On the relative ethics and economics of used CD sales and cd burning

[The Magnificent Goldberg]

Quick hypothetical example: You want to buy a cd, which I happen to own. You are holding out for a cheap copy (used/promo/whatever). I burn it for you, and you decide having the cdr is good enough for you. You are now out of the market for a cheap copy, so you don't pick up the used copy that turns up in your local shop next week. Someone else walks into the store, meaning to but the cd whether new or used, sees the used copy, and makes the purchase. If you had bought the used copy, they would have bought the new copy. The artist is now deprived of their 75 cent royalty.

By the same rationale, one shouldn't sell used CDs.

Guy

I disagree, because the artist knows that's part of the bargain he's made at the time he signs his contract.

The artist also knows that there will be some CD-R copying. Perhaps I am not understanding your point.

Guy

Hank Mobley didn't know that. Nor did thousands of musicians who were making records up to a very few years ago. But they, or their families, are still entitled.

MG

[Guy Berger]

Well, a used copy only resulted in compensation on its original sale -- the same thing with a CD-R copy.

You're right, the used copy resulted in compensation on it's original sale. The artist is happy. The fact that it changes hands later on is not relevant to the artist - he/she has been paid what's due them.

The CD-R copy did NOT result in compensation, unlike the original. It's an additional copy of the music that is now in existence that has not compensated the artist. The artist is not getting paid for this copy which you are getting without paying for.

Maybe compensation for each copy is owed to the artists in some sort of mystical, metaphysical sense. But the only thing that matters to the artist's income is compensation for each sale.

The CD-R copy is in effect a sale of that music for which the artist received no compensation/income. Two copies of the CD are now in existence.

Aggie --

Let's assume that there are two individuals, one of whom originally purchased a new copy of a CD and another who is willing to pay up to full price for that CD. Consider two scenarios:

1) The owner of the CD sells it to the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. One copy of the CD are now in existence.

2) The owner of the CD copies it for the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. Two copies of the CD are now in existence.

What you are arguing is that the artist doesn't care about his income ("the artist is happy" with the used sale), but rather about how many of the copies in circulation he's been compensated for. I am not sure this is plausible.

Guy

[Guy Berger]

Quick hypothetical example: You want to buy a cd, which I happen to own. You are holding out for a cheap copy (used/promo/whatever). I burn it for you, and you decide having the cdr is good enough for you. You are now out of the market for a cheap copy, so you don't pick up the used copy that turns up in your local shop next week. Someone else walks into the store, meaning to but the cd whether new or used, sees the used copy, and makes the purchase. If you had bought the used copy, they would have bought the new copy. The artist is now deprived of their 75 cent royalty.

By the same rationale, one shouldn't sell used CDs.

Guy

I disagree, because the artist knows that's part of the bargain he's made at the time he signs his contract.

The artist also knows that there will be some CD-R copying. Perhaps I am not understanding your point.

Guy

The artist knows that the law allows for orignal purchaser of his cds to resell their copies. He also knows that the law does not allow people to burn copies of his cds and distribute them. Given that the artist knows that when they make the decision to enter a recording contract, there can not be an ethical problem with the buying and selling of used copies of his music. The same can not be said of burning, which does do further harm to the artist above and beyond the existance of the used market.

I'm going to let you have the last word on this line of argument* because I'm not an ethicist and don't feel I have a particularly qualified opinion on this. I will continue discussion on the economics of the issue.

Guy

*Except one: just because a behavior is legitimated by a recording contract does not make it ethical.

[Aggie87]

Aggie --

Let's assume that there are two individuals, one of whom originally purchased a new copy of a CD and another who is willing to pay up to full price for that CD. Consider two scenarios:

1) The owner of the CD sells it to the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. One copy of the CD are now in existence.

2) The owner of the CD copies it for the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. Two copies of the CD are now in existence.

What you are arguing is that the artist doesn't care about his income ("the artist is happy" with the used sale), but rather about how many of the copies in circulation he's been compensated for. I am not sure this is plausible.

Guy

Under scenario 1, the artist (+ all others associated) received compensation for the 1 copy in existence. Ownership transferred hands. The artist did not lose anything, because the first owner has simply transferred ownership of the copy (and listening rights) to the second owner. The first owner no longer has rights to that music. One copy of the music and the listening rights were sold/purchased, and the artist was paid accordingly.

Under scenario 2, there are now two copies of the music in existence. As you said, the artist lost full compensation for the second, burned copy. The first owner still has listening rights, but the second "owner" does not have legal or ethical listening rights to this music that is now in his possession.

