Streaming Kills Piracy

Yesterday morning I was talking to my 13 year old son Josh. He's currently obsessed with the TV show Friday Night Lights. He's going back and watching all the old seasons. I asked him how he is doing that, expecting to hear "bit torrent". But instead he said "Netflix Watch Instantly". I was so happy to hear that and asked him why. He said, "bit torrent takes too long."

And then this morning, I came across this story in The Guardian which talks about a collapse in illegal sharing and a commensurate increase in legal streaming. The story says 26% of 14 to 18 year olds shared music illegally last month compared to 42% in December of 2007. The story also says 65% of teens stream music regularly.

I've been talking about this trend for a long time. In my post about The Free Music Business a couple summers ago, I said this about file-based music versus streamed music:

Streaming music is better because it's abundant. I don't own all the
music in the world on my server. But almost every song ever recorded is
on the Internet somewhere.

I am not a fan of file-based media business models. They lead to piracy and they put transactional friction into a system that doesn't require it. Streaming is much better. Unfortunately, we don't have a good mobile broadband system to make streaming possible everywhere. And until that happens, we will have files and we will have piracy.

But the good news is that as the media business wakes up and puts all the media we want out there in streams available on the Internet (paid or free – this is not about free), we see people streaming more and stealing less.

We used to wonder if we could "untrain" a generation to steal. The answer is yes. Just make it easier to get the content they want and they'll stop stealing. It makes my day to read that.

Reblog this post [with Zemanta]

Comments (Archived):

  1. ssaint

    Channel 4’s 4oD (in the UK) is another perfect example, there were times I used to download old TV series so I could watch them at my leisure, but now I can watch them legally and usually in better quality, all for the price of maybe a minute of ads! Why would you bother downloading these shows any more?

  2. Jonathan Deamer

    I’ve never been a big music pirate, but I barely even download MP3s from blogs these days; I stream people’s recommendations on Twitter from Spotify – similar to Netflix Watch Instantly. Too many clicks to download from blog, save, open in iTunes.

  3. millarm

    Media industry execs would do good to remember basic economics – and that there is an elastic demand for media. The lower the price, the greater the demand. So work out how to monetize the demand.http://www.viewfromlondon.c

  4. anrahman

    Totally agree overall – after Hulu came out, p2p sharing on campus at Cornell went down the tubes. However, I still feel like music piracy is going to be a while. There isn’t a great cloud-based music service that syncs on-demand to a mobile device without issues that has taken off yet and data isn’t universally accessible yet either. This will definitely change within the next 5-10 years though.

    1. fredwilson

      I agree but I think 5-10 years may be too long. It could happen much more quickly

      1. Kontra

        How do you get universal streaming infrastructure ready in the U.S. in under 5 years?Awful lot of music, for example, is consumed on-the-go or out-of-base. The reaction of network operators to the most significant streaming device we have, iPhone, has not been pretty. They are not jumping at the chance to invest in the infrastructure and perhaps not seeing sufficient ROI.Surely in the long run this’ll get sorted out, but in the 3 year frame, how do you see incumbent network operators (cable, phone, cell) delivering universal streaming payloads?

  5. álvaro ortiz

    You nailed it: make it easier to access a content and people will use that service, even if they have to pay a small fee. Its easier to use Netflix On Demand or Amazon VOD or any other service which provides streaming content than to search for a file, download it, etc.Regarding paying for content, the best example is iTunes: a low price and a superb user experience makes it worthwhile to use the system instead of using eMule or whatever.On a side note, I was in a meeting a month ago with the spanish RIAA, who has – a site to watch films in streaming for $2-4 each film. I asked why they haven’t spend more money on marketing so to promote the product which I think is great: their response was that until there was no laws to punish downloads, they think their product is not going to be used.I think the opposite is going to happen, as you: create a great product and reasonably priced and people will switch. Its all a matter of user experience.

    1. fredwilson

      I’m with you

  6. Deepak Das

    How can streaming really change anything to the recording artist? The revenue per song/album has dropped precipitously. Users switching from ripping and filesharing to streaming does not necessarily mean that users of streaming services are buying more music. How do you ascertain that the streaming services’ collection is legit? Also, do the artists get some kind of royalty based on how many times the song/selection has been streamed? As far as leveraging the audience habits that can be used to instantly offer additional products for user consumption, I would argue that most artists aren’t prepared to be able do that. (There may be a new industry here)One other thing. When it comes to the definition of stealing, many teens know that walking into a store and walking out with an item without paying for it is stealing. However, when it comes to downloading music, many of them don’t consider it stealing! That is the bigger issue. Convenience of access always trumps over knowing whether it’s legit or not in the digital world.

    1. fredwilson

      Musicians get royalties in several ways. If the stream is considered ‘internet radio’ then its a lower royalty. If it is considered ‘on demand’ then its a higher royalty. And there is also the publishing fees.Musicians will make money in this model as long as they don’t sign bad deals with their labels

      1. eric

        are they really going to distinguish between ‘internet radio’ and ‘on demand’? and why? maybe ‘internet radio’ should be at a higher royalty rate – since you are allowing a stream to be packaged (added value).

  7. rosshill

    Well said Fred – I’m looking forward to seeing this break out too 🙂

  8. Guest

    This also touches off the previous point made about the Hype Machine effectively leveraging Twitter. Interesting to read that one of the primary reasons for less piracy is the faster speed of the stream.Though, along with being faster, we’re all getting far lighter too. Like you mention here, it’s overkill to download and store everything.In a way, the stream seems to be more in sync with human nature and our fleeting interests, which probably also explains its rapid growth and popularity. That’s why we tend to rent movies more than we do buy them, same goes for how we consume almost any other kind of content; it’s just more efficient – both in utility and cost. The stream just feels more natural.

    1. fredwilson

      Yes. I agree. I’ve been saying this for years now

  9. kidmercury

    by “untraining to steal” you may inadvertently mean “untraining to share.”damn boss, i thought you were down with using media to share and socialize, i.e. social media. guess i was wrong. bummer.continuing with your son as an example, i understand why he chose netflix over bit torrent, that makes sense. but i think your son will at some point also want to share what he is watching. for instance, perhaps he would like to recommend to you an episode he found particularly interesting. or perhaps he would like to edit a particular episode with some video footage he took of you and share it with your family as an inside joke of some kind.if streaming kills piracy, it’s going to kill remixing, sharing, and socializing as well — because in reality that’s what piracy is.i agree streaming is in most instances better than file sharing (i myself own very little file-based music but stream stuff almost all day) for the reasons you noted. but i don’t think streaming kills piracy, and i don’t think we should want it to. if anything, i think the great publishing business models of the future will look to embrace and monetize the social aspects of piracy.

