For the future of the music and movie industry look to video games

With the Supreme Court ruling on Grokster, expect of flood of ink (or, more up to date, a flood of digits) on the meaning of the decision for the future of the music and movie industries. As I’ve opined before (most recently last week in “Music industry adjusts to file sharing”), the Grokster case is an attempt to put the genie back in the bottle.
So where does this leave the music and movie industries? Some will use the decision to try to defend the existing business model. The smart ones will move on. And where will they go? An intriguing notion surfaced at a recent talk on the OECD’s work on digital content. The presentation was an overview of the OECD’s Working Party on the Information Economy (WPIE) studies on scientific publishing, music, video-gaming and mobile digital content.
The speaker, Graham Vickery, is a long-time scholar of innovation and new technology. He pointed out the parallels between the music industry and the video gaming industry. In all of our discussions, we tend to overlook the video gaming industry. Yet, it is 2/3 the size of the recording music industry. It is growing rapidly and is subject to the same problems of online piracy.
The direction video gaming is heading, however, may overcome the piracy problem. Games used to be relatively static. Once the game was released, it became a good, just like a movie or song. As such, it was easy to copy – until the latest version came out. The industry is now moving more toward online games (multiplayer that change and develop over time). In essence, the business model has changed from providing a good to providing a service (an experience). And an online service is much easier to protect from piracy.
Could the music industry move in this direction? It has been argued that the future of music in back with the live-performance (see my earlier posting “The new music industry“). That is one way of turning a good back into a service. Maybe there are other innovative ways to create an online, interactive music “service.” Isn’t that what radio stations (including XM radio) do? They provide not only the music but the service of the information broker. And they pay royalties to the artist and the companies.
For the movie industry, the situation is not the same. There already exists an interactive version of movie — it is called theatre. If is doubtful that movie companies will survive as promotes for the stage. Interactive movies have been tried before (at the Expo 67 – Montreal Worlds Fair) with less than sterling success. However, the direct tie in between movies and video-games is growing. Maybe that will be a way for the movie industry to change its model — say an online connection to some special feature of the movie that isn’t available on the DVD. Remember that there were prophecies of doom when the VCR came out. And now videos make up a large proportion of the industry revenues.
Granted all of this is unclear — major shifts tend to be that way. What is clear is that the old models are unsustainable – even now after the Supreme Court rules against Grokster.

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