Regarding your final coment, my argument was that the artist was happy with the original sale of the CD, and compensated for it appropriately. I am arguing that the artist does care about his income, and should be compensated/receive income for all copies of his/her music that are out there. CDRs screw the artist.

Edited November 3, 2006 by Aggie87

[J Larsen]

Quick hypothetical example: You want to buy a cd, which I happen to own. You are holding out for a cheap copy (used/promo/whatever). I burn it for you, and you decide having the cdr is good enough for you. You are now out of the market for a cheap copy, so you don't pick up the used copy that turns up in your local shop next week. Someone else walks into the store, meaning to but the cd whether new or used, sees the used copy, and makes the purchase. If you had bought the used copy, they would have bought the new copy. The artist is now deprived of their 75 cent royalty.

By the same rationale, one shouldn't sell used CDs.

Guy

I disagree, because the artist knows that's part of the bargain he's made at the time he signs his contract.

The artist also knows that there will be some CD-R copying. Perhaps I am not understanding your point.

Guy

The artist knows that the law allows for orignal purchaser of his cds to resell their copies. He also knows that the law does not allow people to burn copies of his cds and distribute them. Given that the artist knows that when they make the decision to enter a recording contract, there can not be an ethical problem with the buying and selling of used copies of his music. The same can not be said of burning, which does do further harm to the artist above and beyond the existance of the used market.

I'm going to let you have the last word on this line of argument* because I'm not an ethicist and don't feel I have a particularly qualified opinion on this. I will continue discussion on the economics of the issue.

Guy

*Except one: just because a behavior is legitimated by a recording contract does not make it ethical.

Hey, you're the one who put "ethics" before "economics" in the thread title!

I can't really agree with your footnote. It is incumbent upon market participants to know and accept the rules of their chosen market before they enter it. As a silly analogy, it would be ludicrous for a football player to complain about getting tackled; that's part of the rules he accepted before stepping on to the field. Getting kicked in the nuts while trying to get up is a different matter.

BTW, are you still disagreeing that there is an economic distinction? I thought my example was pretty realistic. In any event, all you really need to do is look at total music sales over the past ten years or so to see that something has gone very wrong.

[Guy Berger]

Aggie --

Let's assume that there are two individuals, one of whom originally purchased a new copy of a CD and another who is willing to pay up to full price for that CD. Consider two scenarios:

1) The owner of the CD sells it to the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. One copy of the CD are now in existence.

2) The owner of the CD copies it for the other individual. The artist/label/whatever is not compensated and loses the full price of the CD they would have obtained had this transaction not taken place. Two copies of the CD are now in existence.

What you are arguing is that the artist doesn't care about his income ("the artist is happy" with the used sale), but rather about how many of the copies in circulation he's been compensated for. I am not sure this is plausible.

Guy

Under scenario 1, the artist (+ all others associated) received compensation for the 1 copy in existence. Ownership transferred hands. The artist did not lose anything, because the first owner has simply transferred ownership of the copy (and listening rights) to the second owner.

Sorry, Aggie, but this is incorrect. The artist/label/whatever would have pocketed $18 had the used CD sale not taken place. In an economic sense, the used CD sale is an $18 loss for the artist/label/whatever. This is just a logical deduction from my assumptions.

If you have a different definition of "loss" from the economic one, then we may just be disagreeing about definitions.

Guy

Edited November 3, 2006 by Guy

[Guy Berger]

BTW, are you still disagreeing that there is an economic distinction? I thought my example was pretty realistic. In any event, all you really need to do is look at total music sales over the past ten years or so to see that something has gone very wrong.

This may be because of music sharing, not CD-R burning. (Though a single shared copy is not as harmful to the artist as a used CD sale, the problem is sharing on a mass scale.)

Guy

[rockefeller center]

Guy, what about burning CD-Rs of computer operating systems for friends?

Edit: I'm talking about non-free OSs.

Edited November 3, 2006 by rockefeller center

[Aggie87]

Sorry, Aggie, but this is incorrect. The artist/label/whatever would have pocketed $18 had the used CD sale not taken place. In an economic sense, the used CD sale is an $18 loss for the artist/label/whatever. This is just a logical deduction from my assumptions.

If you have a different definition of "loss" from the economic one, then we may just be disagreeing about definitions.

Guy

I'm not sure if we're agreeing or disagreeing...LOL.

I still see the used cd scenario as dealing with one legitimate copy of music in existence, for which the artist was paid.

The artist etc. would have pocketed an additional $18 if both the first owner kept his copy of the CD, and the second owner chose to also purchase a legitimate copy of the CD. In that case there would be a market demand for two copies of the music.