    1. kirklove

      Kid,Always love your comments, but I think you’re missing a big component here: Passed Links. That’s something that’s been discussed a ton here. If his son wants to share something it’s as easy and simple as broadcasting a link via Twitter (or Social Media vehicle of choice). I actually think the potential of the one to many model via passed link is incredibly powerful for social.Also, there are a plethora of apps (with questions of legality) that can save a stream for offline viewing if someone wants to repurpose it later. Just another thought.The bigger issue IMHO is who will pay for all this ubiquity? It’s easy to cite YouTube and Spotify as good examples of streaming, but the financial truth is they are both losing money. A lot of money in the case of YouTube. And Spotify can’t get people to subscribe even though it’s a killer service. They Freemium model isn’t coming to fruition. And they can’t seem to generate enough revenue via ads. Not to mention the majors are screwing everything up yet again with their greed. Why you don’t see Spotify in the States yet is not an issue of whether people want it or not (I’m dying to use it), it’s that they can’t monetize it to sustain it.

      1. fredwilson

        Kirk – you are on your game. I agree with all of this but I am a bit more optimistic than you on the business model question. We’ll get there pretty soon

    2. fredwilson

      I disagree kid. Boxee shows how social streaming can be. The remix part is trickier but there are tools out there for that too

      1. ShanaC

        They’re illegal- I’ve seen them and know people who’ve used them. (This is part of my BA). The fact that we start out with a culture where people are not educated in code to begin with means we are complacent about what the difference between the music and the code that writes the music is.In some ways, it is more difficult to have access to information, and then reinterpret it, if it is never fully yours. You have to work all that much harder to repossess it and make it your own, through a variety of semi-legal tools, in a swimming sea of too much.While streaming can be very social, we also know the building can be equally so- we know that from those both positive and negative forces that choose to intervene in those spaces in which we’ve built. Although I disagree with their habits of wrecking with mischief, the idea that one can intervene, be social, and build by the phrase “The Internet is a Serious Business*” is a powerful one.*that phrase is meant with at least twice as much humor in the positive sense than the way it is colloquially used. I do think if you are going to try and intervene, try and bring some joy and laughter the way a child would think in this world. There isn’t enough of it to go around.

    3. adwhore

      kidmercury nailed it. If it’s streaming or or downloading, it’s still someone sharing content. Aren’t we faced with the same conundrum? You still need a model of ad support or pay-per-stream, just like pay-per download on iTunes. It’s a workable model, but I see no huge difference between the two. If I burn a disc for you, or if I stream an mp3 from my server for 100,000 people to check out, is it now piracy? It’s the same thing, whether you call it piracy or sharing, and that’s what the internet is all about.I can post a file to my server and you can stream it through a browser. The copyright is for what is going into your ears. It’s not the file itself. Someone is still sharing and someone is still consuming, and someone still needs to monetize.Get every mp3 streaming OR downloading in one place and charge a monthly fee and ensure the artist gets paid. Sounds simple, so why hasn’t it been done? iTunes has come close. I need to understand how streaming would be any different from that model. It’s more efficient for some people (not all – I want my files), but it really doesn’t change the model as far as I can see.

      1. fredwilson

        Streaming is convenient. Its instant gratification. And people will pay for it. If you have to download and wait, you might be tempted to go the free route (aka piracy)

        1. GrishaRemake

          I love your blog Fred and I learn a lot from you and AVC community.But let me disagree with you that technical solution (streaming, pre-roll advertising and so on) could solve the problem of teen’s “piracy”.I am a teacher. I work with teenagers and what I hate about “piracy = stealing” campaign is that entertainment industry treats teenagers as a cash cow with unlimited money supply.In reality, teenagers don’t have money. They have weekly allowances from parents.For example: You are teenager and you have $20 for your weekly entertainment. For that amount of money you can go to the movie with you friends or buy CD/DVD and stay at home.Or you can go to the movie and download CD/DVD for free. What would you choose?TV/Radio advertising model, when ads attached to content, is no good for Internet.The solution is to separate advertising from content and create Advertising Market online.Teenagers can go online and earn extra money (credits) watching ads, taking part in research and so on.It must be a real work, something like – watch three video adverts, rate them, explain your rating and get 30 credits for that.Then teens can go on iTunes or Amazon and spend their hard earned credits on music or movies.That should solve the “piracy” problem.

  10. Paolo

    Totally agree! Let’s do like this Fred: we bring you Spotify and you give us Netflix Watch Instantly 😉 Europe vs. US, let’s shake hands…

    1. fredwilson

      I love it!!!!

  11. Andrew Parker

    I see two motivating forces for bittorrent piracy: cost and usability. Bittorrent is cheaper in terms of money and attention and it was easier than buying and ripping DVDs, especially when it came to sharing media. If streaming is going to replace bittorrent it needs to make large strides in usability to offset the costs that come with any viable business model. In the example of Josh, the cost is money because netflix is an ASP business model, and with respect to Hulu the cost is attention (ads).

  12. NatMich

    I think you’re right though there are still plenty of streaming sources that put profits from streaming into the hands of people outside the TV networks. This is the case even with networks that DO allow streaming, since often they take longer to put up new episodes snd/or do not provide streaming for all old episodes (most likely because they want to make more money off selling DVD sets). But the same basic economic principle you mentioned is still there: people tend to stop stealing when stealing becomes the more difficult, less efficient alternative.

  13. Robert Kim, Investor

    Fred, My web community lectures are on bittorrent. So while the abundance mentality does curb theft overall, it only benefits artists who are in the abundance stream.Indi musicians and film makers are not in sirius playlists or netflix. Ironically, streaming only really protects the established not-starving artist.I’m looking for a ubiquitous (bankrupt word usage quota filled) solution that DOESN’T put an even greater distance between the rockstars and the starving. Until then, my all of my edu community’s lecture mp3s (the paid ones) come with ad plugs for said community. A price that makes honest supporters who’ve paid, pay twice.

    1. fredwilson

      I don’t get your point. You can post those mp3s on a blog and stream them all day long

    2. eric

      I think $$$ for streaming empowers the indie artist.long tail to maximze revenue. ie make everything available to an artist (and not a good one) – it is exciting to think that it is that easy. make it available, and you make money. make it appreciated, or better yet, find your audience – and make more money.but to answer your concern, for an artist that doesn’t generate a pile of listens – he probably needs to figure out some different revenue streams or settle for less revenue than an established, popular prolific artist.>> ubiquitous (bankrupt word usage quota filled) solutionwhy does it have to be ubiquitous?>> Until then, my all of my edu community’s lecture mp3s (the paid ones) come with ad plugs for said community.>> A price that makes honest supporters who’ve paid, pay that a bad thing?you want to make money, and you need to figure it out. if that is working for you – job done.

