplicate it and give it away for free, thus making my £10 copies less attractive in the marketplace and therefore less likely to find willing buyers.
Possibly my solution here is to invite pre-orders. Once 337 people have pre-ordered and pre-paid – and the £3370 is comfortably in my bank account – I can send out all of the CDs at once. Fine.
But suppose more than 337 people order a copy of my CD. Very well; I shall make more copies and make those available for pre-order and pre-payment too. In fact, I will make as many copies and sell as many pre-orders as the market demands; but nobody will receive their CD until that demand is exhausted and the profit guaranteed (by its presence in my bank account), because the minute I actually hand over the first disk, everything on it ceases to be my property and can be made available for free.
My other option is to make no additional copies of the CD, and to sell my single existing copy for £3370. (This is, for example, what happens with unique pieces of art.)
Essentially, therefore, if the CD and everything encoded on it is purely physical property, I have absolutely no incentive to make it someone else’s property until I have received the compensation I desire. This is not so much a problem if I sell it as a single entity to one buyer for £3370 (although I think few people would pay that amount for a music CD).
But if I want to sell copies of it at reduced cost to multiple buyers, it makes sense for me to hold onto all copies until I have as many confirmed buyers as possible. This could end up being ridiculous; there could be a time lag of literally years between when the first buyer pays me and when I send him his copy.
Buyer #1 obviously does not want to wait years; in fact, since he has already paid me for his copy of the CD, it is now his property, and I have no right to withhold it from him. But if I send it to him immediately, the CD and everything on it becomes his property, and he can duplicate it and give it away for free, meaning people will be less likely to buy copies from me, meaning I am likely to make a massive loss. In fact, if I sell him his copy for £10, he makes his property available for free, and nobody buys copies from me, I have made a loss of £3360.
But wait! There may be another way. Let us say that I agree to sell a copy of my CD to Buyer #1 as long as he agrees not to make the material on it freely available for x number of years, x being the time during which I reasonably predict demand for my music CD to exist. This will naturally involve a reduction in price to compensate him for voluntarily restricting his use of his property, but fine. If I can get all of my buyers to agree to the same terms of sale, they will get their property, and I will get my money, and all will be happy.
And lo and behold, we have just invented ‘copyright’: the agreement by which the buyer gets his purchase of property at a discounted price in return for not making that property freely available for x number of years. This enables the seller to compensate for that discounted price by making up the difference in volume of sales.
Since we have copyright, as a good way to satisfy both buyer and seller with respect to their property and money, I therefore conclude that intellectual property does not exist.
Given, of course, that I estimated the cost of producing an album professionally at some £257,000 (not including promotional costs) rather than £3,370, one can see that the required length of time to wait might be rather longer than the wife's illustration might warrant.
UPDATE: over at Kore Studios (owned by a friend of my brother's), you can get an album package—which includes 30 day exlusive studio time, an engineer and assistant and mastering—for £16,000 (inc VAT) [no direct link: go to Rates].
Also, Unity has a long and detailed article on the shenanigans indulged in by the music industry, including the financial breakdown for music tracks.
UPDATE 2: the wife replies to her detractors in the comments.
For all these people accusing me of various naive assumptions, I respond as follows.
First, I deliberately excluded record companies, gigs, merchandise, etc. in my thought experiment. I began with the premise that I wrote, performed, and paid for my home-made album myself, and this was the extent of my investment. Gigs, merchandise, etc. are not relevant.
Second, I worked on the cynical, but absolutely not naive, belief that if it is possible for people to distribute my product for free, some will do so. Naturally, as a businessperson, I wish to minimise the incidence of this, preferably to zero. This is not naivety. What is naive is for me to believe that there will be people who, although they could get my album for free, will choose to pay for it instead. I'm sure many people are indeed like this, but to rely on everyone's being like this is unsound business practice.
So what I end up with is the perfectly reasonable prediction that, if able, some people will distribute my stuff for free, and some people will acquire it for free. Because I am a greedy bastard, I don't want to quibble about potential lost earnings or potential gains from free publicity. I want to reduce some to zero.
Third, for a home-made album with no marketing or publicity (you'll notice these are nowhere mentioned in the thought experiment), 337 copies sold is a bit optimistic, even if it is the greatest music on earth, because word of mouth between friends and the friends of friends, etc. can only get one so far. If my completely non-marketed, non-publicised album can sell 337 copies, I'll be happy.
Fourth, I'm aware that whatever contract I and my customers agree about not reproducing my work for x time is not binding on third parties. If my customer's CD of my music is stolen, well, that's too bad for me. Hopefully the thief can be caught and made to compensate us both.
If my customer breaks the contract, however, this is actionable. It can be determined in court how many free copies my customer made or distributed, and I can present to the jury my estimate of how much potential earnings I have lost as a result. Obviously it won't be 100%, because not all of the people who got free copies off my customer would have bought it in an alternate reality. If the jury thinks my estimate is, on balance of probability, fair, they can award me those damages. If the jury thinks my estimate is unfair, they can choose not to. In fact, the jury can return a 'guilty' verdict without awarding me any damages at all except my court costs. This is all just as it should be. So quibbling about the amount of potential earnings lost, which is a completely subjective estimate, is irrelevant. It is not pertinent to the law whether this amount can be determined exactly; the law comes into force if I can convince a jury that this amount is greater than zero. If I can't convince the jury of that, too bad for me.
This is what court is for: to judge whether the contract has been broken, and at what cost. If the law required me to prove all of that before taking it to court, I wouldn't need the court at all.
Has that cleared up some of the objections?
Oh, and as someone who is involved in flogging my brother's albums, I can tell you that 337 is pretty darn optimistic—even when you have a loyal following after more than a decade playing gigs (which usually end up costing the musician money).
To expand, at the level at which most (part-time) bands play, they will make to money on playing gigs—in fact, gigs will probably cost them money. This is especially true in London, where promoters and venues have the upper hand because of the number of bands around.
Once you make the leap to being a full-time band—and are thus able to tour the country rather than your immediate environs—the amount of money that you have to make increases by thousands of percent. Whereas once you might have been happy if your earnings covered a couple of rehearsal sessions and the transport of your instruments to the venue, now you have to actually make enough to pay you to live—and to hire the venues and promote the gig.
In order to do that, you have to get lots of people in to see you—in every venue. In order to try to mitigate these costs, small bands will often support larger bands—and they will pay a fee to the larger band for the privilege.
So, without the record sales and without much (if any) money coming in from the gigs, you are left with merchandise. That is going to need to be paid for up-front—with all of the inventory problems that brings. This merchandise will also need to be carried around with you, meaning that your transport becomes more expensive.
In truth, it is those who claim that any but the biggest bands can make money out of merchandise and touring that are naive—not me.
