Sorry, Pirates — Your Business Model Has Been “Disrupted”

This video is about a half-hour long, but it’s worth watching all the way through, as there’s a lot of interesting stuff in it. Marc Geiger is the head of the music division of the huge William Morris agency, and he’s obviously a smart guy — but he only has to turn out to have been half-right about the predictions he’s making now, and the consequences will be enormous. One of those consequences is that the business model of on-line piracy is broken (and yes, it is a business; its advocates, enablers and proprietors like to pretend that they’re all ideologically driven, on a now old-fashioned “information wants to be free” basis, but really it’s all about advertising revenue). The pirates are about to sink beneath the waves of the changes that are coming.

Okay, here’s my partial takeaway from Geiger’s speech. He’s predicting a massive revenue surge for the music content industry, based on the streaming business model replacing the file download model, which has already pretty much kicked the ass of the old physical media model such as CDs, DVDs, etc. He’s certainly right about that much, and he’s probably right that this revenue surge will go through the big players, the Apples and Googles and Amazons, dominating the field; outfits such as Pandora and Spotify, etc., will be absorbed or wiped out.

Why is this the death knell for the pirates? Because the pirates’ business model, what made their operations attractive to the consumer of recorded media — music, movies, etc. — was the enormous cost savings to that consumer. Get in bed with the pirates and you had access, through a not very attractive user experience, to thousands and perhaps even millions of music recordings and movies that you would otherwise have had to spend thousands of dollars (tens of thousands of dollars for the real enthusiast) for your selection out of that pile. Whatever was wrong with the piracy experience was offset by the enormous amount of money you saved, to get what you wanted from them. That all changes when the streaming model finally takes over. Get in bed with the pirates then, and what do you save? Ten, fifteen bucks a month? Sure, some people will make that choice, but the vast majority of consumers won’t. Which of course hammers the pirates’ revenue stream — what companies will choose to spend their advertising dollars with pirate outfits, when they only get a minuscule fraction of the audience that the streamers get? That swamp in which the pirates sail is already drying up; they’re not able to charge for ad spots on their websites what they were able to even just a couple of years ago. Eventually their already thin profit margin will fall below zero, and then they’re out of business.

There are a lot of things I don’t like about the future on-line landscape that Geiger predicts, and I’ll probably do another post about that. And of course, nobody has a perfectly clear crystal ball, including him. But whatever the exact nature of that future, one thing is pretty certain — Piracy is so 2008. It’s done. We just have to wait for the wreckage to wash ashore.

3 thoughts on “Sorry, Pirates — Your Business Model Has Been “Disrupted”

  1. I have no sympathy where companies restrict trade. I try to buy music and books from companies, but I’m living on an unacceptable continent. I’m also annoyed at how much material doesn’t become available for various reasons.

    1. To my mind, that’s about the only understandable reason for downloading from pirates, and I have some sympathy in that regard. But if this Geiger fellow is correct — and I think there’s a very good chance he might be — then in the very near future, that’s just not going to even be an option. But that won’t really be a problem, because virtually everything you could want will be available through the streaming services. Which of course would be good for everybody.

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