Since the first owner decided he didn't want that music anymore, and knows there's a secondary market for CDs (like autos), he chose to sell the CD and the listening rights to someone else interested in purchasing a used CD. In this case there is only a market demand of one copy of the music.

Creating a CDR copy and passing it on to a friend means there is a market demand of two copies, and the artist has only been paid once.

Edited November 3, 2006 by Aggie87

[J Larsen]

I agree, but to me that kind of sounds like saying petty shoplifting isn't so bad when you compare it to armed robbery. Granted, this analogy is overly dramatic, but it captures the essense of what I'm trying to say regardless.

Edit: this was in reply to post 82.

Can't you guys save the entertaining discussions for while I'm NOT trying to work???

Edited November 3, 2006 by J Larsen

[Guy Berger]

Guy, what about burning CD-Rs of computer operating systems for friends?

Edit: I'm talking about non-free OSs.

Again, probably not as bad economically (for an individual copy) for the firm as a used sale. I don't know anything about this industry, though.

Guy

[Guy Berger]

I agree, but to me that kind of sounds like saying petty shoplifting isn't so bad when you compare it to armed robbery. Granted, this analogy is overly dramatic, but it captures the essense of what I'm trying to say regardless.

Hey, I'm not trying to argue that burning CDs is ethical. All I am trying to argue is that if burning CDs is unethical, then it seems to me that economics would suggest that selling/buying used copies is as well.

Guy (not an ethicist)

[J Larsen]

I agree, but to me that kind of sounds like saying petty shoplifting isn't so bad when you compare it to armed robbery. Granted, this analogy is overly dramatic, but it captures the essense of what I'm trying to say regardless.

Hey, I'm not trying to argue that burning CDs is ethical. All I am trying to argue is that if burning CDs is unethical, then it seems to me that economics would suggest that selling/buying used copies is as well.

Guy (not an ethicist)

Gotcha. I still think there is a distinction in the economics, though... I'll try to come back to this later. This has been a fun argument.

[GA Russell]

It appears to me that all of the participants of this thread except Alexander believe that the people here who participate in the BFTs are unethical. Am I right?

[The Magnificent Goldberg]

It appears to me that all of the participants of this thread except Alexander believe that the people here who participate in the BFTs are unethical. Am I right?

Er... not exactly. They're not legal, but not unethical, given that they introduce people to music they haven't heard and may not otherwise come across, resulting in sales that wouldn't otherwise have come about. Not ethically dissimilar to playing a record for a friend.

MG

Edited November 3, 2006 by The Magnificent Goldberg

[RDK]

THe CD-R copy is in effect a sale of that music for which the artist received no compensation/income.

And yet - in an example that probably hits closer to home for many of us - what if that CDR is of an album that we either wouldn't or can't buy otherwise: for example, an album by an artist who we're not sure we'd like, an oop album, or a rare/expensive import - or old vinyl? If it weren't for free radio, library loans, used LPs (and CDs), generous friends, and (more recently) on-line downloads, the breadth of my jazz listening would be much more limited than it is now. Heck, how does one go from Miles and Brubeck and Coltrane to Charles Tolliver, Misha Mengelberg, and Von Freeman without being exposed to them in ways other than buying their albums outright? It's hardly a "lost sale" when you wouldn't buy that artist's work anyway, but the exposure might give that same artist a sale down the road.

[RDK]

It appears to me that all of the participants of this thread except Alexander believe that the people here who participate in the BFTs are unethical. Am I right?

Er... not exactly. They're not legal, but not unethical, given that they introduce people to music they haven't heard and may not otherwise come across, resulting in sales that wouldn't otherwise have come about. Not ethically dissimilar to playing a record for a friend.

MG

So let me get this straight: charging friends to come over and listen to my record collection is wrong? Damn - there go my plans for the weekend!

[J Larsen]

What is a BFT?

[Aggie87]

What is a BFT?

Big Friggin' Taco

[Aggie87]

THe CD-R copy is in effect a sale of that music for which the artist received no compensation/income.

And yet - in an example that probably hits closer to home for many of us - what if that CDR is of an album that we either wouldn't or can't buy otherwise: for example, an album by an artist who we're not sure we'd like, an oop album, or a rare/expensive import - or old vinyl? If it weren't for free radio, library loans, used LPs (and CDs), generous friends, and (more recently) on-line downloads, the breadth of my jazz listening would be much more limited than it is now. Heck, how does one go from Miles and Brubeck and Coltrane to Charles Tolliver, Misha Mengelberg, and Von Freeman without being exposed to them in ways other than buying their albums outright? It's hardly a "lost sale" when you wouldn't buy that artist's work anyway, but the exposure might give that same artist a sale down the road.