  14. Mike Altschul

    I can relate to the anecdote about your son. (Great show, especially for anyone who’s witnessed HS Texas football or played HS football.) I just played catch up of Friday Night Lights on Netflix (via TiVo) for seasons 1 & 2. Then a funny thing happened: season 3 isn’t available for WatchNow, so I had to make a decision: 1) Hulu for 5 rotating ep’s (the first two and last 3 as it turns out), 2) Torrent ~4.5GB, 3) Queue up DVDs on Netflix. No solution is ideal though: 1) isn’t available in my living room & isn’t complete, 2) is illegal, 3) takes too long to receive content to watch & too much planning. So far, I’ve watched ep 1 via Hulu on my 27″ monitor. Do follow-up post when your son gets to Season 3, I’ll be curious to hear his solution.So what does this suggest? Not surprisingly, streaming can kill piracy *if* it meets the needs of the consumers on price, quality, convenience. It also implies that if Netflix’s business model makes everyone happy (I’m not sure that it does, otherwise we’d likely see more content out there), then it’s in a position to win big in the world of subscriber-based digital distribution.

    1. fredwilson

      That’s so funny. My 16 year old daughter is ahead of my son by a week and she hit the wall you hit last night. Her answer was to order the DVDs on netflixBut I am sure a bunch of people will turn to bit torrent which sort of proves the point of this post. You gotta put the media up or it will be pirated

    2. Jeff Chow

      the FNL example extends even further. To keep the series alive they did a deal with directv to show season 4 and 5 on directv in the fall and then on NBC in January. (…So there’s a 4 month window where the only way you can watch the new season when it first airs is either be a DirecTV subscriber OR bittorrent.They’re going out of their way to make true fans pirates!

    3. Jeff Chow

      the FNL example extends even further. To keep the series alive they did a deal with directv to show season 4 and 5 on directv in the fall and then on NBC in January. (…So there’s a 4 month window where the only way you can watch the new season when it first airs is either be a DirecTV subscriber OR bittorrent.They’re going out of their way to make true fans pirates!

  15. nameleswonderer

    Very good and while we are at maybe the thief in the village of the future we can celebrate and discover as a community why anyone would ever need to steal anything!

    1. fredwilson

      Because they were prohibited from consuming content they wanted

  16. paramendra

    “…..almost every song ever recorded ison the Internet somewhere….” Isn’t that just an amazing amazing thing to be able to say? Technology has made abundance possible already. But we have not done as good a job on business models. The law of demand and supply says if the supply is limitless and the demand is almost limitless, the cost ought be free. Did someone say freemium! :-)Also applied to books, all books.http://technbiz.blogspot.co…And, by the way, have you heard of PayCheckr?

    1. ShanaC

      No every book has a demand that is limitless or a supply that is limitless. Those books are often the top priority to be scanned if they are in public collections- but in private collections, they are unlikely to see the light of day..And most people would never want to read a book from the 15th century from the original- or even the scans. It’s not most people mojo.

      1. paramendra

        One thing Google Books has proven is that there are a ton of books that are in copyright but out of print. How much sense does it make to not scan them?

        1. ShanaC

          never said it didn’t-I just also talk to the librarians. They are very careful. The biggest issue is preservation- preserving a file format is in some ways more difficult- incompatibility issues. If you can find the machines of today that will be able to read correctly the files of 30 years ago, then I will be amazed. But that is what librarians, especially at the university and research level, are charged to do now. And the rate which they have to figure it out is faster.There are also secondary DRM issues to figure out as well- if a file becomes obsolete, or nearly so- how do you copy over the text in it? You do realize that the libraires and the rare book collections of research universities have collections of nearly everything somewhere in this world. Even napkins with little notes on it. That’s what they are saving. And they aren’t saving it for you or me, they are saving it for someone 100 years from now, or more. Obsolesce of technology is a plague for management of these items, especially if they contain what is believed to become essential texts. I would hate for the next Oddessy to get deleted, by accident.My school is part of the Google Rare Book Scan Project, among other digitization projects. The scanners they are using are incredible. They get to levels of detail unseen by the naked eye, and are now even being made to be portable, so that they can go to ends of human civilazations and the libraries safeguarded there, rarely seen by outsiders.That being said, the trustees distinctly made a decision to not decide the future of books and what they contain based off the Google and hopefully similar scans. They’ve increased funding for in person rare book research and shelving, the point where we’ve now broken ground for new library space for the rare books collection, as well as a move, for more compact shelving in one of the other libraries.

          1. paramendra

            I think I just read a comment that reads like a great blog post. Fred, you got competition.

  17. ErikSchwartz

    It’s not the streaming that kills piracy, it’s the abundance that kills. Streaming is a mechanism for creating abundance. But streaming is an incredibly expensive way to create abundance.If you did have all the music in the music in the world on your server there would be no need to stream. All the music ever recorded fits in well under 100T. You be able to buy 100T for $100 in 5-7 years (assuming the storage market continues on the same trends it has for the last 30 years).

    1. fredwilson

      That’s right. And you’ve made that case before here erik. Will that model work for video too?

      1. ErikSchwartz

        Most video is way more ephemeral. It’s that 3 bucket slide I showed you. Freshness is paramount with a lot of video. There is lots of music I listen to over and over again, not so much video gets multiple viewings. There’s an equation that includes importance of timeliness and likelihood of repeat consumption.Big storage works for some stuff on the video side, stuff with enduring value. No point in streaming Casablanca or Star Wars. But downloading the news or the daily show or sporting events is dumb.The answer is a hybrid where ephemeral time sensitive material is stored centrally and accessed remotely (streamed) and material of enduring value is stored locally.

        1. Ezra Fischer

          Actually, I think the Daily Show is a great example of how shows should make themselves available on the internet. The Daily Show has every minute of every episode ever available on-demand and keyword searchable on their website.

        2. David Semeria

          That explains why kid’s DVD’s cost on average 2x normal price.Kids (pre-teens) treat their favorite videos like music, and are quite happy to watch them over and over again (trust me, I know every line from Wall-e, Nemo, Shrek, etc).This makes Disney’s library more valuable (per title) than most of the mainstream studios,

          1. GrishaRemake

            “watch them over and over again” – that’s how children learn language. You are right -Disney’s library is the most valuable library in the world.

    2. harpos_blues

      Eric,All the music ever recorded is far more than 100T. I suggest you take a look at the storage requirements for a major movie studio and/or record label, a large library (system), or even better the (US) Library of Congress.On a personal note, I have close to 2500-3000 CDs (I stopped counting a couple years ago), I still buy 6-8 CDs per month.I’ve filled 5T for my home use, have not ripped all my CDs, and still need to buy more disk.

      1. ErikSchwartz

        Uncompressed stereo 44.1 .wav files are about 10 meg a minute or .75 gig an audio CD. Your 3000 CDs totally uncompressed should fit on 2.25T.You can fit about 250,000 songs per terabyte assuming compression equivalent to hi-quality streaming music.

        1. harpos_blues

          Erik,Do ou have any practical experience with this or are you just doing the (hypothetical) math?I listen mostly to jazz, opera, or classical music — with lots of vintage R & B. I use a several encoding algorithms (largely some form of variable bit recording). All of my music has complete sets of metadata, for use with online systems.And no, my CD collection will *not* fit on 5T.Here’s how I have it broken out now (for home use):• 2T “cold” storage, slower access• 2T medium speed access• 1T rapid access (scratch) – for stuff that needs my immediate attention (work related)I often have several versions of the same song, each of these ripped with different encoding techniques. And again complete sets of metadata must be included in any calculation of disk space.I keep my metadata on local disk, as access to that should be more rapid than the media file itself.I’m just sayin’ there’s a lot more involved than just the calculation of file size.

