Monday, April 20, 2009

Business Models

Pirate Bay, the torrent search engine, has been found guilty of sharing files, movies, books, what-have-you illegally and the principals have been sentenced. Personally I have never been a fan of these sites, however the business person in me realizes that at the same time this is not a win for authors and producers and actors. It just seems to prolong the inevitable - an excuse to cling to old business models which have been failing.

Via Tech Dirt:

.... the entertainment industry will gleefully declare victory, and make statements about how this is a major victory against "piracy." But, in actuality, the exact opposite of that will occur. Unauthorized file sharing continues (or even increases) and it becomes that much more difficult for the legacy industries to win back customers and embrace these new, useful and efficient tools of distribution and promotion. It's a classic case of winning the battle and losing the war. The ultimate problem, of course, is that the entertainment industry still (amazingly) thinks this is a legal issue, not a business model one. It can win as many legal battles as it wants, but in thinking it's a legal issue, it will never recognize how its business models need to change.

It is difficult for me, and people like me who want to embrace all sorts of new models, to side with the entertainment industry. It is also tough for me who wants to see artists getting paid for what they do, to side with this site. It is a grey-area in both business and moral terms, in my opinion.

I think back to the 1970's when in Canada, and in the US, it cost dollars a minute to make a long distance call. The telecommunications market needed opening up, but the industry fought it. When it finally did open up, we saw tremendous innovation, much lower prices, and a changing model. Some of those "old companies" were invigorated, and as consumers we were rewarded.

I believe that the old way of distributing music and movies has to change as well. In 1999, selling a CD with 12 songs for $19.99, when the consumer wanted only one song, was good to line pockets of the sellers, but the consumer was getting the shaft, and the first chance they got to jump ship, they did. In racing we see similar - the first chance people got to join something new (poker, bookmaking sites, betfair) they did. They were finally delivering what they wanted, at a fair price, in a fun way.

Places like betfair have pushed the racing business in many ways; many of them for the better. In 2009 we can get rebates, innovative video, some free past performances, and so on. But we have a long way to go. And it is never easy when old must become new, for the businesses themselves, or for us as consumers. But I do hope racing, and the other old businesses like entertainment do realize that the reason these places exist is for a major systemic reason - their customers are not being catered to in a 21st century way.

Keith at Triple Dead Heat has his thoughts up on the Woodbine start/finish experiment. Check it out.

2 comments:

Allan said...

I think you are missing the point regarding Pirate Bay. There is a difference regarding changing the pricing structure to reflect the new realities but that is different than getting the item for free (stealing).

Do I advocate changing the business model of racing so off shore sites can get the signal, yes? But that is provided it is done in a fair way so everyone including the racetracks benefit. I don't agree in giving them the signal where they pay nothing or virtually nothing towards the production of the programming (staging the races and maintaing the facility to allow for racing).

Pull the Pocket said...

I have addressed that point and am well aware of the pirating issues, so nope I am not missing that issue.

The broader issue which I address is the reason for the market, and the changing markets via the internet, where book sellers are fighting kindles and racing is fighting change, despite getting paid for it.

The long distance companies fought to charge $4 a minute until their very last breath. $4 a minute was unsustainable. 22% takeouts, or not distributing Hollywood or music content more effiiently are unsustainable over the internet as well; and the sooner change happens in this regard, the better.