Piracy is dead

Unauthorized distribution has already been factored into the music economy. Valuations have been adjusted. The economic impact of filesharing is complete.

When Napster happened, it was a surprise to the music industry. The techies saw it coming but the music people didn’t. This hurt many people with investments in the music business. Highly successful musicians, who are especially loved by the public, took an especially big hit.

Then something normal happened: people adjusted their investments to accomodate the changed environment. Investors sold stock in CD stores and bought stock in guitar stores. The concert business grew. Musicians stopped doing expensive studio recording and put their money into home studios, a move from an ongoing investment in services to a one-time investment in capital. Players redirected their economic efforts from CD sales to merchandise, concerts, advertising, soundtracks and other products which benefitted from the changed environment.

It has now been nine years since Napster. The music industry has been steadily reconfiguring itself, and while the transformation to a new configuration isn’t complete, the valuation of the recording industry has already dropped to take napsterization into account.

Money lost to napsterization is already gone. There is no more to be lost.

If record labels make less money now than before, it’s not a surprise to anyone. Somebody who puts money into a recording business that is affected by napsterization does it with full knowledge of the situation. Therefore, they don’t stand to lose money on it.

It’s like buying a house in an expensive neighborhood and losing money when the neighborhood becomes less popular. If the expensive house loses value as a result of the neighborhood becoming less popular, money is lost. But once that change has happened, the transformation is over. If somebody buys the devalued expensive house at the new market rate and the house stays at the lower value, no money is lost.

Which is to say that unauthorized distribution is having no further impact on the recording industry now that it is simply a basis part of the environment. Piracy is dead.