The digitization of media content is fundamentally changing and transforming the entertainment industry. To be a competitor in the digital age, understanding those changes is becoming increasingly more important.
Michael D. Smith, Professor of Information Technology and Marketing at Carnegie Mellon University’s H. John Heinz III College, knows the need to understand and comprehend these changes. So when he disagreed with a recent New York Times Op-Ed on digital piracy “Internet Pirates Will Always Win“, he decided to respond in a post on the blog Digitopoly.
Here is an excerpt of Smith’s response, “Anti-piracy regulation and competing with free” :
“…Nick Bilton used the metaphor of “Whac-A-Mole” to suggest that the creative industries are hopelessly naïve in their efforts to regulate online piracy. The editorial,“Internet Pirates Will Always Win”, argues that anti-piracy regulation is a lot like Whac-A-Mole: hitting one target only causes two or three new targets to emerge — content identification systems can be fooled, shutting down some sites only causes new sites to open, and new filesharing protocols make it harder and harder to monitor pirate activity. In a way, the argument parallels the “you can never compete with free” arguments that have been advanced by those in favor of anti-piracy regulations, but this time with a very different conclusion: Because you will never stop piracy, the creative industries should stop trying.
“Those who don’t know history are destined to repeat it.” Edmund Burke (1729-1797)
The problem with this formulation of the “competing with free” argument is that it doesn’t learn from the history of online price competition. Harken all the way back to 1998 where conventional wisdom said that the Internet would allow consumers to easily find the lowest price and therefore would inevitably lead to “fierce price competition, dwindling product differentiation, and vanishing brand loyalty.”
This argument seemed plausible enough: Why would you pay more for something that you could get for less? Unfortunately, the argument ignored the power of product differentiation.”