What we call Digital Economy (ii)

Some paradigmatic changes

blog-Eso que llamamos economía digital (ii)When I was a young child and we visited my Aunt Cecilia’s house, I enjoyed three things: The milanesa o schnitzel; the occasional palace card game, especially in November, and listening to music on the audio recorder they had at home. At that time music was purchased on vinyl discs and the ones we could listen at home and in the recent cars radios with tape player was recorded on audio ”cassettes”. But my Auntie’s tape recorder was different, it had magnetic rolls that had to be inserted manually in the support from one end, we had to pass the tape through the magnetic heads and next we had to adjust the tape into the empty roll. It was necessary to rewind the tape in order to reproduce the sound. In this format, they had some tape with music of the fifties and early sixties. Today I only remember something of Joan Baez.

In my teenage years, I started my music collection. With the few savings of the day, I started to buy some singles and LPs vinyl discs. My goal was clear, to buy a new disc as often as I could. This way, my collection was slowly enriched with jewels like “The Wall”, the hits of “Queen”, or “Songs from the Wood”. But the most frequent way to obtain and save the music was recording it directly from the radio to a cassette, and sometimes from the original disc when a friend had it, and this method was better because the recording was of higher quality, but never equal to the original, not even with the – today mythical -1979 Walkman.

In 1987, I bought my first CD: The fabulous “Graceland” of Paul Simon, and this was the end of my vinyl discs purchases. Since then and until 2005 my music collection grew bigger, not only because of my increased purchasing power, since I was no longer a student, but also, let’s say it, because my musical preferences were becoming more eclectic. Without realizing at first, things had changed drastically, not only the CDs were smaller and easier to store, but the real change was the digital format, no longer analogical. Copying music from CD to CD not only was possible, but easy and cheap. The quality difference of the copy could be seen on the packaging only, not in the content itself. The formats increased, and then copying a friend’s music wouldn’t take an afternoon to copy 10 LPs, now we could copy from one device to another hundreds or even thousands of songs in minutes. The music industry saw its business model become obsolete, losing most of its revenue to piracy. At that time, I frequently moved from a country to another. Each time, almost all my CDs were travelling with me. But there was still a non-negligible cost to transport them.

In 2005 I bought my first iPod and this meant a new transformation of my music collection. On one hand, I spent long nights copying my favorite songs from cds to my music library; on the other hand I could buy online songs directly from the online store. When I travel today, most of this music travel with me, and the rest or my collection is saved on a cloud storage and could be listened at all time, via an internet connection. The sales model for downloading music created a real revolution in the music industry and according to several sources, it saved the industry. It seems that the same people who were ready to pay two dollars for a pirated CD were also ready to pay one dollar for an original and legal song.

There is now a decade since my first iPod, and the music industry has suffered a new shock. Soon, buying music, even downloading it, is something that could become obsolete from one day to another due to the coming of subscription music services which allow you to listen, for a periodic fee, the music you want, whenever you want, almost always with internet connection but including download options to listen “on the way”, even if the mobile connection is growing by the day and more and more airplanes have a Wi-Fi connection on board.

At my mother’s house in Quito, the vinyl CD collection is still there. There are some jewels that I don’t want to lose: Caruso’s music, some great American jazz groups, Carlos Gardel. Since these LPs were recorded and until after 2000, the business model has been changing. From sales of goods on one hand and payment of copyrights on the other hand, with many intermediaries including international sales operations. Direct and indirect taxes, including duties, were more or less clear. Since then, the music sales has been transferred from tangible to intangible goods, first, and now to services. Taxes and their administration also grow more complicated by the day.

Good luck

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1 comment

  1. Ave Fenix Reply

    It´s really interesting your point of view, and the way you tell us how the time make us change our customs and the way we usually see the things. I think that it´s an interesting way to see how the digital economy works, and how our Tax Administrations have to work on it to find the way to avoid the non-compliance pay of taxes of the services used by the digital economy.

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