For Bob: the free rider problem

Thanks to Bob for giving us some really nice food for thought! Bob brought up the free rider problem – who creates the content vs. who merely consumes content? How do systems of distribution or exchange guarantee that content producers are fairly compensated for their work?

The free rider is a problem only in economies such as capitalism, where property is privately held. In systems where there are significant common resources available (feudalism, communism), there are no free riders in the pejorative sense, because everyone uses the common resources freely and that is economically normative. Such systems also normally contain collectively understood work obligations – all can withdraw resources from the common account because all deposit value through their work.

In our own, admittedly somewhat utopian thinking, those of us on the young internet left (like the Swedish Pirate Party, which just took a seat in the EU Parliament!), want to use the internet if possible to transform the capitalist economy by growing a body of commonly available resources, a new non-commercial commons.

In general, the problem with free riders is that they eat up bodies of resources without contributing to those bodies. In the case of digital file sharing, the main distinction is between users who “share” content, by both uploading and downloading, and those who only donwload (the free riders). As a recent research paper in Business/Econ argued, those who take files without giving any in return use up one key resource: bandwidth. They slow down the network for everyone hooked into it, making it incrementally harder for each individual user to upload and download files, and they do so without offering any files in return.

But this same research paper also argues that internet free riders can have a quiet, often unnoticed benefit: they are likely to become uploaders or sharers by accident, because the programs they use to find content are designed to automatically share whatever content they have previously downloaded. The default setting in many P2P programs is to put downloads and uploads in the same folder, to handle all files in and out through that same location. Users can normally change these settings at will, but free riders are the type of users who don’t bother with more advanced settings, looking for a quick fix download – and thus, they end up sharing files anyway.

This trend is especially visible in recent episodes where the MPAA or RIAA tried to sue a group of kids for uploading who “didn’t know what they were doing” or “just wanted to download.” I think there is good reason to suspect that a large percentage of people who share files at all are not interested in these P2P systems and how they work, but just want to download the songs, movies, etc. that they like. Most downloaders are not proud pirates intending to upload, but they use software that uploads on their behalf.

From this perspective, the internet is unusual as a system of exchange because it is full of free riders, and still delivers unprecidented amounts of content, both free and paid. What do we make of this? Can we argue that P2P systems are a unique type of exchange system, one which tends to multiply free riders for their side effects, so to speak? Do free riders matter where transactions are non-commercial, I mean non-monetary? Interesting stuff, and I’m sure we could generate further important questions at will.

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4 Comments on “For Bob: the free rider problem”

  1. P Says:

    Obviously this post requires a more substantive response than the one I am about to give, but:

    I would quibble with your interpretation of Bob’s definition of a free rider – or at least the type of free rider with which he seems to be most concerned . I think what he is suggesting is that the free rider is one that consumes (for example) content without compensating the creator in cases where the creator is basing his/her livelyhood on such compensation.

    In these cases any user of a p2p network trading in unauthorized content, whether an avid seeder or a big time leecher, is going to be considered a free rider. Thus, the key resource they are consuming would not be bandwidth, but content.

    • pizzapelsa Says:

      Okay, assuming that it is content we are talking about, and not bandwidth:

      The model of recorded music sales invented in the 20th century was based on a broadcast model, where large companies, often those which owned the media technology for broadcasting such content like NBC or BBC, sent out content produced by a handful of superstar artists to a mass of consumers. In this model, at least in theory, there are no free riders. Consumers could not copy media, because the machines they used to get media were radios or phonographs, which played sound but didn’t record sound. The only way to experience sound was to purchase a receiver or purchase a recording and a player. This is what the RIAA has in mind when it protects copyright on recordings – a corporate monopoly on media distribution. The idea here is that there cannot be free riders, access to media content = paying for it.

      People have also envisioned a small business model of media distribution in which there are more sellers and more creators of content – more artists, whose works are sold by many smaller distribution companies. These smaller companies (e.g. smaller record labels) commonly have to take on more artists than the majors do, because they take a smaller cut of record sales. Prices and profit margins would decline, number of users would increase, and users would have more opportunity, more chance, to start producing content, getting picked up for distribution. Such an economy is still commercial, but it is oriented toward being inclusive – affordable for consumers, who are more often eligible to become producers. Free riders pose the exact same threat to small businesses as they do to larger corporations, only in smaller measure (smaller sums of money are at stake).

      But what does a “free rider” mean for non-commercial and digital exchanges? Here, no money changes hands – content is bartered, so to speak. What’s more, when the resources changing hands are digital, each downloader does not deplete some other body of resources – the files s/he downloads are copies of the originals. The free riding, I guess, comes in the moment the media is ripped – the moment the commodity (the CD) is turned into a shareable digital file. Thereafter, the file can be shared, sold, copied at will, etc.