          1. ErikSchwartz

            I have a lot of practical experience with this. I built Yahoo!’s first streaming media product in 1999. I have built several internet radio networks since then. I built one of the first companies killed by the labels (despite being clear under fair use). 1000 years ago (mid 1980s while I was in college) I was a classical and opera buyer for Tower Records.But this is really about math.A red book audio CD holds a maximum of 783 Megabytes of data.44,100 samples/channel/second x 2 bytes/sample x 2 channels x 74 minutes x 60 seconds/minute = 783,216,000 bytes.3000 red book CDs can be stored on 2.349 T of storage assuming every CD you own is totally full (which seems unlikely).That’s the simple math.Q.E.D.

          2. harpos_blues

            Erik,I think we store different types of data. As I said, I often have to accomomdate large amounts of metadata to comply with Library of Congress guidelines. So it’s not just “Q.E.D”.Glad to hear you were working with Yahoo! back in the day, but I pre-date by a few years.. My first live streaming service (still ongoing) was in ’95-’96.Also, to my knowledge, part of the problem that yahoo! had back in the day was lack of metadata for reporting/royalty requirements (please correct me if I’m wrong).Have you reviewed the LOC requirements?If you know opera and classical, then you know that the metadata requirements (for archival purposes) can be disk intensive.

          3. ErikSchwartz

            The conversation is about storing the data on the CDs. CDs hold 783 meg of data. If you want to store other data about a piece of music, that’s a different conversation. I am talking about the data on the discs.3,000 CDs hold up to 2.349 T of data. That is a fact not an opinion.It sounds like you are storing dupes of everything (which is easy to do if you are using iTunes) or you are storing these on RAID arrays.FWIW. Y! had plenty of problems but reporting data was not one of them.

          4. harpos_blues

            Erik,I often work from master tapes as well as CDs. It’s not a matter of “dupes” as much as it’s a requirement for what I do. Yes you are correct that an individual CD contains a limited amount of of data (usually less 68 mins worth, though it can be pushed to 72 mins). but when talking physical storage, I have to accommodate limitations of the physical media, as well as software limitations which can drastically reduce available disk space (like RAID). Again, you know this.Thus, I cannot practically fit my CD collection on 5 terabytes. But you might find the LOC technical papers interesting. The solution set was petabytes (at a minimum).Funny on the Yahoo reporting, I attended the CRB meetings as far back as ’98 when I was working for the Dept. of Justice.Perhaps my memory is faulty, but as I recall reporting was an issue.As I stated above

          5. ErikSchwartz

            So we could characterize your use case as atypical? Atypical use cases, while interesting, are not particularly relevant for building consumer products.So would you concede in a typical use case one can fit 250,000 songs in a terabyte? Therefore 100T can store roughly 25 million songs.

          6. harpos_blues

            Erik,I’ve been working audio since the mid-80s, as I started out creating DTDs for SGML, for Dept. of Defense purposes (sonar).I find that what may seem an atypical or edge case quickly becomes the norm.Again, I’ll state that there are larger issues than raw physical storage, even at (or especially at) the consumer space. I’ve yet to see a one terabyte drive that actually yields a full terabyte storage… if we’re talking consumer product.

      2. fredwilson


  18. kevinpmiller

    An interesting article…but perhaps it’s not the 14-16 year olds that we should be worried about, rather the 20 and 30 year olds. Just yesterday I came across a dozen more Bit Torrent files for my documentary GENERATION RX. All it takes is one dishonest person to buy the DVD and create the files.The odd thing is that most of these individuals seem to really LOVE my film and want to spread the word, but in my Universe, this is ‘death and destruction.” It is already difficult enough to compete with the Michael Moore-sized budgets and marketing roll-outs. Don’t people see that for specialized work like GENERATION RX that they are killing the creative force behind what they profess to admire?As Wan Qi Kim says above, it is quite a challenge to create a model that will foster growth among independent artists and filmmakers…and still allow indies to survive. But we should be seeking this solution vociferously, because I’ve got news for you: CNN is NOT airing work in the genre that I and other indies are producing!Unless we want to see the haves (Michael Moore etc) versus the have-nots (set up a camera, speak your piece and be done with it), it is vital that we find an integrity-based solution to these challenges. Otherwise, the diversity of well-produced information will be gone forever—and only the big boys will be able to program for the masses.

    1. im2b_dl

      Kevin what much of the free/not free argument and much of the web development community doesn’t discuss is the little independents- the ones who haven’t been co-opted by large mammoth studios, networks and corporations… (where most “story” -and a lot of political- innovation and challenge happens)- that this “free” and “fair use at all costs” will destroy…not hurt…not damage…but decimate.and then society will be worse. I think Fred’s point is a good one (especially lately) for the middle ground but the whole model of all of this has to be trashed at this point. There are still many in their 20’s and 30’s who think copyright itself should be abolished for intellectual property. The arguments for free and an extended fair use that ignores the person who spent their life without medical insurance to have one song sell… is/was created by people who can’t comprehend that sacrifice or don’t correlate building art or media with building anything “structural”.

      1. kevinpmiller

        im2b_dl :Yes — I agree wholeheartedly! When I produce a documentary investigating BigPharma, payoffs, collusion with government workers and government agencies, I do so because the Mainstream media will NOT…because they are reaping billions of dollars in profits from drug ads and don’t want to upset the apple cart!But no matter “how low I lay to the Earth” in terms of expenses — and I do — it still takes REAL money to travel, hire cameramen, graphics people, editors etc. etc etc. How is that even disputable? For example, for GENERATION RX, I had to travel to Europe for two weeks with two other crew members. It cost tens of thousands to do so—and we were NOT staying in the Ritz.As you say, “the little independents- the ones who haven’t been co-opted by large mammoth studios, networks and corporations… (where most “story” -and a lot of political- innovation and challenge happens)- that this “free” and “fair use at all costs” will DESTROY…not hurt…not damage…but DECIMATE.”It is already more difficult than ever to produce the kinds of films I do, and I have been blessed enough to have won many international film and TV awards. It is difficult to get investors to pitch in even modest amounts of capital because of the piracy problem…they simply assume that they won’t even have a chance of recouping any of their money.So who will produce these films of social and corporate injustices—FOX? I think not.As for the people in their 20’s and 30’s “who think copyright itself should be abolished for intellectual property,” well, how convenient is THAT? Pretty soon there will be nothing left to steal, except for low-end/low impact videos and high-end Big Studio productions.Then what will the “free-ists” do?Please understand that I am NOT talking about the 10 second “fair use” provisions — but rather addressing the outright piracy of an Independent film. There is a huge difference, no matter how people try to hide behind bit torrents and their unethical acts.

