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Dana Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
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Moore’s Law defines the history of technology. It held that the number of circuits etched on a given piece of silicon could double every 18 months as far as its author, Intel co-founder Gordon Moore, could see. Moore’s Law has spawned constant revolutions since then, not just in computing but in communications, in science, in a host of areas. Moore’s Law applies to radios, and to optical fiber, but there are some areas where it doesn’t apply. In this blog we’ll take a daily look at new implications of Moore’s Law in real time, as it rolls forward to create our future.
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January 04, 2006

File Hoarding 1.0 Proves Bad Business

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Posted by Dana Blankenhorn

riaa-logo.jpgThe AP had a headline yestoday that Luddites and the RIAA will love. "File-Sharing Barons Face Day of Reckoning."

The story is that old file-sharing sites are closing up shop. The RIAA beat them.

But what really beat these shops was technology.

Systems like BitTorrent don't depend on a central site. Its legitimate uses -- for distributing software, and for breaking international censorship regimes -- are compelling. Many copyright holders, like GE, have found that releasing videos (like CC-Chronicles of Narnia) directly to sites like YouTube is good for business. MySpace (and its imitators) are giving music lovers what they really wanted, community. A host of companies are now working to make file sales online a legitimate business, and some, like Apple, are succeeding.

This is what users wanted. They wanted access to files, they wanted the copyright industries to come to them. Gradually, grudgingly, the industry is obeying the market. But the market won't sit around and wait forever. That's why music sales are declining. (That and things like Sony's Rootkit fiasco, which causes people to distrust all CDs and DVDs they see.)


Yet the RIAA continues suing individuals, and making a fool of itself.

Isn't it time the companies paying for freight for all these lawsuits took another look at what they're doing? Embrace the market, and stop fighting your customers in court.

Comments (2) + TrackBacks (0) | Category: Business Strategy | Consumer Electronics | Copyright | Economics | Internet | ethics | law


COMMENTS

1. Brad Hutchings on January 6, 2006 01:32 AM writes...

I'm gonna hazzard a guess that you don't have any non-techie friends. Because if you did, you'd know that the appeal of the file sharing networks is "free", plain and simple. It just seemed a hell of lot more anonymous and harmless than holding up the local Tower Records. There has always been "file sharing" in small networks (i.e. taping an LP for a friend) where one purchased seed could feed a few appetites, but there had not been near-instant, perfect-quality replication among a highly connected network, where one purchased seed could feed millions of appetites.

I have a friend who asked me if I could set up Limewire a few months ago, as a friend of this friend told this friend that one could get free music on it. These are 30-something adults who drive within 15 mph of the posted limits, pay their taxes, and pick up after their dogs. We're not talking hooligans. "Fortunately", this friend does not have broadband at home, so I could just say it wasn't gonna work well, rather than have to either give a moral and legal explanation of why it isn't a good idea or bite my tongue and do it.

What I learn from this is that keeping files valuable really does require two approaches. One is making them available legally, and that market is developing very nicely. The other is informing the general public that they are expected to pay for the files. When the BSA does "don't copy that floppy" campaigns or Lars Ulrich (prior to suing Napster) makes a plea to fans not to share files, they get ridiculed. So the industries sue egregious offenders and everyone gets bent out of shape. Frankly, I think they need to sue more people. The law suits are very much like the informal file sharing "networks" that preceeded Napster. If you had a friend who had a record you liked, you could tape it. Well, if you had a friend who has settled a suit with the RIAA, maybe you decide it's better to buy the music. Or if you're a parent and know that some other parent paid a few large because their kids became piracy kingpins, maybe you take a little interest in what your kids are doing on the net. The RIAA, in terms of numbers of lawsuits, is probably 1/100 of the way toward effective saturation by lawsuit. These things are known in the copyfight circles and not in the wide culture. It's not on the local ABC news. It's not on SNL.

Put another way, why in South Orange County, CA, a very large pocket of affluence, does the local PetsMart have 12V batteries in a locked case with RFID security tags on them? Because if they didn't, the batteries would grow legs and walk around the cash registers. People's behavior en mass does not suddenly turn choir boy when they get online. In fact, as evidenced by Napster, Grokster, etc., it probably turns worse and they've got lots of apologists egging them on.

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2. Jesse Kopelman on January 6, 2006 06:41 PM writes...

Software piracy is wrong (be it music, video, or applications). Is it more wrong than speeding? I don't think so. Both are serious only if taken to the extreme. The real issue, however, is how best to stop the piracy. I would argue that the correct answer is not litigation better pricing and means of distribution. For example, ring tones and music videos on demand have shown that you can charge an outrageous premium for delivering content in exactly the form people want. Meanwhile, it is very hard and very expensive to legislate peoples' behavior. Instead of working very hard and spending lots of money to protect the status quo of media distribution, content owners would be better served by working out new methods of distribution (iTunes, Rhapsody) that are less vulnerable to piracy. At the same time content developers need to take a hard look at the current state of affairs and ask themselves if they are really getting enough from the old school content distribution mavens to justify giving them the lion's share of profit.

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