Monday, December 01, 2003

'Every major label is drooling over the money-making prospects of having its own iTunes or Musicmatch. But they are all, in the immortal words of Johnny Cash, 'born to lose, and destined to fail.' Why? The music industry's problem is fundamental: the implicit contract between music companies and listeners is no longer viable.

The music industry fails to understand that a primary reason that consumers illegally share music files is that they want insurance against the music industry itself. File sharing is as much about risk sharing as it is about the theft of value. Technology makes file swapping possible - but the music industry's business model, which is at odds with the implicit contract it signs with listeners, is what makes it probable...' "

The Economics of File Sharing

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