On Piracy and The Future of the Entertainment Industry

I'm a "pirate." Everyday, I steal. I steal music, by downloading it from music blogs.

I steal movies, by downloading them or streaming them from websites.

I steal information, by reading it online.

Except that stealing information isn't exactly stealing it. Websites everywhere are giving it away. People set up blogs for the sole purpose of giving away what they write for free. News organizations do the same thing all the time: they post content on their website, and give it away freely.

And stealing music and movies isn't stealing either. It's piracy. Stealing removes the original, while piracy merely makes a copy (see this diagram by Danielle for help understanding this concept).

So what is the difference between the print publications (those, not including the Globe and Mail, that realize they can still have a profitable business by giving away content for free) and the entertainment industry that refuses to change its business model in the face of the internet?

Its not like there aren't successful examples of entertainment organizations giving away their content for free and exploring different models.

Michael Moore recently allowed his film "Slacker Uprising" to be downloaded for free. Techdirt reports that Wayne Wang (director of the Joy Luck Club and Maid In Manhattan) is giving away his most recent film for free via YouTube.

As I've pointed out before, BMW gave away a number of short films they created with actor Clive Owen. There's no reason that kind of model of corporate sponsorship (in exchange for product placement) can't work in a future of legal, free downloads.

Similarly, both Radiohead and the Nine Inch Nails have seen a great deal of success in giving away albums or allowing fans to pay what they want for them. Rapper Lil Wayne is constantly giving away his music for free, and that hasn't stopped him from near-record breaking sales.

At least one record label seems to understand this concept, even if their hosting company doesn't. According to this story, Quote Unquote Records worked on a model that allowed fans to download albums and songs from the label's catologue for free. Unfortunately, the company that owned the space they were hosting their content on didn't understand this concept and took down their site for copyright infringement.

South Korean Jin-Young Park also seems to get the new economy. According to an article in Portfolio a few months ago, his entertainment company (I hesitate to call it a music label) is worth over $100 million US, and music sales only make up a small part of that fortune. That's because Jin-Young Park recognizes that the music promotional, and can be used to sell other products and services that his company offers related to that music. This includes concert tickets, cell phones and more.

Oh, and to the American record labels that are lamenting the loss of revenue as a result of declining CD sales: Jin-Young Park created his company in a country where CD sales declined 80% from 2000 to 2006.

The world has changed, and the failure of organizations to realize that they will be unable to profit in ways that they were accustomed to will be their downfall. Those that are capable of adapting will prosper.