keep your eye on the products

David Barrett (aka Quinthar)‘s comment on the quinthar edition blog post:

The fact that an insignificant pirate outfit like Limewire is within an order of magnitude to the revenue earned by Apple on content sales is stunning. Apple is worth $240 *billion* dollars; it earns over $40B a year in revenue. For it to only earn $150M on content sales should be proof that nobody else should even bother. As a comparison, they sold 2M iPads in 2 months. Those cost $500 each, so that’s roughly a billion dollars. In 2 months, from one product. iTunes will never, ever be significant to Apple. Indeed, I believe the only reason Apple has iTunes is to distract from the fact that Apple is the major beneficiary of piracy. Nobody can argue with a straight face that people buy $30K worth of iTunes music to fill up their ever-expanding iPods; Apple *is* the largest inducer of piracy in the world. They’re just more clever about monetizing and hiding it.

Yup! I agree. I just don’t agree that unauthorized distribution matters to the recording industry except where it reduces profit. My case is not that the Sue Em All strategy has given consumers an direct incentive to stop filesharing.

My case is that the Sue Em All strategy has lead to new products being created which stay as far away from infringement as possible, and they are successfully drawing attention from filesharing. Pandora, YouTube, Hulu are all licensed, and they’re all doing significant volume. And out of the current wave of music products, nothing interesting is coming out of vendors with significant legal exposure.