Fonts and RIAA

Tim Oren turns his not inconsiderable pirate skills on the rich prize what is the dying music industry.

He makes a fascinating point that the Ticket Master monopoly might be the big winner in reshaping the industry. On the other hand the dollars may just go someplace else, never to return.

He points our that there will always be a top 40, the power-law curve is always there. I certainly agree, there will always be a top 40. But, three points temper that. One: The market share of that top 40 can decline substantially. Shifting the wealth out into the tail and lowering the slope (or exponent) of the curve. Two: The slope of the power-law curve depends on, at least, two things. The strength of the bottlenecks in the market, and the scarcity of information available to buyers. The net acts to undermine both these. This is true across the all the information industries. Third: durable are positions in the top 40? Saying there will always be a top 40 isn’t the same as saying there will be another Beatles.

Picking possibly winners, like Ticket Master, is a fun way to look at the problem. Maybe the winners are the equipment makers, maybe the platform vendors.

All this has reminded me of a story I find useful to revisit whenever I’m thinking about the role of DRM in these markets. It’s the story of what happen to the Font Foundries. They were almost innocent civilians, collateral damage, in the platform wars back in the 1980s.

A huge demand emerged for high quality fonts in the 1980s as the price of high quality printing fell. On the one hand olde font foundries wanted DRM on their IP. On the other hand there was an explosion in demand for high quality fonts due to the arrival of laser printer and it’s complements.

Adobe stepped in between these two and offered a DRM solution coupled with a bundle of other stuff. This solved the problem faced by the font foundries. Adobe needed access to source of quality fonts. But the bundle that Adobe offered threatened the platform vendors. The bundle that Adobe pulled together solved two problems. The print driver problem. Adobe really irritated the platform vendors with Display Postscript which offered to solve the display driver problem.

Technically, operating systems are not much more than bundle of device drivers – i.e. they solve the rondevous problem between hardware and application software. You can’t compete in markets like this without huge flexibility in pricing. When bootstrapping the network effect you desperately need to be able to match the price of the competing solutions. In software, where marginal costs are close to zero, that often means zero.

It’s hard to sell something at zero price if you have to pay a unit cost to some other vendor buy some random component part. In this story Adobe threatened both Apple and Microsoft in just this way.

This is one of the problems you can solve with industrial standards. Industrial standards allow components to be comoditized. So Apple and Microsoft got together and put forth an reasonably open standard for font encoding, and for the display. The display standard never took fire. But OpenType(r) did.

The platform vendors weren’t targeting the font industry. They were targeting Adobe. Adobe had somewhat incidentally solved the DRM problems of the font foundries. Adobe cared about high quality fonts. High quality fonts were pretty low on the agenda of the platform vendors.

I find this story fascinating because what happened next. Billions of fonts appeared in the market.

Good fonts had been scarce. The font industry saw to that. Suprise, good font designers were not scarce. Lots of talented font designers were hiding out in the art schools all over the planet. Their motivations to create new fonts? Well it wasn’t fame and fortune.

Out of the long tail of the power-law curve we saw billions of horrible fonts appear, thousands of good fonts, and occationally really really great fonts It was a font bubble!

That forced Adobe to back off on the DRM. Adobe couldn’t afford to lose the attention of the font designing community. They had to move fast to assure that font designers built fonts for their platform at least as often as they built them for the new OpenType(r) font platform.

To this day it’s still the case that the traditional font foundries horde the IP rights to some wonderful and beautiful fonts. That means that those fonts are rarely seen.

I see a very similar future in the cards for the music industry. I suspect we will see a bloom of new music from the long tail of the curve. We will see some moves by various players to try to keep up with the new more open distribution channels. Other players will cling to the old model. Much of 20th century music will become rare (loose market share, become more rarely played, etc.) just as many beautiful fonts are now rarely seen.

Locked up in the old business models.

This kind of displacement – margarine for butter – is a common downside of shifting technology and business models. You seem to have to just lump it. Those aspects maximized by the olde winners are rarely the same aspects maximized by the new winners.

Tim notes this and other things in assorted posting about how the movie industry seems more clueful, how there is some sign that alternate kinds of entertainment (video games?) maybe grabbing consumer dollars from the music industry, and how on some days it looks like content is just the necessary evil of a rising tide of communications.

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