I Drink Your Milkshake

A popular myth propagated on nearly a daily basis by online bloggers is that the entertainment industry unfairly wields its power to block innovation and that piracy is either its own fault or unharmful.  In fact, the reverse is true.  The entertainment industry has been besieged  by far more powerful forces that make high margins by distributing content without compensating the creators,investors and owners who made the content.  In our opinion, the numbers presented here speak for themselves.

“It’s easy to forget that it was the magical beauty of Napster, the then-illegal music-sharing service, that spurred many of us to sign up for DSL and cable broadband connections. Napster’s popularity made it clear for the first time that broadband was a platform, no different than, say, Windows or the PlayStation. That’s because it allowed for new applications to be developed and run on top of it, applications that consumed bandwidth — and in turn, driving demand for even more of it.” - GigaOm

“Peer-to-peer technology, . . .  boosted their business, increasing the demand for broadband and upgraded services” – NYU Law Journal

It appears to us that ISPs, search engines and internet advertising networks are in the midst of unfairly using their control of distribution networks to gain control over the content producers.  This is exactly how Standard Oil came to be split up into several smaller oil companies.

Search engines, internet ad networks and ISPs make 10 times more money than the music and movie industries depending on how you size them.  Annual revenues: Google $44B, Verizon $120B, WMG $2.4B.  The US movie industry home video and box office was approx. $28B in 2011, down from $37B in 2006.  Music was $6B in 2011 down from $12B in 2000.  According to Sandvine 18% of US Internet traffic is P2P filesharing and 5% is used for sites like Megaupload.   Search engines, internet ad networks appear to make millions if not billions from selling ads to point people to these links without compensating content owners.  It appears to us that US citizens are being trained by search engines that stealing content is the “new normal.”  Type “Adele discography” into Google and see it autopopulate the word “tpb” – the pirate bay.  ISPs make a lot of money providing the networks used to distribute this content without permission.

The United States telecom industry generated $367 billion in service revenue in 2010 and is forecast to grow to $443 billion in 2016.

United States internet advertising industry generated $28 billion in 2011 and is forecast to grow to $40 billion through 2015.

While US broadband internet penetration grew from 5 million subscribers to 80 million in 2009 and 85 million in 2010.

Recorded music revenues dropped by half even though actual music consumption measured by total downloads on P2P networks and cyberlockers is in the tens of billions.

Source: Mashable

The US Home Video Market (DVD, Blu-Ray, PayTV, VOD and Streaming) has declined 26% from $25B in 2006[1] to $18.5B in 2011.[2]  The first BitTorrent search engines debuted in summer of 2004.[3]

[1] December 2008 Futuresource http://forums.highdefdigest.com/high-definition-smackdown/117934-futuresource-consulting-blu-ray-top-50-sales-2014-od-still-33b-72-share.html

[2] http://www.isuppli.com/Media-Research/News/Pages/Network-Delivery-of-Video-Fails-to-Live-Up-to-Hype-in-2010.aspx

[3] http://mozy.com/infographics/a-history-of-bittorrent/


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