How to sink pirates: The decline of music piracy holds lessons for other industries

You open a window on your computer’s screen. You type in the name of a cheesy song from the 1980s. A list of results appears. You double-click on one of them, and within a few seconds the song is playing. This is what it was like to use Napster a decade ago; and it is also how Spotify, another free online-music service, works today. The difference? Napster was an illegal file-sharing service that was shut down by the courts. Spotify, by contrast, is an entirely legal, free service supported by advertising. This shows how much things have changed in the world of online music in the past decade. It also explains why online music piracy may at last be in decline.For most of the past decade the music industry focused on litigation to try to prevent piracy. Over the years the Recording Industry Association of America (RIAA) has accused 18,000 internet users of engaging in illegal file-sharing. Most of them settled, though two cases went to court this year. In both cases the defendants (a single mother and a student) lost and were ordered to pay damages (of $1.92m and $675,000 respectively). But the industry has realised that such cases encourage the publication of embarrassing headlines more than they discourage piracy, for as each network was shut down, another would sprout in its place.
http://www.economist.com/opinion/displaystory.cfm?story_id=14845177

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