I'll agree things get greyer and greyer when you're talking about OOP albums. I've made that point (I think) on previous threads about this same topic.

For imports and rare/expensive stuff, that's why you go to work, earn a salary, and hopefully have disposable income. That's why we all work, isn't it? To provide a living for ourselves?

But if it's something in print, but you wouldn't buy otherwise, why would you want to have a CDR of it? That's just theft again, to me.

I do agree with the point that it may result in a sale down the road, in SOME cases, but I doubt alot of the teens out there burning copies left and right for their friends are going to buy 50 Cent's next album because they got a burn of his last one. They'll just want a burn of the next one too.

[GA Russell]

What is a BFT?

I'm not a participant, but as I understand it the guys doing the Blindfold Tests make CD-Rs of songs they like, mail them to each other, and challenge the recipents to guess who the artists are.

If that's not right, maybe I ought to open one of those BFT threads and find out!

[J Larsen]

THe CD-R copy is in effect a sale of that music for which the artist received no compensation/income.

And yet - in an example that probably hits closer to home for many of us - what if that CDR is of an album that we either wouldn't or can't buy otherwise: for example, an album by an artist who we're not sure we'd like, an oop album, or a rare/expensive import - or old vinyl? If it weren't for free radio, library loans, used LPs (and CDs), generous friends, and (more recently) on-line downloads, the breadth of my jazz listening would be much more limited than it is now. Heck, how does one go from Miles and Brubeck and Coltrane to Charles Tolliver, Misha Mengelberg, and Von Freeman without being exposed to them in ways other than buying their albums outright? It's hardly a "lost sale" when you wouldn't buy that artist's work anyway, but the exposure might give that same artist a sale down the road.

I'll agree things get greyer and greyer when you're talking about OOP albums. I've made that point (I think) on previous threads about this same topic.

For imports and rare/expensive stuff, that's why you go to work, earn a salary, and hopefully have disposable income. That's why we all work, isn't it? To provide a living for ourselves?

But if it's something in print, but you wouldn't buy otherwise, why would you want to have a CDR of it? That's just theft again, to me.

I do agree with the point that it may result in a sale down the road, in SOME cases, but I doubt alot of the teens out there burning copies left and right for their friends are going to buy 50 Cent's next album because they got a burn of his last one. They'll just want a burn of the next one too.

I'm with Aggie on each point here, though I'll admit no-longer-ongoing behaviour in my recent past makes me a bit of a hypocrite. Got to run down to J&R this weekend and atone for past sins...

[Alexander]

If I'm burning a CD for a friend, then the artist got paid when I bought MY original copy. You are assuming that I didn't pay for the disc from which I am copying.

But now your friend is getting an illegal copy of that music, for which the artists etc received no compensation. Your original copy is fine and legitimate. Don't you get that?

From the artist's perspective, how is this different from a used CD sale?

Guy

My point exactly, thank you. In both cases, the artist was compensated once, when the original copy was sold new. In both cases, the music is passed on to another listener without compensation to the artist (or other copyright holders). If you object to burning on ethical grounds, you must also object to the buying/selling of used CDs.

I disagree. In the case of burning a cd, you have created a new copy of that music for which the artist/producer etc has never been paid what's due. 2 copies of the music, artist paid once.

There is a difference between that and the used cd, which DID pay whatever money was due. 1 copy of music, artist paid once.

Again, the end result is identical: Two owners, artist paid once. In the case of the used CD, it's only one owner at a time. In the case of the burn, you have two owners at the same time. How does the first instance make the artist any richer?

[Alexander]

Creating a CDR copy and passing it on to a friend means there is a market demand of two copies, and the artist has only been paid once.

The artist was only paid once on the used CD sale as well. This is what is so frustrating. You seem to think that the artist is bilked out of $18 in the case of the burn, but not in the case of the used sale. It's crazy.

Two people walk into a record store. Both buy a copy of the same album new. Both pay full price. The artist gets his cut of both sales.

Two people walk into a record store. One buys a new copy of an album and pays full price. The other buys a used copy of the same album. The artist gets compensated on the first sale only. (I know, I know. He was compensated on the original sale of the used CD).

Two people walk into a record store. One buys a new copy of an album and pays full price. The other says, "My best friend has a copy of that album. I'll go burn a copy of his CD." The artist is only compensated on the one sale. He WAS, however, compensated when customer #2's best friend bought the album from which he makes his copy.

I still fail to see the difference.

[Chuck Nessa]

I still fail to see the difference.

Who the hell started the idiot festival?