Sunday, January 18, 2009

Economists take note

Those of you followed and figured out what was going on behind this post will doubtless want to read on. The analysis that follows is my response to people who believe that piracy is good or neutral for comics sales. This analysis will deal entirely with demand, because, quite frankly, I don't really understand how the free supply of comics on the Internet affects their supply curve.

Relative to its demand and price (P), there are a few relevant groups for each comic:
A1) People who demand a comic at or above P and pay for it.
A2) People who demand a comic at or above P but download it for free anyways.
A3) People who demand a comic, but at below P, so they download it for free.
There's also another very important group of people for this analysis: people who don't demand a comic, but might if they were exposed to it thanks to piracy. And once those people download that comic and start demanding it, they will fall into one of the three above categories (B1, B2, B3).

In the debate about whether piracy is good for a comic's sales, the key question is this: which is larger, A2 or B1? A3, B2 and B3 people won't pay for the comic anyways, and A1 people already do. But A2 people are the people who would pay for the comic, but don't because piracy allows them not to. And B1 people are the people who aren't paying for a comic but will once they've read pirated copies of it.

Most of the arguments for piracy track these categories. They contend that there aren't many A2s at all, our that they themselves have often been B1s. Well, obviously, there's no way to know how many A2s there are. Simple human psychology suggests that a decent number of people will respond to incentives by taking things for free they would otherwise have to pay for.

But the existence of many B1s is what I'm most skeptical of. Because, what do we already know about them? We know that they're willing to download comics for free. Which gives us some reason to believe that they will continue to do so.

To put this is simpler terms and drop the labels: to believe that piracy is good for a comic's sales, you'd have to believe that the number of people who will pay for that comic after downloading a pirated copy is greater than the number of people who download pirated copies even though they would pay for the comic if they had to. For the reasons I outline here, I think that this is an implausible thing to believe.

Of course, these are empirical questions that only data can conclusively resolve. But in the absence of that data, we should still do the best speculating we can. These are my best speculations. And, even if you disagree, I hope you find the framework useful.

1 comment:

Tom D said...

The 8 Feburary 2009 DC Comics podcast (URL below or in iTunes) has a discussion on downloading toward the end.

The DLer's argument is the usual amalgam of "not as good as they used to be" and "I sometimes buy things I download" thrown together as convenient. I think he gets thrown a bit off, rightly, by the derision he gets from the DC crew but then the main editor tries to feel out his reasoning a bit more.

It turns into a discussion on "Event" comic arcs vs. stand-alones. Which voiced something that I think is part of why I don't buy comics as much as I used to, though I have never downloaded.

Prices per issue have gone up, but the return per issue could be said to have gone down because of all the event arcs. That, or you feel like your $3 commitment is really a $30 commitment to 10 issues so why bother if you don't already know?

http://www.dccomics.com/media/podcasts/DCComics_2009-02-08_Sunday_with_Dan_Didio_New_York_Comic_Con_2009.mp3

Personally I don't download music but I don't have much of a problem with sharing music at work, much of which was probably downloaded with the remainder being legally owned by co-workers. The reasoning / rationalization I use is that the share of my money that goes to the artist is pretty low and I don't really feel like Capitol/EMI/&c. actually improves the quality of the music experience...

The comic experience is a little harder to create at a keyboard. Maybe Kindle or a netbook would work.

I'm interested in seeing the Marvel iTunes business.