        1. fredwilson

          I don’t know how much money it takes to make generation rx but check out kickstarter.comThere are new models emerging and the internet will help them develop and thrive

          1. ShanaC

            OOh useful. By the end of next year I want to have 7 two story c prints and a a way of diplaying them about this issue. I watch it very closely, and try to be non-partisan.It’s an issue. The art market, no matter which one you are in- is either openly or unopenly heavily capitalistic. It fosters a good deal of innovation, and a good deal of stupid ideas (I’m sorry but a skull made of platinum and diamonds anyone?)It is very hard to get interests align. Advocate for yourself.

        2. im2b_dl

          I feel for ya. Fred is listening…which is awesome…just need to get the other people who financed technology that they are invested in…who are now tied to that technology (which is often dependent on content not calling shots)to realize the only way this works for anyone outside NBC and Microsoft and google… and Fox…. is the new technology has to be involved in content creation…and seem like a friend of content creators like yourself who have risked years, decades, health and livelihood… for 1, 2 maybe 3 important far that is not happening. all those 20 year olds making movies while living still in their parents basements with their health…in 10 years (maybe 5 if memory is correct) when they make more important projects are not going to be their friends still.Like I say I like Fred cuz Fred is actually listening and debating to find the model. whether it seem like an ass kiss or not. many other people involved are like Sundance in the 90’s believing in their own hype.

          1. fredwilson

            I am listening because I know its ppl like you who will show me the way

        3. Matija

          The problem is, in every ten people I know, there’s six of them who spend more to just survive and feed their kids in a month, than they actually earned during that same month working a honest work. They are the victims of ‘blood piracy’ as their employers gradually suck the last drop of life from their bodies. Why does nobody ever cry against *that* kind of piracy?So yeah, lots of people work without earning what they should, in that perspective, you at least have a bonus of being an artist, and therefore heard. Just stop complaining and work (like the people I’ve mentioned are told repeatedly every day).

    2. fredwilson

      I agree with your concernsAre you streaming a low-fi version of generation rx? I’d like to check it out and maybe pay for a high-res version

      1. kevinpmiller

        Hi Fred:Thank you…I meant to mention that! We are streaming through Amazon’s service—and it is only $1.99 (sometimes only $1.00) for 7 days. And we make virtually little or no money off of that…but did it for people who were “cash-challenged,” so to speak.Many thanks for this vital discussion. You are to be commended.Here’s the Amazon video-on-demand link,Kevin

        1. fredwilson

          I will check it out. Thanks!

          1. kevinpmiller

            i will investigate the link you sent. Thanks again, Fred! I look forward to following your work here!

          2. eric

            the website for the film.http://www.generationrxfilm…Stream provided above at Amazon (but not available in Canada)Torrent – DVD Rip…ok you have my attention. I would watch this (now)…I am not going to order the DVD, simply put, because I don’t need it (physical product). $1 or $2 to stream… I might pay (but not because of the content, because of this thread), if it was easy to do. maybe it is, you tell me – I haven’t found an easy way… yet.>> but did it for people who were “cash-challenged,” so to much do you want to make from me? $2 seems generous – considering my passive relationship to you, the project, the film. of course that could change after I see it… if i see much do you need for the project to make money? be considered successful? how do you fund the creation of the movie? what are your revenue streams?It seems to me that you need to find the people who care about what the movie is about – some in advance of the creation of the movie, some after. and get as many people as possible to watch it – ie remove friction.who wants to (should) suport the movie? is it pure entertainment?

  19. bombtune

    I still believe that consumers want copies, not just for interoperability betwwen devices but for long-term storage. Who knows when a digital music service will go bust and you end up losing your library.Music futurists believe that music is like water and you’ll pay only when necessary or if you really like a track. If I could retain an MP3 copy of every streamed track I’d be ok with this. I’ll still stream it online but I want the hard file for safekeeping.At some point I want iTunes in the Internet cloud. I want to be able to access my library from the car with ease. The download market persists but the Internet makes access ubiquitous.

    1. fredwilson

      I’ve argued this point for six years on this blog. I don’t agree. But I understand your point of view. I think its a generational thing. My kids don’t care about a library. They just want to watch a show or listen to song

      1. ShanaC

        I’m a tad older than your daughters- there are days I want a library and days I want a song. I guess the model I want is semanticly tagged streaming. A cross between a library and a song- so that I don’t have to “own” (except for production or particular emotional responsive reasons- I could see myself buying an actual record of the music I walk down the aisle too or something like that), where there is a library aspect to it (so I know how it all relates and remember what I like), but don’t have to have it with me.I’m tired of forgetting that I like The Genders. But I don’t want to buy the cd and lug it with me. Or an ipod and lug that with me and sync it. I just want to remember that I like The Genders. Or Stravinsky’s setting of the Lord’s Prayer, sung by the Tallis Scholars. A Music note system that sits in the stream per say that is yours.

      2. bombtune

        There’s no doubt the future is in the streaming all access model if the labels and platforms can reach a reasonable payout structure but current Internet speeds restrict us to MP3 ownership particularly if you’re on the go.The Pandora and apps are too slow and because royalties are so high who knows if those platforms will even last.Rupert Murdoch believes in micropayments. I think we can train 13-16 year olds that quality content combined with other stuff (videos and games etc) is worth 99 cents and under. If they can interact in some way they will pay.

        1. ShanaC

          Don’t make me feel old now- I’m a kid at heart.Here’s the big thing: I’m not totally sure that the Genders price should be the same as the Tallis Scholars. That might be the snob in me. I don’t know many people who listen to both. I know more who listen to the Tallis Scholars, but The Genders could become a breakout.You can also train into any sort of system cultural elitism too, you know. If that exists…some days I wonder.

      3. giffc

        putting aside the “always on” issue of internet accessibility, possibly one generational difference is older folks have had services fail more often. All you need is a Magnolia experience blowing up and losing all your bookmarks and you realize that you also want a Foxmarks with both local & cloud redundancy.granted that’s not an issue if streaming music is commoditized and there are multiple services with unlimited music plans and all with the same library — if one blows up, you just switch to the survivor.but if you’ve been arguing this for six years you’ve been over this dozens of times 🙂

      4. Aaron Klein

        If anything, streaming gives the record company MORE control because they hit a button and remove their content from your grasp. They can’t do that if you own the file.Not advocating against it…just pointing that out.You hit the nail on the head in the post when talking about the quality of mobile broadband. That’s really the issue.When truly high-speed bandwidth is available anywhere and everywhere, the average consumer will see no difference between “library” and “streaming”, because the difference will be “is the song stored in the same place as the playlist, or does the playlist point out to the cloud?” The user experience will be the same.That being said, the day will come when dad says “hey, I need some help…I had that Beatles song on my iPod and now it’s gone…get it back” and you’re trying to explain to him that Michael Jackson died, his estate owned those songs, and got caught up in litigation, and thus the song isn’t on the playlist any more.”But I had it. How can they take my song away?”It will be an interesting problem if and when it happens. I don’t disagree with your prediction though.

