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Book Publisher's fought against Libraries
This whole problem with the media not groking the internet reminds me of the history of the book publishing industry. The best analysis of this I have read recently is in the book Information Rules, A Strategic Guide to the Network Economy by Carl Shapiro and Hal R. Varian. Back in the late 1800's a growing literate middle class arose who had free time to read, but not much money to purchase books which were very expensive. In America, we developed a system of Public Lending Libraries to give people access to books. In England, the concept of a lending library was slow to take off, so book stores began to rent books. Publisher's where quite upset with this perceived loss of book sales, and the attempted to bring book lending to a halt. Overtime, the publishers learned how to thrive in a market where books could be read freely. First as more people decided that they enjoyed spending their free time reading books as a result of free access to books, the market of potentially book purchasers exploded. Second, the publishers realized that they needed print books more cheaply to sell to this new market. In England, you could still rent books until the 1950's when the creation of the paperback book finally destroyed the book rental market. There are many parallels to the current situation, and of course there are many differences. Today the most notable difference is that the marginal cost of unit production and distribution is approaching a very low number for both the original firm and for pirates. Still a believe that media companies need to look to economic history for ideas for the future path. The book Information Rules would be a great place for them to start.
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