The attraction of having something for nothing is as strong as ever. The advertising industry understands that ‘new’ and ‘free’ have real power to connect with consumers, although consumer access to digital technology has opened up whole opportunities for goods and services to be made free.
The reason the music industry is continuing to struggle with the issue of free music is that it made some mistakes at the dawn of the dotcom era. In the 1990s, it’s 16-24 year- old key customers, were way ahead of the industry in their use of the internet and computers. They adopted the Napster website - which allowed users to share music on members’ computers - far more quickly than music industry managements.
By the time the music industry reacted effectively in 2000, shutting down Napster through legal means and starting downloading services of their own, it was too late: a generation had been raised on unlimited free music. They expect music to be freely available, are untroubled by moral taboos and are less impressed by the industry’s inaccurate mantra that copying music is theft.
The music industry’s great fear is the same as that of a bus company or railway operator. Illegal downloaders don’t pay any copyright fees or royalties. In economics, those who prefer to take what others choose or are forced to pay for are known as ‘free riders’ and if too many people are allowed a free ride, the service provided will not pay for itself or make a profit.
The burden of free riding is one of the explanations for the old saying, used by economist Milton Friedman as the title of one of his books, that there is no such thing as a free lunch. Surely this spells disaster for newspaper publishers, record companies, book publishers - the content providers who are being pushed by the combination of new technology and commercial pressures to give away what once they sold?
Not necessarily. For even when there is the literal possibility of a free lunch, human nature’s better instincts can shine through in a way that suggests people are able to recognise the potentially destructive implications of free riding. Economist Steven Levitt’s research, popularised in his book Freakonomics, includes the case of the Washington bagel distributor. Bagels were distributed to Washington offices with an honesty box. Each morning the ‘bagel guy’ would deliver fresh bagels and collect the takings from a cash box. He could not monitor payment and only had the threat of withdrawing the bagels to enforce it.
The bagel man kept records about theft, noting a decline in honesty to the point in the middle of 2001 where 13% of bagels were stolen each day. But things changed on September 11, 2001: honesty rates shot up by 15% and have stayed higher ever since.
Another example comes from Austria. Retailing laws mean that it is difficult to sell newspapers on a Sunday in some regions, so publishers put stacks of their papers in the street alongside an honesty box for payment. Innsbruck University researchers secretly monitored who took newspapers and how much they paid. Nearly 40% took the Sunday paper for free, while 61% paid something - although only 19% paid at least the cover price of 60 cents, or 40p.
The Innsbruck university researchers then used two different signs to see how they affected newspaper sales. One stated ‘Stealing a newspaper is illegal’, while the other said: ‘Thank you for being honest’. The number of newspapers stolen remained the same using both signs (and a control with no sign). But the ‘Thank you for being honest’ sign saw a larger payment from those who did pay: the average more than doubled from about 16 cents to 38.
These examples suggest that appeals to better nature do make significant differences to our perceptions of not just what we can get away with but how we value things. There will always be people that want free newspapers, music downloads and bagels, and there isn’t much to be done to affect them. But the majority can be persuaded otherwise, and this implies that music sales still have a future.
Copyright Guardian News and Media Limited 2006