You’re right; it’s hard to compete with free, especially when they’re over-charging to begin with. With Napster–especially at that time–you were at the epicenter of the corporate backlash tsunami. Of course, Napster is disproportionately blamed/praised for the market disruption (Kazaa, LimeWire, and now any number of free file-sharing programs have done the job since), but my kingdom to have been a fly on the wall for some of those conversations! Still, I find it kind of funny/sad that so many consumers and so many music industry folk still think this is a war between business and consumer. THAT’s what I don’t buy…

Once the distribution model works itself out a bit more, I like to think it will get better for the consumer (more choice), better for the industry (more in touch with what the customer wants and how/where to sell it), and… oh, yeah… better for the ARTISTS (more $$$).

As for circulation numbers dropping, that’s just because things have changed. And newspapers haven’t changed with the times. Sure they’ve gone online in their own clumsy way–but is that what the reader wants?

When we got electricity, the candle industry went out of business. Or did they? When a new wave sweeps, they’re going to have to ride the wave for what it is. Newspapers, CD sales–they’ll all die when they keep doing what they’re doing.

Our business was fully online.
We’re moving in big chunks offline.
You think offline is un-profitable? Nope it’s not. But you can’t use 1980’s thinking in 2007.

Declaring “newspapers are dead”, as Scoble did, makes for great headlines, but the truth is newspapers and all Intellectual Property is being disrupted by the Internet. Dead? no. Disrupted? yes.

My point was to step back and look at the larger picture, not just focus on newspapers problems or magazines in the case of Infoworld, but to look at all forms of Intelectual Property that can be digitized and distributed on the Internet. Music, video, newspapers, magazines, and even software, is being disrupted.

You are correct that distribution methods and costs are one of the problems. People still want music, video, and news, but they are getting it from different distribution channels (Internet) that have very different cost structures and business models.

There is plenty of time for the big music labels, film studios, and newspaper chains to react and evolve. The smart ones have already started, the rest will cling to their standard business for as long as possible and slowly go down hill.

The music industry has a long history of selling one or two good songs on a CD for $20. Consumers had no choice but to take the junk with the good songs. Now consumers can buy singles on the Internet and that has radically changed the economics of the music business. Now it is the record labels that have no choice but to adapt.

As part of the Napster team back in 2000 I am proud to have played a small part in the transformation of the music business to provide choice for consumers.

The same transformations are rippling across all IP businesses today…including software.