  20. im2b_dl

    Fred I think a large part of that actually is the lawsuits. For the general public…especially parents…that scared the shit out of them. If there is a reduction it is …look at the calendar… pre parental awareness on file sharing and it’s illegality… and post.

    1. fredwilson

      Well I started the post with an anecdote about my son. My kids are not scared of getting sued. They don’t even know what the RIAA is

      1. im2b_dl

        true… but your son is 13.there is a big change from 13 to 16… and if I remember your piece said 14 -19?and You fred… are not your average parent and your son I am sure (like me and growing up with my dad at Polaroid…having an inherent ability to frame an image) probably has inherent skills and awareness about the web . Tell me you don’t see many parents (especially dad’s who never did before) who saw the lawsuits on television who don’t understand the details…who don’t have your (; ))savvy walked in to their kids in the other room “you’re not on their trading files are ya?”My guess is to most “lay” individuals/parents the lawsuits scared the crap out of them.

        1. im2b_dl

          P.s. Not to make a father of a 13 year old MORE nervous about 16 coming down the pipeline …lol

        2. fredwilson

          I’ll concede this point. I am sure you are right that the lawsuits have affected many people

  21. hallson

    Definitely agree with much of what you said. A personal anecdote I think you might find interesting. I do not want to stream music. Subscription music services have no appeal to me as music is something I want to own. I have no desire to ‘rent’ it and be hostage to a provider. Now this may change is there are multiple providers and the ability to switch and save playlists, etc exists. But I do not feel this way about movies. I am more than happy to ‘rent’ movies (and tv shows) a la netflix. I have no desire to own a movie and never really have.The question is why do I think this way? Is it due to a learnt behavior? Video rental has been around in one form or the other since the early 80s, while music has not. Is it due to frequency of use? I will always listen to ‘old’ music, but rarely watch old movies (unless they are great). Is it because I am sick and tired of re-buying music (lp->cassette->cd->mp3) and want a permanent solution? Who knows.

  22. Vladimir Vukicevic

    Bit torrent did this to itself. People like safe and clean – even younger people. Bit torrent got too messy, slow, inaccurate, and riddled with viruses, spyware, etc.As soon as a better alternative came along, consumers have logically jumped to streaming. We might be even willing to pay a little for this ease of use, cleanliness, and safety.

  23. vincentvw

    “Unfortunately, we don’t have a good mobile broadband system to make streaming possible everywhere.”I’m sorry, I don’t buy that statement. I have perfect broadband in all the European countries that I lived, but not much in terms of legal streaming services. I think that the real barrier is that agreements have been made with traditional media channels for a type of exclusive content to be shown here, which prevent content from services like Pandora, Hulu, Netflix to be shown.Media = the most unflat industry in this modern world and it’s mostly thanks to the lawyers.

    1. fredwilson

      I agree about licenses (or the lack thereof)

  24. Chris Dodge

    What’s your opinion on Pandora’s royalty fee agreement last week? I haven’t been able to track down the details yet, but I was happy to hear some progress on the business-side front nevertheless. That’s one of the critical pieces to be put in place for this “streaming everywhere” vision – until the costs structures are understood, it’ll be hard to evaluate whether the revenue side will cover the costs of operations.

    1. fredwilson

      I think pandora has a bright future and the royalty deal will help them. I’m not convinced they needed it to make a sustainable business but it sure helps

  25. mfeinstein

    In the long run, you’re right. When you really can get broadband Internet absolutely everywhere, you’ll have very little reason to own a copy of music. But, I think that in terms of infrastructure, this is years and years off. And, as long as there is some significant share of the world that doesn’t have ubiquitous broadband Internet, they’ll have to be a business model that deals with owning a copy of music. I also agree that my view is probably shaped by being ‘old’ — I’ve always owned copies of music. But, if I want to listen to music when I am on an airplane, riding my bike, or traveling to other parts of the world that are still years behind even us in infrastructure, I need to bring my music with me if I want to be sure to have access to it.

    1. fredwilson

      Today, that is trueBut so many people are jacking their iphones into their car dashes and listening to pandora, etcRhapsody, spotify, msft’s rumored new service, can do the same for on demand

  26. scyphers

    In general, I agree. However, I think that there will always be a market and a need for files. Streaming is great, until another backhoe opens up Mae-East (or a bunch of trees take out the lines around your house, for those who don’t remember the M-E fiasco) and your pipes are down for a few days.

    1. fredwilson

      I’ve got my old vinyl records for that moment 🙂

  27. pfreet

    It might be helpful to stop equating copyright violation with stealing. You lose people quickly by making incendiary comparisons like that.Music and movies have always been free. Just turn on the radio or TV. Business models around content are primarily about selling convenience in a world of scarcity. If there is no scarcity, there is no business model. If you produce content, you had better go find a new business model. The genie aint going back in that bottle.

    1. ErikSchwartz

      Movies and music have never been free. They just have not been paid for by the end use consumer.There’s a big difference between that and free.

    2. davidshore

      when you listen to radio or watch tv, your are paying by also listening or watching the ads

    3. kevinpmiller

      Music and movies have NEVER been free. Someone has always had to pay for the privilege of licensing. ASCAP/BMI was established to make certain that each time an artist’s song was played on the radio, he/she/they would get royalties. Radio, supports those payments—and makes money—through ad revenues.On TV, content producers make money through licensing via cable & broadcasting Many programs pay a minimum of $40 per minute for exclusive content, and obviously in the TENS of millions of dollars to air syndicated TV programs like Seinfeld, etc.Even in the old days of the radio business, each radio station paid fees to AP/UPI for the privilege to “rip and read” their news from the teletype. Thus your assertions that “music and movies have always been free” is patently incorrect. SOMEONE paid for the content.I mean no disrespect to pfreet, but this idea that Indies who try to defend their substantial investment are being “incendiary” by “equating copyright violation with stealing” is ridiculous. Artists have a right to make an income also. I wonder—if you created the latest, greatest “widget” that took the world by a storm…only to find out that it had been knocked-off in Hong Kong in clear violation of your trademark, if you’d say “oh well…the genie ain’t going back in the bottle?”Again, respectfully, I find that highly unlikely.

      1. David Semeria


        1. kevinpmiller

          Somehow, I mistakenly typed “Many programs pay a minimum of $40 per minute for exclusive content,” when I meant to type “$540 per minute.”Sorry.That’s still not huge dollars (approximately $43,000 per 80-minute program), but it’s better than the alternative — and it’s only one license.

          1. David Semeria

            Don’t worry – your general point still holds: commercial media has never been truly free.Fred pointed out his post was not about free, rather that if you make it easier for people to access content legally, there is less incentive to nick it.I would just add that the incentive to copy/borrow/steal is directly proportional to the perceived value of what you’re getting. If MP3s could be had in a frictionless manner for 10 cents a pop then I’m sure most people would be happy to pay for them.But as Clay Shirky pointed out a long time ago, it’s not only the price, it’s the hassle.

