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Thursday
Nov292012

The Distribution At The End Of The Universe

Back when the original episode went out, I responded a bit to Marco Arment's position concerning piracy. Well he's mentioned it again this week, and as is my wont, I'm responding again.

At issue this week is a string of responses to responses regarding whether consumers are "forced" into piracy because distribution models are still clinging to the past. Most of the arguments arrive at the conclusion that people are NOT being forced to pirate but this I fear is based on too limited a definition of the term "force". The implication is that consumers believe that they have an insatiable desire for content and the ravenous bugblatter beast within them is literally forcing their hands. While this is indeed an over simplification, it is a manifestation of a very real phenomenon - market forces.

When Instapaper first launched, it was $9.99. Sometime later, Marco chose to lower the price to $4.99. Was he "forced" to do this? Did someone show up at his house and beat him about the head and neck until he lowered his price? Of course not. Because market forces are not (usually) violent, but they are forces none-the-less.

iTunes created a profitable sales channel that made paying for digital music more attractive than stealing it because it didn't ignore the very real market forces at work. Digital distribution (of music first, but now of video) removes one of the main market regulators effecting pricing and availability - scarcity. Scarcity is what drives the price of something like a Wii to 300% it's retail price on Ebay. Since content doesn't work by the same rules of scarcity (nor has it ever), delivery mechanism and timing became the stand-in for scarcity giving rise to release windows. 

Asking consumers to ignore the reality that there is no scarcity in content distribution is misguided because this is a situation where both the distribution and the consumption side have to deal with the new reality. This has already happened in music. Producers realized that the way to deal with the lack of scarcity was to get out in front of it and offer a better downloadable product. The market force that was driving people to download illegally was the same force the music industry turned to their advantage - convenience. 

Video content producers are trying to use their own market forces to keep consumer behavior within the old distribution model. "We want to drive sales of our monthly cable subscriptions so we artifically limit availability outside that channel." Whether you consider a downloader to be a "dirty pirate" is really a secondary issue. If people are willing to break the law rather than participate in the prefered sales channel, then there is a very real market force that is going to shape the distribution of video content, whether the producers like it or not.

Now this may very well create a market where quality programming is no longer sustainable. It may also make it harder for smaller networks to compete and lead to far less content being created. This too is a real market force. But saying people should just "be an adult and wait" is missing the point. On the face of it, what that is essentially saying is - "We have customers who want our stuff so badly that they are willing to break the law. Instead of taking their money, we would rather just lecture them."

Maybe ask Lars Ulrich how well that worked out.