File-sharing and business models

This evening I had an interesting discussion with my dad and sister about filesharing. It all started when I mentioned the Kindle at the dinner table. The things we discussed were rather standard. But one thing leads to another…

About an hour later, I noticed that there is already a business model out there that is similar to one in which filesharing is legalised. That is the ‘free1 software model’, implemented most notably by major Linux distributions. This is a rather fuzzy definition of the ‘free software model’, and there are many nuances. But for now, make your mental picture something like the GNU Public License (GPL), where the only real condition on redistribution is keeping the GPL and providing source code (again only roughly speaking).

With the free software model, businesses don’t usually charge for the software itself (because of the way in which redistribution can occur). Instead, they have found ways to sell services supporting the free software. Moreover, it seems to work, otherwise there wouldn’t be companies doing it…

I was quick to point out to myself that there are differences between (free) software and the music industry. After all, free software is built on the principle of substantial rights associated with licensing of a product (redistribution, inclusion of source code, etc.)

But this isn’t really an inherent, essential difference. In fact, it could be the difference that is causing the record industry to lose squillions2 every year.

File-sharing (legal or otherwise) is widespread. It shows that people naturally want to have more rights to redistribution of music, because they are doing it even though it is often illegal. By ignoring this demand, and instead providing essentially the wrong product, the record industry is, to put it very lightly, completely missing the point.

Lawsuits aren’t working to rein in illegal file-sharing very much at all. Record companies need to either accept that they are obsolete and disappear, or find new services they can offer other than simply distribution of music (no prizes for spotting a false dichotomy here though). It’s not the ‘pirates’ who are causing the record companies’ financial losses. Rather, it is the fault of record companies themselves for being so out of touch with their target market.

Footnotes:
1 I am not going to get into the beer/speech divide here. It’s covered to death elsewhere.
2 A very scientific unit of measurement, defined by (inter alia, in all likelihood) the epic P. Bursill-Hall

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