Is Netflix Ruining Culture?

People certainly have strong opinions about what has happened to media and pop culture in our internet age. Depending on who you ask, the music, books, and other products that digitization has made possible either represent the unfettered expression of man’s noblest creative potential, or they are garbage not worth the electricity they took to transmit. Any critic can muster a few examples of gems or garbage to support her case, but systematically exploring the effects of digitization on culture is a much larger and more difficult task.

This systematic exploration is possible, though, and I know because Joel Waldfogel has done it. In Digital Renaissance: What Data and Economics Tells Us about the Future of Popular Culture , Waldfogel undertook this ambitious project while keeping his findings relevant and accessible even to lay audiences.

First, we must ask the right questions about the proposed digital renaissance. Social and technological changes are rarely, if ever, inherently “good” or “bad.” Instead, change impacts people differently. Clearly, cultural industry incumbents have experienced disruption recently and they’re employing fewer people. With computers, it takes far fewer employees to produce a show or movie, and those Blockbuster stores don’t need cashiers anymore either. In this respect, the individuals who held media industry jobs that no longer exist have been harmed by the digital renaissance, hopefully temporarily. (Although high-​profile artists who earn slightly less money than they would have otherwise are a slightly less sympathetic sob story.)

But it would be nearsighted to complain about the costs associated with digitization without also tallying up its benefits. The media establishment does face increased competition from indie shops. The ease of digital piracy has eroded the value of copyright protections. At the same time, media production and distribution have become dramatically cheaper. Media companies are also able to reduce their risks by signing artists with previously established commercial potential (e.g. self-​published authors, YouTube stars) rather than trying to discover them on their own, as was formerly the practice.

In any case, copyright protections are supposed to incentive cultural production, not to protect corporate profits or specific jobs. While the costs of the digital renaissance are mostly concentrated among a few incumbent media companies, the benefits of cultural digitization are widely diffused throughout society. So the right questions to ask are not ones like “did streaming radio harm record sales?” or “was it wrong to let Netflix to put Blockbuster out of business?”

Instead, we should keep an impartial bottom line in mind: culture’s overall utility to society at large. The right question, per Waldfogel, when technological or legal change occurs is “What will happen to the quantity and quality of new cultural products?” And, as it turns out, the digital renaissance has delivered on the promise of greater quantity and better quality of cultural products.

When it comes to music, movies, television shows, books, and photography, Waldfogel finds clear indication that the rate of production for these artifacts has sped up. And quantity has not come at the cost of quality. The best recent cultural products compare favorably to their historical counterparts, according to both regular consumers and experts/​critics.

One big driver of this digital renaissance has been the “nobody knows anything” factor inherent in culture. Even at the former heights of their commercial success, media industry actors like movie producers, literary agents, and various talent scouts wielded only a very limited ability to predict who and what would be popular with the general public.

This “adult supervision” of culture appeals philosophically to the self-​proclaimed protectors and inheritors of high culture. But “adult supervision” (i.e. gatekeeping) doesn’t straightforwardly translate into more utility for consumers. Ordinary people do face a more cluttered consumption environment than pre-​digitization, but it’s a good and worthwhile problem to have. An increasing amount of value originates from the long tail of moderately popular or even niche cultural products, which never would have come into existence but for digitization.

Waldfogel’s breezy prose and clear graphics convey well the extensive and sometimes complex evidence that backs his narrative. Each of these industries has its own fascinating peculiarities. For instance, illegally downloading songs displaces song purchases at a much lower rate than illegally downloading movies replaces movie purchases. I also appreciated the walkthrough of the math behind “bundling,” which I’d never bothered to consider before. And I’m impressed with how Waldfogel constructed a statistical measure for the over- and under-​representedness of different geographical regions in each other’s Netflix catalogs. You’ll have to read the book for all the fascinating details. (I would have been interested to hear Waldfogel’s take on pay-​what-​you-​want media, which had a moment a few years ago.)

Despite allegedly being a book about the future, Digital Renaissance is primarily about the past. But Waldfogel’s findings do imply plenty about the future. He leads the reader towards this conclusion without hammering on it: if the production of culture proceeds apace despite the advent of digital-​era piracy, then copyright as presently conceived has outlived its usefulness. Effective copyright was supposed to facilitate continued investment in cultural products, but it seems those investments are still happening anyways despite, or even because of, the weakening of effective copyright protection. Plus, enforcing existing copyright law is not costless and keeping impotent laws on the books is not great for the rule of law in general.

A full repeal of copyright protections probably isn’t necessary or possible. However, growing pains like technological unemployment notwithstanding, the erosion of copyright in practice does not seriously threaten our cultural future. This is very good news for libertarians who see a conflict between intellectual property rights and other rights, like the so-​called “physical property right” to do as we please with our computers.

There is one kind of digital critic who I’m sure won’t be placated by Waldfogel’s arguments. It seems plausible that consumers like cultural products today at least as much as consumers in the past liked the cultural products they had then. But this observation doesn’t actually exclude the possibility that we live in a culturally-​debased world, where consumer taste has objectively declined. Ultimately, that’s not a question that an economist can answer, so I think he’ll have to bite the bullet on this one.

Let’s just grant, for the sake of argument, that consumers today are in some sense aesthetically less advanced than their forebears. (I have no strong position on this question.) Even still, public policy would remain a poor tool for remedying the matter. The future of copyright should be based on evidence rather than the I-​know-​good-​art-​when-​I-​see-​it judgments of the few. Increasing overall consumer surplus is the proper policy goal, even when those consumers are imperfect in various ways.