      2. eric

        except… the burden of how they (try to) make that income is on the artist. not the consumer. read as DRM. the artist has the tools to protect their precious little files today.As a consumer I have a tough time navigating copyright legislation and related enforcement – which IMHO makes it irrelevant to the consumer. so convenience (and utility) win.for any legislation… what makes it work? mutual participation in the laws. it takes agreement on both (all) sides of the agreement. It simply is NOT A CASE of dictating convoluted legislation – there needs to be understanding and agreement on both sides. How do we get that agreement and understanding?simply put – if the consumers do NOT want to respect copyright legislation. copyright legislation needs to change to reflect their input. This does not make them criminals.If there were paid streams of artist content (or ways to make them paid) – certainly, for the artists I like – I would jump through the hoops to make it happen. Most of the (digital) music I have purchased – I never listen to again (and I paid too much for) – I would much prefer a system that rewarded artists by how much I listen to them, or how much I want to pledge my support (there are artists I love that I rarely listen too)..

      3. eric

        >> Artists have a right to make an income alsono. they have the right to try and earn an income.

    4. VintageFilings

      I agree! You cannot blame these savvy youngsters for not wanting to pay for such nonsensical tangible music platforms anymore. In today’s digital age, there is truly no use of them (I still have my vinyl though!). The real ingenuity will come when people start to utilize alternative means of profit gains instead of the sale of CDs, LPs or EPs. Like pfreet mentioned – where there is a will, there is a way.

    5. pfreet

      Consumers have shown over and over that they are willing to pay for convenience or experience, but not for content itself. I pay for a CD to avoid having to wait for my favorite song to come on the radio. I buy a movie ticket for the enjoyment of the theater experience.Content producers don’t have a right to a profit. Free digital media is here and it is not going away. They must find a way to create a business model for themselves and stop criminalizing their biggest fans.

      1. Aaron Klein

        “Content producers don’t have a right to a profit.”Perhaps you just arrived from the Soviet Union, comrade, but here in America, you have a right to reap the profits of anything you labor to produce that others want to buy.(tongue firmly in cheek)

        1. kevinpmiller

          pfreet: “I buy a movie ticket for the enjoyment of the theater experience.”Might I suggest a “Home Theater,” then? There, you could watch your free content in Surround Sound.One thing though: since all of the material will be stolen, you won’t mind viewing a pixelated, 20th generation copy of the movie, will you? And if there’s a slight hum or buzz on the soundtrack…you won’t mind THAT either, right? I mean, you get what you PAY for.

  28. wjcohen

    Doesn’t Netflix watch instantly bode well for cable’s TV everywhere initiative? Basically the same thing – you get your suite of channels wherever you want so long as you’re a subscriber.

    1. fredwilson

      Its a good model. More will adopt it

  29. davidshore

    Its all about convenience.It seems to me that most people that download illegally today do so for convenience – its easy to find the file and get it to a device. There are still a few who think they ‘have a right to free media’ or think that the artists make so much money its ok to steal, but they are in the single-digit (or less) minority of all that acquire media.iTunes and Amazon are easy to use for not for all content and not everywhere.Convenience goes a long way to deciding the winner of streaming over download too. It depends on the content and where and when you want to consume, since streaming isn’t always so convenient or pratical.Downloads will always have their place and piracy will fade as new models emerge that cater to convenience.

    1. fredwilson

      I agree. I wrote a post a few years back called ‘convenience trumps quality’. I think convenience is the number one quality you need to attract users. In the case of twitter, its the ability to tweet from sms. Many people move away from that once they get a mobile client, but its always there if you need it and its on every phone

  30. Charles Jolley

    No one was ever trained to steal. They were trained to expect to consume the media they and their friends care about anytime they want. That’s why I think streaming works so well – it solves the same problem just in a “legal” way.Another thing to consider is that streaming doesn’t have to mean realtime. A service could always keep a cached copy of some media on your player for offline playback; giving you access to your media even when you’re on a 3g network etc.

  31. kellan

    Slightly off topic, but this blog post is showing ads for in the feed reader.

    1. fredwilson

      oh greati suppose i should block themit’s actually a pain to do that

  32. CathleenRitt

    Fred, I thought you would be interested in this story from the FT, because you write often about how your teenage children are using and consuming tech and media. Coincidentally, it’s related to your subject today. Morgan Stanley TMT bankers in London had a 15 year old intern write about his and other teenagers’ media consumption. MS found it so revealing, they published it as a research report and received more responses than usual. Here’s a link to the story and a link to the report (also in the story).

  33. Damon

    “If it wasn’t for dickheads like you, there wouldn’t be any thievery in this world, would there?”-Gunnery Sergeant HartmanPerhaps true, but is that where we want to go?

  34. David Hyman

    that’s good news to hear. clearly the fact that pandora is the number 1 app on iphone means consumers are getting streaming audio to their portable devices as well. the quality of streaming these days is just too good that it doesn’t really matter. youtube is a progressive download that hides the file in the cache. there’s a point it’s just semantics.

  35. Chris Phenner

    Recent infringement claims filed against imeem and Seeqpod say to me that the issue is not one of ‘files vs. streaming,’ it’s an issue of ‘licensed or not,’ but that’s a smaller point than the one I would really make, if you listen to what Josh said. Let me repeat the most important line of the whole post, in my view:”bit torrent takes too long”Recall that feature article “Wired” wrote years ago that gushed and gushed over the distributed nature of the torrent-based network and how amazing it was — what a load of garbage — it’s always been impossible to use.Paid streaming is where it’s at. In other words, provide a service that is so useful, and so ‘there’ (whether connected or not) that it feels worth paying for (like cell service).Shameless thought: Stop posting about Hype Machine and 8tracks and INVEST in one of them 🙂

  36. Jamie Lin

    Good one.I feel at the end of the day, it’ll come back to pricing. If music labels and movie studios price it at a point that it doesn’t worth the extra effort of stealing, people will choose not too. People do have a proven willingness-to-pay for convenience.

  37. CaseyWhitehead

    Agree in terms of audio files, but for video I think it is another case altogether. From an Australian perspective (which could be related to anywhere where Broadband is sadly lagging), the inability to access connections with the speed to stream effectively (even a simple YouTube video) at anywhere away from a corporate environ or expensive cable connections means that downloads will remain the primary choice for content consumption. Earlier comments in relation to storage in my opinion address a problem which technology will solve very quickly. Rather than focusing on replacing download technology, finding ways to monetise this channel intuitively makes sense.Companies such as Hiro Media (an Israeli start up now domiciled in the US) and an Australian company, Hyper MP (disclosure: Hyper MP is a corp advisory client of mine) are attempting this with media players with dynamic ad insertion, giving users the same experience whilst allowing content owners to monetise their assets. It’s still very early in the piece, and we are yet to see if advertising dollars migrating to streaming sites such as Hulu also come across to these models, but as media companies move to embrace frictionless distribution, it is hard to see this sector missing out.

