Only days after my piece on Radiohead’s open pricing policy, another music industry dinosaur announced a significant shift in business philosophy. Madonna is leaving Warners, her record label of 25 years, to sign a deal with Live Nation, a company primarily interested in concert promotion. It has been widely regarded as an acknowledgement of the declining importance of album sales over other forms of revenue for the music industry.

These recent business ideas are discombobulating the music industry, but the concepts of free data and reputation trading are quite familiar to another group of cultural artists – Software Developers. Software Developers and Rock Stars now have a lot in common since the world went digital. Both professions are trading in pure information, the product they produce, and sell, is nothing more than data – easily reproducible, distributable, storable, stealable.

Data is a post-scarcity commodity. Post-scarcity, as the name suggests, is the successor of scarcity, upon which our current economic systems are built. When you consume scarce goods – eat a chocolate bar, or buy a CD – there is one less of that commodity in the marketplace. But when you consume a post-scarce item – download an application, or an mp3 – you copy it. Meaning there is now one more of that commodity out there, not less. This is how the success of a post-scarce product is measured, by the number of times it has been reproduced.

And this is of course very similar to how the music industry works. Or how it would work if you were to take the record companies out of the picture. In a crowded marketplace the greatest issue for a new band is being heard, getting their music to as many ears as possible, not maximising the profit on shifting units. There are a hundred thousand people with the talent to write a great song, but there are only a select few who can attract a wide audience with it. This initial recognition has nothing to do with the pricing mechanisms of CDs, it is to do with reputation. Kudos is the main commodity of agalmic economics.

It might sound crazy to a traditional capitalist to give away one’s goods and services, but this is what Open Source Software Developers have been happy to do for years, and what digital music artists are now coming on board with. Both groups make their reputations this way, to enable them to stand out from the crowd and make themselves a marketable commodity.

When Kurt, Keef or Kat smashes up a guitar at the end of a set it probably doesn’t make the best sense to their accountant, but it does to the audience. This what rock and roll is about. Just as giving away free code is what the Open Source movement is about. There is probably no easily measurable correlation between number of guitars smashed and CD’s sold, or indirect kudos benefits reaped for every line of code given away, but it is clearly an important economic factor.

Radiohead’s (and others) decision to give away their music, and to a lesser extent Madonna’s shift of focus away from CD sales to concert promotion, are reflections of Open Source principles creeping into the mainstream. It is not the production of the commodity that is the revenue earner, but the kudos gained off the back of it. The Rock Star will cash this in with tours, merchandise, personal appearances etc. The Software Developer cashes their kudos with consultancy, corporate commissions, and conference appearances.

As for me, I only got into programming for the chicks.

This entry was posted on Thursday, November 1st, 2007 at 11:40 am and is filed under agalmics, culture, music, open source, philosophy, tech. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.