Lost Revenue.

When talking about intellectual property something comes up time and again.

How much money the owners are losing due to lost sales.  Also known as "lost revenue".

It is certain that there are people who would have bought and paid for the content if it had not been available on the black market for free.  What is wrong about the assumptions here is that everyone who obtained the content for free would have paid for it if that had been the only way to get it.

I think that is the majority of the "purchasers" and counting people who would have gone without rather than pay as lost sales is inflating the impact of illegal file sharing.

Let us also consider lost sales from other means.  Recently Apple finally got to add The Beatles music catalog to iTunes.  CNET's Buzz Report had a humorous mention of it.  While they were wrangling about the right to SELL the catalog online, people were just ripping their CDs.  People who would have happily paid $1.29 a song on iTunes but couldn't because it wasn't being offered for sale.  This is a genuine lost sale.  Even the original mp3 sharing haters, Metallica, have their tunes on iTunes.

How about "out of print"?  There have been many songs I have wanted to purchase but could not because it was not available from iTunes nor from the local music store on CD.  Oftentimes I am forced to make a longish drive to the used music store to see if they happen to have what I want.  OK MPAA, who benefits from this if the used store doesn't have it?  I don't have the song I want and nobody is getting paid.  I want to pay, I spent money on electricity and connectivity to check iTunes and ebay, I spent money on gas and time to physically run to the local brick and mortar stores.  Florida Power got paid.  Verizon got paid.  Shell got paid.  The people selling music didn't get paid.  The artist didn't get paid.

Tell me, MPAA, how is finding this song online from a pirate costing you money?  You are refusing to sell it.  I would like to point out that finding it at Vinyl Fever doesn't send any money your way either since it's used.  Who's cutting whose throat here?  What percentage of online piracy falls into this category?

As the copyright holder, it is your right to decide not to sell it.  What I am attempting to point out to is that you are ignoring a market demand for a product you can sell!  Digitize all the "out of print" songs in your vast libraries of music and sell them on your very own web sites for 50¢ a song.  That's $0.50 more per song than you are making now. How much are you spending on lawyers to win judgements for sums you will never be paid?  General Pyrrhus is calling on line two...

The big-huge neutronium simian in the room, movie and recording industries, is that your business model is broken.  You are failing to adapt to changing conditions and it is killing you.  What I think is happening is you can see that the successful music/movie model is much, much less lucrative (but still profitable) than the old one and you desperately don't want that to happen.  What you need to accept is that it has already happened.

I have an IP example for you.  Third Wire makes a combat flight sim I enjoy called "Strike Fighters 2".  It's a series of six $20 installments.  You get it via download at their web site.  They do not put any form of copy protection or DRM on the files.  I could pay once and make dozens of copies and send them to my friends on CD's for Holy Robaunakka without any difficulty.  I don't because I am honest.  What about others?  The Strike Fighters series is conspicuous in its absence on torrent sites.  Buh wah?  How can that be?

I think it really boils down to a good product at a fair price.  There's no anger about being "ripped off" to dissipate.  Without the DRM there's no challenging puzzle to break for the hackers.  Don't fool yourselves IP owners, that shiny puzzle is the entire reason some of these titles are out there.  The DRM free pirate download is their proof they succeeded in solving the puzzle.  People getting the product for free is a side effect, not a goal of the hacking.

Fix your model and business will follow.