      The record companies big and small, and the artists whose work they sell, have no financial interest in the P2P networks. From their economic point of view, these networks pretty much create free riders, riders who have short-circuited economic exchange by freely acquiring copies.

      But these networks also create new fans who may later purchase recordings, pay to see a show, etc. They often expose consumers to new products to consume in a trial version. They can convince free riders to buy into the system, to become sharers.

      The big questions here, I think, are a few:
      1. Are there some large scale systems of distribution which are non-commerical, if still “economic” and based on exchange in some broad sense?
      2. Are there some large scale systems of exchange or distribution that actually “want” free riders, in which free riders are somehow “functional” as functionalists would have it?
      3. Do free riders pose unique problems for digital exchanges that they don’t pose for analog exchanges?
      4. Do digital technologies create a new free rider problem?
      5. Who is really more threatened by digital technologies, artists or the corporations who sell their products?
      6. Is open source culture an attempt to subvert capitalism and build what social scientists call a “gift economy” ( Is that why commercial culture producers and distributors are so threatened by it?
      7. Does open source mean a system immune to free riders?

  2. P Says:

    I’ll pose answers for a couple of these:

    3 & 4: I think that it’s not that digital technologies create “new” free rider problems, it’s that they exponentially expand the scope of the free rider problem. Advancements in analog consumer media technologies lowered the horizon of unauthorized duplication to some extent (i.e. “Home Taping is Killing the Music Industry”), but with digital technologies, the horizon is more or less obliterated.

    You no longer even have to buy blank tapes to make copies of movies or music. With the most basic computer know-how, you have free access to more or less any piece of corporate or independent media as soon as (or before) it’s released.

    But keep in mind, commercial media distribution has not remained static during this period, vis a vis notions of ownership. The 20th century model assumed that when you buy a book or a record or a movie, you might share your singular copy with your friends. With the rise of encrypted audio files and devices like the Kindle (here, for instance,), this is no longer the case. You no longer own a copy of the content (for the reasons stated above, such notions of digital content ownership now border on the absurd), but rather the official right to access that copy of the content under the terms dictated by your EULA.

    Because copies of digital media are so effortlessly and infinitely reproducible, I think the only way to understand a “free rider” here is somebody who bypasses the toll road when he or she accesses media. The threat of p2p is the wholesale evaporation of the commercial market for media. Which brings us to:

    5. Who is more threatened. Obviously, it is the media distribution corporations who have most at stake (in terms of aggregate dollars and inherent needs of the business model) in the 20th century model we’re talking about. And they are also presumably the ones feeling the biggest economic hit. I will go out on a limb here and admit that I don’t care. We are increasingly getting to the point that there is nothing their system can create which cannot be done just as well by independent producers. Culture will go on without them, probably for the better.

    However, Bob’s original comment about free riders gets at a more pressing question. Will p2p networks also make the work of independent media creators economically unsustainable. This is certainly what corporate media interests want us to believe (in that they want to make themselves indistinguishable from the actual creators of the work they sell), but I think we need to really investigate whether it’s true.

    One thing to consider: Do we imagine that independent producers/distributors and the consumers of their work tend to develop more durable relationships than than corporate culture distributors can evoke? For example, a rabid fan of Kanye West probably doesn’t care deeply about the well-being of the corporation that sells his records. The fan of an independent musician interacts directly with the artist and therefore intertwines commercial and emotional aspects of the relationship. Does this speak in a substantive way about the fate of independent artists in the age of digital reproduction?

  3. Bob Says:

    P was correct in saying that my concern in my earlier posting was in how the creator of the content gets financially compensated for his/her efforts and if she doesn’t, then won’t she create less of it because she has to do other things to survive? Maybe that’s not an issue as she’ll have time to do both. After all, as I recollect, Einstein did most of his most productive work on relativity while working at the Swiss customs office or some other Swiss government agency. Presumably, he wasn’t getting paid for his work at the cutting edge of physics.

    That said, though, I do worry about such things as newspapers going out of business because they can’t compete with “free” news available on the web. Sure it’s true you can get lots of good (and bad) “free opinion” on the web, but I wonder who is going to take the time to do all the important investigative “factual” reporting that needs to be done on the ground, if people don’t get paid to do it. And can they (will they) get paid if the content is free? Now it’s true that people like I.F. (Izzy) Stone made a living at investigative reporting years ago and maybe others can follow his lead, but I think they’ll be a lot less of it as news gets owned “in common” Does the same apply to music? I don’t know.

    Question: Is your concern with individual private ownership of content on the web and elsewhere or with corporate ownership? Can one make a distinction? Is it ok for Ani DeFranco to own her music and market it to people who like it as long as it’s not a middle man who makes the money from sales? (sorry for the old fashioned reference but we still get postcards from Righteous Babe Records based on interests of a family member from long ago)

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