This post was written in 2012–2013 and reflects thinking at the time. For current views and topical discussions, please see recent articles.
I've come across this interview with one of senior BitTorrent employees, Matt Mason, who has written extensively on the issues around music piracy. BitTorrent, in case one doesn't know, is an incredibly powerful tool for P2P sharing of high volumes of data. As such, it has succeeded where Napster failed before: it has made music (and video) piracy more than technically possible - it has made it virtually irresistible. Does this mean that the music recording industry is finally doomed?
In my view, what is doomed is the music divisions of the huge US studios, which may well follow EMI into the sunset, unless they radically change their game. For we are now seeing a likely end of paid content. This is a much bigger challenge than that posed by "first generation" P2P file-sharing around ten years ago. Back then, the CD was king, and the king was way over-priced! As a reaction to that, young people started ripping their CDs into mp3 files and swapping them over the likes of Napster. The trade-off was poorer sound quality and a lack of a physical medium (although of course you could then burn your pirated mp3 tracks onto a CD...). What that meant was that, having found the music that they liked via free file-sharing, people were then willing to go and buy it in physical form, through an "official" retailer (and it helped that, faced with the threat of piracy, CD prices declined to more reasonable levels). The music studios' revenue model therefore had to adjust, rather than crumbled completely.
What happened then, though, was that the studios, and of course Apple, saw this as a opportunity to get rid of the physical medium altogether. Of course this reduced the distribution costs and sped up the buying process. And of course Apple made a lot of money. But once a professionally-produced and professional-looking physical medium is no longer the default, there is no longer any difference in the user experience whether you go through the "official" or "pirate" channel to get your music tracks (or the latest episode of Hardcore Pawn). In fact, ownership is no longer viewed as very important, since with high-speed broadband, 3G (and soon 4G), wi-max and other "always on" technologies, consumers can simply stream whatever piece of content they fancy this very second. In this sense, perhaps the bigger challenge to the studios is not BitTorrent but services such as LastFM and YouTube (although they do pay royalties to the rights owners).
But back to BitTorrent. What Matt Mason is saying is that the studios can monetise their content rights by using P2P portals as audience aggregators for the purposes of advertising selling, product placement etc. Facebook has shown how this should be done. Of course, Facebook's challenge now is that it is no longer seen as "cool enough" by a lot of people. BitTorrent and similar services should be immune to such a "falling out of fashion", as their focus is external (music content) rather than internal (interaction with other "cool people"). Don't treat the file-sharers as pirates, treat them as consumers (and milk them accordingly!). If that's how it pans out, the recorded music business model will come to resemble that of FTA television, in being predominantly advertising-funded. Isn't it curious how the future of one medium may well lie in the past of another. But before that happens, a lot of companies that once seemed "too big to fail", will have failed. And hopefully their place will be taken by a large number of independent labels, or even artists marketing their music direct. But that's the topic for a separate article.
