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  • Ian Ritchie : Scottish Business Insider

Fear of the download: it’s here to stay so exploit it

WHEN will they ever learn? Leading publishers are criticising Amazon for putting the full content of hundreds of thousands of publications up on its website and making them fully searchable. They are suffering from the perennial and irrational fear of publishers of making stuff available for potential copying and the assumption that it will wreck their legitimate sales.

What they have repeatedly failed to realise is that new technologies actually bring a wonderful opportunity to sell even more stuff to even more people. But they always, always fail to ‘get it’.

They also forget the golden rule of technology — you cannot uninvent it, so it’s probably just as well to get used to it and to make the most of the opportunities it presents.

Despite the slowing of sales of recorded music on CD, the music industry is still dragging its feet about putting its tracks up on the internet for legal downloading. At least Apple’s iTunes and others have started providing a proper service which offers what the customer wants — lots of legitimate music to download. Whether they want to pay the fairly high price is more debatable.

By selling music tracks directly to the customer over the internet, the record companies are cutting out the costs of manufacturing, warehousing, distribution and retailing. So why is it that they charge 79p or 99p per track — or £8 per album — almost as much as the physical shrink-wrapped product bought in a shop? Greed, basically.

As for the movie studios, they are currently concentrating on attacking file-sharing sites such as BitTorrent and trying to sue students for illegal downloading of movies.

Students are mostly connected to high-speed broadband in their university residences and are keen to consume the latest entertainment products. So what are the studios doing about this market opportunity? Are they setting up well-branded and easy-to-use downloading sites where people can obtain legal, high-quality copies of TV series and films at reasonable prices?

Well, no, actually. Their lack of understanding of the potential of new technologies is quite staggering. Instead, they ignore the problem until all the likely ‘early-adopter’ consumers have learned how to download files illegally — and then they try to sue them.

Back in 1984, the major Hollywood studios took the Sony Corporation to the Supreme Court in an attempt to stop Sony from selling its new Betamax video recorders in the USA. They were scared stiff that people would use the video recorder to make lots of illegal copies of movies and give them to all their friends.

The Supreme Court ruled that the video recorder was a legal device for an individual to own because it was “capable of substantial non-infringing uses”, even though they admitted that it could be used to violate copyright.

Well, last year, consumers in the USA spent $24.1bn buying and renting home-video titles; far more than the $9.4bn that moviegoers spent at the box office. And the home-video market is fantastically profitable — total revenue to the studios totalled $l3bn in 2002.

The movie studios must be thinking thank goodness they lost that 1984 case. So does that make them look ahead this time round? Again, the answer is no.

Will they ever learn?

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