The True Cost of Content (Piracy and the Internet)

In the early days of broadcasting, newspapers prevented radio stations from broadcasting news reports for fear of competition; in the 1960's the record industry restricted the number of hours radio stations could play records; in the 1970's Hollywood tried to stop the introduction of video recorders to prevent people recording films from TV; in the 80's the record industry ran a campaign "Home taping is killing music". Existing industries are just scared of innovation.

So is file-sharing really so bad? Why do studies show that the people who file-share the most also spend the most on films and music? Why don't existing industries take advantage of file-sharing rather than try to stop it?

Before the internet, phone calls to far-away places would be more expensive than local calls. The internet has now demonstrated that this model was wrong: the cost of communication is not distance-based.

Now we see CDs of music often costing more than the DVD of a film, even though a film is much more expensive to produce. Why is this? Will the internet eventually show us the true cost of content in the same way it has shown us the true cost of communication?

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If there's one thing the internet has taught us, it's the true cost of communication. Until the introduction of the internet, telecoms companies would happily charge us for phone calls according to the distance involved. A local call was cheaper than a long-distance call, which in turn was cheaper than an international call.

What the internet showed was that this charge structure did not reflect reality. It is no more expensive to access a website in New York than it is one in Amsterdam. Why not? Because although international lines are more expensive to lay, that is a one-time charge, that is amortised over the millions of simultaneous calls and connections that are made over such a line.

And as a result, the cost of international calls has plummeted, to the point that from Amsterdam it is now cheaper to phone New York than Amsterdam.

So on a similar note, why is a DVD of a film often cheaper than a CD of an album? Especially when a new DVD can be cheaper than many CDs of music recorded in the 60's, where presumably the recording costs have been covered many times over. In general making a film costs many more times what it costs to record a CD, and while it is true that a film has other sources of revenue, there is still a large gap that can't be explained.

And why are e-books often barely cheaper than the same book in analogue form? Especially when you realise that the author is probably only receiving 10% of the price. What's going on here?

And how about piracy? In the early days of broadcasting, newspapers got the government to disallow the BBC broadcasting news reports. In the 1960's the British recording industry imposed "needle time" on the BBC to prevent it playing records more than so many hours per day, for fear that people would no longer buy their records; in 1976, Hollywood film studios took Sony to court to try and prevent them selling video recorders, because they didn't want people to record television programs. In the 1980's the British recording industry had a campaign "Home Taping is Killing Music". And yet study after study finds that people who "illegally" download music and films are the very people who spend *more* on such media.