Bootleg

Back in the olden days, when Napster was still a thing, record industry execs spent a whole lot of time and money trying to prosecute people for digitally downloading music. They contended that people were stealing music because they didn’t want to pay for it. But, in retrospect, it’s clear that people were stealing music because that was the only way to get it online. As digital album sales data demonstrate, once they were able to buy music digitally, people flocked to that option in droves.1

During the pre-iTunes Store period, I remember talking with Sean Parker, who compared the online theft of music at the time to bathtub gin. During Prohibition, people couldn’t buy liquor, so they started making it at home. Once Prohibition ended, they could have continued to home-brew inexpensively. Instead, nearly everyone was more than willing to pay for the quality, convenience, and consistency of store-bought brand liquor.

I thought of that again recently, when I came across a table calculating overall internet usage data for last year. Back in 2011, BitTorrent – the primary method for illegally downloading movies – accounted for 23 percent of daily internet traffic in North America, and the movie industry was tearing its hair out with distress about piracy. By last year, BitTorrent traffic was under 5 percent, while (legal, paid) Netflix and Amazon Video have now grown to account for more than 40% of daily traffic.2

In other words: the bathtub gin effect strikes again.

  1. While digital sales never rose to match album levels, that’s primarily a result of unbundling albums into individual songs – people often only want one or two songs from a given album – and moving heavily to a streaming model – which tends to increase consumption without increasing revenue as incremental consumption is free. While both are great for consumers, and less great for record company profits, they’re business model choices made by the industry itself.) ↩︎
  2. I expect things will push even further in that direction once studios give up the practice of ‘windowing’ – delaying the digital release of films until after their full theatrical run. I’ve long contended that a lot of people would be willing to pay fairly high prices (as two movie tickets now closes in on $40, even before marked-up popcorn) to watch new movies at home on the same day that they’re theatrically released. ↩︎

May 3, 2017