Selling Copyrighted Materials Is Not a Sustainable Business Model

With all the technology advancements, “piracy” spread – we are talking about “stealing” mp3’s and DVD rips. This leads to stern measures by governments to counter “stealing”. Including the recent SOPA, which is condemned by many internet leaders, including Sergey Brin and Jimmy Wales.

The debate is old and lengthy. Is it really stealing when the original is preserved, how exactly are the money divided between producers, labels, studios and artists, are government regulations against the rights of consumers. These are hard questions, but we don’t have to answer them. Because there is a higher-level question – is the business model of selling copyrighted materials sustainable? What if the music industry didn’t exist and you went to a VC today, proposing your business model. He’d reply that you just can’t stop people from copying the material without regulations, and you can’t make the government pass these regulations. But the music industry, and the film industry, are older than the technology, they have the money and influence, and they can make the government protect their business model. But in a pure capitalism the government would not interfere in the market. And this business model would fail in the open market.

I’m not saying this is good. Creative work – music, movies, books must be rewarded. And quality and distribution depends on money. So ultimately, these industries need money to give us better products. But they can adapt their business model to the market. This will not be the first business model that fails because of emerging technology. Is it too big to fail? I believe not. Will this drive quality artists out of business? Perhaps. Should the government interfere in the market with such regulations? Sometimes yes. But in this case the regulations aim to protect the interests of studios, rather than that of consumers.