  38. GrishaRemake

    “if streaming kills piracy, it’s going to kill remixing, sharing, and socializing as well”Well said Kid.I think that Remixing, Sharing and Socializing is how children learn in this digital age. And calling it piracy is a crime

  39. benjaminjtaylor

    Interesting related article in Ars Technica on this topic. Report: UK file sharing drops, even among teens

  40. marcelofrontiereconomy

    I think that’s an artifact of current protocols and technologies. There’s nothing making p2p streaming inherently impossible.> But the good news is that as the media business wakes up and puts all the media we want out there in streams available on the Internet (paid or free – this is not about free), we see people streaming more and stealing less.I’m not sure I follow the underlying logic of this phrase. Streaming != not stealing Stealing != p2p. And that’s leaving aside the highly debatable “piracy == stealing” equation. Law breaking? Arguably. Stealing? Less clear. “Wrong”? Even harder to establish.Ultimately, this is a generation that understands, down to their bones, that information has zero replication cost. That knowledge isn’t going to go away.

  41. vishalsood

    I totally agree here. One more point, in a lot of cases as broadband reaches masses, the quality you could get out of streaming may be better than P2P in a lot of cases. While you can get good quality with P2P, it takes a lot of effort and installing custom players.Disclaimer: I work in Microsoft in Smooth Streaming team so naturally my views are that streaming will change the world 🙂

  42. csertoglu

    I personally prefer streaming, as well, but at least when music is concerned, you could technically have the entire recorded music catalog local on your hard-drive. With storage costs coming down, that may emerge as an alternative model. Not the most efficient solution, i realize, but one also is blown away when bandwidth requirements exponentially grow with all these streams.

  43. Matija

    All this ‘piracy is theft’ screaming is just one big whine to my ears. You’re all like the little kid in the kindergarden crying because another kid took away one of their toys, while not noticing a crowd of starving children just outside the window. Or, even worse, like a policeman putting a parking ticket on a car while next to him a band of hulky teenagers are beating the crap out of a little kid.Couldn’t you just finally shut up if you can’t find anything more serious to discuss, please?

  44. RollingStoneKK69

    I am so following this blog. I am learning so much.

  45. vijayanand

    Couldnt agree more on this.

  46. Terry J Leach

    Fred maybe you have observed the evolving Internet life cycle for intellectual property. The initial use of digitized content just distribution channel with no regard for IP or making making money, but if the owners of the IP license the IP to a variety of channels over time the profit motives by the various channels reduces the transactional friction. It’s like creating an Long-tail Innovation ecosystem, where the IP owners are comfortable with collaborating and licensing their IP and not having total control. The IP owner’s revenue stream may never be the same as before but their content will have broader reach.

  47. ravisohal

    I think many people are beginning to look at media like music, news, movies as “rightful data.” That is, they have the right to this data set and the providers have to figure out how to get consumers their data/media as fast and conveniently as possible. And content providers will need to build monetization models around consumer needs. So if you can improve the consumer access experience like Netflix/Hulu are doing – make it instant, and (almost) anywhere available, I think the driving force behind illegal downloads will be a lot less potent and revenue streams will start to sort themselves out.

    1. fredwilson

      Yup. I totally agree

      1. Matías Attwell

        And when we get better streaming music services, we can be saved from really bad ideas born out of wrong concepts like

  48. adwhore

    Heard about a band. Downloaded their stuff from bit torrent. Loved it. Shared with 10 friends. They all liked. Band came to town. Tickets were $30 each. 11 people went. $330 spent. I have seen them twice. Bought merchandise. Havent paid a dime for a file or a stream. Why would I?That “pirated” download probably made the band more money than me taking a chance and paying for a disc or download (wouldn’t have done it), which I would have shared with those 10 people anyway.I have a problem here with the “piracy” and “stealing” crap. Metallica got signed only because they gave away their music, then had the nerve to cry about piracy while they bought and sold million-dollar paintings. As someone said in another comment, the only artists being protected are the ones already “making it”.When we’re truly living in a cloud with every mp3 ever recorded, then fine – this discussion makes sense. Until that day, in the end, the artist is getting screwed by someone, and making technology the boogeyman is just a pointless exercise. The only thing to stop it is a fascist state who locks up technology.Art is not a commodity. If its hollywood crap, then fine – call it stealing. If it’s art, call it sharing. That’s cultural value – not monetary value. If an artist falls for the “piracy” con job, then they should re-think why they make art in the first place. Sure – an artist deserves to make a living on art. Certainly they deserve it a lot more than the labels and other vultures who suck off of them. That’s why the piracy argument is for the labels – not the artist. Streaming, downloaded, or dropped out of the sky from planes down your chimney – the artist is still getting jacked.

  49. CathleenRitt sent this email today… for sharing and streaming music. On closer look it may be the antithesis of what you’re talking about, but thought you would find it of interest.

    1. fredwilson

      Thanks. I’ll check it out

    2. GrishaRemake

      Thanks for the link Cathleen.”The brainchild of a 16-year-old Aussie – iZaRia allows entirely free downloads of all its music, legally allowing you to own all your favourite songs without paying a cent.” Another Teen Rebel.Ahoy !

  50. Matthew Quint

    I’ve enjoyed both the post and the comments here. Thanks, Fred & fans.I am personally a fan of Rhapsody (for 4 years now) and its mixed capabilities of online streaming and DRM-based unlimited file transfers to licensed mp3 devices. As a NYC resident who often listens to music in the subway, I am thrilled to be able to pay $15/mo. to drag nearly any song I want from Rhapsody’s 6 million song library onto my Creative Zen.This article from the New York Times in May is also interesting in light of the finance/licensing comments: It appears that the labels are in fact easing the financial burdens on streaming services in the hopes that a robust business model will develop that challenges (illegal) peer-to-peer file downloads.

    1. fredwilson

      Its true that the labels are finally coming to the conclusion that streaming is an important business model for them. But its taken them so long to get there

  51. steveschildwachter

    Dear Fred: This was a thoughtful post and I am glad your son did the right thing, regardless of his motivation. I am sure you and GothamGal are great parents. I would quibble just a bit with the conclusion that we can untrain our children to steal. It seems if the trend you’ve identified holds true, users of any age are merely pursuing their entertainment by any means necessary, and if it is convenient again in the future to do so illegally, they would. In any case, I really enjoy your tweets and your blog and will continue to read them! — SteveS1, Chicago, Illinois

  52. dudeeriest

    Yeah, well, if greedy producers start charging way less, then maybe. And maybe if the minimum wage becomes decent too so that we can afford these things. Not all of us are software engineers at Microsoft, ya’ know?

  53. fredwilson

    Well I can tell you that I will miss them. A lot.But they hated twitter, tumblr, boxee, and many other investments I made until they understood them a bit better. Now they love all of them and use themSo I don’t know. I learn a lot from watching them but they certainly don’t lead me to my investments. If it was up to them, I’d be locked into only one investment – facebook