I’m always amused when I hear arguments about file sharing and piracy as the root of all evil. This recent Mashable post points out an argument that Sony is using in a court case vs LimeWire.
At first glance I was annoyed and began to wonder how many potential jurists would buy this garbage. Basically it would be like black and white tv makers suing color tv for their declining sales. It’s just a silly argument with an even more preposterous supposition about what would have happened in the future without fire sharing. And this isn’t even taking into consideration that their chart doesn’t seem to consider online sales and other revenue generators.
But after I thought about it a while longer, it became apparent to me that file sharing really is one of the reasons for the decline in big music, but not in the direct way that big music would like you to believe. File sharing was one of the factors that potentially accelerated the long-tail effect in the music industry. And for those that aren’t aware, the long-tail effect is simply that the internet has made it possible to be profitable selling to a much more niche audience. This has caused the big players in some industries to lose market share to the smaller players. So it can be argued (and I’d like to see if anyone actually has statistics on this) that the overall music industry hasn’t declined, but the share that is held by the big players certainly has.
I would suspect if you looked at numbers for the big beer companies,as well as the brick-and-morter book and electronics stores over the same time period you would see a similar loss curve.
There are a lot of questions around this new environment that can be asked and potentially have already been answered. If this is the market and the direction that certain businesses are heading, how do you stay profitable? Can companies learn from the mistakes of the past? Who is the big winner in these situations? One market to watch for some of these answers will be books. With the new viability of digital ebook readers it will be interesting to see how niche book writers try to find an audience and how this will affect both physical book sales as well as percentage of overall book sales that stay with the big book publishers.
What are some other examples of this long-tail effect? In what other markets will this effect soon be felt?
