INDUSTRY ANALYSIS
P2P and the Return of Customer Choice

Through its RIAA (Recording Industry Association) and MPAA (Motion Picture Association) enforcement units, the entertainment industry has been riding rough-shod over consumers ever since Napster -- the original, not the ghastly Napster II -- showed up online.

Napster's appearance represented the first act in a commercial revolution that pits ordinary people against the corporate interests who've been in control ever since the first recording cylinder and first movie were made.

During the entire twentieth century, consumers took what was given to them. They liked it or lumped it.

But that's not the case any more.

Fighting Technology

"The music industry has made great efforts to stop peer-to-peer music sharing. Those efforts include suing individuals in the U.S., the attempt to do so in Canada and lobbying efforts to lawmakers," wrote the Canadian freelancer David Canton in the London (Ontario) Free Press.

"The music industry is trying to use the law to prop up an outdated business model," he added. "This is no surprise as the entertainment industry has a history of trying to prevent new technology. They tried to stop the VCR (the Sony (NYSE: SNE) Betamax case) because they feared it would cost them revenue, but quite the opposite has proven to be true."

Canton has the picture firmly in frame, but what's interesting is not so much when his story appeared but where it appeared.

You could almost call the Free Press a grassroots daily. When stories such as Canton's start turning up in this kind of media outlet, you know the writing is on the wall.

P2P and the Return of Customer Choice

"Consumers" have become "customers" again. And they're exercising their choices and hitherto blocked-off rights in ways never before available to them.

It used to be that you bought a single, LP, CD or DVD knowing you were shelling out for two or three decent tracks -- if you were lucky. The remaining tracks were probably garbage.

Or you went to a movie hyped by trailers only to find that it had two good scenes.

Now, thanks to P2P, you can sample the entertainment industry's goods -- all of them, not just catchy bits with hooks -- and then decide if you want them.

The Big Music cartel -- with only four members -- and the major studios claim their businesses are being devastated by file sharing. But this is nonsense.

File Sharing and Sales

Mel Gibson's The Passion of the Christ was the most-posted movie on the P2P networks in April. But it's now achieved another record: After doing gangbusters in the theaters, it has so far sold 4.1 million copies on DVD.

The days of wine and roses are over for the entertainment industry. It can no longer charge whatever it wants for shoddy product and get away with it.

Sooner or later, it'll have to start using P2P as a marketing, distribution and sales vehicle.

Punish the True Pirates

And in the process, they'd be taking a large step toward dealing with the real pirates -- the hard-core professional criminals who are making their fortunes by copying and distributing entertainment industry product on- and offline. The counterfeit crooks would find it difficult to compete head-to-head with readily available product carried online at reasonable prices.

Big Music continues to pursue its bloody-minded "sue 'em all!" campaign. Having been whipped in the courts through the recent Grokster-Morpheus decision, the MPAA will probably try to do the same, using Hollywood-conceived legislation as its primary weapon.

However, they're both beating a dead horse.

P2P is the competition. It's forcing the entertainment industry to think about what they're offering and how they're offering it. Garbage is no longer acceptable.

And an old maxim the movie and music moguls thought they'd succeeded in burying is staging a re-appearance: The customer is always right.

And the customer plans to keep it that way.