OT Circulating Libraries and Video Rental Stores [article]

Hi,

Sorry can't resist, this site has been a fav of mine for a long time, saw this gem on the homepage by accident. No stunning conclusion even at time of publication but interesting in it's analysis. I hope you like the read :)

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Circulating Libraries and Video Rental Stores by Richard Roehl and Hal R. Varian
First Monday, volume 6, number 5 (May 2001),
URL: http://firstmonday.org/issues/issue6_5/roehl/index.html





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Implications for the Internet

In examining the video and book rental market we have seen several effects that appear to be taking place in the current development of the Internet and the World Wide Web. Certainly erotic material played a significant role in the early development of all three media. Just as the circulating library industry and the video rental industry searched for viable economic models, so too do the providers of Internet content. The demand for network access and the availability of online content go hand in hand today, just as literacy and books or video cassettes and video machines did previously.

Finally, there is the widespread fear among content providers that these new technologies will act to their detriment. Just as publishers feared circulating libraries and Hollywood feared video rental outlets, today's producers of digital content fear that the Internet will dilute the value of their intellectual property. Perhaps some dilution will occur, but the historical record seems to suggest that the expansion of the market may well outweigh the impact of this dilution.

Indeed we see this happening currently in the recorded music market. The availability of MP3 music files on the Internet at sites like www.mp3.com has inspired fear and loathing in the music industry. Their initial impulse was to suppress it via legal action. Their next impulse was to control it, via alternative licensing and copy-protection schemes. Both initiatives appear to have failed. At this point the industry is asking, with considerable trepidation: "How can we make money out of it?" The history of rental books and rental videos suggests that there is probably a business model for very low-cost music distributed over the Internet, just as there was for low-cost books and videos.